<PAGE>
Filed Pursuant to Rule 424(b)(5)
Registration File No.: 333-64765
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED OCTOBER 29, 1998)
$826,728,000
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION
Depositor
NATIONAL REALTY FINANCE L.C.
CIBC INC.
Mortgage Loan Sellers
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 1999-NRF1
The Commercial Mortgage Pass-Through Certificates, Series 1999-NRF1 will
consist of 16 classes of certificates. Only the classes described in the
following table are offered by this Prospectus Supplement. An additional 10
classes of certificates are not offered by this Prospectus Supplement. All of
the Series 1999-NRF1 Certificates will represent beneficial ownership interests
in a trust fund whose principal assets consist of a pool of 257 fixed rate
mortgage loans secured by first liens on 286 commercial and multifamily
residential properties.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
CERTIFICATE
INITIAL CLASS RATING(4)
CERTIFICATE INITIAL PASS- SCHEDULED FINAL WEIGHTED AVERAGE -----------------
BALANCE(+ / - 5%) THROUGH RATE DISTRIBUTION DATE(1) LIFE (YEARS) FITCH MOODY'S
---------------- ------------- -------------------- ---------------- ----- -------
<S> <C> <C> <C> <C> <C> <C>
Class A-1 ......... $188,500,000 6.074% January 15, 2008 5.507 AAA Aaa
Class A-2 ......... $480,307,000 6.480% January 15, 2009 9.416 AAA Aaa
Class B ........... $ 51,092,000 6.608% January 15, 2009 9.806 AA Aa2
Class C ........... $ 46,447,000 6.746% February 15, 2009 9.848 A A2
Class D ........... $ 46,447,000 7.433%(2) November 15, 2009 10.489 BBB Baa2
Class E ........... $ 13,935,000 7.433%(3) November 15, 2009 10.639 BBB- Baa3
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The "Scheduled Final Distribution Date" with respect to any class of
certificates is the Distribution Date on which the related certificate
balance or notional balance would be reduced to zero, assuming no delays
in liquidation or the collection of any payments, no exercise of
defeasance options, no prepayments (other than of ARD Loans on their
Anticipated Repayment Dates), no early termination of the trust fund, no
defaults, no condemnations, no loan modifications, no loan extensions and
payment in full of ARD Loans on their Anticipated Repayment Dates.
(2) Initial Pass-Through Rate. The Class D Certificates accrue interest at
the Weighted Average Net Mortgage Rate.
(3) Initial Pass-Through Rate. The Class E Certificates accrue interest at
the Weighted Average Net Mortgage Rate.
(4) The Rated Final Distribution Date is November 1, 2031.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THE SECURITIES OR DETERMINED IF THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
YOU SHOULD CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE 18 OF
THIS PROSPECTUS SUPPLEMENT AND ON PAGE 12 OF THE ACCOMPANYING PROSPECTUS PRIOR
TO INVESTING IN THE OFFERED CERTIFICATES.
The Series 1999-NRF1 Certificates will represent interests in the trust
fund only and will not represent an interest in or obligations of the
above-named persons or in any other party. The Series 1999-NRF1 Certificates
and the mortgage loans are not insured or guaranteed by any governmental agency
or the Transferor, the Depositor, any Mortgage Loan Seller, the Master
Servicer, the Special Servicer, the Special Sub-Servicer, the Trustee or any
private mortgage insurer.
---------------------
PRUDENTIAL SECURITIES CIBC WORLD MARKETS MORGAN STANLEY DEAN WITTER
MARCH 18, 1999
<PAGE>
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 1999-NRFI
GEOGRAPHIC OVERVIEW OF MORTGAGE POOL
IDAHO
2 properties
$1,941,388
0.21% of total
MONTANA
1 property
$4,751,679
0.51% of total
NORTH DAKOTA
1 property
$8,682,574
0.93% of total
MISSOURI
5 properties
$19,407,405
2.09% of total
MINNESOTA
1 property
$1,459,038
0.16% of total
ILLINOIS
11 properties
$25,775,902
2.77% of total
MICHIGAN
12 properties
$24,346,903
2.62% of total
INDIANA
8 properties
$18,509,197
1.99% of total
OHIO
35 properties
$56,742,021
6.11% of total
PENNSYLVANIA
6 properties
$16,183,431
1.74% of total
NEW YORK
24 properties
$114,799,017
12.36% of total
VERMONT
2 properties
$572,173
0.06% of total
NEW HAMPSHIRE
1 property
$494,905
0.05% of total
MAINE
2 properties
$19,506,924
2.10% of total
MASSACHUSETTS
16 properties
$39,022,632
4.20% of total
CONNECTICUT
8 properties
$24,698,582
2.66% of total
NEW JERSEY
6 properties
$12,962,782
1.40% of total
MARYLAND
4 properties
$13,290,425
1.43% of total
VIRGINIA
3 properties
$3,409,608
0.37% of total
TENNESSEE
5 properties
$13,175,305
1.42% of total
GEORGIA
16 properties
$43,927,115
4.73% of total
FLORIDA
20 properties
$96,137,807
10.35% of total
KENTUCKY
3 properties
$27,883,244
3.00% of total
ALABAMA
1 property
$3,791,718
0.41% of total
MISSISSIPPI
1 property
$1,397,707
0.15% of total
LOUISIANA
1 property
$6,436,652
0.69% of total
OKLAHOMA
6 properties
$9,645,201
1.04% of total
TEXAS
27 properties
$105,497,855
11.36% of total
KANSAS
4 properties
$4,563,729
0.49% of total
COLORADO
10 properties
$18,928,052
2.04% of total
ARIZONA
2 properties
$9,322,499
1.00% of total
UTAH
5 properties
$6,315,622
0.68% of total
<PAGE>
CALIFORNIA
18 properties
$68,391,270
7.36% of total
NEVADA
9 properties
$51,060,090
5.50% of total
OREGON
3 properties
$20,218,347
2.18% of total
WASHINGTON
5 properties
$20,814,351
2.24% of total
HAWAII
1 property
$14,500,000
1.56% of total
ALASKA
1 property
$355,193
0.04% of total
[ ] (is less than or equal to) 1.0%
of Initial Pool Balance
[ ] 1.1% - 5.0%
of Initial Pool Balance
[ ] 5.1% - 10.0%
of Initial Pool Balance
[ ] (is greater than) 10.0%
of Initial Pool Balance
<PAGE>
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS PROSPECTUS SUPPLEMENT
AND THE ACCOMPANYING PROSPECTUS
General information about mortgage pass-through certificates we might
offer publicly is contained in the accompanying Prospectus, some of which may
not apply to the Series 1999-NRF1 Certificates or the particular classes of
Series 1999-NRF1 Certificates being offered. This Prospectus Supplement
describes the specific terms of the series of mortgage pass-through
certificates being offered to you.
IF WE DESCRIBE TERMS OF THE SERIES OF MORTGAGE PASS-THROUGH CERTIFICATES
OFFERED HEREBY DIFFERENTLY IN THIS PROSPECTUS SUPPLEMENT THAN WE DO IN THE
PROSPECTUS, YOU SHOULD RELY ON THE INFORMATION IN THIS PROSPECTUS SUPPLEMENT
RATHER THAN ON THE MORE GENERAL INFORMATION IN THE PROSPECTUS. HOWEVER, YOU
SHOULD CAREFULLY REVIEW THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING
PROSPECTUS TOGETHER, BECAUSE NEITHER ONE BY ITSELF PROVIDES COMPLETE
INFORMATION ABOUT THE SERIES OF MORTGAGE PASS-THROUGH CERTIFICATES OFFERED BY
THIS PROSPECTUS SUPPLEMENT.
Sometimes the discussion of a particular topic in this Prospectus
Supplement or in the Prospectus relates to a separate discussion in another
section of this Prospectus Supplement or in the Prospectus. We make
cross-references to other sections of the Prospectus Supplement and the
Prospectus whenever we believe that they will enhance your understanding of the
topic under discussion. The Table of Contents of this Prospectus Supplement and
the Table of Contents included in the accompanying Prospectus list the pages on
which these captions are located.
Whenever we use words like "intends," "anticipates" or "expects" or
similar words in this Prospectus Supplement, we are making a forward-looking
statement, or a projection of what we think will happen in the future.
Forward-looking statements are inherently subject to a variety of
circumstances, many of which are beyond our control, that could cause actual
results to differ materially from what we think they will be. Any
forward-looking statements in this Prospectus Supplement speak only as of the
date of this Prospectus Supplement. We do not assume any responsibility to
update or review any forward-looking statements contained in this Prospectus
Supplement to reflect any change in our expectation with respect to the subject
of such forward-looking statements or to reflect any change in events,
conditions or circumstances on which any such forward-looking statements are
based.
You can find a listing of the pages where capitalized terms used in this
Prospectus Supplement and the Prospectus are defined under the caption "Index
of Significant Definitions" beginning on page S-106 in this Prospectus
Supplement and under the caption "Index of Significant Definitions" beginning
on page 87 in the accompanying Prospectus.
WHERE YOU CAN FIND MORE INFORMATION
We have filed a registration statement (including this Prospectus
Supplement and the Prospectus) with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933 (the "1933 Act"), as amended.
This Prospectus Supplement and the accompanying Prospectus do not contain all
of the information contained in the registration statement. For further
information regarding the documents referred to in this Prospectus Supplement
and the Prospectus, you should refer to the registration statement and the
exhibits to the registration statement. The registration statement and such
exhibits can be inspected and copied at the Public Reference Room of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 and the
Commission's regional offices at Seven World Trade Center, 13th Floor, New
York, New York 10048, and Citicorp Center, 500 West Madison Street, Suite 1500,
Chicago, Illinois 60661. Copies of such materials can be obtained at prescribed
rates from the Public Reference Section of the Commission at 450 Fifth Street,
N.W., Washington D.C. 20549. Electronic filings made through the Electronic
Data Gathering Analysis and Retrieval System are publicly available through the
Commission's Web Site (http://www.sec.gov). Certain documents filed with the
Commission by or on behalf of the trust fund are incorporated by reference
herein. See "Incorporation of Certain Information by Reference" in the
Prospectus.
--------------------------
UNTIL 90 DAYS AFTER THE DATE OF THIS PROSPECTUS SUPPLEMENT, ALL DEALERS
EFFECTING TRANSACTIONS IN THE OFFERED CERTIFICATES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS
SUPPLEMENT AND A PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS
ACTING AS UNDERWRITERS TO DELIVER A PROSPECTUS SUPPLEMENT AND A PROSPECTUS WITH
RESPECT TO THEIR UNSOLD ALLOTMENTS AND SUBSCRIPTIONS.
S-3
<PAGE>
<TABLE>
<CAPTION>
PROSPECTUS SUPPLEMENT PROSPECTUS
--------------------- ----------
<S> <C> <C> <C>
Important Notice about Information Presented Prospectus Supplement ........................... 2
in this Prospectus Supplement and the Additional Information .......................... 2
Accompanying Prospectus ......................... S-3 Incorporation of Certain Information by
Where You Can Find More Information ............... S-3 Reference ..................................... 2
Summary ........................................... S-5 Reports ......................................... 3
Risk Factors ...................................... S-18 Summary of Prospectus ........................... 7
Description of the Mortgage Pool .................. S-30 Risk Factors .................................... 12
Prudential Securities Secured Financing The Depositor ................................... 19
Corporation ..................................... S-59 Use of Proceeds ................................. 19
Prudential Securities Credit Corp. ................ S-59 Description of the Certificates ................. 19
Mortgage Loan Sellers ............................. S-59 The Mortgage Pools .............................. 25
Description of the Certificates.................... S-64 Servicing of the Mortgage Loans ................. 29
Yield and Maturity Considerations ................. S-74 Credit Enhancement .............................. 36
Master Servicer and Special Sub-Servicer .......... S-81 Certain Legal Aspects of the Mortgage Loans ..... 39
Special Servicer .................................. S-81 Material Federal Income Tax Consequences ........ 55
The Pooling and Servicing Agreement ............... S-81 State and Other Tax Considerations .............. 81
Material Federal Income Tax Consequences .......... S-99 ERISA Considerations ............................ 81
ERISA Considerations .............................. S-100 Legal Investment ................................ 83
Legal Investment .................................. S-103 Plan of Distribution ............................ 85
Plan of Distribution .............................. S-104 Legal Matters ................................... 86
Use of Proceeds ................................... S-104 Financial Information ........................... 86
Legal Matters ..................................... S-104 Rating .......................................... 86
Ratings ........................................... S-104 Index of Significant Definitions ................ 87
Index of Significant Definitions .................. S-106
Annex A--Mortgage Loan Characteristics ............ A-1
Annex B--Additional Step Loan and
Interest-Only Loan Characteristics .............. B-1
Annex C--Affiliated Borrowers ..................... C-1
Annex D--Form of Statement to
Certificateholders .............................. D-1
Annex E--Structural and Collateral Term Sheet
and Top Ten Loan Descriptions ................... E-1
</TABLE>
S-4
<PAGE>
SUMMARY
This Summary includes selected information from this Prospectus
Supplement. It does not contain all of the information you need to consider in
deciding whether to buy any class of the Offered Certificates. To understand
the terms of the offering of the Offered Certificates, you should read
carefully this entire Prospectus Supplement and the Prospectus.
OVERVIEW OF THE CERTIFICATES:
<TABLE>
<CAPTION>
INITIAL APPROXIMATE
CERTIFICATE APPROXIMATE PERCENTAGE OF
BALANCE OR RATINGS (1) PERCENTAGE OF INITIAL SUBORDINATED
CLASS NOTIONAL BALANCE FITCH/MOODY'S POOL BALANCE SECURITIES
----- ---------------- ------------- --------------------- -------------
<S> <C> <C> <C> <C>
Offered Certificates
--------------------
Class A-1 $188,500,000 AAA/Aaa 20.29% 28.00%
Class A-2 $480,307,000 AAA/Aaa 51.71% 28.00%
Class B $ 51,092,000 AA/Aa2 5.50% 22.50%
Class C $ 46,447,000 A/A2 5.00% 17.50%
Class D $ 46,447,000 BBB/Baa2 5.00% 12.50%
Class E $ 13,935,000 BBB-/Baa3 1.50% 11.00%
Private Certificates (not offered hereby)
----------------------------------------
Class A-EC(2) $928,918,344 AAA/Aaa N/A N/A
Class F $ 20,903,000 BB+/Ba1 2.25% 8.75%
Class G $ 25,546,000 BB/Ba2 2.75% 6.00%
Class H $ 9,291,000 BB-/Ba3 1.00% 5.00%
Class J $ 9,291,000 B+/B1 1.00% 4.00%
Class K $ 15,794,000 NR(3)/B2 1.70% 2.30%
Class L $ 6,502,000 NR(3)/B3 0.70% 1.60%
Class M $ 14,863,344 NR(3)/NR(3) 1.60% 0.00%
</TABLE>
- --------
(1) Ratings are by Fitch IBCA, Inc. ("Fitch") and Moody's Investors Service,
Inc. ("Moody's"). A security rating is not a recommendation to buy, sell
or hold securities and may be subject to revision or withdrawal at any
time by the assigning rating organization. A security rating does not
address: the likelihood or frequency of prepayments (both voluntary and
involuntary), the possibility that you might suffer a lower than expected
yield, the likelihood of receipt of Prepayment Premiums or Yield
Maintenance Charges, any allocation of Prepayment Interest Shortfalls, or
the likelihood of collection by the Master Servicer of Default Interest.
(2) Interest only strip with a notional balance ("Notional Balance") equal to
the aggregate of the Certificate Balances for Classes A-1 through M.
(3) Rating not obtained by the Depositor from such Rating Agency.
See "Risk Factors" in this Prospectus Supplement and in the Prospectus.
S-5
<PAGE>
<TABLE>
<CAPTION>
EXPECTED
AMORTIZATION
WEIGHTED AVERAGE PERIOD
CLASS PASS-THROUGH RATE LIFE (YEARS) (1) (MONTH/YEAR) (1)
----- ----------------- ---------------- ----------------
<S> <C> <C> <C>
Offered Certificates
--------------------
Class A-1 6.074% 5.507 4/1999 - 1/2008
Class A-2 6.480% 9.416 1/2008 - 1/2009
Class B 6.608% 9.806 1/2009 - 1/2009
Class C 6.746% 9.848 1/2009 - 2/2009
Class D 7.433%(2) 10.489 2/2009 - 11/2009
Class E 7.433%(3) 10.639 11/2009 - 11/2009
Private Certificates (not offered hereby)
-----------------------------------------
Class A-EC 0.998%(4) 9.099 N/A
Class F 6.074% 10.889 11/2009 - 9/2010
Class G 6.074% 11.561 9/2010 - 11/2010
Class H 6.074% 11.697 11/2010 - 12/2010
Class J 6.074% 11.764 12/2010 - 1/2011
Class K 6.074% 13.151 1/2011 - 9/2013
Class L 6.074% 14.616 9/2013 - 2/2014
Class M 6.074% 17.104 2/2014 - 10/2018
</TABLE>
- --------
(1) Assumes a prepayment scenario of 0% CPR, with each ARD Loan prepaying in
full on the related Anticipated Repayment Date, and no defaults. See
"Yield and Maturity Considerations--Weighted Average Life" herein.
(2) Initial Pass-Through Rate. The Pass-Through Rate will be a per annum rate
equal to the Weighted Average Net Mortgage Rate.
(3) Initial Pass-Through Rate. The Pass-Through Rate will be a per annum rate
equal to the Weighted Average Net Mortgage Rate.
(4) Initial Pass-Though Rate. The related Pass-Through Rate will be a per
annum rate equal to a fraction, (a) the numerator of which is (i) the
excess of the Weighted Average Net Mortgage Rate multiplied by the Class
A-EC Notional Balance over the weighted averages of the Pass-Through Rates
of the Class A-1, Class A-2, Class B, Class C, Class D, Class E, Class F,
Class G, Class H, Class J, Class K, Class L and Class M Certificates
multiplied by the sum of the Class A-1, Class A-2, Class B, Class C, Class
D, Class E, Class F, Class G, Class H, Class J, Class K, Class L and Class
M Certificate Balances, and (b) the denominator of which is the Class A-EC
Notional Balance.
S-6
<PAGE>
General................ The Certificates will consist of 16 Classes, 6 of
which will be the Offered Certificates and 10 of which
will be the Private Certificates. The Offered
Certificates are the only securities being offered by
this Prospectus Supplement. We do not intend to
register any of the Private Certificates under the
1933 Act, and are not offering such Private
Certificates to you pursuant to this Prospectus
Supplement or the Prospectus. We have included
information regarding the Private Certificates in this
Prospectus Supplement solely because of its relevance
to your understanding of the Offered Certificates.
Denominations.......... We will issue the Offered Certificates in minimum
denominations of Certificate Balance or Notional
Balance, as applicable, of $25,000 and integral
multiples of $1.00 in excess thereof.
Book Entry
Certificates.......... Each Class of Offered Certificates will be registered
in the name of Cede & Co., as nominee of The
Depository Trust Company. Beneficial interests in such
Certificates will be held through the book-entry
facilities of the Depository. You will not receive a
physical certificate representing your interest in any
Offered Certificate except in the limited
circumstances set forth herein. See "Description of
the Certificates-- Delivery, Form and Denomination"
herein.
Early Termination...... When the outstanding aggregate Scheduled Principal
Balance of the Mortgage Loans is reduced to 1.0% of
the Initial Pool Balance, certain parties will have
the option to purchase the remaining Mortgage Loans
and thereby terminate the Trust Fund: (1) any holder
of the Class R-II Certificates representing more than
a 50% Percentage Interest of the Class R-II
Certificates, (2) the Master Servicer or (3) the
Depositor (in that order) will have the option to
purchase the remaining Mortgage Loans and thereby
terminate the Trust Fund. See "Description of the
Certificates--Early Termination" herein.
Trust Fund............. Prudential Securities Secured Financing Corporation,
as Depositor, is establishing a trust fund (the "Trust
Fund"), the assets of which consist of a pool of
fixed-rate mortgage loans described more fully herein.
The Mortgage Loans are secured by first liens on
commercial and multifamily residential properties.
Relevant Parties:
Depositor.............. Prudential Securities Secured Financing Corporation
Master Servicer........ National Realty Funding L.C.
Special Servicer....... Banc One Mortgage Capital Markets, LLC
Special Sub-Servicer... National Realty Funding L.C.
Transferor............. Prudential Securities Credit Corp.
Trustee................ The Chase Manhattan Bank
Mortgage Loan Sellers... National Realty Finance L.C., a wholly-owned
subsidiary of National Realty Funding L.C., and CIBC
Inc.
S-7
<PAGE>
Relevant Dates and Periods:
Cut-off Date........... March 1, 1999.
Closing Date........... On or about March 25, 1999.
Rated Final
Distribution Date..... November 1, 2031.
Determination Date..... The 11th day of any month, or if such day is not a
business day, the next succeeding business day,
commencing on April 12, 1999. As used herein, a
"business day" is any day other than a Saturday,
Sunday or a day on which banking institutions in the
States of New York, Texas or Missouri are authorized
or obligated by law, executive order or governmental
decree to close.
Distribution Date...... Generally the 15th day of each month, or if that day
is not a business day, the next succeeding business
day. The Distribution Date will be no fewer than four
business days after the related Determination Date.
The first Distribution Date will be April 16, 1999.
We expect that the Scheduled Final Distribution Dates
will be as set forth below, assuming that there are
no defaults, delinquencies or modifications of the
Mortgage Loans after March 1, 1999. See "Description
of the Certificates--Scheduled Final Distribution
Date" herein.
<TABLE>
<CAPTION>
SCHEDULED FINAL
CLASS DISTRIBUTION DATE
- ----- ------------------
<S> <C>
Class A-1 ......... January 15, 2008
Class A-2 ......... January 15, 2009
Class B ........... January 15, 2009
Class C ........... February 15, 2009
Class D ........... November 15, 2009
Class E ........... November 15, 2009
</TABLE>
Record Date............ The Record Date is the close of business on the last
business day of each month. The Record Date always
relates to the Distribution Date for the following
calendar month.
Interest Accrual
Period................ With respect to any Distribution Date, the Interest
Accrual Period is the calendar month before the month
in which such Distribution Date occurs. Interest for
each Interest Accrual Period is calculated based on a
360-day year consisting of twelve 30-day months.
Collection Period...... With respect to each Distribution Date and any
Mortgage Loan, the Collection Period is the period
beginning on the day after the Determination Date in
the month before the month in which such Distribution
Date occurs (or, in the case of the Distribution Date
occurring in April, 1999, on the day after the Cut-off
Date) and ending on the Determination Date in the
month in which such Distribution Date occurs.
Due Date............... With respect to any Collection Period and Mortgage
Loan, the Due Date is the first day of the month on
which Mortgage Loan payments are due (disregarding any
applicable grace periods), except Mortgage Loan
Control #120, with respect to which the Due Date is
the 10th day of such month (disregarding any
applicable
S-8
<PAGE>
grace periods). With respect to Mortgage Loan Control
#120, an account (the "Loan 120 Account") will be
established and funded with an amount equal to one
scheduled payment thereof. The amount so deposited
will be advanced each month to the Trust and then
reimbursed to such account on the related Due Date
from Collections in respect of such Mortgage Loans,
so that no shortfall in collections will result
solely from the related Due Date occurring on the
10th of each month.
Structural Features:
Distributions of
Interest............... Generally, on each Distribution Date, subject to the
availability of funds to make such payment and the
payment priorities described below, each Class of
Certificates (other than the Residual Certificates)
will receive distributions of interest accrued on
those Certificates during the related Interest Accrual
Period at the applicable Pass-Through Rate, plus any
interest remaining unpaid from prior Distribution
Dates. As described more fully in this Prospectus
Supplement under "Description of the
Certificates--Distributions", on each Distribution
Date such distributions will be made, concurrently, to
the Class A-1, Class A-2 and Class A-EC Certificates
(collectively, the "Senior Certificates") and then
sequentially to the Class B, Class C, Class D, Class
E, Class F, Class G, Class H, Class J, Class K, Class
L and Class M Certificates (collectively, the
"Subordinate Certificates") to the extent they are
outstanding on such Distribution Date.
Additional Master Servicer or Special Servicer
compensation, interest on Advances, extraordinary
expenses of the Trust Fund and other similar items
may create a shortfall in available funds
distributable on any Distribution Date. Resulting
Class Interest Shortfalls will be allocated to the
most subordinate Class then outstanding. See
"Description of the Certificates--Distributions"
herein.
Distributions of
Principal.............. Payments in respect of principal (including the
principal component of Balloon Payments and other
scheduled payments and Unscheduled Payments of
Principal on the Mortgage Loans) will be paid
sequentially to each Class of Certificates (other than
the Class A-EC, Class R-I and Class R-II Certificates)
based on their alphabetical class designations, as
described herein.
In each case, your distributions will be subject to
the availability of funds after all required payments
of interest and certain other distributions have been
made, except that on any Distribution Date on or
after the date on which the Certificate Balances of
all Classes of Subordinate Certificates have been
reduced to zero, distributions of principal will be
made to all Classes of Senior Certificates on a pro
rata basis. See "Description of the
Certificates--Distributions" herein.
The holders of the Class M Certificates will be
entitled to all distributions of Excess Interest,
subject to the limitations set forth in the Pooling
and Servicing Agreement, including on Distribution
Dates on or after that on which the Class Certificate
Balance thereof is reduced to zero. Additionally, the
holder of 100% of the Class M Certificates or the
Special Servicer will have the option to purchase any
anticipated repayment date Mortgage Loan ("ARD Loan")
on or after its Anticipated Repayment Date under the
circumstances described under "Description of the
Mortgage Pool----Certain Terms and Conditions of the
Mortgage Loans" herein.
Additional Master Servicer or Special Servicer
compensation, interest on Advances, extraordinary
expenses of the Trust Fund and other similar items
may create a shortfall in Available Funds
distributable on any Distribution Date. Resulting
Class Interest Shortfalls will be allocated to the
most subordinate Class then outstanding. See
"Description of the Certificates--Distributions"
herein.
S-9
<PAGE>
Distributions of Prepayment
Premiums and Yield
Maintenance Charges... Prepayment Premiums and Yield Maintenance Charges
will be distributed to the extent described under
"Description of the Certificates--Distributions--Yield
Maintenance Charges and Prepayment Premiums" herein.
Credit Enhancement..... Credit enhancement is provided by the sequential
payment and subordination mechanisms set forth in the
Pooling and Servicing Agreement and described herein
under "Description of the Certificates."
Subordination.......... As a means of providing some protection to the
holders of the Senior Certificates against losses
associated with delinquent and defaulted Mortgage
Loans, the rights of the holders of the Subordinate
Certificates to receive distributions of interest and
principal, as applicable, will be subordinated to the
rights of the holders of the Senior Certificates. Each
Class of Subordinate Certificates (other than the
Residual Certificates) will likewise be protected by
the subordination offered by the other Classes of
Certificates that bear a later sequential alphabetical
Class designation (e.g., no distribution of principal
or interest will be made on the Class C Certificates
until applicable distributions have been made on the
Class B Certificates). See "Description of the
Certificates--Priorities" herein.
In addition, the rights of the holders of the
Residual Certificates shall be subordinate to the
rights of the holders of each Class of Regular
Certificates. The Residual Certificates are not
entitled to any regular or scheduled distributions of
interest or principal.
Advances............... Subject to the limitations described in this
Prospectus Supplement, the Master Servicer is required
to make advances in respect of delinquent Monthly
Payments on Mortgage Loans. Advances in respect of
Mortgage Loans as to which there has been an Appraisal
Reduction Event will equal the amount required to be
advanced by the Master Servicer (disregarding the
related Appraisal Reduction) reduced in proportion to
the reduction of the outstanding principal balance of
the related Mortgage Loan caused by the Appraisal
Reduction.
The Master Servicer will not be required to advance
any Balloon Payment not made by the related borrower
on its due date, but will be required to advance any
portion of the regular Monthly Payments not received
on the Mortgage Loan after such default, calculated
on the original amortization schedule of such
Mortgage Loan, with interest, as described herein,
unless the Master Servicer deems advance payments
unrecoverable.
If the Trustee becomes the successor master servicer
due to the Master Servicer's failure to make a
required Advance or for any other reason, the
Trustee, as successor master servicer and subject to
the servicing standard applicable to the Master
Servicer, will be required to make P&I Advances.
See "The Pooling and Servicing Agreement--Advances"
herein.
Federal Tax Status..... Elections will be made to treat designated portions
of the Trust Fund as two separate "real estate
mortgage investment conduits" (each a "REMIC").
The Offered Certificates will constitute "regular
interests" in a REMIC.
The Offered Certificates generally will be treated as
newly originated debt instruments for federal income
tax purposes. You will be required to include in
income all interest on such Certificates in
accordance with the accrual method of
S-10
<PAGE>
accounting, regardless of your usual method of
accounting. With the exception of the Class E
Certificates, none of the Offered Certificates is
expected to be treated for federal income tax
reporting purposes as having been issued with an
original issue discount.
We anticipate that the Offered Certificates may be
treated for federal income tax purposes as having
been issued at a premium.
If you are a mutual savings bank or domestic building
and loan association, the Offered Certificates held
by you will represent interests in "qualifying real
property loans" within the meaning of Section 593(d)
of the Internal Revenue Code of 1986 (the "Code"). If
you are a real estate investment trust, the Offered
Certificates held by you will constitute "real estate
assets" within the meaning of Section 856(c)(5)(B) of
the Code, and income with respect to Offered
Certificates will be considered "interest on
obligations secured by mortgages on real property or
on interests in property" within the meaning of
Section 856(c)(3)(B) of the Code. If you are a
domestic building and loan association, the Offered
Certificates held by you will generally constitute a
"regular or residual interest in a REMIC" within the
meaning of Section 7701(a)(19)(C)(xi) of the Code
only to the extent that the Mortgage Loans are
secured by multifamily apartment buildings. The Class
R-I and Class R-II Certificates (collectively, the
"Residual Certificates") will constitute "residual
interest in a REMIC" within the meaning of Section
7701(a)(19)(C)(xi) of the Code to the same extent.
See "Material Federal Income Tax Consequences--
Taxation of the REMIC and its Holders" in the
Prospectus.
ERISA.................. As described under "ERISA Considerations" herein and
in the Prospectus, the Class A-1 and Class A-2
Certificates may be purchased by employee benefit
plans that are subject to ERISA. See "ERISA
Considerations" herein and in the Prospectus.
SMMEA.................. The Class A-1, Class A-2, Class A-EC and Class B
Certificates will be mortgage related securities
pursuant to the Secondary Mortgage Market Enhancement
Act of 1984 ("SMMEA"). See "Legal Investment" herein
and in the Prospectus.
Book-Entry............. The Offered Certificates are being delivered through
the facilities of the Depository Trust Company
("DTC").
The Mortgage Loans and Mortgaged Properties:
The Mortgage Pool...... The assets of the Trust Fund will primarily consist
of the Mortgage Loans. Each Mortgage Loan constitutes
the obligation of one or more persons to repay a
specified sum with interest. Each Mortgage Loan will
be secured by a first lien on a commercial or
multifamily residential property.
113 of the Mortgage Loans were originated by National
Realty Funding L.C. ("NRF") or its wholly-owned
subsidiary, National Realty Finance L.C.
("NRFinance"). 102 of the Mortgage Loans were
purchased by NRF from KeyBank National Association.
The Mortgage Loans originated or purchased by NRF
subsequently were sold to NRFinance, and will be sold
by NRFinance together with the Mortgage Loans
originated by NRFinance, to Prudential Securities
Credit Corp. (the "Transferor") on the Closing Date.
42 of the Mortgage Loans were originated by CIBC Inc.
("CIBC") and sold to the Transferor. NRFinance and
CIBC are the "Mortgage Loan Sellers," as such term is
used herein. The Mortgage Loans will be sold to the
Depositor by the Transferor on the date on which the
Certificates are first issued. Each of the Mortgage
Loans sold to the Depositor by
S-11
<PAGE>
the Transferor will be subject to certain repurchase
obligations whereby any breach of representations and
warranties is enforceable by the Trustee and the
Depositor directly against the Transferor. Certain
characteristics of the Mortgage Loans and the related
Mortgaged Properties are described under "Risk
Factors" and "Description of the Mortgage Pool"
herein.
Annex A to this Prospectus Supplement provides
certain characteristics of the Mortgage Loans on a
loan-by-loan basis. The following tables summarize
certain information with respect to all of the
Mortgage Loans. All weighted average information
regarding the Mortgage Loans reflects weighting of
the Mortgage Loans by their Cut-off Date Principal
Balances. The "Cut-off Date Principal Balance" of
each Mortgage Loan is equal to the unpaid principal
balance thereof as of the Cut-off Date, after
application of all payments of principal due on or
before such date, whether or not received.
GENERAL MORTGAGE LOAN CHARACTERISTICS
(AS OF THE CUT-OFF DATE)
<TABLE>
<S> <C>
Initial Pool Balance(1) ....................................... $928,918,344
Number of Mortgage Loans ...................................... 257
Average Mortgage Loan Balance ................................. $ 3,614,468
Largest Mortgage Loan Balance ................................. $67,500,000
Smallest Mortgage Loan Balance ................................ $ 255,509
Weighted Average Mortgage Rate (Gross) ........................ 7.361%
Weighted Average Mortgage Rate (Net) .......................... 7.299%
Weighted Average Remaining Amortization Term (months) ......... 319.16
Range of Remaining Amortization Terms (months) ................ 109-360
Range of Original Amortization Terms (months) ................. 120-360
Weighted Average Underwritten DSCR ............................ 1.45
Range of DSCRs ................................................ 0.93-2.54
Weighted Average LTV (Current) ................................ 69.638%
Range of LTVs (Current) ....................................... 28.6-84.8%
Weighted Average Balloon/ARD LTV .............................. 55.94%
Percentage of Initial Pool Balance made up of:
Fully Amortizing Loans ........................................ 3.38%
Balloon Loans (including ARD Loans) ........................... 96.62%
</TABLE>
----------
(1) The "Initial Pool Balance" is the aggregate of
the Cut-off Date Principal Balances of the
Mortgage Loans, and gives effect to (a) the
deposit into the Loan 120 Account of principal
amounts payable on its Due Date in March 1999
as if such payment were made before March 1,
1999 and (b) the funding of an additional
$200,000 with respect to Mortgage Loan Control
#55 as though such funding occurred on the
Cut-off Date rather than on March 3, 1999.
S-12
<PAGE>
DISTRIBUTION OF CUT-OFF DATE PRINCIPAL BALANCES
<TABLE>
<CAPTION>
PERCENTAGE OF
NUMBER OF AGGREGATE CURRENT
RANGE OF CURRENT PRINCIPAL BALANCES MORTGAGE LOANS PRINCIPAL BALANCE
- ---------------------------------------- ---------------- ------------------
<S> <C> <C>
$ 255,509 - $ 499,999 ............ 14 0.57%
$ 500,000 - $ 999,999 ............ 29 2.36%
$ 1,000,000 - $ 1,999,999 ............ 90 14.31%
$ 2,000,000 - $ 2,999,999 ............ 34 9.00%
$ 3,000,000 - $ 3,999,999 ............ 25 9.41%
$ 4,000,000 - $ 4,999,999 ............ 16 7.92%
$ 5,000,000 - $ 5,999,999 ............ 14 8.35%
$ 6,000,000 - $ 6,999,999 ............ 9 6.34%
$ 7,000,000 - $ 7,999,999 ............ 5 4.06%
$ 8,000,000 - $ 8,999,999 ............ 4 3.68%
$ 9,000,000 - $ 9,999,999 ............ 1 1.07%
$10,000,000 - $11,999,999 ............ 3 3.47%
$12,000,000 - $13,999,999 ............ 4 5.51%
$14,000,000 - $16,999,999 ............ 4 6.27%
$17,000,000 or greater ............... 5 17.68%
--- ------
Total ................................ 257 100.00%
--- ------
</TABLE>
DEBT SERVICE COVERAGE RATIOS
Debt Service Coverage Ratios ("DSCRs") for each
Mortgage Loan are calculated based on the ratio of
the related annual Underwritten Cash Flow to the
related Annual Debt Service, as more fully described
herein under "Description of the Mortgage
Pool--Certain Characteristics of the Mortgage Pool."
RANGE OF DEBT SERVICE COVERAGE RATIOS
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF INITIAL
DSCR(X) MORTGAGE LOANS POOL BALANCE
- -------------------------- ---------------- -------------------
<S> <C> <C>
0.90 - 1.00(1) ......... 1 0.14%
1.01 - 1.15(1) ......... 1 0.35%
1.16 - 1.20 ............ 3 0.39%
1.21 - 1.25 ............ 14 6.45%
1.26 - 1.30 ............ 27 8.23%
1.31 - 1.35 ............ 38 18.11%
1.36 - 1.40 ............ 34 14.09%
1.41 - 1.45 ............ 47 13.06%
1.46 - 1.50 ............ 25 14.09%
1.51 - 1.55 ............ 20 7.24%
1.56 - 1.60 ............ 11 6.25%
1.61 - 1.65 ............ 6 2.15%
1.66 - 1.70 ............ 5 1.01%
1.71 - 1.75 ............ 6 1.90%
1.76 - 1.80 ............ 4 1.03%
1.81 - 1.85 ............ 6 0.97%
1.86 - 1.90 ............ 2 1.13%
1.91 - 1.95 ............ 2 1.75%
1.96 - 2.00 ............ 1 0.47%
2.01 - 2.15 ............ 1 0.10%
2.16 - 2.50 ............ 2 0.79%
2.51 - 3.00 ............ 1 0.32%
-- ------
Total .................. 257 100.00%
--- ------
</TABLE>
----------
(1) Mortgage Loan Control #7.40, which has a 0.93x
DSCR, and Mortgage Loan Control #7.30, which has
a 1.03x DSCR, are part of a cross-collateralized,
cross-defaulted pool. The pool has a Weighted
Average Underwritten DSCR of 1.62x. See "Annex E"
attached hereto.
S-13
<PAGE>
RANGE OF LOAN-TO-VALUE RATIOS AS OF THE CUT-OFF DATE
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF INITIAL
RANGE OF LTVS MORTGAGE LOANS POOL BALANCE
- --------------------------- ---------------- -------------------
<S> <C> <C>
15.01% - 35.00% ......... 3 0.18%
40.01% - 45.00% ......... 2 0.70%
45.01% - 50.00% ......... 3 0.55%
50.01% - 55.00% ......... 11 3.27%
55.01% - 60.00% ......... 17 10.65%
60.01% - 65.00% ......... 26 9.21%
65.01% - 70.00% ......... 46 12.83%
70.01% - 75.00% ......... 99 42.96%
75.01% - 80.00% ......... 49 19.59%
80.01% - 85.00% ......... 1 0.06%
-- ------
Total ................... 257 100.00%
--- ------
</TABLE>
PROPERTY TYPES
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF INITIAL
PROPERTY TYPE MORTGAGED PROPERTIES POOL BALANCE
- -------------------------------- ---------------------- -------------------
<S> <C> <C>
Assisted Living Facility ..... 2 0.33%
Congregate Care .............. 4 2.16%
Hospitality .................. 9 7.48%
Industrial ................... 16 4.52%
Mixed Use .................... 2 0.62%
Mobile Home Park ............. 2 0.20%
Multifamily .................. 99 24.09%
Nursing Home ................. 5 1.93%
Office ....................... 34 25.93%
Office/Industrial ............ 32 8.24%
Retail-Anchored .............. 21 15.07%
Retail-Shadow Anchored ....... 4 0.70%
Retail-Single Tenant ......... 9 1.06%
Retail-Unanchored ............ 29 6.15%
Self-Storage ................. 1 0.07%
Special Purpose .............. 16 1.35%
Warehouse .................... 1 0.10%
-- ------
Total ........................ 286 100.00%
--- ------
</TABLE>
S-14
<PAGE>
MATURITY YEARS
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF INITIAL
MATURITY YEAR MORTGAGE LOANS POOL BALANCE
- ----------------- ---------------- -------------------
<S> <C> <C>
2005 .......... 2 2.96%
2006 .......... 3 0.81%
2007 .......... 14 1.47%
2008 .......... 153 57.56%
2009 .......... 50 23.53%
2010 .......... 17 6.89%
2011 .......... 3 1.17%
2012 .......... 1 0.19%
2013 .......... 6 1.56%
2015 .......... 1 0.47%
2016 .......... 1 0.18%
2017 .......... 1 1.46%
2018 .......... 5 1.75%
--- ------
Total ......... 257 100.00%
--- ------
</TABLE>
82 of the Mortgage Loans, representing approximately
22.46% of the Initial Pool Balance, contain
provisions that prohibit a prepayment for a certain
period of time, and thereafter allow prepayment which
must be accompanied by payment of a Prepayment
Premium or Yield Maintenance Charge. 84 of the
Mortgage Loans, representing approximately 28.80% of
the Initial Pool Balance, contain provisions that
allow prepayment accompanied by payment of a
Prepayment Premium or Yield Maintenance Charge
without a Lockout Period.
88 of the Mortgage Loans, representing approximately
47.27% of the Initial Pool Balance, provide that
after a period of not less than two years after the
Closing Date (a "Defeasance Lockout Period"), a
borrower may obtain a release of the lien on the
related Mortgaged Property (a "defeasance") by
substituting for such Mortgaged Property, as
collateral for the related promissory note, U.S.
government obligations that provide for payments in
amounts equal to or greater than the amounts payable
under the related promissory note on each Due Date or
maturity date (or, in the case of the ARD Loans,
through the related Anticipated Repayment Dates,
including prepayment in full on their related
Anticipated Repayment Dates) and upon satisfaction of
certain other conditions.
1 of the Mortgage Loans, representing approximately
0.11% of the Initial Pool Balance, which has a
defeasance feature also provides that any prepayment
of the Mortgage Loan must include payment of an
accompanying Yield Maintenance Charge, and affords
the related borrower the option either to prepay or
to exercise the defeasance feature.
2 of the Mortgage Loans, representing approximately
1.35% of the Initial Pool Balance, contain provisions
which provide for a period allowing prepayment
accompanied by payment of a Yield Maintenance Charge,
followed by a period with a defeasance feature.
See "Description of the Mortgage Pool--Certain Terms
and Conditions of the Mortgage Loans--Prepayment
Provisions" herein.
S-15
<PAGE>
PREPAYMENT LOCKOUT/PREMIUM ANALYSIS
<TABLE>
<CAPTION>
PERCENTAGE OF CURRENT POOL BALANCE BY PREPAYMENT RESTRICTION OR DEFEASANCE FEATURE
ASSUMING 0% CPR(1)
- ---------------------------------------------------------------------------------------
03/99 03/00 03/01 03/02 03/03
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Lockout/Defeasance(2) .......... 69.9% 70.0% 67.4% 64.0% 60.5%
Greater of Yield Maintenance
or Percentage Premium of:
5.00% or greater .............. 18.5 18.4 18.3 16.8 16.7
4.00% to 4.99% ................ 0.0 0.0 0.0 0.0 0.0
3.00% to 3.99% ................ 5.1 5.1 5.0 4.6 4.4
2.00% to 2.99% ................ 1.1 1.0 1.0 1.5 1.7
1.00% to 1.99% ................ 5.6 5.5 7.5 12.3 15.9
0.00% to 0.99% ................ 0.0 0.0 0.0 0.0 0.0
Total Yield Maintenance ........ 30.1 30.0 31.9 35.2 38.7
Total of Yield Maintenance,
Lockout/Defeasance ............ 100.0 100.0 99.2 99.2 99.2
Percentage Premium:
5.00% or greater .............. 0.0 0.0 0.0 0.0 0.0
4.00% to 4.99% ................ 0.0 0.0 0.0 0.0 0.0
3.00% to 3.99% ................ 0.0 0.0 0.8 0.0 0.0
2.00% to 2.99% ................ 0.0 0.0 0.0 0.8 0.0
1.00% to 1.99% ................ 0.0 0.0 0.0 0.0 0.8
Total Percentage Premium ....... 0.0 0.0 0.8 0.8 0.8
Open (no Call Protection) ...... 0.0 0.0 0.0 0.0 0.0
Total All Categories ........... 100.0 100.0 100.0 100.0 100.0
Current Pool Balance
($MM)........................... 928.9 917.7 905.2 891.4 876.6
Pool Factor(3) ................. 100.0 98.8 97.4 96.0 94.4
<CAPTION>
03/04 03/05 03/06 03/07 03/08
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Lockout/Defeasance(2) .......... 49.0% 49.2% 49.5% 49.5% 37.1%
Greater of Yield Maintenance
or Percentage Premium of:
5.00% or greater .............. 15.7 14.2 14.6 5.9 5.8
4.00% to 4.99% ................ 0.3 1.5 0.1 0.1 0.1
3.00% to 3.99% ................ 5.1 5.2 6.3 3.2 1.6
2.00% to 2.99% ................ 0.6 0.2 0.2 1.4 0.0
1.00% to 1.99% ................ 25.8 24.7 24.0 19.8 14.1
0.00% to 0.99% ................ 0.0 0.0 0.0 0.4 0.0
Total Yield Maintenance ........ 47.5 45.9 45.3 30.7 21.7
Total of Yield Maintenance,
Lockout/Defeasance ............ 96.5 95.1 94.8 80.2 58.8
Percentage Premium:
5.00% or greater .............. 0.9 0.0 0.9 8.6 1.3
4.00% to 4.99% ................ 0.2 0.9 0.0 0.9 0.0
3.00% to 3.99% ................ 0.0 0.2 1.1 3.2 1.0
2.00% to 2.99% ................ 0.3 0.3 0.4 2.5 0.0
1.00% to 1.99% ................ 2.2 2.2 2.3 4.1 1.7
Total Percentage Premium ....... 3.5 3.6 4.8 19.4 3.9
Open (no Call Protection) ...... 0.0 1.4 0.5 0.4 37.3
Total All Categories ........... 100.0 100.0 100.0 100.0 100.0
Current Pool Balance
($MM)........................... 860.8 843.7 797.6 774.8 717.9
Pool Factor(3) ................. 92.7 90.8 85.9 83.4 77.3
</TABLE>
- --------
(1) This table sets forth an analysis of the percentage of the declining
balance of the Mortgage Pool that, on the Distribution Date in March in
each of the years indicated, will be within a Lockout Period or will
require that Principal Prepayments be accompanied by the indicated
Prepayment Premium or Yield Maintenance Charge. See "Description of the
Mortgage Pool--Certain Terms and Conditions of the Mortgage
Loans--Prepayment Provisions" and "--Defeasance."
(2) After the related Defeasance Lockout Period, the related borrower may
obtain the release of the lien on the related Mortgaged Property by
substituting for such Mortgaged Property, as collateral for the related
promissory note, direct, non-callable obligations of the United States
which provide for payments on or prior to each Due Date and on the
maturity date of the Mortgage Loan in amounts equal to or greater than
the amounts payable on the related Mortgage Loan on each such date (or,
in the case of the ARD Loans, through the related Anticipated Repayment
Dates including prepayment in full on the related Anticipated Repayment
Dates), and upon satisfaction of certain other conditions. 1 of the
Mortgage Loans, having a principal balance as of the Cut-off Date
representing approximately 0.11% of the Initial Pool Balance, which has a
defeasance feature also provides for prepayment of the Mortgage Loan
(with an accompanying Yield Maintenance Charge), and affords the related
borrower the option either to prepay or to exercise the defeasance
feature. 2 of the Mortgage Loans, representing approximately 1.35% of the
Initial Pool Balance, contain provisions which provide for a period
allowing prepayment accompanied by payment of a Yield Maintenance Charge
followed by a period with a defeasance feature. See "Description of the
Mortgage Pool--Certain Terms and Conditions of the Mortgage
Loans--Prepayment Provisions" herein.
(3) Represents the approximate percentage of the Initial Pool Balance that
will remain outstanding at the indicated date based upon the assumptions
described under "Description of the Certificates--Scheduled Final
Distribution Date."
S-16
<PAGE>
PREPAYMENT LOCKOUT/PREMIUM ANALYSIS
<TABLE>
<CAPTION>
PERCENTAGE OF CURRENT POOL BALANCE BY PREPAYMENT RESTRICTION OR DEFEASANCE
FEATURE ASSUMING 0% CPR(1)
- ----------------------------------------------------------------------------
03/09 03/10 03/11 03/12
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Lockout/Defeasance(2) .......... 49.0% 15.4% 12.5% 13.0%
Greater of Yield Maintenance
or Percentage Premium of:
5.00% or greater .............. 16.3 19.2 16.8 16.1
4.00% to 4.99% ................ 0.0 0.0 0.0 0.0
3.00% to 3.99% ................ 5.7 0.0 0.0 0.0
2.00% to 2.99% ................ 0.0 4.3 11.3 11.9
1.00% to 1.99% ................ 11.0 11.7 19.0 13.0
0.00% to 0.99% ................ 0.0 0.0 0.0 0.0
Total Yield Maintenance ........ 33.0 35.2 47.1 41.0
Total of Yield Maintenance,
Lockout/Defeasance ............ 82.0 50.6 59.6 54.1
Percentage Premium:
5.00% or greater .............. 6.4 3.8 19.2 0.0
4.00% to 4.99% ................ 5.5 0.0 0.0 19.4
3.00% to 3.99% ................ 1.3 8.8 0.0 0.0
2.00% to 2.99% ................ 0.0 0.0 21.2 0.0
1.00% to 1.99% ................ 4.2 0.0 0.0 26.5
Total Percentage Premium ....... 17.3 12.6 40.4 45.9
Open (no Call Protection) ...... 0.6 36.8 0.0 0.0
Total All Categories ........... 100.0 100.0 100.0 100.0
Current Pool Balance ($MM) 154.9 88.3 33.0 30.5
Pool Factor(3) ................. 16.7 9.5 3.6 3.3
<CAPTION>
03/13 03/14 03/15 03/16 03/17 03/18
---------- ---------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Lockout/Defeasance(2) .......... 14.3% 12.2% 13.5% 23.4% 34.3% 0.0%
Greater of Yield Maintenance
or Percentage Premium of:
5.00% or greater .............. 14.2 3.8 3.6 5.1 0.0 0.0
4.00% to 4.99% ................ 0.0 0.0 0.0 0.0 0.0 0.0
3.00% to 3.99% ................ 0.0 4.3 4.2 5.9 0.0 0.0
2.00% to 2.99% ................ 0.0 0.0 0.0 0.0 0.0 0.0
1.00% to 1.99% ................ 13.5 23.6 0.0 0.0 0.0 0.0
0.00% to 0.99% ................ 0.0 0.0 0.0 0.0 0.0 0.0
Total Yield Maintenance ........ 27.7 31.6 7.8 11.0 0.0 0.0
Total of Yield Maintenance,
Lockout/Defeasance ............ 42.0 43.7 21.2 34.5 34.3 0.0
Percentage Premium:
5.00% or greater .............. 1.7 13.9 0.0 0.0 5.2 0.0
4.00% to 4.99% ................ 13.4 2.1 13.2 0.0 0.0 0.0
3.00% to 3.99% ................ 7.1 0.0 0.0 18.0 0.0 0.0
2.00% to 2.99% ................ 0.0 11.0 0.0 0.0 6.1 0.0
1.00% to 1.99% ................ 0.0 0.0 10.6 0.0 0.0 0.0
Total Percentage Premium ....... 22.1 27.0 23.8 18.0 11.4 0.0
Open (no Call Protection) ...... 35.9 29.3 55.0 47.6 54.3 100.0
Total All Categories ........... 100.0 100.0 100.0 100.0 100.0 100.0
Current Pool Balance ($MM) 26.7 14.6 12.1 6.4 3.9 1.7
Pool Factor(3) ................. 2.9 1.6 1.3 0.7 0.4 0.2
</TABLE>
- --------
(1) This table sets forth an analysis of the percentage of the declining
balance of the Mortgage Pool that, on the Distribution Date in March in
each of the years indicated, will be within a Lockout Period or will
require that Principal Prepayments be accompanied by the indicated
Prepayment Premium or Yield Maintenance Charge. See "Description of the
Mortgage Pool--Certain Terms and Conditions of the Mortgage
Loans--Prepayment Provisions" and "--Defeasance."
(2) After the related Defeasance Lockout Period, the related borrower may
obtain the release of the lien on the related Mortgaged Property by
substituting for such Mortgaged Property, as collateral for the related
promissory note, direct, non-callable obligations of the United States
which provide for payments on or prior to each Due Date and on the
maturity date of the Mortgage Loan in amounts equal to or greater than
the amounts payable on the related Mortgage Loan on each such date (or,
in the case of the ARD Loans, through the related Anticipated Repayment
Dates including prepayment in full on the related Anticipated Repayment
Dates), and upon satisfaction of certain other conditions. 1 of the
Mortgage Loans, having a principal balance as of the Cut-off Date
representing approximately 0.11% of the Initial Pool Balance, which has a
defeasance feature also provides for prepayment of the Mortgage Loan
(with an accompanying Yield Maintenance Charge), and affords the related
borrower the option either to prepay or to exercise the defeasance
feature. 2 of the Mortgage Loans, representing approximately 1.35% of the
Initial Pool Balance, contain provisions which provide for a period
allowing prepayment accompanied by payment of a Yield Maintenance Charge
followed by a period with a defeasance feature. See "Description of the
Mortgage Pool--Certain Terms and Conditions of the Mortgage
Loans--Prepayment Provisions" herein.
(3) Represents the approximate percentage of the Initial Pool Balance that
will remain outstanding at the indicated date based upon the assumptions
described under "Description of the Certificates--Scheduled Final
Distribution Dates."
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<PAGE>
RISK FACTORS
You should carefully consider the following risks and those in the
Prospectus under "Risk Factors" before making an investment decision. Your
investment in the Offered Certificates will involve some degree of risk. If any
of the following risks are realized, your investment could be materially and
adversely affected. In addition, other risks unknown to us or which we
currently consider immaterial may also impair your investment.
COMMERCIAL AND MULTIFAMILY MORTGAGE LOANS ARE SUBJECT TO SPECIAL RISKS WHICH
MAY ADVERSELY AFFECT YOUR INVESTMENT.
Your investment decision should take into account that commercial and
multifamily mortgage lending generally involves risks that are different than
those faced in connection with other types of lending. The following factors,
among others, contribute to these risks:
(1) Larger loans provide lenders with less diversification of risk and the
potential for greater losses from the delinquency and/or default of
individual loans;
(2) Many of the Mortgage Loans are non-recourse obligations, the repayment
of which is often solely dependent upon the successful operation of the
related Mortgaged Properties;
(3) Commercial and multifamily property values and net operating income
can be volatile;
(4) Many of the Mortgage Loans are balloon loans, and so your investment
may be exposed to additional risks associated with both the value of
the related Mortgaged Property and the borrower's ability to obtain new
financing when the balloon payment is due;
(5) An increase in vacancy rates, a decline in rental rates, or an
increase in operating expenses or necessary capital expenditures may
impair a borrower's ability to repay its loan;
(6) Changes in the general economic climate, an excess of comparable space
in the area, a reduction in demand for real estate in the area, the
attractiveness of the property to tenants and guests and perceptions of
the property's safety, convenience and services may adversely affect
the income from and market value of a Mortgaged Property; and
(7) Government regulations and changes in real estate, zoning or tax laws,
changes in interest rate levels or potential liability under
environmental and other laws may affect real estate values and income.
AGING, DETERIORATION AND POOR CONSTRUCTION QUALITY MAY ADVERSELY AFFECT THE
VALUE AND CASH FLOW OF THE MORTGAGED PROPERTIES
The age, construction quality and design of a particular Mortgaged
Property may affect the occupancy level and the occupancy fees that may be
charged. Poorly constructed Mortgaged Properties are likely to require more
expenditures for maintenance, repairs and improvements. Even Mortgaged
Properties that were well constructed and have been well maintained will
require improvements in order for such Mortgaged Properties to maintain their
value and retain tenants and other occupants.
LIMITED ADAPTABILITY FOR OTHER USES MAY SUBSTANTIALLY LOWER THE LIQUIDATION
VALUE OF A MORTGAGED PROPERTY IN CERTAIN CIRCUMSTANCES.
Some of the Mortgaged Properties would require substantial capital
expenditures to convert to an alternative use. If the operation of any such
Mortgaged Properties becomes unprofitable due to, among other factors, (1)
competition, (2) age of the improvements, (3) decreased demand, and (4) zoning
restrictions, and as a result the borrower becomes unable to meet its
obligations, the liquidation value of any such Mortgaged Property may be
substantially less than would be the case if such property were more readily
adaptable to other uses.
RENEWAL, TERMINATION, EXPIRATION AND RELETTING OF LEASES ENTAIL RISKS WHICH MAY
ADVERSELY AFFECT YOUR INVESTMENT.
We cannot assure you that (1) leases that expire can be renewed, (2) the
space covered by leases that expire or are terminated can be leased in a timely
manner at comparable rents or on comparable terms or (3) the borrower will have
the cash or be able to obtain the financing to fund any required tenant
improvements. Income from and the market value of the Mortgaged Properties
would be adversely affected if vacant space in the Mortgaged Properties could
not be leased for a
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<PAGE>
significant period of time, if tenants were unable to meet their lease
obligations or if, for any other reason, rental payments could not be
collected. Upon the occurrence of an event of default by a tenant, delays and
costs in enforcing the lessor's rights could occur. In addition, certain
tenants at the Mortgaged Properties may be entitled to terminate their leases
or reduce their rents based upon negotiated lease provisions (e.g., if an
anchor tenant ceases operations at the related Mortgaged Property). In such
cases, we cannot assure you that the operation of such provisions will not
allow such a termination or rent reduction. A tenant's lease may also be
terminated or otherwise affected if such tenant becomes the subject of a
bankruptcy proceeding.
If a significant portion of a Mortgaged Property is leased to a single
tenant, the failure of the borrower to relet such portion of such Mortgaged
Property in the event that such tenant vacates or fails to perform its
obligations will have a greater adverse effect on your investment than if such
Mortgaged Property were leased to a greater number of tenants. See "----The
Cash Flow and Value of a Single Tenant Property Could be Adversely Affected by
a Tenant's Default on Its Lease" herein.
FACTORS AFFECTING THE COMPETITIVE POSITION OF THE MORTGAGED PROPERTIES MAY
ADVERSELY AFFECT THEIR VALUE AND CASH FLOW.
The Mortgaged Properties face competition from various sources, which
could adversely affect such properties' net operating income and market values
and therefore, your investment. Factors affecting the competitive position of
the Mortgaged Properties include:
(1) the existence of similar properties located in the same area, which
attract similar types of occupants on the basis of more favorable
rental rates, location, condition and features;
(2) the existence of any oversupply of available space in a particular
market either as a result of new construction or a decrease in the
number of occupants, which adversely affects the rental rates for the
Mortgaged Properties; and
(3) the possibility of other properties being converted to competitive
uses as a result of trends in the use of property by occupants (e.g.,
the establishment of more home-based offices and businesses or the
conversion of warehouse space for multifamily use).
POOR QUALITY OF MANAGEMENT MAY ADVERSELY AFFECT THE OPERATION OF THE MORTGAGED
PROPERTIES.
The successful operation of the Mortgaged Properties is also dependent on
the performance of the respective property managers of the Mortgaged
Properties. Such property managers may be responsible for:
(1) responding to changes in local market factors such as competition and
patterns of demand;
(2) managing leasing activities such as planning and implementing the
rental rate structure, including establishing levels of rent payments;
and
(3) ensuring that maintenance and capital improvements can be carried out
in a timely fashion.
HOSPITALITY PROPERTIES ARE SUBJECT TO CERTAIN RISKS WHICH COULD ADVERSELY
AFFECT THEIR VALUE AND CASH FLOW.
9 of the Mortgage Loans, representing approximately 7.48% of the Initial
Pool Balance, are secured by hotel, motel and other similar properties
("Hospitality Properties"). The value and cash flow of the Hospitality
Properties will depend on the following factors:
(1) local, regional and national economic conditions and competition;
(2) the frequency of improvements and renovations, including those
performed out of sensitivity to the competition;
(3) changes in public image of chain; to the extent a hotel or motel is
affiliated or associated with such chain;
(4) the ability of a hotel or motel to compete successfully after losing
franchise rights;
(5) the seasonal fluctuations, if any, in the income generated; and
(6) the continued existence of a liquor license.
The liquor licenses for some of the Hospitality Properties may be held by
the property manager rather than by the related borrower. The applicable laws
and regulations relating to such licenses generally prohibit the transfer of
such licenses to any person. In the event of a foreclosure of a Hospitality
Property, it is unlikely that the Master Servicer, Special Servicer
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<PAGE>
or purchaser in any such sale would be entitled to the rights under the liquor
license for the Hospitality Property. Such party would be required to apply in
its own right for such license and would be subject to the risk of denial or
delays in obtaining such license.
OFFICE PROPERTIES ARE SUBJECT TO CERTAIN RISKS WHICH COULD ADVERSELY AFFECT
THEIR VALUE AND CASH FLOW.
66 of the Mortgage Loans, representing approximately 34.17% of the Initial
Pool Balance, are secured by office properties. See "Description of the
Mortgage Pool." Significant factors affecting the value of office properties
are:
(1) the quality of the tenants in the building;
(2) the physical attributes of the building in relation to competing
buildings; and
(3) the strength and stability of the market area as a desirable business
location.
Office properties may be adversely affected by an economic decline in the
business operated by the tenants. The risk of such an adverse effect is
increased if revenue is dependent on a single tenant or if there is a
significant concentration of tenants in a particular business or industry.
Approximately 2.84% of the Initial Pool Balance is secured by office properties
that are single tenant properties. See "Description of the Mortgage Pool."
Office properties also are subject to competition with other office
properties in the same market. Competition is affected by a property's (1) age,
(2) condition, (3) design (e.g., floor sizes and layout), (4) access to
transportation and (5) amenities, including sophisticated building systems such
as fiber optic cables, satellite communications or other base building
technological features.
The successful operation of an office property also depends on the local
economy. For example, factors such as (1) labor cost and quality, (2) tax
environment and (3) quality of life, including proximity to schools and
cultural amenities, affect a company's decision to locate office headquarters
in a given area. A central business district may have an economy that is
markedly different from that of a suburb. The local economy and the financial
condition of the borrower will impact an office property's ability to
consistently attract stable tenants. In addition, the cost of refitting office
space for a new tenant is often more costly than for other property types.
RETAIL PROPERTIES ARE SUBJECT TO CERTAIN RISKS WHICH COULD ADVERSELY AFFECT
THEIR VALUE AND CASH FLOW.
63 of the Mortgage Loans, representing approximately 22.98% of the Initial
Pool Balance, are secured by retail properties. See "Description of the
Mortgage Pool." The value and cash flow of retail properties will depend on the
following factors:
(1) the quality of the tenants;
(2) the fundamental aspects of the real estate such as location and market
demographics;
(3) the success of retail tenant businesses; and
(4) whether a retail property is "anchored," "shadow anchored,"
"unanchored" or occupied by a single tenant.
Retail properties that are anchored are traditionally perceived as less
risky. A retail anchor tenant is a tenant that is proportionately large in size
and is vital in attracting customers to the property. As used in this
Prospectus Supplement, an "anchored property" means a property in which a
nationally or regionally recognized tenant or a tenant of sufficient
creditworthiness occupies a significant portion of the Mortgaged Property, or
in which any tenant occupies more than 20,000 square feet. The following table
shows the breakdown of Mortgage Loans secured by retail property among
anchored, shadow anchored, single tenant and unanchored:
<TABLE>
<CAPTION>
RETAIL PROPERTY TYPE PERCENTAGE OF MORTGAGE LOANS
- ----------------------------- -----------------------------
<S> <C>
Anchored (multi-tenant) 15.07%
Unanchored 6.15%
Occupied by Single Tenant 1.06%
Shadow Anchored 0.70%
</TABLE>
The loss of an anchor tenant, the assignment of an anchor tenant's
interest under any lease to a less desirable tenant or a significant decline in
the level of an anchor tenant's business may have an adverse effect on the
overall operation of such properties. The correlation between the success of
tenant businesses and credit quality of the Mortgage Loan is increased when the
property is a single tenant property.
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<PAGE>
Unlike office properties or Hospitality Properties, traditional retail
properties also face competition from sources outside a given real estate
market, including:
(1) catalog retailers;
(2) home shopping networks;
(3) shopping through electronic media;
(4) telemarketing; and
(5) outlet centers.
Continued growth of these alternative retail outlets could adversely
affect the rents collectible at the retail properties securing Mortgage Loans
in the Trust Fund.
NURSING HOMES AND ASSISTED LIVING PROPERTIES ARE SUBJECT TO CERTAIN RISKS WHICH
COULD ADVERSELY AFFECT THEIR VALUE AND CASH FLOW.
11 of the Mortgage Loans, representing approximately 4.42% of the Initial
Pool Balance, are secured by residential health care facilities consisting of
nursing homes, assisted living facilities or congregate care facilities.
Mortgage Loans secured by liens on residential health care facilities pose
risks not associated with loans secured by liens on other types of
income-producing real estate. Some of these risks are as follows:
(1) providers of long-term nursing care, assisted living and other medical
services are subject to federal and state laws that relate to (a) the
adequacy of medical care, (b) distribution of pharmaceuticals, (c) rate
setting, (d) equipment, (e) personnel, (f) operating policies, (g)
additions to facilities and services and (h) the reimbursement policies
of government programs and private insurers;
(2) the failure of any of the borrowers to maintain or renew any required
license or regulatory approval could prevent it from continuing
operations, in which case no revenues would be received from the
related Mortgaged Property or the portion thereof requiring licensing,
or, if applicable, such borrower could be barred from participating in
certain reimbursement programs;
(3) in the event of foreclosure, we cannot assure you that the Trustee or
any other purchaser at a foreclosure sale would be entitled to any
licenses used by the borrower, and we cannot assure you that a new
license could be obtained;
(4) to the extent any nursing home receives a significant portion of its
revenues from government reimbursement programs, primarily Medicaid and
Medicare, such revenue may be adversely affected by (a) statutory and
regulatory changes, (b) retroactive rate adjustments, (c)
administrative rulings, (d) policy interpretations, (e) reimbursement
delays and (f) government funding restrictions;
(5) governmental payors limit payments to health care providers, and are
currently considering various proposals that could materially change or
curtail those payments; accordingly, payments under government programs
may, in the future, be insufficient to fully reimburse the cost of
caring for program beneficiaries, thereby adversely affecting the
ability of the related borrowers to meet their Mortgage Loan
obligations; and
(6) in the event of a foreclosure, since only the provider who actually
furnished the related medical goods and services may sue for or enforce
its rights to reimbursement, none of the Trustee, the Master or Special
Servicer, or a subsequent lessee or operator would generally be
entitled to obtain any outstanding reimbursement payments from federal
or state governments.
IF TENANT LEASES DO NOT CONTAIN ATTORNMENT PROVISIONS OR ARE NOT SUBORDINATE TO
MORTGAGE LIENS, THE FORECLOSURE VALUE OF THE MORTGAGED PROPERTY COULD BE
ADVERSELY AFFECTED.
Some of the tenant leases, including some of the anchor tenant leases, do
not contain provisions that require the tenant to attorn to, or recognize as
landlord under the lease, a successor owner of the property following
foreclosure. Some of the leases, including some of the anchor tenant leases,
may be either subordinate to the liens created by the Mortgage Loans or else
contain a provision that requires the tenant to subordinate the lease if the
mortgagee agrees to enter into a non-disturbance agreement. In some states, if
tenant leases are subordinate to the liens created by the Mortgage Loans and
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such leases do not contain attornment provisions, such leases may terminate
upon the transfer of the property to a foreclosing lender or purchaser at
foreclosure. Accordingly, in the case of the foreclosure of a Mortgaged
Property located in such a state and leased to one or more desirable tenants
under leases that do not contain attornment provisions, such Mortgaged Property
could experience a further decline in value if such tenants' leases were
terminated (e.g., if such tenants were paying above-market rents). If a
Mortgage is subordinate to a lease, the lender will not (unless it has
otherwise agreed with the tenant) possess the right to dispossess the tenant
upon foreclosure of the property. If the lease contains provisions inconsistent
with the Mortgage (e.g., provisions relating to application of insurance
proceeds or condemnation awards), the provisions of the lease will take
precedence over the provisions of the Mortgage.
MORTGAGE LOANS ARE NOT GUARANTEED.
No Mortgage Loan is insured or guaranteed by the United States of America,
any governmental agency or instrumentality, any private mortgage insurer or by
the Depositor, the Transferor, the Mortgage Loan Sellers, the Master Servicer,
the Special Servicer, the Trustee or any of their respective affiliates.
NON-RECOURSE LOANS LIMIT REMEDIES FOLLOWING BORROWER DEFAULT.
The majority of the Mortgage Loans are non-recourse loans. Therefore,
recourse generally may be had only against the specific Mortgaged Property
securing the Mortgage Loan and such other assets (if any) as may have been
pledged to secure the Mortgage Loan. Consequently, the payment of each
non-recourse Mortgage Loan is primarily dependent upon the sufficiency of the
net operating income from the related Mortgaged Property and, at maturity, upon
the market value of such Mortgaged Property. See "Description of the Mortgage
Pool--General" herein.
In those cases where recourse against the borrower is permitted by the
loan documents, the ability to collect from the borrower is dependent upon the
creditworthiness, solvency and other factors specific to the borrower and
generally are not within the control of any of the Mortgage Loan Sellers, the
Transferor, the Depositor, the Master Servicer, the Special Servicer, the
Trustee or any of their affiliates. We cannot assure you that significant
amounts will be realized in respect of such recourse in the event of a default
with respect to any Mortgage Loan.
CONCENTRATION OF MORTGAGE LOANS AND BORROWERS DECREASES DIVERSIFICATION AND MAY
INCREASE THE RISK OF YOUR INVESTMENT.
In general, a mortgage pool composed of loans having larger average
balances and a smaller number of loans may be subject to losses that are more
severe than other pools having the same or a similar aggregate principal
balance. In all cases, you should carefully consider all aspects of any
Mortgage Loan representing a significant percentage of the Initial Pool Balance
to ensure that no such loan is subject to risks unacceptable to you.
Additionally, a mortgage pool with a high concentration of Mortgage Loans to
the same borrower or related borrowers is subject to the potential risk that a
borrower undergoing financial difficulties might divert its resources or
undertake remedial actions (such as a bankruptcy) in order to alleviate such
difficulties, to the detriment of the Mortgaged Properties and therefore your
investment. See "Description of the Mortgage Pool--Certain Characteristics of
the Mortgage Pool--Concentration of Mortgage Loans and Borrowers" herein.
FORECLOSURE MAY SUBJECT THE TRUST FUND TO CERTAIN TAXES.
If the Trust Fund acquires a Mortgaged Property pursuant to a foreclosure
or deed-in-lieu of foreclosure, REMIC II might become subject to federal (and
possibly state or local) tax, at the highest marginal corporate rate (currently
35%), on certain of its net income from the operation and management of that
Mortgaged Property. As a consequence, the net proceeds available for
distribution to Certificateholders would be lessened
CHANGES IN THE COMPOSITION OF THE MORTGAGE POOL DUE TO PAYMENT PATTERNS MAY
DECREASE DIVERSIFICATION AND INCREASE THE RISK OF YOUR INVESTMENT.
As principal payments or prepayments are made on various Mortgage Loans,
you may be subject to more concentrated risk due to the reduction in both the
diversity of types of Mortgaged Properties and the number of borrowers. Because
principal on the Certificates is payable in sequential order, and no Class
receives principal until the Certificate Balance of the preceding sequential
Class or Classes has been reduced to zero, Classes that have a later sequential
designation are more likely to be exposed to such risk of concentration than
Classes with an earlier sequential priority.
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<PAGE>
REGIONAL FACTORS MAY ADVERSELY AFFECT THE VALUE AND CASH FLOW OF MORTGAGED
PROPERTIES.
Repayments by borrowers and the market values of the Mortgaged Properties
could be affected by:
(1) economic conditions generally or in the regions where the borrowers
and the Mortgaged Properties are located;
(2) conditions in the real estate markets where the Mortgaged Properties
are located;
(3) changes in governmental rules and fiscal policies;
(4) natural disaster; and
(5) other factors that are beyond the control of the borrowers.
The economy of any state or region in which a Mortgaged Property is
located may be adversely affected to a greater degree than that of other areas
of the country by certain developments affecting industries concentrated in
such state or region.
THE ENVIRONMENTAL CONDITION OF MORTGAGED PROPERTIES MAY SUBJECT THE TRUST FUND
TO LIABILITY UNDER FEDERAL AND STATE LAWS.
The environmental condition of a Mortgaged Property may be affected by the
operations of tenants and occupants. Current and future environmental laws,
ordinances or regulations may impose additional compliance obligations on
business operations that can be met only by significant capital expenditures.
Adverse environmental conditions may subject the Trust Fund to certain risks,
including the following:
(1) a diminution in the value of a Mortgaged Property or the inability to
foreclose against such Mortgaged Property;
(2) inability to lease such Mortgaged Property to potential tenants;
(3) the potential that the related borrower may default on a Mortgage Loan
due to such borrower's inability to pay high investigation and/or
remediation costs or difficulty in bringing its operations into
compliance with environmental laws; and
(4) liability for clean-up costs or other remedial actions which could
exceed the value of the Mortgaged Property.
Under certain federal and state laws, a statutory lien over the subject
property may secure the reimbursement of remedial costs incurred by regulatory
agencies to address environmental violations. In some instances, the lien may
be prior to the lien of an existing mortgage. Any such lien arising with
respect to a Mortgaged Property would adversely affect the value of such
Mortgaged Property and could make impracticable the foreclosure by the Special
Servicer on such Mortgaged Property in the event of a default by the related
borrower. Under various federal, state and local laws, ordinances and
regulations, a current or previous owner or operator of real property, as well
as certain other categories of parties, may be liable for the costs of removal
or remediation of hazardous or toxic substances on, under, adjacent to or in
such property. The owner's liability for the cost of any required remediation
is generally not limited under applicable laws, and could exceed the value of
the property and/or the assets of the owner. Under some environmental laws, a
secured lender (such as the Trust Fund) may be deemed an "owner" or "operator"
of the related Mortgaged Property if the lender is deemed to have participated
in the management of the borrower, regardless of whether the borrower actually
caused the environmental damage. Therefore, the Trust Fund's potential exposure
to liability for cleanup costs of any required removal or remediation of
hazardous substances will increase if the Trust Fund actually takes possession
of a Mortgaged Property or control of its day-to-day operations. See "Certain
Legal Aspects of the Mortgage Loans--Environmental Risks" in the Prospectus,
and "Description of the Mortgage Pool--Certain Characteristics of the Mortgage
Pool--Environmental Risks" herein.
Under the laws of some states and under the federal Comprehensive
Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"), it
is conceivable that a secured lender such as the Trust Fund may be held liable
as an "owner" or "operator" for the costs of addressing releases or threatened
releases of hazardous substances at a Mortgaged Property. CERCLA imposes
liability on a secured owner for such costs, even though the environmental
damage or threat was caused by a prior or current owner or operator, if (1)
agents or employees of the secured lender are deemed to have participated in
the management of the Mortgaged Property, or (2) under certain conditions the
secured lender actually takes possession of the Mortgaged Property or control
of its day-to-day operations (for example, through foreclosure or the
appointment of a receiver). CERCLA excludes from the definition of "owner or
operator" a secured creditor who holds an indication of ownership primarily to
protect its security interest, but does not "participate in the management" of
the Mortgaged Property (the "secured creditor exclusion").
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Recently enacted amendments to CERCLA have clarified the range of
activities in which a lender may engage without becoming subject to liability
under CERCLA. Liability for costs associated with the investigation and cleanup
of environmental contamination may also be governed by state law, which may not
provide any specific protections to lenders.
CERCLA does not apply to petroleum products, and the secured creditor
exclusion does not govern liability for cleanup costs associated with releases
of petroleum contamination. Federal regulation of underground petroleum storage
tanks (other than heating oil tanks) is governed by Subtitle I of the Resource
Conservation and Recovery Act ("RCRA"). The United States Environmental
Protection Agency ("EPA") has promulgated a lender liability rule for
underground storage tanks regulated by Subtitle I of RCRA. Under the EPA rule,
a holder of a security interest in an underground storage tank or real property
containing an underground storage tank is not considered an operator of the
underground storage tank as long as petroleum is not added to, stored in or
dispensed from the tank. Moreover, recent amendments to RCRA, enacted
concurrently with the CERCLA amendments discussed above, extend to the holders
of security interests in petroleum underground storage tanks the same
protections accorded to secured creditors under CERCLA. It should be noted,
however, that liability for cleanup of petroleum contamination may be governed
by state law, which may not provide any specific protection for lenders. See
"Certain Legal Aspects of the Mortgage Loans--Environmental Risks" in the
Prospectus.
Each of the Mortgage Loan Sellers has represented to the Transferor that
each of the related Mortgaged Properties was subject to a Phase I Environmental
Site Assessment (ESA) conducted consistently with generally recognized industry
standards or a similar study or an update of a previously conducted Phase I ESA
or an update based upon information contained in an established database or,
for loans with an original principal balance of less than $1,000,000, an
environmental transaction screen assessment. Other than as described in this
Prospectus Supplement under "Description of the Mortgage Pool----Certain
Characteristics of the Mortgage Pool----Environmental Risks," the Mortgage Loan
Sellers have informed the Depositor that such assessments, studies, updates or
environmental transaction screen assessments were conducted within 12 months
prior to the Cut-off Date, the environmental assessments, transaction screen
assessments, studies or updates identified no material adverse environmental
conditions or circumstances anticipated to require any material expenditure
with respect to any Mortgaged Property, except for:
(1) those cases where such conditions or circumstances were investigated
and, based upon such additional investigation, a qualified
environmental consultant recommended no further investigations or
remediation;
(2) those cases in which an operations and maintenance plan was
recommended by the environmental consultant and such plan was obtained
or an escrow reserve established to cover the estimated costs of
obtaining such plan;
(3) those cases in which soil or groundwater contamination was suspected
or identified and either (a) such condition or circumstance was
remediated or abated prior to the Closing Date, (b) a No Further Action
letter was obtained from the applicable regulatory authority or (c) an
environmental insurance policy was obtained, a letter of credit was
provided, an escrow reserve account was established, or an indemnity
from the responsible party was obtained to cover the estimated costs of
any required investigation, monitoring or remediation; and
(4) those cases in which an offsite property is the location of a leaking
underground storage tank or groundwater contamination, a responsible
party has been identified under applicable law, and either (a) such
condition is not known to have affected the Mortgaged Property or (b)
the responsible party has either received a No Further Action letter
from the applicable regulatory agency, established a remediation fund,
or provided an indemnity or guaranty to the borrower.
The above information regarding the absence of material adverse
environmental conditions is based upon the environmental assessments,
transaction screen assessments, similar studies or updates and has not been
independently verified by the Mortgage Loan Sellers, the Depositor, the
Transferor, or any of their respective affiliates.
The Pooling and Servicing Agreement requires that the Special Servicer
obtain an ESA of a Mortgaged Property prior to either acquiring title on behalf
of the Trust Fund or assuming the property's operations. Such requirement may
delay foreclosure until a satisfactory ESA is obtained or until any required
remedial action is thereafter taken, but it will also decrease the likelihood
that the Trust Fund will become liable under any environmental law. We cannot
assure you that any ESA will reveal the existence of conditions or
circumstances that would result in the Trust Fund becoming liable under any
environmental law, or that the requirements of the Pooling and Servicing
Agreement will effectively insulate the Trust Fund from potential liability
under environmental laws. See "The Pooling and Servicing Agreement--Realization
Upon Mortgaged Properties----General Standards for Conduct in Foreclosing or
Selling Defaulted Loans" herein and "Certain Legal Aspects of the Mortgage
Loans----Environmental Risks" in the Prospectus.
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IF A BORROWER USES THE MORTGAGED PROPERTY AS SECURITY FOR ANOTHER LOAN, THE
VALUE OF THE MORTGAGED PROPERTY MAY BE ADVERSELY AFFECTED.
In general, the borrower is prohibited from taking another loan secured by
the Mortgaged Property without the mortgagee's approval. The Pooling and
Servicing Agreement will permit the Master Servicer and the Special Servicer to
give such approval if certain conditions exist, including a confirmation from
the Rating Agencies indicating that forbearance from enforcing such provision
will not result in a reduction, withdrawal or qualification of the respective
ratings of any outstanding Classes of Certificates. The absence of such
conditions may not become evident, however, until the related Mortgage Loan
otherwise defaults. If one or more subordinate liens are imposed on a Mortgaged
Property or the borrower incurs other indebtedness, the Trust Fund is subject
to additional risks. Some of those risks are:
(1) the borrower may defer necessary maintenance of the Mortgaged Property
in order to pay the required debt service on the subordinate financing,
and the value of the Mortgaged Property may decline as a result;
(2) the borrower may have an incentive to repay the subordinate or
unsecured indebtedness before the Mortgage Loan;
(3) it may be more difficult for the borrower to refinance the Mortgage
Loan or to sell the Mortgaged Property for the purpose of making any
Balloon Payment upon the maturity of the Mortgage Loan or for the
purpose of making a prepayment in full on or about the Anticipated
Repayment Date in the case of any ARD Loan; and
(4) additional debt increases the risk that the borrower could become
insolvent or subject to bankruptcy or similar proceedings or might
complicate bankruptcy proceedings delaying foreclosure on the Mortgaged
Property. In addition, if the holder of additional debt becomes
bankrupt or insolvent, the Trustee's ability to foreclose on the
related Mortgage Loan could be delayed. See "Certain Legal Aspects of
the Mortgage Loans--Foreclosure" in the Prospectus.
Except as described under "Description of the Mortgage Pool--Certain
Characteristics of the Mortgage Pool--Other Financing" herein, the Mortgage
Loans do not permit borrowers to incur additional indebtedness secured by the
Mortgage Properties without the consent of the related lenders. In general,
borrowers may incur trade payables in the ordinary course of business. In
certain circumstances, borrowers may incur additional unsecured indebtedness.
See "Certain Legal Aspects of the Mortgage Loans--Secondary Financing;
Due-on-Encumbrance Provisions" in the Prospectus.
EQUITY COURTS MAY REFUSE TO ENFORCE DUE-ON-SALE, DUE-ON-ENCUMBRANCE AND
DEBT-ACCELERATION CLAUSES, ADVERSELY AFFECTING EXERCISE OF REMEDIES UPON
DEFAULTED MORTGAGE LOANS.
The Mortgage Loans generally contain "due-on-sale" and
"due-on-encumbrance" clauses that permit the mortgagee to accelerate the
maturity of the Mortgage Loan if the related borrower sells or otherwise
transfers or encumbers the related Mortgaged Property or its interest in the
Mortgaged Property in violation of the Mortgage. All of the Mortgage Loans also
include a debt-acceleration clause. A debt-acceleration clause permits the
lender to accelerate the debt upon specified monetary or non-monetary defaults
of the borrower. The equity courts of any state, however, may refuse the
foreclosure or other sale of a mortgaged property or refuse to permit the
acceleration of the indebtedness if the default is immaterial, or if
enforcement of the clause would be inequitable, unjust, or unconscionable.
BANKRUPTCY OF BORROWERS MAY ADVERSELY AFFECT PAYMENT OF MORTGAGE LOANS.
Borrowers may be either individuals or legal entities. Most of borrowers
that are legal entities are not bankruptcy-remote entities. Borrowers that are
not bankruptcy-remote entities may be more likely to become insolvent or the
subject of a voluntary or involuntary bankruptcy proceeding because such
borrowers may be (a) operating entities with businesses distinct from the
operation of the property with the associated liabilities and risks of
operating an ongoing business or (b) individuals who may have personal
liabilities unrelated to the Mortgaged Property. In addition, any borrower, as
an owner of real estate, will be subject to certain potential liabilities and
risks. We cannot assure you that a borrower will not file for bankruptcy
protection or that creditors of a borrower, or a corporate or individual
general partner or member of a borrower, will not initiate a bankruptcy or
similar proceeding against such borrower. See "Certain Legal Aspects of the
Mortgage Loans--Foreclosure--Bankruptcy Laws" in the Prospectus.
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A HIGH RATE AND EARLY OCCURRENCE OF MORTGAGOR DELINQUENCIES AND DEFAULTS MAY
ADVERSELY AFFECT YOUR INVESTMENT.
The rate and the timing of delinquencies and defaults on the Mortgage
Loans will affect:
(1) the amount of distributions on your certificates;
(2) the yield to maturity of your certificates;
(3) the rate of principal payments on your certificates; and
(4) the weighted average lives of your certificates.
If you calculate the anticipated yield of your Certificates based on a
rate of default or amount of losses lower than that actually experienced by the
Mortgage Loans and such additional losses are allocable to your Class of
Certificates or such losses result in a reduction of the Class Certificate
Balance of your Class of Certificates, your actual yield to maturity will be
lower than expected and could be negative under certain extreme scenarios. The
timing of any loss on a liquidated Mortgage Loan will also affect the actual
yield to maturity of your Class of Certificates if a portion of the loss is
allocable to such certificates, even if the rate of defaults and severity of
losses are consistent with your expectations. In general, the earlier a loss
borne by you occurs, the greater the effect on your yield to maturity.
APPRAISALS AND ENGINEERING REPORTS ARE OF LIMITED VALUE IN HELPING YOU MAKE
YOUR INVESTMENT DECISION.
In making your investment decision, you should not rely on appraisals and
engineering reports on Mortgaged Properties as your only indicator of the
actual value or physical characteristics of the Mortgaged Properties. In
general, appraisals represent the analysis and opinion of qualified experts and
are not guarantees of present or future value. Moreover, appraisals seek to
establish the amount a willing buyer would pay a willing seller. Such amount
could be significantly higher than the amount obtained from the sale of a
Mortgaged Property under a distressed or liquidation sale. Information
regarding the values of the Mortgaged Properties as of the Cut-off Date is
presented under "Description of the Mortgage Pool--Certain Characteristics of
the Mortgage Pool" in this Prospectus Supplement for illustrative purposes
only. The architectural and engineering reports represent the analysis of the
individual engineers or site inspectors at or before the origination of the
respective Mortgage Loans. The reports may not have been updated since they
were originally conducted and may not have revealed all necessary or desirable
repairs, maintenance or capital improvement items.
CHANGES IN ZONING LAWS MAY ADVERSELY AFFECT THE VALUE AND INCOME OF MORTGAGED
PROPERTY.
The Mortgaged Properties are typically subject to applicable building and
zoning ordinances and codes affecting the construction and use of real
property. Because the zoning laws applicable to a Mortgaged Property (including
density, use, parking and set back requirements) are generally subject to
change at any time, certain of the improvements upon the Mortgaged Properties
may not comply fully with all applicable current and future zoning laws.
Changes in zoning laws may limit the ability of the related borrower to
renovate the premises and, in the event of a substantial casualty loss, to
rebuild or utilize the premises "as is."
THE COSTS OF COMPLIANCE WITH APPLICABLE LAWS AND REGULATIONS MAY ADVERSELY
AFFECT A BORROWER'S ABILITY TO REPAY ITS MORTGAGE LOAN.
A borrower may be required to incur costs to comply with various existing
and future federal, state or local laws and regulations applicable to the
related Mortgaged Property. Such costs, or the imposition of injunctive relief,
penalties or fines in connection with the borrower's noncompliance, could
negatively impact the borrower's cash flow and, consequently, its ability to
pay its Mortgage Loan. See "Certain Legal Aspects of the Mortgage
Loans--Americans With Disabilities Act" in the Prospectus.
LIMITATIONS ON THE ENFORCEABILITY OF CROSS-COLLATERALIZATION ARRANGEMENTS MAY
HAVE AN ADVERSE EFFECT ON RECOURSE IN THE EVENT OF A DEFAULT ON A
CROSS-COLLATERIZED MORTGAGE LOAN.
Arrangements whereby certain of the Mortgage Loans are
cross-collateralized and cross-defaulted with one or more related Mortgage
Loans could be challenged as fraudulent conveyances by the creditors or the
bankruptcy estate of any of the related borrowers. Under federal and most state
fraudulent conveyance statutes, the incurring of an obligation or the transfer
of property, including the granting of a mortgage lien, by a person may be
voided under certain circumstances if:
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(1) the person did not receive fair consideration or reasonably equivalent
value in exchange for such obligation or transfer; and
(2) the person (a) was insolvent at the time of the incurrence of such
obligation or transfer; or (b) was engaged in a business or a
transaction or was about to engage in a business or a transaction, for
which properties remaining with the person constitute an unreasonably
small capital; or (c) intended to incur, or believed that it would
incur, debts that would be beyond the person's ability to pay as such
debts matured.
Accordingly, a lien granted by any such borrower could be avoided if a
court were to determine that (1) the borrower did not receive fair
consideration or reasonably equivalent value when pledging such Mortgaged
Property for the equal benefit of the other related borrowers, and (2) such
borrower was insolvent at the time of granting the lien, was rendered insolvent
by the granting of the lien, was left with inadequate capital or was not able
to pay its debts as they matured.
We cannot assure you that a lien granted by a borrower on a
Cross-Collateralized Loan to secure the Mortgage Loan of an affiliated
borrower, or any payment thereon, would not be avoided as a fraudulent
conveyance. See "Description of the Mortgage Pool--Certain Characteristics of
the Mortgage Pool" herein for more information regarding the Cross-
Collateralized Loans.
THE CASH FLOW AND VALUE OF A SINGLE TENANT PROPERTY COULD BE ADVERSELY AFFECTED
BY A TENANT'S DEFAULT ON ITS LEASE.
Certain of the Mortgaged Properties are leased wholly or in large part to
a single tenant or are wholly or in large part owner-occupied. Any default by
such a tenant could adversely affect the related borrower's ability to make
payments on the related Mortgage Loan. We cannot assure you that any such
tenant will continue to perform its obligations under its lease (or, in the
case of an owner-occupied Mortgaged Property, under the related Mortgage Loan
Documents). See "Description of the Mortgage Pool----Certain Characteristics of
the Mortgage Pool--Tenant Matters" and "Annex A" herein.
LITIGATION AGAINST A BORROWER MAY ADVERSELY AFFECT THE BORROWER'S ABILITY TO
MEET ITS MORTGAGE LOAN OBLIGATIONS.
From time to time, there may be legal proceedings pending or threatened
against the borrowers and their affiliates relating to their business. We
cannot assure you that any such litigation will not have a material adverse
effect on any borrower's ability to meet its obligations under the related
Mortgage Loan and, thus, on the distributions to Certificateholders.
THE MASTER SERVICER, SPECIAL SERVICER OR SPECIAL SUB-SERVICER MAY HAVE
INTERESTS DIFFERENT FROM THOSE OF THE TRUST FUND DUE TO THE MASTER SERVICER'S,
SPECIAL SERVICER'S OR SPECIAL SUB-SERVICER'S PURCHASE OF CERTIFICATES AND
SERVICING OF NON-TRUST FUND LOANS.
The Master Servicer, Special Servicer and/or Special Sub-Servicer may
purchase and own Certificates, including the Subordinate Certificates. Under
such circumstances, it is possible that the interests of the Master Servicer,
Special Servicer or Special Sub-Servicer, as a holder of the Certificates of
any Class, may differ from those of the holders of Certificates of any other
Class. The Master Servicer, Special Servicer and Special Sub-Servicer have
advised the Depositor that they intend to continue to service existing mortgage
loans and new mortgage loans for third parties, including portfolios of
mortgage loans similar to the Mortgage Loans. These mortgage loans and the
related mortgaged properties may be in the same markets as, or have owners,
obligors and/or property managers in common with, certain of the Mortgage Loans
and the Mortgaged Properties. To the extent that overlap exists, the interests
of the Master Servicer, the Special Servicer, the Special Sub-Servicer, and
their respective affiliates and their other clients may differ from, and
compete with, the interests of the Trust Fund. The Master Servicer, Special
Servicer and Special Sub-Servicer are required, however, to service the
Mortgage Loans in accordance with the Servicing Standard contained in the
Pooling and Servicing Agreement.
INCORRECT ASSUMPTIONS REGARDING PRINCIPAL PAYMENTS AND PREPAYMENTS MAY LEAD TO
A LOWER THAN EXPECTED YIELD ON YOUR INVESTMENT.
In deciding whether to purchase any Offered Certificates, you should make
an independent decision as to the appropriate prepayment assumptions to be
used. The yield on the Offered Certificates of any Class will depend on, among
other things, the Pass-Through Rate for such Certificates and the extent to
which principal payments are applied to reduce the related certificate's
principal balance. The yield on any Offered Certificate that is purchased at a
discount or premium will also be affected by the rate and timing of principal
payments and principal losses on the Mortgage Loans.
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If you purchase an Offered Certificate at a discount, you should consider
the risk that a slower than anticipated rate of principal payments on the
Mortgage Loans will result in an actual yield that is lower than you expect. If
you purchase an Offered Certificate at a premium, you should consider the risk
that a faster than anticipated rate of principal payments on the Mortgage Loans
will result in an actual yield that is lower than you expect. Insofar as the
principal in your Offered Certificate is repaid, you may not be able to
reinvest such amounts in an alternative investment with a yield comparable to
the yield on your Offered Certificates.
BORROWERS' FAILURE TO MAKE BALLOON PAYMENTS MAY ADVERSELY AFFECT YOUR
INVESTMENT.
Most of the Mortgage Loans are Balloon Loans. Balloon Loans involve a
greater risk of default than self-amortizing loans. The ability of a borrower
to make a Balloon Payment typically will depend upon its ability either to
refinance the related Mortgaged Property or to sell such Mortgaged Property at
a price sufficient to permit the borrower to make the Balloon Payment. The
ability of a borrower to accomplish either of these goals will be affected by a
number of factors at the time of attempted sale or refinancing, including:
(1) the level of available mortgage rates;
(2) the fair market value of the related Mortgaged Property;
(3) the borrower's equity in the related Mortgaged Property;
(4) the financial condition of the borrower;
(5) the operating history of the related Mortgaged Property;
(6) tax laws;
(7) prevailing economic conditions; and
(8) the availability of credit for multifamily or commercial properties.
See "Yield and Maturity Considerations--Yield Considerations--Balloon
Payments/ARD Loan Payments" herein.
THE INEFFECTIVENESS OF RESTRICTIONS ON VOLUNTARY PREPAYMENTS MAY ADVERSELY
AFFECT THE YIELD OF YOUR INVESTMENT.
Restrictions on voluntary prepayments contained in a promissory note
(e.g., Lockout Periods, Yield Maintenance Charges and Prepayment Premiums)
affect the rate and timing of principal payments made on the related Mortgage
Loan. Most of the Mortgage Loans provide that, for a specified amount of time
during which a prepayment of such Mortgage Loan is permitted, it must be
accompanied by a Yield Maintenance Charge or other Prepayment Premium. The
existence of Yield Maintenance Charges or other Prepayment Premiums generally
will result in the Mortgage Loans prepaying at a lower rate. However, the
requirement that a prepayment be accompanied by a Yield Maintenance Charge or
other Prepayment Premium may not provide a sufficient economic disincentive to
a borrower seeking to refinance at a more favorable interest rate. We cannot
assure you that the obligation to pay a Yield Maintenance Charge or other
Prepayment Premium will be enforceable under applicable state or federal law
(including federal bankruptcy law) or, if enforceable, that the foreclosure
proceeds received with respect to a defaulted Mortgage Loan will be sufficient
to make such payment. See "Description of the Mortgage Pool--Certain Terms and
Conditions of the Mortgage Loans--Prepayment Provisions" herein.
The yield and total return on your Offered Certificates may differ
significantly from your expectations due to prepayments on the Mortgage Loans
being higher or lower than you anticipated. Even if the actual yield is equal
to your anticipated yield, you may not realize your expected total return on
investment or the expected weighted average life of your Certificate. For a
discussion of certain factors affecting prepayment of the Mortgage Loans. See
"Yield and Maturity Considerations" herein.
The structure of the Offered Certificates causes the yield of certain
Classes to be sensitive to changes in the rates of prepayment of the Mortgage
Loans and other factors. If you are purchasing any class of Offered
Certificates other than the Class A-1 or Class A-2 Certificates you will not
receive any principal distributions until the certificate principal balance of
each class that is senior to your class is reduced to zero.
INTEREST ON ADVANCES, SPECIAL SERVICING FEES AND OTHER SERVICING EXPENSES MAY
REDUCE THE AMOUNT OF DISTRIBUTIONS ON YOUR CERTIFICATES.
The Master Servicer or the Trustee will be entitled to receive interest on
unreimbursed Advances at the Advance Rate. Reimbursements will be made no later
than the Distribution Date following the date on which funds are available to
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reimburse such Advance. The Master Servicer's or the Trustee's right to receive
such payments of interest precedes your right to receive distributions on the
Regular Certificates. Consequently, this circumstance may result in decreased
distributions to you that would not otherwise have resulted. See "The Pooling
and Servicing Agreement--Advances" herein. In addition, certain circumstances,
including late payment of principal and interest, will result in a Mortgage
Loan being specially serviced. The Special Servicer is entitled to additional
compensation for special servicing activities, including Special Servicing
Fees, Disposition Fees and Workout Fees, which may result in decreased
distributions on the Regular Certificates that would not otherwise have
resulted. See "The Pooling and Servicing Agreement--Special Servicing" herein.
THE ABSENCE OF A SECONDARY MARKET FOR YOUR CERTIFICATES MAY ADVERSELY AFFECT
THE LIQUIDITY OF YOUR INVESTMENT.
There is currently no secondary market for the Offered Certificates. The
Underwriters have told us that they currently intend to buy and sell or "make a
market in" the Offered Certificates, but they are under no obligation to do so.
Accordingly, we cannot assure you that a secondary market for the Offered
Certificates will develop. Moreover, if a secondary market does develop, we
cannot assure you that it will allow you to resell your Offered Certificates or
that it will continue for the life of the Offered Certificates. We do not
intend to apply for listing of the Offered Certificates on any securities
exchange.
RISKS ASSOCIATED WITH THE YEAR 2000 MAY ADVERSELY AFFECT YOUR INVESTMENT.
The transition from the year 1999 to the year 2000 may disrupt the ability
of computerized systems to process information, the collection of payments on
the Mortgaged Loans, and servicing of the Mortgage Loans and the performance of
related duties by the Master Servicer, the Special Servicer, the Special
Sub-Servicer, the Trustee, the borrowers and other third parties. The Depositor
has been advised by the Master Servicer, the Special Servicer, the Special
Sub-Servicer and the Trustee that, with respect to those computer systems
identified as being mission critical for the performance of the servicing
functions described herein, they are committed to either (1) modifying their
respective existing systems to the extent required to cause them to be Year
2000 capable, or (2) acquiring new and/or upgraded computer systems that are
Year 2000 capable in each case prior to August 31, 1999. The Master Servicer,
the Special Servicer, the Special Sub-Servicer and the Trustee consider their
products and services to be "Year 2000 capable" if the product or service will
be capable of accurately processing, proving and receiving date data from, into
and between the twentieth and twenty-first centuries, and will correctly
create, store, process and output information related to or including dates on
or after December 31, 1999 as a result of the changing of the date from 1999 to
2000, including leap year calculations, when used for the purpose for which it
was intended, assuming that all other products, including hardware and
software, when used in combination with the product or service properly
exchange date data. However, none of the Depositor, the Transferor or any
affiliate of the Depositor or Transferor has made any independent investigation
of the computer systems of the Master Servicer, the Special Servicer, the
Special Sub-Servicer or the Trustee. In the event that the computer systems of
the Master Servicer, the Special Servicer, the Special Sub-Servicer or the
Trustee are not fully Year 2000 capable, the resulting disruption in the
collection or distribution of receipts on the Mortgage Loans could materially
adversely affect the Certificateholders.
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DESCRIPTION OF THE MORTGAGE POOL
GENERAL
The Mortgage Pool will consist of 257 commercial and multifamily "whole"
mortgage loans (the "Mortgage Loans"). The Mortgage Loans have an aggregate
Cut-off Date Principal Balance of approximately $928,918,344 (the "Initial Pool
Balance"), subject to a variance of plus or minus 5%. The "Cut-off Date
Principal Balance" of each Mortgage Loan is the unpaid principal balance
thereof as of the Cut-off Date, after application of all payments of principal
due on or before such date, whether or not received. The "Initial Pool Balance"
is the aggregate of the Cut-off Date Principal Balances of the Mortgage Loans
as of the Cut-off Date, and gives effect to (a) the deposit into the Loan 120
Account of principal amounts payable on Mortgage Loan Control #120 on its Due
Date in March, 1999, as if such payment were made before March 1, 1999 and (b)
the Funding of an additional $200,000 with respect to Mortgage Loan Control #55
as though such Funding occurred on the Cut-off Date rather than on March 3,
1999. The "Pool Balance" as of any date will be the aggregate of the
outstanding principal balances of the Mortgage Loans in the Mortgage Pool as of
such date. The following description of terms and provisions of the Mortgage
Loans is a generalized description of the terms and provisions of the Mortgage
Loans in the aggregate. Many of the individual Mortgage Loans have special
terms and provisions that deviate from the generalized, aggregated description.
Generally, each Mortgage Loan is evidenced by a separate promissory note.
Each Mortgage Loan is secured by one or more mortgages, deeds of trust, deeds
to secure debt or other similar security instruments (each, a "Mortgage") that
creates a first lien on one or more of a fee simple estate, an estate for years
or a leasehold estate in a real property (a related "Mortgaged Property")
improved for commercial or multifamily residential use.
The percentage of the Initial Pool Balance represented by each type of
Mortgaged Property is as follows:
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
MORTGAGED INITIAL
PROPERTY TYPE PROPERTIES POOL BALANCE
- ------------------------------------------ ------------ -------------
<S> <C> <C>
Assisted Living Facility ......... 2 0.33%
Congregate Care .................. 4 2.16
Hospitality ...................... 9 7.48
Industrial ....................... 16 4.52
Mixed Use ........................ 2 0.62
Mobile Home Park ................. 2 0.20
Multifamily ...................... 99 24.09
Nursing Home ..................... 5 1.93
Office ........................... 34 25.93
Office/Industrial ................ 32 8.24
Retail-Anchored .................. 21 15.07
Retail-Shadow Anchored ........... 4 0.70
Retail-Single Tenant ............. 9 1.06
Retail-Unanchored ................ 29 6.15
Self-Storage ..................... 1 0.07
Special Purpose .................. 16 1.35
Warehouse ........................ 1 0.10
-- ------
Total ............................ 286 100.00%
=== ======
</TABLE>
No Mortgage Loan is insured or guaranteed by the United States of America,
any governmental agency or instrumentality, any private mortgage insurer, the
Depositor, the Transferor, the Mortgage Loan Sellers, the Master Servicer, the
Special Servicer, the Trustee or any of their respective affiliates.
The Depositor will purchase the Mortgage Loans on or before the Closing
Date from the Transferor pursuant to a "Mortgage Loan Purchase Agreement" to be
dated on or about March 25, 1999. The Transferor will purchase 215 and 42
Mortgage Loans (representing approximately 70.48% and 29.52% of the Initial
Pool Balance, respectively) from NRFinance and CIBC, respectively, on or before
the Closing Date pursuant to separate agreements (collectively, the "Underlying
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Mortgage Loan Purchase Agreements"). The Depositor will assign the Mortgage
Loans, and make certain representations and warranties regarding the Mortgage
Loans, to the Trustee pursuant to the Pooling and Servicing Agreement. The
Master Servicer and the Special Servicer will each service the Mortgage Loans
pursuant to the Pooling and Servicing Agreement. See "The Pooling and Servicing
Agreement--Servicing of the Mortgage Loans; Collection of Payments."
SECURITY FOR THE MORTGAGE LOANS
Each Mortgage Loan is secured by a Mortgage encumbering the related
Mortgaged Property. 43 of the Mortgage Loans, representing approximately 7.29%
of the Initial Pool Balance, provide for full or limited recourse against the
related borrower or a guarantor or guarantors. The remainder of the Mortgage
Loans are non-recourse loans, meaning that if a borrower defaults thereunder,
recourse generally may be had only against the specific Mortgaged Property
securing such Mortgage Loan and any other assets specifically pledged by the
borrower to secure such Mortgage Loan. For example, each Mortgage Loan is also
secured by an assignment of the related borrower's interest in the leases,
rents, issues and profits of the related Mortgaged Property. Also, each
Mortgage Loan provides for the indemnification of the mortgagee by the related
borrower for the presence of any hazardous substances affecting the Mortgaged
Property. In certain instances, additional collateral may exist. However,
borrowers generally have limited assets, and there can be no assurance that any
borrower will have sufficient assets to support any such indemnification
obligations that may arise. See "Risk Factors--The Environmental Condition of
Mortgaged Properties May Subject the Trust Fund to Liability Under Federal and
State Laws" herein.
Each Mortgage constitutes a first lien on a Mortgaged Property. Generally
such lien is subject only to (1) liens for real estate and other taxes and
special assessments, (2) covenants, conditions, restrictions, rights of way,
easements and other encumbrances in effect as of the date of recording of such
Mortgage, and (3) exceptions and encumbrances on the Mortgaged Property
reflected in the related title insurance policy.
Ground Leases; Estates for Years. 7 of the Mortgage Loans, representing
approximately 11.70% of the Initial Pool Balance, are secured by first liens
encumbering the related borrower's leasehold interest in the related Mortgaged
Property. 5 of the Mortgage Loans, representing approximately 10.75% of the
Initial Pool Balance, are secured by first liens encumbering the related
borrower's leasehold interest in the related Mortgaged Property where the
related fee owner has subordinated or otherwise encumbered its fee interest to
the leasehold interest of the borrower. 1 of the Mortgage Loans, representing
approximately 0.41% of the Initial Pool Balance, is secured by a first lien
encumbering the related borrower's (1) fee interest in a portion of the
Mortgaged Property and (2) leasehold interest in the remainder of the Mortgaged
Property. The Mortgage Loan Sellers have represented that each ground lease
expires not less than 10 years after the maturity date of the related Mortgage
Loan (including extension options). See "Certain Legal Aspects of the Mortgage
Loans--Foreclosure--Leasehold Risks" in the Prospectus.
CERTAIN TERMS AND CONDITIONS OF THE MORTGAGE LOANS
Due Dates. The Mortgage Loans provide for Monthly Payments to be due on
the first day of each month (each, a "Due Date"), except one of the Mortgage
Loans, Mortgage Loan Control #120, representing approximately 0.22% of the
Initial Pool Balance, which provides for Monthly Payments to be due on the 10th
day of each month. With respect to Mortgage Loan Control #120, an account (the
"Loan 120 Account") will be established and funded with an amount equal to one
scheduled payment thereof. The amount so deposited will be advanced each month
to the Trust and then reimbursed on the related Due Date from Collections in
respect of such Mortgage Loans, so that no shortfall in collections will result
from the related Due Date occurring on the 10th of each month. All of the
Mortgage Loans provide for a grace period of ten days or less from the related
Due Date before a scheduled payment is deemed to be contractually delinquent
for purposes of imposing a late charge.
Mortgage Rates; Calculations of Interest. Each Mortgage Loan accrues
interest at an annualized rate that is fixed for the entire term of such
Mortgage Loan (each such initial mortgage rate, whether or not the same may be
modified in accordance with the provisions of the Pooling and Servicing
Agreement, the related "Mortgage Rate") and does not permit any negative
amortization or the deferral of interest except that six of the Mortgage Loans,
representing approximately 11.67% of the Initial Pool Balance, provide that for
a period of up to two years from origination the borrower is obligated only to
pay interest accrued each month. Four of such Mortgage Loans, representing
approximately 10.18% of the Initial Pool Balance, have not yet reached the end
of such period.
Such Mortgage Loans are identified in Annexes A and B, and a summary of
the relevant provisions is provided therein.
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Mortgage Loan Control #51, representing approximately 0.55% of the Initial
Pool Balance, provides that as of its Due Date in April 2002, its Monthly
Payment will be recalculated on the basis of the then-outstanding principal
balance and an amortization term of 22 years. The Monthly Payment from the
first Due Date through the Due Date in April 2002 is based on the original
principal balance of $5,150,000, a Mortgage Rate of 7.05%, and an amortization
term of 21 years such that approximately $39,200 is due on each such due date.
After such adjustment, each Monthly Payment is expected to be approximately
$35,440. Mortgage Loan Control #51 is a Balloon Loan with a maturity date of
December 1, 2010.
ARD Loans; Excess Interest. 33 of the Mortgage Loans (the "ARD Loans"),
representing approximately 27.89% of the Initial Pool Balance, bear interest at
their respective Mortgage Rates until an "Anticipated Repayment Date" specified
therein. Commencing on such Anticipated Repayment Date, each such Mortgage Loan
will bear interest at a fixed annual rate (the "Revised Rate") equal to the
Mortgage Rate plus a specified percentage (generally, no more than 5.0%, so
long as the Mortgage Loan is included in the Trust Fund). The Master Servicer
and Special Servicer will undertake in the Pooling and Servicing Agreement to
cause the Revised Rate not to exceed the Mortgage Rate plus 2% per annum. Until
the principal balance of such Mortgage Loan has been reduced to zero, such
Mortgage Loan will only be required to pay interest at the Mortgage Rate, and
the interest accrued at the related Revised Rate over the interest that would
have accrued at the related Mortgage Rate will be deferred. Such deferred
interest will not be added to the principal balance of the related Mortgage
Loan, but will itself accrue interest at the Revised Rate to the extent such
accrual is lawful. Such accrued and deferred interest, and any interest accrued
thereon is referred to herein as "Excess Interest."
Borrowers under ARD Loans generally are required to enter into lockbox
agreements whereby revenue from the related Mortgage Property will be deposited
into a lockbox account controlled by the Master Servicer, if certain conditions
are met, rather then directly to the borrower. From and after the Anticipated
Repayment Date, the related borrower generally will be required to apply all
monthly cash flow from the related Mortgaged Property to pay the following
amounts in the following order of priority:
(1) required payments to the tax and insurance escrow fund and any ground
lease escrow fund;
(2) payment of monthly debt service;
(3) payments to any other required escrow funds;
(4) payment of operating expenses pursuant to the terms of an annual
budget approved by the Master Servicer;
(5) payment of approved extraordinary operating expenses or capital
expenses not set forth in the approved annual budget or allotted for in
any escrow fund;
(6) principal on the Mortgage Loan until such principal is paid in full;
and
(7) Excess Interest.
The cash flow from the Mortgaged Property securing an ARD Loan after
payments of items (1) through (5) above is referred to herein as "Excess Cash
Flow."
As described below, each ARD Loan generally provides that the related
borrower is prohibited from prepaying the Mortgage Loan until one to six months
prior to the Anticipated Repayment Date. However, upon the commencement of such
period, the borrower may prepay the loan, in whole or in part, without payment
of a Prepayment Premium or Yield Maintenance Charge. The Anticipated Repayment
Date for each ARD Loan is listed in Annex A.
The holders of the Class M Certificates will be entitled to all
distributions of Excess Interest, subject to the limitations set forth in the
Pooling and Servicing Agreement, including on Distribution Dates on or after
that on which the Class Certificate Balance thereof is reduced to zero.
Additionally, the holders of 100% of the Class M Certificates or the Special
Servicer will have the option to purchase any ARD Loan on or after its
Anticipated Repayment Date at a price equal to its outstanding Scheduled
Principal Balance plus accrued and unpaid interest and unreimbursed Advances
made with respect thereto (with interest thereon). As a condition to such
purchase, each such holder will be required to deliver an opinion of counsel to
the effect that such purchase (or such right to purchase) would not cause
either REMIC to fail to qualify as a REMIC under the Code and either (1) an
opinion of counsel to the effect that such purchase would not result in a gain
taxable as net income from prohibited transactions (imposed by Code Section
860F(a)(1)) or result in the imposition of any other tax on either REMIC or (2)
an accountant's certification to the effect that such purchase would not result
in the realization of any net income to either REMIC.
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Amortization of Principal. 247 of the Mortgage Loans (the "Balloon
Loans"), representing approximately 96.62% of the Initial Pool Balance, provide
for monthly payments of principal based on amortization schedules longer than
their remaining terms, thereby leaving substantial principal amounts due and
payable on their respective maturity dates. Such final payment, together with
interest for the one-month period preceding such Balloon Loan's maturity date,
is referred to herein as a "Balloon Payment". The remaining Mortgage Loans have
amortization terms that match their respective terms to maturity. The weighted
average Balloon LTV applicable to the Mortgage Pool is approximately 55.94%.
Prepayment Provisions. All of the Mortgage Loans provide that during a
specified period (generally two to twelve months) prior to the maturity date or
Anticipated Repayment Date, as applicable, of such Mortgage Loans there are no
restrictions on voluntary prepayments. Prior to such specified period, if any,
each Mortgage Loan restricts voluntary prepayments in one or more of the
following ways:
(1) Imposing a "Lockout Period" by prohibiting any prepayments for a
specified period of time after the date of origination of such Mortgage
Loan;
(2) Imposing a "Yield Maintenance Charge" (as described below) in
connection with any principal prepayment made during a specified period
of time (a "Yield Maintenance Period") after the date of origination of
such Mortgage Loan or after a Lockout Period; or
(3) Imposing "Prepayment Premiums" (fees or premiums generally equal to a
fixed percentage of the then outstanding principal balance of such
Mortgage Loan) in connection with any principal prepayment made during
a specified period of time (a "Prepayment Premium Period") after any
Lockout Period and any Yield Maintenance Period.
1 of the Mortgage Loans, representing approximately 0.11% of the Initial
Pool Balance, allows prepayment with either a Prepayment Premium or Yield
Maintenance Charge and also gives the related borrower the option either to
defease the Mortgage Loan (as described below) or to prepay the Mortgage Loan
with payment of an accompanying Yield Maintenance Charge or Prepayment Premium.
2 of the Mortgage Loans, representing approximately 1.35% of the Initial
Pool Balance, contain certain provisions which provide for a period allowing
prepayment accompanied by payment of a Yield Maintenance Charge, followed by a
period with a defeasance feature.
The Mortgage Loans generally require prepayments to be accompanied by a
full month's interest, regardless of the date on which they are made.
Generally, any "Yield Maintenance Charge" will be the greater of (1) a
specified Prepayment Premium or (2) the present value, as of the date of such
prepayment, of the remaining scheduled payments of principal and interest on
the portion of the Mortgage Loan being prepaid (including any Balloon Payment
or principal balance due on the Anticipated Repayment Date for an ARD Loan)
determined by discounting such payments at the Yield Rate, less the amount
prepaid. The "Yield Rate" generally is a per annum rate calculated by the
linear interpolation of the yields of U.S. Treasury constant maturities with
maturity dates (one longer, one shorter) most nearly approximating the maturity
date (or, with respect to ARD Loans, the Anticipated Repayment Date) of the
Mortgage Loan being prepaid, 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 prepayment, or the monthly equivalent of such rate. If Federal Reserve
Statistical Release H.15--Selected Interest Rates is no longer published, the
Master Servicer shall select a comparable publication to determine the relevant
Yield Rate. With respect to Mortgage Loan Control #54, representing
approximately 0.51% of the Initial Pool Balance, the Yield Rate is a per annum
rate calculated as described above plus a spread.
The table in "Summary--Overview of the Certificates--Prepayment
Lockout/Premium Analysis" sets forth for the Distribution Date in each
indicated month the percentage of the aggregate Stated Principal Balance of all
Mortgage Loans expected to be outstanding (after giving effect to scheduled
principal payments for the Due Date relating to such Distribution Date) with
respect to which:
(1) a Lockout Period is in effect;
(2) a prepayment must be accompanied by (a) a Yield Maintenance Charge,
(b) the greater of a Yield Maintenance Charge or a Prepayment Premium
(the percentage used in calculating which Prepayment Premium is also
set forth in such table) or (c) a Prepayment Premium (the percentage
used in calculating which Prepayment Premium is also set forth in such
table); or
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(3) no Lockout Period, Yield Maintenance Period or Prepayment Premium
Period is applicable (designated "Open" on such table).
Annex A attached hereto contains information regarding the Prepayment
Premiums applicable to each of the Mortgage Loans.
Prepayment Premiums and Yield Maintenance Charges are generally not
imposed in connection with involuntary prepayments resulting from a Casualty or
Condemnation, so long as no event of default then exists. The Prepayment
Premiums and Yield Maintenance Charges are payable in connection with
prepayments after an event of default but prior to the sale of the Mortgaged
Property. Certain Mortgage Loans permit the related borrower to transfer the
related Mortgaged Property to a third party without prepaying the related
Mortgage Loan if certain conditions are satisfied, including an assumption by
the transferee of all of such borrower's obligations in respect of such
Mortgage Loan. See "--`Due-on- Encumbrance' and `Due-on-Sale' Provisions"
below.
You should note that the enforceability of provisions requiring payment of
Prepayment Premiums and Yield Maintenance Charges has been challenged in some
states, and that the collectability of any Prepayment Premium depends on the
creditworthiness of the borrower. See "Yield and Maturity Considerations"
herein and "Certain Legal Aspects of the Mortgage Loans--Enforceability of
Certain Provisions" in the Prospectus.
Defeasance. 91 of the Mortgage Loans, representing approximately 48.74% of
the Initial Pool Balance, grant the related borrower the right, after a
specified period, to obtain the release of the lien of the related Mortgage on
the related Mortgaged Property by substituting for such Mortgaged Property,
direct, non-callable obligations of the United States of America. Such
securities must, in the aggregate, provide for payments on or prior to each Due
Date and on the maturity date of the Mortgage Loan in amounts equal to or
greater than the amounts payable under the related promissory note on each such
date (or, in the case of the ARD Loans, through the related Anticipated
Repayment Date, including prepayment in full on the related Anticipated
Repayment Date). Conditions to the related borrower's right to a defeasance
include delivery of (1) an opinion of counsel stating that the Trust REMICs
will not fail to maintain their respective statuses as REMICs as a result of
such defeasance and (2) in some cases, written confirmation from the Rating
Agencies that such defeasance will not result in a downgrading, withdrawal or
qualification of the respective ratings of any outstanding classes of
Certificates. 1 of the Mortgage Loans, representing approximately 0.11% of the
Initial Pool Balance, affords the related borrower the option either to prepay
(with an accompanying Yield Maintenance Charge) or to exercise the defeasance
feature.
"Due-on-Encumbrance" and "Due-on-Sale" Provisions. The Mortgages generally
contain "due-on-encumbrance" clauses that permit the holder of the Mortgage to
accelerate the maturity of the related Mortgage Loan if the borrower encumbers
the related Mortgaged Property without its consent. Certain borrowers are
allowed, under certain circumstances, to further encumber the related Mortgaged
Property with additional liens. See "Risk Factors--If a Borrower Uses the
Mortgaged Property as Security for Another Loan, the Value of the Mortgaged
Property May be Adversely Affected" herein. The Master Servicer or the Special
Servicer, as applicable, will determine, in a manner consistent with the
Servicing Standard described herein under "The Pooling and Servicing
Agreement--Servicing of the Mortgage Loans; Collection of Payments" whether to
accelerate payment of a Mortgage Loan upon, or to consent to, any additional
encumbrance of the related Mortgaged Property. In certain cases, acceleration
may not be waived except upon confirmation from each Rating Agency that such
waiver will not result in the downgrade, withdrawal or qualification of its
then current rating of any Class of Certificates.
The Mortgages generally prohibit the borrower from transferring the
Mortgaged Property, or allowing a change of ownership of the borrower, without
the mortgagee's prior consent. For this purpose, a change in ownership of the
borrower is generally defined to include:
(1) a specified percentage (generally from 10% to 49%) change in the
ownership of the borrower, a guarantor of the Mortgage Loan, or the
general partner or managing member of the borrower;
(2) the removal, resignation or change in ownership of, or the transfer or
pledge of the partnership or membership interest of, any general
partner or managing member of a borrower or a guarantor of the Mortgage
Loan;
(3) with respect to certain of such Mortgage Loans, the removal,
resignation or change in ownership of the managing agent of the related
Mortgaged Property; or
(4) the voluntary or involuntary transfer or dilution of the controlling
interest in the related borrower held by a specified person.
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With respect to certain of such Mortgage Loans, the borrower may be
entitled to transfer the Mortgaged Property or allow a change in ownership if
certain conditions are satisfied, typically including one or more of the
following:
(1) no event of default has occurred;
(2) the proposed transferee meets the mortgagee's customary underwriting
criteria;
(3) the Mortgaged Property continues to meet the mortgagee's customary
underwriting criteria;
(4) an acceptable assumption agreement is executed; and
(5) a specified assumption fee (generally between 0.5% and 1.0% of the
then outstanding principal balance of the related Mortgage Loan) has
been received by the mortgagee.
Certain of the Mortgages also allow: (1) changes in ownership between
existing partners and members; (2) transfers to family members (or trusts for
the benefit of family members), affiliated companies and certain specified
individuals and entities; (3) issuance by the borrower of new partnership or
membership interests; (4) certain other changes in ownership for estate
planning purpose; or (5) certain other transfers similar in nature to the
foregoing.
In the event of any transfer or change in ownership of the Mortgaged
Property which is in direct violation of provisions contained in the Mortgage
Loan Documents, such documents generally permit the holder of the Mortgage Loan
to accelerate the loan's maturity. See "Certain Legal Aspects of the Mortgage
Loans--Enforceability of Certain Provisions--Due--on--Sale Provisions" in the
Prospectus. You should note that the enforceability of due-on-sale and
due-on-encumbrance provisions has been challenged in several states.
Default Provisions. The related Mortgage and the other documents contained
in the Mortgage File (the "Mortgage Loan Documents") generally provide that an
event of default will exist if:
(1) the borrower fails to pay any regular installment of principal and/or
interest (a) upon the date the same is due, (b) within a specified
period (generally five days to 10 days) after the date upon which the
same was due, or (c) within a specified period (generally five days to
10 days) following written notice from the mortgagee of such failure;
(2) the borrower violates prepayment, defeasance, Due-on-Encumbrance or
Due-on-Sale provisions;
(3) the borrower fails to pay taxes or other charges when due, to keep all
required insurance policies in full force and effect, to cure any
material violations of laws or ordinances affecting the Mortgaged
Property or to operate the related Mortgaged Property according to
specified standards;
(4) the imposition of a mechanic's, materialman's or other similar lien
against the Mortgaged Property; or
(5) the institution of a bankruptcy, receivership or similar action
against the borrower or the Mortgaged Property.
Additionally, the related Mortgage Loan Documents may contain other
specified events of default, including one or more of the following:
(1) the unapproved conversion of the related Mortgaged Property to a
condominium or cooperative;
(2) defaults under certain other agreements;
(3) defaults under or unapproved modifications to any related franchise
agreement;
(4) material changes to or defaults under any related management
agreement; or
(5) the failure to correct any deficiency that would justify termination
of a Medicare or Medicaid contract or a ban on new patients otherwise
qualifying for Medicaid or Medicare coverage or the assessment of
certain fines or penalties by any state or any Medicare, Medicaid,
health, reimbursement or licensing agency.
Upon an event of default, the Master Servicer or the Special Servicer may
take such action as it deems advisable to protect and enforce the rights of the
Trustee, on behalf of the Certificateholders, against the related borrower and
in and to the related Mortgaged Property, subject to the terms of the related
Mortgage Loan. Such action may include acceleration of maturity of the Mortgage
Loan or complete or partial foreclosure of the Mortgage Loan.
Default Interest. All of the Mortgage Loans provide for imposition of a
rate of interest higher than the stated interest rate upon the occurrence of an
event of default ("Default Interest"). Default Interest is generally calculated
as a specified
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<PAGE>
rate above the stated interest rate of such Mortgage Loan, and in some cases
may be calculated as a specified rate above a specified base rate (typically a
prime rate reported in The Wall Street Journal or published by major money
center banks). You should note that the enforceability of Default Interest
provisions has been challenged in several states. Also, the collectibility of
any Default Interest is dependent on the creditworthiness of the borrower. See
"Certain Legal Aspects of the Mortgage Loans--Enforceability of Certain
Provisions" in the Prospectus.
Hazard, Liability and other Insurance. Each Mortgage Loan requires that
the related Mortgaged Property be insured against loss or damage by fire or
other risks and hazards covered by a standard extended coverage insurance
policy. Such insurance generally includes:
(1) commercial general liability insurance for bodily injury or death and
property damage;
(2) an "All Risk of Physical Loss" policy or standard extended coverage
policy;
(3) such other coverage as the related Mortgage Loan Seller may require
based on the specific characteristics of the Mortgaged Property
(including in each case other than where a Major Tenant is self-insured
or has independently procured similar insurance, rental loss insurance
and business interruption insurance); and
(4) where appropriate, boiler and machinery coverage and flood insurance.
Generally, such insurance must be for an amount equal to (1) the full
replacement cost of the Mortgaged Property or (2) the outstanding principal
balance of the related Mortgage Loan, whichever is less but in any event in an
amount sufficient to ensure that the insurer would not deem the borrower a
co-insurer. With respect to some of the Mortgage Loans, the related borrower
has satisfied the applicable insurance requirements by obtaining blanket
insurance policies.
The related Mortgage Loan Documents typically provide that in the event of
damage to the related Mortgaged Property (a "Casualty"), insurance proceeds in
excess of a specified amount will be paid to the mortgagee rather than the
borrower. The mortgagee may elect to apply such proceeds to the outstanding
indebtedness rather then to restoration of the related Mortgaged Property.
However, the mortgagee may be required to apply such proceeds to restoration of
the related Mortgaged Property if certain conditions are met. These conditions
typically include one or more of the following:
(1) the insurance proceeds payable are less than a specified amount;
(2) less than a specified percentage of the related Mortgaged Property is
destroyed;
(3) the value of the related Mortgaged Property following such Casualty
remains greater than either a specified amount or a specified
percentage of the value of the related Mortgaged Property before such
Casualty;
(4) the Casualty affects less than a specified percentage of the net
rentable area of the Mortgaged Property or interrupts less than a
specified percentage of the rentals from the Mortgaged Property;
(5) such restoration will cost less than a specified amount and such
proceeds are sufficient to complete such restoration;
(6) such restoration can be accomplished within a specified time period;
(7) the restored Mortgaged Property will adequately secure the related
Mortgage Loan;
(8) income (including rents and insurance proceeds) will be adequate to
service the debt during the restoration period; and
(9) no event of default then exists.
Certain leases require the borrower or the tenant to rebuild the buildings
located upon the related Mortgaged Property in the event of a Casualty, and the
related Mortgage Loan Documents permit the application of insurance proceeds to
satisfy such requirement.
Condemnation. Generally the Mortgage Loans provide that all awards
payable to the borrower in connection with any taking or exercise of the power
of eminent domain with respect to the related Mortgaged Property (a
"Condemnation") will be paid directly to the mortgagee. The mortgagee may elect
to apply such proceeds to the outstanding indebtedness rather than to the
restoration of the related Mortgaged Property. However, the mortgagee may be
required to apply such awards to restoration of the related Mortgaged Property
if certain conditions are met. These conditions typically include one or more
of the following:
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<PAGE>
(1) the award is less than a specified amount;
(2) the Condemnation affects less than a specified percentage of the net
rentable area of the Mortgaged Property or interrupts less than a
specified percentage of the rental revenue from the Mortgaged Property;
(3) restoration will cost less than a specified amount and sufficient
funds are available to complete such restoration;
(4) restoration can be accomplished within a specified time period;
(5) income (including the Condemnation award, rental revenue and insurance
proceeds) will be adequate to service the debt during the restoration
period;
(6) no event of default then exists; or
(7) such restoration is feasible and the Mortgaged Property will be
commercially viable after such restoration.
Certain leases require the borrower or the tenant to restore the related
Mortgaged Property in the event of a Condemnation, and the related Mortgage
Loan Documents permit the application of Condemnation Proceeds to satisfy such
requirement.
Delinquencies and Modifications. As of the Cut-off Date, no Mortgage Loan
was more than 30 days delinquent in respect of any Monthly Payment, and no
Mortgage Loan has been modified in any material manner since its origination in
connection with any default or threatened default on the part of the related
borrower.
CERTAIN CHARACTERISTICS OF THE MORTGAGE POOL
Concentration of Mortgage Loans and Borrowers. Several of the Mortgage
Loans have Cut-off Date Principal Balances that are substantially higher than
the average Cut-off Date Principal Balance. The largest single Mortgage Loan
has a Cut-off Date Principal Balance of $67,500,000, which represents
approximately 7.27% of the Initial Pool Balance. The ten largest individual
Mortgage Loans have Cut-off Date Principal Balances that represent in the
aggregate approximately 26.15% of the Initial Pool Balance.
Descriptions of the Ten Largest Individual Mortgage Loans. See Annex E
attached to this Prospectus Supplement.
Affiliated Borrowers. 71 Mortgage Loans, representing approximately 18.00%
of the Initial Pool Balance, were made to affiliated entities. The two largest
groups consist of 21 and 5 Mortgage Loans, collectively representing
approximately 3.19% and 2.62% of the Initial Pool Balance, respectively. No set
of Mortgage Loans made to a single borrower or to a single group of affiliated
borrowers constitutes more than approximately 7.27% of the Initial Pool
Balance.
38 Mortgage Loans, representing approximately 10.98% of the Initial Pool
Balance, are cross-collateralized and cross-defaulted with one or more other
Mortgage Loans made to the same borrower or to an affiliate thereof. 33
Mortgage Loans, representing approximately 7.02% of the Initial Pool Balance,
are made to the same borrower or to an affiliate thereof but are not
cross-collateralized or cross-defaulted. "Cross-Collateralized Loans" and
"Cross-Defaulted Loans" reduce the risk that the inability of an individual
Mortgaged Property to generate net operating income sufficient to pay debt
service thereon will result in defaults (and ultimately losses) by making the
collateral available to support debt service on, and principal repayment of,
the aggregate indebtedness evidenced by the related Cross-Collateralized Loans
and by making it easier for a lender to foreclose on performing collateral
should the need arise. Annex C contains the Affiliated Borrower Loan Table
which sets forth more detailed information regarding Mortgage Loans made to a
single borrower or to a single group of affiliated borrowers.
Geographic Concentration. The Mortgaged Properties are located in 38
states. The states with the greatest concentration of Mortgage Loans are
indicated in the table below. No more than 5.00% of the Mortgage Loans by
Initial Pool Balance are secured by Mortgaged Properties located in any state
not indicated below.
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<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE
NUMBER OF OF INITIAL
STATE MORTGAGE LOANS POOL BALANCE
- ---------------------------- ---------------- -------------
<S> <C> <C>
New York ................. 24 12.36%
Texas .................... 27 11.36%
Florida .................. 20 10.35%
California ............... 18 7.36%
Ohio ..................... 35 6.11%
Nevada ................... 9 5.50%
</TABLE>
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Environmental Risks. An environmental site assessment ("ESA"), a similar
study, an update of a previously conducted Phase I ESA, an update based on
information contained in an established database, or for Mortgage Loans with an
original principal balance of less than $1,000,000, an environmental
transaction screen assessment was obtained by the related Mortgage Loan Seller
with respect to each of the Mortgaged Properties within 12 months of the
respective dates as of which the Mortgage Loans were originated or purchased
thereby. 29 of the Mortgage Loans, representing approximately 2.13% of the
Initial Pool Balance, were originated based on an environmental transaction
screen assessment. 35 of the Mortgage Loans with original principal balances
greater than $1,000,000 were funded only after receipt of a Phase I ESA
performed less than 12 months before origination of the Mortgage Loan, but more
than 12 months before the Cut-off Date. Updates to these 35 Phase I ESAs have
been obtained and reviewed, based on information contained in an established
database, and did not identify any material adverse environmental conditions or
circumstances except as described below. Other than as described below, an ESA
or such similar study or update has been prepared within the 12 months
preceding the Cut-off Date for each Mortgaged Property.
19 of the Mortgage Loans with original principal balances less than
$1,000,000, constituting approximately 2.01% of the Initial Pool Balance, were
funded only after receipt of a Phase I ESA, a similar study, an update of a
previously conducted Phase I ESA, an update based upon information contained in
an established database or an environmental transaction screen assessment
performed on the Mortgaged Properties less than 12 months before origination of
the loan. As of March 15, 1999 these 20 report dates are over twelve months
old. Given the relatively small original principal balances of these 20
Mortgage Loans and small percentage of the total Mortgage Pool, no updates have
been ordered.
Other than as described below, the Mortgage Loan Sellers have informed the
Depositor that such ESAs, studies or updates did not identify any material
adverse environmental conditions or circumstances, except for:
(1) cases where such conditions or circumstances were investigated
further, and based upon such additional investigation, a qualified
environmental consultant recommended no further investigation or
remediation;
(2) cases where a qualified environmental consultant recommended an
operations and maintenance plan and such plan was obtained or an escrow
reserve was established to cover the estimated costs of obtaining such
plan;
(3) cases where soil or groundwater contamination was suspected or
identified and either (a) such condition was remediated or abated prior
to the Closing Date; (b) a No Further Action letter was obtained from
the applicable regulatory authority, or (c) either an environmental
insurance policy was obtained (in the case of 8 of the Mortgage Loans,
representing approximately 3.34% of the Initial Pool Balance), a letter
of credit provided, an escrow reserve account established, or an
indemnity from the responsible party was obtained, to cover the
estimated costs of any further required investigation, testing,
monitoring or remediation; and
(4) cases in which an offsite property is the location of a leaking
underground storage tank or groundwater contamination, a responsible
party has been identified under applicable law, and either (a) such
condition is not known to have affected the Mortgaged Property or (b)
the responsible party has either received a No Further Action letter
from the applicable regulatory agency, established a remediation fund,
or provided an indemnity or guaranty to the borrower.
The foregoing information is based upon ESAs, transaction screen
assessments, similar studies or updates and has not been independently verified
by the Mortgage Loan Sellers, the Depositor, the Transferor, or any of their
respective affiliates.
The ESAs, studies, transaction screen assessments, or updates with respect
to certain Mortgaged Properties identified potentially adverse environmental
conditions which could be important and require material expenditure. One of
the Mortgage Loans, Control #214 (Kenny Rogers Roasters, Boise, ID) is secured
by a Mortgaged Property to which regional groundwater contamination originating
from an offsite source has migrated. The responsible owner of the offsite
source property is currently operating a groundwater remediation system
partially located on an adjacent property and is otherwise responsible for all
required investigation and remediation under a Consent Order from the State of
Idaho. Additionally, the Phase I ESA for each of the Mortgage Loan Control #134
(Snowville Shopping Center, Parma, OH) and Mortgage Loan Control #196 (Burkey
Apartments, Bellevue, PA) identified presumed but not confirmed
asbestos-containing building materials in the related Mortgaged Property and
recommended that the related borrower obtain an asbestos-containing material
operations and maintenance plan. No evidence exists in the related Mortgage
File that the related borrower obtained such a plan.
You should understand that none of the Depositor, the Mortgage Loan
Sellers, the Master Servicer, the Special Servicer, the Trustee, any affiliate
of any of the foregoing, any environmental consultants or any other person
guarantees the absence
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<PAGE>
of or extent of any environmental condition on the Mortgaged Properties that
could result in environmental liability. The ESAs, similar studies and updates
are limited in scope. An environmental condition may not be discovered or have
its severity revealed thereby. Further, none of the aforementioned persons or
entities can give any assurance that future changes in applicable environmental
laws, the development or discovery of presently unknown environmental
conditions at the Mortgaged Properties or the deterioration of existing
conditions will not require material additional study costs or material
remediation expenses, or generate material liabilities, or otherwise put stress
on the borrower's cash flow.
Other Financing. 13 of the Mortgage Loans, representing approximately
6.76% of the Initial Pool Balance, allow the borrower, under circumstances
specified in the Mortgage Loan Documents, either to maintain an existing
subordinate mortgage encumbering the Mortgaged Property or to grant such a
subordinate mortgage in the future. Such Mortgage Loans are identified in Annex
A. The circumstances specified in the Mortgage Loan Documents typically include
one or more of the following:
(1) The senior mortgagee approves one or more of the purpose, amount, term
and amortization period of the proposed subordinate debt, together with
the identity of the subordinate lender and the terms of the subordinate
loan document.
(2) The subordinate mortgage is unconditionally subordinated to the
related Mortgage Loan Documents, and/or the subordinate lender is
prohibited from exercising any remedies against the borrower without
the senior mortgagee's consent and/or from receiving any payments on
such subordinate debt if, for the preceding 12 months, either (a) the
aggregate debt service coverage ratio for such Mortgage Loan and such
subordinate debt is less than a specified ratio (generally ranging from
1.20 to 1.30), or (b) the aggregate loan to value ratio for such
Mortgage Loan and such subordinate debt is greater than a specified
ratio (generally ranging from 70% to 80%).
(3) The subordinate debt is non-recourse.
(4) The Mortgaged Property is in acceptable economic condition as of the
effective date of the subordinate financing, such condition being
typically indicated by the following: (a) the aggregate debt service
coverage ratio for such Mortgage Loan and such subordinate debt is
equal to or greater than a specified ratio (generally 1.20), and/or (b)
the aggregate loan to value ratio for such Mortgage Loan and such
subordinate debt is less than a specified ratio (generally ranging from
70% to 80%).
(5) The conditions set forth in the Pooling and Servicing Agreement for
waiver of Due-on-Encumbrance provisions are met.
Zoning Compliance. The related Mortgage Loan Seller received assurances
that all of the improvements located upon each respective Mortgaged Property
complied in all material respects with applicable zoning laws, or that such
improvements qualified as permitted nonconforming uses. In some cases, the
assurances were limited to a representation or warranty from the related
borrower, for breach of which recourse may be had to such borrower.
Tenant Matters. With respect to 109 of the Mortgage Loans, representing
approximately 40.39% of the Initial Pool Balance, a major tenant occupies more
than 20% of the net leasable area of the related Mortgaged Property. Many of
such major tenants occupy their respective leased premises pursuant to leases
that require them to pay all applicable real property taxes, maintain insurance
over the improvements thereon and maintain the physical condition of such
improvements. With respect to Mortgage Loans secured by a retail, office or
industrial property, the related Mortgage Loan Seller generally obtained an
estoppel certificate from each major tenant in which such tenant indicated its
intention to continue in the relevant lease and that such tenant was not
presently aware of any condition or event that would allow it to terminate such
lease prior to the end of the lease term. Generally, major tenants do not have
investment-grade credit ratings. Additional information regarding major tenants
is set forth in Annex A herein.
Other Information. The following tables and Annex A set forth certain
information with respect to the Mortgage Loans and the Mortgaged Properties.
Such information was primarily derived from financial statements supplied by
the borrowers which, in most cases, are unaudited and were not prepared in
accordance with generally accepted accounting principles. "Net Operating
Income" and "Cash Flow" do not represent the net operating income and cash flow
reflected on the borrowers' financial statements. The differences between "Net
Operating Income" and "Cash Flow" determined by the Mortgage Loan Sellers and
net operating income and cash flow reflected on the borrowers' financial
statements represent the adjustments made by the related Mortgage Loan Seller
as described below, to increase the level of consistency between the financial
statements provided by the borrowers. However, such adjustments were subjective
in nature and were not made in a uniform
S-40
<PAGE>
manner nor in accordance with generally accepted accounting principles.
"Underwritten NOI" and "Underwritten Cash Flow" are pro forma numbers prepared
by the related Mortgage Loan Seller to reflect their assessment of the market
based performance of the related Mortgaged Property. None of the Depositor, the
Transferor or either of the Underwriters has made any attempt to verify the
accuracy of the financial statements supplied by the borrowers or the accuracy
or appropriateness of the adjustments discussed below to determine "Net
Operating Income," "Cash Flow," "Underwritten NOI," and "Underwritten Cash
Flow."
"Net Operating Income," "Cash Flow," "Underwritten NOI" and "Underwritten
Cash Flow" are not substitutes for, or improvements upon, net income as
determined in accordance with generally accepted accounting principles as a
measure of the results of a Mortgaged Property's operations or for cash flows
from operating activities determined in accordance with generally accepted
accounting principles as a measure of liquidity. No representation is made as
to the future net income or net cash flow of the Mortgaged Properties, nor are
"Net Operating Income," "Cash Flow," "Underwritten NOI" and "Underwritten Cash
Flow" as set forth herein intended to represent such future net income or net
cash flow.
The Mortgage Loan Sellers have had appraisals of the Mortgaged Properties
conducted in compliance with the Code of Professional Ethics and Standards of
Professional Conduct of the Appraisal Institute and the Uniform Standards of
Professional Appraisal Practice as adopted by the Appraisal Standards Board of
the Appraisal Foundation and accepted and incorporated into FIRREA. No other
person has prepared or obtained a separate appraisal or reappraisal. Another
appraiser might arrive at a different opinion of value. Any Appraised Value
might differ from the value that would be determined in a current appraisal or
the amount that would be realized upon a sale or liquidation of the Mortgaged
Property. Accordingly, you should not rely on the Loan-to-Value Ratios set
forth herein as necessarily indicative of the true Loan-to-Value Ratios.
Debt service coverage ratios are used by lenders of loans secured by
income producing property to measure the ratio of (1) cash currently generated
by a property annually that is available for debt service (that is, cash that
remains after payment of operating expenses) to (2) required annual debt
service payments. Debt service coverage ratios, however, only measure the
current, or recent, ability of a property to service mortgage debt. If a
property is not expected to have a stable operating cash flow (because, for
instance, it is subject to leases that expire during the loan term and provide
for above-market rents, or that are difficult to replace), a debt service
coverage ratio may not be a reliable indicator of a property's ability to
service the mortgage debt over the entire remaining loan term. In addition, a
debt service coverage ratio may not adequately reflect the significant amounts
of cash that a property owner may be required to expend to pay for capital
improvements, tenant improvements and leasing commissions when expiring leases
are replaced. Accordingly, we can give no assurance and make no representation
that the Debt Service Coverage Ratios accurately reflect the future ability of
a Mortgaged Property to generate sufficient cash flow to repay the related
Mortgage Loan.
For purposes of the following tables and Annex A:
(1) "Net Operating Income" or "NOI" means revenue derived from the use and
operation of the Mortgaged Property (primarily rental income) less operating
expenses (such as utilities, general administrative expenses, management
fees, advertising, repairs and maintenance) and less fixed expenses (such as
insurance and real estate taxes). NOI generally does not reflect capital
expenditures, replacement reserves, interest expense, income taxes and
non-cash items such as depreciation or amortization. The Mortgage Loan
Sellers have informed the Depositor that they have adjusted items of revenue
and expense shown on the borrower's financial statements in order to reflect
the historical operating results for a Mortgaged Property on a normalized
basis (e.g., adjusting for the payment of two years of real estate taxes in
a single year). Revenue was generally adjusted to eliminate security
deposits and to eliminate non-recurring items and items not related to the
operation of the Mortgaged Property. Expense was generally adjusted to
eliminate distributions to owners, items of expense not related to the
operation of the Mortgaged Property, non-recurring items, such as capital
expenditures, and refunds of security deposits. The Mortgage Loan Sellers
have informed the Depositor that they have made the adjustments based upon
their review of borrower financial statements, their own experience in
originating loans and, in some cases, conversations with borrowers. The
adjustments were subjective in nature and were not uniform for each
Mortgaged Property. "1996 NOI" and "1997 NOI" reflect calendar year
operations for 1996 and 1997, respectively. "1998 NOI," on the other hand,
reflects operations for one of three periods: (a) at least 8 months during
1998, annualized, (b) the trailing 12 months ending no earlier than October
1998 including at least 10 months of calendar 1998, or (c) calendar year
1998.
(2) "Cash Flow" means the NOI for the related Mortgaged Property decreased
by tenant improvements, leasing commissions, capital expenditures and other
non-recurring expenditures, as appropriate.
S-41
<PAGE>
(3) "Underwritten NOI" means the NOI for the related Mortgaged Property on
an annual basis as determined by the related Mortgage Loan Seller in
accordance with its underwriting guidelines for similar properties. Although
there are differences in the underwriting guidelines of the Mortgage Loan
Sellers, the nature and types of adjustments made by each of them were
generally the same. Revenue generally is calculated as follows. Rental
revenue is calculated using the lower of actual or market rental rates, with
a vacancy rate equal to the higher of the Mortgaged Property's historical
rate, the market rate or an assumed vacancy rate. Other revenues, such as
parking fees, percentage rents, vending income, etc. are included only if
sustainable. Revenues, such as application fees and lease termination fees,
are not included. Operating and fixed expenses generally are adjusted to
reflect the higher of the Mortgaged Property's average expenses or a
mid-range industry norm for expenses on similar properties in similar
locations plus the greater of actual management fees or an assumed market
rate management fee and a reserve for replacement of capital items.
(4) "Underwritten Net Cash Flow" for the related Mortgage Loan Seller
means the Underwritten NOI for such Mortgage Loan decreased by an amount
that the related Mortgage Loan Seller has determined to be an appropriate
allowance, based upon its underwriting guidelines, for average annual tenant
improvements and leasing commissions. CIBC's calculation is also decreased
by capital expenditures and other expenditures, as appropriate.
(5) "Appraised Value" means the appraised value of such property as
determined by an appraisal made not more than nine months prior to the
origination date of the related Mortgage Loan and reviewed by the related
Mortgage Loan Seller.
(6) "Annual Debt Service" means, for any Mortgage Loan, the current annual
debt service (including interest allocable to the payment of the related
Servicing Fee, Trustee Fee and principal) payable with respect to such
Mortgage Loan during the 12-month period commencing on the Cut-off Date
(assuming no prepayments occur).
(7) "Debt Service Coverage Ratio," "Underwritten DSCR" or "DSCR" means,
(a) the Underwritten Cash Flow for the related Mortgaged Property divided by
(b) the Annual Debt Service for such Mortgage Loan.
(8) "Loan-to-Value Ratio," "Appraised LTV" or "LTV" means the principal
balance of such Mortgage Loan as of the Cut-off Date divided by the
Appraised Value of the related Mortgaged Property.
(9) "Balloon/ARD LTV" means the Balloon Amount or ARD Amount for such
Mortgage Loan as of the Cut-off Date divided by the Appraised Value of the
related Mortgaged Property.
(10) "ARD Amount or ARD Balance" for any ARD Loan is equal to the
Scheduled Principal Balance as of the related Anticipated Repayment Date.
(11) "Balloon Amount" or "Balloon Balance" means the principal amount, if
any, due at maturity, taking into account scheduled amortization, assuming
no prepayments or defaults.
(12) "Occupancy Rate" means the percentage of net rentable area, rooms,
units, beds, pads or sites of a Mortgaged Property that are leased or
occupied. Occupancy rates are calculated based upon the most recent rent
information received by the related Mortgage Loan Seller. The "Physical
Occupancy %" and "Occupancy As of Date" for each Mortgage Loan are based
upon rent information received by the related Mortgage Loan Seller from the
related borrower or mortgage loan originator (if other than the related
Mortgage Loan Seller).
(13) "Remaining Term to Maturity" means the number of Due Dates remaining
from the Cut-off Date until the maturity of a mortgage loan (or, for ARD
Loans, through the related Anticipated Repayment Dates).
(14) "Remaining Amortization Term" for any Mortgage Loan is calculated as
the original amortization term of the related Mortgaged Loan (based upon
such Mortgage Loan's original balance, interest rate and monthly payment, in
the case of the ARD Loans, assuming prepayment in full on the related
Anticipated Repayment Date) less the number of Due Dates through and
including the Cut-off Date.
(15) The "Year Built" is based on information contained in deed records,
appraisals, engineering surveys, architectural papers, title insurance,
and/or other insurance policies.
(16) The "Year Renovated" is based upon information contained in the
appraisal of the related Mortgaged Property.
(17) All calculations of any applicable Lockout Period, Defeasance Lockout
Period, Yield Maintenance Period, Prepayment Premium or Yield Maintenance
Charge for a Mortgage Loan are based upon such Mortgage Loan's first
scheduled payment date.
S-42
<PAGE>
(18) For each Mortgage Loan secured by more than one Multifamily Property
or by more than one Congregate Care Property, the "Number of Units,"
"Units/SF," "Appraised Value," "Current Occupancy," "Underwritten NOI" and
"Underwritten Cash Flow" is the sum of the respective values for each
Mortgaged Property securing such Mortgaged Loan.
(19) "Weighted Average Maturity" means the weighted average of the
Remaining Terms to Maturity of the Mortgage Loans.
(20) Due to rounding, percentages may not add to 100% and amounts may
not add to the indicated total.
COLLATERAL CONTRIBUTORS
<TABLE>
<CAPTION>
SCHEDULED
WEIGHTED PRINCIPAL
NUMBER OF PERCENT OF AVERAGE WEIGHTED BALANCE AS OF
MORTGAGE CUT-OFF DATE INTEREST AVERAGE THE CUT-OFF
COLLATERAL CONTRIBUTORS LOANS POOL BALANCE RATE DSCR DATE
- ------------------------- ----------- -------------- ---------- ---------- --------------
<S> <C> <C> <C> <C> <C>
NRF ..................... 113 49.83% 7.127% 1.41x $462,878,238
CIBC .................... 42 29.52 7.605 1.48 274,240,616
KEY ..................... 102 20.65 7.577 1.48 191,799,490
--- ------ ------ ----- ------------
Total ................. 257 100.00% 7.361% 1.45x $928,918,344
=== ====== ====== ===== ============
</TABLE>
PAYMENT TYPES
<TABLE>
<CAPTION>
WEIGHTED SCHEDULED
WEIGHTED AVERAGE WEIGHTED PRINCIPAL
NUMBER OF PERCENT OF AVERAGE REMAINING AVERAGE WEIGHTED BALANCE AS OF
MORTGAGE CUT-OFF DATE INTEREST TERM CUT-OFF DATE AVERAGE THE CUT-OFF
PAYMENT TYPES LOANS POOL BALANCE RATE (MONTHS) LTV DSCR DATE
- --------------------------------- ----------- -------------- ---------- ----------- -------------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Amortizing then Balloon ......... 240 84.41% 7.327% 116.70 71.02% 1.44x $784,064,794
Fully Amortizing ................ 10 3.38 7.206 220.22 68.08 1.50 31,364,582
Graduated P&I Balloon ........... 1 0.55 7.050 141.00 67.41 1.32 5,122,956
Interest only, then Amortizing
then Balloon ................... 6 11.67 7.664 122.67 60.21 1.47 108,366,011
--- ----- ----- ------ ----- ---- ------------
Total ......................... 257 100.00% 7.361% 121.02 69.64% 1.45x $928,918,344
=== ====== ===== ====== ===== ==== ============
</TABLE>
S-43
<PAGE>
RANGE OF CUT-OFF DATE PRINCIPAL BALANCES
<TABLE>
<CAPTION>
WEIGHTED SCHEDULED
WEIGHTED AVERAGE WEIGHTED PRINCIPAL
NUMBER OF PERCENT OF AVERAGE REMAINING AVERAGE WEIGHTED BALANCE AS OF
RANGE OF CUT-OFF DATE MORTGAGE CUT-OFF DATE INTEREST TERM CUT-OFF DATE AVERAGE THE CUT-OFF
PRINCIPAL BALANCES LOANS POOL BALANCE RATE (MONTHS) LTV DSCR DATE
- ---------------------------------- ----------- -------------- ---------- ----------- -------------- ---------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 255,509 - 499,999 ......... 14 0.57% 8.377% 113.81 60.66% 1.52x $ 5,260,319
500,000 - 999,999 ......... 29 2.36 7.916 114.13 66.69 1.49 21,901,614
1,000,000 - 1,999,999 ......... 90 14.31 7.466 120.25 69.14 1.44 132,970,582
2,000,000 - 2,999,999 ......... 34 9.00 7.425 123.74 69.91 1.46 83,564,801
3,000,000 - 3,999,999 ......... 25 9.41 7.395 117.48 71.21 1.43 87,456,544
4,000,000 - 4,999,999 ......... 16 7.92 7.459 133.29 71.39 1.47 73,576,059
5,000,000 - 5,999,999 ......... 14 8.35 7.173 126.34 70.65 1.40 77,578,975
6,000,000 - 6,999,999 ......... 9 6.34 7.485 117.67 63.20 1.52 58,914,285
7,000,000 - 7,999,999 ......... 5 4.06 6.934 119.32 74.41 1.41 37,677,973
8,000,000 - 8,999,999 ......... 4 3.68 6.956 114.27 71.12 1.52 34,154,527
9,000,000 - 9,999,999 ......... 1 1.07 7.550 117.00 69.50 1.35 9,972,563
10,000,000 - 11,999,999 ......... 3 3.47 6.898 117.02 74.99 1.44 32,234,685
12,000,000 - 13,999,999 ......... 4 5.51 7.183 132.54 73.57 1.41 51,163,603
14,000,000 - 16,999,999 ......... 4 6.27 7.183 109.85 70.86 1.50 58,264,007
17,000,000 or greater ........... 5 17.68 7.497 119.71 66.69 1.43 164,227,809
--- ------ ----- ------ ----- ---- -------------
Total .......................... 257 100.00% 7.361% 121.02 69.64% 1.45x $ 928,918,344
=== ====== ===== ====== ===== ==== =============
</TABLE>
RANGE OF GROSS MORTGAGE RATES
<TABLE>
<CAPTION>
WEIGHTED SCHEDULED
WEIGHTED AVERAGE WEIGHTED PRINCIPAL
NUMBER OF PERCENT OF AVERAGE REMAINING AVERAGE WEIGHTED BALANCE AS OF
RANGE OF GROSS MORTGAGE CUT-OFF DATE INTEREST TERM CUT-OFF DATE AVERAGE THE CUT-OFF
MORTGAGE RATES LOANS POOL BALANCE RATE (MONTHS) LTV DSCR DATE
- -------------------------- ----------- -------------- ---------- ----------- -------------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
6.0001 - 6.2500% ......... 2 1.04% 6.186% 115.22 78.16% 1.42x $ 9,651,215
6.2501 - 6.5000 .......... 10 3.58 6.315 120.86 68.74 1.64 33,270,011
6.5001 - 6.7500 .......... 12 4.56 6.650 114.75 72.30 1.46 42,353,363
6.7501 - 7.0000 .......... 37 21.60 6.926 119.15 74.14 1.40 200,635,633
7.0001 - 7.2500 .......... 37 15.77 7.150 129.39 71.02 1.41 146,464,954
7.2501 - 7.5000 .......... 38 17.66 7.364 116.94 70.06 1.44 164,002,969
7.5001 - 7.7500 .......... 46 11.46 7.607 123.56 67.97 1.46 106,441,489
7.7501 - 8.0000 .......... 13 11.51 7.808 123.68 61.49 1.46 106,947,915
8.0001 - 8.2500 .......... 20 5.92 8.154 118.61 66.17 1.50 55,010,546
8.2501 - 8.5000 .......... 19 3.97 8.389 123.69 66.69 1.47 36,876,008
8.5001 - 8.7500 .......... 15 2.33 8.656 109.34 71.12 1.48 21,611,545
8.7501 - 9.0000 .......... 4 0.20 8.912 104.03 61.51 1.42 1,823,072
9.0001 - 9.2500 .......... 2 0.17 9.090 99.00 72.94 1.41 1,583,094
9.2501 - 9.5000 .......... 2 0.24 9.447 98.00 63.39 1.47 2,246,530
--- ------ ----- ------ ----- ---- ------------
Total .................. 257 100.00% 7.361% 121.02 69.64% 1.45x $928,918,344
=== ====== ===== ====== ===== ==== ============
</TABLE>
S-44
<PAGE>
MATURITY YEARS
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED SCHEDULED
PERCENT OF AVERAGE AVERAGE WEIGHTED PRINCIPAL
NUMBER OF CUT-OFF DATE MORTGAGE REMAINING AVERAGE WEIGHTED BALANCE AS OF
MORTGAGE PRINCIPAL INTEREST TERM CUT-OFF DATE AVERAGE THE CUT-OFF
MATURITY YEARS LOANS BALANCE RATE (MONTHS) LTV DSCR DATE
- ----------------- ----------- -------------- ---------- ----------- -------------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
2005 ............ 2 2.96% 7.376% 76.62 68.55% 1.61x $ 27,509,673
2006 ............ 3 0.81 7.226 84.17 73.26 1.37 7,531,088
2007 ............ 14 1.47 8.738 101.50 69.15 1.49 13,635,574
2008 ............ 153 57.56 7.210 113.11 71.62 1.43 534,647,998
2009 ............ 50 23.53 7.734 121.32 65.47 1.45 218,620,414
2010 ............ 17 6.89 7.051 139.43 67.98 1.46 63,995,791
2011 ............ 3 1.17 7.350 142.13 67.86 1.59 10,879,038
2012 ............ 1 0.19 7.540 159.00 74.27 1.29 1,782,361
2013 ............ 6 1.56 7.361 173.89 73.92 1.44 14,514,445
2015 ............ 1 0.47 8.380 199.00 64.37 1.56 4,360,893
2016 ............ 1 0.18 6.800 204.00 77.09 1.29 1,649,622
2017 ............ 1 1.46 7.240 224.00 73.12 1.60 13,562,941
2018 ............ 5 1.75 7.254 232.87 62.29 1.57 16,228,508
--- ------ ----- ------ ----- ---- ------------
Total ......... 257 100.00% 7.361% 121.02 69.64% 1.45x $928,918,344
=== ====== ===== ====== ===== ==== ============
</TABLE>
PROPERTY TYPES
<TABLE>
<CAPTION>
WEIGHTED SCHEDULED
WEIGHTED AVERAGE WEIGHTED PRINCIPAL
NUMBER OF PERCENT OF AVERAGE REMAINING AVERAGE WEIGHTED BALANCE AS OF
MORTGAGED CUT-OFF DATE INTEREST TERM CUT-OFF DATE AVERAGE THE CUT-OFF
PROPERTY TYPES PROPERTIES POOL BALANCE RATE (MONTHS) LTV DSCR DATE
- ---------------------------------- ------------ -------------- ---------- ----------- -------------- ---------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Office ........................... 34 25.93% 7.375% 118.68 67.04% 1.40x $ 240,877,522
Multifamily ...................... 99 24.09 7.167 116.90 73.29 1.44 223,743,123
Retail-Anchored .................. 21 15.07 7.250 132.78 73.01 1.37 139,992,537
Office/Industrial ................ 32 8.24 7.611 118.36 70.38 1.39 76,516,529
Hotel ............................ 9 7.48 7.668 111.90 65.10 1.70 69,479,123
Retail-Unanchored ................ 29 6.15 7.548 130.33 67.70 1.43 57,162,918
Industrial ....................... 16 4.52 7.298 120.57 71.33 1.44 42,032,540
Congregate Care .................. 4 2.16 6.974 113.44 72.83 1.67 20,020,851
Nursing Home ..................... 5 1.93 7.612 134.24 59.96 1.77 17,944,128
Special Purpose .................. 16 1.35 8.195 120.18 53.90 1.56 12,507,588
Retail-Single Tenant ............. 9 1.06 7.684 137.49 68.36 1.42 9,819,068
Retail-Shadow Anchored ........... 4 0.70 7.227 121.67 65.51 1.41 6,488,576
Mixed Use ........................ 2 0.62 7.091 110.81 69.29 1.57 5,798,599
Assisted Living Facility ......... 2 0.33 6.869 113.25 65.21 1.64 3,065,739
Mobile Home Park ................. 2 0.20 7.353 130.70 78.35 1.61 1,851,709
Warehouse ........................ 1 0.10 7.560 116.00 45.03 2.06 945,674
Self-Storage ..................... 1 0.07 7.970 116.00 74.68 1.23 672,122
--- ----- ----- ------ ----- ---- -------------
Total .......................... 286 100.00% 7.361% 121.02 69.64% 1.45x $ 928,918,344
=== ===== ===== ====== ===== ==== =============
</TABLE>
S-45
<PAGE>
RANGE OF CUT-OFF DATE LOAN-TO-VALUE RATIOS
<TABLE>
<CAPTION>
WEIGHTED SCHEDULED
WEIGHTED AVERAGE WEIGHTED PRINCIPAL
NUMBER OF PERCENT OF AVERAGE REMAINING AVERAGE WEIGHTED BALANCE AS OF
MORTGAGE CUT-OFF DATE INTEREST TERM CUT-OFF DATE AVERAGE THE CUT-OFF
LOAN-TO-VALUE RATIO LOANS POOL BALANCE RATE (MONTHS) LTV DSCR DATE
- ------------------------ ----------- -------------- ---------- ----------- -------------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
15.01 - 35.00% ......... 3 0.18% 7.712% 143.39 29.32% 1.90x $ 1,680,364
40.01 - 45.00 .......... 2 0.70 7.278 114.47 42.89 1.55 6,475,664
45.01 - 50.00 .......... 3 0.55 7.580 182.36 45.44 2.05 5,140,016
50.01 - 55.00 .......... 11 3.27 7.546 130.98 52.52 1.75 30,370,847
55.01 - 60.00 .......... 17 10.65 7.684 125.69 57.01 1.48 98,937,172
60.01 - 65.00 .......... 26 9.21 7.505 118.45 63.36 1.58 85,520,564
65.01 - 70.00 .......... 46 12.83 7.520 123.54 67.88 1.43 119,171,859
70.01 - 75.00 .......... 99 42.96 7.330 118.94 73.03 1.41 399,034,580
75.01 - 80.00 .......... 49 19.59 7.039 119.31 77.99 1.38 182,015,105
80.01 - 85.00 .......... 1 0.06 8.710 105.00 84.77 1.42 572,173
--- ------ ----- ------ ----- ---- ------------
Total ................ 257 100.00% 7.361% 121.02 69.64% 1.45x $928,918,344
=== ====== ====== ====== ===== ==== ============
</TABLE>
LOAN ORIGINATION YEARS
<TABLE>
<CAPTION>
WEIGHTED SCHEDULED
WEIGHTED AVERAGE WEIGHTED PRINCIPAL
NUMBER OF PERCENT OF AVERAGE REMAINING AVERAGE WEIGHTED BALANCE AS OF
MORTGAGE CUT-OFF DATE INTEREST TERM CUT-OFF DATE AVERAGE THE CUT-OFF
ORIGINATION YEARS LOANS POOL BALANCE RATE (MONTHS) LTV DSCR DATE
- ------------------- ----------- -------------- ---------- ----------- -------------- ---------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
1997 .............. 23 5.46% 7.943% 144.90 70.65% 1.51x $ 50,726,363
1998 .............. 228 90.52 7.299 119.63 69.51 1.44 840,865,747
1999 .............. 6 4.02 7.960 119.91 71.17 1.51 37,326,234
--- ----- ----- ------ ----- ---- -------------
Total ........... 257 100.00% 7.361% 121.02 69.64% 1.45x $ 928,918,344
=== ====== ===== ====== ===== ==== =============
</TABLE>
S-46
<PAGE>
RANGE OF DEBT SERVICE COVERAGE RATIOS
<TABLE>
<CAPTION>
WEIGHTED SCHEDULED
WEIGHTED AVERAGE WEIGHTED PRINCIPAL
NUMBER OF PERCENT OF AVERAGE REMAINING AVERAGE WEIGHTED BALANCE AS OF
MORTGAGE CUT-OFF DATE INTEREST TERM CUT-OFF DATE AVERAGE THE CUT-OFF
DSCR(X) LOANS POOL BALANCE RATE (MONTHS) LTV DSCR DATE
- ------------------------- ----------- -------------- ---------- ----------- -------------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
0.93 - 1.00 (1) ......... 1 0.14% 7.620% 115.00 46.72% 0.93x $ 1,268,063
1.01 - 1.15 (1) ......... 1 0.35 7.620 115.00 59.86 1.03 3,232,319
1.16 - 1.20 ............. 3 0.39 7.974 116.00 72.13 1.20 3,600,274
1.21 - 1.25 ............. 14 6.45 7.319 108.36 74.10 1.24 59,907,417
1.26 - 1.30 ............. 27 8.23 7.442 125.79 72.69 1.28 76,412,700
1.31 - 1.35 ............. 38 18.11 7.224 123.14 72.23 1.33 168,267,665
1.36 - 1.40 ............. 34 14.09 7.309 117.63 73.21 1.38 130,879,823
1.41 - 1.45 ............. 47 13.06 7.210 115.30 72.34 1.43 121,286,130
1.46 - 1.50 ............. 25 14.09 7.562 123.14 62.78 1.49 130,871,427
1.51 - 1.55 ............. 20 7.24 7.238 117.92 67.55 1.53 67,291,200
1.56 - 1.60 ............. 11 6.25 7.885 148.37 68.84 1.58 58,025,331
1.61 - 1.65 ............. 6 2.15 7.101 114.93 67.90 1.63 19,996,110
1.66 - 1.70 ............. 5 1.01 7.447 114.76 65.25 1.69 9,370,450
1.71 - 1.75 ............. 6 1.90 7.163 127.11 67.67 1.73 17,629,260
1.76 - 1.80 ............. 4 1.03 6.965 115.67 64.17 1.78 9,550,334
1.81 - 1.85 ............. 6 0.97 7.309 118.64 62.40 1.84 8,976,637
1.86 - 1.90 ............. 2 1.13 7.620 115.00 65.75 1.88 10,517,467
1.91 - 1.95 ............. 2 1.75 7.477 81.09 63.08 1.93 16,287,721
1.96 - 2.00 ............. 1 0.47 8.660 107.00 74.09 1.98 4,334,546
2.01 - 2.15 ............. 1 0.10 7.560 116.00 45.03 2.06 945,674
2.16 - 2.50 ............. 2 0.79 6.495 143.35 49.97 2.23 7,341,519
2.51 - 3.00 ............. 1 0.32 7.570 233.00 45.02 2.54 2,926,279
--- ------ ----- ------ ----- ---- ------------
Total ................. 257 100.00% 7.361% 121.02 69.64% 1.45x $928,918,344
=== ====== ===== ====== ===== ==== ============
</TABLE>
- --------
(1) Mortgage Loan Control #7.40, which has a 0.93x DSCR, and Mortgage Loan
Control #7.30, which has a 1.03x DSCR, are part of a
cross-collateralized, cross-defaulted pool. The pool has a Weighted
Average Underwritten DSCR of 1.62x.
S-47
<PAGE>
GEOGRAPHIC DISTRIBUTION OF THE MORTGAGED PROPERTIES
<TABLE>
<CAPTION>
WEIGHTED SCHEDULED
WEIGHTED AVERAGE WEIGHTED PRINCIPAL
NUMBER OF PERCENT OF AVERAGE REMAINING AVERAGE WEIGHTED BALANCE AS OF
MORTGAGED CUT-OFF DATE INTEREST TERM CUT-OFF DATE AVERAGE THE CUT-OFF
STATE OR TERRITORY PROPERTIES POOL BALANCE RATE (MONTHS) LTV DSCR DATE
- ----------------------- ------------ -------------- ---------- ----------- -------------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Alabama ............... 1 0.41% 7.800% 118.00 79.57% 1.27x $ 3,791,718
Alaska ................ 1 0.04 8.050 112.00 28.64 1.31 355,193
Arizona ............... 2 1.00 7.452 110.23 70.15 1.41 9,322,499
California ............ 18 7.36 7.082 119.46 70.83 1.41 68,391,270
Colorado .............. 10 2.04 7.352 117.45 67.68 1.47 18,928,052
Connecticut ........... 8 2.66 7.438 116.90 70.79 1.35 24,698,582
Florida ............... 20 10.35 7.263 120.98 72.40 1.38 96,137,807
Georgia ............... 16 4.73 7.529 136.44 69.64 1.42 43,927,115
Hawaii ................ 1 1.56 6.990 113.00 73.42 1.37 14,500,000
Idaho ................. 2 0.21 6.822 113.97 59.57 1.63 1,941,388
Illinois .............. 11 2.77 7.100 112.67 72.06 1.54 25,775,902
Indiana ............... 8 1.99 7.802 131.37 68.45 1.40 18,509,197
Kansas ................ 4 0.49 6.814 122.22 76.78 1.44 4,563,729
Kentucky .............. 3 3.00 8.222 117.48 70.37 1.54 27,883,244
Louisiana ............. 1 0.69 6.970 115.00 63.42 1.48 6,436,652
Maine ................. 2 2.10 7.310 111.00 71.67 1.37 19,506,924
Maryland .............. 4 1.43 7.238 114.83 74.62 1.41 13,290,425
Massachusetts ......... 16 4.20 7.111 119.86 62.29 1.63 39,022,632
Michigan .............. 12 2.62 7.374 135.52 73.32 1.48 24,346,903
Minnesota ............. 1 0.16 7.640 234.00 72.95 1.35 1,459,038
Mississippi ........... 1 0.15 7.720 118.00 75.10 1.70 1,397,707
Missouri .............. 5 2.09 6.953 121.65 73.25 1.50 19,407,405
Montana ............... 1 0.51 7.450 106.00 74.24 1.47 4,751,679
Nevada ................ 9 5.50 7.168 114.85 74.45 1.38 51,060,090
New Hampshire ......... 1 0.05 8.820 108.00 41.24 1.60 494,905
New Jersey ............ 6 1.40 7.719 120.77 67.38 1.42 12,962,782
New York .............. 24 12.36 7.623 130.02 60.89 1.47 114,799,017
North Dakota .......... 1 0.93 6.680 114.00 79.30 1.31 8,682,574
Ohio .................. 35 6.11 7.707 113.25 68.74 1.48 56,742,021
Oklahoma .............. 6 1.04 7.124 137.05 69.53 1.30 9,645,201
Oregon ................ 3 2.18 7.120 191.47 69.30 1.67 20,218,347
Pennsylvania .......... 6 1.74 7.281 114.95 71.78 1.37 16,183,431
Tennessee ............. 5 1.42 7.786 111.85 72.91 1.59 13,175,305
Texas ................. 27 11.36 7.173 110.38 72.73 1.38 105,497,855
Utah .................. 5 0.68 7.380 137.50 70.82 1.39 6,315,622
Vermont ............... 2 0.06 8.710 105.00 84.77 1.42 572,173
Virginia .............. 3 0.37 8.357 116.61 64.29 1.49 3,409,608
Washington ............ 5 2.24 7.370 89.95 65.17 1.77 20,814,351
--- ------ ----- ------ ----- ---- ------------
Total ............... 286 100.00% 7.361% 121.02 69.64% 1.45x $928,918,344
=== ====== ===== ====== ===== ==== ============
</TABLE>
S-48
<PAGE>
CHANGES IN MORTGAGE POOL CHARACTERISTICS
The foregoing description of the Mortgage Pool and the Mortgaged
Properties is based upon scheduled principal payments due on the Mortgage Loans
on or before the Cut-off Date. Before we issue the Certificates, one or more
Mortgage Loans may be removed from the Mortgage Pool if the Depositor deems
such removal necessary or appropriate or if such Mortgage Loans are prepaid. A
limited number of other mortgage loans may be included in the Mortgage Pool
before we issue the Certificates, unless including such mortgage loans would
materially alter the characteristics of the Mortgage Pool, as described in this
Prospectus Supplement. Accordingly, the characteristics of the Mortgage Loans
constituting the Mortgage Pool at the time we issue the Certificates may vary
from those described herein.
A Current Report on Form 8-K (the "Form 8-K") will be filed, together with
the Pooling and Servicing Agreement, with the Securities and Exchange
Commission within 15 days after the initial issuance of the Certificates. The
Form 8-K will be available to the Certificateholders promptly after its filing.
In the event that Mortgage Loans are removed from or added to the Mortgage Pool
as set forth in the preceding paragraph, such removal or addition will be noted
in the Form 8-K.
REPRESENTATIONS AND WARRANTIES; REPURCHASE
Each Mortgage Loan Seller will make certain representations and warranties
to the Transferor in the related Underlying Mortgage Loan Purchase Agreement.
The Transferor will make substantially similar representations and warranties
to the Depositor in the Mortgage Loan Purchase Agreement. The sole remedy
available to the Trustee or Certificateholders for a Mortgage Loan Seller's
failure to cure any breach of such representations and warranties that
materially and adversely affect the interest of the Certificateholders in such
Mortgage Loan is for the Depositor to cure or repurchase the affected Mortgage
Loan within 85 days of receiving notice of such breach or as otherwise provided
in the Pooling and Servicing Agreement. The Depositor will assign its rights
under the Mortgage Loan Purchase Agreement (and therewith the rights of the
Transferor under the Underlying Mortgage Loan Purchase Agreements) to the
Trustee for the benefit of the Certificateholders.
All references in these representations and warranties are to related
documents and entities unless otherwise indicated. The representations and
warranties are made for each Mortgage Loan as of the date specified in the
related Underlying Mortgage Loan Purchase Agreement, and include the following
(subject to certain exceptions set forth in such Underlying Mortgage Loan
Purchase Agreement):
(1) Mortgage Loan Characteristics. The information set forth in Annex A is
true and complete in all material respects. In the case of the informatiosdn set
forth with respect to each Mortgage Loan under the captions "Physical Occupancy
%," "Occupancy As of Date," "1996 NOI," "1997 NOI," "1998 NOI," "Underwritten
NOI," "Underwritten Net Cash Flow" and "Underwritten NOI DSCR", however, the
Mortgage Loan Seller represents only that such information is an accurate
reproduction or derivation, as adjusted in accordance with its customary
underwriting practices, of the information provided to it by the related
borrower. The Mortgage Loan Seller takes no responsibility for the truth,
accuracy or completeness of any such information; provided, however, that the
Mortgage Loan Seller has no actual knowledge that such information is
incorrect, inaccurate or incomplete following the reasonable and customary
investigation performed by the Mortgage Loan Seller in connection with its
origination of the Mortgage Loans.
(2) Loan Origination; Loan Underwriting. The Mortgage Loan was originated
by the Mortgage Loan Seller, an affiliate of the Mortgage Loan Seller or an
originator approved by the Mortgage Loan Seller, and the Mortgage Loan
substantially complied with all of the terms, conditions and requirements of
the Mortgage Loan Seller's underwriting standards in effect at the time of the
origination or purchase of such Mortgage Loan, subject to such exceptions as
are noted in the related Mortgage File and as the Mortgage Loan Seller approved
in the exercise of discretion consistent with that of a prudent commercial
mortgage lender.
(3) Domestic Borrower. The related borrower is an individual who is a
citizen of, or an entity organized under the laws of, a state of the United
States.
(4) Single-Purpose, Bankruptcy-Remote Entity. Each borrower of a Mortgage
Loan in excess of $25,000,000 is an entity which has represented in connection
with the origination of the Mortgage Loan, or whose organizational documents as
of the date of origination of the Mortgage Loan provide that so long as the
Mortgage Loan is outstanding it will be a single-purpose entity whose
activities and ability to incur debt are restricted by the applicable Mortgage
or the organizational documents in a manner intended to make the likelihood of
bankruptcy proceedings being commenced by or against such borrower remote, and
as to which the borrower has delivered an opinion of counsel concerning
substantive nonconsolidation and as to which the borrower has at least one
independent director. For this purpose, "single-purpose entity" shall mean a
person, other than
S-49
<PAGE>
an individual, which does not engage in any business unrelated to the related
Mortgaged Property and its financing, does not have any assets other than those
related to its interest in such Mortgaged Property or its financing, or any
indebtedness other than as permitted by the related Mortgage or the other
Mortgage Loan Documents, has its own books and records separate and apart from
any other person and holds itself out as being a legal entity, separate and
apart from any other person.
(5) Delivery of Mortgage Loan Documents. The related Mortgage Loan Seller
has or will deliver to the Transferor or its designee, within the time period
prescribed by the related Underlying Mortgage Loan Purchase Agreement, each of
the documents comprising the Mortgage File for each Mortgage Loan.
(6) Payment Current. All payments required to be made with respect to the
Mortgage Loan under the terms of the related promissory note or Mortgage up to
the closing date (including any applicable grace or cure period) specified in
the related Underlying Mortgage Loan Purchase Agreement have been made. Within
the twelve months proceeding the closing date, there had not been any
delinquency in excess of 30 days.
(7) Equity Participation or Participation Interest. The Mortgage Loan
contains no equity participation by the Mortgage Loan Seller and is a whole
loan and not a participation interest. Neither the related promissory note nor
the Mortgage provides for negative amortization or any contingent or additional
participation interest in the cash flow of the Mortgaged Property. The Mortgage
Loan Seller has no ownership interest in such Mortgaged Property or in the
borrower. Neither the Mortgage Loan Seller nor any affiliate of the Mortgage
Loan Seller has any obligation to make any capital contributions to the related
borrower under the Mortgage or any other related Mortgage Loan Document.
(8) Compliance with Applicable Laws. As of its origination, the Mortgage
Loan either complied with or was exempt from applicable state or federal laws,
regulations and other requirements pertaining to usury. To the best of the
Mortgage Loan Seller's knowledge, as of the origination of the Mortgage Loan,
the related originator complied in all material respects with the requirements
of all other federal, state or local laws applicable to the origination,
servicing and collection of the Mortgage Loan, including truth-in-lending laws,
real estate settlement procedures, equal credit opportunity and disclosure
laws. No governmental or regulatory approval or consent is required for the
sale of the Mortgage Loan by the Mortgage Loan Seller, and the Mortgage Loan
Seller has full right, power and authority to sell such Mortgage Loan. To the
extent necessary to ensure the enforceability and effective transfer of the
Mortgage Loan and the related promissory note, the originator and/or the
Mortgage Loan Seller each was qualified and appropriately licensed to conduct
business in the jurisdiction in which the Mortgaged Property is located at the
time it had possession of the related promissory note.
(9) Proceeds Fully Disbursed. The proceeds of the Mortgage Loan have been
fully disbursed. Some of the proceeds may have been disbursed into reserve
accounts ("Reserve Accounts") that are controlled by the Mortgage Loan Seller
and have been established as described in Annex A. There is no requirement for
future advances under the Mortgage Loan.
(10) Origination Expenses Paid. The borrower has paid, or has made
arrangements to pay, on a timely basis and to the appropriate person all costs,
fees and expenses incurred in connection with the origination and closing of
the Mortgage Loan, including recording costs and fees.
(11) Documents Valid. Each of the related promissory note, the Mortgage
and any other related Mortgage Loan Document is the legal, valid and binding
obligation of the borrower, the related guarantor or other party executing such
document and is enforceable in accordance with its terms. Those documents are
subject to any non-recourse or partial recourse provisions contained therein
and may also be subject to limitations to enforceability arising under
bankruptcy, insolvency, reorganization or other similar laws affecting
enforcement of creditors' rights generally, general principles of equity, and
any applicable anti-deficiency law. There is no valid offset, defense,
counterclaim or right of rescission with respect to the promissory note,
Mortgage or any other Mortgage Loan Document. The operation of any of the terms
of the promissory note or the Mortgage, or the exercise of any right
thereunder, will not render either the Mortgage or the promissory note
unenforceable or subject to any valid right of rescission, offset, counterclaim
or defense, including the defense of usury. The Mortgage Loan Seller has no
knowledge that any such right of rescission, offset, counterclaim or defense
has been asserted or is available with respect to the promissory note or the
Mortgage. Except as described in the following sentence, the Mortgage and
promissory note do not require the mortgagee to release any portion of the
Mortgaged Property except upon payment in full of the Mortgage Loan or the
exercise of a defeasance feature. In the case of certain Mortgaged Properties
securing cross-collateralized Mortgage Loans, certain Mortgage Loans secured by
multiple Mortgaged Properties, and certain Mortgage Loans secured by one or
more parcels constituting a single Mortgaged Property, the mortgagee may be
required to release a Mortgaged Property or a portion thereof upon payment of a
portion of the Mortgage Loan, determined as specified in the related Mortgage
Loan Documents.
S-50
<PAGE>
(12) Assignment of Mortgage: Note Endorsement. The assignment of mortgage
is or will be in recordable form and constitutes or will constitute the
Mortgage Loan Seller's legal, valid and binding assignment to the Transferor of
the Mortgage and any related assignment of leases, rents and profits or
assignment of assignment of leases, rents and profits. The Mortgage Loan
Seller's endorsement and delivery of the related promissory note to the
Transferor in accordance with the terms of the Underlying Mortgage Loan
Purchase Agreement constitutes or will constitute a legal, valid and binding
assignment to the Transferor of such promissory note, and together with the
Mortgage Loan Seller's execution and delivery of such assignment of mortgage to
the Transferor legally and validly conveys or will convey all right, title and
interest of the Mortgage Loan Seller in such Mortgage Loan to the Transferor.
(13) First Lien. Based on the related policy of title insurance, the
Mortgage is a legal, valid and enforceable first lien on the Mortgaged
Property. Such first lien includes all buildings and improvements on such
Mortgaged Property and all installations and mechanical, electrical, plumbing,
heating and air conditioning systems located in or annexed to such buildings,
and all additions, alterations and replacements made at any time prior to the
closing date of the Mortgage Loan. Such first lien does not include any related
personal property. The Mortgaged Property is free and clear of all encumbrances
and liens having priority over or equal to the first lien of such Mortgage,
except for:
(a) the lien of current real estate taxes and special assessments not yet
delinquent or accruing interest or penalties;
(b) covenants, conditions and restrictions, rights of way, easements and
other matters of public record as of the date of recording of such Mortgage
which do not materially and adversely (A) affect the value of the Mortgaged
Property as security for the Mortgage Loan or (B) interfere with the related
borrower's ability to make required principal and interest payments or to
make use of such Mortgaged Property for the intended purposes;
(c) leases and subleases for the Mortgaged Property which the Mortgage
Loan Seller did not require to be subordinated to the lien of the Mortgage,
provided that such leases and subleases, if any, are with entities which are
not affiliated with the Mortgage Loan Seller; and
(d) other matters which do not materially and adversely (A) affect the
value of the Mortgaged Property as security for the Mortgage Loan, or (B)
interfere with the related borrower's ability to make required principal and
interest payments or to make use of the Mortgaged Property for the intended
purposes.
(14) No Modification, Release or Satisfaction. Except by a written
instrument which has been delivered to the Transferor or its designee as part
of the Mortgage File:
(a) neither the Mortgage nor the related promissory note (including any
amendments or supplements thereto) has been impaired, waived, modified,
altered, satisfied, canceled, subordinated or rescinded;
(b) the Mortgaged Property has not been released from the lien of the
Mortgage; and
(c) the borrower has not been released from its obligations under the
Mortgage, in whole or in any part, in any manner which would materially
interfere with the security intended to be provided by such Mortgage.
(15) Defeasance. Mortgage Loans that permit defeasance provide that, after
the applicable Defeasance Lockout Period, the borrower may obtain the release
of the related Mortgaged Property, or a portion thereof, from the lien of the
related Mortgage by pledging to the Trustee noncallable U.S. Treasury or other
noncallable U.S. government obligations that provide payments on or prior to
all successive payment dates to maturity (or, in the case of the ARD Loans,
through the related Anticipated Repayment Dates) in the amounts due on such
dates and upon the satisfaction of certain other conditions. All Mortgage Loans
containing defeasance provisions have a Defeasance Lockout Period of not less
than two years after the Closing Date or include other conditions which will
ensure that the exercise of a defeasance option will not cause either REMIC to
fail to be a REMIC. Some of the Mortgage Loans require that a REMIC opinion be
provided as a condition to exercise of any defeasance option, and the Mortgage
or other related Mortgage Loan Documents generally require the satisfaction of
one or more of the following conditions prior to the defeasance of the related
Mortgaged Property:
(a) the borrower must provide the mortgagee with a prior written notice
of not less than 30 days;
(b) the borrower must pay to the mortgagee or the servicer of the Mortgage
Loan, as the case may be, an amount sufficient to purchase the government
obligations described above in this (15);
(c) the borrower must provide a written confirmation from the Rating
Agencies indicating that such defeasance will not result in a reduction,
withdrawal or qualification of the respective ratings of any outstanding
Classes of Certificates;
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<PAGE>
(d) the borrower must deliver an officer's certificate to the effect that
all of the borrower's obligations with respect to the Mortgage Loan have
been satisfied and that the Mortgage Loan is not in default; and
(e) the borrower must undertake to provide such other documents or
information as the mortgagee may reasonably request in connection with such
defeasance.
(16) No Delinquent Taxes or Assessments. All tax or govermental
assessments, or installments thereof, which were due on or prior to the date of
origination had been paid as of such date and the Mortgage Loan Seller knows of
no tax or governmental assessment, or installment thereof, which became due
thereafter and prior to the Closing Date which, if left unpaid, would be, or
might become, a lien on the Mortgaged Property having priority over the
Mortgage which has become delinquent such that (a) such tax, assessment or
installment has commenced to accrue interest or penalties, or (b) the
applicable taxing authority may commence proceedings to collect such tax,
assessment or installment.
(17) Escrow or Reserve Deposits. As of the date specified in the
Underlying Mortgage Loan Purchase Agreement: (a) the related reserve accounts,
if any, contain all escrow deposits and other payments required by the terms of
the mortgage loan documents to be held by the Mortgage Loan Seller as of the
date specified; and (b) the Mortgage Loan Seller has transferred all amounts on
deposit in the related reserve account(s) to the Transferor. All escrow
deposits required under the promissory note, the Mortgage and any other
Mortgage Loan Documents that are not being transferred to the Transferor have
been applied in accordance with their intended purposes by the mortgage loan
originator, Mortgage Loan Seller or its agent.
(18) No Third Party Advances. The Mortgage Loan Seller has not, directly
or indirectly, (a) advanced funds; (b) induced or solicited any payment from a
Person other than the borrower; or (c) to the Mortgage Loan Seller's knowledge,
received payment, from any person other than the borrower, of any amount
required under the promissory note or the Mortgage, except for interest
accruing from the date of such promissory note or the date of disbursement of
the proceeds of such Mortgage Loan, whichever is later, to the date which
precedes by 30 days the first Due Date under such promissory note.
(19) No Condemnation or Damages. To the best of the Mortgage Loan Seller's
knowledge, except for partial condemnation proceedings which do not materially
and adversely affect the value of the Mortgaged Property as security for the
Mortgage Loan, no proceedings for the total or partial condemnation of the
Mortgaged Property (a) have occurred since the date of the appraisal relied
upon in the origination of the Mortgage Loan or (b) are pending or threatened.
To the best of the Mortgage Loan Seller's knowledge, the Mortgaged Property is
free of material damage. The Mortgage requires that any related condemnation
award be applied either to the restoration of the Mortgaged Property or the
payment of the outstanding principal balance of or accrued interest on the
Mortgage Loan.
(20) No Mechanics' Liens. To the knowledge of the Mortgage Loan Seller,
the Mortgaged Property (excluding any related personal property) is free and
clear of any mechanics' or materialmen's or similar liens. No rights are
outstanding that, under law, could give rise to any such liens which are or may
be prior to, or equal with, the lien of the related Mortgage, except those
which are insured against by the lender's title insurance policy referred to in
(24) below.
(21) Title Survey: Improvements; Separate Tax Parcels. The Mortgage Loan
Seller has satisfied the requirements of the title insurance company for
deletion from the title insurance policy of the standard general exceptions for
encroachments, boundary and other survey matters and, if possible, for
easements not shown by the public records. With respect to any of the Mortgaged
Properties located in a jurisdiction (such as the State of Texas where survey
title insurance coverage is prohibited by law) in which the exception for
easements not shown by the public records could not be deleted, such exception
is customarily accepted by prudent commercial mortgage lenders in such
jurisdiction.
Except for encroachments and similar matters which are (a)
inconsequential, (b) do not materially and adversely affect the value of the
Mortgaged Property as security for the Mortgage Loan, or (c) are insured
against by the lender's title insurance policy referred to in (24) below,
surveys and/or title insurance obtained at the time of origination indicated
that (x) none of the improvements which were included for the purpose of
determining the appraised value of the Mortgaged Property in the appraisal at
the time of the origination of the Mortgage Loan lie outside the boundaries and
building restriction lines of the Mortgaged Property, and (y) no improvements
on adjoining properties encroach upon the Mortgaged Property.
Each Mortgaged Property constitutes one or more complete separate tax lots
or is subject to an endorsement under the related title insurance policy
described in (24) below.
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<PAGE>
(22) Title. The Mortgage Loan Seller has good title to and is the sole
owner and beneficial holder of the Mortgage Loan. The Mortgage Loan Seller has
full right and authority to sell and assign the Mortgage Loan, is the sole
mortgagee or beneficiary of record under the Mortgage and is transferring the
Mortgage Loan to the Transferor free and clear of any and all liens,
encumbrances, participation interests, pledges, charges or security interests
of any nature encumbering the Mortgage Loan.
(23) Compliance with Laws. To the best of the Mortgage Loan Seller's
knowledge, based upon a letter or letters from governmental authorities, a
legal opinion, an endorsement or endorsements to the related title insurance
policy, a representation of the borrower at the time of origination of the
Mortgage Loan or other information reasonably acceptable to the Mortgage Loan
Seller at the time of such origination:
(a) no improvements located on or forming a part of the Mortgaged Property
are in violation of any applicable zoning and building laws or ordinances;
(b) the Mortgaged Property complies with all other laws and regulations
pertaining to its use and occupancy excluding environmental laws (see (36)
and (37) below) and all applicable insurance requirements;
(c) the borrower has obtained all inspections, licenses, permits,
authorizations, and certificates necessary for such compliance, including
certificates of occupancy, if available; and
(d) the Mortgage Loan Seller has not received notification from any
governmental authority that the Mortgaged Property violates such laws or
regulations or is being used, operated or occupied unlawfully or that the
borrower has failed to obtain such inspections, licenses or certificates,
except any violation, unlawfulness or failure (A) which does not materially
and adversely affect the value of the Mortgaged Property as security for the
Mortgage Loan or the use for which such Mortgaged Property was intended at
the time of origination, (B) which was specifically addressed by the
appraiser in the determination of the appraised value, or (C) for which a
reserve account held for the related Mortgage Loan Seller has been
established in an amount sufficient to pay for the estimated costs to
correct such violation.
(24) Title Insurance. The lien of the Mortgage is or will be insured by an
ALTA lender's title insurance policy or another state-approved form of lender's
title insurance policy issued in an amount not less than the stated principal
amount of the Mortgage Loan after all advances of principal. The policy insures
the Mortgage Loan Seller and its successors and assigns that the Mortgage is a
valid first lien on the Mortgaged Property, subject only to exceptions
described in (13) above. If such a title insurance policy has not yet been
issued with respect to the Mortgage Loan, such a policy is currently evidenced
by a pro forma or specimen policy or by a "marked-up" commitment for title
insurance which was furnished by the related title insurance company for
purposes of closing the Mortgage Loan. The premium for such title insurance
policy has been paid in full and such title insurance policy is or will be in
full force and effect, and upon endorsement and delivery of the related
promissory note to the Transferor and recording of the assignment of mortgage
in favor of the Transferor in the applicable real estate records, such title
insurance policy will inure to the benefit of the Transferor. Such title
insurance policy (a) does not contain the standard general exceptions for
encroachments or boundary or other survey matters and for easements not shown
by the public records, other than matters which do not materially and adversely
(A) affect the value of the related Mortgaged Property as security for the
Mortgage Loan, or (B) interfere with the related borrower's ability to make
required principal and interest payments or to make use of such Mortgaged
Property for the intended purposes, and (b) only contains such exceptions for
encroachments and boundary and other survey matters as are customarily accepted
by prudent commercial mortgage lenders. The Mortgage Loan Seller and its agents
have not taken, or failed to take, any action that would materially impair the
coverage benefits of any such title insurance policy. Neither the Mortgage Loan
Seller nor any prior holder of the Mortgage has made any claim under such title
insurance policy.
(25) Insurance Related to Mortgaged Property. All improvements on the
Mortgaged Property are insured as follows:
(a) by a fire and extended perils insurance policy containing a standard
mortgagee clause naming the originator or Mortgage Loan Seller and its
successors as additional insureds covering full replacement cost in an
amount not less than the lesser of (A) the full replacement cost of all
improvements to the Mortgaged Property, and (B) the outstanding principal
balance of the Mortgage Loan, but in any event in an amount sufficient to
avoid the operation of any co-insurance provisions contained in the
insurance policy;
(b) by an insurance policy providing business interruption or rental
continuation coverage in an amount not less than the income anticipated from
12 months of operations of the Mortgaged Property;
(c) by a comprehensive general liability insurance policy in an amount
not less than $1,000,000 per occurrence; and
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<PAGE>
(d) if any material improvement on the Mortgaged Property is located in an
area identified by the Federal Emergency Management Agency as having special
flood hazards under the National Flood Insurance Act of 1968, as amended, by
a flood insurance policy providing coverage in an amount not less than the
lesser of (A) the stated principal amount of the promissory note, and (B)
the maximum amount of insurance available under the Flood Disaster
Protection Act of 1973, as amended.
As of the Closing Date the insurance premium for each such insurance
policy shall have been paid or escrowed. Each such insurance policy contains a
clause providing that it is not terminable and may not be reduced without 30
days prior written notice to the mortgagee except that, in the event of
nonpayment of insurance premiums, each such insurance policy provides for
termination upon not less than 10 days prior written notice. No such notice has
been received by the Mortgage Loan Seller. With respect to each such insurance
policy, the Mortgage Loan Seller has received a certificate of insurance or
similar document dated within the last 12 months stating that such policy is in
full force and effect. The Mortgage Loan Seller has no knowledge of any action,
omission, misrepresentation, negligence or fraud which would result in the
failure of any such insurance policy. The Mortgage Loan Documents require the
related borrower or a tenant of such borrower to maintain each such insurance
policy at its expense, but authorizes the mortgagee to maintain any such
insurance policy at the borrower's expense upon such borrower's or such
tenant's failure to do so (subject to any applicable notice or cure periods).
The related Mortgage and insurance policy require that any related insurance
proceeds, in excess of a specified amount, will be applied either to the repair
or restoration of all or part of the Mortgaged Property or to the payment of
the outstanding principal balance of or accrued interest on the Mortgage Loan.
(26) Workers' Compensation Insurance. The related Mortgage Loan Documents
generally require the borrower to maintain a workers' compensation insurance
policy in connection with any construction, renovation, alteration,
improvements or other work performed on or to any part of the Mortgaged
Property (a) in an amount required by applicable law or (b) in the case of
certain Mortgage Loans, in an amount satisfactory to the applicable mortgagee.
(27) UCC Financing Statements. One or more Uniform Commercial Code
financing statements have been filed or recorded, or have been sent for filing
or recording, wherever necessary to perfect under applicable law a security
interest in all furniture, fixtures, equipment and other personal property,
including rights under leases and all agreements affecting the use, enjoyment
or occupancy of all or any part of the Mortgaged Property, and hotel room
revenues (a) which are collateral under the Mortgage or under a security or
similar agreement executed and delivered in connection with the Mortgage Loan,
and (b) in which a security interest can be perfected by the filing of Uniform
Commercial Code financing statement(s) under applicable law.
(28) Default, Breach and Acceleration. There is no default, breach,
violation or event of acceleration existing under the Mortgage or the
promissory note. The Mortgage Loan Seller knows of no event, other than failure
to make payments due but not yet delinquent, which, with the passage of time or
with notice and the expiration of any grace or cure period, would constitute a
default, breach, violation or event of acceleration. The Mortgage Loan Seller
has no knowledge that the borrower is a debtor in any state or federal
bankruptcy or insolvency proceeding.
(29) Customary Provisions. The promissory note and the Mortgage, together
with applicable state law, contain customary and enforceable provisions which
render the rights and remedies of the holder thereof adequate for the practical
realization against the Mortgaged Property of the benefits of the security.
Such remedies include, but are not limited to, judicial or nonjudicial
foreclosure, subject to limitations to enforceability arising under bankruptcy,
insolvency, reorganization or other similar laws, by general principles of
equity or applicable anti-deficiency laws or statutes.
(30) Access Routes. Surveys, title insurance reports, the title insurance
policy or other relevant documents indicate that at the time of origination of
the Mortgage Loan, (a) the related borrower had sufficient rights with respect
to amenities, ingress and egress and similar matters identified in the
appraisal as critical to the appraised value of the Mortgaged Property, and (b)
the Mortgaged Property was receiving adequate services from public or private
water, sewer and other utilities, none of which are subject to revocation as a
result of a foreclosure or change in ownership of an adjacent property.
(31) Mortgage Loans Secured by Ground Lease but Not Fee Interest. If the
Mortgage Loan is secured in whole or in part by the related borrower's interest
as lessee under a ground lease of all or a portion of the Mortgaged Property
and the related fee interest in the portion of the Mortgaged Property covered
by the ground lease is not subject or subordinate to the lien of the Mortgage:
(a) as of the date of the closing of the Mortgage Loan, the ground lease
is in full force and effect, and the ground lease or a memorandum thereof
has been duly recorded in the applicable real estate records and (A) such
ground lease
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does not prohibit the interest of the related lessee from being encumbered
by the Mortgage, and does not restrict the use of the related Mortgaged
Property of such lessee in a manner that would interfere with the related
borrower's ability to make required interest and principal payments or to
make use of the Mortgaged Property for the intended purposes, or a separate
estoppel letter or written agreement permitting such encumbrance has been
obtained, and (B) there have been no material changes in the terms of the
ground lease that would be binding on the Mortgagee as successor to the
lessee except as set forth in written instruments which are part of the
Mortgage File;
(b) based on the related policy of title insurance, the lessee's leasehold
interest in the portion of the Mortgaged Property covered by the ground
lease is not subject to any liens or encumbrances securing indebtedness
which are superior to, or of equal priority with, the Mortgage, except for
liens of current real estate taxes and special assessments not yet
delinquent or accruing interest or penalties;
(c) the lessee's interest in the ground lease may be transferred to the
Transferor and its successors and assigns through foreclosure of the
Mortgage or conveyance in lieu of foreclosure and, thereafter, may be
transferred to another Person by the mortgagee and its successors and
assigns upon notice to, but without the consent of, the lessor, provided
that the ground lease has not been terminated and all amounts owed
thereunder have been paid. Alternatively, if any such consent is required,
either (A) it has been obtained prior to the date specified in the
Underlying Mortgage Loan Purchase Agreement, or (B) it is not to be
unreasonably withheld;
(d) the lessor is required to give notice of any default under the ground
lease by the lessee to the mortgagee either under the terms of the ground
lease or under the terms of a separate estoppel letter or written agreement;
(e) the mortgagee is entitled, under the terms of the ground lease or a
separate estoppel letter or written agreement, to receive notice of any
default by the lessee under the ground lease, and after any such notice is
entitled to not less than the time provided to the lessee under the ground
lease to cure such default, which is curable during such period before the
lessor may terminate the ground lease. All rights of the lessee under the
ground lease may be exercised by or on behalf of the mortgagee;
(f) the currently effective term of the ground lease, excluding any
extension or renewal which is not binding on the lessor, extends not less
than 10 years beyond the maturity date of the Mortgage Loan;
(g) the ground lease does not impose any restrictions on subletting which
the Mortgage Loan Seller considered to be commercially unreasonable at the
time of origination or purchase of the Mortgage Loan or that a prudent
commercial mortgage lender would have considered unreasonable at such date;
(h) to the Mortgage Loan Seller's knowledge as of the Closing Date, no
event of default has occurred and no event (other than rental or other
payments being due, but not yet delinquent) has occurred which, with the
passage of time or the giving of notice would result in a default or an
event of default under the terms of the ground lease;
(i) the lessor has agreed in a writing included in the Mortgage File that
the ground lease may not be amended, modified, cancelled or terminated
without the prior written consent of the Mortgage Loan Seller or mortgagee
and that any such action without such consent is not binding upon the
mortgagee, its successors and assigns. Unless the mortgagee fails to cure a
default of the lessee under the ground lease following notice thereof from
the lessor as set forth in (e) above, the lessor is required to enter into a
new ground lease upon termination of the ground lease for any reason,
including rejection of the ground lease in a bankruptcy proceeding;
(j) under the terms of the ground lease and the Mortgage, any related
insurance proceeds or condemnation award for other than a total or
substantially total loss or taking will be applied either to the payment of
the outstanding principal balance of and accrued interest on the Mortgage
Loan or to the repair or restoration of all or part of the Mortgaged
Property covered by the ground lease. The mortgagee or a trustee appointed
by it will have the right to hold and disburse such proceeds as such repair
or restoration progresses, except where the Mortgage Loan provides that the
related borrower or its agent may hold and disburse such proceeds with
respect to any loss or taking less than a stipulated amount not greater than
$50,000; and
(k) there are no existing mortgages on the related fee interest which can
be foreclosed upon that are not subject to the ground lease, and the
provisions of such ground lease and/or other documents related thereto and
included as part of the related Mortgage File preclude the creation of any
future mortgage on the related fee interest that can be foreclosed upon not
subject to the ground lease.
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(32) Deed of Trust. With respect to any Mortgage that is a deed of trust
or trust deed, a duly qualified trustee has either been properly designated and
currently serves or may be substituted in accordance with applicable law.
Except in connection with (a) a trustee's sale after default by the borrower,
or (b) the release of the Mortgaged Property following the payment of the
Mortgage Loan in full, no fees or expenses are payable by the Mortgage Loan
Seller or the Transferor to such trustee.
(33) Cross-Security. The Mortgaged Property is not collateral or security
for the payment or performance of (a) any other obligations owed to the
originator or Mortgage Loan Seller other than another Mortgage Loan being sold
and assigned by the Mortgage Loan Seller under the Underlying Mortgage Loan
Purchase Agreement, or (b) to the Mortgage Loan Seller's knowledge, any other
obligations owed to any Person other than the Mortgage Loan Seller. The related
promissory note is not secured by any property other than a Mortgaged Property.
(34) Assignment of Leases, Rents and Profits. Unless the Mortgaged
Property is occupied by the borrower, the mortgage loan documents include,
either in the mortgage or in a separate document, an assignment of leases,
rents and profits or an assignment of assignment of leases, rents and profits.
The recording of any assignment of leases, rents and profits incorporated
within the Mortgage or set forth in a separate mortgage loan document creates a
valid first priority assignment of, or security interest in, the right to
receive all payments, if any, due under the leases.
(35) REMIC.
(a) The Mortgage Loan is principally secured by an interest in real
property and either (A) the fair market value of such real property was at
least 80% of the adjusted issue price of the Mortgage Loan on the date of
origination or, if such Mortgage Loan has been "significantly modified"
within the meaning of Section 1001 of the Code, on the date of such
modification (unless such modification may be disregarded under Treas. Reg.
Sec. 1.860G-2(b)(3)), or (B) substantially all of the proceeds of the
Mortgage Loan were used to acquire or improve or protect an interest in real
property that, at origination, was the only security for the Mortgage Loan;
(b) The Mortgage Loan contains no equity participation by the Mortgage
Loan Seller, and neither the promissory note nor the Mortgage provides for
any contingent or additional participation interest in the cash flow or
proceeds realized on disposition of the Mortgaged Property; and
(c) the Mortgage Loan is a "qualified mortgage" as defined in, and for
purposes of, Section 860G of the Code and provides for the payments of
interest at a fixed rate or at a rate described in Treas. Reg. Sec.
1.806G-1(a)(3).
(36) Environmental Site Assessments (ESAs). Subject to the exceptions
specified herein under "Description of the Mortgage Pool--Certain
Characteristics of the Mortgage Pool--Environmental Risks," the ESAs,
transaction screen assessments, studies or updates prepared or obtained in
connection with the origination of the Mortgage Loan identified no material
adverse environmental conditions or circumstances anticipated to require any
material expenditure with respect to the Mortgaged Property, except for:
(a) those cases where such conditions or circumstances were investigated
further and based upon such additional investigation, a qualified
environmental consultant recommended no further investigation or
remediation;
(b) those cases in which an operations and maintenance plan was
recommended by the environmental consultant and such plan was obtained or an
escrow reserve established to cover the estimated costs of obtaining such
plan;
(c) those conditions in which soil or groundwater contamination was
suspected or identified and either (A) such condition or circumstance was
remediated or abated prior to the date of closing of the Mortgage Loan, (B)
a "no further action" letter was obtained from the applicable regulatory
authority, or (C) either an environmental insurance policy was obtained, a
letter of credit provided, an escrow reserve account established, or an
indemnity from the responsible party was obtained, to cover the estimated
costs of any required investigation, testing, monitoring or remediation; and
(d) those cases in which (A) a leaking underground storage tank or
groundwater contamination was identified to be located on or to have
originated from an offsite property, (B) a responsible party has been
identified under applicable law, and (C) either such condition is not known
to have affected the Mortgaged Property or the responsible party has either
received a "no further action" letter from the applicable regulatory agency,
established a remediation fund, or provided an indemnity or guaranty to the
borrower.
(37) Notice of Environmental Problem. Other than with respect to any
conditions identified in the ESAs, transaction screen assessments, studies or
updates referred to in (36), the Mortgage Loan Seller:
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(a) has not received actual notice from any federal, state or other
governmental authority of (A) any failure of the Mortgaged Property to
comply with any applicable environmental laws, or (B) any known or
threatened release of Hazardous Materials on or from the Mortgaged Property
in violation of environmental laws;
(b) has not received actual notice from the borrower that (A) such
borrower has received any such notice from any such governmental authority,
(B) the Mortgaged Property fails to comply with environmental laws, or (C)
such borrower has received actual notice that there is any known or
threatened release of Hazardous Materials on or from the Mortgaged Property
in violation of environmental laws; and
(c) has no actual knowledge that (A) the Mortgaged Property fails to
materially comply with any applicable environmental law or (B) there has
been any known or threatened release of Hazardous Materials on or from the
Mortgaged Property where such release falls outside of exceptions (a)
through (d) of (36) above.
(38) Recourse. The Mortgage Loan Documents contain standard provisions
providing for recourse against the borrower or a principal of the borrower for
damages sustained in connection with the borrower's fraud, material
misrepresentation or misappropriation of any tenant security deposits, rent,
insurance proceeds or condemnation proceeds, willful misconduct or waste
(except, with respect to waste, 68 of the Mortgage Loans, representing
approximately 17.87% of the Initial Pool Balance). The Mortgage Loan Documents
contain provisions in which the borrower or a principal of the borrower has
agreed to indemnify the mortgagee for damages resulting from violations of
Environmental Laws.
(39) Leases. Prior to the origination of the Mortgage Loan, the Mortgage
Loan Seller obtained tenant estoppel certificates from all tenants whose leases
covered more than 10% (20% if the Mortgage Loan has an original principal
balance less than or equal to $2,500,000) of the net leasable area of the
Mortgaged Property; and based upon such tenant estoppel certificates, no
material defaults with respect to any such lease existed as of the date of the
tenant estoppel certificate. The Mortgage Loan Seller has not received any
notice of the existence of any default under any such lease or of the existence
of any condition which, but for the passage of time or the giving of notice
would result in such a default.
(40) Environmental Compliance. Each Mortgage Loan contains either (a) a
representation, warranty or covenant that the borrower will not use, cause or
permit to exist on the Mortgaged Property any Hazardous Materials in violation
of environmental law, or (b) an indemnity with respect to any such violation in
favor of the Mortgage Loan Seller.
(41) Inspection. The Mortgage Loan Seller has inspected or caused an
inspection of the Mortgaged Property within the 12 months preceding the date of
the Underlying Mortgage Loan Purchase Agreement.
(42) Subordinate Debt. Except as disclosed in Annex A, the Mortgage
contains a provision for the acceleration of the payment of the unpaid
principal balance of the Mortgage Loan in the event that the borrower encumbers
the Mortgaged Property without the prior written consent of the mortgagee as
described above under "--Certain Characteristics of the Mortgage Pool--Other
Financing." Consent may be withheld in the mortgagee's sole discretion (except
in the case of 9 of the Mortgage Loans, representing approximately 4.63% of the
Initial Pool Balance, where consent may be withheld in the mortgagee's
reasonable discretion or will not be unreasonably withheld).
(43) Common Ownership. No two properties securing Mortgage Loans are
directly or indirectly under common ownership except to the extent that such
common ownership and the ownership structure have been disclosed in Annex A and
Annex C.
(44) Operating or Financial Statement. The Mortgage Loan Documents require
the borrower to furnish to the mortgagee at least annually an operating
statement with respect to the Mortgaged Property or, in the case of a
borrower-occupied Mortgaged Property, a financial statement with respect to the
borrower.
(45) Litigation. To the best knowledge of the Mortgage Loan Seller as of
the date of origination or purchase of such Mortgage Loan, and to the Mortgage
Loan Seller's knowledge thereafter, there is no pending action, suit,
proceeding, arbitration or governmental investigation with respect to the
borrower or the Mortgaged Property which if determined adversely to the
borrower would have a material adverse effect on the value of the Mortgaged
Property or the borrower's ability to continue to perform its obligations under
the Mortgage Loan.
(46) Assisted Living Loans and Nursing Home Loans. With respect to each
Assisted Living Loan and each Nursing Home Loan, the Mortgage Loan Seller
represents and warrants that each operator, manager, borrower and facility
holds, in the name of the borrower, all requisite licenses, permits, regulatory
agreements or other approvals necessary or desirable for the use and operation
of the facility, and such licenses are in full force and effect, have not been
transferred to any location
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other than the related facility, have not been pledged to secure any debt and
are held free from conflicts and restrictions that would materially impair the
intended use or operation of the facility and, to the best knowledge of the
Mortgage Loan Seller as of the date of origination or purchase of such Mortgage
Loan, and to the Mortgage Loan Seller's knowledge thereafter that:
(a) each facility operator or manager, the borrower, and the related
facility comply with all federal, state and local laws, regulations, quality
and safety standards, accreditation standards and requirements of the
applicable state department of health;
(b) the facility is in compliance with all requirements for participation
in Medicare and Medicaid, is in compliance with all insurance, reimbursement
and cost reporting requirements and has a current provider agreement which
is in full force and effect;
(c) there is no threatened or pending revocation, suspension, termination,
probation, restriction, limitation or nonrenewal affecting the related
operator, borrower or Mortgage Loan Seller or any participation or provider
agreement, and there is no threatened or pending proceeding or investigation
by any governmental agency with respect to the operator, borrower or
Mortgage Loan Seller;
(d) no such facility has committed a "Level A" or equivalent violation, no
statement of charges or deficiencies has been made or penalty imposed, and
no enforcement action has been undertaken by any governmental agency against
the facility, operator or Mortgage Loan Seller or any officer, director or
stockholder thereof, within the three years preceding the sale of such
Mortgage Loan to the Transferor;
(e) there are no current or pending Medicaid, Medicare or third-party
payor's program reimbursement audits or appeals pending with respect to the
facility;
(f) there are no current or pending Medicaid, Medicare or third-party
payor's program recoupment efforts with respect to the facility;
(g) the borrower has not pledged any accounts receivable relating to the
operations of the facility as security for any debt; and
(h) any existing management agreement with respect to the operation of the
facility is in full force and effect and no party to such agreement has
defaulted or evidenced intent to terminate or fail to renew such agreement.
Pursuant to the terms of such agreement and the relevant statutes and
regulations, in the event such agreement is terminated, the borrower, the
Trustee or any other successor manager of the facility need not obtain a
certificate of need prior to applying for or receiving a license to operate
the facility or receiving payments from Medicare or Medicaid.
(47) ARD Loans. If the Mortgage Loan is an ARD Loan, it commenced
amortizing on its initial scheduled Due Date (or, in the case of certain
interest-only Mortgage Loans, as otherwise provided in the related Notes) and
provides that:
(a) The spread used in calculating its Mortgage Rate will increase by no
more than 5% in connection with the passage of its Anticipated Repayment
Date;
(b) its Anticipated Repayment Date is of the term specified in Annex A and
Annex B following the origination of the Mortgage Loan;
(c) if it has not previously done so, the borrower is required to enter
into a "lockbox agreement" no later than the Anticipated Repayment Date,
whereby all revenue from the Mortgaged Property shall be deposited directly
into a designated account controlled by the Master Servicer; and
(d) any cash flow from the Mortgaged Property that is applied to amortize
the Mortgage Loan following its Anticipated Repayment Date shall, to the
extent such net cash flow is in excess of the Monthly Payment, be net of
budgeted and discretionary (servicer approved) capital expenditures.
(48) Due-on-Sale. Subject to certain transfer rights allowed in accordance
with certain provisions set forth in the Mortgage securing the Mortgage Loan,
the Mortgage (except in the case of the Mortgage relating to 1 of the Mortgage
Loans, representing approximately 0.13% of the Initial Pool Balance) contains a
"due-on-sale" clause that provides for the acceleration of the payment of the
unpaid principal balance of the Mortgage Loan if, without the prior written
consent of the mortgagee, the borrower transfers or sells the Mortgaged
Property.
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(49) SMMEA Qualification. Each Mortgage Loan was originated by a savings
and loan association, savings bank, commercial bank, credit union, insurance
company, or similar institution which is supervised and examined by a Federal
or State authority, or by a mortgagee approved by the Secretary of Housing and
Urban Development pursuant to Sections 203 and 211 of the National Housing Act;
provided, however, that 24 of the Mortgage Loans, representing approximately
15.57% of the Cut-off Date Pool Balance, were originated by NRF or NRFinance
before it was so approved by the Secretary of Housing and Urban Development.
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION
Prudential Securities Secured Financing Corporation, formerly known as P-B
Secured Financing Corporation (the "Depositor"), was incorporated in the State
of Delaware on August 26, 1988, as a wholly-owned, limited purpose finance
subsidiary of Prudential Securities Group Inc. (a wholly-owned indirect
subsidiary of The Prudential Insurance Company of America). The Depositor's
principal executive offices are located at One New York Plaza, 18th Floor, New
York, New York 10292. Its telephone number is (212) 778-1818, Attention: Peter
Riemenschneider. The Depositor does not have, nor is it expected in the future
to have, any significant assets.
PRUDENTIAL SECURITIES CREDIT CORP.
Prudential Securities Credit Corp. (the "Transferor"), was incorporated in
the State of Delaware on May 13, 1988, as a wholly-owned, limited purpose
finance subsidiary of Prudential Securities Group Inc. (a wholly-owned indirect
subsidiary of The Prudential Insurance Company of America). The Transferor's
principal executive offices are located at One New York Plaza, 18th Floor, New
York, New York 10292. Its telephone number is (212) 214-1000, Attention: Clay
Lebhar.
MORTGAGE LOAN SELLERS
The Depositor will purchase the Mortgage Loans to be included in the
Mortgage Pool on or before the Closing Date from the Transferor pursuant to the
Mortgage Loan Purchase Agreement. The Transferor will have purchased such
Mortgage Loans from the Mortgage Loan Sellers pursuant to the Underlying
Mortgage Loan Purchase Agreements.
NRFinance is a limited liability company organized under the laws of the
State of Missouri in 1997. It is a wholly-owned, limited purpose finance
subsidiary of NRF, which also is a Missouri limited liability company organized
in 1997. NRF is a real estate financial services company which originates
commercial and multi-family real estate loans, provides loan servicing for
large pools of commercial and multi-family real estate loans, and offers asset
management for other commercial and multi-family real estate assets. NRF has
offices in Chicago, Illinois, Jersey City, New Jersey, Kansas City, Missouri
and Burlingame, California. NRFinance was organized for the purpose of
acquiring loans originated by NRF and holding them pending securitization or
other disposition thereof. The principal offices of both NRF and NRFinance are
located at 911 Main Street, Suite 1400, Kansas City Missouri 64105.
CIBC Inc. is a wholly-owned subsidiary of Canadian Imperial Holdings Inc.
and is incorporated under the laws of Delaware. Canadian Imperial Holdings Inc.
is a wholly-owned subsidiary of CIBC Delaware Holdings Inc., also a Delaware
corporation, which is a subsidiary of Canadian Imperial Bank of Commerce, a
bank chartered under the Bank Act of Canada having its head office in the City
of Toronto, in the Province of Ontario, Canada, and licensed to do business in
the United States of America through its Agency located at 425 Lexington
Avenue, New York, New York 10017. CIBC Inc. is a commercial finance company
that originates commercial and multi-family real estate loans, purchases
participations in loans from third-party lenders and otherwise extends credit
to Fortune 1000 companies. CIBC Inc. has offices in Atlanta, Chicago, Houston,
Dallas, San Francisco, Los Angeles and New York. The principal office of CIBC
Inc. is located at 425 Lexington Avenue, New York, New York 10017.
CIBC Inc. is an affiliate of CIBC Oppenheimer Corp. ("CIBCOPCO"). Although
CIBCOPCO is an indirect, wholly owned subsidiary of Canadian Imperial Bank of
Commerce, it is solely responsible for its contractual obligations and
commitments, and any securities products offered or recommended or purchased or
sold in any client accounts by CIBCOPCO (1) will not be insured by the Federal
Deposit Insurance Corporation, (2) will not be deposits or other obligations of
Canadian Imperial Bank of Commerce, (3) will not be endorsed or guaranteed by
Canadian Imperial Bank of Commerce, and (4) will be subject to investment
risks, including possible loss of principal invested.
UNDERWRITING GUIDELINES AND PROCESS FOR NRF
Overview. National Realty Funding L.C. ("NRF") underwrites a high volume
of commercial real estate loans with principal amounts that range from $1.0
million to $15.0 million. Loans underwritten by NRF are secured by mortgages on
commercial and multifamily real estate assets located throughout the United
States.
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Mortgage Loan Underwriting Guide. NRF maintains a Mortgage Loan
Underwriting Guide (the "Guide") which sets forth its policies and procedures
for originating commercial real estate loans. While many aspects of commercial
real estate lending are subjective, and the Guide expressly provides for many
exceptions, the Guide establishes baseline standards and a generally uniform
approach to originating commercial real estate loans.
Initial Steps for Loan Origination. NRF's first step in evaluating a
prospective borrower involves reviewing the property's operating statements,
rent roll (which indicates current lease terms), copies of all leases, copies
of actual real estate tax bills as well as property and casualty bills,
financial statements of such prospective borrower and/or its principals, copies
of bank statements for the rental collection account of the property and copies
of utility bills. NRF reviews information provided by the borrower, certified
by the borrower as correct, regarding any current or past loan defaults,
bankruptcies or lawsuits and obtains applicable credit reports.
Market Analysis. Prior to property inspection, lease and sale comparables
are usually gathered from reliable sources such as appraisers, leasing agents
and real estate brokers that are active in the marketplace. NRF collects and
evaluates data regarding the local market economics including overall market
occupancy, rental rates and prices for similar properties, submarket and
neighborhood specific data.
Financial Analysis. NRF analyzes the financial condition of a prospective
borrower and its principals and conducts credit and background inquiries to
determine their credit history and uncover any potential legal and/or ethical
issues affecting or otherwise involving the prospective borrower or its
principals. NRF also contacts the respective credit references provided by the
borrower.
Property Analysis. NRF conducts an analysis of the real estate collateral
for each originated or purchased loan to try to reasonably project the
property's future cash flows. Using a proprietary cash flow model, NRF attempts
to determine an appropriate loan to value ratio ("LTV") for a prospective
borrower and the impact that principal and interest payments in respect of the
new loan would have on the property's debt service coverage ratio ("DSCR"). NRF
is required to determine the LTV of the mortgage loan as of the date of
origination based on the value set forth in the related appraisal conducted as
described below under "--Appraisals."
NRF's mortgage officers analyze property data including, in most
instances, building size, age, land area, number of units, amenities, ceiling
height, number of loading docks, tenants, lease expiration, rental rates,
credit worthiness of major tenants, rollover exposure and expense
reimbursements. Historical financial performance of the property may also be
evaluated.
NRF incorporates analysis of the foregoing to forecast the revenues and
the expenses for each property. Mortgage officers pay close attention to any
reasonably identifiable irregular or non-recurring costs such as tenant
improvements and leasing commissions to measure the potential impact of such
expenses on a borrower's ability to service its debt.
The following table highlights NRF's underwriting guidelines, subject to
certain exceptions, for minimum DSCR and maximum LTV ratios for various
property types. These guidelines are as follows:
<TABLE>
<CAPTION>
PROPERTY TYPE MINIMUM DSCR(X) MAXIMUM LTV
- ------------------------------------------ ----------------- ------------
<S> <C> <C>
Multifamily ....................... 1.20 80%
Mobile Home Park .................. 1.20 80%
Assisted Living Facility .......... 1.20 75%
Anchored Retail ................... 1.25 75%
Unanchored Retail ................. 1.30 75%
Industrial ........................ 1.25 75%
Office ............................ 1.25 75%
Congregate Care ................... 1.25 75%
Nursing Homes ..................... 1.30 75%
Self-Storage ...................... 1.30 70%
Hospitality ....................... 1.40 70%
</TABLE>
In addition to guidelines for DSCR and LTV, there are guidelines relating
to the amortization of the loan with specific requirements based on property
type and property age.
Site Inspection. A mortgage officer personally inspects the property
securing a loan and attempts to meet with the prospective borrower and its
principals. The mortgage officer tours the subject property, inspects tenant
spaces, evaluates the
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property's condition, and observes the surrounding area and marketplace. By
conducting a personal inspection of the competing properties and confirming the
accuracy of the property related data, NRF can efficiently evaluate the
property relative to competing properties. This comparison analysis is an
integral component in projecting the ongoing physical and financial viability
of the property.
After completing the site inspection, the mortgage officer who inspected
the property and met with the borrower and its principals develops a
presentation concerning the merits and the weaknesses of the loan, including a
consideration of any corresponding mitigating factors. This loan presentation
generally involves the following:
(1) overview of the loan request with requirements and exceptions;
(2) description of the collateral;
(3) description of the market and neighborhood;
(4) photographs, description and comparative analysis of 4 lease and 4
sale comparables;
(5) description of any major tenants in the property with pertinent
financial data;
(6) description of the borrowing entity, the principals and their
financial condition;
(7) photographs of the property which often includes an aerial photograph;
and
(8) comparison of stabilized economics with historicals and an explanation
of the stabilized numbers.
The loan officer distributes the mortgage loan presentation to NRF's
credit committee and to Prudential Securities Credit Corp., as NRF's warehouse
lender. Prior to the issuance of any binding commitment, NRF's loan committee
and Prudential Securities Credit Corp. must approve and agree upon all
substantive terms of the proposed loan.
Generally, NRF approves and commits loans subject to receipt and review of
third party reports. These reports consist of an appraisal, a property
condition report and a Phase I environmental report.
Appraisals. NRF requests bids from local or regional appraisers on an "as
needed" basis. Appraisers must be state certified and NRF's appraisals are
generally prepared by Members of the Appraisal Institute. Appraisals must be
prepared in conformity with the requirements of the Code of Professional
Ethics, the Standards of Professional Appraisal Practice as adopted by the
Appraisal Standards Board of the Appraisal Foundation and accepted and
incorporated into FIRREA. A mortgage officer reviews the final loan appraisal.
Property Condition Reports. NRF orders property condition reports from
third party agents. Bids are typically requested from several engineering
firms. The engineer examines the entire property and provides a report of all
property characteristics. The report outlines immediate repairs necessary to
remedy any deferred maintenance as well as a schedule of anticipated capital
repair expenditures over the life of the loan. NRF policy stipulates that
should the immediate property repairs exceed $10,000 in aggregate, the repairs
must be made prior to loan closing. If the repairs are not completed prior to
loan closing, NRF establishes an escrow account and requests a deposit of 125%
of the estimated cost to be held until the repairs are completed. NRF compares
its internal annual capital repair estimates to that of the engineer and
applies the higher amount to the model which forecasts the property's
economics.
Phase I Environmental Reports. McRoberts and Associates, a Kansas City
based environmental law firm, orders all Phase I environmental site assessments
on behalf of NRF. All firms that prepare site assessments must meet
requirements as to experience, knowledge of local or regional issues and
insurance policy issues. McRoberts and Associates reviews all reports with
regard to adequacy of the report as well as recommendations for further
investigation or issues raised in the report.
Should the Phase I report conclude that additional investigation is
necessary, McRoberts and Associates prepares the scope of work for the testing
and solicits bids. McRoberts and Associates reviews the test results and
consults with NRF's loan closing personnel to determine the extent of any
environmental risk.
In those instances where NRF requires environmental insurance, McRoberts
and Associates assists NRF with regard to review and negotiation of the policy.
Loan Closing. An NRF executive vice-president and NRF's in-house counsel
manage the loan closing process and supervise the activities of NRF's loan
closing coordinators. The closing coordinators collect and analyze (with the
assistance,
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when requested by the closing coordinators, of in-house counsel, NRF mortgage
officers and executives, and outside counsel) such items as tenant estoppels,
zoning letters and borrower formation documents. NRF's outside counsel reviews
the title insurance commitment and survey and prepares most of the loan
documents including modifications required for the specific state in which the
property is located. A title company completes the loan closing process.
102 of the Mortgage Loans sold by NRFinance to the Transferor were
originated by Key Bank National Association. In the related Underlying Mortgage
Loan Purchase Agreement, NRFinance has represented and warranted that such
Mortgage Loans were originated pursuant to underwriting guidelines and
procedures substantially similar to those utilized by NRF and NRFinance in
their originations of mortgage loans.
UNDERWRITING GUIDELINES AND PROCESS FOR CIBC
CIBC Inc. is an originator of Mortgage Loans which has developed a
detailed set of underwriting guidelines and procedures. Whether originated
directly by CIBC Inc. or purchased from another originator, each loan is
subject to an identical set of underwriting guidelines and procedures
prescribed by CIBC Inc. including, but not limited to, a full review by an
independent credit officer (see below for details). In some instances, one or
more provisions of the guidelines may have been waived or modified where it was
determined not to adversely affect the value of a Mortgage Loan in any material
respect.
Property Analysis. CIBC Inc. performs a site inspection to evaluate the
location and quality of each mortgaged property. Such inspection includes an
evaluation of functionality, design, attractiveness, visibility, and
accessibility, including convenience to major thoroughfares, transportation
centers, employment sources, retail areas and educational or recreational
facilities. The mortgage loan originator also is required to assess the
submarket in which the property is located to evaluate competitive or
comparable properties, demand generators, additions to supply and market
trends. The mortgage loan originator is required to evaluate the property's
age, physical condition, operating history, lease and tenant mix, and
management. All site inspections are performed by CIBC Inc. personnel and
documented in each loan file with a site inspection form.
Cash Flow Analysis. CIBC Inc. reviews operating statements provided by the
mortgagor and to make adjustments in order to determine the debt service
coverage ratio ("DSCR"). See "Description of the Mortgage Pool--Certain
Characteristics of the Mortgage Loans" herein. In most cases, CIBC Inc. also
engages a reputable, third-party accounting firm to review operating statements
and confirm historical operating data. All operating statements are required to
be certified by the borrower as to accuracy and completeness.
Appraisal and Loan-to-Value Ratio. CIBC Inc. obtains a current,
independent appraisal in connection with the origination of the mortgage loans.
Each such appraisal must be in compliance with the Code of Professional Ethics
and Standards of Professional Conduct of the Appraisal Institute and the
Uniform Standards of Professional Appraisal Practice as adopted by the
Appraisal Standards Board of the Appraisal Foundation and accepted and
incorporated into FIRREA. The mortgage loan originator is required to determine
the loan-to-value ratio ("LTV") of the mortgage loan at the date of origination
based on the value set forth in the appraisal.
Evaluation of Borrower. CIBC Inc. evaluates the mortgagor and its
principals with respect to credit history and prior experience as an owner and
operator of commercial real estate properties. The evaluation generally is to
include obtaining and reviewing personal financial statements, a credit report
or other reliable indication of the mortgagor's financial capacity, obtaining
and verifying credit references and/or business and trade references, and
obtaining and reviewing certifications provided by the mortgagor as to prior
real estate experience and current contingent liabilities. Finally, although
the mortgage loans generally are non-recourse in nature, in the case of
substantially all mortgage loans, the mortgagor and certain principals thereof
are required to assume legal responsibility for liabilities relating to fraud,
misrepresentation, misappropriation of funds, breach of environmental or
hazardous waste requirements or unauthorized transfer of title to the property.
CIBC Inc. evaluates the financial capacity of the borrower and such principals
to meet any obligations that may arise with respect to such liabilities.
Environmental Site Assessments. At origination, CIBC Inc. obtains or
updates an ESA or similar study for each mortgaged property prepared by a
qualified environmental firm approved by CIBC Inc. CIBC Inc. requires that
every ESA is reviewed by (1) experienced CIBC Inc. personnel, and (2) an
experienced environmental attorney employed by a reputable, third-party law
firm. Based on such reviews, CIBC Inc. has informed the Depositor that, except
for the exceptions described herein under "Description of the Mortgage Loan
Pool--Certain Characteristics of the Mortgage Pool--Environmental Risks," the
ESAs, studies or updates do not identify any material adverse environmental
conditions or
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circumstances anticipated to require any material expenditure with respect to
any Mortgaged Property. Such information is based upon the ESAs, studies or
updates and is not independently verified by CIBC Inc., the Depositor, the
Transferor, or any of their respective affiliates.
Physical Assessment Report. At origination, CIBC Inc. obtains a physical
assessment report ("PAR") for each mortgaged property prepared by a qualified
structural engineering firm approved by CIBC Inc. CIBC Inc. requires that every
PAR is reviewed by experienced CIBC Inc. personnel to verify that the property
is reported to be in satisfactory physical condition, and to determine the
anticipated cost of necessary repair, replacement and major maintenance or
capital expenditure needs over the term of the mortgage loan. In substantially
all cases in which the PAR identifies material repairs or replacements needed
immediately, CIBC Inc. requires the mortgagor to carry out such repairs or
replacements prior to the origination of the mortgage loan, or to place
sufficient funds in escrow at the time of origination of the mortgage loan to
complete such repairs or replacements within not more than twelve months.
Title Insurance Policy. CIBC Inc. requires each mortgagor to provide a
title insurance policy for each mortgaged property. CIBC Inc. and CIBC Inc.'s
legal counsel review the title insurance policy, which must satisfy the
following requirements:
(1) approval by CIBC Inc. of the financial condition of the title insurer
or reinsurer (unless the insurer or the reinsurer is on a list of insurers or
reinsurers preapproved by the mortgage loan originator);
(2) the policy must be written by a title insurer licensed to do business
in the jurisdiction where the mortgaged property is located;
(3) the policy must be in an amount equal to the original principal
balance of the mortgage loan;
(4) the protection and benefits must run to the mortgagee and its
successors and assignees;
(5) the policy should be written on a standard policy form of the American
Land Title Association or an equivalent policy form promulgated in the
jurisdiction where the mortgaged property is located; and
(6) the legal description of the mortgaged property in the title policy
must conform to that shown on the survey of the mortgaged property, where such
a survey has been required.
Property Insurance. CIBC Inc. requires each mortgagor to provide
certificates of required insurance with respect to the mortgaged property. CIBC
Inc. and its third-party insurance consultant review each property insurance
policy, which must satisfy, among other things, the following requirements:
(1) commercial general liability insurance for bodily injury or death and
property damage;
(2) an "All Risk of Physical Loss" policy or standard extended coverage
policy;
(3) if applicable, boiler and machinery coverage;
(4) if the mortgaged property is located in a flood hazard area, flood
insurance; and
(5) such other coverage (including in each case other than where a major
tenant is self-insured or has independently procured similar insurance, rental
loss insurance and business interruption insurance) as the mortgage loan
originator may require based on the specific characteristics of the mortgaged
property.
Underwriting Process. In general, the underwriting process begins with the
mortgage loan originator receiving a loan submission from a prospective
mortgagor or independent mortgage banker working on behalf of a prospective
mortgagor. Upon receiving a loan submission, the mortgage loan originator
typically will perform a preliminary cash flow analysis and a general
evaluation of the loan submission. If the mortgage loan originator decides to
offer the prospective mortgagor financing based on the preliminary analysis,
the mortgage loan originator provides the prospective mortgagor with a loan
application, which is first approved by CIBC Inc.'s senior underwriter. Upon
acceptance of the terms, the prospective mortgagor must submit an executed
application and deposit an application fee with CIBC Inc. Upon receipt of the
loan application, experienced CIBC Inc. personnel will perform a more detailed
cash flow analysis and conduct a physical inspection of the mortgaged property.
After the loan evaluation is completed, the prospective loan is submitted to
independent credit officers for approval. Such approval is subject to adherence
to CIBC Inc.'s credit policy guidelines which includes, among other things,
minimum debt service coverage, maximum loan-to-value based upon a current
appraisal, a qualitative review of third-party reports, property quality and
borrower quality. Upon approval of the prospective loan, CIBC
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Inc. may issue a loan commitment to the prospective mortgagor. Such commitments
are subject to satisfaction of certain requirements such as legal due
diligence, insurance review and cash escrows for repairs identified by the
related physical site assessments and for pending lease expirations. At
closing, the mortgagor must provide satisfactory title insurance, evidence of
satisfaction of zoning requirements, evidence of satisfactory property
insurance and satisfactory legal opinions of mortgagor's counsel, and must
satisfy other closing requirements typically required by institutional lenders.
CIBC Independent Credit Committee Process: Each mortgage loan is reviewed
and must be approved by (1) the CIBC Real Estate Finance Department
underwriting committee and (2) an independent credit committee comprised of
experienced Canadian Imperial Bank of Commerce risk management officers that
are not answerable to the CIBC Real Estate Finance Department and whose
compensation is not related to the CIBC Real Estate Finance Department.
DESCRIPTION OF THE CERTIFICATES
GENERAL
The Certificates will be issued pursuant to the Pooling and Servicing
Agreement and will consist of 16 Classes to be designated as the Class A-1,
Class A-2, Class A-EC, Class B, Class C, Class D, Class E, Class F, Class G,
Class H, Class J, Class K, Class L, Class M, Class R-I and Class R-II
Certificates. Only the Class A-1, Class A-2, Class B, Class C, Class D and
Class E Certificates are offered hereby. The initial Certificate Balance of
each Class of Offered Certificates is expected to be the balance set forth on
the cover of this Prospectus Supplement, subject to a permitted variance of
plus or minus 5%, depending on the aggregate principal balance of the Mortgage
Loans actually transferred to the Trust Fund.
The Pooling and Servicing Agreement will be included as part of the Form
8-K to be filed with the Commission within 15 days after the Closing Date. See
"The Pooling and Servicing Agreement" herein and "Description of the
Certificates" and "Servicing of the Mortgage Loans" in the Prospectus for
important additional information regarding the terms of the Pooling and
Servicing Agreement and the Certificates.
The Certificates represent in the aggregate the entire beneficial
ownership interest in a Trust Fund consisting primarily of:
(1) the Mortgage Loans, all scheduled payments of interest and principal
due after the Cut-off Date (whether or not received) and all payments under and
proceeds of the Mortgage Loans received after the Cut-off Date (exclusive of
payments of principal and interest due on or before the Cut-off Date);
(2) any REO Property;
(3) such funds or assets as from time to time are deposited in the
Collection Account, the Distribution Account and any account established in
connection with REO Properties (an "REO Account");
(4) the rights of the mortgagee under all insurance policies with respect
to the Mortgage Loans;
(5) the Depositor's rights and remedies under the Mortgage Loan Purchase
Agreement, including rights with respect to enforcement of repurchase
obligations of the Mortgage Loan Sellers in connection with any breaches of
representations and warranties concerning the Mortgage Loans pursuant to the
Underlying Mortgage Loan Purchase Agreements; and
(6) all of the related mortgagee's right, title and interest in the
Reserve Accounts.
The Certificate Balance ("Certificate Balance") of any Class of
Certificates outstanding at any time represents the maximum amount that the
holders thereof are entitled to receive as distributions allocable to principal
from the cash flow on the Mortgage Loans and the other assets in the Trust
Fund. The respective Certificate Balance of each Class of Certificates will in
each case be reduced by amounts actually distributed on such Class that are
allocable to principal and by any Realized Losses allocated to such Class. The
Class A-EC Certificates are interest only Certificates, have no Certificate
Balances and are not entitled to distributions in respect of principal.
DISTRIBUTIONS
Method, Timing and Amount. Distributions on the Regular Certificates will
be made on the 15th day of each month or, if such day is not a Business Day,
then on the next succeeding Business Day, commencing on April 16, 1999,
provided that no such day shall be fewer than four Business Days after the
related Determination Date (each, a "Distribution Date"). All distributions
(other than the final distribution on any Certificate) will be made by the
Trustee to the persons in whose names
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the Certificates are registered at the close of business on the last Business
Day of the month preceding the month in which such Distribution Date occurs
(the "Record Date"). Such distributions will be made (1) by wire transfer of
immediately available funds to the account specified by the related
Certificateholder at a bank or other entity having appropriate facilities for
such transfer, if such Certificateholder (a) is DTC or its nominee or (b)
provides the Trustee with wiring instructions no less than five Business Days
prior to the related Record Date and is the registered owner of Certificates
with an aggregate Certificate Balance or Notional Balance of at least $25,000,
or otherwise (2) by check mailed to such Certificateholder. The final
distribution on any Certificate will be made in like manner, but only upon
presentation or surrender of such Certificate at the location specified in the
notice to the holder thereof of such final distribution. The "Class A-EC
Notional Balance" as of any date is equal to the sum of the Certificate
Balances of the Class A-1, Class A-2, Class B, Class C, Class D, Class E, Class
F, Class G, Class H, Class J, Class K, Class L, and Class M Certificates.
The aggregate distribution to be made on the Regular Certificates on any
Distribution Date will equal the Available Funds. The "Available Funds" for a
Distribution Date will be the sum of all previously undistributed Monthly
Payments or other receipts on account of principal of and interest on or in
respect of the Mortgage Loans (including Unscheduled Payments and Net REO
Proceeds, if any) received by the Master Servicer during the related Collection
Period, all P&I Advances made in respect of such Distribution Date, and all
other amounts required to be placed in the Collection Account by the Master
Servicer (including any Appraisal Reduction Excess Collections). "Available
Funds" does not include the following:
(1) the Trustee Fee payable for the related Collection Period (which
amount will be paid to the Trustee prior to any other allocations or
distributions on each Distribution Date);
(2) amounts used to reimburse the Master Servicer or the Trustee, as
applicable, for previously unreimbursed Advances and interest thereon;
(3) the Servicing Fee, Special Servicing Fee, Disposition Fee, Workout Fee
and other compensation due to the Master Servicer, Special Servicer and/or
Special Sub-Servicer with respect to each Mortgage Loan;
(4) all amounts used to pay late fees, late charges and similar fees,
"insufficient funds" check charges, loan modification fees, extension fees,
loan service transaction fees, demand fees, beneficiary statement charges,
assumption fees and similar fees, which the Master Servicer, the Special
Servicer and/or the Special Sub-Servicer, as applicable, is entitled to retain
as additional servicing compensation;
(5) all amounts representing scheduled Monthly Payments due after the Due
Date in the related Collection Period (such amounts to be treated as received
on the Due Date when due);
(6) other amounts payable to the Master Servicer, the Special Servicer
and/or the Special Sub-Servicer in respect of unpaid servicing compensation
from:
(a) amounts received in connection with the sale or liquidation of
Specially Serviced Mortgage Loans, by foreclosure, trustee's sale or
otherwise from the proceeds thereof;
(b) amounts (other than Insurance Proceeds) received in connection with
the taking of a Mortgaged Property by exercise of the power of eminent
domain or condemnation ("Condemnation Proceeds," and together with amounts
referred to in clause (a), "Liquidation Proceeds"); or
(c) proceeds of insurance policies to the extent not applied to the
restoration of the Mortgaged Property or released to the borrower in
accordance with the normal servicing procedures of the Master Servicer or
the related sub-servicer and the terms and conditions of the related
Mortgage and promissory note ("Insurance Proceeds");
(7) all amounts representing reimbursable expenses of the Master Servicer,
the Special Servicer and/or the Special Sub-Servicer or the Trustee and amounts
permitted to be retained by the Master Servicer, the Special Servicer and/or
the Special Sub-Servicer or withdrawn by the Master Servicer from the
Collection Account to cover such expenses;
(8) Prepayment Premiums, Yield Maintenance Charges and Excess Interest
received in the related Collection Period, which are to be distributed
separately as described herein;
(9) interest or investment income with respect to funds on deposit in the
Collection Account, Reserve Accounts or Advance Payment Account; and
(10) Default Interest received in the related Collection Period with
respect to a Mortgage Loan that is in default with respect to its Balloon
Payment.
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"Class Interest Distribution Amount" with respect to any Distribution Date
and each class of Certificates other than the Residual Certificates is the
amount of interest accrued on the Certificate Balance or Notional Balance of
such Class during the related Interest Accrual Period at the applicable
Pass-Through Rate.
Allocations of Appraisal Reductions and Realized Losses on the
Distribution Date occurring during any Interest Accrual Period will be deemed
to have been made as of the first day of such Interest Accrual Period for
purposes of determining any Class Interest Distribution Amount. Notwithstanding
the foregoing, the Class Interest Distribution Amount for each Class of
Certificates otherwise calculated as described above will be reduced by such
Class' pro rata share of any Prepayment Interest Shortfall not offset by
Prepayment Interest Surplus (determined pro rata according to each Class
Interest Distribution Amount without regard to this sentence).
"Class Interest Shortfall" for any Class of Certificates on any
Distribution Date means the excess, if any, of the amount of interest required
to be distributed to the holders of such Class of Certificates on such
Distribution Date over the amount of interest actually distributed to such
holders. No interest will accrue on unpaid Class Interest Shortfalls.
The "Collection Period," with respect to a Distribution Date, is the
period beginning on the day following the Determination Date in the month
preceding the month in which such Distribution Date occurs (or, in the case of
the Distribution Date occurring in April 1999, on the day after the Cut-off
Date) and ending on the Determination Date in the month in which such
Distribution Date occurs.
The "Default Rate," with respect to any Mortgage Loan, is the annual rate
at which interest accrues on such Mortgage Loan following any event of default
on such Mortgage Loan, including a default in the payment of a Monthly Payment
or a Balloon Payment.
The "Interest Accrual Period" with respect to any Distribution Date is the
calendar month preceding the month in which such Distribution Date occurs.
Interest for each Interest Accrual Period is calculated based on a 360-day year
consisting of twelve 30-day months.
The "Monthly Payment" with respect to any Mortgage Loan for any
Distribution Date (other than any REO Mortgage Loan) is the scheduled monthly
payment of principal and interest, excluding any Balloon Payment, that is
payable by the related borrower on the related Due Date. The Monthly Payment
with respect to an REO Mortgage Loan for any Distribution Date is the monthly
payment that would otherwise have been payable on the related Due Date had the
related Mortgage Loan not been discharged (after giving effect to any extension
or other modification), determined as set forth in the Pooling and Servicing
Agreement.
The "Net Mortgage Rate" for each Mortgage Loan is the Mortgage Rate for
such Mortgage Loan in the absence of a default and exclusive of Excess
Interest, minus the related Servicing Fee Rate and the Trustee Fee Rate.
"Net REO Proceeds," with respect to any REO Property and any related
Mortgage Loan, are all revenues received by the Special Servicer with respect
to such REO Property or REO Mortgage Loan that are not Liquidation Proceeds,
net of any insurance premiums, taxes, assessments and other costs and expenses
permitted to be paid from the related REO Account pursuant to the Pooling and
Servicing Agreement.
The "Pass-Through Rate" for any Class of Regular Certificates is the per
annum rate at which interest accrues on the Certificates of such Class during
any Interest Accrual Period, and is set forth under "Summary" herein.
The "Pooled Principal Distribution Amount" for any Distribution Date will
be equal to the sum (without duplication) of:
(1) the principal component of all scheduled Monthly Payments (other than
Balloon Payments) that become due on the Mortgage Loans during the related
Collection Period regardless of whether received;
(2) the principal component of all Assumed Scheduled Payments, as
applicable, deemed to become due during the related Collection Period with
respect to any Balloon Loan that is delinquent in respect of its Balloon
Payment regardless of whether received;
(3) the Scheduled Principal Balance of each Mortgage Loan that was, during
the related Collection Period, repurchased from the Trust Fund in connection
with the breach of a representation or warranty or an early termination of the
Trust Fund as described under "Early Termination";
(4) the portion of Unscheduled Payments allocable to principal of any
Mortgage Loan that was liquidated during the related Collection Period;
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(5) the principal component of any Balloon Payment received during the
related Collection Period;
(6) all Principal Prepayments received in the related Collection Period;
and
(7) all full or partial recoveries in respect of principal, including
Insurance Proceeds, Liquidation Proceeds, Condemnation Proceeds and Net REO
Proceeds.
"Prepayment Interest Shortfall" means the amount of interest a borrower is
not required to pay or does not pay because of a Principal Prepayment thereby
made during any Collection Period relative to the amount of interest that would
have accrued on the Mortgage Loan during such Collection Period in the absence
of such Principal Prepayment. Prepayment Interest Shortfalls not offset as
provided in the following two sentences will be allocated to each Class of
Certificates pro rata based on such Class's Class Interest Distribution Amount
(without taking into account the amount of Prepayment Interest Shortfalls to
such Class on the relevant Distribution Date). Any Prepayment Interest
Shortfall with respect to a Distribution Date will be offset first by the
amount of any Prepayment Interest Surplus and then up to an amount equal to the
aggregate Servicing Fees to which the Master Servicer would otherwise be
entitled on such Distribution Date. If the Master Servicer and the Special
Servicer or the Special Sub-Servicer are the same person, any remaining
Prepayment Interest Shortfall after the application of the prior sentence will
be offset by the aggregate Special Servicing Fees, Workout Fees and Disposition
Fees to which the Special Servicer would otherwise be entitled on such
Distribution Date.
"Prepayment Interest Surplus" with respect to any Principal Prepayment
means the amount by which (a) interest received from the related borrower in
respect of such Mortgage Loan during such Collection Period exceeds interest at
the related Net Mortgage Rate on the Scheduled Principal Balance of such
Mortgage Loan that would have been due in the absence of such Principal
Prepayment. The Master Servicer will be entitled to retain any Prepayment
Interest Surplus as additional servicing compensation to the extent not
required to offset Prepayment Interest Shortfalls as described in the preceding
paragraph.
"Prepayment Premiums" are payments received on a Mortgage Loan in
connection with a Principal Prepayment thereon, calculated as a fixed
percentage of the amount of principal to be prepaid.
"Principal Prepayments" are payments of principal made by a borrower on a
Mortgage Loan that are received in advance of the scheduled Due Date for such
payments and that are not accompanied by an amount of interest representing the
full amount of scheduled interest due on any date or dates in any month or
months subsequent to the month of prepayment.
Priorities. As used below in describing the priorities of distribution of
Available Funds for each Distribution Date, the terms set forth below will have
the following meanings.
An "REO Mortgage Loan" is any Mortgage Loan as to which the related
Mortgaged Property has become an REO Property.
"Unscheduled Payments" are all Liquidation Proceeds and Insurance Proceeds
payable under the Mortgage Loans, the repurchase prices of any Mortgage Loans
that are repurchased or purchased pursuant to the Pooling and Servicing
Agreement and any other payments under or with respect to the Mortgage Loans
not scheduled to be made, including Principal Prepayments, but excluding
Prepayment Premiums, Yield Maintenance Charges and Excess Interest.
The "Weighted Average Net Mortgage Rate" for any Interest Accrual Period
is a per annum rate equal to the weighted average of the amount of interest
accrued on the Mortgage Loans at the related Mortgage Rates during the related
Interest Accrual Period, weighted on the basis of the Scheduled Principal
Balances thereof as of the first day of such Interest Accrual Period, minus the
related Servicing Fee Rate and Trustee Fee Rate.
On each Distribution Date, holders of each Class of Certificates will
receive distributions, up to the amount of Available Funds, in the amounts and
in the order of priority (the "Available Funds Allocation") set forth below:
(1) concurrently to the Class A-1, Class A-2 and Class A-EC Certificates,
pro rata based on their Class Interest Distribution Amounts, up to their Class
Interest Distribution Amounts plus any unpaid Class Interest Shortfalls
previously allocated to such Class,
(2) to the Class A-1 Certificates, in reduction of the Certificate Balance
thereof until reduced to zero, the Pooled Principal Distribution Amount for
such Distribution Date;
(3) to the Class A-1 Certificates, the remaining Available Funds up to the
amount of any unreimbursed Realized Losses previously allocated to such Class;
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(4) after the Certificate Balance of the Class A-1 Certificates has been
reduced to zero, to the Class A-2 Certificates, in reduction of the Certificate
Balance thereof until reduced to zero, the remaining Pooled Principal
Distribution amount;
(5) to the Class A-2 Certificates, the remaining Available Funds up to the
amount of any unreimbursed Realized Losses previously allocated to such Class;
(6) to the Class B Certificates, up to its Class Interest Distribution
Amount plus unpaid Class Interest Shortfalls previously allocated to such
Class;
(7) after the Certificate Balances of the Classes with earlier
alphabetical class designations have been reduced to zero, to the Class B
Certificates, in reduction of the Certificate Balance thereof until reduced to
zero, the remaining Pooled Principal Distribution Amount;
(8) to the Class B Certificates, the remaining Available Funds up to the
amount of any unreimbursed Realized Losses previously allocated to such Class;
(9) to the Class C Certificates, up to its Class Interest Distribution
Amount plus unpaid Class Interest Shortfalls previously allocated to such
Class;
(10) after the Certificate Balances of the Classes with earlier
alphabetical class designations have been reduced to zero, to the Class C
Certificates, in reduction of the Certificate Balance thereof until reduced to
zero, the remaining Pooled Principal Distribution Amount;
(11) to the Class C Certificates, the remaining Available Funds up to the
amount of any unreimbursed Realized Losses previously allocated to such Class;
(12) to the Class D Certificates, up to its Class Interest Distribution
Amount plus unpaid Class Interest Shortfalls previously allocated to such
Class;
(13) after the Certificate Balances of the Classes with earlier
alphabetical class designations have been reduced to zero, to the Class D
Certificates, in reduction of the Certificate Balance thereof until reduced to
zero, the remaining Pooled Principal Distribution Amount;
(14) to the Class D Certificates, the remaining Available Funds up to the
amount of any unreimbursed Realized Losses previously allocated to such Class;
(15) to the Class E Certificates, up to its Class Interest Distribution
Amount plus unpaid Class Interest Shortfalls previously allocated to such
Class;
(16) after the Certificate Balances of the Classes with earlier
alphabetical class designations have been reduced to zero, to the Class E
Certificates, in reduction of the Certificate Balance thereof until reduced to
zero, the remaining Pooled Principal Distribution Amount;
(17) to the Class E Certificates, the remaining Available Funds up to the
amount of any unreimbursed Realized Losses previously allocated to such Class;
(18) to the Class F Certificates, up to its Class Interest Distribution
Amount plus unpaid Class Interest Shortfalls previously allocated to such
Class;
(19) after the Certificate Balances of the Classes with earlier
alphabetical class designations have been reduced to zero, to the Class F
Certificates, in reduction of the Certificate Balance thereof until reduced to
zero, the remaining Pooled Principal Distribution Amount;
(20) to the Class F Certificates, the remaining Available Funds up to the
amount of any unreimbursed Realized Losses previously allocated to such Class;
(21) to the Class G Certificates, up to its Class Interest Distribution
Amount plus unpaid Class Interest Shortfalls previously allocated to such
Class;
(22) after the Certificate Balances of the Classes with earlier
alphabetical class designations have been reduced to zero, to the Class G
Certificates, in reduction of the Certificate Balance thereof until reduced to
zero, the remaining Pooled Principal Distribution Amount;
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(23) to the Class G Certificates, the remaining Available Funds up to the
amount of any unreimbursed Realized Losses previously allocated to such Class;
(24) to the Class H Certificates, up to its Class Interest Distribution
Amount plus unpaid Class Interest Shortfalls previously allocated to such
Class;
(25) after the Certificate Balances of the Classes with earlier
alphabetical class designations have been reduced to zero, to the Class H
Certificates, in reduction of the Certificate Balance thereof until reduced to
zero, the remaining Pooled Principal Distribution Amount;
(26) to the Class H Certificates, the remaining Available Funds up to the
amount of any unreimbursed Realized Losses previously allocated to such Class;
(27) to the Class J Certificates, up to its Class Interest Distribution
Amount plus unpaid Class Interest Shortfalls previously allocated to such
Class;
(28) after the Certificate Balances of the Classes with earlier
alphabetical class designations have been reduced to zero, to the Class J
Certificates, in reduction of the Certificate Balance thereof until reduced to
zero, the remaining Pooled Principal Distribution Amount;
(29) to the Class J Certificates, the remaining Available Funds up to the
amount of any unreimbursed Realized Losses previously allocated to such Class;
(30) to the Class K Certificates, up to its Class Interest Distribution
Amount plus unpaid Class Interest Shortfalls previously allocated to such
Class;
(31) after the Certificate Balances of the Classes with earlier
alphabetical class designations have been reduced to zero, to the Class K
Certificates, in reduction of the Certificate Balance thereof until reduced to
zero, the remaining Pooled Principal Distribution Amount;
(32) to the Class K Certificates, the remaining Available Funds up to the
amount of any unreimbursed Realized Losses previously allocated to such Class;
(33) to the Class L Certificates, up to its Class Interest Distribution
Amount plus unpaid Class Interest Shortfalls previously allocated to such
Class;
(34) after the Certificate Balances of the Classes with earlier
alphabetical class designations have been reduced to zero, to the Class L
Certificates, in reduction of the Certificate Balance thereof until reduced to
zero, the remaining Pooled Principal Distribution Amount;
(35) to the Class L Certificates, the remaining Available Funds up to the
amount of any unreimbursed Realized Losses previously allocated to such Class;
(36) to the Class M Certificates, up to its Class Interest Distribution
Amount plus unpaid Class Interest Shortfalls previously allocated to such
Class;
(37) after the Certificate Balances of the Classes with earlier
alphabetical class designations have been reduced to zero, to the Class M
Certificates, in reduction of the Certificate Balance thereof until reduced to
zero, the remaining Pooled Principal Distribution Amount;
(38) to the Class M Certificates, the remaining Available Funds up to the
amount of any unreimbursed Realized Losses previously allocated to such Class;
and
(39) any remaining Available Funds shall be distributed to the Class R-I
Certificates.
Additional Master Servicer or Special Servicer compensation, interest on
Advances, extraordinary expenses of the Trust Fund and other similar items will
create a shortfall in Available Funds, which generally will result in a Class
Interest Shortfall for the class then outstanding with the latest alphabetical
class designation.
Distributions of Principal After Senior Principal Distribution Cross-Over
Date. Notwithstanding the foregoing, on each Distribution Date on and after the
Senior Principal Distribution Cross-Over Date, and on the final Distribution
Date in connection with the termination of the Trust Fund, all distributions of
principal to the Class A-1 and A-2 Certificates will be paid to holders of such
Classes of Certificates, pro rata based on their outstanding Certificate
Balances immediately prior to such Distribution Date, until the Certificate
Balance of each such Class is reduced to zero.
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The "Senior Principal Distribution Cross-Over Date" will be the first
Distribution Date on which the aggregate Certificate Balance of the Class A-1
and A-2 Certificates (before any distributions are made) exceeds the sum of (a)
the aggregate Scheduled Principal Balance of all Mortgage Loans on such
Distribution Date and (b) the portion of the Available Funds that will remain
after the required distributions of interest to be made to such classes on such
Distribution Date.
Yield Maintenance Charges and Prepayment Premiums. Yield Maintenance
Charges collected during any Collection Period will be allocated as between the
Class A-EC Certificates and all other eligible Classes based on the Base
Interest Fraction. The product of the Base Interest Fraction and Yield
Maintenance Charges will be allocated for distribution to Classes entitled to
receive principal distributions on the related Distribution Date. The product
of (a) the amount of principal distributed to each Class (other than the Class
A-EC Certificates) as a percentage of the principal distributed to all such
Classes multiplied by (b) the Base Interest Fraction and multiplied by (c) the
amount of Yield Maintenance Charges will be distributed to each such Class. The
remainder of such Yield Maintenance Charges will be distributed to the Class
A-EC Certificates.
Twenty-five percent of the Prepayment Premiums collected during any
Collection Period will be allocated for distribution to Classes entitled to
receive principal distributions on the related Distribution Date on a pro rata
basis, based on the amount of principal distributed to each such Class as a
percentage of the amount of principal distributed to all such classes. The
remainder of such Prepayment Premiums will be allocated to the Class A-EC
Certificates.
The "Base Interest Fraction" with respect to any principal prepayment on
any Mortgage Loan and with respect to any class of Certificates is a fraction
(a) whose numerator is the amount, if any, by which (1) the Pass-Through Rate
on such Class of Certificates exceeds (2) the Yield Rate used in calculating
the Yield Maintenance Charge with respect to such principal prepayment and (b)
whose denominator is the amount, if any, by which the (1) Mortgage Rate on such
Mortgage Loan exceeds (2) the Yield Rate used in calculating the Yield
Maintenance Charge with respect to such principal prepayment; provided,
however, that under no circumstances shall the Base Interest Fraction be
greater than one. If such Yield Rate is greater than or equal to the lesser of
(a) the Mortgage Rate on such Mortgage Loan and (b) the related Pass-Through
Rate, then the Base Interest Fraction shall equal zero.
Notwithstanding the foregoing, no Prepayment Premiums or Yield Maintenance
Charges will be distributed to holders of the Class F, Class G, Class H, Class
J, Class K, Class L, Class M or Residual Certificates. Instead, after the
Certificate Balances of the Class A-1, Class A-2, Class B, Class C, Class D and
Class E Certificates have been reduced to zero, all Prepayment Premiums and
Yield Maintenance Charges will be distributed to holders of the Class A-EC
Certificates. For a description of Prepayment Premiums and Yield Maintenance
Charges, See "Description of the Mortgage Pool--Certain Terms and Provisions of
the Mortgage Loans--Prepayment Provisions." See also "Certain Legal Aspects of
the Mortgage Loans--Enforceability of Certain Provisions--Prepayment
Provisions" in the Prospectus.
Prepayment Premiums and Yield Maintenance Charges will be distributed on
any Distribution Date only to the extent they are received in respect of the
Mortgage Loans in the related Collection Period.
Default Interest with Respect to Balloon Payments. Default Interest
received with respect to a Mortgage Loan that is in default with respect to its
Balloon Payment will be distributed on such Distribution Date to the holders of
the Class of Certificates that is entitled to distributions of principal on
such Distribution Date; provided that if more than one Class of Certificates is
entitled to distributions of principal on such Distribution Date, the amount of
such Default Interest will be allocated among such Classes pro rata, based on
their respective Certificate Balances immediately prior to such Distribution
Date.
Realized Losses. Realized Losses on Mortgage Loans included in the
Mortgage Pool will be allocated to the outstanding class of Certificates with
the latest alphabetical class designation (other than the Residual Certificates
and Class A-EC Certificates) in reverse sequential order, until the Certificate
Balance thereof is reduced to zero. However, on and after the Senior Principal
Distribution Cross-Over Date, Realized Losses will be allocated among the Class
A-1 and Class A-2 Certificates on a pro rata basis. Realized Losses allocated
to any class of Certificates other than the Residual Certificates will reduce
the Class A-EC Notional Balance.
As referred to herein, the "Realized Loss" with respect to any
Distribution Date will mean the amount, if any, by which (1) the aggregate
Certificate Balance after giving effect to distributions made on such
Distribution Date, exceeds (2) the aggregate Scheduled Principal Balance of the
Mortgage Loans as of the Due Date in the month in which such Distribution Date
occurs. Any amounts recovered in respect of any amounts previously written off
as Realized Losses will be distributed to the Classes of Certificates in
reverse order of allocation of Realized Losses thereto.
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Available Funds will be reduced by the aggregate amount of any
indemnification payments made from amounts comprising assets of the Trust Fund
to any person under the Pooling and Servicing Agreement. Such reduction of
amounts otherwise distributable to a Class shall be allocated first in respect
of interest and second in respect of principal but shall not be reimbursable
and so shall not create Class Interest Shortfalls and shall not constitute
Realized Losses. See "Servicing of the Mortgage Loans--Certain Matters With
Respect to the Master Servicer, the Special Servicer, the Trustee and the
Depositor" in the Prospectus.
The "Scheduled Principal Balance" of any Mortgage Loan as of any Due Date
will be the principal balance of such Mortgage Loan as of such Due Date, after
giving effect to (1) any Principal Prepayments, prepayments that do not include
prepayment premiums or other unscheduled recoveries of principal and any
Balloon Payments received during the related Collection Period and (2) any
payment in respect of principal due on or before such Due Date (excluding
Balloon Payments, but including the principal portion of any Assumed Scheduled
Payment), irrespective of any delinquency in payment by the borrower. The
Scheduled Principal Balance of any REO Mortgage Loan as of any Due Date is
equal to the principal balance thereof outstanding on the date that the related
Mortgaged Property became an REO Property minus any Net REO Proceeds allocated
to principal and minus the principal component of Monthly Payments due thereon
on or before such Due Date. With respect to any Mortgage Loan, from and after
the date on which the Master Servicer makes a determination that it has
recovered all amounts that it reasonably expects to be finally recoverable (a
"Final Recovery Determination"), the Scheduled Principal Balance thereof will
be zero.
The aggregate Appraisal Reduction will be allocated by the Trustee on each
Distribution Date for purposes of determining the Voting Rights and the amount
of P&I Advances with respect to the related Mortgage Loan to the Certificate
Balance of the Class M, Class L, Class K, Class J, Class H, Class G, Class F,
Class E, Class D, Class C, and Class B Certificates, in that order, up to the
amount of their respective Certificate Balances.
SCHEDULED FINAL DISTRIBUTION DATE
The "Scheduled Final Distribution Date" with respect to any Class of
Certificates is the Distribution Date on which the aggregate Certificate
Balance or aggregate Notional Balance, as the case may be, of such Class of
Certificates would be reduced to zero based on the assumptions set forth below.
Such Distribution Date shall in each case be as follows:
<TABLE>
<CAPTION>
SCHEDULED FINAL
CLASS DISTRIBUTION DATE
- --------------------- ------------------
<S> <C>
Class A-1 ......... January 15, 2008
Class A-2 ......... January 15, 2009
Class B ........... January 15, 2009
Class C ........... February 15, 2009
Class D ........... November 15, 2009
Class E ........... November 15, 2009
</TABLE>
The Scheduled Final Distribution Dates set forth above were calculated
without regard to any delays in the collection of Balloon Payments and without
regard to a reasonable liquidation time with respect to any Mortgage Loans that
may become delinquent. Accordingly, in the event of defaults on the Mortgage
Loans, the actual final Distribution Date for any class of Certificates may be
later, and could be substantially later, than the related Scheduled Final
Distribution Date.
In addition, the Scheduled Final Distribution Dates set forth above were
calculated assuming no prepayments (involuntary or voluntary), no exercise of
defeasance options, no early termination, no defaults, no condemnations, no
modifications, no extensions and payment in full of ARD Loans on the related
Anticipated Repayment Dates. Since the rate of payment (including prepayments)
of the Mortgage Loans can be expected to exceed the scheduled rate of payments,
and could exceed such scheduled rate by a substantial amount, the actual final
Distribution Date for any class of Certificates may be earlier, and could be
substantially earlier, than the related Scheduled Final Distribution Date.
ADDITIONAL RIGHTS OF THE RESIDUAL CERTIFICATES
The Residual Certificates will remain outstanding for as long as the Trust
Fund exists. Holders of the Residual Certificates are not entitled to regular
or scheduled distributions in respect of principal, interest, Prepayment
Premiums, Yield Maintenance Charges or Excess Interest. Holders of the Residual
Certificates are not expected to receive any
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distributions until after the Certificate Balances of all other Classes of
Certificates have been reduced to zero, and then will receive distributions
only to the extent of any Available Funds remaining on any Distribution Date
and any remaining assets of the REMICs.
EARLY TERMINATION
The holder of the Class R-II Certificates representing greater than a 50%
Percentage Interest of the Class R-II Certificates, and, if such holder does
not exercise this option, the Master Servicer and, if the Master Servicer does
not exercise this option, the Depositor, will have the option to purchase all
of the Mortgage Loans and all property remaining in the Trust Fund on any
Distribution Date on which the aggregate Scheduled Principal Balance of the
Mortgage Loans remaining in the Trust fund is less than 1% of the Initial Pool
Balance. Any such purchase would effect an early termination of the Trust Fund
and early retirement of the outstanding Certificates. The purchase price
payable upon the exercise of such option on such a Distribution Date will be an
amount equal to the greater of:
(1) the sum of (a) 100% of the outstanding principal balance of each
Mortgage Loan included in the Trust Fund as of the last day of the month
preceding such Distribution Date (less any Advances previously made on account
of principal); (b) the fair market value of all other property included in the
Trust Fund as of the last day of such preceding months, as determined by an
independent appraiser no more than 30 days prior to the last day of such month;
(c) all unpaid interest accrued on such principal balance of each such Mortgage
Loan (including any REO Mortgage Loan) at the Mortgage Rate to the last day of
such month (less any Advances previously made on account of interest); and (d)
unreimbursed Advances with interest thereon at the Advance Rate, unpaid
servicing compensation and unpaid Trust Fund expenses; or
(2) the aggregate fair market value of the Mortgage Loans and all other
property acquired in respect of any Mortgage Loan in the Trust Fund, on the
last day of the month preceding such Distribution Date, as determined by an
independent appraiser no more than 30 days prior to the last day of such month
together with one month's interest thereon at the related Mortgage Rate, plus
disposition expenses.
Under the circumstances described under "Description of the Mortgage
Pool--Certain Terms and Conditions of the Mortgage Loans--ARD Loans; Excess
Interest," the holders of 100% of the Class M Certificates or the Special
Servicer will have the option to purchase any ARD Loan on or after its
Anticipated Repayment Date at a price equal to its outstanding Scheduled
Principal Balance plus accrued and unpaid interest and unreimbursed Advances
made with respect thereto (with interest thereon). The exercise of this option
may accelerate repayment of certain Certificates, but is not expected to result
in repayment of all Classes on the same Distribution Date.
DELIVERY, FORM AND DENOMINATION
Book-Entry Certificates. No Person acquiring an Offered Certificate (a
"Book-Entry Certificate") will be entitled to receive a physical certificate,
except under the limited circumstances described below. Absent such
circumstances, the Book-Entry Certificates will be registered in the name of a
nominee of DTC and beneficial interests therein will be held by investors
("Beneficial Owners") through the book-entry facilities of DTC, as described
herein, in denominations of $25,000 initial Certificate Balance or Notional
Balance and integral multiples of $1.00 in excess thereof. One certificate of
each such Class may be issued that represents a different initial Certificate
Balance or Notional Balance to accommodate the remainder of the initial
Certificate Balance or Notional Balance of such Class. The Depositor has been
informed by DTC that its nominee will be Cede & Co. Accordingly, Cede & Co. is
expected to be the holder of record of the Book-Entry Certificates.
No Beneficial Owner of a Book-Entry Certificate will be entitled to
receive a definitive Certificate (a "Definitive Certificate") representing such
person's interest in the Book-Entry Certificates except as set forth below.
Unless and until Definitive Certificates are issued to Beneficial Owners in
respect of the Book-Entry Certificates under the limited circumstances
described herein, all references to actions taken by Certificateholders or
holders will, in the case of the Book-Entry Certificates, refer to actions
taken by DTC upon instructions from its participants, and all references herein
to distributions, notices, reports and statements to Certificateholders or
holders will, in the case of the Book-Entry Certificates, refer to
distributions, notices, reports and statements to DTC or Cede & Co., as the
case may be, for distribution to Beneficial Owners in accordance with DTC
procedures. DTC may discontinue providing its services as securities depository
with respect to the Book-Entry Certificates at any time by giving reasonable
notice to the Trustee. Under such circumstances, in the event that a successor
securities depository is not obtained, certificates are required to be printed
and delivered. The Trustee, the Master Servicer, the Special Servicer and the
Certificate Registrar may for all purposes, including the making of payments
due on the Book-Entry Certificates, deal with DTC as the authorized
representative of the Beneficial Owners with respect to such Certificates.
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The Depository Trust Company ("DTC") is a limited purpose trust company
organized under the laws of the State of New York, a member of the Federal
Reserve System, a "clearing corporation" within the meaning of the New York
Uniform Commercial Code and a "clearing agency" registered pursuant to Section
17A of the Securities Exchange Act of 1934, as amended. DTC was created to hold
securities for its participating organizations ("Participants") and to
facilitate the clearance and settlement of securities transactions among
Participants through electronic computerized book-entry charges in
Participants' accounts, thereby eliminating the need for physical movement of
certificates. Participants include securities brokers and dealers (including
the Underwriters), banks, trust companies and clearing corporations and certain
other organizations. The Rules applicable to DTC and its participants are on
file with the Securities and Exchange Commission. Indirect access to the DTC
system also is available to banks, brokers, dealers, trust companies and other
institutions that clear through or maintain a custodial relationship with a
Participant, either directly or indirectly ("Indirect Participants"). DTC is
owned by a number of its Direct Participants and by the New York Stock
Exchange, Inc., the American Stock Exchange, Inc. and the National Association
of Securities Dealers, Inc.
Purchases of Book-Entry Certificates under the DTC system must be made by
or through Direct Participants, which will receive a credit for the Book-Entry
Certificates on DTC's records. The ownership interest of each Beneficial Owner
is in turn to be recorded on the Direct and Indirect Participants' records.
Beneficial Owners will not receive written confirmation from DTC of their
purchase, but Beneficial Owners are expected to receive written confirmations
providing details of the transaction, as well as periodic statements of their
holdings, from the Direct or Indirect Participant through which the Beneficial
Owner entered into the transaction. Transfers of ownership interests in the
Book-Entry Certificates are to be accomplished by entries made on the books of
Participants acting on behalf of Beneficial Owners. Beneficial Owners will not
receive certificates representing their ownership interests in the Certificates
except in the event that use of the book-entry system for the Book-Entry
Certificates is discontinued. Neither the Certificate Registrar nor the Trustee
will have any responsibility to monitor or restrict the transfer of ownership
interests in Book-Entry Certificates through the book-entry facilities of DTC.
To facilitate subsequent transfers, all Book-Entry Certificates deposited
by Participants with DTC are registered in the name of DTC's partnership
nominee, Cede & Co. The deposit of Book-Entry Certificates with DTC and their
registration in the name of Cede & Co. effect no change in beneficial
ownership. DTC has no knowledge of the actual Beneficial Owners of the
Book-Entry Certificates; DTC's records reflect only the identity of the Direct
Participants to whose accounts such Book-Entry Certificates are credited, which
may or may not be the Beneficial Owners. The Participants will remain
responsible for keeping account of their holdings on behalf of their customers.
Beneficial Owners will not be recognized as Certificateholders, as such term is
used in the Pooling and Servicing Agreement, by the Trustee or any paying agent
(each, a "Paying Agent") appointed by the Trustee. Beneficial Owners will be
permitted to exercise the rights of Certificateholders only indirectly through
DTC and its Participants.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners, will be governed
by arrangements among them, subject to any statutory or regulatory requirements
as may be in effect from time to time.
Because DTC can only act on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of a Beneficial
Owner to pledge Book-Entry Certificates to persons or entities that do not
participate in the DTC system, or to otherwise act with respect to such
Book-Entry Certificates, may be limited due to lack of a definitive Certificate
for such Book-Entry Certificates. In addition, under a book-entry format,
Beneficial Owners may experience delays in their receipt of payments, since
distributions will be made by the Trustee or a Paying Agent on behalf of the
Trustee to Cede & Co., as nominee for DTC.
Neither DTC nor Cede & Co. will consent or vote with respect to the
Book-Entry Certificates. Under its usual procedures, DTC mails an Omnibus Proxy
to the Trustee as soon as possible after the record date. The Omnibus Proxy
assigns Cede & Co.'s consenting or voting rights to those Direct Participants
to whose accounts the Securities are credited on that record date (identified
in a listing attached to the Omnibus Proxy). DTC may take conflicting actions
with respect to Percentage Interests or Voting Rights to the extent that
Participants whose holdings of Book-Entry Certificates evidence such Percentage
Interests or Voting Rights authorize divergent action.
Neither the Depositor, the Trustee, the Master Servicer, the Special
Servicer, the Special Sub-Servicer nor any Paying Agent will have any
responsibility for any aspect of the records relating to, or payments made on
account of, beneficial ownership interests of the Book-Entry Certificates
registered in the name of Cede & Co., as nominee for DTC, or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests. In the event of the
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insolvency of DTC, a Participant or an Indirect Participant in whose name
Book-Entry Certificates are registered, the ability of the Beneficial Owners of
such Book-Entry Certificates to obtain timely payment may be impaired. In
addition, in such event, if the limits of applicable insurance coverage by the
Securities Investor Protection Corporation are exceeded or if such coverage is
otherwise unavailable, ultimate payment of amounts distributable with respect
to such Book-Entry Certificates may be impaired.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Depositor believes to be reliable, but
the Depositor takes no responsibility for the accuracy thereof.
Physical Certificates. Book-Entry Certificates will be converted to
Definitive Certificates and reissued to Beneficial Owners or their nominees,
rather than to DTC or its nominee, only if (1) (a) the Depositor advises the
Certificate Registrar in writing that DTC is no longer willing or able to
discharge properly its responsibilities as Depository with respect to any Class
of the Book-Entry Certificates and (b) the Depositor is unable to locate a
qualified successor or (2) the Depositor, at its option, advises the Trustee
and Certificate Registrar that it elects to terminate the book-entry system
through DTC with respect to any Class of the Book-Entry Certificates.
Upon the occurrence of any event described in the immediately preceding
paragraph, the Certificate Registrar will be required to notify all affected
Beneficial Owners through DTC of the availability of Definitive Certificates.
Upon surrender by DTC of the physical certificates representing the affected
Book-Entry Certificates and receipt of instructions for re-registration, the
Certificate Registrar will reissue the Book-Entry Certificates as Definitive
Certificates to the Beneficial Owners. Upon the issuance of Definitive
Certificates for purposes of representing ownership of the Certificates
originally issued as Book-Entry Certificates, the registered holders of such
Definitive Certificates will be recognized as Certificateholders under the
Pooling and Servicing Agreement and, accordingly, will be entitled directly to
receive payments on, and exercise Voting Rights with respect to, and to
transfer and exchange such Definitive Certificates.
Definitive Certificates will be transferable and exchangeable at the
offices of the Trustee or the Certificate Registrar in accordance with the
terms of the Pooling and Servicing Agreement.
REGISTRATION AND TRANSFER
The holder of any Definitive Certificate may transfer or exchange the same
in whole or part (subject to the minimum authorized denomination) at the
corporate trust office of the certificate registrar appointed pursuant to the
Pooling and Servicing Agreement (the "Certificate Registrar") or at the office
of any transfer agent. In exchange for any Definitive Certificate properly
presented for transfer or exchange with all necessary accompanying
documentation, the Certificate Registrar will, within five Business Days of
such request if made at the corporate trust office of the Certificate
Registrar, or within ten Business Days if made at the office of another
transfer agent, execute and deliver to the transferee or holder the transferred
or exchange Definitive Certificate or Definitive Certificates.
No fee or service charge will be imposed by the Certificate Registrar for
any registration of transfer or exchange referred to above. The Certificate
Registrar may require payment by each transferor of a sum sufficient to pay any
tax, expense or other governmental charge payable in connection with any such
transfer.
YIELD AND MATURITY CONSIDERATIONS
YIELD CONSIDERATIONS
General. The yield on any Regular Certificate will depend on (1) the price
at which such Certificate is purchased by an investor and (2) the rate, timing
and amount of distributions on such Certificate. The rate, timing and amount of
distributions on any Regular Certificate will in turn depend on, among other
things:
(1) the rate and timing of principal payments (including voluntary and
involuntary prepayments) and the extent to which such amounts are to be applied
in reduction of the Certificate Balance (or Notional Balance) of the Class of
Certificates to which such Certificate belongs;
(2) the rate, timing and severity of Realized Losses on the Mortgage Loans
and the extent to which such losses are allocable in reduction of the
Certificate Balance (or Notional Balance) of any Class of Certificates;
(3) with respect to the Class D, Class E and Class A-EC Certificates, the
Weighted Average Net Mortgage Rate as in effect from time to time; and
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(4) disproportionate principal payments (whether resulting from
differences in amortization schedules, prepayments or otherwise) on Mortgage
Loans having Net Mortgage Rates that are higher or lower than the current
Weighted Average Net Mortgage Rate will affect the yield on the Class A-EC
Certificates.
Rate and Timing of Principal Payments. The yield to holders of
Certificates purchased at a discount or premium will be affected by the rate
and timing of principal payments made in reduction of the Certificate Balance
of such Certificates. The Pooled Principal Distribution Amount for each
Distribution Date generally will be distributable in its entirety to each Class
of Regular Certificates, sequentially in order of Class designation, in each
case until the Certificate Balance of each such Class of Certificates is
reduced to zero. Consequently, the rate and timing of principal payments made
in reduction of the Certificate Balance of the Regular Certificates will be
directly related to the rate and timing of principal payments on or in respect
of the Mortgage Loans.
Defaults on the Mortgage Loans, particularly at or near their stated
maturity dates, may result in significant delays in payments of principal on
the Mortgage Loans and, accordingly, on the Certificates, while work-outs are
negotiated, foreclosures are completed or bankruptcy proceedings are resolved.
The yield to investors in the Subordinate Certificates will be very sensitive
to the timing and magnitude of losses on the Mortgage Loans due to liquidations
following a default, and will also be very sensitive to delinquencies in
payment. In addition, the Special Servicer has the option, subject to certain
limitations, to extend the maturity of Mortgage Loans following a default in
the payment of a Balloon Payment. See "The Pooling and Servicing
Agreement--Servicing of the Mortgage Loans; Collection of Payments" and
"--Realization Upon Mortgaged Properties" herein and "Certain Legal Aspects of
the Mortgage Loans--Foreclosure" in the Prospectus.
The rate and timing of principal payments and defaults and the severity of
losses on the Mortgage Loans may be affected by a number of factors, including,
without limitation, the terms of the Mortgage Loans (for example, the
provisions requiring the payment of Prepayment Premiums or Yield Maintenance
Charges and amortization terms that require Balloon Payments or include an
Anticipated Repayment Date), prevailing interest rates, the market value of the
Mortgaged Properties, the demographics and relative economic vitality of the
areas in which the Mortgaged Properties are located, the general supply and
demand for such facilities (and their uses) in such areas, the quality of
management of Mortgaged Properties, the servicing of the Mortgage Loans,
federal and state tax laws (which are subject to change) and other
opportunities for investment.
The rate of prepayment on the Mortgage Pool is likely to be affected by
the amount of any required Yield Maintenance Charges and Prepayment Premiums
and the borrowers' ability to refinance their related Mortgaged Loans. If
prevailing market interest rates for mortgage loans of a comparable type, term
and risk level have decreased enough to offset any required Yield Maintenance
Charges and Prepayment Premium, a borrower may have an increased incentive to
refinance its Mortgage Loan. Under such circumstances a borrower may refinance
to "lock in" a fixed rate or a lower rate or to take advantage of an initial
"teaser rate" on an adjustable rate mortgage loan (that is, a mortgage interest
rate below that which would otherwise apply if the applicable index and gross
margin were applied). Also, a borrower may refinance its Mortgage Loan to "cash
out" (that is, to take advantage of an increase in the market value of the
Mortgaged Property).
In addition, some borrowers may sell Mortgaged Properties in order to
realize their equity therein, to meet cash flow needs or to make other
investments. Changes in federal, state and local tax laws or deferral programs
may also impact the refinance opportunities. Also, although excess Cash Flow is
applied to reduce the principal of the ARD Loans after their respective
Anticipated Repayment Dates and the Mortgage Rates are reset at the Revised
Rates, there can be no assurance that any of such Mortgage Loans will be
prepaid on that date or any date prior to maturity. Under the circumstances
described under "Description of the Mortgage Pool--Certain Terms and Conditions
of the Mortgage Loans--ARD Loans; Excess Interest," the holders of 100% of the
Class M Certificates or the Special Servicer will have the option to purchase
any ARD Loan on or after its Anticipated Repayment Date at a price equal to its
outstanding Scheduled Principal Balance, plus accrued and unpaid interest, and
unreimbursed Advances made with respect thereto, plus accrued and unpaid
interest on such advances. The exercise of this option may accelerate repayment
of certain Certificates, but is not expected to result in repayment of all
Classes on the same Distribution Date.
If the markets for commercial and multifamily real estate should
experience an overall decline in property values such that the outstanding
balances of the Mortgage Loans exceed the value of the respective Mortgaged
Properties, a borrower under a non-recourse loan may have a decreased incentive
to fund operating cash flow deficits. As a result, actual losses may be higher
than those originally anticipated by investors.
Neither the Depositor, the Transferor, the Mortgage Loan Sellers nor the
Trustee, or any affiliate of any of them, makes any representation as to the
particular factors that will affect the rate and timing of prepayments and
defaults on particular Mortgage Loans or as to the relative importance of such
factors. None of them makes any representation as to the percentage of the
principal balance of the Mortgage Loans that will be prepaid at all or at any
time or as to whether a default will occur as of any date.
S-75
<PAGE>
The extent to which the yield to maturity of any Class of Regular
Certificates may vary from the anticipated yield will depend upon the degree to
which they are purchased at a discount or premium and when, and to what degree,
payments of principal on the Mortgage Loans are in turn distributed in
reduction of the Certificate Balance of such Certificates. An investor should
consider, in the case of any Regular Certificate purchased at a discount, the
risk that a slower than anticipated rate of principal payments on the Mortgage
Loans could result in an actual yield to such investor that is lower than the
anticipated yield. An investor should consider, in the case of any Certificate
purchased at a premium (or the Class A-EC Certificates, which have no
Certificate Balances), the risk that a faster than anticipated rate of
principal payments could result in an actual yield to such investor that is
lower than the anticipated yield. In general, the earlier a payment of
principal on the Mortgage Loans is distributed in reduction of the Certificate
Balance or Notional Balance of any Regular Certificate purchased at a discount
or premium the greater will be the effect on an investor's yield to maturity.
As a result, the effect on an investor's yield of principal payments on the
Mortgage Loans occurring at a rate higher (or lower) than the rate anticipated
by the investor during any particular period would not be fully offset by a
subsequent like reduction (or increase) in the rate of such principal payments.
A Mortgage Loan as to which an Appraisal Reduction Event occurs may
generate collections at the same rate it had prior to such Appraisal Reduction
Event. Under such circumstances, available Funds will include the principal
portion of any Appraisal Reduction actually collected and the portion of the
interest payments actually collected that is equal to interest accrued on
unreversed Appraisal Reductions allocated to an outstanding Class at the
related Pass-Through Rate (the sum of any such amounts, the "Appraisal
Reduction Excess Collections"). Such amounts will be distributable to the more
senior outstanding Classes of Certificates, which therefore will receive
collections in respect of interest or principal at an increased rate. There can
be no assurance that a subsequent appraisal will reverse an Appraisal Reduction
in whole or in part, that the related borrower will thereafter make payments at
any particular rate or that Realized Losses will be reimbursed to any Class.
Balloon Payments/ARD Loan Payments. 247 of the Mortgage Loans,
representing 96.62% of the Initial Pool Balance are Balloon Loans that will
have substantial payments (that is, Balloon Payments) due at their stated
maturities, unless previously prepaid. 33 of such Mortgage Loans are ARD Loans.
The ability of the borrowers to pay the Balloon Payments at the maturity of the
Balloon Loans or to prepay an ARD Loan in full on the related Anticipated
Repayment Dates may depend on their ability to sell or refinance the Mortgaged
Properties, which, in turn, will depend on a number of factors described above
many of which are beyond the control of such borrowers. The Certificates are
subject to the risk of default by the borrowers in making the required Balloon
Payments or prepayments of ARD Loans on their Anticipated Repayment Dates. If
any borrower is unable to make the applicable Balloon Payment when due or to
prepay an ARD Loan on the Anticipated Repayment Date, the weighted average
lives of the Certificates are likely to be longer than expected.
Losses and Shortfalls. The yield to holders of the Regular Certificates
will also depend on the extent to which such holders are required to bear the
effects of any losses or shortfalls on the Mortgage Loans. Shortfalls in
Available Funds resulting from shortfalls in collections of amounts payable on
the Mortgage Loans (to the extent not advanced) or additional Master Servicer
or Special Servicer compensation, interest on Advances, extraordinary Trust
Fund expenses or other similar items will generally be borne as described above
under "Description of the Certificates."
Pass-Through Rate. The Pass-Through Rates on the Class D, Class E and
Class A-EC Certificates are related to the Weighted Average Net Mortgage Rate.
Therefore, a decrease in the Net Mortgage Rate for any Mortgage Loan (e.g., as
a result of a modification) may result in some or all Classes of Certificates
accruing interest at a rate higher than the Weighted Average Net Mortgage Rate
for the Mortgage Pool and there may not be sufficient cash flow to make all
interest payments due on each of such Classes. Any such interest shortfall
would affect such Certificates in reverse sequential order, commencing with the
Class M Certificates.
The Weighted Average Net Mortgage Rate will fluctuate over the lives of
the Certificates as a result of scheduled amortization, voluntary prepayments,
Appraisal Reductions and liquidations of Mortgage Loans. If principal payments,
including voluntary and involuntary Principal Prepayments, are made on a
Mortgage Loan with a relatively high Net Mortgage Rate at a rate faster than
the rate of principal payments on the Mortgage Pool as a whole, the
Pass-Through Rates applicable to the Class D, Class E and Class A-EC
Certificates will be adversely affected. Accordingly, the yield on each such
Class of Certificates will be sensitive to changes in the outstanding principal
balances of the Mortgage Loans as a result of scheduled amortization, voluntary
prepayments and liquidations of Mortgage Loans.
Delay in Payment of Distributions. Because monthly distributions will not
be made to Certificateholders until, at the earliest, the 15th day of the month
following the month in which interest accrued on the Certificates, the
effective yield to the holders of the Regular Certificates will be lower than
the yield that would otherwise be produced by the applicable Pass-Through Rate
and purchase prices (assuming such prices did not account for such delay).
S-76
<PAGE>
WEIGHTED AVERAGE LIFE
Weighted average life of a Certificate refers to the average amount of
time that will elapse from the Closing Date to the date of distribution to the
investor of each dollar distributed in reduction of Principal Balance or
Notional Balance of such security. The weighted average life of each Class of
Certificates will be influenced by, among other things, the rate at which
principal of the Mortgage Loans is paid.
Prepayments on mortgage loans may be measured by a prepayment standard or
model. The model used in this Prospectus Supplement is the "Constant Prepayment
Rate" or "CPR" model. The CPR model represents an assumed constant rate of
prepayment each month, expressed as an annual rate, relative to the then
outstanding principal balance of a pool of mortgage loans for the life of such
mortgage loans. As used in each of the following tables, the column headed
"0.00%" assumes that none of the Mortgage Loans is prepaid before maturity. The
columns headed "3.00%", "5.00%", "7.00%", "10.00%" and "15.00%" assume that no
prepayments are made on any Mortgage Loan during such Mortgage Loan's Lockout
Period, if any, or during such Mortgage Loan's Yield Maintenance Period, if
any, or during such Mortgage Loan's Defeasance Lockout Period, if any, and are
otherwise made on each of the Mortgage Loans at the indicated CPRs, except for
Mortgage Loan Control #91.10 which is assumed to be locked out for 108 months
for modelling purposes. CPR does not purport to be either an historical
description of the prepayment experience of any pool of mortgage loans or a
prediction of the anticipated rate of prepayment of any mortgage loans,
including the Mortgage Loans to be included in the Trust Fund.
The tables set forth below have been prepared on the basis of certain
assumptions as described below regarding the characteristics of the Mortgage
Loans that are expected to be included in the Mortgage Pool as described under
"Description of the Mortgage Pool" herein and the performance thereof. The
tables assume, among other things, that:
(1) as of the Closing Date the Mortgage Loans (except as set forth herein)
provide for a Monthly Payment of principal and interest that would fully
amortize the remaining principal balance of such Mortgage Loan using the
Monthly Payments set forth in Annex A hereto, commencing on April 1, 1999
(including Balloon Payments on the maturity dates set forth in Annex A);
(2) neither the Depositor, the Transferor nor the related Mortgage Loan
Seller will repurchase any Mortgage Loan, and none of the Master Servicer, the
Special Servicer, the Depositor or the holders of the Class R-II Certificates
will exercise its option to purchase Mortgage Loans and thereby cause a
termination of the Trust Fund;
(3) there are no delinquencies or Realized Losses;
(4) no Prepayment Premiums are paid;
(5) there are no Appraisal Reductions;
(6) payments on the Certificates will be made on the 15th day of each
month, commencing in April, 1999 (notwithstanding that any such day is not a
business day or is fewer than four business days after the related
Determination Date);
(7) there are no ongoing Trust Fund expenses payable out of the Trust Fund
other than Servicing Fees;
(8) the Regular Certificates will be purchased on the Closing Date;
(9) no defaults occur with respect to any of the Mortgage Loans;
(10) all Mortgage Loans have a maturity date on the first day of a month;
and
(11) each ARD Loan is paid in full on its Anticipated Repayment Date
notwithstanding the fact that prepayments could occur under such ARD Loans
prior to such Anticipated Repayment Date and that, in either case, such
prepayments would not be accompanied by payment of a Yield Maintenance Charge
or Prepayment Premium.
The actual performance of the Mortgage Loans will differ from the
assumptions used in calculating the tables set forth below, which are
hypothetical in nature and are provided only to give a general sense of how the
principal cash flows might behave under varying prepayment scenarios. Any
difference between such assumptions and the actual performance of the Mortgage
Loans, or actual prepayment or loss experience, will affect the percentages of
initial Certificate Balance outstanding over time and the weighted average
lives of the Classes of Certificates.
Subject to the foregoing discussion and assumptions, the following tables
indicate the weighted average life of each class of Certificates, and set forth
the percentages of the initial Certificate Balance or Notional Balance of each
Class of Certificates
S-77
<PAGE>
that would be outstanding after each of the Distribution Dates shown based on
the different prepayment speed assumptions reflected in the tables. Prepayments
on mortgage loans are commonly measured relative to a prepayment standard or
model. A common model (the "Constant Prepayment Rate" or "CPR") represents an
assumed constant rate of prepayment relative to the then outstanding principal
balance of a pool of new mortgage loans for the life of such mortgage loans.
The weighted average life of each Class is determined by (1) multiplying the
amount of each distribution in reduction of the Certificate Balance or Notional
Balance of such Class by the number of years from the date of purchase to the
related Distribution Date, (2) adding the results and (3) dividing the sum by
the aggregate distributions in reduction of Certificate Balance or Notional
Balance referred to in clause (1).
PERCENTAGE OF INITIAL CERTIFICATE BALANCE
OUTSTANDING FOR EACH DESIGNATED SCENARIO
<TABLE>
<CAPTION>
CLASS A-1
PREPAYMENT SPEED (1)
---------------------------------------------------------
DISTRIBUTION DATE 0.00% 3.00% 5.00% 7.00% 10.00% 15.00%
- ----------------- --------- --------- --------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Initial Balance .............. 100 100 100 100 100 100
March 15, 2000 ............... 94 94 94 94 94 94
March 15, 2001 ............... 87 87 87 87 87 87
March 15, 2002 ............... 80 80 80 80 79 79
March 15, 2003 ............... 72 72 72 72 71 71
March 15, 2004 ............... 64 63 63 63 62 61
March 15, 2005 ............... 55 54 53 52 51 50
March 15, 2006 ............... 30 29 28 28 26 25
March 15, 2007 ............... 18 15 14 12 10 6
March 15, 2008 ............... 0 0 0 0 0 0
March 15, 2009 ............... 0 0 0 0 0 0
March 15, 2010 ............... 0 0 0 0 0 0
March 15, 2011 ............... 0 0 0 0 0 0
March 15, 2012 ............... 0 0 0 0 0 0
March 15, 2013 ............... 0 0 0 0 0 0
March 15, 2014 ............... 0 0 0 0 0 0
March 15, 2015 ............... 0 0 0 0 0 0
March 15, 2016 ............... 0 0 0 0 0 0
March 15, 2017 ............... 0 0 0 0 0 0
March 15, 2018 ............... 0 0 0 0 0 0
March 15, 2019 ............... 0 0 0 0 0 0
March 15, 2020 ............... 0 0 0 0 0 0
March 15, 2021 ............... 0 0 0 0 0 0
March 15, 2022 ............... 0 0 0 0 0 0
March 15, 2023 ............... 0 0 0 0 0 0
March 15, 2024 ............... 0 0 0 0 0 0
March 15, 2025 ............... 0 0 0 0 0 0
March 15, 2026 ............... 0 0 0 0 0 0
March 15, 2027 ............... 0 0 0 0 0 0
March 15, 2028 ............... 0 0 0 0 0 0
March 15, 2029 ............... 0 0 0 0 0 0
March 15, 2030 ............... 0 0 0 0 0 0
Weighted Average Life (2) 5.51 5.43 5.39 5.35 5.29 5.22
<CAPTION>
CLASS A-2
PREPAYMENT SPEED (1)
----------------------------------------------------------
DISTRIBUTION DATE 0.00% 3.00% 5.00% 7.00% 10.00% 15.00%
- ----------------- --------- --------- --------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Initial Balance .............. 100 100 100 100 100 100
March 15, 2000 ............... 100 100 100 100 100 100
March 15, 2001 ............... 100 100 100 100 100 100
March 15, 2002 ............... 100 100 100 100 100 100
March 15, 2003 ............... 100 100 100 100 100 100
March 15, 2004 ............... 100 100 100 100 100 100
March 15, 2005 ............... 100 100 100 100 100 100
March 15, 2006 ............... 100 100 100 100 100 100
March 15, 2007 ............... 100 100 100 100 100 100
March 15, 2008 ............... 95 93 92 90 89 86
March 15, 2009 ............... 0 0 0 0 0 0
March 15, 2010 ............... 0 0 0 0 0 0
March 15, 2011 ............... 0 0 0 0 0 0
March 15, 2012 ............... 0 0 0 0 0 0
March 15, 2013 ............... 0 0 0 0 0 0
March 15, 2014 ............... 0 0 0 0 0 0
March 15, 2015 ............... 0 0 0 0 0 0
March 15, 2016 ............... 0 0 0 0 0 0
March 15, 2017 ............... 0 0 0 0 0 0
March 15, 2018 ............... 0 0 0 0 0 0
March 15, 2019 ............... 0 0 0 0 0 0
March 15, 2020 ............... 0 0 0 0 0 0
March 15, 2021 ............... 0 0 0 0 0 0
March 15, 2022 ............... 0 0 0 0 0 0
March 15, 2023 ............... 0 0 0 0 0 0
March 15, 2024 ............... 0 0 0 0 0 0
March 15, 2025 ............... 0 0 0 0 0 0
March 15, 2026 ............... 0 0 0 0 0 0
March 15, 2027 ............... 0 0 0 0 0 0
March 15, 2028 ............... 0 0 0 0 0 0
March 15, 2029 ............... 0 0 0 0 0 0
March 15, 2030 ............... 0 0 0 0 0 0
Weighted Average Life (2) 9.42 9.40 9.39 9.38 9.36 9.33
</TABLE>
- --------
(1) Prepayments on mortgage loans are commonly measured relative to a
prepayment standard or model. A common model (the "Constant Prepayment
Rate" or "CPR") represents an assumed constant rate of prepayment
relative to the then outstanding principal balance of a pool of new
mortgage loans for the life of such mortgage loans.
(2) The weighted average life of each Class is determined by (a) multiplying
the amount of each distribution in reduction of the Certificate Balance
of such Class by the number of years from the date of purchase to the
related Distribution Date, (b) adding the results and (c) dividing the
sum by the aggregate distributions in reduction of Certificate Balance
referred to in clause (a).
S-78
<PAGE>
PERCENTAGE OF INITIAL CERTIFICATE BALANCE
OUTSTANDING FOR EACH DESIGNATED SCENARIO
<TABLE>
<CAPTION>
CLASS B
PREPAYMENT SPEED (1)
---------------------------------------------------------
DISTRIBUTION DATE 0.00% 3.00% 5.00% 7.00% 10.00% 15.00%
- ----------------- --------- --------- --------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Initial Balance .............. 100 100 100 100 100 100
March 15, 2000 ............... 100 100 100 100 100 100
March 15, 2001 ............... 100 100 100 100 100 100
March 15, 2002 ............... 100 100 100 100 100 100
March 15, 2003 ............... 100 100 100 100 100 100
March 15, 2004 ............... 100 100 100 100 100 100
March 15, 2005 ............... 100 100 100 100 100 100
March 15, 2006 ............... 100 100 100 100 100 100
March 15, 2007 ............... 100 100 100 100 100 100
March 15, 2008 ............... 100 100 100 100 100 100
March 15, 2009 ............... 0 0 0 0 0 0
March 15, 2010 ............... 0 0 0 0 0 0
March 15, 2011 ............... 0 0 0 0 0 0
March 15, 2012 ............... 0 0 0 0 0 0
March 15, 2013 ............... 0 0 0 0 0 0
March 15, 2014 ............... 0 0 0 0 0 0
March 15, 2015 ............... 0 0 0 0 0 0
March 15, 2016 ............... 0 0 0 0 0 0
March 15, 2017 ............... 0 0 0 0 0 0
March 15, 2018 ............... 0 0 0 0 0 0
March 15, 2019 ............... 0 0 0 0 0 0
March 15, 2020 ............... 0 0 0 0 0 0
March 15, 2021 ............... 0 0 0 0 0 0
March 15, 2022 ............... 0 0 0 0 0 0
March 15, 2023 ............... 0 0 0 0 0 0
March 15, 2024 ............... 0 0 0 0 0 0
March 15, 2025 ............... 0 0 0 0 0 0
March 15, 2026 ............... 0 0 0 0 0 0
March 15, 2027 ............... 0 0 0 0 0 0
March 15, 2028 ............... 0 0 0 0 0 0
March 15, 2029 ............... 0 0 0 0 0 0
March 15, 2030 ............... 0 0 0 0 0 0
Weighted Average Life (2) 9.81 9.81 9.81 9.81 9.81 9.81
<CAPTION>
CLASS C
PREPAYMENT SPEED (1)
----------------------------------------------------------
DISTRIBUTION DATE 0.00% 3.00% 5.00% 7.00% 10.00% 15.00%
- ----------------- --------- --------- --------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Initial Balance .............. 100 100 100 100 100 100
March 15, 2000 ............... 100 100 100 100 100 100
March 15, 2001 ............... 100 100 100 100 100 100
March 15, 2002 ............... 100 100 100 100 100 100
March 15, 2003 ............... 100 100 100 100 100 100
March 15, 2004 ............... 100 100 100 100 100 100
March 15, 2005 ............... 100 100 100 100 100 100
March 15, 2006 ............... 100 100 100 100 100 100
March 15, 2007 ............... 100 100 100 100 100 100
March 15, 2008 ............... 100 100 100 100 100 100
March 15, 2009 ............... 0 0 0 0 0 0
March 15, 2010 ............... 0 0 0 0 0 0
March 15, 2011 ............... 0 0 0 0 0 0
March 15, 2012 ............... 0 0 0 0 0 0
March 15, 2013 ............... 0 0 0 0 0 0
March 15, 2014 ............... 0 0 0 0 0 0
March 15, 2015 ............... 0 0 0 0 0 0
March 15, 2016 ............... 0 0 0 0 0 0
March 15, 2017 ............... 0 0 0 0 0 0
March 15, 2018 ............... 0 0 0 0 0 0
March 15, 2019 ............... 0 0 0 0 0 0
March 15, 2020 ............... 0 0 0 0 0 0
March 15, 2021 ............... 0 0 0 0 0 0
March 15, 2022 ............... 0 0 0 0 0 0
March 15, 2023 ............... 0 0 0 0 0 0
March 15, 2024 ............... 0 0 0 0 0 0
March 15, 2025 ............... 0 0 0 0 0 0
March 15, 2026 ............... 0 0 0 0 0 0
March 15, 2027 ............... 0 0 0 0 0 0
March 15, 2028 ............... 0 0 0 0 0 0
March 15, 2029 ............... 0 0 0 0 0 0
March 15, 2030 ............... 0 0 0 0 0 0
Weighted Average Life (2) 9.85 9.85 9.85 9.84 9.84 9.84
</TABLE>
- --------
(1) Prepayments on mortgage loans are commonly measured relative to a
prepayment standard or model. A common model (the "Constant Prepayment
Rate" or "CPR") represents an assumed constant rate of prepayment
relative to the then outstanding principal balance of a pool of new
mortgage loans for the life of such mortgage loans.
(2) The weighted average life of each Class is determined by (a) multiplying
the amount of each distribution in reduction of the Certificate Balance
of such Class by the number of years from the date of purchase to the
related Distribution Date, (b) adding the results and (c) dividing the
sum by the aggregate distributions in reduction of Certificate Balance
referred to in clause (a).
S-79
<PAGE>
PERCENTAGE OF INITIAL CERTIFICATE BALANCE
OUTSTANDING FOR EACH DESIGNATED SCENARIO
<TABLE>
<CAPTION>
CLASS D
PREPAYMENT SPEED (1)
-----------------------------------------------------------------
DISTRIBUTION DATE 0.00% 3.00% 5.00% 7.00% 10.00% 15.00%
- ----------------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Initial Balance .............. 100 100 100 100 100 100
March 15, 2000 ............... 100 100 100 100 100 100
March 15, 2001 ............... 100 100 100 100 100 100
March 15, 2002 ............... 100 100 100 100 100 100
March 15, 2003 ............... 100 100 100 100 100 100
March 15, 2004 ............... 100 100 100 100 100 100
March 15, 2005 ............... 100 100 100 100 100 100
March 15, 2006 ............... 100 100 100 100 100 100
March 15, 2007 ............... 100 100 100 100 100 100
March 15, 2008 ............... 100 100 100 100 100 100
March 15, 2009 ............... 83 82 81 80 79 77
March 15, 2010 ............... 0 0 0 0 0 0
March 15, 2011 ............... 0 0 0 0 0 0
March 15, 2012 ............... 0 0 0 0 0 0
March 15, 2013 ............... 0 0 0 0 0 0
March 15, 2014 ............... 0 0 0 0 0 0
March 15, 2015 ............... 0 0 0 0 0 0
March 15, 2016 ............... 0 0 0 0 0 0
March 15, 2017 ............... 0 0 0 0 0 0
March 15, 2018 ............... 0 0 0 0 0 0
March 15, 2019 ............... 0 0 0 0 0 0
March 15, 2020 ............... 0 0 0 0 0 0
March 15, 2021 ............... 0 0 0 0 0 0
March 15, 2022 ............... 0 0 0 0 0 0
March 15, 2023 ............... 0 0 0 0 0 0
March 15, 2024 ............... 0 0 0 0 0 0
March 15, 2025 ............... 0 0 0 0 0 0
March 15, 2026 ............... 0 0 0 0 0 0
March 15, 2027 ............... 0 0 0 0 0 0
March 15, 2028 ............... 0 0 0 0 0 0
March 15, 2029 ............... 0 0 0 0 0 0
March 15, 2030 ............... 0 0 0 0 0 0
Weighted Average Life (2) 10.49 10.47 10.46 10.45 10.43 10.40
<CAPTION>
CLASS E
PREPAYMENT SPEED (1)
-----------------------------------------------------------------
DISTRIBUTION DATE 0.00% 3.00% 5.00% 7.00% 10.00% 15.00%
- ------------------------------ ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Initial Balance .............. 100 100 100 100 100 100
March 15, 2000 ............... 100 100 100 100 100 100
March 15, 2001 ............... 100 100 100 100 100 100
March 15, 2002 ............... 100 100 100 100 100 100
March 15, 2003 ............... 100 100 100 100 100 100
March 15, 2004 ............... 100 100 100 100 100 100
March 15, 2005 ............... 100 100 100 100 100 100
March 15, 2006 ............... 100 100 100 100 100 100
March 15, 2007 ............... 100 100 100 100 100 100
March 15, 2008 ............... 100 100 100 100 100 100
March 15, 2009 ............... 100 100 100 100 100 100
March 15, 2010 ............... 0 0 0 0 0 0
March 15, 2011 ............... 0 0 0 0 0 0
March 15, 2012 ............... 0 0 0 0 0 0
March 15, 2013 ............... 0 0 0 0 0 0
March 15, 2014 ............... 0 0 0 0 0 0
March 15, 2015 ............... 0 0 0 0 0 0
March 15, 2016 ............... 0 0 0 0 0 0
March 15, 2017 ............... 0 0 0 0 0 0
March 15, 2018 ............... 0 0 0 0 0 0
March 15, 2019 ............... 0 0 0 0 0 0
March 15, 2020 ............... 0 0 0 0 0 0
March 15, 2021 ............... 0 0 0 0 0 0
March 15, 2022 ............... 0 0 0 0 0 0
March 15, 2023 ............... 0 0 0 0 0 0
March 15, 2024 ............... 0 0 0 0 0 0
March 15, 2025 ............... 0 0 0 0 0 0
March 15, 2026 ............... 0 0 0 0 0 0
March 15, 2027 ............... 0 0 0 0 0 0
March 15, 2028 ............... 0 0 0 0 0 0
March 15, 2029 ............... 0 0 0 0 0 0
March 15, 2030 ............... 0 0 0 0 0 0
Weighted Average Life (2) 10.64 10.64 10.64 10.64 10.64 10.64
</TABLE>
- --------
(1) Prepayments on mortgage loans are commonly measured relative to a
prepayment standard or model. A common model (the "Constant Prepayment
Rate" or "CPR") represents an assumed constant rate of prepayment
relative to the then outstanding principal balance of a pool of new
mortgage loans for the life of such mortgage loans.
(2) The weighted average life of each Class is determined by (a) multiplying
the amount of each distribution in reduction of the Certificate Balance
of such Class by the number of years from the date of purchase to the
related Distribution Date, (b) adding the results and (c) dividing the
sum by the aggregate distributions in reduction of Certificate Balance
referred to in clause (a).
S-80
<PAGE>
MASTER SERVICER AND SPECIAL SUB-SERVICER
National Realty Funding L.C. is the Master Servicer and Special
Sub-Servicer. Certain information regarding National Realty Funding L.C. is set
forth herein under "Mortgage Loan Sellers."
As of January 31, 1999, National Realty Funding L.C. was responsible for
the servicing of approximately 556 commercial and multifamily loans with an
aggregate principal balance of approximately $2.1 billion, the collateral for
which is located throughout the United States.
National Realty Funding L.C. will be appointed by Banc One as special
sub-servicer (the "Special Sub-Servicer") under the Pooling and Servicing
Agreement. The Special Sub-Servicer is expected to perform substantially all of
the duties of the Special Servicer under the Pooling and Servicing Agreement.
Notwithstanding the foregoing, as Special Servicer, Banc One will remain
responsible for the performance of all such duties. The Special Sub-Servicer
will be compensated by Banc One, and not from assets of the Trust Fund (other
than Trust Fund monies that would otherwise be payable to Banc One as the
Special Servicer), for the performance of such duties.
SPECIAL SERVICER
Banc One Mortgage Capital Markets, LLC ("Banc One"), a Delaware limited
liability company, will initially be appointed as special servicer (the
"Special Servicer") to, among other things, oversee the resolution of Mortgage
Loans that in general, are in default or as to which default is imminent and
act as disposition manager of REO Properties. The principal executive offices
of the Special Servicer are located at 1717 Main Street, Suite 1200, Dallas,
Texas 75201.
As of December 31, 1998, Banc One and its affiliates were responsible for
servicing approximately 7,058 commercial and multifamily loans with an
aggregate principal balance of approximately $22.3 billion, the collateral for
which is located in 49 states, Puerto Rico, the District of Columbia, the
Virgin Islands and Mexico. With respect to such loans approximately 6,180 loans
with an aggregate principal balance of approximately $17.9 billion pertain to
commercial and multifamily mortgage-backed securities.
The foregoing information concerning the Special Servicer has been
provided by it. Accordingly, neither the Depositor nor the Initial Purchasers
make any representation or warranty as to the accuracy or completeness of such
information. The Pooling and Servicing Agreement will provide that the Special
Servicer will comply with the REMIC provisions of the Code.
THE POOLING AND SERVICING AGREEMENT
GENERAL
The Certificates will be issued pursuant to a Pooling and Servicing
Agreement, dated as of March 1, 1999 (the "Pooling and Servicing Agreement"),
by and among the Depositor, the Master Servicer, the Special Servicer, the
Special Sub-Servicer and the Trustee.
Upon written request, the Depositor will provide to a prospective or
actual holder of a Certificate a copy (without exhibits) of the Pooling and
Servicing Agreement without charge. Requests should be addressed to Prudential
Securities Secured Financing Corporation, One New York Plaza, 18th Floor, New
York, New York 10292, attention: Peter Riemenschneider, at telephone number
(212) 778-1818.
ASSIGNMENT OF THE MORTGAGE LOANS
On or before the Closing Date, the Depositor will assign or cause the
assignment of the Mortgage Loans, without recourse, to the Trustee for the
benefit of the holders of Certificates. On or before the Closing Date, the
Depositor will deliver to the Trustee the following set of documents for each
Mortgage Loan (the "Trustee Mortgage File") (with a copy to the Master
Servicer):
(1) the original promissory note for such Mortgage Loan, endorsed by the
applicable Mortgage Loan Seller in blank in the following form: "Pay to the
order of , without recourse," which the Master Servicer or its designee is
authorized to complete, and which promissory note and all endorsements thereof
shall show a complete chain of endorsement from the originator of such Mortgage
Loan to the applicable Mortgage Loan Seller, then to the Transferor and then to
the Depositor;
(2) (a) the original recorded Mortgage for such Mortgage Loan or a copy
thereof certified by the related title insurance company, public recording
office or closing agent in the form in which it was executed or was submitted
for recording,
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(b) the related original recorded assignment of mortgage to the applicable
Mortgage Loan Seller or a copy thereof certified by the related title insurance
company, public recording office or closing agent in the form in which it was
executed or was submitted for recording, and (c) the related original
assignment of mortgage executed by the applicable Mortgage Loan Seller in
blank, which the Master Servicer or its designee is authorized to complete and
which, except for the insertion of the name of the assignee and any related
recording information which is not yet available to the applicable Mortgage
Loan Seller, is in suitable form for recordation in the jurisdiction in which
the related Mortgaged Property is located;
(3) if the security agreement for such Mortgage Loan is separate from the
related Mortgage, the original security agreement or a counterpart thereof, and
if the security agreement is not assigned under the assignments of mortgage
described in clause (2) above, the original assignment of such security
agreement to the applicable Mortgage Loan Seller or a counterpart thereof and
the original assignment of such security agreement executed by the applicable
Mortgage Loan Seller in blank which the Master Servicer or its designee is
authorized to complete;
(4) a copy of each Form UCC-1 financing statement, if any, filed with
respect to personal property and fixtures constituting a part of the Mortgaged
Property for such Mortgage Loan, together with a copy of each Form UCC-2 or
UCC-3 assignment, if any, of such financing statement to the applicable
Mortgage Loan Seller and a copy of each Form UCC-2 or UCC-3 assignment, if any,
of such financing statement executed by the applicable Mortgage Loan Seller in
blank which the Master Servicer or its designee is authorized to complete and
which, except for the insertion of the name of the assignee and any related
filing information which is not yet available to the applicable Mortgage Loan
Seller, is in suitable form for filing in the filing office in which such
financing statement was filed;
(5) the original loan agreement for such Mortgage Loan, if any, or a
counterpart thereof;
(6) the original lender's title insurance policy (or the original pro
forma title insurance policy) for such Mortgage Loan, together with any
endorsements thereto;
(7) if any assignment of leases, rents and profits for such Mortgage Loan
is separate from the related Mortgage, (a) the original recorded assignment of
leases, rents and profits or a copy thereof certified by the related title
insurance company, public recording office or closing agent in the form in
which it was executed or was submitted for recording, (b) the related original
recorded reassignment of such instrument, if any, to the applicable Mortgage
Loan Seller or a copy thereof certified by the related title insurance company,
public recording office or closing agent in the form in which it was executed
or was submitted for recording, and (c) the related original reassignment of
such instrument, if any, executed by the applicable Mortgage Loan Seller in
blank which the Master Servicer or its designee is authorized to complete and
which, except for the insertion of the name of the assignee and any related
recording information which is not yet available to the applicable Mortgage
Loan Seller, is in suitable form for recordation in the jurisdiction in which
the related Mortgaged Property is located. Any such reassignments may also be
included in a related assignment of mortgage and need not be a separate
instrument;
(8) copies of the ESAs, transaction screen assessments or similar studies
or reports on the Mortgaged Property for such Mortgage Loan prepared in
connection with the origination of such Mortgage Loan;
(9) if any related assignment of contracts is separate from the related
Mortgage, the original assignment of contracts or a counterpart thereof, and if
the assignment of contracts is not assigned under the assignments of mortgage
described in clause (2) above, the related original assignment of such
instrument to the applicable Mortgage Loan Seller or a counterpart thereof and
the related original reassignment of such instrument executed by the applicable
Mortgage Loan Seller in blank which the Master Servicer or its designee is
authorized to complete;
(10) with respect to any Reserve Accounts for such Mortgage Loan, a copy
of any separate agreement relating thereto between the related borrower and the
originator;
(11) the original of any other written agreement, instrument or document
securing such Mortgage Loan, including, without limitation, original guarantees
for such Mortgage Loan or the original letter of credit, if any, for such
Mortgage Loan, together with any and all amendments thereto, including, without
limitation, any amendment which entitles the Master Servicer to draw upon such
letter of credit on behalf of the Trustee for the benefit of the
Certificateholders, and the original of each instrument or other item of
personal property given as security for such Mortgage Loan the possession of
which by a secured party is necessary to the secured party's valid, perfected,
first priority security interest therein, together with all assignments or
endorsements thereof necessary to entitle the Master Servicer to enforce a
valid, perfected, first priority security interest therein on behalf of the
Trustee for the benefit of the Certificateholders;
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(12) with respect to any Reserve Accounts for such Mortgage Loan, a copy
of the UCC-1 financing statements, if any, submitted for filing relating to the
applicable Mortgage Loan Seller's security interest in such Reserve Accounts
and all funds contained therein, together with a copy of each Form UCC-2 or
UCC-3 assignment, if any, of such financing statement to the applicable
Mortgage Loan Seller and a copy of each Form UCC-2 or UCC-3 assignment, if any,
of such financing statement executed by the applicable Mortgage Loan Seller in
blank, which the Master Servicer or its designee is authorized to complete and
which, except for the insertion of the name of the assignee and any related
filing information which is not yet available to the applicable Mortgage Loan
Seller, is in suitable form for filing in the filing office in which such
financing statement was filed; and
(13) copies of any and all amendments, modifications, supplements and
waivers related to any of the foregoing.
If the Depositor cannot deliver any original or certified recorded
document described above on the Closing Date, the Depositor will use its best
efforts to deliver (or cause to be delivered) such original or certified
recorded documents within 45 days from the Closing Date (subject to delays
attributable to the failure of the appropriate recording office to return such
documents, in which case the Depositor will deliver (or cause to be delivered)
such documents promptly upon receipt thereof). The Trustee is obligated to
review the Trustee Mortgage File for each Mortgage Loan within 90 days after
the later of delivery or the Closing Date and report any missing documents or
certain types of defects therein to the Depositor.
The Master Servicer will hold all remaining Mortgage Loan Documents and
all other documents related to each Mortgage Loan, including copies of any
management agreements, ground leases, appraisals, surveys, environmental
reports and similar documents and any other written agreements relating to each
Mortgage Loan (collectively, the "Master Servicer Mortgage File" and together
with the Trustee Mortgage File, the "Mortgage File") in trust for the benefit
of the Trustee on behalf of Certificateholders. The legal ownership of all
records and documents with respect to each Mortgage Loan prepared by or that
come into the possession of the Master Servicer will immediately vest in the
Trustee, in trust for the benefit of Certificateholders.
SERVICING OF THE MORTGAGE LOANS; COLLECTION OF PAYMENTS
The Pooling and Servicing Agreement requires the Master Servicer and the
Special Servicer (directly or through a sub-servicer or special sub-servicer)
to service and administer the Mortgage Loans (or in the case of the Special
Servicer, the Specially Serviced Mortgage Loans and REO Mortgage Loans) on
behalf of the Trust Fund solely in the best interests of and for the benefit of
all of the Certificateholders and the Trust Fund, in accordance with the terms
of the Pooling and Servicing Agreement and the Mortgage Loans. To the extent
consistent with the foregoing and except to the extent that the Pooling and
Servicing Agreement provides for a contrary specific course of action, each of
the Master Servicer and the Special Servicer is required to service and
administer the Mortgage Loans (1) in the same manner in which, and with the
same care, skill, prudence and diligence with which it services and administers
similar mortgage loans for itself and other third-party portfolios, giving due
consideration to the customary and usual standards of practice used by prudent
institutional commercial mortgage loan servicers of loans comparable to the
Mortgage Loans, or (2) in the same manner in which, and with the same care,
skill, prudence and diligence with which it services and administers similar
mortgage loans that it owns, whichever standard of care is higher, and taking
into account its other obligations under the Pooling and Servicing Agreement
and with the purpose of maximizing the estimated net present value of each
Mortgage Loan, but without regard to:
(1) any other relationship that the Master Servicer, the Special Servicer,
any sub-servicer, any special sub-servicer, the Depositor, the Trustee, or any
affiliate of any of them may have with the borrowers or any affiliate of such
borrowers;
(2) the ownership of any Certificate by the Master Servicer, the Special
Servicer or any affiliate of either;
(3) the Master Servicer's or the Trustee's obligations, as applicable, to
make Advances or to incur servicing expenses with respect to the Mortgage
Loans;
(4) the Master Servicer's, the Special Servicer's, any sub-servicer's or
any special sub-servicer's right to receive compensation for its services under
the Pooling and Servicing Agreement or for any particular transaction;
(5) the ownership, servicing or management for others by the Master
Servicer, the Special Servicer, any sub-servicer or any special sub-servicer of
any other mortgage loans or property; or
(6) any obligation of the Master Servicer to pay any indemnity with
respect to any repurchase obligation.
Each of the Master Servicer and the Special Servicer is permitted, at its
own expense, to employ sub-servicers, special sub-servicers, agents or
attorneys in performing any of its obligations under the Pooling and Servicing
Agreement. The
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Special Servicer intends to appoint the Special Sub-Servicer to perform
substantially all of the duties of the Special Servicer under the Pooling and
Servicing Agreement. In any such instance, the Master Servicer or the Special
Servicer will not be relieved of any of its obligations under the Pooling and
Servicing Agreement and each will be responsible for the acts and omissions of
any such sub-servicers, agents or attorneys. The Pooling and Servicing
Agreement provides, however, that neither the Master Servicer nor the Special
Servicer, nor any of their directors, officers, employees or agents, will have
any liability to the Trust Fund or the Certificateholders for taking any action
or refraining from taking any action in good faith or for errors in judgment.
The foregoing provision does not protect the Master Servicer, the Special
Servicer or such other person from:
(1) any liability resulting from a breach of any of the Master Servicer's
or the Special Servicer's or such other person's respective representations or
warranties in the Pooling and Servicing Agreement;
(2) any specific liability imposed on the Master Servicer or the Special
Servicer or such other person for a breach of the servicing standards set forth
in the Pooling and Servicing Agreement; or
(3) any liability by reason of the Master Servicer's or the Special
Servicer's or such other person's willful misfeasance, bad faith, fraud or
negligence in the performance of its duties under the Pooling and Servicing
Agreement or its reckless disregard of its obligations and duties under the
Pooling and Servicing Agreement.
The Pooling and Servicing Agreement requires the Master Servicer and the
Special Servicer to make reasonable efforts to collect all payments called for
under the terms of the Mortgage Loans and to follow collection procedures as
are consistent with the servicing standards under the Pooling and Servicing
Agreement. Consistent with the above, the Master Servicer or the Special
Servicer, as applicable, may, in its discretion, waive any late payment charge
or penalty fee in connection with any delinquent Monthly Payment or Balloon
Payment with respect to any Mortgage Loan. With respect to any ARD Loan, the
Pooling and Servicing Agreement prohibits the Master Servicer and the Special
Servicer from taking any enforcement action (other than requests for
collections) for payment of Excess Interest or principal in excess of the
principal component of the constant Monthly Payment for such ARD Loan before
(1) any acceleration of the maturity of such ARD Loan based on a default other
than the non-payment of Excess Interest or principal in excess of the principal
component of the related Scheduled Monthly Payment for such ARD Loan or (2) the
final maturity date of such ARD Loan.
ADVANCES
Subject to the limitations described below, the Master Servicer will be
obligated to advance (each such amount, a "P&I Advance"), on the business day
preceding each Distribution Date (the "Remittance Date"), an amount equal to
the total or any portion of the Monthly Payment on any Mortgage Loan that was
delinquent as of the close of business on the Business Day preceding such
Remittance Date or, in the event of a default in the payment of a Balloon
Payment, the Assumed Scheduled Payment for the related Balloon Loan, unless the
Master Servicer determines that any such advance would be a Nonrecoverable
Advance and delivers to the Trustee an officer's certificate and accompanying
documentation related to a determination of nonrecoverability.
For any Distribution Date, the amount required to be advanced for a
Mortgage Loan that has been subject to an Appraisal Reduction Event will equal
the amount that would be required to be advanced by the Master Servicer without
giving effect to the Appraisal Reduction reduced in proportion to the reduction
of the outstanding principal balance of the Mortgage Loan caused by such
Appraisal Reduction.
In addition to P&I Advances, the Master Servicer will also be obligated
(subject to the limitations described herein) to make cash advances ("Property
Advances," and together with P&I Advances, "Advances") (a) to pay certain costs
and expenses incurred in connection with defaulted Mortgage Loans, acquisition
of title to, or management of, REO Properties, or the sale of defaulted
Mortgage Loans or REO Properties, (b) to pay delinquent real estate taxes,
assessments and hazard insurance premiums and (c) to cover other similar costs
and expenses necessary to protect and preserve the security of the related
Mortgage. None of the Master Servicer, the Special Servicer or the Trustee, as
applicable, shall be obligated to advance from its own funds any amounts
required to cure any failure of any Mortgaged Property to comply with any
applicable environmental law or to contain, clean up or remedy any
environmental condition present at any Mortgaged Property, and such expense
shall be an expense of the Trust Fund.
If the Trustee becomes the successor Master Servicer, the Trustee, as
successor master servicer acting in accordance with the servicing standards set
forth in the Pooling and Servicing Agreement, will be required to make the
Advances subject to its determination of recoverability. The Trustee will be
entitled to rely conclusively on any non-recoverability determination of the
Master Servicer. See "--The Trustee" below.
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The obligation of the Master Servicer or the Trustee, as applicable, to
make Advances with respect to any Mortgage Loan continues through the
foreclosure of such Mortgage Loan and until the liquidation of the Mortgage
Loan or related Mortgaged Properties. Advances are intended to provide a
limited amount of liquidity and not to guarantee or insure against losses.
Neither the Master Servicer nor the Trustee will be required to make any
Advance that it determines (possibly based on, among other things, an updated
appraisal), in its good faith business judgment, will not be recoverable out of
related late payments, Insurance Proceeds, Liquidation Proceeds and certain
other collections with respect to the Mortgage Loan as to which such Advance
was made. To the extent that any borrower is not obligated under its Mortgage
Loan Documents to pay or reimburse any portion of any related outstanding
Advances as a result of a modification of such Mortgage Loan by the Special
Servicer that forgives loan payments or other amounts that the Master Servicer
or the Trustee previously advanced, and the Master Servicer or the Trustee
determines that no other source of payment or reimbursement for such Advances
is available to it, such Advances will be deemed to be nonrecoverable. In
addition, if the Master Servicer or the Trustee, as applicable, determines that
any Advance previously made will not be recoverable from the foregoing sources,
then the Master Servicer or the Trustee, as applicable, will be reimbursed for
such Advance, plus interest thereon, out of amounts on deposit in the
Collection Account before any distributions are made on the Certificates. Any
such determination must be evidenced by an officer's certificate delivered to
the Trustee (or, in the case of the Trustee, to the Depositor) setting forth
such determination of nonrecoverability and the procedure and considerations of
the Master Servicer or the Trustee, as applicable, forming the basis of such
determination. Such officer's certificate must include a copy of the updated
appraisal or any other information or reports obtained by the Master Servicer
or the Trustee, as applicable, such as property operating statements, rent
rolls, property inspection reports, engineering reports and other documentation
which may support the determination as set forth in such certificate.
The Master Servicer or the Trustee, as applicable, will be reimbursed for
any Advance it has made from (1) any collections on or in respect of the
particular Mortgage Loan or REO Property with respect to which such Advance was
made or (2) upon determining that such Advance is not recoverable in the manner
described in the preceding paragraph, from any other amounts from time to time
on deposit in the Collection Account.
The Master Servicer or the Trustee, as applicable, will be entitled to
receive interest at a rate equal to the prime rate published in The Wall Street
Journal, or if The Wall Street Journal is no longer published, The New York
Times (the "Advance Rate"), on its outstanding Advances. The Master Servicer or
the Trustee, as applicable, will be authorized to pay itself such interest from
general collections on all of the Mortgage Loans before any payments are made
to holders of Certificates. If the interest on such Advance is not offset by
the Default Interest, a shortfall will result which generally will result in a
Class Interest Shortfall for the most Subordinate Class then outstanding.
APPRAISAL REDUCTIONS
After an Appraisal Reduction Event has occurred for a Mortgage Loan, an
Appraisal Reduction will be calculated for such Mortgage Loan. An "Appraisal
Reduction Event" for a Mortgage Loan will occur at the earliest of:
(1) the third anniversary of the date on which the first extension of the
maturity date of such Mortgage Loan became effective as a result of a
modification of such Mortgage Loan by the Special Servicer, which extension did
not decrease the aggregate amount of Monthly Payments on the Mortgage Loan;
(2) 120 days after an uncured delinquency occurs for such Mortgage Loan;
(3) the date on which a reduction in the amount of Monthly Payments on
such Mortgage Loan, or a change in any other material economic term of such
Mortgage Loan (other than an extension of its maturity) becomes effective as a
result of a modification of such Mortgage Loan by the Special Servicer;
(4) 60 days after a receiver has been appointed;
(5) 60 days after the related borrower of such Mortgage Loan declares
bankruptcy or is the subject of an involuntary bankruptcy proceeding; or
(6) immediately after such Mortgage Loan becomes an REO Mortgage Loan;
provided, however, that an Appraisal Reduction Event will not occur at any time
when the aggregate Certificate Balances of all Classes of Certificates other
than the Senior Certificates have been reduced to zero.
The "Appraisal Reduction" for any Distribution Date and for any Mortgage
Loan as to which any Appraisal Reduction Event has occurred will be an amount
equal to the excess, if any, of (1) the outstanding Scheduled Principal Balance
of such
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Mortgage Loan over (2) the excess of (a) 90% of the Appraised Value of the
related Mortgaged Property as determined (A) by one or more appraisals, if such
Mortgage Loan has an outstanding Scheduled Principal Balance equal to or in
excess of $2,000,000, conducted in compliance with the Code of Professional
Ethics and Standards of Professional Conduct of the Appraisal Institute and the
Uniform Standards of Professional Appraisal Practice as adopted by the
Appraisal Standards Board of the Appraisal Foundation and accepted and
incorporated into FIRREA (the costs of which will be paid by the Master
Servicer as a Property Advance) or (B) by either an appraisal conducted as
described in the preceding clause (A) or an internal valuation performed by the
Special Servicer, if such Mortgage Loan has an outstanding Scheduled Principal
Balance less than $2,000,000 over (b) the sum of (A) to the extent not
previously advanced by the Master Servicer or the Trustee, all unpaid interest
on such Mortgage Loan at a per annum rate equal to its Mortgage Rate, (B) all
unreimbursed Advances (and interest thereon) in respect of such Mortgage Loan
and (C) all currently due and unpaid real estate taxes and assessments,
insurance premiums, ground rents and all other amounts due and unpaid with
respect to such Mortgage Loan (which taxes, assessments, premiums, ground rents
and other amounts have not been subject to an Advance by the Master Servicer or
the Trustee. If an appraisal is to be obtained as described above, the Special
Servicer must obtain such appraisal within 60 days of the occurrence of the
related Appraisal Reduction Event (and not more than 120 days thereafter,
including within such 120-day period the passage of any time period set forth
in the definition of Appraisal Reduction Event). If such appraisal is not
obtained by such date, the Appraisal Reduction for the related Mortgage Loan
will be 35% of the outstanding Scheduled Principal Balance of such Mortgage
Loan as of the date of the related Appraisal Reduction Event. On the first
Determination Date occurring on or after the delivery of such appraisal, the
Special Servicer will be required to calculate and report to the Master
Servicer, and the Master Servicer will report to the Trustee and the Directing
Certificateholder, the Appraisal Reduction to take into account such appraisal.
The Directing Certificateholder shall have the right, at any time within six
months of the date of its receipt of any appraisal of any Mortgaged Property
required to be obtained as set forth above, to require that the Special
Servicer obtain a new appraisal of such Mortgaged Property meeting the criteria
specified above. The cost of any such appraisal shall be paid by the
Controlling Class Certificateholders without right of reimbursement. However,
the Special Servicer shall not be required to obtain any such appraisal unless
the Special Servicer shall have received reasonable assurance of payment of the
costs of such appraisal and of any expenses related thereto. Upon receipt of
the appraisal obtained pursuant to the immediately preceding sentence, the
Special Servicer shall redetermine and report to the Servicer, the Trustee and
the Directing Certificateholder the amount of the Appraisal Reduction on the
basis of both appraisals with respect to such Mortgage Loan, and such
redetermined Appraisal Reduction shall replace the prior Appraisal Reduction
with respect to such Mortgage Loan.
As a result of calculating an Appraisal Reduction for a Mortgage Loan, the
P&I Advance for such Mortgage Loan for the related Remittance Date will be
reduced, which will have the effect of reducing the amount of interest
available for distribution to the Certificateholders. The maximum amount of the
P&I Advance for any Distribution Date and any Mortgage Loan for which an
Appraisal Reduction has been calculated will equal the product of (1) the
scheduled Monthly Payment due during the related Collection Period and (2) the
outstanding principal balance of such mortgage loan less the amount of such
Appraisal Reduction divided by the outstanding principal balance of such
Mortgage Loan. Appraisal Reductions will be allocated to the Subordinate
Certificates in reverse sequential order of the Classes for purposes of
determining Voting Rights. See "--Realization Upon Mortgage Loans" and
"--Voting Rights" herein.
With respect to each Mortgage Loan as to which an Appraisal Reduction has
occurred (unless such Mortgage Loan has become a Corrected Mortgage Loan and
has remained current for twelve consecutive Monthly Payments and no other
Appraisal Reduction Event has occurred and is continuing), the Special Servicer
is required, within 30 days before each anniversary of such Appraisal Reduction
Event, unless the outstanding Scheduled Principal Balance of such Mortgage Loan
is $1,000,000 or less, to order an appraisal (which may be an update of a prior
appraisal) or, with respect to any Mortgage Loan with an outstanding principal
balance less than $2,000,000, perform an internal valuation or obtain an
appraisal (which may be an update of a prior appraisal), the cost of which will
be paid by the Master Servicer as a Property Advance recoverable from the Trust
Fund. Based upon such appraisal, internal valuation or, as described in the
second preceding paragraph, percentage calculation of the Appraisal Reduction,
as the case may be, the Special Servicer will redetermine and report to the
Master Servicer and the Trustee the amount of the Appraisal Reduction for such
Mortgage Loan, and such redetermined Appraisal Reduction will replace the prior
Appraisal Reduction for such Mortgage Loan. Notwithstanding the foregoing, the
Special Servicer will not be required to obtain an appraisal or perform an
internal valuation for a Mortgage Loan which is the subject of an Appraisal
Reduction Event if the Special Servicer has obtained an appraisal for the
related Mortgaged Property during the 12-month period before the occurrence of
such Appraisal Reduction Event. Instead, the Special Servicer may use such
prior appraisal in calculating any Appraisal Reduction for such Mortgage Loan.
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ACCOUNTS
Collection Account. The Master Servicer will establish and maintain a
segregated account or accounts (the "Collection Account") into which it will be
required to deposit, within two Business Days of receipt, the following
payments and collections received or made by it on or with respect to the
Mortgage Loans:
(1) all payments on account of principal on the Mortgage Loans, including
the principal component of Unscheduled Payments on the Mortgage Loans;
(2) all payments on account of interest and Default Interest on the
Mortgage Loans and the interest portion of all Unscheduled Payments and all
Prepayment Premiums;
(3) any amounts required to be deposited by the Master Servicer in
connection with losses realized on Permitted Investments with respect to funds
held in the Collection Account and in connection with Prepayment Interest
Shortfalls;
(4) all Net REO Proceeds transferred from an REO Account, (b) all amounts
transferred from lockbox accounts in respect of ARD Loans and payable to the
Certificateholders and (c) all Condemnation Proceeds, Insurance Proceeds and
Liquidation Proceeds (net of related expenses) not required to be applied to
the restoration or repair of the related Mortgaged Property;
(5) any amounts received from borrowers that represent recoveries of
Property Advances or Appraisal Reduction Excess Collections; and
(6) any other amounts required by the provisions of the Pooling and
Servicing Agreement to be deposited into the Collection Account by the Master
Servicer or the Special Servicer, including, without limitation, proceeds of
any purchase or repurchase of a Mortgage Loan as described under "Description
of the Mortgage Pool--Representations and Warranties; Repurchase," "The Pooling
and Servicing Agreement--Realization Upon Mortgage Loans" and "Description of
the Certificates--Early Termination" herein.
The foregoing requirements for deposits in the Collection Account will be
exclusive, and any payments in the nature of late payment charges, late fees,
"insufficient funds" check charges, assumption fees, loan modification fees,
loan service transaction fees, extension fees, demand fees, beneficiary
statement charges and similar fees need not be deposited in the Collection
Account by the Master Servicer. To the extent permitted by applicable law, the
Master Servicer or the Special Servicer, as applicable, will be entitled to
retain any such charges and fees received with respect to the Mortgage Loans.
In the event that the Master Servicer deposits into the Collection Account any
amount not required to be deposited therein, the Master Servicer may at any
time withdraw such amount from the Collection Account.
Distribution Account. The Trustee will establish and maintain a segregated
account or accounts (the "Distribution Account") in its name in trust for the
benefit of the holders of Certificates. For each Distribution Date, the Master
Servicer will deposit in the Distribution Account, to the extent of funds on
deposit in the Collection Account on or before the Remittance Date, the
aggregate amount of Available Funds as required by the Pooling and Servicing
Agreement, plus (1) any Prepayment Premiums, Yield Maintenance Charges, Excess
Interest and Appraisal Reduction Excess Collections received by the Master
Servicer during the related Collection Period, (2) any Default Interest
received with respect to any Mortgage Loan that is in default with respect to
its Balloon Payment, and (3) amounts payable to the Trustee as compensation for
its services (including, but not limited to, the Trustee Fee). To the extent
not included in Available Funds, the Master Servicer will remit to the Trustee
all P&I Advances for deposit into the Distribution Account on the related
Remittance Date. See "Description of the Certificates--Distributions" herein.
The Collection Account and the Distribution Account will be held in the
name of the Trustee (or, in the case of the Collection Account, the Master
Servicer on behalf of the Trustee) on behalf of the holders of Certificates,
and the Trustee (and, in the case of the Collection Account, the Master
Servicer) will be authorized to make withdrawals therefrom. Each of the
Collection Account and the Distribution Account will be either (1) a segregated
account or accounts maintained with either a federally or state-chartered
depository institution or trust company, the short term unsecured debt
obligations of which are rated at least P-1 by Moody's and at least A-1+ by
Fitch or, if deposits are to be held therein for 30 or more days, the long term
unsecured debt obligations of which (or of such institution's parent holding
company) are rated at least Aa2 by Moody's and at least BBB by Fitch or (2) a
segregated trust account or accounts maintained with a federally or state
chartered depository institution or trust company acting in its fiduciary
capacity, having, in either case, a combined capital and surplus of at least
$50,000,000 and subject to supervision or examination by federal or state
authority and subject to regulations regarding fiduciary funds on deposit
substantially similar to 12 CFR 9.10(b), or as to which the Trustee has been
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informed in writing by each Rating Agency that the maintenance of such account
will not, in and of itself, result in a downgrading, withdrawal or
qualification of the rating then assigned by such Rating Agency to any Class of
Certificates (an "Eligible Bank"). Amounts on deposit in the Collection Account
and certain other accounts may be invested in certain United States government
securities and other investments specified in the Pooling and Servicing
Agreement ("Permitted Investments"). See "Description of the
Certificates--Accounts" in the Prospectus for a listing of Permitted
Investments.
WITHDRAWALS FROM THE COLLECTION ACCOUNT
The Master Servicer may make withdrawals from the Collection Account for
the following purposes:
(1) to remit on or before each Remittance Date to the Distribution Account
an amount equal to Available Funds and any Prepayment Premiums, Yield
Maintenance Charges, Excess Interest and Appraisal Reduction Excess Collections
for the related Distribution Date;
(2) to pay or reimburse the Master Servicer or the Trustee, as applicable,
for Advances made by it and interest on such Advances, but the Master
Servicer's right to reimburse itself will be limited as described herein under
"--Advances";
(3) to (a) pay on or before each Remittance Date to the Master Servicer,
the Special Servicer or the Special Sub-Servicer, as applicable the fee portion
of the servicing compensation for the related Distribution Date (provided that
the Servicing Fees must be paid from interest received on the related Mortgage
Loan), (b) pay from time to time to the Master Servicer any interest or
investment income earned on funds deposited in the Collection Account, (c) pay
to the Master Servicer as additional servicing compensation any Prepayment
Interest Surplus received in the preceding Collection Period, and (d) pay to
the Master Servicer, the Special Servicer or the Special Sub-Servicer, as
applicable, any other amounts constituting additional servicing compensation;
(4) to pay on or before each Distribution Date to the Depositor, the
Transferor, the related Mortgage Loan Seller or other purchaser of each
Mortgage Loan or REO Property that has previously been purchased or repurchased
by such person pursuant to the Pooling and Servicing Agreement, all amounts
received thereon during the related Collection Period and after the date as of
which the price of such purchase or repurchase was determined;
(5) to the extent not reimbursed or paid pursuant to any of the above
clauses, to reimburse or pay to the Master Servicer, the Special Servicer, the
Special Sub-Servicer, the Trustee and/or the Depositor, as applicable, for
certain other unreimbursed expenses incurred by or on behalf of such person
pursuant to and to the extent reimbursable under the Pooling and Servicing
Agreement and to satisfy any other payment or reimbursement obligations of the
Trust Fund under the Pooling and Servicing Agreement;
(6) to pay to the Trustee amounts payable as compensation, including, but
not limited to, the Trustee Fee, and amounts requested by the Trustee to pay
taxes on certain net income with respect to REO Properties (provided that the
Trustee will also have the right to withdraw such amounts for such
applications);
(7) to withdraw any amount deposited into the Collection Account that was
not required to be deposited therein; and
(8) to clear and terminate the Collection Account pursuant to a plan for
termination and liquidation of the Trust Fund.
ENFORCEMENT OF "DUE-ON-SALE" AND "DUE-ON-ENCUMBRANCE" CLAUSES
The Master Servicer or the Special Servicer, as applicable, will be
obligated to enforce the Trustee's rights under the "due-on-sale" clause in the
related Mortgage Loan Documents to accelerate the maturity of the related
Mortgage Loan, unless (1) such provision is not enforceable under applicable
law, (2) such enforcement is reasonably likely to result in meritorious legal
action by the related borrower, or (3) the Master Servicer or the Special
Servicer, as applicable, acting in accordance with the servicing standards
described herein, determines that such enforcement is not in the best interests
of the Trust Fund. However, if the Scheduled Principal Balance of any Mortgage
Loan or a group of Mortgage Loans (1) made to a single borrower or affiliated
borrowers or (2) that is secured by any group of cross-collateralized Mortgaged
Properties equals or exceeds 5% of the Pool Balance, and if the related
Mortgage Loan Documents permit the Master Servicer to require such
confirmation, the Master Servicer or the Special Servicer, as applicable, will
not be permitted to refrain from enforcing the Trustee's rights under the
"due-on-sale" clause in such Mortgage Loan or a group of Mortgage Loans without
obtaining a confirmation from each Rating Agency that such forbearance will not
result, in and of itself, in a downgrading, withdrawal or qualification of its
then current rating of any Class of Certificates.
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If (1) applicable law prohibits the enforcement of a "due-on-sale" clause,
(2) the Master Servicer or the Special Servicer is otherwise prohibited from
taking such action, or (3) the Master Servicer or the Special Servicer has
determined that such enforcement is not in the best interests of the Trust Fund
as described in the preceding paragraph (and the confirmation from each Rating
Agency described therein has been obtained), then the Mortgage Loan in question
may be assumed by a third person. As a result, (1) the original borrower may be
released from liability for the unpaid principal balance of such Mortgage Loan
and interest thereon at the applicable Mortgage Rate during the remaining term
of such Mortgage Loan, (2) the Master Servicer may accept payments in respect
of such Mortgage Loan from the new owner of the related Mortgaged Property, and
(3) the Master Servicer or the Special Servicer, as applicable, may enter into
an assumption agreement with a new purchaser whereby the new owner of the
related Mortgaged Property will be substituted as the borrower and the original
borrower will be released, so long as (to the extent permitted by law) the new
owner satisfies the underwriting requirements customarily imposed by the Master
Servicer or the Special Servicer, as applicable, as a condition to its approval
of a borrower on a new mortgage loan substantially similar to such Mortgage
Loan. In the event a Mortgage Loan is assumed as described in the preceding
sentence, the Trustee, the Master Servicer and the Special Servicer will not
permit any modification of such Mortgage Loan other than as described below
under "--Amendments, Modifications and Waivers." The Master Servicer or the
Special Servicer, as applicable, will be entitled to retain as additional
servicing compensation any assumption fees paid by the original borrower or the
new owner in connection with such assumption. See "Certain Legal Aspects of the
Mortgage Loans--Enforceability of Certain Provisions--Due-on-Sale Provisions"
in the Prospectus. A new owner of the related Mortgaged Property may be
substituted, or a junior or senior lien may be allowed on the related Mortgaged
Property, without the consent of the Master Servicer, the Special Servicer or
the Trustee in a bankruptcy proceeding involving the Mortgaged Property.
If any Mortgage Loan contains a provision in the nature of a
"due-on-encumbrance" clause, which by its terms (1) provides that such Mortgage
Loan will (or may at the related mortgagee's option) become due and payable
upon the creation of any lien or other encumbrance on such Mortgaged Property
or (2) requires the consent of the related mortgagee to the creation of any
such lien or other encumbrance on such Mortgaged Property, then, for so long as
the related Mortgage Loan is included in the Trust Fund, and such borrower
creates any such lien or other encumbrance, the Master Servicer or the Special
Servicer, as applicable, on behalf of the Trust Fund, will enforce such
provision. As a result, the Master Servicer or the Special Servicer, as
applicable, will (1) accelerate the payments due on such Mortgage Loan or (2)
withhold its consent to the creation of any such lien or other encumbrance, as
applicable. However, the Master Servicer or the Special Servicer, as
applicable, will not enforce such provision if, acting in accordance with the
applicable servicing standards, it determines that such enforcement would not
be in the best interests of the Trust Fund and it is able to obtain the
confirmation of each Rating Agency that such Rating Agency will not downgrade,
withdraw or qualify its then current rating of any Class of Certificates as a
result of such forbearance from enforcement.
A "due-on-sale" or "due-on-encumbrance" clause may, under certain
circumstances, be unenforceable against a borrower that is a debtor in a case
under the Bankruptcy Code. In addition, notwithstanding the foregoing, the
Master Servicer or the Special Servicer, as applicable, may elect to consent to
the assumption of a Mortgage Loan by a prospective new borrower, or to refrain
from enforcing any "due-on-encumbrance" provision relating to any junior or
senior lien on a Mortgaged Property imposed in any bankruptcy proceeding
involving such Mortgaged Property.
INSPECTIONS; APPRAISALS
The Master Servicer (or the Special Servicer with respect to Specially
Serviced Mortgage Loans or REO Properties) is required, at its own expense, to
inspect each Mortgaged Property at such times and in such manner as are
consistent with the servicing standards described herein, but will in any event
be required to (1) inspect each Mortgaged Property at least once every 12
months (or 24 months for any Mortgage Loan with a principal balance of less
then $2,000,000), with the first such inspection to be completed on or before
April 30, 2000, unless each of the Rating Agencies has confirmed in writing
that a longer period between inspections (which may not exceed 24 months) will
not result, in and of itself, in a downgrading, withdrawal or qualification of
the rating then assigned by such Rating Agency to any Class of Certificates;
and (2) inspect the related Mortgaged Property as soon as practicable after the
Master Servicer or the Special Servicer, as applicable, has received any
financial and lease reporting fees for any Mortgage Loan (unless such property
has been inspected by the Master Servicer or the Special Servicer during the
preceding 120-day period). In addition, if any Monthly Payment on any Mortgage
Loan becomes more than 60 days delinquent (without giving effect to any grace
period permitted under the related promissory note or Mortgage), the Special
Servicer will inspect each related Mortgaged Property at its own expense as
soon as practicable thereafter.
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REALIZATION UPON MORTGAGED PROPERTIES
If a Mortgage Loan has defaulted or, in the Special Servicer's judgment, a
payment default is imminent, the Special Servicer may at any time institute
foreclosure proceedings, exercise any power of sale contained in the related
Mortgage or otherwise acquire title to the related Mortgaged Property.
General Standards for Conduct in Foreclosing or Selling Defaulted Loans
Any costs and expenses incurred in any foreclosure or similar proceedings
will be advanced by the Master Servicer as a Property Advance, unless the
Master Servicer determines that such Advance would constitute a Nonrecoverable
Advance.
If the Special Servicer elects to proceed with a non-judicial foreclosure
in accordance with the laws of the jurisdiction in which the subject Mortgaged
Property is located, the Special Servicer will not be required to pursue a
deficiency judgment against the related borrower or any other liable party if
(1) the laws of the jurisdiction do not permit such a deficiency judgment after
a non-judicial foreclosure or (2) the Special Servicer determines, in its best
judgment, that the likely recovery resulting from a deficiency judgment will
not be sufficient to warrant the cost, time, expense and/or exposure of
pursuing the deficiency judgment and such determination is evidenced by an
officer's certificate delivered to the Trustee.
The Special Servicer, on behalf of the Trust Fund, is prohibited from
obtaining title to a Mortgaged Property as a result of or in lieu of
foreclosure or otherwise obtaining title to any direct or indirect partnership
interest or other equity interest in any borrower pledged pursuant to a pledge
agreement and thereby become the beneficial owner of a Mortgaged Property, and
otherwise acquiring possession of, or taking any other action with respect to,
any Mortgaged Property if, as a result of any such action, the Trustee, for the
Trust Fund or the Certificateholders, would be considered to hold title to, to
be a "mortgagee-in-possession" of, or to be an "owner" or "operator" of such
Mortgaged Property within the meaning of CERCLA or any comparable law, unless
the Special Servicer has previously determined, in accordance with the
servicing standards set forth in the Pooling and Servicing Agreement and based
on an updated ESA prepared within the past twelve months by a person
independent of the Special Servicer who regularly conducts environmental
assessments, that:
(1) such Mortgaged Property is in compliance with applicable environmental
laws in all material respects or, if such Mortgaged Property is found not to be
in compliance after consultation with an environmental consultant, that it
would be in the best economic interest of the Trust Fund to take such actions
as are necessary to bring such Mortgaged Property in compliance with such laws,
and
(2) there are no circumstances present at such Mortgaged Property relating
to the use, management or disposal of any hazardous materials for which
investigation, testing, monitoring, containment, clean-up or remediation could
reasonably be required under any currently effective federal, state or local
law or regulation, or that, if any such hazardous materials are present for
which such action could reasonably be required, after consultation with an
environmental consultant, it would be in the best economic interest of the
Trust Fund to take such actions with respect to such Mortgaged Property.
In the event that the environmental assessment last obtained by the
Special Servicer with respect to a Mortgaged Property indicates that such
Mortgaged Property may not be in compliance with applicable environmental laws
in all material respects or that hazardous materials may be present but does
not definitively establish such fact, the Special Servicer will cause such
further environmental tests as the Special Servicer deems prudent to protect
the interests of Certificateholders to be conducted by a person independent of
the Special Servicer who regularly conducts such tests. Any such tests will be
deemed part of the ESA obtained by the Special Servicer for these purposes. In
the event that title to any Mortgaged Property is acquired in foreclosure or by
deed-in-lieu of foreclosure, the deed or certificate of sale will be issued to
the Trustee or to its nominee (which may not be the Master Servicer or the
Special Servicer) or a separate trustee or co-trustee on behalf of the Trust
Fund. Notwithstanding any such acquisition of title and cancellation of the
related Mortgage Loan, such Mortgage Loan will be considered to be a Mortgage
Loan held in the Trust Fund until such time as the related REO Property is sold
by the Trust Fund. Net REO Proceeds with respect to such REO Property will be
allocated in reduction of the principal balance of such Mortgage Loan and
treated as Available Funds.
If the Trust Fund acquires a Mortgaged Property by foreclosure or
deed-in-lieu of foreclosure upon a default of a Mortgage Loan, the Pooling and
Servicing Agreement provides that the Special Servicer must administer such
Mortgaged Property in such manner so that it qualifies at all times as
"foreclosure property" within the meaning of Code Section 860G(a)(8). The
Pooling and Servicing Agreement also requires that, within 90 days of the Trust
Fund's acquisition of such Mortgaged Property, the Special Servicer contract
with an independent contractor (as defined in the Pooling and Servicing
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Agreement) for the management and operation of such Mortgaged Property, unless
the Special Servicer provides the Trustee with an opinion of counsel that the
operation and management of the Mortgaged Property other than through an
independent contractor will not cause such Mortgaged Property to fail to
qualify as "foreclosure property." Such opinion will be obtained at an expense
of the Trust Fund.
The Special Servicer may offer to sell to any person any Specially
Serviced Mortgage Loan or any REO Property, if and when the Special Servicer
determines, consistent with the servicing standards set forth in the Pooling
and Servicing Agreement, that such a sale would be in the best economic
interests of the Trust Fund. In any event, the Special Servicer will offer to
sell each REO Property so that the sale of such REO Property will occur within
the period specified in the Pooling and Servicing Agreement. For any such sale
of a Specially Serviced Mortgaged Loan or a REO Property, the Special Servicer
will give the Trustee at least 10 Business Days prior written notice of its
intention to sell. The Special Servicer will accept an offer from any person
that is determined by the Special Servicer to be a fair price for such
Specially Serviced Mortgage Loan or REO Property, if the highest offeror is not
an Interested Person, or is determined to be such a price by the Trustee (which
may be based upon updated independent appraisals received by the Trustee or the
Special Servicer, as applicable), if the highest offeror is an Interested
Person; provided, however, that any offer by an Interested Person in the amount
of the repurchase price determined in accordance with the Pooling and Servicing
Agreement shall be deemed to be a fair price. "Interested Person" means the
Depositor, the Master Servicer, the Special Servicer, the Trustee, any borrower
or property manager of a Mortgaged Property, an independent contractor engaged
by the Special Servicer to manage or operate an REO Property or any known
affiliate of any of the foregoing. Notwithstanding anything to the contrary
herein, neither the Trustee, in its individual capacity, nor any of its
affiliates may offer to purchase any Specially Serviced Mortgage Loan or any
REO Property. In addition, the Special Servicer may accept an offer that is not
the highest offer if it determines, in accordance with the servicing standards
set forth in the Pooling and Servicing Agreement, that acceptance of such offer
would be in the best interests of the holders of Certificates (for example, if
the prospective buyer making the lower offer is more likely to perform its
obligations, or other terms offered by the prospective buyer making the lower
offer are more favorable).
The Special Servicer will prepare a report (an "Asset Status Report") for
each Mortgage Loan which becomes a Specially Serviced Mortgage Loan within 30
days after the servicing of such Mortgage Loan is transferred to the Special
Servicer. The Special Servicer will deliver each Asset Status Report to the
Master Servicer, the Directing Certificateholder and the Rating Agencies. The
Directing Certificateholder may object to any Asset Status Report within 10
business days of receipt; provided, however, that the Special Servicer shall
implement the recommended action as outlined in such Asset Status Report if it
makes an affirmative determination that such objection is not in the best
interest of all the Certificateholders. In connection with making such
affirmative determination, the Special Servicer will request a vote by all the
Certificateholders. If the majority of Certificateholders fail within five days
after the notice of such vote is sent to them to reject such Asset Status
Report, the Special Servicer shall implement the same. If the majority of
Certificateholders reject the Asset Status Report, the Special Servicer shall
revise such Asset Status Report as set forth below. If the Directing
Certificateholder does not disapprove an Asset Status Report within 10 business
days, the Special Servicer shall implement the recommended action as outlined
in such Asset Status Report.
If the Directing Certificateholder disapproves such Asset Status Report
and the Special Servicer has not made the affirmative determination described
above, the Special Servicer will revise such Asset Status Report as soon as
practicable thereafter, but in no event later than 30 days after such
disapproval. The Special Servicer will revise such Asset Status Report until
the earlier of (1) the Directing Certificateholder's failure to disapprove such
revised Asset Status Report as described above; or (2) the Special Servicer
makes a determination that such objection is not in the best interests of the
Certificateholders. The Special Servicer shall implement the recommended action
as outlined in such Asset Status Report in a commercially reasonable manner.
The Special Servicer will not be required to take or refrain from taking
any action in connection with any Asset Status Report that would cause it to
violate applicable law, this Agreement, including the Servicing Standard, or
the REMIC Provisions. No direction of the Directing Certificateholder shall (1)
require or cause the Special Servicer to violate the terms of a Specially
Serviced Mortgage Loan, applicable law or any provision of this Agreement,
including the Servicing Standard and to maintain the REMIC status of each Trust
REMIC, or (2) result in the imposition of a "prohibited transaction" or
"prohibited contribution" tax under the REMIC Provisions, (3) expose the Master
Servicer, the Special Servicer, the Depositor, the Mortgage Loan Seller, the
Trust Fund, the Trustee or their officers, directors, employees or agents to
any claim, suit or liability, or (4) materially expand the scope of the Special
Servicer's or the Master Servicer's responsibilities under this Agreement.
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"Directing Certificateholder" means the Controlling Class
Certificateholder selected by the Holders of more than 50% of the Percentage
Interests in the Controlling Class, by Certificate Balance; provided, however,
that (1) absent such selection, (2) until a Directing Certificateholder is so
selected or (3) upon receipt by the Trustee of a notice from the Holders of
more than 50% of the Percentage Interests in the Controlling Class, by
Certificate Balance, that a Directing Certificateholder is no longer
designated, the Controlling Class Certificateholder that owns the largest
aggregate Certificate Balance of the Controlling Class will be the Directing
Certificateholder.
"Controlling Class" means, as of any date of determination, the most
subordinate Class of Regular Certificates then outstanding that then has an
aggregate Certificate Balance at least equal to (a) 25% of the initial
Certificate Balance of such Class, in the case of the Class M Certificates, or
(b) 50% of the initial Certificate Balance of such Class, in the case of any
Class of Certificates other than the Class M Certificates (or if no such Class
exists, the most subordinate Class then outstanding). As of the Closing Date,
the Controlling Class will be the Class M Certificates.
"Controlling Class Certificateholders" means each Holder (or Certificate
Owner, if applicable) of a Certificate of the Controlling Class as certified by
the Certificate Registrar to the Trustee from time to time by such Holder (or
Certificate Owner).
After a default in the payment of a Balloon Payment, the Special Servicer
may, acting in accordance with the servicing standards set forth in the Pooling
and Servicing Agreement, grant any number of successive extensions of up to 12
months (or the period from the beginning of the first of such extension, if
shorter) on the defaulted Mortgage Loan. However, the Special Servicer may not
grant any extension that (1) permits the related borrower to make payments of
only interest for a period of longer than 12 months in the aggregate, or (2)
extends the maturity date of the related Mortgage Loan beyond the date that is
10 years before the expiration of any related ground lease with respect to the
Mortgaged Property securing such Mortgage Loan without the written consent of
each Rating Agency or beyond 5 years from the original maturity date of such
Mortgage Loan based on its original amortization schedule.
AMENDMENTS, MODIFICATIONS AND WAIVERS
The Master Servicer and the Special Servicer have, subject to the
restrictions noted above and in the Pooling and Servicing Agreement, the
authority to prepare and execute any modifications, waivers, consents or
amendments with respect to any Mortgage Loan, including modification of the
Mortgage Rate, forgiveness of principal and interest payments, and extension of
the maturity date. Neither the Master Servicer nor the Special Servicer may
amend, modify, waive or otherwise consent to the change of the stated maturity
date of any Mortgage Loan, the payment of principal of or interest (including
Default Interest) on any Mortgage Loan, or any other term of any Mortgage Loan,
unless (1) such amendment, modification, waiver or consent is not a
"significant modification" under Section 1001 of the Code, (2) to the extent
such amendment, modification, waiver or consent would constitute a "significant
modification" under Section 1001 of the Code, such modification is occasioned
by a default or a reasonably foreseeable default on such Mortgage Loan, or (3)
the Master Servicer or the Special Servicer shall have received an Opinion of
Counsel (at the Trust Fund's expense) that such amendment, modification or
waiver would not cause an imposition of a tax under the REMIC Provisions or
cause a loss of the REMIC status. In addition, the Special Servicer shall not,
under any circumstances, extend the maturity date of any Mortgage Loan beyond 5
years from the original maturity date of such Mortgage Loan based on its
original amortization schedule.
The Trust Fund will indemnify the Depositor, the Master Servicer, the
Special Servicer, the Special Sub-Servicer and the Directing Certificateholder,
and any of the directors, officers, employees or agents of the Depositor, the
Master Servicer, the Special Servicer, the Special Sub-Servicer or the
Directing Certificateholder (or of any general partner of any of them) against
any loss, liability or expense incurred in connection with any legal action
relating to the Pooling and Servicing Agreement or the Certificates not (i)
incurred by reason of its respective willful misfeasance, bad faith, fraud or
negligence or (in the case of the Master Servicer, Special Servicer, the
Special Sub-Servicer or Directing Certificateholder) a breach of the Servicing
Standard in the performance of its respective duties or by reason of reckless
disregard of its respective obligations or duties hereunder of (ii) imposed by
any taxing authority.
THE TRUSTEE
The Chase Manhattan Bank, a New York banking corporation with its
principal offices in New York, New York, will act as the Trustee pursuant to
the Pooling and Servicing Agreement. The Trustee's corporate trust office is
located at 450 West 33rd Street, 14th Floor, New York, New York 10001; Capital
Markets Fiduciary Services (CMBS).
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The Trustee may resign at any time by giving written notice to the
Depositor, the Master Servicer, the Special Servicer and the Rating Agencies.
Upon such notice of the Trustee's resignation, the Master Servicer will appoint
a successor trustee. If no successor trustee is appointed within 30 days after
the giving of such notice of resignation, the resigning Trustee may petition
any court of competent jurisdiction for appointment of a successor trustee.
The Depositor or the Master Servicer may remove the Trustee if, among
other things, (1) the Trustee ceases to be eligible to continue as such under
the Pooling and Servicing Agreement, (2) the Trustee at any time becomes
incapable of acting, (3) the Trustee is adjudged bankrupt or insolvent, (4) a
receiver of the Trustee or its property is appointed, or (5) any public officer
takes charge or control of the Trustee or its property. The holders of
Certificates representing a majority of the aggregate Voting Rights may remove
the Trustee upon written notice to the Master Servicer, the Special Servicer,
the Depositor and the Trustee. No resignation or removal of the Trustee or
appointment of a successor trustee will become effective until the acceptance
of the appointment by the successor trustee.
The Trust Fund will indemnify the Trustee and its directors, officers,
employees, agents and affiliates against any and all losses, liabilities,
damages, claims or expenses (including reasonable attorneys' fees) arising in
respect of the Pooling and Servicing Agreement or the Certificates (but only to
the extent that they are expressly reimbursable under the Pooling and Servicing
Agreement or are "unanticipated expenses incurred by the REMIC" under Treasury
Regulations Section 1.860G-1(b)(s)(ii)) other than those resulting from the
negligence, fraud, bad faith or willful misconduct of the Trustee and those for
which such indemnified persons are indemnified by the Master Servicer or the
Special Servicer as described in the last sentence of this paragraph. The
Trustee will not be required to expend or risk its own funds or otherwise incur
financial liability in the performance of any of its duties under the Pooling
and Servicing Agreement or in the exercise of any of its rights or powers if,
in the Trustee's opinion, the repayment of such funds or adequate indemnity
against such risk or liability is not reasonably assured to it. Each of the
Master Servicer, the Special Servicer and the Special Sub-Servicer will
indemnify the Trustee and its directors, officers, employees, agents and
affiliates against any losses, liabilities, damages, claims and expenses
resulting from the willful misconduct, fraud, bad faith and/or negligence in
the performance of the Master Servicer's, the Special Servicer's, or the
Special Sub-Servicer's respective duties under the Pooling and Servicing
Agreement or by reason of reckless disregard of the Master Servicer's, the
Special Servicer's, or the Special Sub-Servicer's respective obligations and
duties under the Pooling and Servicing Agreement.
DUTIES OF THE TRUSTEE
The Trustee, the Master Servicer, the Special Servicer and the Special
Sub-Servicer will make no representation as to the validity or sufficiency of
the Pooling and Servicing Agreement, the Certificates or this Prospectus
Supplement or the validity, enforceability or sufficiency of the Mortgage Loans
or related documents. The Trustee will not be accountable for the use or
application by the Depositor of any Certificates or of the proceeds of such
Certificates, or for the use or application of any funds paid to the Depositor,
the Master Servicer, the Special Servicer or the Special Sub-Servicer, in
respect of the Mortgage Loans, or any funds deposited in or withdrawn from the
Collection Account or the Distribution Account by the Depositor, the Master
Servicer, the Special Servicer or the Special Sub-Servicer, other than with
respect to any funds held by the Trustee.
If no event of default has occurred of which the Trustee has actual
knowledge or, after the curing of all events of default which may have
occurred, the Trustee is required to perform only those duties specifically
required under the Pooling and Servicing Agreement. Upon receipt of the various
certificates, reports and other instruments required to be furnished to it, the
Trustee is required to examine such documents and to determine only whether
they conform on their face to the requirements of the Pooling and Servicing
Agreement.
If the Master Servicer fails to make any required Advance, the Trustee, as
successor master servicer, will be required to make such Advance to the extent
that such Advance is not deemed to be nonrecoverable. The Trustee will be
entitled to rely conclusively on any determination by the Master Servicer that
an Advance, if made, would be nonrecoverable (any such Advance, a
"Nonrecoverable Advance"). The Trustee will be entitled to reimbursement for
each Advance made by it in the same manner and to the same extent as the Master
Servicer. See "--Advances" herein.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
The Master Servicer will be entitled to receive a monthly servicing fee
(the "Servicing Fee") with respect to each Mortgage Loan and for each
Distribution Date equal to one-twelfth (1/12) of a per annum rate (the related
"Servicing Fee Rate") ranging from 0.05% to 0.25% (in the case of the Mortgage
Loans sold to the Transferor by NRFinance) and equal to 0.05% (in the case of
the Mortgage Loans sold to the Transferor by CIBC) multiplied by the Scheduled
Principal Balance of
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such Mortgage Loan as of the Due Date in the month preceding the month in which
such Distribution Date occurs. The Servicing Fee relating to each Mortgage Loan
will be retained by the Master Servicer from payments and collections
(including Insurance Proceeds and Liquidation Proceeds) on such Mortgage Loan.
The Master Servicer will also be entitled to retain as additional servicing
compensation:
(1) investment income earned on amounts on deposit in the Collection
Account and the Reserve Accounts (to the extent consistent with applicable law
and the related Mortgage Loan Documents);
(2) amounts collected on the Mortgage Loans that are not Specially
Serviced Mortgage Loans in the nature of late payment charges, late fees,
"insufficient funds" check charges (including with respect to Specially
Serviced Mortgage Loans), loan service transaction fees, extension fees, demand
fees, modification fees, assumption fees, beneficiary statement charges and
similar fees and charges (but excluding any Prepayment Premiums, Yield
Maintenance Charges, Excess Interest, Appraisal Reduction Excess Collections,
Default Interest or other amounts required to be deposited or retained in the
Collection Account);
(3) financial and lease reporting fees relating to any Mortgage Loan that
is not a Specially Serviced Mortgage Loan and to the extent permitted under the
related Mortgage Loan; and
(4) Prepayment Interest Surplus (to the extent not offset against any
Prepayment Interest Shortfall in accordance with the Pooling and Servicing
Agreement).
The Master Servicer will reimburse the Trustee for certain out of pocket
expenses incurred by the Trustee in the performance of its duties in accordance
with the Pooling and Servicing Agreement.
The Master Servicer will pay all expenses incurred in connection with its
responsibilities under the Pooling and Servicing Agreement (subject to
reimbursement as described herein).
SPECIAL SERVICING
With respect to any Mortgage Loan that is designated a Specially Serviced
Mortgage Loan, the Master Servicer will transfer its servicing responsibilities
to the Special Servicer, but will continue to (1) receive payments on such
Mortgage Loan (including amounts collected by the Special Servicer), (2) make
certain calculations relating to such Mortgage Loan, and (3) make remittances
and prepare certain reports to the Trustee relating to such Mortgage Loan. If
the related Mortgaged Property is acquired in respect of any such Mortgage Loan
whether through foreclosure, deed-in-lieu of foreclosure or otherwise (upon
acquisition, an "REO Property"), the Special Servicer will continue to be
responsible for the operation and management thereof. The Master Servicer will
have no responsibility for the performance by the Special Servicer or the
Special Sub-Servicer of its duties under the Pooling and Servicing Agreement.
The Pooling and Servicing Agreement will define a "Specially Serviced
Mortgage Loan" to include any Mortgage Loan with respect to which:
(1) the related borrower is 60 or more days delinquent in the payment of
principal and interest (regardless of whether P&I Advances have been reimbursed
in respect thereof);
(2) the related borrower has expressed to the Master Servicer its
inability to pay the Mortgage Loan or a hardship in paying the Mortgage Loan in
accordance with its terms;
(3) the Master Servicer has received notice that the related borrower has
(a) become the subject of any bankruptcy, insolvency or similar proceeding, (b)
admitted in writing its inability to pay its debts as they come due, or (c)
made an assignment for the benefit of creditors;
(4) the Master Servicer has received notice of a foreclosure or threatened
foreclosure of any lien on the Mortgaged Property securing such Mortgage Loan;
(5) a default of which the Master Servicer has notice (other than a
failure by the related borrower to pay principal or interest) and which
materially and adversely affects the interests of the Certificateholders has
occurred and remains unremedied for the applicable grace period specified in
the Mortgage Loan (or, if no grace period is specified, 60 days); provided,
that in any case a default requiring a Property Advance will be deemed to
materially and adversely affect the interests of the Certificateholders;
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(6) the related borrower has failed to make a Balloon Payment when due
(unless the Master Servicer and the Special Servicer agree in writing that such
Mortgage Loan is likely to be paid in full within 30 days after such default);
(7) the Master Servicer proposes to commence foreclosure or other workout
arrangements; or
(8) the Master Servicer otherwise determines that there is a material risk
of default by the related borrower.
A Mortgage Loan will cease to be a Specially Serviced Mortgage Loan:
(1) with respect to the circumstances described in clauses (1) and (6)
above, when the related borrower has brought the Mortgage Loan current and
thereafter has made three consecutive full and timely Monthly Payments thereon;
provided that with respect to the circumstances described in clause (6), the
related borrower may satisfy the requirements above pursuant to any workout
recommended by the Special Servicer;
(2) with respect to the circumstances described in clauses (2) and (4)
above, when such circumstances cease to exist in the good faith judgment of the
Special Servicer and with respect to the circumstances described in clauses (3)
and (7), when such circumstances cease to exist;
(3) with respect to the circumstances described in clause (5) above, when
such default is cured; or
(4) with respect to the circumstances described in clause (8) above, when
the Master Servicer determines that there is no longer a material risk of
default by the related borrower, provided that, in any such case, no
circumstance exists (as described above) at such time that would cause such
Mortgage Loan to be otherwise characterized as a Specially Serviced Mortgage
Loan.
If any Specially Serviced Mortgage Loan, in accordance with its original
terms or as modified in accordance with the Pooling and Servicing Agreement,
becomes a performing Mortgage Loan (through workout by the Special Servicer or
otherwise) for three consecutive Monthly Payments (provided no additional event
of default is foreseeable in the reasonable judgment of the Special Servicer),
the Special Servicer will return the full servicing responsibilities of such
Mortgage Loan (a "Corrected Mortgage Loan") to the Master Servicer.
Banc One will be the initial Special Servicer. At any time, upon
application by NRF, the Trustee will remove Banc One and appoint NRF as the
Special Servicer, provided, that, (i) the Trustee shall have received a
confirmation from each Rating Agency that such removal and appointment will not
result, in and of itself, in a downgrading, withdrawal or qualification of its
then current rating of any Class of Certificates and (ii) NRF is the Special
Sub-Servicer immediately prior to such application. The Special Servicer may
also be removed and a successor special servicer may be appointed by the
Directing Certificateholder at will. If any such removal is made without cause,
then the costs of transferring the servicing responsibilities to a successor
Special Servicer will be paid by the removing Certificateholders as described
in the Pooling and Servicing Agreement.
Notwithstanding the foregoing, the removal of the Special Servicer and the
appointment of a successor special servicer will not be effective until (1) the
successor special servicer has assumed in writing all of the responsibilities,
duties and liabilities of the Special Servicer under the Pooling and Servicing
Agreement pursuant to an agreement satisfactory to the Trustee, and (2) each of
the Rating Agencies confirms to the Trustee in writing that such appointment
and assumption will not result, in and of itself, in a downgrading, withdrawal
or qualification of the rating then assigned by such Rating Agency to any Class
of Certificates.
The Special Servicer will be entitled to certain fees, including a special
servicing fee (the "Special Servicing Fee") equal to one-twelfth of 0.25% of
the outstanding Scheduled Principal Balance of each Specially Serviced Mortgage
Loan on a monthly basis. In addition to the Special Servicing Fee, the Special
Servicer will also receive, with respect to any Specially Serviced Mortgage
Loan or REO Property that is sold or transferred or otherwise liquidated
(except in connection with the repurchase of a Mortgage Loan as described under
"Description of the Mortgage Pool--Representations and Warranties;
Repurchase"), a disposition fee (the "Disposition Fee") equal to the product of
(1) the excess, if any, of (a) the proceeds of the sale or liquidation of such
Specially Serviced Mortgage Loan or REO Property over (b) any broker's
commission and related brokerage referral fees and (2) 1%. Furthermore, the
Special Servicer will receive, as additional servicing compensation, a workout
fee (the "Workout Fee") equal to the product of 1.0% and the amount of Net
Collections received by the Master Servicer or the Special Servicer with
respect to each Corrected Mortgage Loan. If any Corrected Mortgage Loan again
becomes a Specially Serviced Mortgage Loan, any right to the Workout Fee
relating to such Mortgage Loan earned from the initial modification,
restructuring or workout thereof will terminate, and the Special Servicer will
be entitled to a new Workout Fee for such Specially Serviced Mortgage Loan upon
resolution or workout of the subsequent event of default under such Specially
Serviced Mortgage Loan. Each of the foregoing fees, along with certain expenses
related to
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special servicing of a Mortgage Loan, will be payable out of funds otherwise
available to pay principal and interest on the Certificates. The Special
Servicer will also be entitled to retain as additional servicing compensation
(1) all investment income earned on amounts on deposit in any REO Account and
(2) to the extent permitted under the related Mortgage Loan, all amounts
collected with respect to the Specially Serviced Mortgage Loans in the nature
of late payment charges, late fees, assumption fees, loan modification fees,
extension fees, financial and lease reporting fees (to the extent such fees are
not required to be remitted to the related borrower pursuant to the related
promissory note), loan service transaction fees, beneficiary statement charges
or similar items (but excluding any Default Interest, Yield Maintenance Charges
or other Prepayment Premiums, Excess Interest or Appraisal Reduction Excess
Collections), in each case to the extent received with respect to any Specially
Serviced Mortgage Loan and not required to be deposited or retained in the
Collection Account pursuant to the Pooling and Servicing Agreement.
"Net Collections" means, with respect to any Corrected Mortgage Loan, an
amount equal to all payments on account of principal and interest on such
Mortgage Loan and all Prepayment Premiums, Yield Maintenance Charges and Excess
Interest.
REPORTS TO CERTIFICATEHOLDERS; AVAILABLE INFORMATION
Monthly Reports. On each Distribution Date, the Trustee will mail to each
Certificateholder, with copies to the Depositor, the Paying Agent, the
Underwriters, the Master Servicer and each Rating Agency, a statement on the
distribution to be made on such date, setting forth for each Class:
(1) the Pooled Principal Distribution Amount and the amount allocable to
principal included in Available Funds;
(2) The Class Interest Distribution Amount distributable to such Class and
the amount of Available Funds allocable thereto, together with any Class
Interest Shortfall allocable to such Class;
(3) The amount of any P&I Advances by the Master Servicer or the Trustee
included in the amounts distributed to the Certificateholders;
(4) The Certificate Balance of each Class of Certificates after giving
effect to the distribution of amounts in respect of the Pooled Principal
Distribution Amount on such Distribution Date;
(5) Realized Losses and their allocation to the Certificate Balance of any
Class of Certificates;
(6) The Scheduled Principal Balance of the Mortgage Loans as of the Due
Date preceding such Distribution Date;
(7) The number and aggregate principal balance of the Mortgage Loans (a)
delinquent one month, (b) delinquent two months, (c) delinquent three or more
months, (d) as to which foreclosure proceedings have been commenced, and (e)
that otherwise constitute Specially Serviced Mortgage Loans, and, with respect
to each Specially Serviced Mortgage Loan, the amount of Property Advances made
during the related Collection Period, the amount of P&I Advances made on such
Distribution Date, the aggregate amount of Property Advances made that remain
unreimbursed and the aggregate amount of P&I Advances made that remain
unreimbursed;
(8) With respect to any Mortgage Loan that became an REO Mortgage Loan
during the preceding calendar month, the principal balance of such Mortgage
Loan as of the date it became an REO Mortgage Loan;
(9) As of the Due Date preceding such Distribution Date, as to any REO
Property sold during the related Collection Period, the date on which the
Special Servicer made a Final Recovery Determination and the amount of the
proceeds of such sale deposited into the Collection Account, and the aggregate
amount of REO Proceeds and Net REO Proceeds (in each case other than
Liquidation Proceeds) and other revenues collected by the Special Servicer with
respect to each REO Property during the related Collection Period and credited
to the Collection Account, in each case identifying such REO Property by name;
(10) The outstanding principal balance of each REO Mortgage Loan as of the
close of business on the immediately preceding Due Date and the appraised value
of the related REO Property per the most recent appraisal obtained;
(11) The amount of the servicing fee and special servicing fee paid to the
Master Servicer and Special Servicer with respect to such Distribution Date,
and the amount of the additional servicing compensation or additional special
servicing fee that was paid to the Master Servicer and Special Servicer with
respect to such Distribution Date;
(12) The amount of any Special Servicing Fee, Disposition Fee or Workout
Fee paid to the Special Servicer with respect to such Distribution Date;
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(13) The amount of any Appraisal Reduction allocated, and the amount of
any Appraisal Reduction Excess Collections received, during the related
Collection Period on a loan-by-loan basis and the total amount of Appraisal
Reductions made through such Distribution Date; and
(14) (a) The amount of Yield Maintenance Charges or Prepayment Premiums
collected and any Excess Interest received during the related Collection
Period, and (b) the amount of Default Interest received during the related
Collection Period.
In the case of information furnished pursuant to clauses (1), (2), (3) and
(14)(a) above, the amounts will be expressed as a dollar amount in the
aggregate for all Certificates of each applicable Class, and will be expressed
as a dollar amount for each Class of Certificates for a certificate having a
denomination of $1,000 initial Certificate Balance or Notional Balance.
Within a reasonable period of time after the end of each calendar year,
the Trustee will furnish to each person who at any time during such calendar
year was a holder of a Certificate (except for a Residual Certificate) a
statement containing the information set forth in clauses (1) and (2) above,
aggregated for such calendar year or applicable portion thereof during which
such person was a Certificateholder. Such obligation of the Trustee will be
deemed to have been satisfied to the extent that it provided substantially
comparable information pursuant to any requirements of the Code as from time to
time in effect.
On each Distribution Date, the Trustee will mail to each holder of a
Residual Certificate a copy of the reports mailed to the other
Certificateholders on such Distribution Date and a statement setting forth the
amounts, if any, actually distributed on the Residual Certificates on such
Distribution Date.
Within a reasonable period of time after the end of each calendar year,
the Trustee will furnish to each person who at any time during such calendar
year was a holder of a Residual Certificate a statement setting forth the
amounts actually distributed on such Certificate aggregated for such calendar
year or applicable portion thereof during which such person was a
Certificateholder. Such obligation of the Trustee will be deemed to have been
satisfied to the extent that it provided substantially comparable information
pursuant to any requirements of the Code as from time to time in effect.
In addition, the Trustee will provide each Certificateholder with any
additional information, if any, regarding the Mortgage Loans that the Master
Servicer or the Special Servicer, in its sole discretion, delivers to the
Trustee for distribution to the Certificateholders. Also, certain information
made available in the Distribution Date statements may be obtained by accessing
a World Wide Website maintained by the Trustee at
http://www.globaltrustservices.com.
Other Available Information. The Master Servicer or the Special Servicer,
if applicable, will promptly give notice to the Trustee, who will provide a
copy to each Certificateholder, each Rating Agency, the Depositor, the
Underwriters, the related Mortgage Loan Seller and the Master Servicer or the
Special Servicer (if affecting a Special Serviced Mortgage Loan), of (1) any
notice from a borrower or insurance company regarding an upcoming voluntary or
involuntary prepayment (including that resulting from a Casualty or
Condemnation) of all or part of the related Mortgage Loan (provided that a
request by a borrower or other party for a quotation of the amount necessary to
satisfy all obligations with respect to a Mortgage Loan will not, in and of
itself, be deemed to be such notice); and (2) any other occurrence known to it
with respect to a Mortgage Loan or REO Property that the Master Servicer or the
Special Servicer determines in accordance with the servicing standards set
forth in the Pooling and Servicing Agreement would have a material effect on
such Mortgage Loan or REO Property. The notice referred to in (2) will include
an explanation as to the reason for such material effect (provided that any
extension of the term of any Mortgage Loan will in any event be deemed to have
a material effect).
In addition to the other reports and information made available and
distributed to the Depositor, the Underwriters, the Trustee or the
Certificateholders pursuant to the provisions of the Pooling and Servicing
Agreement, the Master Servicer and the Special Servicer will, in accordance
with such reasonable rules and procedures as they may adopt (including that,
for so long as NRF is the Special Sub-Servicer, the Special Servicer may direct
such parties to obtain such information from the Special Sub-Servicer), also
make available any information relating to the Mortgage Loans, the Mortgaged
Properties or the borrowers for review by the Depositor, the Underwriters, the
Trustee, the Certificateholders and any other persons to whom the Master
Servicer or the Special Servicer, as the case may be, believes such disclosure
is appropriate, unless prohibited by applicable law or by any documents related
to a Mortgage Loan. In providing such additional information, the Master
Servicer or the Special Servicer may, to the extent it deems such action to be
necessary or appropriate, require the recipient of such information to execute
an agreement governing the availability, use and disclosure of such
information. Such agreement may also contain indemnification provisions for the
Master Servicer or the Special Servicer, as applicable, against any liability
or damage that may arise from disclosing such information.
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Upon reasonable prior written request, the Trustee will also make
available during normal business hours, for review by the Depositor, the Rating
Agencies, any Certificateholder, the Underwriters, any person identified to the
Trustee by a Certificateholder as a prospective transferee of a Certificate and
any other persons to whom the Trustee believes such disclosure is appropriate,
the following items:
(1) the Pooling and Servicing Agreement;
(2) all monthly statements to Certificateholders delivered since the
Closing Date;
(3) all annual statements as to compliance delivered to the Trustee and
the Depositor; and
(4) all annual independent accountants' reports delivered to the Trustee
and the Depositor.
The Master Servicer, the Special Servicer or the Special Sub-Servicer, as
appropriate, will make available at its offices during normal business hours,
for review by the Depositor, the Underwriters, the Trustee, the Rating
Agencies, any Certificateholder, any person identified to the Master Servicer,
the Special Servicer, or the Special Sub-Servicer, as applicable, by a
Certificateholder as a prospective transferee of a Certificate, and any other
persons to whom the Master Servicer, the Special Servicer, or the Special
Sub-Servicer, as applicable, believes such disclosure is appropriate, the
following items:
(1) the inspection reports prepared by or on behalf of the Master Servicer
or the Special Servicer, as applicable, in connection with the property
inspections conducted by the Master Servicer or the Special Servicer, as
applicable;
(2) any and all modifications, waivers and amendments of the terms of a
Mortgage Loan entered into by the Master Servicer or the Special Servicer; and
(3) any and all officer's certificates and other evidence delivered to the
Trustee and the Depositor to support the Master Servicer's determination that
any Advance was, or if made, would be, a Nonrecoverable Advance, in each case
except to the extent doing so is prohibited by applicable law or by any
document relating to a Mortgage Loan.
Each of the Master Servicer, the Special Servicer and the Trustee will be
permitted to require payment of a sum sufficient to cover the reasonable costs
and expenses incurred by it in providing copies of or access to any of the
above information. However, any such costs and expenses arising from any such
request by a Rating Agency will be paid by the Master Servicer.
The Master Servicer will, on behalf of the Trust Fund, prepare, sign and
file with the Commission any and all reports, statements and information
relating to the Trust Fund that the Master Servicer or the Trustee determines
are required to be filed with the Commission pursuant to Sections 13(a) or
15(d) of the 1934 Act. Each such report, statement and information must be
filed on or before the required filing date for such report, statement or
information. Notwithstanding the foregoing, the Depositor will file with the
Commission, within 15 days of the closing date, a Form 8-K together with the
Pooling and Servicing Agreement.
None of the Trustee, the Master Servicer and the Special Servicer will be
responsible for the accuracy or completeness of any information supplied to it
by a borrower or other third party for inclusion in any notice or in any other
report or information furnished or provided by the Trustee, Master Servicer or
the Special Servicer under the Pooling and Servicing Agreement. The Trustee,
the Master Servicer and the Special Servicer will be indemnified and held
harmless by the Trust Fund against any loss, liability or expense incurred in
connection with any legal action relating to any statement or omission or
alleged statement or omission in or from such notice, report or information,
including any report filed with the Commission.
VOTING RIGHTS
The "Voting Rights" assigned to each Class will be:
(1) 0% in the case of the Residual Certificates;
(2) in the case of any other Class of P&I Certificates, a percentage equal
to the product of (a) 99% and (b) a fraction, the numerator of which is equal
to the aggregate outstanding Certificate Balance of such Class and the
denominator of which is equal to the aggregate outstanding Certificate Balances
of all Classes of Certificates; and
(3) in the case of the Class A-EC Certificates, 1%.
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The Voting Rights of any Class of Certificates will be allocated among
holders of Certificates of such Class in proportion to their respective
percentage interests; provided, however, that any Certificate held or
beneficially owned by the Depositor, the Master Servicer, the Special Servicer,
the Trustee, a property manager or a borrower or any affiliate thereof will be
deemed not to be outstanding and the Voting Rights to which it is entitled will
not be taken into account in determining whether the requisite percentage of
Voting Rights necessary to effect any consent, approval or waiver that
specifically relates to any such person has been obtained (unless such consent,
approval or waiver is to an action that would materially and adversely affect
the interests of the holders of any Class of Certificates while any such person
is the holder of Certificates aggregating not less than 662/3% of the
Percentage Interest of any such Class).
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
For federal income tax purposes, two separate "real estate mortgage
investment conduit" ("REMIC") elections will be made with respect to the Trust
Fund, creating two REMICs. Upon the issuance of the Offered Certificates,
O'Melveny & Myers LLP will deliver its opinion, generally to the effect that,
assuming compliance with all provisions of the Pooling and Servicing Agreement,
(1) each pool of assets with respect to which a REMIC election is made will
qualify as a REMIC under the Internal Revenue Code of 1986 (the "Code"), and
(2) (a) the Class A-1, Class A-2, Class A-EC, Class B, Class C, Class D and
Class E Certificates will be, or will represent ownership of, REMIC "regular
interests" and (b) each residual interest will be the sole "residual interest"
in the related REMIC.
Because they represent regular interests, the Regular Certificates
generally will be treated as newly originated debt instruments for federal
income tax purposes. Holders of such Classes of Certificates will be required
to include in income all interest on such Certificates in accordance with the
accrual method of accounting, regardless of a Certificateholder's usual method
of accounting. The Offered Certificates are not expected to be treated for
Federal income tax reporting purposes as having been issued with original issue
discount. For purposes of determining the rate of accrual of market discount,
original issue discount and premium for federal income tax purposes, it has
been assumed that the Mortgage Loans will prepay at the rate of 0% CPR, with
all ARD Loans prepaying on their related Anticipated Repayment Dates. No
representation is made as to whether the Mortgage Loans will prepay at that
rate or any other rate.
Certain Classes of the Offered Certificates may be treated for federal
income tax purposes as having been issued at a premium. Whether any holder of
such a Class of Certificates will be treated as holding a Certificate with bond
premium will depend on such Certificateholder's purchase price. Holders of such
Classes of Certificates should consult their own tax advisors regarding the
possibility of making an election to amortize any such premium. See "Material
Federal Income Tax Consequences" in the Prospectus.
Offered Certificates held by a mutual savings bank or domestic building
and loan association will represent interests in "qualifying real property
loans" within the meaning of Section 593(d) of the Code. Offered Certificates
held by a real estate investment trust will constitute "real estate assets"
within the meaning of Section 856(c)(5)(B) of the Code, and income with respect
to Offered Certificates will be considered "interest on obligations secured by
mortgages on real property or on interests in real property" within the meaning
of Section 856(c)(3)(B) of the Code. Offered Certificates held by a domestic
building and loan association will generally constitute a "regular or residual
interest in a REMIC" with the meaning of Section 7701(a)(19)(C)(xi) of the Code
only in the proportion that the Mortgage Loans are secured by multifamily
apartment buildings. See "Material Federal Income Tax Consequences--Federal
Income Tax Consequences for REMIC Certificates" in the Prospectus.
For further information regarding the federal income tax consequences of
investing in the Offered Certificates, See "Material Federal Income Tax
Consequences" in the Prospectus.
DUE TO THE COMPLEXITY OF THESE RULES AND THE CURRENT UNCERTAINTY AS TO THE
MANNER OF THEIR APPLICATION TO THE TRUST FUND AND CERTIFICATEHOLDERS, IT IS
PARTICULARLY IMPORTANT THAT POTENTIAL INVESTORS CONSULT THEIR OWN TAX ADVISORS
REGARDING THE TAX TREATMENT OF THEIR ACQUISITION, OWNERSHIP AND DISPOSITION OF
THE CERTIFICATES.
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ERISA CONSIDERATIONS
SUMMARY
The Subordinate Certificates may not be purchased by or transferred to:
(1) an employee benefit plan or other retirement arrangement, including an
individual retirement account or a Keogh plan, which is subject to the
fiduciary responsibility provisions of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") or Section 4975 of the Code, or a
governmental plan subject to any federal, state or local law ("Similar Law")
that is, to a material extent, similar to the foregoing provisions of ERISA
or the Code ("Plans");
(2) a collective investment fund in which such Plans are invested;
(3) other persons acting on behalf of any such Plan or using the assets of
any such Plan or any entity whose underlying assets include plan assets by
reason of a Plan's investment in the entity (within the meaning of
Department of Labor Regulations Section 2510.3-101); or
(4) an insurance company that is using assets of any insurance company
separate account or general account in which the assets of such Plans are
invested (or which are deemed pursuant to ERISA or any Similar Law to
include assets of such Plans) other than an insurance company using the
assets of its general account under circumstances whereby the assets of the
Trust Fund will not be treated as "plan assets" for purposes of applying the
fiduciary responsibility and the prohibited transactions provisions of
ERISA, the Code or any Similar Law.
Each prospective transferee of a Certificate will be required to deliver
to the Depositor, the Certificate Registrar and the Trustee either: (a) a
transferee representation letter, substantially in the form of Exhibit D-2 to
the Pooling and Servicing Agreement, stating that such prospective transferee
is not a person referred to in clause (1), (2), (3) or (4) above, or (b) an
opinion of counsel which establishes to the satisfaction of the Depositor, the
Trustee and the Certificate Registrar that the purchase and holding of such
Certificate will not result in the assets of the Trust Fund being deemed to be
"plan assets" and subject to the fiduciary responsibility or prohibited
transaction provision of ERISA, the Code or any Similar Law, and will not
constitute or result in a non-exempt prohibited transaction within the meaning
of Section 406 or 407 of ERISA, Section 4975 of the Code or any Similar Law,
and will not subject the Master Servicer, the Special Servicer, the Depositor,
the Trustee or the Certificate Registrar to any obligation of liability
(including obligations or liabilities under ERISA or Section 4975 of the Code).
If a prospective transferee elects to deliver the opinion of counsel referred
to in (b), then such opinion of counsel will be at the expense of such
prospective transferee and not the expense of the Trustee, the Trust Fund, the
Master Servicer, the Special Servicer, the Certificate Registrar or the
Depositor.
TO THE EXTENT ANY OFFERED CERTIFICATE IS IN BOOK-ENTRY FORM, THE HOLDER OF
BENEFICIAL INTEREST IN SUCH CERTIFICATE AND ANY TRANSFEREE THEREOF WILL BE
DEEMED TO HAVE REPRESENTED THAT IT IS NOT A PERSON REFERRED TO IN CLAUSES (1),
(2), (3) OR (4) ABOVE.
None of the Residual Certificates may be purchased by or transferred to a
Plan. Accordingly, the following discussion does not purport to discuss the
considerations under ERISA or Code Section 4975 with respect to the purchase,
holding or disposition of the Residual Certificates.
CERTAIN REQUIREMENTS UNDER ERISA
General. ERISA and the Code impose certain duties and restrictions on
Plans and certain persons who perform services for Plans. In accordance with
ERISA's general fiduciary standards, before investing in a Certificate a Plan
fiduciary should determine whether to do so is permitted under the governing
Plan instruments and is appropriate for the Plan in view of its overall
investment policy and the composition and diversification of its portfolio. A
Plan fiduciary should especially consider the ERISA requirement of investment
prudence and the sensitivity of the return on the Certificates to the rate of
principal repayments (including voluntary prepayments by the borrowers and
involuntary liquidations) on the Mortgage Loans, as discussed in "Yield and
Maturity Considerations" herein.
Parties in Interest/Disqualified Persons. Other provisions of ERISA (and
corresponding provisions of the Code) prohibit certain transactions involving
the assets of a Plan and persons who have certain specified relationships to
the Plan (so-called "parties in interest" within the meaning of ERISA or
"disqualified persons" within the meaning of the Code). The Depositor, the
Underwriters, the Master Servicer, the Special Servicer or the Trustee or
certain affiliates thereof might be considered or might become "parties in
interest" or "disqualified persons" with respect to a Plan. If so, the
acquisition or holding of Certificates by or on behalf of such Plan could be
considered to give rise to a "prohibited transaction" within the
S-100
<PAGE>
meaning of ERISA and the Code unless an administrative exemption described
below or some other exemption is available. Special caution should be exercised
before the assets of a Plan are used to purchase a Certificate if, with respect
to such assets, the Depositor, the Underwriters, the Master Servicer, the
Special Servicer or the Trustee or an affiliate thereof either: (1) has
discretionary authority or control with respect to the investment or management
of such assets of such Plan, or (2) has authority or responsibility to give, or
regularly gives, investment advice with respect to such assets pursuant to an
agreement or understanding that such advice will serve as a primary basis for
investment decisions with respect to such assets and that such advice will be
based on the particular needs of the Plan.
Delegation of Fiduciary Duty. Further, if the assets included in the Trust
Fund were deemed to constitute Plan assets, it is possible that a Plan's
investment in the Certificates might be deemed to constitute a delegation under
ERISA of the duty to manage Plan assets by the fiduciary deciding to invest in
the Certificates, and certain transactions involved in the operation of the
Trust Fund might be deemed to constitute prohibited transactions under ERISA
and the Code. Neither ERISA nor the Code define the term "plan assets."
The United States Department of Labor has issued regulations (the "Plan
Asset Regulations") concerning whether a Plan's assets will be considered to
include an interest in the underlying assets of an entity (such as the Trust
Fund) for purposes of the general fiduciary responsibility provisions of ERISA,
as well as for the prohibited transaction provisions of ERISA and the Code, if
the Plan acquires an "equity interest" (such as a Certificate) in an entity.
Certain exceptions are provided in the Plan Asset Regulations whereby an
investing Plan's assets would be considered merely to include its interest in
the Certificates instead of being deemed to include an interest in the
underlying assets of a Trust Fund. However, the Depositor cannot predict in
advance, nor can there be any continuing assurance whether such exceptions may
be applicable, because of the factual nature of certain of the rules set forth
in the Plan Asset Regulations. For example, one of the exceptions in the Plan
Asset Regulations states that the underlying assets of an entity will not be
considered "plan assets" if less than 25% of the value of each class of equity
interests is held by "benefit plan investors," which are defined as Plans,
individual retirement accounts and employee benefit plans not subject to ERISA
(for example, governmental plans), but this exception is tested immediately
after each acquisition of an equity interest in the entity whether upon initial
issuance or in the secondary market.
ADMINISTRATIVE EXEMPTIONS
Individual Administrative Exemptions. The Department has granted to
Prudential Securities Incorporated an individual administrative exemption
(Prohibited Transaction Exemption 90-32, 55 Fed. Reg. 23147 (June 6, 1990, as
amended by Prohibited Transaction Exemption 97-34, 62 Fed. Reg. 39021 (July 21,
1997)) (the "Exemption") for certain mortgage-backed and asset-backed
certificates underwritten in whole or in part by Prudential Securities
Incorporated. The Exemption may be applicable to the initial purchase, the
holding and the subsequent resale by a Plan of certain certificates, such as
the Senior Certificates, underwritten by the Underwriters, representing
interests in pass-through trusts that consist of certain receivables, loans and
other obligations, provided that the conditions and requirements of the
Exemption are satisfied. The loans described in the Exemption include mortgage
loans such as the Mortgage Loans.
Among the conditions that must be satisfied for the Exemption to apply are
the following:
(1) The acquisition of Certificates by a Plan is on terms (including the
price for the Certificates) that are at least as favorable to the Plan as
they would be in an arm's length transaction with an unrelated party;
(2) The rights and interests evidenced by Certificates acquired by the
Plan are not subordinated to the rights and interests evidenced by other
certificates of the trust fund;
(3) The Certificates acquired by the Plan have received a rating at the
time of such acquisition that is one of the three highest generic rating
categories from either Duff & Phelps Credit Rating Service ("Duff &
Phelps"), Fitch IBCA, Inc., Moody's Investors Service, Inc. or Standard &
Poor's Rating Services, a division of the McGraw-Hill Companies ("S&P");
(4) The Trustee must not be an affiliate of any of the Depositor, the
Underwriters, the Master Servicer, the Special Servicer, any obligor with
respect to the Mortgage Loans included in the Trust Fund constituting more
than 5% of the aggregate unamortized balance of the assets in the Trust
Fund, or any affiliate of such parties (the "Restricted Group");
(5) The sum of all payments made to and retained by the Underwriters in
connection with the distribution of certificates represents not more than
reasonable compensation for underwriting the certificates; the sum of all
payments
S-101
<PAGE>
made to and retained by the Depositor pursuant to the assignment of the
mortgage loans to the Trust Fund represents not more than the fair market
value of such mortgage loans; the sum of all payments made to and retained
by the Master Servicer and any other Servicer represents not more than
reasonable compensation for such person's services under the pooling and
servicing agreement and reimbursement of such person's reasonable expenses
in connection therewith; and
(6) The Plan investing in the Certificates is an "accredited investor" as
defined in Rule 501(a)(1) of Regulation D of the Commission under the 1933
Act.
In addition, the Trust Fund must also meet the following requirements:
(1) The corpus of the Trust Fund must consist solely of assets of the type
that have been included in other investment pools;
(2) Certificates in such other investment pools must have been rated in
one of the three highest rating categories by Duff & Phelps, Fitch IBCA,
Inc., Moody's Investors Service, Inc. or S&P for at least one year before
the Plan's acquisition of the certificates pursuant to the Exemption; and
(3) Certificates evidencing interests in such other investment pools must
have been purchased by investors other than Plans for at least one year
before any Plan's acquisition of the Certificates pursuant to the Exemption.
If the conditions of the Exemption are met, the acquisition, holding and
resale of Certificates by Plans would be exempt from the prohibited transaction
provisions of ERISA and the Code (regardless of whether a Plan's assets would
be considered to include an ownership interest in the Mortgage Loans in the
Mortgage Pool).
Moreover, the Exemption provides relief from certain
self-dealing/conflict-of-interest prohibited transactions that may occur if a
Plan fiduciary causes a Plan to acquire certificates in a trust in which the
fiduciary (or its affiliate) is an obligor on the receivables, loans or
obligations held in the trust provided that, among other requirements:
(1) in the case of an acquisition in connection with the initial issuance
of certificates, at least 50% of each class of certificates in which Plans
have invested is acquired by persons independent of the Restricted Group;
and at least 50% of the aggregate interest in the trust is acquired by
persons independent of the Restricted Group;
(2) such fiduciary (or its affiliate) is an obligor with respect to 5% or
less of the fair market value of the obligations contained in the trust;
(3) the Plan's investment in certificates of any class does not exceed 25%
of all of the certificates of that class outstanding at the time of the
acquisitions; and
(4) immediately after the acquisition no more than 25% of the assets of
the Plan with respect to which such person is a fiduciary are invested in
certificates representing an interest in one or more trusts containing
assets sold or served by the same entity.
The Exemption does not apply to the purchasing or holding of Certificates
by Plans sponsored by the Depositor, the Underwriters, the Trustee, the Master
Servicer, the Special Servicer, any obligor with respect to Mortgage Loans
included in the Trust Fund constituting more than 5% of the aggregate
unamortized principal balance of the assets in the Trust Fund or any affiliate
of such parties.
THE CHARACTERISTICS OF THE SUBORDINATE CERTIFICATES AND THE RESIDUAL
CERTIFICATES DO NOT MEET THE REQUIREMENTS OF THE EXEMPTION. ACCORDINGLY, THE
SUBORDINATE CERTIFICATES AND RESIDUAL CERTIFICATES MAY NOT BE PURCHASED BY OR
TRANSFERRED TO A PLAN OR PERSON ACTING ON BEHALF OF ANY PLAN OR USING THE
ASSETS OF ANY SUCH PLAN, OTHER THAN AN INSURANCE COMPANY USING ASSETS OF ITS
GENERAL ACCOUNT UNDER CIRCUMSTANCES IN WHICH SUCH PURCHASE OR TRANSFER WOULD
NOT CONSTITUTE OR RESULT IN A PROHIBITED TRANSACTION.
Before purchasing a Senior Certificate, a fiduciary of a Plan should make
its own determination as to the availability of the exemptive relief provided
by the Exemption or the availability of any other prohibited transaction
exemptions, and whether the conditions of any such exemption will be applicable
to the Senior Certificates. Any fiduciary of a Plan (including an entity that
is deemed to hold Plan assets for purposes of ERISA and the Code) considering
whether to purchase a Senior Certificate should also carefully review with its
own legal advisors the applicability of the fiduciary duty and prohibited
transaction provisions of ERISA and the Code to such investment and the
availability of the Exemption.
THE SALE OF SENIOR CERTIFICATES TO A PLAN IS IN NO RESPECT A
REPRESENTATION BY THE DEPOSITOR, EITHER UNDERWRITER OR ANY OTHER MEMBER OF THE
RESTRICTED GROUP THAT THIS INVESTMENT MEETS ALL RELEVANT LEGAL REQUIREMENTS
WITH RESPECT TO INVESTMENTS BY PLANS GENERALLY OR ANY PARTICULAR PLAN OR THAT
THIS INVESTMENT IS APPROPRIATE FOR PLANS GENERALLY OR ANY PARTICULAR PLAN.
S-102
<PAGE>
EXEMPT PLAN
A governmental plan as defined in Section 3(32) of ERISA is not subject to
ERISA or Code Section 4975. However, such a governmental plan may be subject to
a Similar Law. A fiduciary of a governmental plan should make its own
determination as to the need for and the availability of any exemptive relief
under any Similar Law.
UNRELATED BUSINESS TAXABLE INCOME; RESIDUAL CERTIFICATES
The purchase of a Residual Certificate by any employee benefit plan
qualified under Code Section 401(a) and exempt from taxation under Code Section
501(a), including most varieties of ERISA Plans, may give rise to "unrelated
business taxable income" as described in Code Sections 511-515 and 860E.
Further, before the purchase of Residual Certificates, a prospective transferee
may be required to provide an affidavit to a transferor that it is not, nor is
it purchasing a Residual Certificate on behalf of, "Disqualified
Organizations," which term as defined above under the caption "Material Federal
Income Tax Consequences" in the Prospectus includes certain tax-exempt entities
not subject to Code Section 511, including certain governmental plans, as
discussed under the caption "Material Federal Income Tax Consequences" in the
Prospectus. Accordingly, Plans may not purchase Residual Certificates.
LEGAL INVESTMENT
The Class A-1, Class A-2, Class A-EC and Class B Certificates will be
mortgage-related securities for purposes of the Secondary Mortgage Market
Enhancement Act of 1984 ("SMMEA"). The appropriate characterization of the
Certificates under various legal investment restrictions, and thus the ability
of investors subject to these restrictions to purchase the Certificates, may be
subject to significant interpretive uncertainties.
The Depositor makes no representations as to the proper characterization
of the Certificates for legal investment purposes, financial institution
regulatory purposes or other purposes or as to the ability of particular
investors to purchase the Certificates under applicable legal investment
restrictions. These uncertainties may adversely affect the liquidity of the
Certificates. Accordingly, all institutions whose investment activities are
subject to legal investment laws and regulations, regulatory capital
requirements or review by regulatory authorities should consult with their own
legal advisors in determining whether and to what extent the Certificates
constitute a legal investment or are subject to investment, capital or other
restrictions.
S-103
<PAGE>
PLAN OF DISTRIBUTION
Prudential Securities Incorporated, CIBC Oppenheimer Corp. and Morgan
Stanley & Co. Incorporated (together referred to herein as the "Underwriters")
have agreed, severally and not jointly, pursuant to an Underwriting Agreement
dated March 18, 1999 (the "Underwriting Agreement"), to purchase from the
Depositor the principal or notional balances of Certificates set forth under
their names below.
<TABLE>
<CAPTION>
CLASS PRUDENTIAL SECURITIES INCORPORATED CIBC OPPENHEIMER CORP.
- ----------------- ------------------------------------ ------------------------
<S> <C> <C>
Class A-1 ....... $ 98,924,800 $ 55,645,200
Class A-2 ....... $252,065,114 $141,786,626
Class B ......... $ 36,009,642 $ 15,082,358
Class C ......... $ 32,735,846 $ 13,711,154
Class D ......... $ 32,735,846 $ 13,711,154
Class E ......... $ 9,821,388 $ 4,113,612
<CAPTION>
AGGREGATE INITIAL
CLASS MORGAN STANLEY & CO. INCORPORATED CERTIFICATE BALANCE
- ----------------- ----------------------------------- --------------------
<S> <C> <C>
Class A-1 ....... $33,930,000 $188,500,000
Class A-2 ....... $86,455,260 $480,307,000
Class B ......... $ 0 $ 51,092,000
Class C ......... $ 0 $ 46,447,000
Class D ......... $ 0 $ 46,447,000
Class E ......... $ 0 $ 13,935,000
</TABLE>
The Underwriters have informed the Transferor and Depositor that they
propose to offer the Offered Certificates for sale from time to time in one or
more negotiated transactions, or otherwise, at varying prices to be determined,
in each case, at the time of the related sale. The Underwriters may effect such
transactions by selling such Certificates to or through dealers, and such
dealers may receive compensation in the form of underwriting discounts,
concessions or commissions from the Underwriters or purchasers of the
Certificates for whom they may act as agent. The Underwriters and any dealers
that participate with the Underwriters in the distribution of the Certificates
purchased by the Underwriters may be deemed to be underwriters, and any
discounts or commissions received by them and any profit on the resale of
Certificates by them or the Underwriters may be deemed to be underwriting
discounts or commissions under the 1933 Act.
The Depositor has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the 1933 Act, or contribute to
payments that the Underwriters may be required to make in respect thereof.
The Underwriters have advised the Depositor that they currently expect to
make a market in the Certificates. However they have no obligation to do so.
Any market making may be discontinued at any time, and there can be no
assurance that an active public market for the Certificates will develop. For
further information regarding any offer or sale of the Certificates pursuant to
this Prospectus Supplement and the Prospectus, see "Plan of Distribution" in
the Prospectus.
USE OF PROCEEDS
The Depositor will apply the net proceeds from the sale of Certificates to
pay the purchase price of the Mortgage Loans, to repay indebtedness that has
been incurred to obtain funds to acquire the Mortgage Loans and to pay costs of
structuring, issuing and underwriting the Certificates.
LEGAL MATTERS
Certain legal matters will be passed upon for the Depositor and for the
Underwriters by O'Melveny & Myers LLP.
RATINGS
It is a condition to the issuance of the Offered Certificates that each
such class of Certificates be assigned the ratings indicated on the cover
hereof by Fitch and by Moody's, respectively.
The Rating Agencies' ratings on mortgage pass-through certificates address
the likelihood of the receipt by holders of payments of interest and principal
to which they are entitled by the Rated Final Distribution Date. The Rating
Agencies' ratings take into consideration the credit quality of the mortgage
pool, structural and legal aspects associated with the Certificates, and the
extent to which the payment stream in the mortgage pool is adequate to make
payments required under the Certificates. Ratings on mortgage pass-through
certificates do not, however, represent an assessment of the likelihood, timing
or frequency of principal prepayments by borrowers or the degree to which such
prepayments (both voluntary and involuntary) might differ from those originally
anticipated. The security ratings do not address the possibility that
Certificateholders might suffer a lower than anticipated yield. In addition,
ratings on mortgage pass-through certificates do not address the likelihood of
receipt of Prepayment Premiums or the timing of the receipt thereof or the
likelihood of collection by the Master Servicer of Default Interest. In
general, the ratings thus address credit risk and not prepayment risk.
S-104
<PAGE>
There can be no assurance as to whether any rating agency not requested to
rate the Certificates will nonetheless issue a rating and, if so, what such
rating would be. A rating assigned to the Certificates by a rating agency that
has not been requested by the Depositor to do so may be lower than the rating
assigned by the Rating Agencies pursuant to the Depositor's request.
The rating of the Certificates should be evaluated independently from
similar ratings on other types of securities. A security rating is not a
recommendation to buy, sell or hold securities and may be subject to revision
or withdrawal at any time by the assigning rating agency.
S-105
<PAGE>
INDEX OF SIGNIFICANT DEFINITIONS
DEFINITIONS PAGE
Advance Rate............................................................ S-85
Advances................................................................ S-84
Annual Debt Service..................................................... S-42
Anticipated Repayment Date.............................................. S-32
Appraisal Reduction..................................................... S-85
Appraisal Reduction Event............................................... S-85
Appraisal Reduction Excess Collections.................................. S-76
Appraised LTV........................................................... S-42
Appraised Value......................................................... S-42
ARD Amount or ARD Balance............................................... S-42
ARD Loan................................................................. S-9
ARD Loans............................................................... S-32
Asset Status Report..................................................... S-91
Available Funds......................................................... S-65
Available Funds Allocation.............................................. S-67
Balloon Amount.......................................................... S-42
Balloon Balance......................................................... S-42
Balloon Loans........................................................... S-33
Balloon Payments........................................................ S-76
Balloon/ARD LTV......................................................... S-42
Banc One................................................................ S-81
Base Interest Fraction.................................................. S-70
Beneficial Owners....................................................... S-72
Book-Entry Certificate.................................................. S-72
business day............................................................. S-8
Cash Flow............................................................... S-41
Casualty................................................................ S-36
CERCLA.................................................................. S-23
Certificate Balance..................................................... S-64
Certificate Registrar................................................... S-74
CIBC.................................................................... S-11
CIBCOPCO................................................................ S-59
Class A-EC Notional Balance............................................. S-65
Class Interest Distribution Amount...................................... S-66
Class Interest Shortfall................................................ S-66
Code.................................................................... S-11
Collection Account...................................................... S-87
Collection Period....................................................... S-66
Commission............................................................... S-3
Condemnation............................................................ S-36
Condemnation Proceeds................................................... S-65
Constant Prepayment Rate................................................ S-78
Controlling Class....................................................... S-92
Controlling Class Certificateholders.................................... S-92
Corrected Mortgage Loan................................................. S-95
CPR..................................................................... S-78
Cross-Collateralized Loans.............................................. S-37
Cross-Defaulted Loans................................................... S-37
Current Occupancy....................................................... S-43
Cut-off Date Principal Balance.......................................... S-12
Debt Service Coverage Ratio............................................. S-42
Default Interest........................................................ S-35
S-106
<PAGE>
Default Rate............................................................ S-66
Defeasance Lockout Period............................................... S-15
Definitive Certificate.................................................. S-72
Depositor................................................................ S-7
Directing Certificateholder............................................. S-92
Disposition Fee......................................................... S-95
Distribution Account.................................................... S-87
Distribution Date....................................................... S-64
DSCR.................................................................... S-42
DTC............................................................... S-11, S-73
Due Date................................................................ S-31
Duff & Phelps.......................................................... S-101
Eligible Bank........................................................... S-88
EPA..................................................................... S-24
ERISA.................................................................. S-100
ESA..................................................................... S-39
Excess Cash Flow........................................................ S-32
Excess Interest......................................................... S-32
Exemption.............................................................. S-101
Final Recovery Determination............................................ S-71
Fitch.................................................................... S-5
Form 8-K................................................................ S-49
Guide................................................................... S-60
Hospitality Properties.................................................. S-19
Indirect Participants................................................... S-73
Initial Pool Balance.................................................... S-30
Insurance Proceeds...................................................... S-65
Interest Accrual Period................................................. S-66
Liquidation Proceeds.................................................... S-65
Loan 120 Account................................................... S-9, S-31
Loan-to-Value Ratio..................................................... S-42
Lockout Period.......................................................... S-33
LTV..................................................................... S-42
Master Servicer Mortgage File........................................... S-83
Monthly Payment......................................................... S-66
Moody's.................................................................. S-5
Mortgage File........................................................... S-83
Mortgage Loan Documents................................................. S-35
Mortgage Loan Purchase Agreement........................................ S-30
Mortgage Loan Sellers.................................................... S-7
Net Collections......................................................... S-96
Net Mortgage Rate....................................................... S-66
Net Operating Income.................................................... S-41
Net REO Proceeds........................................................ S-66
NOI..................................................................... S-41
Nonrecoverable Advance.................................................. S-93
Notional Balance......................................................... S-5
NRF............................................................... S-11, S-59
NRFinance............................................................... S-11
Number of Units......................................................... S-43
Occupancy As of Date.................................................... S-42
Occupancy Rate.......................................................... S-42
Open.................................................................... S-34
PAR..................................................................... S-63
Participants............................................................ S-73
S-107
<PAGE>
Paying Agent............................................................ S-73
Permitted Investments................................................... S-88
Physical Occupancy %.....................................................S-42
P&I Advance............................................................. S-84
Plan Asset Regulations................................................. S-101
Plans.................................................................. S-100
Pool Balance............................................................ S-30
Pooled Principal Distribution Amount.................................... S-66
Pooling and Servicing Agreement......................................... S-81
Prepayment Interest Shortfall........................................... S-67
Prepayment Interest Surplus............................................. S-67
Prepayment Premium Period............................................... S-33
Prepayment Premiums..................................................... S-67
Principal Prepayments................................................... S-67
Property Advances....................................................... S-84
Rated Final Distribution Date............................................ S-8
RCRA.................................................................... S-24
Realized Loss........................................................... S-70
Record Date............................................................. S-65
Remaining Amortization Term............................................. S-42
Remaining Term to Maturity.............................................. S-42
REMIC............................................................. S-10, S-99
Remittance Date......................................................... S-84
REO Account............................................................. S-64
REO Mortgage Loan....................................................... S-67
REO Property............................................................ S-94
Reserve Accounts........................................................ S-50
Residual Certificates................................................... S-11
Restricted Group....................................................... S-101
Revised Rate............................................................ S-32
Scheduled Final Distribution Date....................................... S-71
Scheduled Principal Balance............................................. S-71
Senior Certificates...................................................... S-9
Senior Principal Distribution Cross-Over Date........................... S-70
Servicing Fee........................................................... S-93
Servicing Fee Rate...................................................... S-93
Similar Law............................................................ S-100
SMMEA.................................................................. S-103
S&P.................................................................... S-101
Special Servicer........................................................ S-81
Special Servicing Fee................................................... S-95
Special Sub-Servicer.................................................... S-81
Specially Serviced Mortgage Loan........................................ S-94
Subordinate Certificates................................................. S-9
Transferor........................................................ S-11, S-59
Trust Fund............................................................... S-7
Trustee Mortgage File................................................... S-81
Underlying Mortgage Loan Purchase Agreements............................ S-30
Underwriters........................................................... S-104
Underwriting Agreement................................................. S-104
Underwritten DSCR....................................................... S-42
Underwritten Net Cash Flow.............................................. S-42
Underwritten NOI........................................................ S-42
Units/SF................................................................ S-43
Unscheduled Payments.................................................... S-67
S-108
<PAGE>
Voting Rights........................................................... S-98
Weighted average life................................................... S-77
Weighted Average Maturity............................................... S-43
Weighted Average Net Mortgage Rate...................................... S-67
Workout Fee............................................................. S-95
Year Built.............................................................. S-42
Year Renovated.......................................................... S-42
Yield Maintenance Charge................................................ S-33
Yield Maintenance Period................................................ S-33
S-109
<PAGE>
ANNEX A
EXPLANATORY NOTES
Shaded Mortgage Loans signify either single notes secured by multiple
Mortgages, or cross-collateralized/cross-defaulted notes and Mortgages.
Crossed loans (i.e., cross-collateralized or cross-defaulted Mortgage Loans)
include a summation of certain loan parameters (e.g. Cut-off Date Balance) on
the top line of the loan group as designated in bold type and, therefore, some
loan totals are duplicated and must be adjusted to attain portfolio totals.
"NRF", "CIBC", and "KEY" denote National Realty Funding L.C. or National Realty
Finance L.C., as applicable, CIBC Inc. and KeyBank National Association,
respectively, as originators of the Mortgage Loans.
Certain ratios including Cut-off Date Balance/Unit or SF, DSCR, LTV and Balloon
LTV are calculated on a combined basis for Mortgage Loans that are secured by
multiple Mortgaged Properties or are cross-collateralized and cross-defaulted.
"ARD" indicates the Anticipated Repayment Date.
The Amortization Term shown is the basis for determining the fixed monthly
principal and interest payment as set forth in the related Note. For those
Mortgage Loans utilizing an actual/360 interest calculation methodology, the
actual amortization to a zero balance may require more monthly payments than
indicated.
"Largest Tenant Name" refers to the tenant that represents the greatest
percentage of the total square footage at the related Mortgaged Property.
YM represents yield maintenance. "YM1", "YM2", "YM3", "YM4" and "YM5" represent
the greater of yield maintenance or one percent, two percent, three percent,
four percent and five percent of the outstanding principal balance at such
time, respectively. The stated percentages represent specified Prepayment
Premiums. "Open" represents a period during which principal prepayments are
permitted without payment of a Prepayment Premium. For each Mortgage Loan, the
sum of the numbers set forth under the Prepayment Description category
represents the number of months in the original term to maturity.
"LO" denotes that a Mortgage Loan is locked out for a period during which
prepayment is not permitted.
"DEF" denotes defeasance and indicates that a loan may be defeased only during
the indicated period.
Yield Maintenance Description provides a summation of the calculation of any
Yield Maintenance Charge. Note that with respect to Mortgage Loan Control #54,
the Yield Maintenance Charge is calculated as the Treasury Rate plus 135 basis
points per annum.
"Seasoning" represents the approximate number of months elapsed from the date
of the first regularly scheduled payment to the Cut-off Date.
Missing NOI data points occur because the data was not available or because
they apply to a time period that is not comparable to other Mortgage Loans in
the Mortgage Loan Pool.
Due on Sale provides a confirmation that exercise is at the related lender's
option with a fee payable for such option.
Fixed Loan Type identifies that interest will accrue on the balance of the
related Mortgage Loan at the indicated fixed coupon during the term of the
loan.
"NAP" denotes data is not applicable.
Current LTV Ratio is calculated using the original appraised value and the
Cut-off Date Balance.
All reserve holdback balances, monthly reserves and monthly escrows were
obtained from the related Mortgage Loan Seller.
1998 NOI--Generally, 1996 and 1997 NOI indicates a January through December
calendar year. 1998 NOI may be calculated on any one of the three following
methods: (a) at least 8 months during 1998, annualized, (b) the trailing 12
months ending no earlier than October 1998 including at least 10 months of
calendar 1998, or (c) calendar year 1998.
Mortgage Loan Control #5 is a set of 4 NRF cross-collateralized Mortgage Loans
made up of loan #'s 2493, 2494, 2496 and 2497. Loan #2494 is secured by two
Mortgaged Properties identified as #2494A and #2494B. Information regarding
#2494A and #2494B is added together on the loan level line and shown as #2494.
Therefore, when adding the numbers to determine the rolled-up balances for the
entire cross-collateralized group for Mortgage Loan Control #5, the information
for #2494A and #2494B should not be included so as to avoid double counting.
"Future Subordinate Financing" indicates whether the related borrower may enter
into further financing secured by the Mortgaged Property.
A-1
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
CONTROL LOAN
NUMBER NUMBER ORIGINATOR PROPERTY NAME PROPERTY ADDRESS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 C101 CIBC Three Park Avenue 3 Park Avenue
2 2172 NRF Tower Shops Southeast Corner of I-595/State Road
3 C102 CIBC Louisville Marriott East 1903 Embassy Sq. Blvd.
4 4803 KEY Bank Of America 50 West Liberty Street
5 NRF THE AIP LOANS & PROPERTIES
5.10 2493 NRF Spring Valley Business Park, #6 1055-1059 S. Sherman Street
5.20 2496 NRF 109-111 Inverness 109-111 Inverness Dr. East
5.30 2494 NRF CENTRAL PARK & SKYWAY ROLLUP VARIOUS
5.31 2494A NRF Central Park Office Tech Center 1901 Glenville Drive and 1900 Firman Drive
5.32 2494B NRF Skyway Business Center 3002-3018 Skyway Circle South
5.40 2497 NRF Avion Business Center 2155 Chenault Drive
6 C104 CIBC One City Center One City Center
7 KEY THE NURSING CENTER LOANS
7.10 6275 KEY Hickory of Athens Nursing Center 51 East Fourth Street
7.20 6276 KEY Southern Hills Health & Rehabilitation Center 19530 Bagley Road
7.30 6274 KEY Scenic Hills Nursing Center 311 Buck Ridge Road
7.40 6273 KEY Arcadia Nursing Center Route 7, East Main Street
8 C105 CIBC Sea Tac Hotel 17001 Pacific Highway South
9 C103 CIBC PRIME GROUP PORTFOLIO VARIOUS
9.10 C103i CIBC 11039 Gage Avenue 11039 Gage Avenue
9.20 C103b CIBC 11045 Gage Avenue 11045 Gage Avenue
9.30 C103j CIBC 1401 South Jefferson Street 1401 South Jefferson Street
9.40 C103g CIBC 200 E. Fullerton Avenue 200 E. Fullerton Avenue
9.50 C103h CIBC 350 Randy Road 350 Randy Road
9.60 C103f CIBC 370 Carol Lane 370 Carol Lane
9.70 C103c CIBC 4160-4190 Madison Street 4160-4190 Madison Street
9.80 C103d CIBC 4211 Madison Street 4211 Madison Street
10 2454 NRF St. Francis Outpatient Building 2226 Liliha Street
11 2701 NRF Lake Howell Square 1241-1271 Semoran Boulevard
12 1079 NRF Hedges Greene Shopping Center 8515 SW Tualatin-Sherwood Road
13 2254 NRF Blanco Crossing Apartments 13999 Old Blanco Road
14 6270 KEY Kansas City FBI Building 1300 Summit Street
15 2643 NRF Metro Square II & III 2735-2775 Villa Creek Road & 12200/12300
Ford Road
16 C106 CIBC Tech Park I & II 2230-2260 Corporate Center Drive
17 2557 NRF Rosemeade Apartments 3737 Timberglen Road
18 3816 NRF Bonita Center 4340-4450 Bonita Road
19 4713 NRF Carter Oak Crossing 5495 Jimmy Carter Blvd.
20 KEY LEXFORD GEORGIA PORTFOLIO
20.10 6040 KEY Stewart Way I & II Apartments 302 General Stewart Way
20.20 6039 KEY Mill Run Apartments, No. 3480 300 Jones Mill Road
20.30 6041 KEY Wilcrest Woods Apartments 701 Penn Waller Road
20.40 6035 KEY Oakley Woods Apartments 6300 Oakley Road
20.50 6042 KEY Glenwood Village 1420 Gray Highway
20.60 6037 KEY Camden Way I Apartments 145 N. Gross Road
20.70 6036 KEY Hatcher Way Apartments 127 Havanna Avenue
20.80 6038 KEY Quail Call Apartments 2414 North Brierwood Drive
21 NRF THE REALMARK PORTFOLIO
21.10 4923 NRF Inducon Park East Phase I & II 415 & 435 / 410, 430 & 440 Lawrence Bell Drive
21.20 2752 NRF Inducon Park East Phase III 80/90 Curtwright Drive
21.30 4022 NRF Paddock at Metro Center 230 Cumberland Bend Drive
22 2236 NRF Asbury Court 210 Airport Road & 230 S. Lincolnway
23 C108 CIBC RegstadPortfolio 1430 34th St.SW,1414 35th St,3100 33rd St.,
1710 49t
24 C109 CIBC Doubletree Grand Hotel 1717 North Bayshore Drive
25 C110 CIBC 300 West 49th Street 300 West 49th Street
26 5639 NRF Custer Park Apartments 3400 Custer Road
27 3421 NRF Colonnade Office Building 53 Forest Avenue
28 3007 NRF Moss Creek Apartments 12851 Haster Street
29 C111 CIBC Wild Harvest Marketplace 575 Worcester Road (Route 9)
30 C112 CIBC Frontier Village Phase III 1841 East Highway 69
31 2606 NRF Verdugo Hills Professional Building 1808 and 1818 Verdugo Blvd
32 C113 CIBC Cortez Plaza East S/W/C Cortez Road & 5th Street West
33 C115 CIBC Uptons Department Store 21759 State Road 7
34 1920 NRF Radisson Inn 75 Felton Street
35 3193 NRF Comfort Suites Downtown 346 Baronne Street
36 5454 NRF CAPTEC FRANCHISE PORTFOLIO IV VARIOUS
36.10 5454A NRF Bennigan's - Norfolk, VA 5741 Virginia Beach Blvd.
36.20 5454B NRF Steak & Ale - Farmington Hills, MI 27590 Orchard Lake Road
36.30 5454C NRF Arby's - Southgate, MI 18767 Northline Road
36.40 5454D NRF Blockbuster Video - Riverdale,GA 8529 Georgia Highway 85
36.50 5454E NRF Hollywood Video - Hamilton, OH 1491 Main Street
36.60 5454F NRF Hollywood Video - Cincinnati, OH 6123 Colerain Avenue
36.70 5454G NRF Steak & Ale - Trevose, PA 2224 Roosevelt Boulevard
36.80 5454H NRF Carino's Italian Kitchen - El Paso, TX 675 Sunland Park Drive
37 KEY LEXFORD MICHIGAN PORTFOLIO
37.10 6228 KEY Ashgrove Apartments 15151 Ashgrove Drive
37.20 6229 KEY Heathmoore Apartments 34895 Heathmoore Drive
37.30 6230 KEY Montgomery Court Apartments of Ingham Co. 1715 Huntsville Drive
38 5453 NRF CAPTEC FRANCHISE PORTFOLIO III VARIOUS
38.10 5453A NRF Denny's Restaurant 5720 Northampton Boulevard
38.20 5453B NRF Golden Corral 4532 South Florida Avenue
38.30 5453C NRF Applebee's Bar & Grill 105 Potomac Boulevard
38.40 5453D NRF Church's Chicken 1003 Southeast Military Drive
38.50 5453E NRF Red Robin Grill 1701 William D. Tate Ave.
38.60 5453F NRF Jack-in-the-Box 320 Grapevine Highway
38.70 5453G NRF Hollywood Video 3610 West Owen K. Garriott Road
38.80 5453H NRF Black-Eyed Pea 1905 Preston Road
39 6278 KEY American Twine Office Park 222 Third Street
40 3252 NRF 2-30 Spring Mill Drive 2-30 Spring Mill Drive
41 1888 NRF Pittsford Place Mall 3300 Monroe Avenue
43 4707 NRF Courtside Village Apartments 255 Sonoma Way & 260 Ashley Avenue
44 5273 NRF Walgreens/West University 3200 Bissonet Street
45 4843 NRF The Bayer Building 35 Executive Boulevard
46 3344 NRF Coral Gates Apartments 12401 Studebaker Road
47 C117 CIBC 100 Brinson Road 100 Brinson Road
48 3779 NRF Commons on Park Springs Apartments 2115 Park Springs Circle
49 C119 CIBC Branson Ultrasonics Building 41 Eagle Road
50 3291 NRF River Oaks Apartments 711 Brentford Place
51 4371 NRF Memorial Skyway Plaza 610 North Michigan Street
52 2495 NRF AIP FLORIDA VARIOUS
52.10 2495A NRF Presidents Plaza 4801 & 4803 George Road
52.20 2495B NRF Corporex Plaza I Service Center 3902 & 3904 Corporate Park Drive
53 4448 NRF Riverrain Terrace Apartments 1110-1128 Huron River Road
54 3635 KEY Cambridge Place 1100 6th Ave North
55 5150 NRF Third Avenue Plaza 765 Third Avenue
56 6281 KEY Lockbourne Industrial Park II 4140 Lockbourne Road
57 4113 NRF Hall Group Industrial Buildings 40200, 40230 and 40220 Grand River
58 4737 NRF Cymer, Inc. 16725 Technology Drive
59 2763 NRF The Fairview Center Office Building 1003 West Seventh Street
60 2700 NRF Willows Apartments 5280 West Hacienda Ave.
61 3810 NRF Willows Apartments Phase II 5245 South Edmond
62 C121 CIBC Cardiff Plaza 6701 Black Horse Pike
63 KEY LEXFORD OHIO PORTFOLIO
63.10 6227 KEY Woodlands Apartments of Columbus 5354 Deerbrook Lane
63.20 6225 KEY Timbercreek Apartments of Toledo, Ltd. 2140 Timbercreek Drive
63.30 6224 KEY Springwood Apartments 5463 Yellowbud Drive
64 2401 NRF West Town Market Square Shopping Center 3830 Washington Road
65 6259 KEY Eagles Run Apts. - Phase I 2000 Bouldercrest Road
66 3637 KEY Plasti-Line Headquarters 623 East Emory Rd
67 4486 NRF Brenbrook Apartments 11 Cinnamon Circle
68 NRF YVONNE KING TRUST PORTFOLIO
68.10 4027 NRF La Prada Place Apartments 8383 La Prada Drive
68.20 4028 NRF McCallum Corners Apartments 7795 McCallum Boulevard
69 4326 NRF Acorn Tree Apartments 2105 West Jefferson Blvd.
70 4338 NRF Unifiber Building 3855 Ruffin Road
71 4840 NRF Sandlin Square Shopping Center 303 Beltline Place
72 3376 NRF Museum Place Two East India Square
73 6277 KEY Good Neighbor Care Center 622 South 57th Place
74 1930 NRF Miramar Plaza 8220-8290 Miramar Road
75 3644 KEY Gaylord Container 815 Industrial Drive
76 6282 KEY Cedaridge West Apartments 2072 30th Street
77 C123 CIBC Revere Crossing 826 Guenther Avenue
78 3701 NRF Pepper Place Apartments 601 W. Renner Road
79 5775 NRF Day Hill Corporate Center 200 Day Hill Road
80 C124 CIBC ROIFF PORTFOLIO - B SUMMARY VARIOUS
80.10 C124a CIBC Roiff - B (50 Evergreen) 50 Evergreen Street
80.20 C124b CIBC Roiff-B (113 Beacon) 113 Beacon Street
81 1703 NRF Gateway Business Park BuildingB 6360 S. Pecos
82 5416 KEY Best Western - Luxbury Hotel 5501 Coventry Lane
83 3636 KEY American Sign 7430 Industrial Blvd.
85 C126 CIBC Normandy Village Apartments 6668 Mt. Zion Boulevard
86 C125 CIBC Glen Plaza Shopping Center 216-230 Glen Cove Road
87 6279 KEY Crossroads Business Park Loop Road
88 2347 NRF Valu-Home Plaza 4152 West Main Street
89 NRF SUNNYLANE & REMINGTON APTS.
89.10 3145 NRF Sunnylane Park Apartments 4215 S.E. 53rd Street
89.20 3151 NRF Remington Place Apartments 1801 E. Remington
90 C127 CIBC ROIFF PORTFOLIO - A SUMMARY VARIOUS
90.10 C127a CIBC Roiff - A (772, 774, 776 Columbus) 772, 774, 776 Columbus Avenue
90.20 C127b CIBC Roiff A (216-218 Hemenway) 216 - 218 Hemenway Street
90.30 C127c CIBC Roiff- A (480 & 486 Massachusetts) 480 & 486 Massachusetts Avenue
91 NRF MCLEOD PHASES I & II 6255 S. MCLEOD DRIVE
91.10 1898 NRF McLeod Phase I 6255 S. McLeod Drive
91.20 1899 NRF McLeod Phase II 6255 S. McLeod Drive
92 3610 NRF Cannon Oaks Retail Center 3421 West William Cannon Drive
93 4029 NRF Ambassador Apartments 4400 Ambassador Way
94 3180 NRF Comfort Suites Motel 12010 NE Airport Way
95 C129 CIBC Fairfield Inn - Knoxville 1551 Cracker Barrel Lane
96 2731 NRF Westchester Gardens 3301 McMullen Booth Road
97 2343 NRF Wheatland Village Shopping Center 4001-4041 Wheatland
98 6287 KEY Forest Creek Patio Homes 6510 U.S. Highway 31 South
99 C131 CIBC Rolling Ridge Apartments 9 Denise Drive
100 3422 NRF Airport Properties I & II 640-642 Cordell and 4767-4787 Clark Howell
Boulevard
101 4409 NRF Olympic View Apartments 16700 31st Avenue
102 C132 CIBC ROIFF PORTFOLIO - C SUMMARY VARIOUS
102.10 C132a CIBC Roiff - C (610 Columbus) 610 Columbus Avenue
102.20 C132b CIBC Roiff - C (28, 55, 61, 63 S.Huntington) 28, 55, 61, & 63 South Huntington Avenue
103 3921 KEY Kendale Industries 7600 Hub Parkway & 8600 Pleasant Valley Road
104 3098 NRF Greentree Commons 8001-8004 Lincoln Dr. West
105 C133 CIBC 87 West Cedar & 19 Chestnut 87 West Cedar & 19 Chestnut Street
106 3293 NRF Evans Sheridan Plaza 485 Evans Road
107 3730 NRF Landmark Lofts 426 West 5th Street
108 2235 NRF 1701 Louisville 1701 Louisville & 3501 Workman
109 C134 CIBC Greenspring Valley Office Center 9505 Reisterstown
110 6291 KEY Ogden OfficeMax 1250 Washington Boulevard
111 C135 CIBC Whitehall Commons 3 Maryland Circle
112 3194 NRF Laverock Place 1000 Ivy Hill Road Mt. Airy
113 4482 NRF Inwood World Plaza 14807 Inwood Road
114 C136 CIBC Walgreen's Store 503 S. Chickasaw Trail/8000 Lake Underhill Road
115 4126 NRF Springs Village Shopping Center 3841 South Highway 97
116 3797 KEY Spanish Village 7204 Ho Road -7211 Hum Street
117 2049 NRF Westside Plaza Shopping Center 20310 - 20358 NW 2nd Ave.
118 3817 NRF Montrose Apartments 2841-2851 Montrose Ave.
119 C137 CIBC Harrisonburg Plaza 2475 South Main Street
120 3922 KEY Dover Junction Shopping Centerand Mall 620 Dover Center Road
121 1420 NRF Ditek Facility 1720 Starkey Road
122 C139 CIBC Southland Shopping Center 1716-1930 South Fourth Street
123 C138 CIBC 901 Broadway 901 Broadway
124 6264 KEY Mayfield Plaza 1400 SOM Center Road
125 6262 KEY 6705 Wales Road 6705 Wales Road
126 4875 NRF Riverside Business Park 3343-3387 Chicago Ave. & 3330-3392 Durahart St.
127 1678 NRF East Village Annex Shopping Center 2611, 2621 & 2625 Oswell St.
128 5720 NRF Pyramid Professional Center 1404-1406 S. Crain Highway
129 6232 KEY Forsythia Court Apartments 6001 Barley Avenue
130 3640 KEY Patrick-Sandhill Business Park 6126 South Sandhill Road
131 6267 KEY 5900 Roche Drive 5900 Roche Drive
132 3036 NRF Savannah Square Crossing 1515-1595 Rice Road
133 C140 CIBC 3991 Sarno Road 3991 Sarno Road
134 6271 KEY Snowville Shopping Center 5739-5785 Chevrolet Blvd. & 11680 Snow Rd.
135 3382 NRF Deauville Apartments 8260 East Ten Mile Road
136 3923 KEY Janita Plaza 3620-3650 E. Flamingo Rd.
137 3596 NRF Greenhaven Plaza & Lakecrest Medical Plaza 900 thru 902, 910 Florin Road
138 6289 KEY Union Place 85 South Union Boulevard
139 3924 KEY Hamilton Fixture Building 4805 Hamilton-Middletown Road
140 6266 KEY Fountain View Retirement Village of Grant 50 South Maple Street
141 2342 NRF Towngate Plaza Shopping Center 1901 Northwest Highway
142 3643 KEY Jubilee Supermarket 45-47 Ellicott Street
143 KEY BROADFIELD & WESTFIELD OFFICES
143.10 6260 KEY Broadfield North 8903-8939 Broadway Avenue
143.20 6261 KEY Westfield Commons South 101-107 West 79th. St.
144 2556 NRF Moorehouse Main Street 881 Main Street
145 1418 NRF 495 Post Road East Office Park 495 Post Road East
146 2543 NRF Broadview Ridge Townhomes 2110-2160 Farnon Court
147 4633 NRF Pinetree II and III condominiums 335 East 100 South and 50 South 350 East
148 4092 NRF River Hills Apartments 3017 Limestone Drive Suite 1
149 2546 NRF Crescent Heights Plaza 8149-8165 Santa Monica Boulvard
150 3801 KEY Interart/Sunrise Publications 3963 Vernal Pike
151 2986 NRF Tinker Plaza View Apartments 7401 SE 29th St.
152 3319 NRF 3052-3070 San Fernando Road 3052-3070 San Fernando Road
153 C141 CIBC Quaker Plaza Shopping Center 33 Quaker Road
154 4460 NRF Fountain Ridge Apartments 507 S. Claiborne
155 C142 CIBC The Plaza Building Building 400, Riverview Executive Park
156 3888 NRF Chamberlain Court/Stadium View/Abbott Corner 1733 Ohio/1040 Mississippi/W. 18th St.
157 C144 CIBC Midlothian Plaza Shopping Center 1000 East U.S. Highway 287
158 C143 CIBC Country Greene Condominium 320 West Harwood Road
159 1208 NRF San Joaquin Valley Professional Center 7405 & 7489 N. First Street
160 2215 NRF Modernistic Die Cutting 169 Jenks Avenue
161 3420 NRF Adams Plaza 976-1032 Eastern Avenue
162 6268 KEY Mayflower Shopping Center 2134-2226 Lincoln Way
164 4258 NRF Best Western Executive Inn 27441 Helen Drive
165 4297 NRF Bluffs West Apartments 4335-4343 N. Chestnut Street
166 6280 KEY JRH Office Building 32600 Telegraph Road
167 C145 CIBC Bay Pointe Apartments 296 U.S. Highway 90
168 3181 NRF Paint Creek Village Apts. 750-770 Orion Road
169 3798 KEY Woodland Apartments 3140 Route 209
170 6027 KEY Windrush Court Apartments 13971 Windrush Court
171 C146 CIBC Sunny Point Garden Apartments 886 South Nova Road
172 3708 NRF Bearmore Mobile Home Park 1820 Hwy. #35, Block 72, Lot 35
173 4328 NRF Fair Oaks Garden Apartments 1158-1174 Fair Oaks Avenue
174 3386 NRF Alpine Vista Apartments 1705 West Pine Street
175 6026 KEY Heronwood Apartments 13809 Heronwood Lane
176 3393 NRF Strasbourg Apartments 3 NW O'Brien Road
177 3412 NRF Brighton Court Apartments 14300 32nd Ave, NE
178 2398 NRF Greenback Oaks Plaza 8800-8820 Greenback Lane
179 2320 NRF 235 West Parkway 235 West Parkway
180 3858 NRF Wachovia Bank Building 1489 North Military Trail
181 6028 KEY Shadow Wood Apartments 1927 Sanford Circle
182 6286 KEY Green Plaza Shopping Center 4195 Massillon Road
183 3925 KEY Bissman Company - 30 Fifth 30 West Fifth St./ 175-193 N. Main St./ 189 N.
Mulberry St.
184 6283 KEY Carmel Office Center 4501-4507 Hills & Dales Road NW
185 3186 NRF Baxter Office Park 510 Baxter Road
186 6030 KEY Parkway North Apartments 8049 Stillwater Court
187 6290 KEY U.S. Bank Branch 1125 Garden of the Gods Road
188 6231 KEY Bradford Place Apartments 16 Bradford Place
189 C147 CIBC 42 Grove Street 42 Grove Street
190 6226 KEY Annhurst Apartments of Columbus 5849 Cherry Bottom Road
191 3926 KEY Airy Forest Apartments 5100-5120 Hawaiian Terrace
192 2397 NRF Centennial Marketplace 956 W. Cherry Street
193 2396 NRF 510 Compton Street 510 Compton Street
194 3646 KEY Mountlake Terrace Business Park 21718-66 Avenue West
195 3927 KEY Sandler Property 142 Route 17K
196 6258 KEY Burkey Apartments 37 Washington Avenue
197 6265 KEY 990 High Street 988-990 High Street
198 3928 KEY Madison Villa Apts 199 North Madison Road
199 3929 KEY Packard House Apts 1373 Mahoning Ave. N.W.
200 6263 KEY Randall Park Strip Mall 4834 - 4836 Northfield Road
201 3647 KEY Kent Central Business Center 1510 & 1514 S. Central Ave.
202 3650 KEY Ponderosa Apartments 5300 South 900 East
203 3649 KEY Beaver Circle 3078-3109 W. Beaver Circle
204 6288 KEY Wagner Hardware Company 455 West Longview Avenue
205 3889 NRF Carson Place Apartments 1121-23 Louisiana
206 C148 CIBC ROIFF PORTFOLIO - D SUMMARY VARIOUS
206.10 C148a CIBC Roiff - D (1742 Washington Street) 1742 Washington Street
206.20 C148b CIBC Roiff - D (226 Parker Hill) 226 Parker Hill Avenue
207 6272 KEY Iliff Square Shopping Center 2201-2271 S. Peoria Street
208 C149 CIBC Eckerd's Drug Store 200 Main Street
209 3930 KEY Audrey Ave.Apts 2 Audrey Avenue
210 C150 CIBC Eckerd's Drug Store 104 East Main Street
211 3800 KEY Turtle Rock Apartments 10-17, 20-27, 30-37 Turtle Rock Court
212 3931 KEY Childrens World Day Care Center 9034 East Mineral Avenue
213 6284 KEY Storage Quarters Mini Warehouse 15415 Pine Ridge Road
214 2120 NRF Kenny Rogers Roasters 535 N. Milwaukie Street
215 3932 KEY Park View Plaza 11002-11010 Clifton Road
216 3934 KEY Gateway Apartments 501 Southern Boulevard N.W.
217 3933 KEY Grover Cleveland 783-819 Millersport Highway
218 3936 KEY Pembroke Estates 20539-20541 Southfield Road
219 3937 KEY PAUL G. MAYER APARTMENTS VARIOUS
219.10 3937A KEY Paul G. Mayer Apartments 51-53 Brookes Avenue
219.20 3937B KEY 349 College Street 349 College Street
220 3938 KEY Ripley Machine Company 3171 Albrecht Avenue
221 3939 KEY Northcliffe Manor Apts 4528 Hamilton Avenue
222 3940 KEY Hull's Mobile Home Park 13 Andrus Street
223 3941 KEY Joseph Drowne House 36-38 State Street
225 3942 KEY Merrimack Village Mall Route 3 - 416 Daniel Webster Highway
226 3943 KEY Vision Development 20974 Arsenal Street
227 4279 NRF 511 Miami Street 511 Miami Street
228 3944 KEY 45 Allen Place Apts 45 Allen Place
230 3945 KEY Euclid Place Office Building 25000 Euclid Avenue
231 3947 KEY 50 Allen Place Apts 50 Allen Place
232 3948 KEY J & A Latham Properties Corp. 17 Hemlock Street
233 3949 KEY Brickton Manor 22250 Euclid Ave.
234 3950 KEY Bayside Apartments 1051 West Van Buren Street
235 3951 KEY North French Plaza 560-570 North French Road
236 3952 KEY 180 Bond Street Apartments 180 Bond Street
237 3953 KEY Hong Commercial Retail 1649 Central Avenue
238 3954 KEY 337 South 400 East 337 South 400 East
239 3955 KEY Children's Discovery Center 54166 County Road 7 North
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
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CONTROL PROPERTY PROPERTY PROPERTY PROPERTY BORROWER
NUMBER CITY STATE ZIP CODE TYPE NAME
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 New York New York 10016 Office Three Park Avenue Building Co.,L.P.
2 Davie Florida 33324 Retail-Anchored Tri-County Plaza Associates, Ltd.
3 Louisville Kentucky 40299 Hotel Columbia Properties Louisville, Ltd.
4 Reno Nevada 89501 Office Liberty West Holdings, L.L.C.
5 VARIOUS AMERICAN INDUSTRIAL PROPERTIES REIT
5.10 Richardson Texas 75081 Office American Industrial Properties REIT
5.20 Englewood Colorado 80112 Office/Industrial American Industrial Properties REIT
5.30 VARIOUS VARIOUS VARIOUS VARIOUS AMERICAN INDUSTRIAL PROPERTIES REIT
5.31 Richardson Texas 75081 Office/Industrial American Industrial Properties REIT
5.32 Irving Texas 75038 Office/Industrial American Industrial Properties REIT
5.40 Carrollton Texas 75006 Office/Industrial American Industrial Properties REIT
6 Portland Maine 04101 Office One City Center Associates
7 OHIO NURSING HOME
7.10 The Plains Ohio 45780 Nursing Home Hickory Creek of Athens, Inc.
7.20 Middleburg Heights Ohio 44130 Nursing Home Southern Hills Health and
Rehabilitation Center, I
7.30 Bidwell Ohio 45614 Nursing Home Scenic Hills Nursing Center, Inc.
7.40 Coolville Ohio 45723 Nursing Home Arcadia Nursing Center, Inc.
8 Sea Tac Washington 98188 Hotel CHIP REIT No. 25 Sea-Tac Ltd.
9 VARIOUS VARIOUS VARIOUS INDUSTRIAL PRIME GROUP REALTY TRUST
9.10 Franklin Park Illinois Industrial Prime Group Realty Trust
9.20 Franklin Park Illinois Industrial Prime Group Realty Trust
9.30 Chicago Illinois Industrial Prime Group Realty Trust
9.40 Carol Stream Illinois Industrial Prime Group Realty Trust
9.50 Carol Stream Illinois Industrial Prime Group Realty Trust
9.60 Elmhurst Illinois Industrial Prime Group Realty Trust
9.70 Hillside Illinois Industrial Prime Group Realty Trust
9.80 Hillside Illinois Industrial Prime Group Realty Trust
10 Honolulu Hawaii 96817 Office Liliha Partners, LP, dba Liliha LMP
Company
11 Casselberry Florida 32707 Retail-Anchored Buffalo-LH Business Trust & Buffalo
Casselberry Bu
12 Tualatin Oregon 97062 Retail-Anchored Zian Limited Partnership
13 San Antonio Texas 78216 Multifamily Sovereign Development Partners1994-1,
Ltd.
14 Kansas City Missouri 64106 Office Missouri Assets L.L.C.
15 Farmers Branch Texas 75234 Office Ford Villa Operating Associates,
Limited Partnersh
16 Henderson Nevada 89014 Office Green Valley Tech Park, LLC
17 Dallas Texas 75287 Multifamily Rosemeade Associates-320, Inc.
18 Chula Vista California 91902 Retail-Anchored Bonita Centre, LLC
19 Norcross Georgia 30092 Retail-Anchored Carter Oak Crossing, LLC
20 GEORGIA MULTIFAMILY VARIOUS
20.10 Hinesville Georgia 31313 Multifamily Lexford GAKB, LLC
20.20 Statesboro Georgia 30458 Multifamily Lexford GAKB II, L.L.C.
20.30 Savannah Georgia 31410 Multifamily Wilcrest Woods Apartments, LTD.
20.40 Union City Georgia 30291 Multifamily Oakley Woods Apartments of Union City,
LTD
20.50 Macon Georgia Multifamily Glenwood Village Apartments ofMacon,
Ltd.
20.60 Kingsland Georgia 31548 Multifamily Camden Way Apartments, Ltd.
20.70 Waycross Georgia 31501 Multifamily Hatcher Way Apartments, Ltd.
20.80 Albany Georgia 31705 Multifamily Quail Call Apartments, Ltd.
21 OFFICE/INDUSTRIAL REALMARK PROPERTY INVESTORS LIMITED
PARTNERSHIP V
21.10 Amherst New York 14221 Office/Industrial Realmark Property Investors Limited
Partnership V
21.20 Amherst New York 14221 Office/Industrial Realmark Property Investors Limited
Partnership V
21.30 Nashville Tennessee 37228 Office/Industrial Realmark Property Investors Limited
Partnership V
22 North Aurora Illinois 60542 Congregate Care Z.L. Company, Inc., EJR Enterprises,
Inc., et al
23 Fargo North Dakota 58103 Multifamily Regstad Family Limited Partnership
24 Miami Florida 33132 Hotel PH Hotel, Inc.
25 New York New York 10019 Multifamily 300 West 49th Street Associates LLC
26 Plano Texas 75023 Multifamily Price Custer Park, L.P.
27 Greenwich Connecticut 06870 Office The Colonnade One at Old Greenwich
Limited Partner
28 Garden Grove California 92643 Multifamily Fritz Hoelscher, William N. & Nancy M.
Buxton, as
29 Framingham Massachusetts 01701 Retail-Anchored 575 Worcester Road LLC
30 Prescott Arizona 86301 Retail-Anchored Grace Investment Company
31 Glendale California 91208 Office Verdugo Hills Professional Buildings
32 Bradenton Florida 34207 Retail-Anchored Bradenton Associates
33 Boca Raton Florida 33428 Retail-Anchored Bayshore Developers II, LC
34 Marlborough Massachusetts 01752 Hotel N&L Marlboro Development Company
35 New Orleans Louisiana 70112 Hotel Putnam Hotel Corporation
36 VARIOUS VARIOUS VARIOUS VARIOUS CAPTEC FRANCISE CAPITAL PARTNERS L.P. IV
36.10 Norfolk Virginia 23502 Special Purpose Captec Francise Capital Partners L.P. IV
36.20 Farmington Hills Michigan 48334 Special Purpose Captec Francise Capital Partners L.P. IV
36.30 Southgate Michigan 48195 Retail-Unanchored Captec Francise Capital Partners L.P. IV
36.40 Riverdale Georgia 30274 Retail-Single Tenant Captec Francise Capital Partners L.P. IV
36.50 Hamilton Ohio 45013 Retail-Single Tenant Captec Francise Capital Partners L.P. IV
36.60 Cincinnati Ohio 45239 Retail-Single Tenant Captec Francise Capital Partners L.P. IV
36.70 Trevose Pennsylvania 19503 Special Purpose Captec Francise Capital Partners L.P. IV
36.80 El Paso Texas 79912 Special Purpose Captec Francise Capital Partners L.P. IV
37 MICHIGAN MULTIFAMILY VARIOUS
37.10 Sterling Heights Michigan 48313 Multifamily Ashgrove Apartments of Sterling
Heights, Ltd.
37.20 Clinton Township Michigan 48035 Multifamily Heathmoore Apartments of Macomb County,
Limited
37.30 Haslett Michigan 48840 Multifamily Montgomery Court Apartments of Ingham
County, Ltd.
38 VARIOUS VARIOUS VARIOUS VARIOUS CAPTEC FRANCHISE CAPITAL PARTNERS L.P.
III
38.10 Viginia Beach Virginia 23455 Special Purpose Captec Franchise Capital Partners L.P.
III
38.20 Lakeland Florida 33813 Special Purpose Captec Franchise Capital Partners L.P.
III
38.30 Mt. Vernon Illinois 62864 Special Purpose Captec Franchise Capital Partners L.P.
III
38.40 San Antonio Texas 76214 Special Purpose Captec Franchise Capital Partners L.P.
III
38.50 Grapevine Texas 76051 Special Purpose Captec Franchise Capital Partners L.P.
III
38.60 Hurst Texas 76054 Special Purpose Captec Franchise Capital Partners L.P.
III
38.70 Enid Oklahoma 36856 Retail-Single Tenant Captec Franchise Capital Partners L.P.
III
38.80 Plano Texas 75093 Special Purpose Captec Franchise Capital Partners L.P.
III
39 Cambridge Massachusetts 02142 Office American Twine Limited Partnership
40 Malvern Pennsylvania 19355 Office Pennswood Spring Mill Associates, LP
41 Pittsford New York 14534 Retail-Unanchored Pittsford Place Associates, LP
43 Woodland California 95695 Multifamily KATS Family Trust
44 Houston Texas 77056 Retail-Anchored Sand Springs Ranch TX, L.P.
45 Orange Connecticut 06477 Office Baker Properties Limited Partnership
46 Norwalk California 90650 Multifamily Granite Four, LLC
47 Vidalia Georgia 30474 Industrial Insite Vidalia, L.L.C.
48 Arlington Texas 76013 Multifamily Fair Oaks Creek Ltd.
49 Danbury Connecticut 06810 Industrial Eagle Road, LLC
50 Arlington Texas 76006 Multifamily Canada River Oaks Ltd.
51 South Bend Indiana 46601 Office Memorial/Holladay Office Park
Associates L.P.
52 VARIOUS VARIOUS VARIOUS VARIOUS AMERICAN INDUSTRIAL PROPERTIES REIT
52.10 Tampa Florida 33634 Office/Industrial American Industrial Properties REIT
52.20 Tampa Florida 33619 Office/Industrial American Industrial Properties REIT
53 Ypsilanti Michigan 48197 Multifamily Riverside Apartments, L.L.C.
54 Great Falls Montana 59401 Congregate Care CPRC, LLC
55 Chula Vista California 91910 Office Third Avenue Plaza, LLC
56 Columbus Ohio 43207 Office/Industrial Lockbourne II LLC, AKA Lockbourne Two,
LLC
57 Novi Michigan 48375 Office/Industrial Hall Group, LLC.
58 Rancho Bernardo California 92127 Industrial Lepercq Corporate Income Fund L.P.
59 Frederick Maryland 21701 Office Fairview Center LLLP
60 Las Vegas Nevada 89118 Multifamily Willows Apartment Partners Limited
Partnership
61 Las Vegas Nevada 89118 Multifamily Willows Apartments Partners Limited
Partnership II
62 Egg Harbor Township New Jersey 08234 Retail-Unanchored Benbrooke Cardiff Partners, L.P.
63 OHIO MULTIFAMILY VARIOUS
63.10 Columbus Ohio 43213 Multifamily Woodlands Apartments of Columbus, LTD.
63.20 Toledo Ohio 43615 Multifamily Timbercreek Apartments of Toledo,
Limited Partners
63.30 Columbus Ohio 43231 Multifamily Springwood Apartments of Columbus, LTD.
64 Martinez Georgia 30907 Retail-Anchored John D. Hickok Family Trust
65 Atlanta Georgia 30316 Multifamily Eagles Run Housing Partners, Ltd.
66 Knoxville Tennessee 37938 Office/Industrial Plasti-Line Knoxville, LLC
67 Randallstown Maryland 21133 Multifamily Brenbrook Apartments LLC
68 DALLAS TEXAS MULTIFAMILY YVONNE G. KING TRUST
68.10 Dallas Texas 75228 Multifamily Yvonne G. King Trust
68.20 Dallas Texas 75252 Multifamily Yvonne G. King Trust
69 Dallas Texas 75208 Multifamily 2105 W. Davis Limited Parnership
70 San Diego California 92123 Industrial PMSI Kearny Mesa, L.L.C.
71 Decatur Alabama 35601 Retail-Anchored Edward L. Hill
72 Salem Massachusetts 01970 Mixed Use Heritage Museum Realty Trust
73 Springfield Oregon 97478 Congregate Care Good Neighbor Care - Springfield, LLC
74 San Diego California 92126 Retail-Unanchored Miramar Plaza, L.L.C.
75 Tipton Indiana 46072 Industrial Tipton Partners I, LLC
76 Greeley Colorado 80631 Multifamily Investwest Property V, Limited
77 Yeadon Pennsylvania 19050 Multifamily ADG Colonial Manor Associates
78 Richardson Texas 75080 Multifamily Linosana I, Limited
79 Windsor Connecticut 06095 Office 200 Day Hill Road Associates
80 VARIOUS VARIOUS VARIOUS MULTIFAMILY EB PROPERTIES, LLC
80.10 Boston Massachusetts 02130 Multifamily EB Properties, LLC
80.20 Boston Massachusetts 02116 Multifamily EB Properties, LLC
81 Las Vegas Nevada 89120 Office American Pacific Capital Gateway
Company L.L.C.
82 Fort Wayne Indiana 46804 Hotel Luxbury-Fort Wayne, LP
83 Florence Kentucky 41042 Office/Industrial Plasti-Line Florence, LLC
85 Morrow Georgia 30260 Multifamily Normandy Village Associates
86 Carle Place New York 11514 Retail-Unanchored Glen Plaza Associates LP
87 Savannah Georgia 31403 Office/Industrial Zaremba Foxfield Limited Partnership II
88 Batavia New York 14020 Retail-Anchored 425 West Main Associates (Batavia), L.P.
89 OKLAHOMA MULTIFAMILY VARIOUS
89.10 Oklahoma City Oklahoma 73135 Multifamily Pacific Investment Corporation
89.20 Shawnee Oklahoma 74801 Multifamily Park Place Properties, Inc.
90 VARIOUS VARIOUS VARIOUS MULTIFAMILY CHM PROPERTIES, LLC
90.10 Boston Massachusetts 02120 Multifamily CHM Properties, LLC
90.20 Boston Massachusetts 02115 Multifamily CHM Properties, LLC
90.30 Boston Massachusetts 02118 Multifamily CHM Properties, LLC
91 LAS VEGAS NEVADA 89120 OFFICE/INDUSTRIAL PARK 2000
91.10 Las Vegas Nevada 89120 Office/Industrial Park 2000
91.20 Las Vegas Nevada 89120 Office/Industrial Park 2000
92 Austin Texas 78745 Retail-Unanchored Sage-O'Connor Associates Ltd.
93 Balch Springs Texas 75180 Multifamily Dallas Ambassador Limited Partnership
94 Portland Oregon 97220 Hotel Gruhlaxmi, Inc.
95 Knoxville Tennessee 37914 Hotel Straw, L.P.
96 Safety Harbor Florida 34621 Nursing Home Westchester Gardens Limited Partnership
97 Dallas Texas 75237 Retail-Shadow Anchored Kong's Properties, Inc.
98 Indianapolis Indiana 46227 Congregate Care Forest Creek Patio Homes, L.L.C.
99 Colonie New York 12110 Multifamily Rolling Ridge LLC
100 Atlanta Georgia 30320 Office/Industrial Airport Properties Realty, LLC
101 SeaTac Washington 98188 Multifamily Olympic View, L.L.C.
102 VARIOUS VARIOUS VARIOUS MULTIFAMILY CSOH PROPERTIES, LLC
102.10 Boston Massachusetts 02118 Multifamily CSOH Properties, LLC
102.20 Boston Massachusetts 02130 Multifamily CSOH Properties, LLC
103 Valley View Ohio 44131 Office/Industrial Dale K. Honroth and Sharon T. Honroth
104 Marlton New Jersey 08053 Office BBHN Greentree Commons, L.P.
105 Boston Massachusetts Multifamily Christine Anne Realty Corp.
106 Williamsville New York 14221 Retail-Unanchored Bernard I. Obletz Evans-Sheridan
Property Trust
107 Kansas City Missouri 64105 Multifamily Mallin/Gibson Family L.P.
108 Knoxville Tennessee 37921 Office/Industrial Vista, L.P.
109 Owings Mills Maryland 21117 Office GV, LLC
110 Ogden Utah 84404 Retail-Single Tenant Broadway Partners, L.L.C.
111 Whitehall Pennsylvania 18052 Multifamily Gensa, L.L.C.
112 Philadelphia Pennsylvania 19150 Multifamily Barry Davis
113 Addison Texas 75244 Retail-Unanchored Inwood World Joint Venture
114 Orlando Florida 32825 Retail-Anchored The Edward H. Spiegel 1998 W-G
Revocable Trust
115 Sand Springs Oklahoma 74063 Retail-Shadow Anchored Springs Village Company
116 Carefree Arizona 85377 Retail-Unanchored Crimson Canyon LLC
117 Miami Florida 33169 Retail-Unanchored Sheridan Properties II, Inc.
118 Glendale California 91214 Multifamily Robert M. Parks, as Trustee ofthe Parks
Family Tru
119 Harrisonburg Virginia 22801 Retail-Anchored Benbrooke Shenandoah Partners, L.P.
120 Bay Village Ohio 44140 Retail-Unanchored Dover-Junction, Ltd.
121 Largo Florida 33771 Office/Industrial HR Starkey Limited
122 Chickasha Oklahoma 73203 Retail-Anchored Oklahoma City Associates
123 New York New York 10012 Mixed Use 901 Broadway, LLC
124 Mayfield Heights Ohio 44124 Retail-Single Tenant Key Plaza - LG LLC & Key Plaza- JR LLC
125 Northwood Ohio 43619 Office/Industrial Northwood One LLC
126 Riverside California 92705 Office/Industrial Martin Investment Company
127 Bakersfield California 93306 Retail-Unanchored Donald and Joan Maltzman Revocable
Family Trust
128 Glen Burnie Maryland 21060 Office Pyramid Limited Partnership
129 Louisville Kentucky 40218 Multifamily Forsythia Court Apartments of
Jefferson County, LT
130 Las Vegas Nevada 81920 Office/Industrial Patrick-Sandhill Business Park, L.L.C.
131 Columbus Ohio 43299 Office Roche Drive LLC
132 Lee's Summit Missouri 64060 Retail-Unanchored Ward Development & Investment Co.
133 Melbourne Florida 32934 Industrial Henderson Sarno, L.C.
134 Parma Ohio 44129 Retail-Unanchored S.N.C.H. Ltd.
135 Center Line Michigan 48015 Multifamily Deauville Apartments, L.L.C.
136 Las Vegas Nevada 89121 Retail-Unanchored Waldman Enterprises Inc.
137 Sacramento California 95831 Office Greenhaven Plaza
138 Lakewood Colorado 80228 Retail-Unanchored Havana Plaza Corporation
139 Hamilton Ohio 45011 Office/Industrial Hamilton Fixture Co., Inc.
140 Grant Michigan 49327 Assisted Living Facility Leisure Living Properties-Grant, L.L.C.
141 Garland Texas 75041 Retail-Unanchored Gateway Investments, L.C.
142 Batavia New York 14020 Retail-Single Tenant LKLWL Properties, L.P.
143 MERRILLVILLE INDIANA 46410 OFFICE VARIOUS
143.10 Merrillville Indiana 46410 Office Broadfield Square North
143.20 Merrillville Indiana 46410 Office Westfield Commons
144 Borough Of Sayreville New Jersey 08872 Retail-Unanchored Moorehouse Main Street Corp. & Main
Street Fidelco,
145 Westport Connecticut 06880 Office Topper Associates, L.L.C.
146 Colorado Springs Colorado 80906 Multifamily Cloud Family Partnership, LTD
147 Ephraim Utah 84627 Multifamily Pinetree II investors, LLC, a Utah
limited liabili
148 Louisville Tennessee 37777 Multifamily River Hill Multi-Family, L.P.
149 West Hollywood California 90046 Retail-Unanchored 8159 Santa Monica, LLC
150 Bloomington Indiana 47402 Office/Industrial IAHC Real Estate, LLC
151 Midwest City Oklahoma 73110 Multifamily Tinker Plaza View Apartment
152 Los Angeles California 90065 Retail-Unanchored Portola Ventures
153 Queensbury New York 12804 Retail-Unanchored Quaker Plaza, LLC
154 Olathe Kansas 66202 Multifamily Future Enterprises, LLC
155 Trenton New Jersey 08611 Office BOI I, L.L.C.
156 Lawrence Kansas 66044 Multifamily Twenty-One Company, L.C.
157 Midlothian Texas 76065 Retail-Anchored Benbrooke Midlothian Partners Limited
158 Hurst Texas 76054 Multifamily Townhomes of Country Greene, Ltd.
159 Fresno California 93720 Office M&G Partnership
160 St Paul Minnesota 55117 Office/Industrial Modernistic, Inc.
161 Malden Massachusetts 02148 Retail-Unanchored Adams Plaza Associates, L.L.C.
162 Massillon Ohio 44646 Retail-Anchored Mayflower Development Company
164 Perrysburg Ohio 43551 Hotel Best Ventures Corp.
165 Colorado Springs Colorado 80907 Multifamily Cosprings Bluffs West, LLC
166 Bingham Farms Michigan 48025 Office Shekerjian, L.L.C.
167 Bay St. Louis Mississippi 39520 Multifamily Bay Pointe Partners, L.P.
168 Lake Orion Michigan 48326 Multifamily ARC Investment, L.L.C.
169 Marbletown New York 12401 Multifamily Woodland Trust Agreement And Declaration
170 North Fort Myers Florida 33903 Multifamily Windrush Apartments, Ltd.
171 Daytona Beach Florida 32114 Multifamily M & E Ventures, Inc.
172 Wall Township New Jersey 07719 Mobile Home Park Joseph C. Frezza, LLC
173 Arroyo Grande California 93420 Multifamily Ronald J. Simmons, Connie Y. Simmons,
Johnny Yip
174 Sandpoint Idaho 83864 Assisted Living Facility Retirement Living Concepts Incorporated
175 Fort Myers Florida 33907 Multifamily Heronwood Apartments, LTD
176 Lee's Summit Missouri 64063 Multifamily Strasbourg Apartments II, L.P.
177 Seattle Washington 98101 Multifamily Craig B. Kennedy and Karen L.
Kennedy/Craig A. Coo
178 Orangevale California 95622 Retail-Unanchored Kaljian Family Revocable Trust
179 Pequannock New Jersey 07440 Industrial Mandarin Associates IV
180 West Palm Beach Florida 33409 Office KNARF 1489, Ltd.
181 Sarasota Florida 34234 Multifamily Shadow Wood Apartments II, LTD
182 Green Ohio 44685 Retail-Unanchored Green Center Inc
183 Manfield Ohio 44902 Industrial The Bissman Company
184 Canton Ohio 44708 Office Hills & Dales Office Center, Ltd
185 Chesterfield Missouri 63017 Office Charles J. Becker and Marion Becker,
husband and w
186 North Fort Myers Florida 33903 Multifamily Parkway North Apartments, LTD
187 Colorado Springs Colorado 80907 Special Purpose L.K. Leeper Associates, L.L.C.
188 Belleville Illinois 62221 Multifamily Bradford Place Apartments of St. Clair
County, Lim
189 Boston Massachusetts 02114 Multifamily Grove Street LLC
190 Columbus Ohio 43230 Multifamily Annhurst Apartments of Columbus, Ltd.
191 Cincinnati Ohio 45238 Multifamily Redleaf Properties, Inc.
192 Louisville Colorado 80027 Retail-Shadow Anchored Centennial Marketplace, LLC
193 Broomfield Colorado 80020 Office/Industrial 510 Broomfield LLC
194 Mountlake Terrace Washington 98043 Office/Industrial Dryfly Holdings, Inc.
195 Newburgh New York 12550 Office/Industrial Elinor C. Sandler
196 Bellevue Pennsylvania 15202 Multifamily Burnside Avenue Trust
197 Wadsworth Ohio 44281 Retail-Unanchored 2701 Market Street Investors
198 London Ohio 43140 Multifamily Thomas M. Phillips & Marsha S. Phillips
199 Warren Ohio 44483 Multifamily Packard House Apartments, Ltd.
200 North Randall Ohio 44128 Retail-Anchored Eye Plaza, Ltd.
201 Kent Washington 98032 Office/Industrial Cross Connections I, L.L.C.
202 Murray Utah 84117 Multifamily Ponderosa L.L.C.
203 West Valley City Utah 84119 Multifamily Beaver Circle, L.L.C.
204 Mansfield Ohio 44906 Warehouse Wagner Hardware Company
205 Lawrence Kansas 66044 Multifamily Twenty-Four Company, L.C.
206 VARIOUS VARIOUS VARIOUS MULTIFAMILY PW PROPERTIES, LLC
206.10 Boston Massachusetts 02118 Multifamily PW Properties, LLC
206.20 Boston Massachusetts 02120 Multifamily PW Properties, LLC
207 Aurora Colorado 80014 Retail-Unanchored Iliff Square, Inc.
208 Johnson City New York 13790 Retail-Anchored CP Realty Associates
209 Oyster Bay New York 11771 Multifamily 2 Audrey, Inc.
210 Cobleskill New York 12043 Retail-Anchored CP Realty Associates
211 New Paltz New York 12561 Multifamily Turtle Rock Trust
212 Englewood Colorado 80112 Special Purpose Steven P. Levine
213 Fort Myers Florida 33908 Self-Storage Martin E. Hawley and Kimberly S. Hawley
214 Boise Idaho 83704 Retail-Single Tenant Idaho Roasters Land, LLC
215 Cleveland Ohio 44122 Retail-Unanchored Park View Plaza, Ltd.
216 Warren Ohio 44485 Multifamily Gateway Apartments, Ltd.
217 Amherst New York 14226 Retail-Unanchored Charles G. Youngers
218 Detroit Michigan 48219 Multifamily Pembrooke Estates Associates L.L.C.
219 VARIOUS VARIOUS VARIOUS MULTIFAMILY PAUL G. MAYER, KAREN L. MAYER AND
DENNIS J. DELOY
219.10 Burlington Vermont 05401 Multifamily Paul G. Mayer, Karen L. Mayer and
Dennis J. Deloy
219.20 Burlington Vermont 05401 Multifamily Paul G. Mayer, Karen L. Mayer and
Dennis J. Deloy
220 Akron Ohio 44312 Office/Industrial Ripley Machine, Inc.
221 Cincinnati Ohio 45223 Multifamily Redleaf Properties, Inc.
222 Silvercreek New York 14136 Mobile Home Park Mohammed I. Charlie
223 Portland Maine 04101 Multifamily Honey Bee Properties, L.L.C.
225 Merrimack New Hampshire 03254 Retail-Shadow Anchored Adrien A. Labrie, Jr.
226 Watertown New York 13601 Special Purpose Vision Development, Inc.
227 Kansas City Kansas 66101 Special Purpose Tri-Comm, Inc.
228 Hartford Connecticut 06114 Multifamily Allen Place Apartments, LLC
230 Euclid Ohio 44117 Office Euclid Place
231 Hartford Connecticut 06114 Multifamily Allen Place Apartments, LLC
232 Town of Colonie New York 12110 Office/Industrial J & A Latham Properties Corp.
233 Euclid Ohio 44117 Multifamily Martin R. and Debra A. Homes
234 Seward Alaska 99664 Multifamily D/T Alaska, an Alaskan Limited
Partnership
235 Amherst New York 14228 Retail-Unanchored James D. DeMola, Sr., and Grace DeMola
236 Hartford Connecticut 06114 Multifamily Bond Street Apartments, LLC
237 Colonie New York 12205 Retail-Single Tenant Chol Hui Hong & Sun Cha Hong
238 Salt Lake City Utah 84111 Office Patrick Mundt, David Baker andJan Baker
239 Elkhart Indiana 46514 Special Purpose Buss Real Estate, Inc.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
ORIGINAL CUT-OFF GROSS NET
CONTROL PRINCIPAL DATE LOAN MORTGAGE MORTGAGE NOTE
NUMBER BALANCE BALANCE TYPE RATE RATE DATE
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 $ 67,500,000 $ 67,500,000 Fixed 7.7600% 7.7075% 11/30/98
2 35,000,000 34,753,057 Fixed 6.9300% 6.8775% 05/28/98
3 22,600,000 22,566,728 Fixed 8.2100% 8.1575% 01/15/99
4 20,500,000 20,432,272 Fixed 7.0000% 6.9475% 10/29/98
5 19,742,000 19,502,430 FIXED 7.2800% 7.2275% 04/14/98
5.10 6,900,000 6,816,268 Fixed 7.2800% 7.2275% 04/14/98
5.20 5,500,000 5,433,257 Fixed 7.2800% 7.2275% 04/14/98
5.30 4,017,000 3,968,254 FIXED 7.2800% 7.2275% 04/14/98
5.31 2,688,068 2,655,448 Fixed 7.2800% 7.2275% 04/14/98
5.32 1,328,932 1,312,806 Fixed 7.2800% 7.2275% 04/14/98
5.40 3,325,000 3,284,651 Fixed 7.2800% 7.2275% 04/14/98
6 19,100,000 18,975,752 Fixed 7.2900% 7.2375% 05/14/98
7 15,100,000 15,017,849 FIXED 7.6200% 7.5675% 09/23/98
7.10 5,800,000 5,768,445 Fixed 7.6200% 7.5675% 09/23/98
7.20 4,775,000 4,749,022 Fixed 7.6200% 7.5675% 09/23/98
7.30 3,250,000 3,232,319 Fixed 7.6200% 7.5675% 09/23/98
7.40 1,275,000 1,268,063 Fixed 7.6200% 7.5675% 09/23/98
8 14,950,000 14,849,396 Fixed 7.5000% 7.4475% 08/27/98
9 14,933,000 14,823,814 FIXED 7.1700% 7.1175% 05/01/98
9.10 676,777 671,829 Fixed 7.1700% 7.1175% 05/01/98
9.20 4,024,081 3,994,658 Fixed 7.1700% 7.1175% 05/01/98
9.30 592,637 588,304 Fixed 7.1700% 7.1175% 05/01/98
9.40 1,829,128 1,815,754 Fixed 7.1700% 7.1175% 05/01/98
9.50 1,006,020 998,665 Fixed 7.1700% 7.1175% 05/01/98
9.60 1,865,710 1,852,069 Fixed 7.1700% 7.1175% 05/01/98
9.70 2,359,575 2,342,322 Fixed 7.1700% 7.1175% 05/01/98
9.80 2,579,070 2,560,213 Fixed 7.1700% 7.1175% 05/01/98
10 14,500,000 14,500,000 Fixed 6.9900% 6.9075% 07/17/98
11 14,200,000 14,090,797 Fixed 7.0600% 7.0075% 10/27/98
12 14,000,000 13,562,941 Fixed 7.2400% 7.1875% 10/15/97
13 12,750,000 12,660,277 Fixed 7.2300% 7.1775% 05/14/98
14 12,600,000 12,538,269 Fixed 6.8900% 6.8375% 08/18/98
15 12,500,000 12,402,115 Fixed 7.3700% 7.3175% 04/24/98
16 11,325,000 11,305,487 Fixed 7.4000% 7.3475% 12/30/98
17 10,600,000 10,549,282 Fixed 6.2600% 6.2075% 09/10/98
18 10,400,000 10,379,916 Fixed 7.0000% 6.8975% 12/28/98
19 10,000,000 9,972,563 Fixed 7.5500% 7.4975% 11/19/98
20 9,797,000 9,772,900 FIXED 7.6000% 7.4982% 12/31/98
20.10 2,225,000 2,219,527 Fixed 7.6000% 7.5475% 12/31/98
20.20 1,538,000 1,534,217 Fixed 7.6000% 7.5475% 12/31/98
20.30 1,365,000 1,361,642 Fixed 7.6000% 7.5475% 12/31/98
20.40 1,145,000 1,142,183 Fixed 7.6000% 7.5475% 12/31/98
20.50 1,110,000 1,107,269 Fixed 7.6000% 7.5475% 12/31/98
20.60 935,000 932,700 Fixed 7.6000% 7.3475% 12/31/98
20.70 754,000 752,145 Fixed 7.6000% 7.3475% 12/31/98
20.80 725,000 723,217 Fixed 7.6000% 7.3475% 12/31/98
21 9,780,000 9,758,455 FIXED 7.7330% 7.6875% 12/29/98
21.10 6,205,000 6,191,346 Fixed 7.7400% 7.6875% 12/29/98
21.20 1,875,000 1,870,874 Fixed 7.7400% 7.6875% 12/29/98
21.30 1,700,000 1,696,235 Fixed 7.7000% 7.6475% 12/29/98
22 8,900,000 8,869,270 Fixed 6.7800% 6.7275% 10/14/98
23 8,750,000 8,682,574 Fixed 6.6800% 6.6275% 08/28/98
24 8,500,000 8,445,257 Fixed 7.7600% 7.7075% 08/27/98
25 8,200,000 8,157,427 Fixed 6.6100% 6.5575% 08/31/98
26 8,000,000 7,993,442 Fixed 7.0000% 6.9475% 01/07/99
27 7,600,000 7,563,529 Fixed 7.2000% 7.1475% 08/10/98
28 7,550,000 7,513,529 Fixed 6.2100% 6.1075% 09/15/98
29 7,500,000 7,462,327 Fixed 6.7700% 6.7175% 08/21/98
30 7,200,000 7,145,145 Fixed 7.5100% 7.4575% 10/24/97
31 7,000,000 6,956,895 Fixed 7.3700% 7.3175% 06/25/98
32 6,850,000 6,836,881 Fixed 7.9500% 7.8975% 12/22/98
33 6,700,000 6,645,866 Fixed 7.2200% 7.1675% 03/04/98
34 6,500,000 6,455,376 Fixed 6.3900% 6.3375% 09/17/98
35 6,500,000 6,436,652 Fixed 6.9700% 6.9175% 09/09/98
36 6,375,000 6,375,000 FIXED 8.1300% 8.0775% 12/17/98
36.10 803,770 803,770 Fixed 8.1300% 8.0775% 12/17/98
36.20 1,134,734 1,134,734 Fixed 8.1300% 8.0775% 12/17/98
36.30 420,272 420,272 Fixed 8.1300% 8.0775% 12/17/98
36.40 593,634 593,634 Fixed 8.1300% 8.0775% 12/17/98
36.50 774,876 774,876 Fixed 8.1300% 8.0775% 12/17/98
36.60 756,489 756,489 Fixed 8.1300% 8.0775% 12/17/98
36.70 998,146 998,146 Fixed 8.1300% 8.0775% 12/17/98
36.80 893,078 893,078 Fixed 8.1300% 8.0775% 12/17/98
37 6,298,000 6,282,507 FIXED 7.6000% 7.5475% 12/31/98
37.10 3,324,000 3,315,823 Fixed 7.6000% 7.5475% 12/31/98
37.20 1,746,000 1,741,705 Fixed 7.6000% 7.5475% 12/31/98
37.30 1,228,000 1,224,979 Fixed 7.6000% 7.5475% 12/31/98
38 6,200,000 6,200,000 FIXED 8.3700% 8.3175% 11/25/98
38.10 461,157 461,157 Fixed 8.3700% 8.3175% 11/25/98
38.20 932,562 932,562 Fixed 8.3700% 8.3175% 11/25/98
38.30 973,554 973,554 Fixed 8.3700% 8.3175% 11/25/98
38.40 217,769 217,769 Fixed 8.3700% 8.3175% 11/25/98
38.50 1,634,545 1,634,545 Fixed 8.3700% 8.3175% 11/25/98
38.60 573,884 573,884 Fixed 8.3700% 8.3175% 11/25/98
38.70 555,950 555,950 Fixed 8.3700% 8.3175% 11/25/98
38.80 850,579 850,579 Fixed 8.3700% 8.3175% 11/25/98
39 6,000,000 5,980,759 Fixed 7.1500% 7.0975% 10/08/98
40 5,850,000 5,800,628 Fixed 6.2800% 6.2275% 10/14/98
41 5,975,000 5,712,711 Fixed 7.3100% 7.2575% 05/28/98
43 5,700,000 5,680,049 Fixed 6.7100% 6.6575% 10/28/98
44 5,650,000 5,637,367 Fixed 7.5100% 7.4575% 11/11/98
45 5,605,000 5,593,000 Fixed 7.9100% 7.8075% 12/07/98
46 5,575,000 5,541,871 Fixed 6.9100% 6.8575% 07/15/98
47 5,580,030 5,552,416 Fixed 7.4200% 7.3675% 07/22/98
48 5,400,000 5,372,090 Fixed 6.8200% 6.7675% 08/25/98
49 5,250,000 5,213,029 Fixed 7.3300% 7.2775% 05/01/98
50 5,200,000 5,170,397 Fixed 7.1300% 7.0775% 07/07/98
51 5,150,000 5,122,956 Fixed 7.0500% 6.9975% 11/23/98
52 4,950,000 4,889,932 FIXED 7.2800% 7.2275% 04/14/98
52.10 1,532,903 1,514,301 Fixed 7.2800% 7.2275% 04/14/98
52.20 3,417,097 3,375,630 Fixed 7.2800% 7.2275% 04/14/98
53 4,840,000 4,832,042 Fixed 7.0000% 6.9475% 12/17/98
54 4,800,000 4,751,679 Fixed 7.4500% 7.3975% 12/30/97
55 4,900,000 4,893,594 Fixed 7.9700% 7.8875% 12/29/98
56 4,680,000 4,656,707 Fixed 7.0000% 6.9475% 10/21/98
57 4,650,000 4,635,559 Fixed 7.3200% 7.2675% 10/29/98
58 4,635,000 4,624,400 Fixed 7.5000% 7.4475% 12/29/98
59 4,600,000 4,576,512 Fixed 7.2000% 7.1475% 09/25/98
60 4,600,000 4,565,712 Fixed 7.0500% 6.9475% 05/28/98
61 4,500,000 4,484,613 Fixed 6.8300% 6.7275% 10/14/98
62 4,500,000 4,488,867 Fixed 8.4400% 8.3875% 10/23/98
63 4,481,000 4,469,977 FIXED 7.6000% 7.5475% 12/31/98
63.10 1,824,000 1,819,513 Fixed 7.6000% 7.5475% 12/31/98
63.20 1,561,000 1,557,160 Fixed 7.6000% 7.5475% 12/31/98
63.30 1,096,000 1,093,304 Fixed 7.6000% 7.5475% 12/31/98
64 4,500,000 4,446,714 Fixed 6.8900% 6.7875% 08/28/98
65 4,403,500 4,360,893 Fixed 8.3800% 8.3275% 09/11/97
66 4,387,500 4,334,546 Fixed 8.6600% 8.6075% 01/30/98
67 4,300,000 4,285,268 Fixed 6.8200% 6.7675% 10/15/98
68 4,100,000 4,086,062 FIXED 6.8600% 6.8075%
68.10 3,000,000 2,989,802 Fixed 6.8600% 6.8075% 10/13/98
68.20 1,100,000 1,096,261 Fixed 6.8600% 6.8075% 10/16/98
69 4,000,000 3,986,744 Fixed 6.9900% 6.9375% 10/01/98
70 3,850,000 3,825,349 Fixed 6.8400% 6.7375% 09/11/98
71 3,800,000 3,791,718 Fixed 7.8000% 7.7475% 12/04/98
72 3,800,000 3,774,862 Fixed 6.6300% 6.5775% 09/14/98
73 3,750,000 3,713,078 Fixed 6.7200% 6.6675% 09/24/98
74 3,775,000 3,721,215 Fixed 7.4600% 7.4075% 02/02/98
75 3,680,000 3,640,841 Fixed 7.6100% 7.5575% 04/30/98
76 3,650,000 3,632,674 Fixed 7.3000% 7.2475% 10/22/98
77 3,600,000 3,592,810 Fixed 8.0600% 8.0075% 11/17/98
78 3,600,000 3,581,999 Fixed 6.9900% 6.9375% 08/14/98
79 3,450,000 3,445,025 Fixed 7.6600% 7.5575% 12/29/98
80 3,450,000 3,444,075 FIXED 7.4200% 7.3675% 12/07/98
80.10 1,150,000 1,148,025 Fixed 7.4200% 7.3675% 12/07/98
80.20 2,300,000 2,296,050 Fixed 7.4200% 7.3675% 12/07/98
81 3,425,000 3,406,508 Fixed 7.1800% 7.1275% 06/11/98
82 3,400,000 3,387,618 Fixed 8.3400% 8.2875% 12/30/98
83 3,412,500 3,371,313 Fixed 8.6600% 8.6075% 01/30/98
85 3,300,000 3,291,598 Fixed 8.3000% 8.2475% 10/21/98
86 3,300,000 3,282,796 Fixed 6.5900% 6.5375% 08/31/98
87 3,280,000 3,269,270 Fixed 7.0500% 6.9975% 10/15/98
88 3,275,000 3,256,209 Fixed 7.0900% 7.0375% 07/13/98
89 3,260,000 3,217,855 FIXED 6.2800% 6.2275% 09/23/98
89.10 2,060,000 2,038,211 Fixed 6.2800% 6.2275% 09/23/98
89.20 1,200,000 1,179,645 Fixed 6.2800% 6.2275% 09/23/98
90 3,210,000 3,204,487 FIXED 7.4200% 7.3675% 12/07/98
90.10 1,410,989 1,408,566 Fixed 7.4200% 7.3675% 12/07/98
90.20 670,220 669,069 Fixed 7.4200% 7.3675% 12/07/98
90.30 1,128,791 1,126,853 Fixed 7.4200% 7.3675% 12/07/98
91 3,100,000 3,080,674 FIXED 6.9473% 6.8948%
91.10 1,600,000 1,586,121 Fixed 7.3500% 7.2975% 03/27/98
91.20 1,500,000 1,494,553 Fixed 6.5200% 6.4675% 10/23/98
92 3,050,000 3,035,306 Fixed 7.1800% 7.0775% 08/14/98
93 3,000,000 2,992,572 Fixed 7.0000% 6.8975% 12/28/98
94 3,000,000 2,942,328 Fixed 7.0700% 6.9525% 08/17/98
95 3,000,000 2,973,173 Fixed 8.0500% 7.9975% 05/21/98
96 2,950,000 2,926,279 Fixed 7.5700% 7.5175% 07/28/98
97 2,750,000 2,726,707 Fixed 7.2400% 7.1875% 07/16/98
98 2,700,000 2,686,824 Fixed 7.1250% 7.0725% 10/28/98
99 2,700,000 2,694,519 Fixed 7.9800% 7.9275% 11/13/98
100 2,685,000 2,667,127 Fixed 6.5900% 6.4875% 09/11/98
101 2,650,000 2,643,822 Fixed 7.3000% 7.1975% 11/30/98
102 2,620,000 2,615,500 FIXED 7.4200% 7.3675% 12/07/98
102.10 1,310,000 1,307,750 Fixed 7.4200% 7.3675% 12/07/98
102.20 1,310,000 1,307,750 Fixed 7.4200% 7.3675% 12/07/98
103 2,640,000 2,604,148 Fixed 8.3500% 8.2975% 12/16/97
104 2,600,000 2,587,049 Fixed 7.0000% 6.9475% 10/23/98
105 2,600,000 2,595,005 Fixed 8.2500% 8.1975% 11/10/98
106 2,500,000 2,490,761 Fixed 7.0500% 6.9975% 11/05/98
107 2,500,000 2,487,573 Fixed 7.0200% 6.9675% 08/28/98
108 2,495,000 2,479,149 Fixed 6.8900% 6.8075% 09/17/98
109 2,500,000 2,483,851 Fixed 7.6900% 7.6375% 04/29/98
110 2,420,000 2,411,207 Fixed 7.3800% 7.3275% 09/16/98
111 2,400,000 2,395,029 Fixed 7.8800% 7.8275% 11/18/98
112 2,350,000 2,336,278 Fixed 7.0000% 6.8975% 07/29/98
113 2,300,000 2,290,430 Fixed 8.0900% 7.9875% 11/20/98
114 2,285,000 2,274,060 Fixed 7.0000% 6.9475% 09/01/98
115 2,196,000 2,174,677 Fixed 6.7700% 6.7175% 11/03/98
116 2,200,000 2,177,354 Fixed 7.2600% 7.2075% 05/29/98
117 2,175,000 2,154,145 Fixed 7.3200% 7.2675% 06/11/98
118 2,150,000 2,137,686 Fixed 6.1000% 6.0475% 10/21/98
119 2,150,000 2,144,681 Fixed 8.4400% 8.3875% 10/23/98
120 2,100,000 2,083,305 Fixed 8.4700% 8.4175% 12/10/97
121 2,100,000 2,071,191 Fixed 8.1100% 8.0575% 06/10/98
122 2,050,000 2,047,097 Fixed 8.7500% 8.6975% 01/25/99
123 2,060,000 2,023,737 Fixed 7.9500% 7.8975% 09/24/97
124 2,000,000 1,982,283 Fixed 7.3800% 7.3275% 06/12/98
125 2,000,000 1,980,753 Fixed 7.3800% 7.3275% 01/27/98
126 1,980,000 1,975,889 Fixed 8.1000% 8.0475% 12/30/98
127 1,972,500 1,946,294 Fixed 7.3300% 7.2775% 03/04/98
128 1,950,000 1,944,794 Fixed 7.6700% 7.5675% 12/30/98
129 1,950,000 1,945,203 Fixed 7.6000% 7.5475% 12/31/98
130 1,950,000 1,935,648 Fixed 7.6100% 7.5575% 03/26/98
131 1,950,000 1,932,353 Fixed 7.2600% 7.2075% 06/30/98
132 1,950,000 1,934,145 Fixed 7.5000% 7.4475% 07/17/98
133 1,925,000 1,902,948 Fixed 7.0200% 6.9675% 08/05/98
134 1,900,000 1,888,367 Fixed 6.9200% 6.8675% 09/01/98
135 1,900,000 1,890,555 Fixed 7.0200% 6.9675% 08/24/98
136 1,875,000 1,849,176 Fixed 8.6000% 8.5475% 11/21/97
137 1,850,000 1,838,537 Fixed 7.0500% 6.9975% 09/11/98
138 1,839,000 1,830,131 Fixed 7.2000% 7.1475% 11/03/98
139 1,840,000 1,810,086 Fixed 8.7500% 8.6975% 08/21/97
140 1,800,000 1,789,561 Fixed 7.2100% 7.1575% 06/25/98
141 1,800,000 1,783,353 Fixed 7.5500% 7.4975% 06/24/98
142 1,800,000 1,782,361 Fixed 7.5400% 7.4875% 05/08/98
143 1,770,000 1,748,637 FIXED 8.6600% 8.5414% 01/06/98
143.10 1,185,000 1,170,698 Fixed 8.6600% 8.6075% 01/06/98
143.20 585,000 577,939 Fixed 8.6600% 8.4075% 01/06/98
144 1,750,000 1,739,242 Fixed 7.1000% 7.0475% 09/02/98
145 1,750,000 1,740,370 Fixed 6.3600% 6.3075% 10/09/98
146 1,730,000 1,714,834 Fixed 7.0200% 6.9675% 07/14/98
147 1,700,000 1,698,093 Fixed 7.6000% 7.5475% 01/07/99
148 1,700,000 1,692,202 Fixed 6.4800% 6.4275% 09/14/98
149 1,700,000 1,683,766 Fixed 7.1400% 7.0875% 09/01/98
150 1,725,000 1,666,812 Fixed 9.4700% 9.4175% 04/28/97
151 1,675,000 1,649,622 Fixed 6.8000% 6.7475% 08/27/98
152 1,660,000 1,656,335 Fixed 7.7200% 7.6675% 12/31/98
153 1,660,000 1,655,643 Fixed 8.1500% 8.0975% 10/09/98
154 1,640,000 1,633,666 Fixed 6.7700% 6.6675% 11/11/98
155 1,600,000 1,598,278 Fixed 8.5300% 8.4775% 01/08/99
156 1,550,000 1,541,870 Fixed 6.6700% 6.6175% 10/15/98
157 1,500,000 1,496,289 Fixed 8.4400% 8.3875% 10/23/98
158 1,500,000 1,494,394 Fixed 7.2500% 7.1975% 10/01/98
159 1,500,000 1,484,048 Fixed 7.5900% 7.5375% 12/18/97
160 1,475,000 1,459,038 Fixed 7.6400% 7.5875% 08/04/98
161 1,457,000 1,453,970 Fixed 8.0900% 8.0375% 12/23/98
162 1,450,000 1,438,325 Fixed 7.2400% 7.1875% 07/01/98
164 1,425,000 1,422,596 Fixed 8.0500% 7.9975% 01/07/99
165 1,420,000 1,415,549 Fixed 8.0800% 8.0275% 11/09/98
166 1,400,000 1,395,597 Fixed 7.2500% 7.1975% 10/20/98
167 1,400,000 1,397,707 Fixed 7.7200% 7.6675% 12/10/98
168 1,400,000 1,386,356 Fixed 6.9700% 6.9175% 09/17/98
169 1,347,500 1,332,536 Fixed 6.8200% 6.7675% 05/29/98
170 1,330,000 1,326,728 Fixed 7.6000% 7.5475% 12/31/98
171 1,330,000 1,326,182 Fixed 8.4300% 8.3775% 09/04/98
172 1,320,000 1,313,414 Fixed 6.9900% 6.9375% 10/23/98
173 1,300,000 1,295,084 Fixed 6.3100% 6.2575% 10/16/98
174 1,285,000 1,276,178 Fixed 6.3900% 6.3375% 09/28/98
175 1,274,000 1,270,866 Fixed 7.6000% 7.5475% 12/31/98
176 1,265,000 1,255,283 Fixed 6.8600% 6.8075% 08/25/98
177 1,250,000 1,243,036 Fixed 6.2800% 6.1775% 10/26/98
178 1,250,000 1,236,809 Fixed 7.4800% 7.4275% 05/20/98
179 1,245,000 1,235,932 Fixed 7.2000% 7.1475% 08/10/98
180 1,240,000 1,231,822 Fixed 6.6500% 6.5975% 09/01/98
181 1,235,000 1,231,962 Fixed 7.6000% 7.5475% 12/31/98
182 1,220,000 1,214,163 Fixed 7.2500% 7.1975% 10/27/98
183 1,225,000 1,213,812 Fixed 8.4300% 8.3775% 04/15/98
184 1,200,000 1,194,093 Fixed 7.0700% 7.0175% 10/22/98
185 1,200,000 1,192,135 Fixed 6.6900% 6.6375% 09/18/98
186 1,158,000 1,155,151 Fixed 7.6000% 7.5475% 12/31/98
187 1,150,000 1,134,563 Fixed 7.0000% 6.9475% 11/24/98
188 1,112,000 1,109,264 Fixed 7.6000% 7.5475% 12/31/98
189 1,110,000 1,107,868 Fixed 8.2500% 8.1975% 11/10/98
190 1,100,000 1,097,294 Fixed 7.6000% 7.5475% 12/31/98
191 1,104,000 1,094,005 Fixed 7.9900% 7.9375% 03/25/98
192 1,100,000 1,092,287 Fixed 7.3800% 7.3275% 05/22/98
193 1,100,000 1,089,485 Fixed 7.3400% 7.2375% 06/05/98
194 1,100,000 1,088,408 Fixed 7.1250% 7.0725% 05/20/98
195 1,100,000 1,086,270 Fixed 8.4700% 8.4175% 01/26/98
196 1,075,000 1,060,541 Fixed 8.5800% 8.5275% 05/24/97
197 1,050,000 1,040,548 Fixed 7.2900% 7.2375% 06/24/98
198 1,030,000 1,023,398 Fixed 8.1800% 8.1275% 03/05/98
199 1,008,000 997,973 Fixed 9.0900% 8.8375% 05/09/97
200 1,000,000 991,062 Fixed 7.3300% 7.0775% 06/11/98
201 1,000,000 989,688 Fixed 7.2500% 6.9975% 05/20/98
202 1,000,000 989,232 Fixed 7.0000% 6.7475% 05/27/98
203 970,000 959,734 Fixed 7.1000% 6.8475% 05/27/98
204 950,000 945,674 Fixed 7.5600% 7.3075% 10/30/98
205 940,000 935,070 Fixed 6.6700% 6.6175% 10/20/98
206 930,000 928,403 FIXED 7.4200% 7.3675% 12/07/98
206.10 388,657 387,989 Fixed 7.4200% 7.3675% 12/07/98
206.20 541,343 540,414 Fixed 7.4200% 7.3675% 12/07/98
207 900,000 886,143 Fixed 7.2600% 7.0075% 09/01/98
208 861,000 855,990 Fixed 8.7000% 8.6475% 11/23/98
209 800,000 791,682 Fixed 8.3200% 8.0675% 03/13/98
210 768,000 763,531 Fixed 8.7000% 8.6475% 11/23/98
211 752,500 744,144 Fixed 6.8200% 6.5675% 05/29/98
212 715,000 699,129 Fixed 8.5700% 8.3175% 12/12/97
213 675,000 672,122 Fixed 7.9700% 7.7175% 10/23/98
214 675,000 665,210 Fixed 7.6500% 7.5975% 06/01/98
215 610,000 603,991 Fixed 8.5900% 8.3375% 08/01/97
216 591,000 585,121 Fixed 9.0900% 8.8375% 05/09/97
217 600,000 581,171 Fixed 8.9600% 8.7075% 07/11/97
218 590,000 579,719 Fixed 9.3800% 9.1275% 04/17/97
219 580,000 572,173 FIXED 8.7100% 8.4575% 11/06/97
219.10 257,778 254,299 Fixed 8.7100% 8.4575% 11/06/97
219.20 322,222 317,874 Fixed 8.7100% 8.4575% 11/06/97
220 562,500 554,256 Fixed 8.4200% 8.1675% 04/03/98
221 560,000 554,930 Fixed 7.9900% 7.7375% 03/25/98
222 544,500 538,294 Fixed 8.2400% 7.9875% 02/20/98
223 536,000 531,172 Fixed 8.0100% 7.7575% 05/28/98
225 500,000 494,905 Fixed 8.8200% 8.5675% 02/05/98
226 500,000 491,487 Fixed 8.9900% 8.7375% 06/24/97
227 460,000 453,122 Fixed 7.7600% 7.7075% 09/04/98
228 450,000 446,478 Fixed 8.0600% 7.8075% 06/15/98
230 450,000 439,028 Fixed 8.3500% 8.0975% 11/25/97
231 405,000 399,500 Fixed 8.3500% 8.0975% 12/16/97
232 400,000 375,962 Fixed 8.3500% 8.0975% 03/17/98
233 380,000 374,560 Fixed 8.3900% 8.1375% 11/18/97
234 358,000 355,193 Fixed 8.0500% 7.7975% 06/02/98
235 325,000 322,508 Fixed 8.1700% 7.9175% 06/17/98
236 300,000 297,652 Fixed 8.0600% 7.8075% 06/15/98
237 300,000 297,057 Fixed 8.6300% 8.3775% 03/16/98
238 260,000 257,357 Fixed 8.4400% 8.1875% 03/02/98
239 257,500 255,509 Fixed 8.8300% 8.5775% 05/29/98
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
1ST INT. &
PRIN. INTEREST
CONTROL 1ST INTEREST PAYMENT ACCRUAL DUE GRACE PAYMENT MONTHLY
NUMBER PAYMENT DATE DATE METHOD DATE PERIOD FREQUENCY PAYMENT
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 01/01/99 11/01/99 Actual / 360 1 7 12 $ 484,044.80
2 07/01/98 Actual / 360 1 10 12 231,212.79
3 03/01/99 03/01/99 Actual / 360 1 7 12 177,586.06
4 12/01/98 Actual / 360 1 10 12 136,387.01
5 06/01/98 30 / 360 1 10 12 143,078.32
5.10 06/01/98 30 / 360 1 10 12 50,007.11
5.20 06/01/98 30 / 360 1 10 12 39,860.74
5.30 06/01/98 30 / 360 1 10 12 29,112.84
5.31 06/01/98 30 / 360 1 10 12 19,481.52
5.32 06/01/98 30 / 360 1 10 12 9,631.32
5.40 06/01/98 30 / 360 1 10 12 24,097.63
6 07/01/98 07/01/98 Actual / 360 1 7 12 130,814.27
7 11/01/98 ACTUAL / 360 1 10 12 112,768.95
7.10 11/01/98 Actual / 360 1 10 12 43,315.23
7.20 11/01/98 Actual / 360 1 10 12 35,660.38
7.30 11/01/98 Actual / 360 1 10 12 24,271.46
7.40 11/01/98 Actual / 360 1 10 12 9,521.88
8 10/01/98 10/01/98 Actual / 360 1 7 12 110,479.18
9 06/01/98 06/01/98 ACTUAL / 360 1 7 12 101,060.35
9.10 06/01/98 06/01/98 Actual / 360 1 7 12 4,580.15
9.20 06/01/98 06/01/98 Actual / 360 1 7 12 27,233.31
9.30 06/01/98 06/01/98 Actual / 360 1 7 12 4,010.72
9.40 06/01/98 06/01/98 Actual / 360 1 7 12 12,378.78
9.50 06/01/98 06/01/98 Actual / 360 1 7 12 6,808.33
9.60 06/01/98 06/01/98 Actual / 360 1 7 12 12,626.35
9.70 06/01/98 06/01/98 Actual / 360 1 7 12 15,968.62
9.80 06/01/98 06/01/98 Actual / 360 1 7 12 17,454.08
10 09/01/98 08/01/00 30 / 360 1 10 12 96,371.50
11 12/01/98 30 / 360 1 5 12 110,604.44
12 12/01/97 30 / 360 1 10 12 110,567.83
13 07/01/98 30 / 360 1 10 12 86,820.67
14 10/01/98 Actual / 360 1 5 12 82,899.36
15 06/01/98 30 / 360 1 10 12 86,291.80
16 02/01/99 02/01/99 Actual / 360 1 7 12 78,412.01
17 11/01/98 30 / 360 1 5 12 65,334.98
18 02/01/99 30 / 360 1 5 12 70,679.30
19 01/01/99 30 / 360 1 5 12 72,004.98
20 02/01/99 ACTUAL / 360 1 5 12 73,037.41
20.10 02/01/99 Actual / 360 1 5 12 16,587.55
20.20 02/01/99 Actual / 360 1 5 12 11,465.91
20.30 02/01/99 Actual / 360 1 5 12 10,176.18
20.40 02/01/99 Actual / 360 1 5 12 8,536.07
20.50 02/01/99 Actual / 360 1 5 12 8,275.14
20.60 02/01/99 Actual / 360 1 5 12 6,970.50
20.70 02/01/99 Actual / 360 1 5 12 5,621.13
20.80 02/01/99 Actual / 360 1 5 12 5,404.93
21 02/01/99 30 / 360 1 12 73,762.37
21.10 02/01/99 30 / 360 1 5 12 46,827.42
21.20 02/01/99 30 / 360 1 10 12 14,150.11
21.30 02/01/99 30 / 360 1 10 12 12,784.84
22 12/01/98 30 / 360 1 5 12 57,902.82
23 10/01/98 10/01/98 Actual / 360 1 7 12 60,068.55
24 10/01/98 10/01/98 Actual / 360 1 7 12 64,258.76
25 10/01/98 10/01/98 Actual / 360 1 7 12 52,424.20
26 03/01/99 30 / 360 1 5 12 53,224.20
27 10/01/98 30 / 360 1 5 12 51,587.90
28 11/01/98 30 / 360 1 5 12 46,290.41
29 10/01/98 10/01/98 Actual / 360 1 7 12 48,744.61
30 12/01/97 06/01/98 30 / 360 1 7 12 50,392.76
31 08/01/98 Actual / 360 1 10 12 48,812.60
32 02/01/99 02/01/99 Actual / 360 1 7 12 51,171.29
33 05/01/98 09/01/98 Actual / 360 1 7 12 48,298.64
34 11/01/98 30 / 360 1 5 12 43,442.74
35 11/01/98 30 / 360 1 5 12 50,277.45
36 02/01/99 02/01/01 30 / 360 1 5 12 53,839.98
36.10 02/01/99 02/01/01 30 / 360 1 5 12 6,788.23
36.20 02/01/99 02/01/01 30 / 360 1 5 12 9,583.38
36.30 02/01/99 02/01/01 30 / 360 1 5 12 3,549.40
36.40 02/01/99 02/01/01 30 / 360 1 5 12 5,013.53
36.50 02/01/99 02/01/01 30 / 360 1 5 12 6,544.21
36.60 02/01/99 02/01/01 30 / 360 1 5 12 6,388.92
36.70 02/01/99 02/01/01 30 / 360 1 5 12 8,429.83
36.80 02/01/99 02/01/01 30 / 360 1 5 12 7,542.48
37 02/01/99 ACTUAL / 360 1 5 12 46,952.10
37.10 02/01/99 Actual / 360 1 5 12 24,780.69
37.20 02/01/99 Actual / 360 1 5 12 13,016.57
37.30 02/01/99 Actual / 360 1 5 12 9,154.84
38 01/01/99 01/01/01 30 / 360 1 5 12 53,296.00
38.10 01/01/99 01/01/01 30 / 360 1 5 12 3,964.17
38.20 01/01/99 01/01/01 30 / 360 1 5 12 8,016.42
38.30 01/01/99 01/01/01 30 / 360 1 5 12 8,368.79
38.40 01/01/99 01/01/01 30 / 360 1 5 12 1,871.97
38.50 01/01/99 01/01/01 30 / 360 1 5 12 14,050.76
38.60 01/01/99 01/01/01 30 / 360 1 5 12 4,933.18
38.70 01/01/99 01/01/01 30 / 360 1 5 12 4,779.02
38.80 01/01/99 01/01/01 30 / 360 1 5 12 7,311.68
39 12/01/98 Actual / 360 1 6 12 40,523.41
40 12/01/98 30 / 360 1 10 12 42,861.65
41 07/01/98 30 / 360 1 10 12 46,147.27
43 12/01/98 30 / 360 1 5 12 36,818.66
44 01/01/99 30 / 360 1 5 12 39,544.32
45 02/01/99 30 / 360 1 5 12 42,926.66
46 09/01/98 30 / 360 1 10 12 36,754.25
47 09/01/98 09/01/98 Actual / 360 1 7 12 38,711.16
48 10/01/98 30 / 360 1 5 12 35,275.93
49 06/01/98 06/01/98 Actual / 360 1 7 12 36,099.58
50 09/01/98 30 / 360 1 5 12 35,050.91
51 01/01/99 30 / 360 1 5 12 39,218.03
52 06/01/98 30 / 360 1 10 12 35,874.67
52.10 06/01/98 30 / 360 1 10 12 11,109.58
52.20 06/01/98 30 / 360 1 10 12 24,765.09
53 02/01/99 30 / 360 1 5 12 32,200.64
54 02/01/98 Actual / 360 1 5 12 33,398.11
55 02/01/99 30 / 360 1 5 12 35,853.74
56 12/01/98 Actual / 360 1 5 12 33,077.27
57 12/01/98 30 / 360 1 10 12 31,942.27
58 02/01/99 30 / 360 1 10 12 34,252.24
59 11/01/98 30 / 360 1 5 12 32,241.64
60 07/01/98 30 / 360 1 10 12 30,758.54
61 12/01/98 30 / 360 1 5 12 29,426.61
62 12/01/98 12/01/98 Actual / 360 1 7 12 34,409.94
63 02/01/99 ACTUAL / 360 1 5 12 33,406.22
63.10 02/01/99 Actual / 360 1 5 12 13,598.07
63.20 02/01/99 Actual / 360 1 5 12 11,637.38
63.30 02/01/99 Actual / 360 1 5 12 8,170.77
64 10/01/98 30 / 360 1 5 12 34,591.95
65 11/01/97 Actual / 360 1 10 12 33,485.32
66 03/01/98 Actual / 360 1 5 12 35,803.66
67 12/01/98 30 / 360 1 10 12 28,090.09
68 12/01/98 30 / 360 1 5 12 26,893.01
68.10 12/01/98 30 / 360 1 5 12 19,677.81
68.20 12/01/98 30 / 360 1 5 12 7,215.20
69 12/01/98 30 / 360 1 5 12 26,585.24
70 11/01/98 30 / 360 1 5 12 26,819.30
71 02/01/99 30 / 360 1 5 12 28,827.35
72 11/01/98 30 / 360 1 10 12 25,967.41
73 11/01/98 Actual / 360 1 10 12 28,446.80
74 04/01/98 30 / 360 1 10 12 27,798.77
75 06/01/98 Actual / 360 1 10 12 27,458.73
76 12/01/98 Actual / 360 1 5 12 26,500.14
77 01/01/99 01/01/99 Actual / 360 1 7 12 26,566.26
78 10/01/98 30 / 360 1 5 12 23,926.72
79 02/01/99 30 / 360 1 5 12 24,502.00
80 02/01/99 02/01/99 ACTUAL / 360 1 7 12 23,934.19
80.10 02/01/99 02/01/99 Actual / 360 1 7 12 7,978.06
80.20 02/01/99 02/01/99 Actual / 360 1 7 12 15,956.13
81 08/01/98 30 / 360 1 10 12 23,226.97
82 02/01/99 Actual / 360 1 5 12 29,411.02
83 03/01/98 Actual / 360 1 5 12 27,847.29
85 12/01/98 12/01/98 Actual / 360 1 7 12 24,907.89
86 10/01/98 10/01/98 Actual / 360 1 7 12 21,053.95
87 12/01/98 Actual / 360 1 5 12 21,932.17
88 09/01/98 30 / 360 1 10 12 21,986.97
89 11/01/98 30 / 360 1 10 12 25,401.87
89.10 11/01/98 30 / 360 1 10 12 15,093.16
89.20 11/01/98 30 / 360 1 10 12 10,308.71
90 02/01/99 02/01/99 ACTUAL / 360 1 7 12 22,269.20
90.10 02/01/99 02/01/99 Actual / 360 1 7 12 9,788.66
90.20 02/01/99 02/01/99 Actual / 360 1 7 12 4,649.61
90.30 02/01/99 02/01/99 Actual / 360 1 7 12 7,830.93
91 30 / 360 1 12 20,524.31
91.10 05/01/98 30 / 360 1 10 12 11,023.55
91.20 12/01/98 30 / 360 1 5 12 9,500.76
92 10/01/98 30 / 360 1 5 12 20,661.76
93 02/01/99 30 / 360 1 5 12 21,203.38
94 10/01/98 Actual / 360 1 10 12 27,247.73
95 07/01/98 07/01/98 Actual / 360 1 7 12 23,253.94
96 09/01/98 30 / 360 1 5 12 21,934.74
97 09/01/98 30 / 360 1 10 12 19,859.48
98 12/01/98 Actual / 360 1 5 12 19,298.88
99 01/01/99 01/01/99 Actual / 360 1 7 12 19,774.01
100 11/01/98 30 / 360 1 5 12 18,280.60
101 01/01/99 30 / 360 1 5 12 18,167.63
102 02/01/99 02/01/99 ACTUAL / 360 1 7 12 18,176.11
102.10 02/01/99 02/01/99 Actual / 360 1 7 12 9,088.06
102.20 02/01/99 02/01/99 Actual / 360 1 7 12 9,088.06
103 02/01/98 Actual / 360 1 10 12 20,991.80
104 12/01/98 30 / 360 1 5 12 18,376.26
105 01/01/99 01/01/99 Actual / 360 1 7 12 19,532.93
106 01/01/99 30 / 360 1 10 12 17,749.30
107 10/01/98 30 / 360 1 5 12 16,666.16
108 11/01/98 30 / 360 1 5 12 17,459.45
109 06/01/98 06/01/98 Actual / 360 1 7 12 17,806.76
110 11/01/98 Actual / 360 1 10 12 16,722.59
111 01/01/99 01/01/99 Actual / 360 1 7 12 17,410.00
112 09/01/98 30 / 360 1 10 12 15,634.61
113 01/01/99 30 / 360 1 5 12 18,674.58
114 10/01/98 10/01/98 Actual / 360 1 7 12 15,202.16
115 01/01/99 30 / 360 1 5 12 19,456.97
116 07/01/98 Actual / 360 1 5 12 15,915.92
117 08/01/98 30 / 360 1 10 12 15,819.27
118 12/01/98 30 / 360 1 5 12 13,984.20
119 12/01/98 12/01/98 Actual / 360 1 7 12 16,440.30
120 02/10/98 Actual / 360 10 10 12 16,102.56
121 08/01/98 30 / 360 1 10 12 17,709.28
122 03/01/99 03/01/99 Actual / 360 1 7 12 16,853.94
123 11/01/97 11/01/97 Actual / 360 1 7 12 15,831.24
124 08/01/98 Actual / 360 1 10 12 14,624.08
125 03/01/98 Actual / 360 1 5 12 13,820.32
126 02/01/99 30 / 360 1 5 12 15,413.36
127 05/01/98 30 / 360 1 10 12 14,359.19
128 02/01/99 30 / 360 1 5 12 15,058.39
129 02/01/99 Actual / 360 1 5 12 14,537.41
130 05/01/98 Actual / 360 1 5 12 13,781.86
131 08/01/98 Actual / 360 1 5 12 14,107.30
132 09/01/98 30 / 360 1 5 12 14,410.33
133 10/01/98 10/01/98 Actual / 360 1 7 12 14,947.62
134 11/01/98 Actual / 360 1 5 12 13,332.00
135 10/01/98 30 / 360 1 5 12 12,666.28
136 01/01/98 Actual / 360 1 10 12 15,224.57
137 11/01/98 30 / 360 1 5 12 13,134.48
138 12/01/98 Actual / 360 1 5 12 13,233.25
139 10/01/97 Actual / 360 1 10 12 15,127.44
140 08/01/98 Actual / 360 1 5 12 12,230.38
141 08/01/98 30 / 360 1 10 12 13,360.44
142 07/01/98 Actual / 360 1 5 12 13,348.71
143 03/01/98 ACTUAL / 360 1 5 12 14,443.87
143.10 03/01/98 Actual / 360 1 5 12 9,670.05
143.20 03/01/98 Actual / 360 1 5 12 4,773.82
144 11/01/98 30 / 360 1 10 12 12,480.50
145 12/01/98 30 / 360 1 5 12 11,663.49
146 09/01/98 30 / 360 1 5 12 12,249.36
147 03/01/99 30 / 360 1 5 12 12,673.64
148 11/01/98 30 / 360 1 10 12 10,722.81
149 11/01/98 30 / 360 1 10 12 13,323.32
150 06/01/97 30 / 360 1 5 12 16,045.48
151 10/01/98 30 / 360 1 5 12 13,661.89
152 02/01/99 30 / 360 1 5 12 12,505.78
153 12/01/98 12/01/98 Actual / 360 1 7 12 12,354.52
154 01/01/99 30 / 360 1 5 12 11,351.67
155 03/01/99 03/01/99 Actual / 360 1 7 12 12,336.65
156 12/01/98 30 / 360 1 5 12 10,630.96
157 12/01/98 12/01/98 Actual / 360 1 7 12 11,469.98
158 11/01/98 11/01/98 Actual / 360 1 7 12 10,232.64
159 02/01/98 30 / 360 1 10 12 10,580.81
160 10/01/98 30 / 360 1 5 12 12,009.09
161 02/01/99 30 / 360 1 10 12 11,332.37
162 09/01/98 Actual / 360 1 10 12 10,471.33
164 03/01/99 30 / 360 1 5 12 11,963.65
165 01/01/99 30 / 360 1 5 12 11,035.15
166 12/01/98 Actual / 360 1 5 12 9,550.47
167 02/01/99 02/01/99 Actual / 360 1 7 12 10,000.76
168 11/01/98 30 / 360 1 5 12 10,828.99
169 07/01/98 Actual / 360 1 10 12 9,369.69
170 02/01/99 Actual / 360 1 5 12 9,915.26
171 11/01/98 11/01/98 Actual / 360 1 7 12 10,160.64
172 12/01/98 30 / 360 1 5 12 9,321.07
173 12/01/98 30 / 360 1 5 12 8,055.12
174 11/01/98 30 / 360 1 5 12 8,588.30
175 02/01/99 Actual / 360 1 5 12 9,497.77
176 10/01/98 30 / 360 1 5 12 8,828.10
177 12/01/98 30 / 360 1 5 12 8,269.06
178 07/01/98 30 / 360 1 10 12 9,221.13
179 10/01/98 30 / 360 1 5 12 8,958.88
180 11/01/98 30 / 360 1 5 12 8,489.16
181 02/01/99 Actual / 360 1 5 12 9,207.02
182 12/01/98 Actual / 360 1 5 12 8,818.24
183 06/01/98 Actual / 360 1 10 12 9,806.31
184 12/01/98 Actual / 360 1 10 12 8,535.01
185 11/01/98 30 / 360 1 5 12 8,245.53
186 02/01/99 Actual / 360 1 5 12 8,632.98
187 01/01/99 Actual / 360 1 5 12 11,826.38
188 02/01/99 Actual / 360 1 5 12 8,290.05
189 01/01/99 01/01/99 Actual / 360 1 7 12 8,339.06
190 02/01/99 Actual / 360 1 5 12 8,200.59
191 05/01/98 Actual / 360 1 10 12 8,319.78
192 07/01/98 30 / 360 1 10 12 7,601.18
193 08/01/98 30 / 360 1 10 12 8,014.77
194 07/01/98 Actual / 360 1 10 12 7,862.51
195 03/01/98 Actual / 360 1 10 12 8,835.27
196 07/01/97 30 / 360 1 0 12 8,326.85
197 08/01/98 Actual / 360 1 10 12 7,616.58
198 05/01/98 Actual / 360 1 10 12 7,687.42
199 07/01/97 Actual / 360 1 0 12 8,175.96
200 08/01/98 Actual / 360 1 5 12 7,279.69
201 07/01/98 Actual / 360 1 10 12 7,228.07
202 07/01/98 Actual / 360 1 5 12 7,067.83
203 07/01/98 Actual / 360 1 5 12 6,917.75
204 12/01/98 Actual / 360 1 10 12 7,057.53
205 12/01/98 30 / 360 1 5 12 6,447.16
206 02/01/99 02/01/99 ACTUAL / 360 1 7 12 6,451.83
206.10 02/01/99 02/01/99 Actual / 360 1 7 12 2,696.29
206.20 02/01/99 02/01/99 Actual / 360 1 7 12 3,755.54
207 11/01/98 Actual / 360 1 5 12 8,220.83
208 01/01/99 01/01/99 Actual / 360 1 7 12 7,902.21
209 05/01/98 Actual / 360 1 10 12 6,345.07
210 01/01/99 01/01/99 Actual / 360 1 7 12 7,048.66
211 07/01/98 Actual / 360 1 10 12 5,232.42
212 02/01/98 Actual / 360 1 10 12 6,236.65
213 12/01/98 Actual / 360 1 10 12 5,196.34
214 08/01/98 30 / 360 1 10 12 5,499.83
215 10/01/97 Actual / 360 1 10 12 4,729.34
216 07/01/97 Actual / 360 1 0 12 4,793.64
217 09/01/97 Actual / 360 1 10 12 5,461.27
218 06/01/97 Actual / 360 1 0 12 5,105.68
219 01/01/98 ACTUAL / 360 1 10 12 4,752.68
219.10 01/01/98 Actual / 360 1 10 12 2,112.30
219.20 01/01/98 Actual / 360 1 10 12 2,640.38
220 06/01/98 Actual / 360 1 10 12 4,799.08
221 05/01/98 Actual / 360 1 10 12 4,220.18
222 04/01/98 Actual / 360 1 10 12 4,289.47
223 07/01/98 Actual / 360 1 10 12 4,140.49
225 04/01/98 Actual / 360 1 10 12 4,134.58
226 08/01/97 Actual / 360 1 0 12 4,192.56
227 11/01/98 30 / 360 1 5 12 4,332.50
228 08/01/98 Actual / 360 1 10 12 3,491.08
230 01/01/98 Actual / 360 1 10 12 3,862.59
231 02/01/98 Actual / 360 1 10 12 3,220.33
232 05/01/98 Actual / 360 1 10 12 4,927.40
233 01/01/98 Actual / 360 1 10 12 3,031.75
234 08/01/98 Actual / 360 1 10 12 2,774.97
235 08/01/98 Actual / 360 1 10 12 2,545.11
236 08/01/98 Actual / 360 1 10 12 2,327.39
237 05/01/98 Actual / 360 1 10 12 2,442.02
238 05/01/98 Actual / 360 1 10 12 2,083.09
239 07/01/98 Actual / 360 1 10 12 2,131.03
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
YIELD
CONTROL MAINTENANCE
NUMBER CROSS COLLATERALIZED / CROSS DEFAULTED PREPAYMENT DESCRIPTION DESCRIPTION
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1 NAP LO (28), DEF (97), O (6) NAP
2 NAP LO(45),DEF(69),O(6) NAP
3 NAP LO (26), DEF (88), O (6) NAP
4 NAP LO(60),YM1(57),O(3) Treasury Flat
5 YM1(96),3%(12),O(12) TREASURY FLAT
5.10 2494, 2496, 2497 YM1(96),3%(12),O(12) Treasury Flat
5.20 2493, 2494, 2497 YM1(96),3%(12),O(12) Treasury Flat
5.30 2493, 2496, 2497 YM1(96),3%(12),O(12) TREASURY FLAT
5.31 2493, 2496, 2497 YM1(96),3%(12),O(12) NAP
5.32 2493, 2496, 2497 YM1(96),3%(12),O(12) NAP
5.40 2493, 2494, 2496 YM1(96),3%(12),O(12) Treasury Flat
6 NAP LO (33), DEF (81), O (6) NAP
7 LO(60),YM1(57),O(3) TREASURY FLAT
7.10 6273, 6274, 6276 LO(60),YM1(57),O(3) Treasury Flat
7.20 6273, 6274, 6275 LO(59),YM1(58),O(3) Treasury Flat
7.30 6273, 6275, 6276 LO(60),YM1(57),O(3) Treasury Flat
7.40 6274, 6275, 6276 LO(60),YM1(57),O(3) Treasury Flat
8 NAP LO (60), YM1 (18), O (6) Treasury Flat
9 C103 B-J LO (24), DEF (90), O (6) NAP
9.10 c103 b-j LO (24), DEF (90), O (6) NAP
9.20 c103 b-j LO (24), DEF (90), O (6) NAP
9.30 c103 b-j LO (24), DEF (90), O (6) NAP
9.40 c103 b-j LO (24), DEF (90), O (6) NAP
9.50 c103 b-j LO (24), DEF (90), O (6) NAP
9.60 c103 b-j LO (24), DEF (90), O (6) NAP
9.70 c103 b-j LO (24), DEF (90), O (6) NAP
9.80 c103 b-j LO (24), DEF (90), O (6) NAP
10 NAP LO(31),DEF(83),O(6) NAP
11 NAP YM5(72),YM4(12),YM3(12),YM2(12),YM1(24),O(12) Treasury Flat
12 NAP YM1(120),5%(12),4%(12),3%(12),2%(12),1%(12),O(60) Treasury Flat
13 NAP LO(24),YM1(36),1%(12),O(12) Treasury Flat
14 NAP LO(30),DEF(87),O(3) NAP
15 NAP LO(34),DEF(80),O(6) NAP
16 NAP LO (27), DEF (87), O (6) NAP
17 NAP LO(36),YM1(36),1%(36),O(12) Treasury Flat
18 NAP LO(26),DEF(91),O(3) NAP
19 NAP YM5(96),5%(12),O(12) Treasury Flat
20 LO(26),DEF(91),O(3) NAP
20.10 6035, 6036, 6037, 6038, 6039, 6041, 6042 LO(26),DEF(91),O(3) NAP
20.20 6035, 6036, 6037, 6038, 6040, 6041, 6042 LO(26),DEF(91),O(3) NAP
20.30 6035, 6036, 6037, 6038, 6039, 6040, 6042 LO(26),DEF(91),O(3) NAP
20.40 6036, 6037, 6038, 6039, 6040, 6041, 6042 LO(26),DEF(91),O(3) NAP
20.50 6035, 6036, 6037, 6038, 6039, 6040, 6041 LO(26),DEF(91),O(3) NAP
20.60 6035, 6036, 6038, 6039, 6040, 6041, 6042 LO(26),DEF(91),O(3) NAP
20.70 6035, 6037, 6038, 6039, 6040, 6041, 6042 LO(26),DEF(91),O(3) NAP
20.80 6035, 6036, 6037, 6039, 6040, 6041, 6042 LO(26),DEF(91),O(3) NAP
21 YM2(60),YM1(57),O(3) TREASURY FLAT
21.10 2752, 4022 YM2(60),YM1(57),O(3) Treasury Flat
21.20 4923, 4022 YM2(60),YM1(57),O(3) Treasury Flat
21.30 2752, 4923 YM2(60),YM1(57),O(3) Treasury Flat
22 NAP YM3(96),2%(12),O(12) Treasury Flat
23 NAP LO (30), DEF (84), O (6) NAP
24 NAP LO (31),DEF(29);5%(12),4%(12),3%(12),2%(12),1%(6),O(6) NAP
25 NAP LO(30), DEF(54); 5%(12), 4%(12), 3%(6), O(6) NAP
26 NAP LO(36),YM1(81),O(3) Treasury Flat
27 NAP YM1(120),1%(12),O(12) Treasury Flat
28 NAP LO(29),DEF(88),O(3) NAP
29 NAP LO (31), DEF (83), O (6) NAP
30 NAP LO(30), 3%(12), 2%(12), 1%(66), O(6) NAP
31 NAP YM5(96),5%(12),O(12) Treasury Flat
32 NAP LO (27), DEF (87), O (6) NAP
33 NAP LO (35), DEF (83), O (6) NAP
34 NAP YM3(132),O(12) Treasury Flat
35 NAP YM5(96),5%(12),O(12) Treasury Flat
36 NAP YM5(26),DEF(91),O(3) TREASURY FLAT
36.10 NAP YM5(26),DEF(91),O(3) NAP
36.20 NAP YM5(26),DEF(91),O(3) NAP
36.30 NAP YM5(26),DEF(91),O(3) NAP
36.40 NAP YM5(26),DEF(91),O(3) NAP
36.50 NAP YM5(26),DEF(91),O(3) NAP
36.60 NAP YM5(26),DEF(91),O(3) NAP
36.70 NAP YM5(26),DEF(91),O(3) NAP
36.80 NAP YM5(26),DEF(91),O(3) NAP
37 LO(26),DEF(91),O(3) NAP
37.10 6229, 6230 LO(26),DEF(91),O(3) NAP
37.20 6228, 6230 LO(26),DEF(91),O(3) NAP
37.30 6228, 6229 LO(26),DEF(91),O(3) NAP
38 NAP YM5(27),DEF(90),O(3) TREASURY FLAT
38.10 NAP YM5(27),DEF(90),O(3) NAP
38.20 NAP YM5(27),DEF(90),O(3) NAP
38.30 NAP YM5(27),DEF(90),O(3) NAP
38.40 NAP YM5(27),DEF(90),O(3) NAP
38.50 NAP YM5(27),DEF(90),O(3) NAP
38.60 NAP YM5(27),DEF(90),O(3) NAP
38.70 NAP YM5(27),DEF(90),O(3) NAP
38.80 NAP YM5(27),DEF(90),O(3) NAP
39 NAP LO(60),YM1(56),O(3) Treasury Flat
40 NAP LO(36),YM1(72),O(12) Treasury Flat
41 NAP YM5(180),5%(12),4%(12),3%(12),O(24) Treasury Flat
43 NAP YM3(108),1%(6),O(6) Treasury Flat
44 NAP LO(27),DEF(114),O(3) NAP
45 NAP LO(26),DEF(91),O(3) NAP
46 NAP LO(31),DEF(83),O(6) NAP
47 NAP LO (32), DEF (82), O (6) NAP
48 NAP LO(36),YM1(60),1%(12),O(12) Treasury Flat
49 NAP LO (35); DEF (79); O (6) NAP
50 NAP LO(36),YM1(60),1%(12),O(12) Treasury Flat
51 NAP YM5(132),YM1(9),O(3) Treasury Flat
52 NAP YM1(96),3%(12),O(12) TREASURY FLAT
52.10 NAP YM1(96),3%(12),O(12) NAP
52.20 NAP YM1(96),3%(12),O(12) NAP
53 NAP YM5(141),O(3) Treasury Flat
54 NAP LO(60),YM1(54),O(6) Spread to Treasury
55 NAP LO(26),DEF(91),O(3) NAP
56 NAP LO(28),DEF(89),O(3) NAP
57 NAP YM5(144),5%(12),4%(18),O(6) Treasury Flat
58 NAP LO(26),DEF(115),O(3) NAP
59 NAP YM5(96),5%(12),O(12) Treasury Flat
60 NAP YM3(108),O(12) Treasury Flat
61 NAP YM3(108),O(12) Treasury Flat
62 NAP LO (29), DEF (85), O (6) NAP
63 LO(26),DEF(91),O(3) NAP
63.10 6224, 6225 LO(26),DEF(91),O(3) NAP
63.20 6224, 6227 LO(26),DEF(91),O(3) NAP
63.30 6225, 6227 LO(26),DEF(91),O(3) NAP
64 NAP YM5(144),5%(12),4%(12),3%(12),2%(12),1%(12),O(36) Treasury Flat
65 NAP LO(72),YM3(72),YM2(36),YM1(24),O(12) Treasury Flat
66 NAP LO(60),YM1(57),O(3) Treasury Flat
67 NAP YM5(96),5%(12),O(12) Treasury Flat
68 LO(36),YM1(51),O(3) TREASURY FLAT
68.10 4028 LO(36),YM1(51),O(3) Treasury Flat
68.20 4027 LO(36),YM1(51),O(3) Treasury Flat
69 NAP YM5(132),5%(9),O(3) Treasury Flat
70 NAP YM3(36),YM2(36),YM1(24),1%(12),O(12) Treasury Flat
71 NAP LO(26),DEF(91),O(3) NAP
72 NAP YM5(96),5%(12),O(12) Treasury Flat
73 NAP LO(29),DEF(88),O(3) NAP
74 NAP YM5(96),5%(12),O(12) Treasury Flat
75 NAP LO(96),YM1(72),O(12) Treasury Flat
76 NAP LO(60),YM1(57),O(3) Treasury Flat
77 NAP LO (28), DEF (86), O (6) NAP
78 NAP YM5(96),5%(12),O(12) Treasury Flat
79 NAP LO(26),DEF(55),O(3) NAP
80 C124 A-B LO (27), DEF (87), O (6) NAP
80.10 c124 a-b LO (27), DEF (87), O (6) NAP
80.20 c124 a-b LO (27), DEF (87), O (6) NAP
81 NAP LO(60),YM1(57),O(3) Treasury Flat
82 NAP LO(26),DEF(91),O(3) NAP
83 NAP LO(60),YM1(57),O(3) Treasury Flat
85 NAP LO (29), DEF (85), O (6) NAP
86 NAP LO (31), DEF (83), O (6) NAP
87 NAP LO(60),YM1(57),O(3) Treasury Flat
88 NAP YM5(120),5%(12),O(12) Treasury Flat
89 YM5(96),5%(12),O(12) TREASURY FLAT
89.10 3151 YM5(96),5%(12),O(12) Treasury Flat
89.20 3145 YM5(96),5%(12),O(12) Treasury Flat
90 C127 A-C LO (27), DEF (87), O (6) NAP
90.10 c127 a-c LO (27), DEF (87), O (6) NAP
90.20 c127 a-c LO (27), DEF (87), O (6) NAP
90.30 c127 a-c LO (27), DEF (87), O (6) NAP
91 TREASURY FLAT
91.10 1899 YM5(60),4%(12),3%(12),2%(12),YM(12),O(12) Treasury Flat
91.20 1898 YM5(60),YM4(12),YM3(12),YM2(12),YM(12),O(12) Treasury Flat
92 NAP LO(24),YM1(84),O(12) Treasury Flat
93 NAP YM5(117),O(3) Treasury Flat
94 NAP YM5(120),5%(12),O(12) Treasury Flat
95 NAP LO (33); DEF (81); O (6) NAP
96 NAP LO(30),DEF(204),O(6) NAP
97 NAP LO(36),YM1(36),1%(36),O(12) Treasury Flat
98 NAP LO(60),YM1(57),O(3) Treasury Flat
99 NAP LO (28), DEF (86), O (6) NAP
100 NAP YM5(96),5%(12),O(12) Treasury Flat
101 NAP LO(27),DEF(90),O(3) NAP
102 C132 A-B LO (27), DEF (87), O (6) NAP
102.10 c132 a-b LO (27), DEF (87), O (6) NAP
102.20 c132 a-b LO (27), DEF (87), O (6) NAP
103 NAP LO(60),YM1(57),O(3) Treasury Flat
104 NAP YM3(96),3%(12),O(12) Treasury Flat
105 NAP LO (28), DEF (86), O (6) NAP
106 NAP YM5(120),5%(12),O(12) Treasury Flat
107 NAP YM1(156),1%(12),O(12) Treasury Flat
108 NAP YM5(96),5%(12),O(12) Treasury Flat
109 NAP LO (24), YM1 (90), O (6) Treasury Flat
110 NAP LO(29),DEF(148),O(3) NAP
111 NAP LO (28); DEF (86); O (6) NAP
112 NAP YM5(96),5%(12),O(12) Treasury Flat
113 NAP YM5(96),5%(12),O(12) Treasury Flat
114 NAP LO (31), DEF (83), O (6) NAP
115 NAP YM3(48),YM2(36),YM1(48),O(12) Treasury Flat
116 NAP LO(36),YM1(81),O(3) Treasury Flat
117 NAP YM5(96),5%(12),O(12) Treasury Flat
118 NAP YM5(96),5%(12),O(12) Treasury Flat
119 NAP LO (29), DEF (85), O (6) NAP
120 NAP LO(60),YM1(57),O(3) Treasury Flat
121 NAP YM5(120),5%(12),O(12) Treasury Flat
122 NAP LO (26), DEF (88), O (6) NAP
123 NAP LO (36), DEF (78), O (6) NAP
124 NAP LO(60),YM1(54),O(6) Treasury Flat
125 NAP LO(60),YM1(57),O(3) Treasury Flat
126 NAP YM5(108),O(12) Treasury Flat
127 NAP YM5(96),5%(12),O(12) Treasury Flat
128 NAP LO(26),DEF(91),O(3) NAP
129 NAP LO(26),DEF(91),O(3) NAP
130 NAP LO(60),YM1(57),O(3) Treasury Flat
131 NAP LO(18),DEF(99),O(3) NAP
132 NAP YM1(108),O(12) Treasury Flat
133 NAP LO (31), DEF (83), O (6) NAP
134 NAP LO(29),DEF(88),O(3) NAP
135 NAP YM5(120),5%(12),O(12) Treasury Flat
136 NAP LO(60),YM1(57),O(3) Treasury Flat
137 NAP YM5(96),5%(12),O(12) Treasury Flat
138 NAP LO(28),DEF(89),O(3) NAP
139 NAP LO(60),YM1(57),O(3) Treasury Flat
140 NAP LO(32),DEF(85),O(3) NAP
141 NAP YM5(96),5%(12),O(12) Treasury Flat
142 NAP LO(84),YM1(81),O(3) Treasury Flat
143 LO(60),YM1(57),O(3) TREASURY FLAT
143.10 6261 LO(60),YM1(57),O(3) Treasury Flat
143.20 6260 LO(60),YM1(57),O(3) Treasury Flat
144 NAP YM5(96),5%(12),O(12) Treasury Flat
145 NAP YM1(96),1%(12),O(12) Treasury Flat
146 NAP YM3(96),2%(12),O(12) Treasury Flat
147 NAP YM5(117),O(3) Treasury Flat
148 NAP YM5(96),5%(12),O(12) Treasury Flat
149 NAP YM5(180),YM3(36),2%(12),O(12) Treasury Flat
150 NAP LO(60),YM1(57),O(3) Treasury Flat
151 NAP YM5(168),5%(12),4%(12),O(18) Treasury Flat
152 NAP YM5(96),5%(12),O(12) Treasury Flat
153 NAP LO (29), DEF (85), O (6) NAP
154 NAP YM3(96),3%(12),O(12) Treasury Flat
155 NAP LO (26), DEF (88), O (6) NAP
156 NAP YM5(60),2%(48),O(12) Treasury Flat
157 NAP LO (29), DEF (85), O (6) NAP
158 NAP LO (30), DEF (84), O (6) NAP
159 NAP YM3(96),3%(12),O(12) Treasury Flat
160 NAP YM5(216),5%(12),O(12) Treasury Flat
161 NAP YM5(60),YM3(24),YM1(33),O(3) Treasury Flat
162 NAP LO(60),YM1(57),O(3) Treasury Flat
164 NAP LO(25),DEF(116),O(3) NAP
165 NAP YM5(117),O(3) Treasury Flat
166 NAP LO(60),YM1(57),O(3) Treasury Flat
167 NAP LO (27), DEF (87), O (6) NAP
168 NAP YM5(120),5%(12),O(12) Treasury Flat
169 NAP LO(60),YM1(57),O(3) Treasury Flat
170 NAP LO(26),DEF(91),O(3) NAP
171 NAP LO (30); DEF (84); O (6) NAP
172 NAP YM3(120),3%(12),O(12) Treasury Flat
173 NAP YM5(96),5%(12),O(12) Treasury Flat
174 NAP YM5(96),5%(12),O(12) Treasury Flat
175 NAP LO(26),DEF(91),O(3) NAP
176 NAP YM5(96),5%(12),O(12) Treasury Flat
177 NAP YM3(120),3%(12),O(12) Treasury Flat
178 NAP YM5(96),3%(12),O(12) Treasury Flat
179 NAP YM5(60),YM4(60),O(24) Treasury Flat
180 NAP YM5(96),5%(12),O(12) Treasury Flat
181 NAP LO(26),DEF(91),O(3) NAP
182 NAP LO(28),DEF(89),O(3) NAP
183 NAP LO(60),YM1(57),O(3) Treasury Flat
184 NAP LO(28),DEF(89),O(3) NAP
185 NAP YM5(96),5%(12),O(12) Treasury Flat
186 NAP LO(26),DEF(91),O(3) NAP
187 NAP LO(27),DEF(114),O(3) NAP
188 NAP LO(26),DEF(91),O(3) NAP
189 NAP LO (28), DEF (86), O (6) NAP
190 NAP LO(26),DEF(91),O(3) NAP
191 NAP LO(60),YM1(57),O(3) Treasury Flat
192 NAP YM3(96),2%(12),O(12) Treasury Flat
193 NAP YM5(96),5%(12),O(12) Treasury Flat
194 NAP LO(60),YM1(57),O(3) Treasury Flat
195 NAP LO(60),YM1(57),O(3) Treasury Flat
196 NAP LO(45),DEF(3),DEF or YM1(69),O(3) Treasury Flat
197 NAP LO(60),YM1(57),O(3) Treasury Flat
198 NAP LO(60),YM1(54),O(6) Treasury Flat
199 NAP LO(60),YM1(57),O(3) Treasury Flat
200 NAP LO(60),YM1(57),O(3) Treasury Flat
201 NAP LO(60),YM1(54),O(6) Treasury Flat
202 NAP LO(60),YM1(57),O(3) Treasury Flat
203 NAP LO(60),YM1(57),O(3) Treasury Flat
204 NAP LO(60),YM1(57),O(3) Treasury Flat
205 NAP YM5(60),2%(48),O(12) Treasury Flat
206 C148 A-B LO (27), DEF (87), O (6) NAP
206.10 c148 a-b LO (27), DEF (87), O (6) NAP
206.20 c148 a-b LO (27), DEF (87), O (6) NAP
207 NAP LO(78),YM1(99),O(3) Treasury Flat
208 NAP LO (28), DEF (96), O (6) NAP
209 NAP LO(60),YM1(57),O(3) Treasury Flat
210 NAP LO (28), DEF (96), O (6) NAP
211 NAP LO(60),YM1(57),O(3) Treasury Flat
212 NAP LO(60),YM1(57),O(3) Treasury Flat
213 NAP LO(60),YM1(57),O(3) Treasury Flat
214 NAP YM5(96),5%(12),O(12) Treasury Flat
215 NAP LO(60), YM1(57), O(3) NAP
216 NAP LO(60),YM1(57),O(3) Treasury Flat
217 NAP LO(60),YM1(57),O(3) Treasury Flat
218 NAP LO(60), YM1(57), O(3) Treasury Flat
219 NAP LO(60),YM1(57),O(3) TREASURY FLAT
219.10 NAP LO(60),YM1(57),O(3) NAP
219.20 NAP LO(60),YM1(57),O(3) NAP
220 NAP LO(60),YM1(57),O(3) Treasury Flat
221 NAP LO(60),YM1(57),O(3) Treasury Flat
222 NAP LO(60), YM1(57), O(3) Treasury Flat
223 NAP LO(60),YM1(57),O(3) Treasury Flat
225 NAP LO(60),YM1(57),O(3) Treasury Flat
226 NAP LO(60),YM1(57),O(3) Treasury Flat
227 NAP YM5(144),5%(12),4%(12),O(12) Treasury Flat
228 NAP LO(60),YM1(57),O(3) Treasury Flat
230 NAP LO(60),YM1(57),O(3) Treasury Flat
231 NAP LO(60),YM1(57),O(3) Treasury Flat
232 NAP LO(60),YM1(57),O(3) Treasury Flat
233 NAP LO(60),YM1(57),O(3) Treasury Flat
234 NAP LO(60),YM1(57),O(3) Treasury Flat
235 NAP LO(60),YM1(57),O(3) Treasury Flat
236 NAP LO(60),YM1(57),O(3) Treasury Flat
237 NAP LO(60),YM1(57),O(3) Treasury Flat
238 NAP LO(60),YM1(57),O(3) Treasury Flat
239 NAP LO(60),YM1(57),O(3) Treasury Flat
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
ORIGINAL REMAINING BALLOON,
ORIGINAL TERM TO MATURITY REMAINING TERM TO FULLY
CONTROL AMORTIZATION MATURITY DATE OR AMORTIZATION MATURITY AMORTIZING
NUMBER TERM OR ARD ARD PERIOD OR ARD SEASONING OR ARD
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 360 131 11/01/09 360 128 3 HyperAm
2 360 120 06/01/08 351 111 9 Balloon
3 300 120 02/01/09 299 119 1 HyperAm
4 360 120 11/01/08 356 116 4 Balloon
5 300 120 05/01/08 290 110 10 BALLOON
5.10 300 120 05/01/08 290 110 10 Balloon
5.20 300 120 05/01/08 290 110 10 Balloon
5.30 300 120 05/01/08 290 110 10 BALLOON
5.31 300 120 05/01/08 290 110 10 Balloon
5.32 300 120 05/01/08 290 110 10 Balloon
5.40 300 120 05/01/08 290 110 10 Balloon
6 360 120 06/01/08 351 111 9 HyperAm
7 300 120 10/01/08 295 115 5 BALLOON
7.10 300 120 10/01/08 295 115 5 Balloon
7.20 300 120 10/01/08 295 115 5 Balloon
7.30 300 120 10/01/08 295 115 5 Balloon
7.40 300 120 10/01/08 295 115 5 Balloon
8 300 84 09/01/05 294 78 6 HyperAm
9 360 120 05/01/08 350 110 10 HYPERAM
9.10 360 120 05/01/08 350 110 10 HyperAm
9.20 360 120 05/01/08 350 110 10 HyperAm
9.30 360 120 05/01/08 350 110 10 HyperAm
9.40 360 120 05/01/08 350 110 10 HyperAm
9.50 360 120 05/01/08 350 110 10 HyperAm
9.60 360 120 05/01/08 350 110 10 HyperAm
9.70 360 120 05/01/08 350 110 10 HyperAm
9.80 360 120 05/01/08 350 110 10 HyperAm
10 360 120 08/01/08 360 113 7 Balloon
11 240 144 11/01/10 236 140 4 Balloon
12 240 240 11/01/17 224 224 16 No
13 360 84 06/01/05 351 75 9 Balloon
14 360 120 09/01/08 354 114 6 Balloon
15 360 120 05/01/08 350 110 10 Balloon
16 360 120 01/01/09 358 118 2 HyperAm
17 360 120 10/01/08 355 115 5 Balloon
18 336 120 01/01/09 334 118 2 Balloon
19 330 120 12/01/08 327 117 3 Balloon
20 300 120 01/01/09 298 118 2 BALLOON
20.10 300 120 01/01/09 298 118 2 Balloon
20.20 300 120 01/01/09 298 118 2 Balloon
20.30 300 120 01/01/09 298 118 2 Balloon
20.40 300 120 01/01/09 298 118 2 Balloon
20.50 300 120 01/01/09 298 118 2 Balloon
20.60 300 120 01/01/09 298 118 2 Balloon
20.70 300 120 01/01/09 298 118 2 Balloon
20.80 300 120 01/01/09 298 118 2 Balloon
21 300 120 01/01/09 298 118 2 BALLOON
21.10 300 120 01/01/09 298 118 2 Balloon
21.20 300 120 01/01/09 298 118 2 Balloon
21.30 300 120 01/01/09 298 118 2 Balloon
22 360 120 11/01/08 356 116 4 Balloon
23 300 120 09/01/08 294 114 6 HyperAm
24 300 119 08/01/08 294 113 6 HyperAm
25 360 120 09/01/08 354 114 6 HyperAm
26 360 120 02/01/09 359 119 1 Balloon
27 360 144 09/01/10 354 138 6 Balloon
28 360 120 10/01/08 355 115 5 Balloon
29 360 120 09/01/08 354 114 6 HyperAm
30 360 126 05/01/08 350 110 16 HyperAm
31 347 120 07/01/08 339 112 8 Balloon
32 330 120 01/01/09 328 118 2 HyperAm
33 300 124 08/01/08 293 113 11 HyperAm
34 300 144 10/01/10 295 139 5 Balloon
35 240 120 10/01/08 235 115 5 Balloon
36 240 120 01/01/09 240 118 2 BALLOON
36.10 240 120 01/01/09 240 118 2 Balloon
36.20 240 120 01/01/09 240 118 2 Balloon
36.30 240 120 01/01/09 240 118 2 Balloon
36.40 240 120 01/01/09 240 118 2 Balloon
36.50 240 120 01/01/09 240 118 2 Balloon
36.60 240 120 01/01/09 240 118 2 Balloon
36.70 240 120 01/01/09 240 118 2 Balloon
36.80 240 120 01/01/09 240 118 2 Balloon
37 300 120 01/01/09 298 118 2 BALLOON
37.10 300 120 01/01/09 298 118 2 Balloon
37.20 300 120 01/01/09 298 118 2 Balloon
37.30 300 120 01/01/09 298 118 2 Balloon
38 240 120 12/01/08 240 117 3 BALLOON
38.10 240 120 12/01/08 240 117 3 Balloon
38.20 240 120 12/01/08 240 117 3 Balloon
38.30 240 120 12/01/08 240 117 3 Balloon
38.40 240 120 12/01/08 240 117 3 Balloon
38.50 240 120 12/01/08 240 117 3 Balloon
38.60 240 120 12/01/08 240 117 3 Balloon
38.70 240 120 12/01/08 240 117 3 Balloon
38.80 240 120 12/01/08 240 117 3 Balloon
39 360 119 10/01/08 356 115 4 Balloon
40 240 120 11/01/08 236 116 4 Balloon
41 240 240 06/01/18 231 231 9 No
43 360 120 11/01/08 356 116 4 Balloon
44 360 144 12/01/10 357 141 3 Balloon
45 300 120 01/01/09 298 118 2 Balloon
46 360 120 08/01/08 353 113 7 Balloon
47 360 120 08/01/08 353 113 7 HyperAm
48 360 120 09/01/08 354 114 6 Balloon
49 360 120 05/01/08 350 110 10 HyperAm
50 360 120 08/01/08 353 113 7 Balloon
51 252 144 12/01/10 249 141 3 Balloon
52 300 120 05/01/08 290 110 10 BALLOON
52.10 300 120 05/01/08 290 110 10 Balloon
52.20 300 120 05/01/08 290 110 10 Balloon
53 360 144 01/01/11 358 142 2 Balloon
54 360 120 01/01/08 346 106 14 Balloon
55 360 120 01/01/09 358 118 2 Balloon
56 300 120 11/01/08 296 116 4 Balloon
57 360 180 11/01/13 356 176 4 Balloon
58 300 144 01/01/11 298 142 2 Balloon
59 324 120 10/01/08 319 115 5 Balloon
60 352 120 06/01/08 343 111 9 Balloon
61 360 120 11/01/08 356 116 4 Balloon
62 360 120 11/01/08 356 116 4 HyperAm
63 300 120 01/01/09 298 118 2 BALLOON
63.10 300 120 01/01/09 298 118 2 Balloon
63.20 300 120 01/01/09 298 118 2 Balloon
63.30 300 120 01/01/09 298 118 2 Balloon
64 240 240 09/01/18 234 234 6 No
65 360 216 10/01/15 343 199 17 Balloon
66 300 120 02/01/08 287 107 13 Balloon
67 360 120 11/01/08 356 116 4 Balloon
68 360 90 05/01/06 356 86 4 BALLOON
68.10 360 90 05/01/06 356 86 4 Balloon
68.20 360 90 05/01/06 356 86 4 Balloon
69 360 144 11/01/10 356 140 4 Balloon
70 300 120 10/01/08 295 115 5 Balloon
71 300 120 01/01/09 298 118 2 Balloon
72 300 120 10/01/08 295 115 5 Balloon
73 240 120 10/01/08 235 115 5 Balloon
74 300 120 03/01/08 288 108 12 Balloon
75 300 180 05/01/13 290 170 10 Balloon
76 300 120 11/30/08 296 116 4 HyperAm
77 360 120 12/01/08 357 117 3 HyperAm
78 360 120 09/01/08 354 114 6 Balloon
79 360 84 01/01/06 358 82 2 Balloon
80 360 120 01/01/09 358 118 2 HYPERAM
80.10 360 120 01/01/09 358 118 2 HyperAm
80.20 360 120 01/01/09 358 118 2 HyperAm
81 360 120 07/01/08 352 112 8 Balloon
82 235 120 01/01/09 233 118 2 Balloon
83 300 120 02/01/08 287 107 13 Balloon
85 360 120 11/01/08 356 116 4 Balloon
86 360 120 09/01/08 354 114 6 Balloon
87 360 120 11/01/08 356 116 4 Balloon
88 360 144 08/01/10 353 137 7 Balloon
89 120 10/01/08 115 5 BALLOON
89.10 240 120 10/01/08 235 115 5 Balloon
89.20 180 120 10/01/08 175 115 5 Balloon
90 360 120 01/01/09 358 118 2 HYPERAM
90.10 360 120 01/01/09 358 118 2 HyperAm
90.20 360 120 01/01/09 358 118 2 HyperAm
90.30 360 120 01/01/09 358 118 2 HyperAm
91 360 120 BALLOON
91.10 360 120 04/01/08 349 109 11 Balloon
91.20 360 120 11/01/08 356 116 4 Balloon
92 360 120 09/01/08 354 114 6 Balloon
93 300 120 01/01/09 298 118 2 Balloon
94 178 144 09/01/10 172 138 6 Balloon
95 300 120 06/01/08 291 111 9 HyperAm
96 300 240 08/01/18 293 233 7 Balloon
97 300 120 08/01/08 293 113 7 Balloon
98 300 120 11/01/08 296 116 4 Balloon
99 360 120 12/01/08 357 117 3 HyperAm
100 300 120 10/01/08 295 115 5 Balloon
101 360 120 12/01/08 357 117 3 Balloon
102 360 120 01/01/09 358 118 2 HYPERAM
102.10 360 120 01/01/09 358 118 2 HyperAm
102.20 360 120 01/01/09 358 118 2 HyperAm
103 300 120 01/01/08 286 106 14 Balloon
104 300 120 11/01/08 296 116 4 Balloon
105 360 120 12/01/08 357 117 3 HyperAm
106 300 144 12/01/10 297 141 3 Balloon
107 360 180 09/01/13 354 174 6 Balloon
108 300 120 10/01/08 295 115 5 Balloon
109 360 120 05/01/08 350 110 10 HyperAm
110 360 180 10/01/13 355 175 5 Balloon
111 360 120 12/01/08 357 117 3 Balloon
112 360 120 08/01/08 353 113 7 Balloon
113 264 120 12/01/08 261 117 3 Balloon
114 360 120 09/01/08 354 114 6 HyperAm
115 180 144 12/01/10 177 141 3 Balloon
116 300 120 06/01/08 291 111 9 Balloon
117 300 120 07/01/08 292 112 8 Balloon
118 300 120 11/01/08 296 116 4 Balloon
119 360 120 11/01/08 356 116 4 HyperAm
120 360 120 01/10/08 346 106 14 Balloon
121 240 144 07/01/10 232 136 8 Balloon
122 300 120 02/01/09 299 119 1 Balloon
123 300 120 10/01/07 283 103 17 HyperAm
124 300 120 07/01/08 292 112 8 Balloon
125 360 120 02/01/08 347 107 13 Balloon
126 300 120 01/01/09 298 118 2 Balloon
127 300 120 04/01/08 289 109 11 Balloon
128 276 120 01/01/09 274 118 2 Balloon
129 300 120 01/01/09 298 118 2 Balloon
130 360 120 04/01/08 349 109 11 Balloon
131 300 120 07/01/08 292 112 8 Balloon
132 300 120 08/01/08 293 113 7 Balloon
133 240 120 09/01/08 234 114 6 HyperAm
134 300 120 10/01/08 295 115 5 Balloon
135 360 144 09/01/10 354 138 6 Balloon
136 300 120 12/01/07 285 105 15 Balloon
137 300 120 10/01/08 295 115 5 Balloon
138 300 120 11/01/08 296 116 4 Balloon
139 300 120 09/01/07 282 102 18 Balloon
140 360 120 07/01/08 352 112 8 Balloon
141 300 120 07/01/08 292 112 8 Balloon
142 300 168 06/01/12 291 159 9 Balloon
143 300 120 02/01/08 287 107 13 BALLOON
143.10 300 120 02/01/08 287 107 13 Balloon
143.20 300 120 02/01/08 287 107 13 Balloon
144 300 120 10/01/08 295 115 5 Balloon
145 300 120 11/01/08 296 116 4 Balloon
146 300 120 08/01/08 293 113 7 Balloon
147 300 120 02/01/09 299 119 1 Balloon
148 360 120 10/01/08 355 115 5 Balloon
149 240 240 10/01/18 235 235 5 No
150 240 120 05/01/07 218 98 22 Balloon
151 210 210 03/01/16 204 204 6 No
152 300 120 01/01/09 298 118 2 Balloon
153 360 120 11/01/08 356 116 4 Balloon
154 300 120 12/01/08 297 117 3 Balloon
155 360 120 02/01/09 359 119 1 Balloon
156 300 120 11/01/08 296 116 4 Balloon
157 360 120 11/01/08 356 116 4 HyperAm
158 360 120 10/01/08 355 115 5 Balloon
159 360 120 01/01/08 346 106 14 Balloon
160 240 240 09/01/18 234 234 6 No
161 300 120 01/01/09 298 118 2 Balloon
162 300 120 08/01/08 293 113 7 Balloon
164 240 144 02/01/11 239 143 1 Balloon
165 300 120 12/01/08 297 117 3 Balloon
166 360 120 11/01/08 356 116 4 Balloon
167 360 120 01/01/09 358 118 2 Balloon
168 240 144 10/01/10 235 139 5 Balloon
169 300 120 06/01/08 291 111 9 Balloon
170 300 120 01/01/09 298 118 2 Balloon
171 360 120 10/01/08 355 115 5 HyperAm
172 300 144 11/01/10 296 140 4 Balloon
173 360 120 11/01/08 356 116 4 Balloon
174 300 120 10/01/08 295 115 5 Balloon
175 300 120 01/01/09 298 118 2 Balloon
176 300 120 09/01/08 294 114 6 Balloon
177 300 144 11/01/10 296 140 4 Balloon
178 300 120 06/01/08 291 111 9 Balloon
179 300 144 09/01/10 294 138 6 Balloon
180 300 120 10/01/08 295 115 5 Balloon
181 300 120 01/01/09 298 118 2 Balloon
182 300 120 11/01/08 296 116 4 Balloon
183 300 120 05/01/08 290 110 10 Balloon
184 300 120 11/01/08 296 116 4 Balloon
185 300 120 10/01/08 295 115 5 Balloon
186 300 120 01/01/09 298 118 2 Balloon
187 144 144 12/01/10 141 141 3 No
188 300 120 01/01/09 298 118 2 Balloon
189 360 120 12/01/08 357 117 3 HyperAm
190 300 120 01/01/09 298 118 2 Balloon
191 324 120 04/01/08 313 109 11 Balloon
192 360 120 06/01/08 351 111 9 Balloon
193 300 120 07/01/08 292 112 8 Balloon
194 300 120 06/01/08 291 111 9 Balloon
195 300 120 02/01/08 287 107 13 Balloon
196 360 120 06/01/07 339 99 21 Balloon
197 300 120 07/01/08 292 112 8 Balloon
198 325 120 04/01/08 314 109 11 Balloon
199 360 120 06/01/07 339 99 21 Balloon
200 300 120 07/01/08 292 112 8 Balloon
201 300 120 06/01/08 291 111 9 Balloon
202 300 120 06/01/08 291 111 9 Balloon
203 300 120 06/01/08 291 111 9 Balloon
204 300 120 11/01/08 296 116 4 Balloon
205 300 120 11/01/08 296 116 4 Balloon
206 360 120 01/01/09 358 118 2 HYPERAM
206.10 360 120 01/01/09 358 118 2 HyperAm
206.20 360 120 01/01/09 358 118 2 HyperAm
207 180 180 10/01/13 175 175 5 No
208 216 130 10/01/09 213 127 3 Balloon
209 300 120 04/01/08 289 109 11 Balloon
210 216 130 10/01/09 213 127 3 Balloon
211 300 120 06/01/08 291 111 9 Balloon
212 240 120 01/01/08 226 106 14 Balloon
213 300 120 11/01/08 296 116 4 Balloon
214 240 120 07/01/08 232 112 8 Balloon
215 360 120 09/01/07 342 102 18 Balloon
216 360 120 06/01/07 339 99 21 Balloon
217 231 120 08/01/07 212 101 19 Balloon
218 300 120 05/01/07 278 98 22 Balloon
219 300 120 12/01/07 285 105 15 BALLOON
219.10 300 120 12/01/07 285 105 15 Balloon
219.20 300 120 12/01/07 285 105 15 Balloon
220 247 120 05/01/08 237 110 10 Balloon
221 324 120 04/01/08 313 109 11 Balloon
222 300 120 03/01/08 288 108 12 Balloon
223 300 120 06/01/08 291 111 9 Balloon
225 300 120 03/01/08 288 108 12 Balloon
226 300 120 07/01/07 280 100 20 Balloon
227 180 180 10/01/13 175 175 5 No
228 300 120 07/01/08 292 112 8 Balloon
230 240 120 12/01/07 225 105 15 Balloon
231 300 120 01/01/08 286 106 14 Balloon
232 120 120 04/01/08 109 109 11 No
233 300 120 12/01/07 285 105 15 Balloon
234 300 120 07/01/08 292 112 8 Balloon
235 300 120 07/01/08 292 112 8 Balloon
236 300 120 07/01/08 292 112 8 Balloon
237 300 120 04/01/08 289 109 11 Balloon
238 300 120 04/01/08 289 109 11 Balloon
239 300 120 06/01/08 291 111 9 Balloon
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
FUTURE
CONTROL BALLOON/ARD BALLOON/ARD DUE ON DUE ON SUBORDINATE APPRAISAL
NUMBER BALANCE LTV RATIO SALE ENCUMBRANCE FINANCING VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 $ 59,950,487 50.0% Yes Yes No $ 120,000,000
2 30,473,197 67.7% Yes - Lender's option with fee Yes No 45,000,000
3 18,734,172 58.5% Yes Yes No 32,000,000
4 17,878,247 65.0% Yes - Lender's option with fee Yes No 27,500,000
5 15,644,589 55.8% YES - LENDER'S OPTION WITH FEE YES NO 28,260,000
5.10 5,467,920 59.1% Yes - Lender's option with fee Yes No 9,250,000
5.20 4,358,487 58.9% Yes - Lender's option with fee Yes No 7,400,000
5.30 3,183,279 47.9% YES - LENDER'S OPTION WITH FEE YES NO 6,650,000
5.31 2,130,164 47.9% Yes - Lender's option with fee Yes No 4,450,000
5.32 1,053,115 47.9% Yes - Lender's option with fee Yes No 2,200,000
5.40 2,634,903 53.1% Yes - Lender's option with fee Yes No 4,960,000
6 16,787,487 63.3% Yes Yes No 26,500,000
7 12,310,745 51.5% YES - LENDER'S OPTION WITH FEE YES NO 24,115,000
7.10 4,728,630 53.1% Yes - Lender's option with fee Yes No 8,901,000
7.20 3,892,968 54.8% Yes - Lender's option with fee Yes No 7,100,000
7.30 2,649,664 49.1% Yes - Lender's option with fee Yes No 5,400,000
7.40 1,039,484 38.3% Yes - Lender's option with fee Yes No 2,714,000
8 13,217,568 56.5% Yes Yes No 23,400,000
9 13,086,222 64.1% YES YES NO 20,410,000
9.10 593,080 64.1% Yes Yes No 925,000
9.20 3,526,419 64.1% Yes Yes No 5,500,000
9.30 519,345 64.1% Yes Yes No 810,000
9.40 1,602,918 64.1% Yes Yes No 2,500,000
9.50 881,605 64.1% Yes Yes No 1,375,000
9.60 1,634,976 64.1% Yes Yes No 2,550,000
9.70 2,067,764 64.1% Yes Yes No 3,225,000
9.80 2,260,114 64.1% Yes Yes No 3,525,000
10 12,973,937 65.7% Yes - Lender's option with fee Yes No 19,750,000
11 8,094,829 42.6% Yes - Lender's option with fee Yes No 19,000,000
12 - 0.0% Yes - Lender's option with fee Yes No 18,550,000
13 11,664,423 68.6% Yes - Lender's option with fee Yes No 17,000,000
14 10,956,755 64.5% Yes - Lender's option with fee Yes No 17,000,000
15 10,818,079 63.6% Yes - Lender's option with fee Yes No 17,000,000
16 9,979,278 66.1% Yes Yes No 15,100,000
17 8,931,508 66.4% Yes - Lender's option with fee Yes No 13,450,000
18 8,666,965 59.8% Yes - Lender's option with fee Yes No 14,500,000
19 8,378,425 58.4% Yes - Lender's option with fee Yes No 14,350,000
20 7,980,670 55.7% YES - LENDER'S OPTION WITH FEE YES NO 14,400,000
20.10 1,812,493 54.8% Yes - Lender's option with fee Yes No 3,310,000
20.20 1,252,860 59.1% Yes - Lender's option with fee Yes No 2,120,000
20.30 1,111,934 54.5% Yes - Lender's option with fee Yes No 2,040,000
20.40 932,720 61.4% Yes - Lender's option with fee Yes No 1,520,000
20.50 904,209 56.5% Yes - Lender's option with fee Yes No 1,600,000
20.60 761,654 56.0% Yes - Lender's option with fee Yes No 1,360,000
20.70 614,211 44.8% Yes - Lender's option with fee Yes No 1,370,000
20.80 590,588 54.7% Yes - Lender's option with fee Yes No 1,080,000
21 7,844,509 52.2% YES - LENDER'S OPTION WITH FEE YES NO 15,100,000
21.10 4,977,917 50.8% Yes - Lender's option with fee Yes No 9,800,000
21.20 1,504,205 60.2% Yes - Lender's option with fee Yes No 2,500,000
21.30 1,362,387 48.7% Yes - Lender's option with fee Yes No 2,800,000
22 7,597,314 62.3% Yes - Lender's option with fee Yes No 12,200,000
23 6,929,048 63.3% Yes Yes No 10,950,000
24 6,975,156 57.2% Yes Yes No 12,200,000
25 7,076,469 54.4% Yes Yes No 13,000,000
26 6,864,991 67.6% Yes - Lender's option with fee Yes No 10,150,000
27 6,236,241 59.4% Yes - Lender's option with fee Yes No 10,500,000
28 6,353,348 66.5% Yes - Lender's option with fee Yes No 9,550,000
29 6,500,798 65.0% Yes Yes No 10,000,000
30 6,250,614 58.9% Yes Yes No 10,605,000
31 6,078,962 57.9% Yes - Lender's option with fee Yes Yes 10,500,000
32 5,907,768 55.7% Yes Yes No 10,600,000
33 5,397,040 64.3% Yes Yes No 8,400,000
34 4,595,503 37.7% Yes - Lender's option with fee Yes No 12,200,000
35 4,335,985 42.7% Yes - Lender's option with fee Yes No 10,150,000
36 4,941,292 40.7% YES - LENDER'S OPTION WITH FEE YES NO 12,135,000
36.10 623,006 40.7% Yes - Lender's option with fee Yes No 1,530,000
36.20 879,538 40.7% Yes - Lender's option with fee Yes No 2,160,000
36.30 325,755 40.7% Yes - Lender's option with fee Yes No 800,000
36.40 460,129 40.7% Yes - Lender's option with fee Yes No 1,130,000
36.50 600,610 40.7% Yes - Lender's option with fee Yes No 1,475,000
36.60 586,359 40.7% Yes - Lender's option with fee Yes No 1,440,000
36.70 773,668 40.7% Yes - Lender's option with fee Yes No 1,900,000
36.80 692,229 40.7% Yes - Lender's option with fee Yes No 1,700,000
37 5,130,370 58.6% YES - LENDER'S OPTION WITH FEE YES NO 8,770,000
37.10 2,707,740 60.4% Yes - Lender's option with fee Yes No 4,480,000
37.20 1,422,297 54.7% Yes - Lender's option with fee Yes No 2,600,000
37.30 1,000,332 59.2% Yes - Lender's option with fee Yes No 1,690,000
38 4,832,602 39.9% YES - LENDER'S OPTION WITH FEE YES NO 12,100,000
38.10 359,450 39.9% Yes - Lender's option with fee Yes No 900,000
38.20 726,887 39.9% Yes - Lender's option with fee Yes No 1,820,000
38.30 758,838 39.9% Yes - Lender's option with fee Yes No 1,900,000
38.40 169,740 39.9% Yes - Lender's option with fee Yes No 425,000
38.50 1,274,050 39.9% Yes - Lender's option with fee Yes No 3,190,000
38.60 447,315 39.9% Yes - Lender's option with fee Yes No 1,120,000
38.70 433,337 39.9% Yes - Lender's option with fee Yes No 1,085,000
38.80 662,985 39.9% Yes - Lender's option with fee Yes No 1,660,000
39 5,261,627 37.9% Yes - Lender's option with fee Yes No 13,900,000
40 3,812,236 48.9% Yes - Lender's option with fee Yes No 7,800,000
41 - 0.0% Yes - Lender's option with fee Yes No 8,300,000
43 4,857,422 64.9% Yes - Lender's option with fee Yes No 7,490,000
44 4,676,656 60.3% Yes - Lender's option with fee Yes No 7,750,000
45 4,516,391 60.2% Yes - Lender's option with fee Yes No 7,500,000
46 4,773,864 65.9% Yes - Lender's option with fee Yes No 7,250,000
47 4,920,602 64.7% Yes Yes No 7,600,000
48 4,614,059 67.9% Yes - Lender's option with fee Yes No 6,800,000
49 4,619,826 61.6% Yes Yes No 7,500,000
50 4,475,796 68.1% Yes - Lender's option with fee Yes No 6,575,000
51 3,669,282 48.3% Yes - Lender's option with fee Yes No 7,600,000
52 3,922,637 50.6% YES - LENDER'S OPTION WITH FEE YES NO 7,750,000
52.10 1,214,752 50.6% Yes - Lender's option with fee Yes No 2,400,000
52.20 2,707,885 50.6% Yes - Lender's option with fee Yes No 5,350,000
53 3,948,566 64.2% Yes - Lender's option with fee Yes No 6,150,000
54 4,233,764 66.2% Yes - Lender's option with fee Yes No 6,400,000
55 4,295,844 61.9% Yes - Lender's option with fee Yes No 6,940,000
56 3,743,539 62.9% Yes - Lender's option with fee Yes No 5,950,000
57 3,484,056 58.6% Yes - Lender's option with fee Yes No 5,950,000
58 3,406,928 44.0% Yes - Lender's option with fee Yes No 7,750,000
59 3,787,699 65.3% Yes - Lender's option with fee Yes No 5,800,000
60 3,952,219 64.8% Yes - Lender's option with fee Yes Yes 6,100,000
61 3,845,976 67.0% Yes - Lender's option with fee Yes No 5,740,000
62 4,065,807 60.7% Yes Yes No 6,700,000
63 3,650,236 58.2% YES - LENDER'S OPTION WITH FEE YES NO 6,275,000
63.10 1,485,836 59.9% Yes - Lender's option with fee Yes No 2,480,000
63.20 1,271,596 58.6% Yes - Lender's option with fee Yes No 2,170,000
63.30 892,805 54.9% Yes - Lender's option with fee Yes No 1,625,000
64 - 0.0% Yes - Lender's option with fee Yes Yes 6,865,000
65 3,242,662 47.9% Yes - Lender's option with fee Yes No 6,775,000
66 3,681,319 62.9% Yes - Lender's option with fee Yes No 5,850,000
67 3,674,159 60.7% Yes - Lender's option with fee Yes No 6,050,000
68 3,694,895 61.9% YES - LENDER'S OPTION WITH FEE YES NO 5,440,000
68.10 2,703,582 72.1% Yes - Lender's option with fee Yes No 3,750,000
68.20 991,313 58.7% Yes - Lender's option fee silent Yes No 1,690,000
69 3,262,321 58.3% Yes - Lender's option with fee Yes No 5,600,000
70 3,013,721 58.5% Yes - Lender's option with fee Yes Yes 5,150,000
71 3,053,284 64.1% Yes - Lender's option with fee Yes No 4,765,000
72 2,956,655 57.6% Yes - Lender's option with fee Yes No 5,130,000
73 2,526,698 47.7% Yes - Lender's option with fee Yes No 5,300,000
74 3,006,115 59.2% Yes - Lender's option with fee Yes No 5,075,000
75 2,405,362 51.2% Yes - Lender's option with fee Yes No 4,700,000
76 2,938,159 52.3% Yes - Lender's option with fee Yes No 5,620,000
77 3,224,568 63.2% Yes Yes No 5,100,000
78 3,088,518 66.6% Yes - Lender's option with fee Yes No 4,640,000
79 3,175,538 64.8% Yes - Lender's option with fee Yes No 4,900,000
80 3,041,587 63.4% YES YES NO 4,800,000
80.10 1,013,862 63.4% Yes Yes No 1,600,000
80.20 2,027,725 63.4% Yes Yes No 3,200,000
81 2,954,559 64.6% Yes - Lender's option with fee Yes No 4,575,000
82 2,378,918 41.9% Yes - Lender's option with fee Yes No 5,680,000
83 2,863,248 62.9% Yes - Lender's option with fee Yes No 4,550,000
85 2,972,042 70.8% Yes Yes No 4,200,000
86 2,846,274 64.7% Yes Yes No 4,400,000
87 2,864,301 65.1% Yes - Lender's option with fee Yes No 4,400,000
88 2,678,827 57.4% Yes - Lender's option with fee Yes No 4,670,000
89 1,872,077 42.3% YES - LENDER'S OPTION WITH FEE YES NO 4,395,000
89.10 1,342,429 46.5% Yes - Lender's option with fee Yes No 2,885,000
89.20 529,649 35.1% Yes - Lender's option with fee Yes No 1,510,000
90 2,829,999 62.2% YES YES NO 4,550,000
90.10 1,243,956 62.2% Yes Yes No 2,000,000
90.20 590,879 62.2% Yes Yes No 950,000
90.30 995,164 62.2% Yes Yes No 1,600,000
91 2,656,372 63.1% YES - LENDER'S OPTION WITH FEE YES NO 4,210,000
91.10 1,384,094 64.8% Yes - Lender's option with fee Yes No 2,135,000
91.20 1,272,279 61.3% Yes - Lender's option with fee Yes No 2,075,000
92 2,628,255 61.1% Yes - Lender's option with fee Yes No 4,300,000
93 2,359,001 57.0% Yes - Lender's option with fee Yes No 4,140,000
94 881,948 15.2% Yes - Lender's option with fee Yes No 5,800,000
95 2,476,977 61.9% Yes Yes No 4,000,000
96 1,092,843 16.8% Yes - Lender's option with fee Yes No 6,500,000
97 2,176,859 53.1% Yes - Lender's option with fee Yes No 4,100,000
98 2,168,120 60.2% Yes - Lender's option with fee Yes No 3,600,000
99 2,413,824 60.3% Yes Yes No 4,000,000
100 2,086,677 56.4% Yes - Lender's option with fee Yes No 3,700,000
101 2,289,821 68.4% Yes - Lender's option with fee Yes No 3,350,000
102 2,309,843 60.8% YES YES NO 3,800,000
102.10 1,154,922 60.8% Yes Yes No 1,900,000
102.20 1,154,922 60.8% Yes Yes No 1,900,000
103 2,196,789 66.6% Yes - Lender's option fee silent Yes Silent 3,300,000
104 2,044,468 55.3% Yes - Lender's option with fee Yes No 3,700,000
105 2,339,267 48.7% Yes Yes No 4,800,000
106 1,809,703 47.6% Yes - Lender's option with fee Yes No 3,800,000
107 1,851,903 57.0% Yes - Lender's option with fee Yes No 3,250,000
108 1,955,825 60.9% Yes - Lender's option with fee Yes No 3,213,000
109 2,219,966 65.3% Yes Yes No 3,400,000
110 1,883,550 60.1% Yes - Lender's option with fee Yes No 3,135,000
111 2,140,469 63.9% Yes Yes No 3,350,000
112 2,016,591 65.1% Yes - Lender's option with fee Yes No 3,100,000
113 1,717,371 49.1% Yes - Lender's option with fee Yes No 3,500,000
114 1,992,833 64.3% Yes Yes No 3,100,000
115 632,294 19.8% Yes - Lender's option with fee Yes No 3,200,000
116 1,774,400 64.5% Yes - Lender's option with fee Yes No 2,750,000
117 1,725,463 59.5% Yes - Lender's option with fee Yes No 2,900,000
118 1,646,617 58.8% Yes - Lender's option with fee Yes No 2,800,000
119 1,942,553 64.8% Yes Yes No 3,000,000
120 1,897,936 67.8% Yes - Lender's option fee silent Silent Silent 2,800,000
121 1,247,777 40.3% Yes - Lender's option with fee Yes No 3,100,000
122 1,724,888 53.9% Yes Yes No 3,200,000
123 1,695,270 51.4% Yes Yes No 3,300,000
124 1,619,226 60.0% Yes - Lender's option with fee Yes No 2,700,000
125 1,760,661 66.4% Yes - Lender's option with fee Yes No 2,650,000
126 1,603,163 46.6% Yes - Lender's option with fee Yes No 3,440,000
127 1,565,241 59.5% Yes - Lender's option with fee Yes No 2,630,000
128 1,483,960 57.1% Yes - Lender's option with fee Yes No 2,600,000
129 1,588,476 51.0% Yes - Lender's option with fee Yes No 3,115,000
130 1,727,905 61.7% Yes - Lender's option with fee Yes No 2,800,000
131 1,572,985 57.2% Yes - Lender's option with fee Yes No 2,750,000
132 1,554,491 53.6% Yes - Lender's option with fee Yes No 2,900,000
133 1,311,198 50.4% Yes Yes No 2,600,000
134 1,516,265 46.4% Yes - Lender's option with fee Yes No 3,265,000
135 1,550,964 58.3% Yes - Lender's option with fee Yes No 2,660,000
136 1,571,433 60.4% Yes - Lender's option fee silent Yes Silent 2,600,000
137 1,456,756 49.4% Yes - Lender's option with fee Yes No 2,950,000
138 1,480,139 60.4% Yes - Lender's option with fee Yes No 2,450,000
139 1,548,212 67.3% Yes - Lender's option with no fee Yes Silent 2,300,000
140 1,578,988 65.8% Yes - Lender's option with fee Yes No 2,400,000
141 1,436,828 45.6% Yes - Lender's option with fee Yes No 3,150,000
142 1,239,484 51.7% Yes - Lender's option with fee Yes No 2,400,000
143 1,485,113 57.8% YES NO 2,580,000
143.10 994,270 55.2% No Yes No 1,800,000
143.20 490,843 62.9% Yes - Lender's option with fee Yes No 780,000
144 1,379,932 44.5% Yes - Lender's option with fee Yes No 3,100,000
145 1,350,834 45.0% Yes - Lender's option with fee Yes No 3,000,000
146 1,361,121 60.2% Yes - Lender's option with fee Yes No 2,260,000
147 1,358,805 55.5% Yes - Lender's option with fee Yes No 2,450,000
148 1,440,470 62.6% Yes - Lender's option with fee Yes No 2,300,000
149 - 0.0% Yes - Lender's option with fee Yes No 3,100,000
150 1,241,591 44.7% Yes - Lender's option fee silent Yes No 2,775,000
151 - 0.0% Yes - Lender's option with fee Yes No 2,140,000
152 1,331,028 55.9% Yes - Lender's option with fee Yes No 2,380,000
153 1,489,819 59.6% Yes Yes No 2,500,000
154 1,281,200 62.5% Yes - Lender's option with fee Yes No 2,050,000
155 1,448,188 59.5% Yes Yes No 2,435,000
156 1,207,404 60.4% Yes - Lender's option with fee Yes No 2,000,000
157 1,355,269 67.8% Yes Yes No 2,000,000
158 1,316,945 65.8% Yes Yes No 2,000,000
159 1,304,494 65.7% Yes - Lender's option with fee Yes No 1,985,000
160 - 0.0% Yes - Lender's option with fee Yes No 2,000,000
161 1,179,404 49.1% Yes - Lender's option with fee Yes No 2,400,000
162 1,168,738 47.7% Yes - Lender's option with fee Yes No 2,450,000
164 844,765 34.5% Yes - Lender's option with fee Yes No 2,450,000
165 1,149,164 60.5% Yes - Lender's option with fee Yes No 1,900,000
166 1,228,958 64.7% Yes - Lender's option with fee Yes No 1,900,000
167 1,243,531 66.9% Yes Yes No 1,860,000
168 795,150 41.0% Yes - Lender's option with fee Yes No 1,940,000
169 1,072,037 55.7% Yes - Lender's option with fee Yes No 1,925,000
170 1,083,422 54.4% Yes - Lender's option with fee Yes No 1,990,000
171 1,201,650 71.7% Yes Yes No 1,675,000
172 953,529 57.8% Yes - Lender's option with fee Yes No 1,650,000
173 1,096,786 57.7% Yes - Lender's option with fee Yes No 1,900,000
174 992,783 40.5% Yes - Lender's option with fee Yes No 2,450,000
175 1,037,805 65.3% Yes - Lender's option with fee Yes No 1,590,000
176 990,786 61.9% Yes - Lender's option with fee Yes No 1,600,000
177 880,163 40.0% Yes - Lender's option with fee Yes No 2,200,000
178 995,937 49.1% Yes - Lender's option with fee Yes No 2,030,000
179 905,904 50.3% Yes - Lender's option with fee Yes No 1,800,000
180 965,364 49.5% Yes - Lender's option with fee Yes No 1,950,000
181 1,006,036 54.1% Yes - Lender's option with fee Yes No 1,860,000
182 983,436 57.9% Yes - Lender's option with fee Yes No 1,700,000
183 1,022,612 60.7% Yes - Lender's option fee silent Silent No 1,685,000
184 961,972 60.1% Yes - Lender's option with fee Yes No 1,600,000
185 935,306 52.0% Yes - Lender's option with fee Yes No 1,800,000
186 943,311 59.0% Yes - Lender's option with fee Yes No 1,600,000
187 14,169 0.7% Yes - Lender's option with fee Yes No 2,100,000
188 905,839 63.4% Yes - Lender's option with fee Yes No 1,430,000
189 998,687 52.6% Yes Yes No 1,900,000
190 896,063 56.0% Yes - Lender's option with fee Yes No 1,600,000
191 945,651 68.5% Yes - Lender's option with fee Yes Silent 1,380,000
192 952,203 60.3% Yes - Lender's option with fee Yes No 1,580,000
193 873,122 56.0% Yes - Lender's option with fee Yes No 1,560,000
194 883,524 54.2% Yes - Lender's option with fee Yes No 1,630,000
195 918,161 61.2% Yes - Lender's option fee silent Yes Silent 1,500,000
196 953,936 65.8% Yes - Lender's option with fee Yes No 1,450,000
197 847,764 60.6% Yes - Lender's option with fee Yes No 1,400,000
198 925,348 69.1% Yes - Lender's option fee silent Silent Silent 1,340,000
199 923,848 73.3% Yes - Lender's option fee silent Silent Silent 1,260,000
200 808,385 59.9% Yes - Lender's option with fee Yes Yes 1,350,000
201 806,298 51.0% Yes - Lender's option with fee Yes No 1,580,000
202 800,085 49.4% Yes - Lender's option with fee Yes No 1,620,000
203 778,507 59.0% Yes - Lender's option with fee Yes No 1,320,000
204 772,986 36.8% Yes - Lender's option with fee Silent No 2,100,000
205 732,233 61.0% Yes - Lender's option with fee Yes No 1,200,000
206 819,905 48.9% YES YES NO 1,675,000
206.10 342,647 48.9% Yes Yes No 700,000
206.20 477,258 48.9% Yes Yes No 975,000
207 17,675 0.6% Yes - Lender's option with fee Yes No 3,100,000
208 521,268 41.7% Yes Yes No 1,250,000
209 665,647 61.1% Yes - Lender's option with fee Silent Silent 1,090,000
210 464,964 42.3% Yes Yes No 1,100,000
211 598,671 55.7% Yes - Lender's option with fee Yes No 1,075,000
212 513,849 38.8% Yes - Lender's option fee silent Silent Silent 1,325,000
213 555,871 61.8% Yes - Lender's option with fee Yes No 900,000
214 460,291 51.1% Yes - Lender's option with fee Yes No 900,000
215 552,852 67.0% Yes - Lender's option fee silent Silent Silent 825,000
216 541,662 57.6% Yes - Lender's option with no fee Silent Silent 940,000
217 421,781 43.3% Yes - Lender's option fee silent Silent Silent 975,000
218 505,100 63.5% Yes - Lender's option fee silent Yes Silent 795,000
219 487,559 72.2% YES - LENDER'S OPTION FEE SILENT YES SILENT 675,000
219.10 216,693 72.2% Yes - Lender's option fee silent Yes Silent 300,000
219.20 270,866 72.2% Yes - Lender's option fee silent Yes Silent 375,000
220 412,870 55.1% Yes - Lender's option fee silent Silent Silent 750,000
221 479,678 68.5% Yes - Lender's option fee silent Silent Silent 700,000
222 452,136 63.2% Yes - Lender's option fee silent Yes Silent 715,000
223 442,043 61.8% Yes - Lender's option fee silent Silent Silent 715,000
225 421,909 35.2% Yes - Lender's option fee silent Yes No 1,200,000
226 423,656 68.7% Yes - Lender's option fee silent Yes Silent 617,000
227 - 0.0% Yes - Lender's option with fee Yes No 720,000
228 371,717 62.0% Yes - Lender's option with fee Silent Silent 600,000
230 321,114 22.9% Yes - Lender's option fee silent Yes No 1,400,000
231 337,008 54.4% Yes - Lender's option fee silent Yes Silent 620,000
232 4,976 0.8% Yes - Lender's option fee silent Silent No 640,000
233 316,632 66.0% Yes - Lender's option fee silent Yes Silent 480,000
234 295,637 23.8% Yes - Lender's option fee silent Silent No 1,240,000
235 269,310 62.6% Yes - Lender's option fee silent Silent Silent 430,000
236 247,811 62.0% Yes - Lender's option with fee Silent No 400,000
237 251,778 53.0% Yes - Lender's option with fee Yes Silent 475,000
238 217,063 45.7% Yes - Lender's option fee silent Silent No 475,000
239 217,281 59.7% Yes - Lender's option with fee Silent Silent 364,000
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
APPRAISAL NET
CONTROL VALUE "AS CURRENT YEAR YEAR OWNERSHIP RENTABLE
NUMBER OF" DATE LTV RATIO BUILT RENOVATED INTEREST SF/UNITS
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 08/25/98 56.3% 1975 1997 Leasehold 656,761
2 03/24/98 77.2% 1990 Fee Simple 373,290
3 01/01/99 70.5% 1985 Fee Simple 254
4 08/28/98 74.3% 1980 Fee Simple 232,130
5 69.5% 398,786
5.10 03/18/98 73.7% 1980 Fee Simple 94,304
5.20 03/12/98 73.4% 1979-1980 Fee Simple 96,386
5.30 59.7% VARIOUS FEE SIMPLE 138,115
5.31 03/18/98 59.7% 1985 Fee Simple 70,965
5.32 03/18/98 59.7% 1981 Fee Simple 67,150
5.40 03/18/98 66.2% 1985 Fee Simple 69,981
6 02/03/98 71.6% 1986 Fee Simple 209,832
7 62.9% 448
7.10 12/12/97 64.8% 1980, 1985, 1991 Fee Simple 175
7.20 12/01/97 66.9% 1995 Fee Simple 100
7.30 12/12/97 59.9% 1981 1997 Fee Simple 98
7.40 12/12/97 46.7% 1955 & 1976 Fee Simple 75
8 05/01/98 63.5% 1960 1998 Fee Simple 308
9 01/06/99 72.6% VARIOUS VARIOUS 497,420
9.10 01/06/99 72.6% 1964 1993 Fee Simple 21,935
9.20 01/06/99 72.6% 1964 1993 Fee Simple 136,600
9.30 01/06/99 72.6% 1964 Fee Simple 17,265
9.40 01/06/99 72.6% 1968 1993 Fee Simple 66,254
9.50 01/06/99 72.6% 1974 Fee Simple 25,200
9.60 01/06/99 72.6% 1977 1994 Fee Simple 60,290
9.70 01/06/99 72.6% 1973 1992 Fee Simple 79,532
9.80 01/06/99 72.6% 1977 1993 Fee Simple 90,344
10 04/16/98 73.4% 1997 Leasehold 80,371
11 08/07/98 74.2% 1986 Fee Simple 265,312
12 09/01/97 73.1% 1997 Fee Simple 160,836
13 04/15/98 74.5% 1996 Fee Simple 324
14 07/01/98 73.8% 1998 Fee Simple 86,739
15 03/27/98 73.0% 1977/1981 Fee Simple 237,202
16 09/02/98 74.9% 1997/1998 Fee Simple 112,279
17 04/07/98 78.4% 1984 Fee Simple 320
18 08/05/98 71.6% 1978 Fee Simple 98,390
19 10/26/98 69.5% 1985 Fee Simple 110,255
20 68.2% 609
20.10 12/08/98 67.1% 1986 Fee Simple 133
20.20 12/08/98 72.4% 1986 Fee Simple 88
20.30 12/08/98 66.8% 1986 Fee Simple 66
20.40 12/07/98 75.1% 1984 Fee Simple 60
20.50 12/07/98 69.2% 1986 Fee Simple 80
20.60 12/09/98 68.6% 1985 Fee Simple 63
20.70 12/09/98 54.9% 1985 Fee Simple 64
20.80 12/09/98 67.0% 1984 Fee Simple 55
21 65.0% 279,728
21.10 10/23/98 63.2% 1987 - 1991 Fee Simple 164,012
21.20 10/23/98 74.8% 1993, 1995 Fee Simple 46,004
21.30 09/16/98 60.6% 1978 Fee Simple 69,712
22 08/04/98 72.7% 1965 1987 Fee Simple 189
23 07/16/98 79.3% 1996, 1994, 1997, 19 Fee Simple 262
24 06/17/98 69.2% 1986 1996/1997 Fee Simple 152
25 06/05/98 62.7% 1909 1998 Fee Simple 107
26 12/22/98 78.8% 1979 1995 Fee Simple 232
27 07/09/98 72.0% 1989 Fee Simple 41,661
28 09/08/98 78.7% 1973 1998 Fee Simple 144
29 05/22/98 74.6% 1997 Fee Simple 43,860
30 01/04/99 67.4% 1998 Leasehold 70,780
31 10/29/97 66.3% 1974 AND 1988 Leasehold 93,538
32 11/30/98 64.5% 1968 1998 Fee Simple 169,330
33 08/01/98 79.1% 1990 1997 Fee Simple 76,750
34 07/01/98 52.9% 1985 Fee Simple 206
35 07/24/98 63.4% 1904 1992 - 1993 Fee Simple 103
36 52.5% VARIOUS 52,273
36.10 11/12/98 52.5% 1977, 1981 Fee Simple 6,798
36.20 11/01/98 52.5% 1977 Fee Simple 7,724
36.30 11/01/98 52.5% 1990 Fee Simple 2,779
36.40 12/10/98 52.5% 1997 Fee Simple 6,500
36.50 01/04/99 52.5% 1997 Fee Simple 7,488
36.60 01/05/99 52.5% 1998 Fee Simple 7,488
36.70 12/16/98 52.5% 1979 Fee Simple 7,239
36.80 12/30/98 52.5% 1995 Fee Simple 6,257
37 12/08/98 71.8% 1985 245
37.10 12/08/98 74.0% 1985 Fee Simple 114
37.20 12/08/98 67.0% 1985 Fee Simple 72
37.30 12/09/98 72.5% 1985 Fee Simple 59
38 51.2% VARIOUS 43,060
38.10 11/30/98 51.2% 1976 Fee Simple 2,986
38.20 12/02/98 51.2% 1997 Fee Simple 8,825
38.30 11/20/98 51.2% 1994 Fee Simple 5,580
38.40 12/04/98 51.2% 1995 Fee Simple 1,850
38.50 11/30/98 51.2% 1995 Fee Simple 7,882
38.60 11/30/98 51.2% 1996 Fee Simple 2,860
38.70 12/04/98 51.2% 1996 Fee Simple 7,500
38.80 11/24/98 51.2% 1996 Fee Simple 5,577
39 04/07/98 43.0% 1875 1983 Fee Simple 117,780
40 09/11/98 74.4% 1988 Fee Simple 76,379
41 03/17/98 68.8% 1965 1986 Fee Simple 156,900
43 10/13/98 75.8% 1985 & 1987 Fee Simple 150
44 11/02/98 72.7% 1998 Fee Simple 23,895
45 11/10/98 74.6% 1988 1998 Fee Simple 66,000
46 06/25/98 76.4% 1968 1997 Leasehold 153
47 01/13/99 73.1% 1964 1991 Fee Simple 540,000
48 08/06/98 79.0% 1979 1997 Fee Simple 280
49 02/10/98 69.5% 1968, 1974, 1981 Fee Simple 208,000
50 06/16/98 78.6% 1983 1997-1998 Fee Simple 188
51 10/14/98 67.4% 1960, 1990 1975 Fee Simple 63,118
52 63.1% VARIOUS 135,182
52.10 03/27/98 63.1% 1988 Fee Simple 41,599
52.20 03/06/98 63.1% 1984 Fee Simple 93,583
53 09/15/98 78.6% 1988 Fee Simple 120
54 11/12/97 74.2% 1929 1995 Fee Simple 62
55 08/03/98 70.5% 1989 Fee Simple 41,329
56 08/01/98 78.3% 1998 Fee Simple 220,000
57 10/01/98 77.9% 1997 & 1998 Fee Simple 66,066
58 12/07/98 59.7% 1986 1996 Fee Simple 65,755
59 07/23/98 78.9% 1988 Fee Simple 52,218
60 04/14/98 74.9% 1998 Fee Simple 86
61 09/24/98 78.1% 1998 Fee Simple 82
62 08/18/98 67.0% 1986 Fee Simple 139,453
63 71.3% 228
63.10 12/08/98 73.4% 1983 Fee Simple 88
63.20 12/09/98 71.8% 1987 Fee Simple 76
63.30 12/08/98 67.3% 1983 Fee Simple 64
64 06/18/98 64.8% 1977 1991 Fee Simple 210,718
65 08/01/97 64.4% 1972 1996-97 Fee Simple 204
66 11/25/97 74.1% 1964-1966 On-going Fee Simple 330,889
67 09/02/98 70.8% 1973 Fee Simple 228
68 09/16/98 75.7% 170
68.10 09/16/98 79.7% 1984 Fee Simple 115
68.20 09/15/98 64.9% 1985 Fee Simple 55
69 09/11/98 71.2% 1985 Fee Simple 168
70 08/03/98 74.3% 1968/1973&1977 1994 Fee Simple 63,641
71 11/10/98 79.6% 1998 Fee Simple 66,167
72 07/10/98 73.6% 1978 1996 & 1997 Both Fee Simple and Leasehold 83,506
73 06/08/98 70.1% 1989 - 1994 Fee Simple 87
74 12/01/97 73.3% 1987 Fee Simple 69,950
75 02/03/98 77.5% 1970 1997 Fee Simple 256,400
76 09/09/98 64.6% 1973 - 1976 On-going Fee Simple 173
77 08/25/98 70.4% 1948 1988 Fee Simple 181
78 07/24/98 77.2% 1980 1997 Fee Simple 88
79 08/13/98 70.3% 1986 Fee Simple 56,329
80 71.8% VARIOUS VARIOUS 36
80.10 07/08/98 71.8% 1950 1992 Fee Simple 23
80.20 07/08/98 71.8% 1900 1997 Fee Simple 13
81 05/01/98 74.5% 1997 Fee Simple 47,566
82 10/01/98 59.6% 1988-1989 ON-GOING Fee Simple 98
83 11/24/97 74.1% 1964-1985 Fee Simple 226,560
85 09/10/98 78.4% 1973 1998 Fee Simple 121
86 05/05/98 74.6% 1987 Leasehold 23,141
87 04/17/98 74.3% 1996/1998 Fee Simple 112,000
88 06/11/98 69.7% 1972 Fee Simple 123,489
89 73.4% 316
89.10 08/24/98 70.7% 1973 Fee Simple 212
89.20 08/07/98 78.1% 1970 Fee Simple 104
90 70.4% VARIOUS VARIOUS 26
90.10 07/08/98 70.4% 1899 1987 Fee Simple 15
90.20 07/08/98 70.4% 1900 1992 Fee Simple 5
90.30 07/08/98 70.4% 1900 1990 Fee Simple 6
91 73.2% 1997 58,157
91.10 03/04/98 74.3% 1997 Fee Simple 28,765
91.20 09/16/98 72.0% 1997 Fee Simple 29,392
92 06/26/98 70.6% 1987 & 1996 Fee Simple 27,338
93 12/08/98 72.3% 1985 Fee Simple 136
94 04/27/98 50.7% 1994 Fee Simple 80
95 03/29/98 74.3% 1996 Fee Simple 105
96 06/04/98 45.0% 1990 1996 Fee Simple 120
97 04/02/98 66.5% 1984 Fee Simple 53,778
98 06/24/98 74.6% 1997 Fee Simple 38
99 09/08/98 67.4% 1969 1987-1989 Fee Simple 100
100 07/08/98 72.1% 1973, 1975 Fee Simple 137,030
101 10/29/98 78.9% 1969 1996 Fee Simple 100
102 68.8% VARIOUS VARIOUS 54
102.10 07/08/98 68.8% 1899 1993 Fee Simple 8
102.20 07/08/98 68.8% 1900 1984 Fee Simple 46
103 02/25/97 78.9% 1964/1973 Fee Simple 137,430
104 07/22/98 69.9% 1980 Fee Simple 40,782
105 06/25/98 54.1% mid 1800s 1991-1992 Fee Simple 24
106 11/01/98 65.6% 1973 Fee Simple 54,825
107 07/07/98 76.5% 1885 1997-1998 Fee Simple 40
108 08/15/98 77.2% 1982 1997 Fee Simple 66,068
109 01/13/99 73.1% 1985 Fee Simple 28,004
110 08/01/98 76.9% 1998 Fee Simple 23,500
111 08/20/98 71.5% 1971 1991 Fee Simple 78
112 06/09/98 75.4% 1969 1988 Fee Simple 66
113 10/15/98 65.4% 1982 1991 Fee Simple 23,610
114 07/07/98 73.4% 1998 Fee Simple 13,905
115 10/19/98 68.0% 1985 Fee Simple 52,442
116 01/06/98 79.2% 1968 THRU 1978 1997 Fee Simple 24,957
117 03/30/98 74.3% 1983 1998 Fee Simple 28,019
118 08/19/98 76.4% 1963 Fee Simple 44
119 08/03/98 71.5% 1969 1997 Fee Simple 101,794
120 11/01/98 74.4% 1963/1979/1984 1991 Fee Simple 54,733
121 02/01/98 66.8% 1997 Fee Simple 46,167
122 11/17/98 64.0% 1975 Fee Simple 161,956
123 01/01/99 61.3% 1860 1996 Fee Simple 15,600
124 04/24/98 73.4% 1987 Fee Simple 9,944
125 11/15/97 74.8% 1997 Fee Simple 101,500
126 11/19/98 57.4% 1980 & 1985 Fee Simple 85,198
127 01/06/98 74.0% 1988 Fee Simple 25,291
128 12/03/98 74.8% 1971-1974 1990 Fee Simple 29,739
129 12/23/98 62.5% 1985 Fee Simple 98
130 10/16/97 69.1% 1997 Fee Simple 30,474
131 05/04/98 70.3% 1973-74 Fee Simple 50,015
132 06/16/98 66.7% 1995/1996 Fee Simple 40,904
133 03/18/98 73.2% 1996 Fee Simple 50,000
134 03/30/98 57.8% 1958/1970 Fee Simple 63,531
135 06/12/98 71.1% 1967 Fee Simple 104
136 08/28/97 71.1% 1985 Fee Simple 25,185
137 09/01/98 62.3% 1981 1998 Fee Simple 32,400
138 07/29/98 74.7% 1980 1998 Fee Simple 40,646
139 07/28/97 78.7% 1973-1986 Fee Simple 116,874
140 05/04/98 74.6% 1956 & 1967 1993 Fee Simple 49
141 05/14/98 56.6% 1986 Fee Simple 39,506
142 09/17/97 74.3% 1969 1991 Fee Simple 49,112
143 10/08/97 68.0% 26,478
143.10 10/08/97 65.0% 1987 Fee Simple 17,360
143.20 10/08/97 74.1% 1988 Fee Simple 9,118
144 06/30/98 56.1% 1986 Fee Simple 24,383
145 10/02/98 58.0% 1983 Fee Simple 21,994
146 06/20/98 75.9% 1984 Fee Simple 26
147 11/02/98 69.3% 1997 AND 1998 Fee Simple 24
148 08/25/98 73.6% 1982 Fee Simple 80
149 08/01/98 54.3% 1989 1988 Fee Simple 20,434
150 02/07/97 60.1% 1980 Fee Simple 168,350
151 06/23/98 77.1% 1985 Fee Simple 105
152 09/21/98 69.6% 1967 & 1988 1995 Fee Simple 15,208
153 07/24/98 66.2% 1991 Fee Simple 27,113
154 09/16/98 79.7% 1981 1997 Fee Simple 72
155 11/05/98 65.6% 1988 Fee Simple 30,395
156 10/08/98 77.1% 1954/1968/1985/1993 Fee Simple 54
157 08/01/98 74.8% 1987 Fee Simple 73,221
158 08/27/98 74.7% 1984-1987 Fee Simple 50
159 10/08/97 74.8% A-1993/D-1997 Fee Simple 13,691
160 06/04/98 73.0% 1966 1996 Fee Simple 67,428
161 10/29/98 60.6% 1986/1987/1988 Fee Simple 20,570
162 04/08/98 58.7% 1966 1993 Fee Simple 51,949
164 11/15/98 58.1% 1983 1995 Fee Simple 102
165 10/06/98 74.5% 1968, 1973 1983 Fee Simple 55
166 02/18/98 73.5% 1998 Fee Simple 14,926
167 09/25/98 75.1% 1963 Fee Simple 67
168 08/20/98 71.5% 1977 Fee Simple 55
169 01/07/98 69.2% 1980, 1986 1995-1997 Fee Simple 46
170 12/14/98 66.7% 1982 Fee Simple 67
171 05/05/98 79.2% 1966 Fee Simple 82
172 08/15/98 79.6% 1955 & 1988 1988 Fee Simple 72
173 09/15/98 68.2% 1979 Fee Simple 38
174 09/08/98 52.1% 1989 Fee Simple 55
175 12/14/98 79.9% 1982 Fee Simple 59
176 07/24/98 78.5% 1965 1990 Fee Simple 72
177 10/05/98 56.5% 1986 Fee Simple 40
178 05/05/98 60.9% 1985 Fee Simple 20,970
179 04/20/98 68.7% 1992 Fee Simple 30,845
180 07/16/98 63.2% 1983 1996 Fee Simple 23,894
181 12/14/98 66.2% 1983 Fee Simple 70
182 07/09/98 71.4% 1984 1997 Fee Simple 34,034
183 06/16/97 72.0% 1979, 1933, 1886 Fee Simple 86,559
184 05/04/98 74.6% 1961 1997 Fee Simple 16,908
185 09/01/98 66.2% 1975 1992 Fee Simple 17,600
186 12/14/98 72.2% 1984 Fee Simple 56
187 07/29/98 54.0% 1985 Fee Simple 7,725
188 12/10/98 77.6% 1985 Fee Simple 68
189 06/25/98 58.3% 1898 1998 Fee Simple 9
190 12/08/98 68.6% 1986 Fee Simple 57
191 12/02/97 79.3% 1967 Fee Simple 66
192 04/20/98 69.1% 1995 Fee Simple 8,777
193 05/14/98 69.8% 1997 Fee Simple 20,382
194 12/22/97 66.8% 1980 1996 Fee Simple 27,200
195 10/09/97 72.4% 1969 1997 Fee Simple 26,300
196 04/07/97 73.1% 1965 On-going Fee Simple 44
197 04/06/98 74.3% 1996 Fee Simple 9,400
198 02/25/98 76.4% 1985 Fee Simple 42
199 05/01/97 79.2% 1968 Fee Simple 60
200 04/01/98 73.4% 1984 1994 Fee Simple 13,500
201 12/22/97 62.6% 1987 Fee Simple 31,398
202 01/05/98 61.1% 1972 Fee Simple 30
203 12/30/97 72.7% 1972 Fee Simple 32
204 09/01/98 45.0% 1974, 1995 Fee Simple 69,400
205 10/06/98 77.9% 1992 Fee Simple 24
206 55.4% VARIOUS VARIOUS 21
206.10 07/08/98 55.4% 1900 1991 Fee Simple 5
206.20 07/08/98 55.4% 1960 1984 Fee Simple 16
207 01/30/98 28.6% 1986 Fee Simple 51,793
208 07/24/98 68.5% 1960 Fee Simple 14,791
209 12/31/97 72.6% 1902 1987, 1990 Fee Simple 17
210 07/23/98 69.4% 1960 Fee Simple 13,205
211 01/07/98 69.2% 1993-1995 Fee Simple 24
212 08/29/97 52.8% 1987 Fee Simple 7,074
213 10/01/98 74.7% 1983 Fee Simple 18,824
214 03/27/98 73.9% 1996 Fee Simple 3,455
215 05/19/97 73.2% 1974 Fee Simple 8,653
216 05/01/97 62.3% 1968 Fee Simple 108
217 08/09/97 59.6% 1952 1996 Fee Simple 13,436
218 02/03/97 72.9% 1967 1996 Fee Simple 35
219 84.8% VARIOUS 8
219.10 05/08/97 84.8% 1930 Fee Simple 4
219.20 05/08/97 84.8% 1900 Fee Simple 4
220 01/26/98 73.9% 1970 - 1993 Fee Simple 26,960
221 12/02/97 79.3% 1963 Fee Simple 30
222 06/18/97 75.3% 1960 Fee Simple 77
223 04/30/98 74.3% 1863 1966 Fee Simple 21
225 11/25/97 41.2% 1969 1994 Fee Simple 28,770
226 05/01/97 79.7% 1986 Fee Simple 3,243
227 07/10/98 62.9% 1964 Fee Simple 15,820
228 05/06/98 74.4% 1972 1997 Fee Simple 36
230 07/24/97 31.4% 1957 1987 Fee Simple 26,880
231 10/22/97 64.4% 1969 1985 Fee Simple 38
232 03/04/98 58.7% 1965 & 1972 Fee Simple 20,000
233 09/26/97 78.0% 1957 Fee Simple 20
234 04/24/98 28.6% 1973 Fee Simple 36
235 04/01/98 75.0% 1980 Fee Simple 8,490
236 05/06/98 74.4% 1964 1996 Fee Simple 20
237 01/15/98 62.5% 1932 1991 Fee Simple 6,350
238 01/20/98 54.2% 1910 1989 Fee Simple 4,910
239 04/06/98 70.2% 1910 1990 Fee Simple 9,000
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
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LARGEST
TENANT SF
CONTROL LARGEST AS A % PHYSICAL OCCUPANCY ORIGINAL
NUMBER LARGEST TENANT NAME TENANT SF OF TOTAL OCCUPANCY % AS OF DATE LTV RATIO
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 Amer. Soc. of Mechanical Eng. 88,000 13.4% 98.7% 01/01/99 56.3%
2 J. Byrons, Inc dba/Uptons 52,013 13.9% 96.4% 12/07/98 77.8%
3 NAP NAP NAP 76.6% 07/31/98 70.6%
4 Bank of America 46,799 20.2% 90.0% 01/27/99 74.6%
5 96.6% 70.4%
5.10 Northern Telcom 94,304 100.0% 100.0% 10/25/98 74.6%
5.20 Centura Health Corporation 33,300 34.6% 100.0% 11/01/98 74.3%
5.30 VARIOUS NAP NAP 60.4%
5.31 KLA-Tencor Corp. 15,833 22.3% 85.0% 09/30/98 60.4%
5.32 Reeve Dental Supply 17,694 26.4% 100.0% 09/30/98 60.4%
5.40 Intellicall 31,985 45.7% 92.1% 11/03/98 67.0%
6 Preti Flaherety 38,124 18.2% 99.8% 09/30/98 72.1%
7 NAP NAP NAP 90.0% 63.2%
7.10 NAP NAP NAP 88.6% 09/30/98 65.2%
7.20 NAP NAP NAP 94.0% 08/25/98 67.3%
7.30 NAP NAP NAP 91.8% 08/25/98 60.2%
7.40 NAP NAP NAP 77.3% 06/05/98 47.0%
8 NAP NAP NAP 68.6% 01/31/99 63.9%
9 VARIOUS NAP NAP 100.0% 12/01/98 73.2%
9.10 Boston Coach 21,935 100.0% 100.0% 12/01/98 73.2%
9.20 Echlin Manufacturing 136,600 100.0% 100.0% 12/01/98 73.2%
9.30 21st Century Cable 17,265 100.0% 100.0% 12/01/98 73.2%
9.40 Spraying Systems Company 66,254 100.0% 100.0% 12/01/98 73.2%
9.50 Data Instruments 9,450 37.5% 100.0% 12/01/98 73.2%
9.60 Semblex Corporation 60,290 100.0% 100.0% 12/01/98 73.2%
9.70 Dynamic Manufacturing 42,907 53.9% 100.0% 12/01/98 73.2%
9.80 Dynamic Manufacturing 64,299 71.2% 100.0% 12/01/98 73.2%
10 SFH - Renal 15,618 19.4% 92.7% 12/22/98 73.4%
11 Wal-Mart 104,442 39.4% 98.8% 12/31/98 74.7%
12 Haggen's, Inc. 60,075 37.4% 97.0% 09/30/98 75.5%
13 NAP NAP NAP 87.4% 11/30/98 75.0%
14 Federal Bureau of Investigatio 86,739 100.0% 100.0% 04/13/98 74.1%
15 Ryland Group - Metro III 17,425 7.4% 92.0% 12/01/98 73.5%
16 Telecommunications of Nevada 31,339 27.9% 91.6% 12/01/98 75.0%
17 NAP NAP NAP 92.5% 11/20/98 78.8%
18 Vons 30,802 31.3% 98.4% 12/01/98 71.7%
19 Circuit City 34,721 31.5% 98.0% 12/31/98 69.7%
20 NAP NAP NAP 94.2% 68.4%
20.10 NAP NAP NAP 97.7% 11/30/98 67.2%
20.20 NAP NAP NAP 98.0% 11/25/98 72.6%
20.30 NAP NAP NAP 97.0% 11/25/98 66.9%
20.40 NAP NAP NAP 88.0% 11/25/98 75.3%
20.50 NAP NAP NAP 96.2% 11/23/98 69.4%
20.60 NAP NAP NAP 87.3% 11/25/98 68.8%
20.70 NAP NAP NAP 89.1% 11/25/98 55.0%
20.80 NAP NAP NAP 90.9% 11/25/98 67.1%
21 88.5% 65.1%
21.10 Williamsville Central Schools 23,607 14.4% 91.2% 11/30/98 63.3%
21.20 DHL Airways 7,485 16.3% 96.2% 12/18/98 75.0%
21.30 Scholastic Book Fairs 16,634 23.9% 70.0% 11/30/98 60.7%
22 NAP NAP NAP 91.0% 11/30/98 73.0%
23 NAP NAP NAP 100.0% 07/15/98 79.9%
24 NAP NAP NAP 74.0% 12/31/98 69.7%
25 NAP NAP NAP 98.2% 06/02/98 63.1%
26 NAP NAP NAP 96.1% 12/28/98 78.8%
27 Union Camp Corporation 25,207 60.5% 100.0% 12/16/98 72.4%
28 NAP NAP NAP 99.3% 11/30/98 79.1%
29 Wild Harvest 31,285 71.3% 96.9% 12/01/98 75.0%
30 Ross Department Store 28,480 40.2% 100.0% 02/01/99 67.9%
31 Med Partners 21,032 22.5% 93.0% 02/16/99 66.7%
32 Service Merchandise 53,243 31.4% 96.0% 12/03/98 64.6%
33 Uptons 76,750 100.0% 100.0% 08/10/98 79.8%
34 NAP NAP NAP 62.1% 11/30/98 53.3%
35 NAP NAP NAP 64.5% 12/21/98 64.0%
36 VARIOUS NAP NAP 52.5%
36.10 Bennigan's 6,798 100.0% 100.0% 11/01/98 52.5%
36.20 Steak & Ale 7,724 100.0% 100.0% 11/01/98 52.5%
36.30 Arby's 2,779 100.0% 100.0% 11/01/98 52.5%
36.40 Blockbuster Video 6,500 100.0% 100.0% 11/01/98 52.5%
36.50 Hollywood Video 7,488 100.0% 100.0% 11/01/98 52.5%
36.60 Hollywood Video 7,488 100.0% 100.0% 11/01/98 52.5%
36.70 Steak and Ale 7,239 100.0% 100.0% 11/01/98 52.5%
36.80 Carino's Italian Kitchen 6,257 100.0% 100.0% 11/01/98 52.5%
37 NAP NAP NAP 97.1% 71.9%
37.10 NAP NAP NAP 97.4% 11/25/98 74.2%
37.20 NAP NAP NAP 95.8% 11/25/98 67.2%
37.30 NAP NAP NAP 98.0% 11/23/98 72.7%
38 VARIOUS NAP NAP 51.2%
38.10 Denny's 2,986 100.0% 100.0% 11/01/98 51.2%
38.20 Golden Corral 8,825 100.0% 100.0% 11/01/98 51.2%
38.30 Applebee's 5,580 100.0% 100.0% 11/01/98 51.2%
38.40 Church's Chicken 1,850 100.0% 100.0% 11/01/98 51.2%
38.50 Red Robin Grill 7,882 100.0% 100.0% 11/01/98 51.2%
38.60 Jack-in-the-Box 2,860 100.0% 100.0% 11/01/98 51.2%
38.70 Hollywood Video 7,500 100.0% 100.0% 11/01/98 51.2%
38.80 Black-Eyed Pea 5,577 100.0% 100.0% 11/01/98 51.2%
39 Dataware 18,571 15.8% 100.0% 06/26/98 43.2%
40 Coram Healthcare 23,643 31.0% 100.0% 12/15/98 75.0%
41 Pittsford Furniture Store 48,000 30.6% 97.3% 12/18/98 72.0%
43 NAP NAP NAP 100.0% 10/01/98 76.1%
44 Walgreen's 15,120 63.3% 100.0% 10/02/98 72.9%
45 Bayer Corporation 66,000 100.0% 100.0% 12/01/98 74.7%
46 NAP NAP NAP 90.9% 09/30/98 76.9%
47 Tumi Luggage 420,000 77.8% 100.0% 12/03/98 73.4%
48 NAP NAP NAP 94.3% 09/25/98 79.4%
49 Branson Ultrasonics 188,000 90.4% 100.0% 02/10/98 70.0%
50 NAP NAP NAP 95.7% 06/02/98 79.1%
51 Memorial Health Systems 16,200 25.7% 100.0% 11/03/98 67.8%
52 VARIOUS NAP NAP 63.9%
52.10 Sharn, Inc. 6,535 15.7% 84.9% 11/02/98 63.9%
52.20 Mediq/PRN Life Support Service 7,500 8.0% 90.8% 10/30/98 63.9%
53 NAP NAP NAP 100.0% 12/01/98 78.7%
54 NAP NAP NAP 100.0% 11/30/98 75.0%
55 County of San Diego 13,226 32.0% 100.0% 12/01/98 67.7%
56 Thomson Consumer Electronics 220,000 100.0% 100.0% 09/01/98 78.7%
57 Cutler-Hammer, Inc. 16,670 25.2% 100.0% 11/30/98 78.2%
58 Cymer, Inc. 65,755 100.0% 100.0% 12/15/98 59.8%
59 Ye Old Sprit Shop 6,571 12.6% 99.2% 12/31/98 79.3%
60 NAP NAP NAP 96.5% 11/30/98 75.4%
61 NAP NAP NAP 98.8% 10/30/98 78.4%
62 RX Place / Pharmhouse 25,620 18.4% 95.6% 12/02/98 67.2%
63 NAP NAP NAP 96.4% 71.5%
63.10 NAP NAP NAP 96.0% 11/25/98 73.6%
63.20 NAP NAP NAP 100.0% 11/23/98 71.9%
63.30 NAP NAP NAP 92.0% 11/30/98 67.5%
64 K-Mart 91,657 43.5% 100.0% 11/30/98 65.6%
65 NAP NAP NAP 98.0% 10/25/98 65.0%
66 Hamilton Fixture/Plasti-Line 330,889 100.0% 100.0% 09/25/97 75.0%
67 NAP NAP NAP 88.0% 11/30/98 71.1%
68 NAP NAP NAP 94.7% 76.0%
68.10 NAP NAP NAP 94.8% 11/23/98 80.0%
68.20 NAP NAP NAP 94.6% 11/20/98 65.1%
69 NAP NAP NAP 98.8% 11/19/98 71.4%
70 Unifiber Corporation 63,641 100.0% 100.0% 11/16/98 74.8%
71 Hobby-Lobby 50,192 75.9% 100.0% 12/02/98 79.8%
72 District Attorney 16,803 20.1% 89.0% 11/30/98 74.1%
73 NAP NAP NAP 90.8% 06/23/98 70.8%
74 Leather Plus, Inc. 5,550 7.9% 89.1% 01/13/99 74.4%
75 Gaylord Container Corporation 256,400 100.0% 100.0% 03/13/98 78.3%
76 NAP NAP NAP 98.3% 10/22/98 65.0%
77 NAP NAP NAP 99.0% 02/28/98 70.6%
78 NAP NAP NAP 96.6% 11/19/98 77.6%
79 Kaiser Permanante 30,589 54.3% 92.0% 12/08/98 70.4%
80 NAP NAP NAP 71.9%
80.10 NAP NAP NAP 100.0% 09/30/98 71.9%
80.20 NAP NAP NAP 100.0% 09/30/98 71.9%
81 Carpet Barn 8,640 18.2% 92.3% 12/01/98 74.9%
82 NAP NAP NAP 66.7% 10/01/98 59.9%
83 Hamilton Fixture Company 226,560 100.0% 100.0% 02/01/98 75.0%
85 NAP NAP NAP 99.0% 12/01/98 78.6%
86 CC Furnitures Inc. 11,441 49.4% 100.0% 03/01/98 75.0%
87 Carson, Inc. 112,000 100.0% 100.0% 09/15/98 74.6%
88 Valu Home Center 40,374 32.7% 97.8% 12/21/98 70.1%
89 NAP NAP NAP 75.7% 74.4%
89.10 NAP NAP NAP 72.2% 11/18/98 71.4%
89.20 NAP NAP NAP 81.7% 11/19/98 79.5%
90 NAP NAP 70.5%
90.10 NAP NAP NAP 100.0% 09/30/98 70.5%
90.20 NAP NAP NAP 100.0% 09/30/98 70.5%
90.30 NAP NAP NAP 100.0% 09/30/98 70.5%
91 VARIOUS 94.34% 73.7%
91.10 Smart Technology 4,209 14.6% 89.0% 12/01/98 74.9%
91.20 Digital Pro Graphics 4,850 16.5% 100.0% 12/21/98 72.3%
92 Blockbuster Video 6,300 23.0% 100.0% 09/30/98 70.9%
93 NAP NAP NAP 95.6% 12/22/98 72.5%
94 NAP NAP NAP 77.8% 05/20/98 51.7%
95 NAP NAP NAP 81.8% 10/31/98 75.0%
96 NAP NAP NAP 90.6% 06/30/98 45.4%
97 Progressive Insurance 3,430 6.4% 81.0% 06/11/98 67.1%
98 NAP NAP NAP 100.0% 10/21/98 75.0%
99 NAP NAP NAP 96.0% 11/30/98 67.5%
100 Kaufmann Tire Service of GA 41,600 30.4% 100.0% 11/18/98 72.6%
101 NAP NAP NAP 96.0% 11/12/98 79.1%
102 NAP NAP 68.9%
102.10 NAP NAP NAP 100.0% 11/30/98 68.9%
102.20 NAP NAP NAP 100.0% 11/30/98 68.9%
103 Kendale Industries, Inc. 137,430 100.0% 100.0% 11/23/98 80.0%
104 Cienne Management Services 11,000 27.0% 100.0% 12/15/98 70.3%
105 NAP NAP NAP 87.5% 11/30/98 54.2%
106 Buffalo Athletic Club 15,187 27.7% 100.0% 10/31/98 65.8%
107 Gregg & Associates 3,240 7.2% 96.1% 12/01/98 76.9%
108 Kryton/Pro Craft #2 10,124 15.3% 90.0% 10/31/98 77.7%
109 Bankers First 7,645 27.3% 100.0% 12/01/98 73.5%
110 OfficeMax, Inc. 23,500 100.0% 100.0% 06/01/98 77.2%
111 NAP NAP NAP 94.0% 12/09/98 71.6%
112 NAP NAP NAP 100.0% 11/20/98 75.8%
113 World Liquor 9,200 39.0% 100.0% 11/01/98 65.7%
114 Walgreens 13,905 100.0% 100.0% 07/06/98 73.7%
115 Med-X-Drug 8,775 16.7% 100.0% 11/30/98 68.6%
116 Ironwood Grill 3,859 15.5% 98.1% 09/30/98 80.0%
117 Dylphon Meats 3,600 12.9% 100.0% 11/30/98 75.0%
118 NAP NAP NAP 100.0% 12/01/98 76.8%
119 RX Place / Pharmhouse 38,365 37.7% 100.0% 12/06/98 71.7%
120 Realty One, Inc. 6,840 12.5% 81.0% 11/23/98 75.0%
121 Diversified Technology Group 46,167 100.0% 100.0% 02/01/98 67.7%
122 Lightners Discount Foods 59,142 36.5% 91.5% 10/22/98 64.1%
123 This End Up 5,600 35.9% 100.0% 12/15/98 62.4%
124 Key Bank 9,944 100.0% 100.0% 06/12/98 74.1%
125 Crown Cork & Seal 70,000 69.0% 100.0% 01/01/99 75.5%
126 Exide Corporation 3,928 4.6% 94.0% 11/03/98 57.6%
127 Egghead Software #244 5,517 21.8% 87.7% 10/28/98 75.0%
128 Veteran's Administration 7,000 23.5% 100.0% 12/29/98 75.0%
129 NAP NAP NAP 98.0% 11/25/98 62.6%
130 Victory Christian Center 20,200 66.3% 100.0% 11/30/98 69.6%
131 CTV Media 7,843 15.7% 86.2% 11/30/98 70.9%
132 The Savannah Grill 11,000 26.9% 100.0% 03/20/98 67.2%
133 MC Assembly & Test 50,000 100.0% 100.0% 04/01/98 74.0%
134 Ohio Bureau of Employment Srvs 18,870 29.7% 84.6% 07/28/98 58.2%
135 NAP NAP NAP 94.2% 09/30/98 71.4%
136 Simmons Beautyrest 4,028 16.0% 100.0% 07/31/97 72.1%
137 Sacramento Regional Medical 3,504 10.8% 92.8% 09/01/98 62.7%
138 Castle Antiques 5,240 12.9% 94.0% 10/27/98 75.1%
139 Hamilton Fixture Co., Inc. 116,874 100.0% 100.0% 06/25/97 80.0%
140 NAP NAP NAP 91.8% 06/12/98 75.0%
141 B.M.A. 10,035 25.4% 94.7% 11/01/98 57.1%
142 S.M. Flickinger Co., Inc. 49,112 100.0% 100.0% 01/01/99 75.0%
143 96.2% 68.9%
143.10 Assoc. in Clinical Practice 4,150 23.9% 94.3% 10/13/98 65.8%
143.20 Castle Mortgage Inc. 3,142 34.5% 100.0% 07/29/98 75.0%
144 Quick Chek 4,000 16.4% 91.0% 10/28/98 56.5%
145 Pricewaterhouse - Coopers & 7,500 34.1% 100.0% 01/25/99 58.3%
146 NAP NAP NAP 92.3% 11/30/98 76.6%
147 NAP NAP NAP 100.0% 12/08/98 69.4%
148 NAP NAP NAP 87.5% 11/16/98 73.9%
149 Rennaissance Health Center 1,785 8.7% 84.0% 11/22/98 54.8%
150 Sunrise Publications 109,428 65.0% 100.0% 11/18/98 62.2%
151 NAP NAP NAP 100.0% 12/07/98 78.3%
152 Denny's 8,328 54.8% 100.0% 11/30/98 69.8%
153 The Big Party 8,420 31.1% 78.4% 05/01/98 66.4%
154 NAP NAP NAP 95.9% 11/01/98 80.0%
155 Gluckshaw Group 8,690 28.6% 100.0% 10/15/98 65.7%
156 NAP NAP NAP 98.0% 11/30/98 77.5%
157 David's Supermarket 25,300 34.6% 91.0% 12/04/98 75.0%
158 NAP NAP NAP 94.0% 11/30/98 75.0%
159 San Joaquin Valley Insurance 6,083 44.4% 100.0% 12/16/98 75.6%
160 Modernistic Die Cutting, Inc. 67,428 100.0% 100.0% 06/04/98 73.8%
161 GAS Laundry Enterprises, LLC 3,000 14.6% 93.0% 12/07/98 60.7%
162 P.J. Bordner & Company, Inc. 31,449 60.5% 100.0% 05/05/98 59.2%
164 NAP NAP NAP 78.0% 11/30/98 58.2%
165 NAP NAP NAP 94.6% 09/30/98 74.7%
166 John Richards Development Corp 14,926 100.0% 100.0% 10/20/98 73.7%
167 NAP NAP NAP 97.0% 10/07/98 75.3%
168 NAP NAP NAP 95.0% 11/12/98 72.2%
169 NAP NAP NAP 100.0% 12/22/98 70.0%
170 NAP NAP NAP 91.0% 11/25/98 66.8%
171 NAP NAP NAP 98.0% 12/01/98 79.4%
172 NAP NAP NAP 100.0% 10/01/98 80.0%
173 NAP NAP NAP 97.4% 11/01/98 68.4%
174 NAP NAP NAP 84.2% 11/03/98 52.5%
175 NAP NAP NAP 96.6% 12/09/98 80.1%
176 NAP NAP NAP 93.1% 11/30/98 79.1%
177 NAP NAP NAP 100.0% 11/30/98 56.8%
178 Century 21 Select 4,675 22.3% 93.2% 10/29/98 61.6%
179 Wine of Japan Imports, Inc. 30,845 100.0% 100.0% 12/07/98 69.2%
180 WorldCom (BizTel) 6,121 25.6% 96.0% 11/01/98 63.6%
181 NAP NAP NAP 96.0% 12/14/98 66.4%
182 Tri Us 13,700 40.3% 100.0% 09/15/98 71.8%
183 The Bissman Company 86,559 100.0% 100.0% 02/01/98 72.7%
184 Smith, Barta and Company 4,214 24.9% 100.0% 01/26/99 75.0%
185 Curtis Lee Row 2,640 15.0% 100.0% 10/30/98 66.7%
186 NAP NAP NAP 100.0% 11/23/98 72.4%
187 U.S. Bancorp, Inc. 7,725 100.0% 100.0% 06/10/98 54.8%
188 NAP NAP NAP 97.0% 11/23/98 77.8%
189 NAP NAP NAP 100.0% 03/01/98 58.4%
190 NAP NAP NAP 91.2% 11/25/98 68.8%
191 NAP NAP NAP 90.9% 12/22/98 80.0%
192 Wholey Bagels 1,944 22.2% 100.0% 11/30/98 69.6%
193 Legasys International, Inc. 9,540 46.8% 100.0% 11/30/98 70.5%
194 Technigraphic Systems, Inc. 8,200 30.2% 100.0% 11/30/98 67.5%
195 PSH Corp. Div. John Herbert C. 20,900 79.5% 100.0% 08/25/97 73.3%
196 NAP NAP NAP 93.2% 09/30/98 74.1%
197 Blockbuster Video 6,600 70.2% 100.0% 05/07/98 75.0%
198 NAP NAP NAP 100.0% 11/01/98 76.9%
199 NAP NAP NAP 91.7% 12/01/98 80.0%
200 Pearle Vision, Inc. 8,550 63.3% 100.0% 03/24/98 74.1%
201 N & C Catering 12,000 38.2% 100.0% 11/30/98 63.3%
202 NAP NAP NAP 100.0% 01/20/99 61.7%
203 NAP NAP NAP 97.0% 01/20/98 73.5%
204 Wagner Hardware - Owner Occ. 69,400 100.0% 100.0% 08/01/98 45.2%
205 NAP NAP NAP 100.0% 11/28/98 78.3%
206 NAP NAP 100.0% 09/30/98 55.5%
206.10 NAP NAP NAP 100.0% 09/30/98 55.5%
206.20 NAP NAP NAP 100.0% 09/30/98 55.5%
207 Xenon Beauty School 6,900 13.3% 84.0% 08/31/98 29.0%
208 Eckerds 14,791 100.0% 100.0% 09/30/98 68.9%
209 Carvel 1,008 7.0% 100.0% 12/31/97 73.4%
210 Eckerds 13,205 100.0% 100.0% 12/31/98 69.8%
211 NAP NAP NAP 95.8% 12/22/98 70.0%
212 Childrens World Learning Ctrs. 7,074 100.0% 100.0% 09/30/97 54.0%
213 NAP NAP NAP 97.0% 09/30/98 75.0%
214 Idaho Roaster, Inc. 3,455 100.0% 100.0% 05/06/98 75.0%
215 Movie Gallery, Inc. 3,175 36.7% 100.0% 11/23/98 73.9%
216 NAP NAP NAP 84.3% 12/01/98 62.9%
217 Jack N Jill Child Care Center 3,582 26.7% 94.4% 06/30/98 61.5%
218 NAP NAP NAP 97.0% 02/06/97 74.2%
219 NAP NAP 85.9%
219.10 NAP NAP NAP 100.0% 07/31/97 85.9%
219.20 NAP NAP NAP 100.0% 05/31/98 85.9%
220 Vesten Corp./Ripley Machine Co 26,960 100.0% 100.0% 03/02/98 75.0%
221 NAP NAP NAP 100.0% 03/01/98 80.0%
222 NAP NAP NAP 89.6% 12/31/97 76.2%
223 NAP NAP NAP 100.0% 05/06/98 75.0%
225 Ultimate Gym 5,870 20.4% 85.0% 12/20/97 41.7%
226 Key Bank of Northern NY, NA 3,243 100.0% 100.0% 06/16/97 81.0%
227 G.I. Trucking Company 15,820 100.0% 100.0% 08/19/98 63.9%
228 NAP NAP NAP 100.0% 06/05/98 75.0%
230 Willcare 3,730 13.9% 96.6% 11/23/98 32.1%
231 NAP NAP NAP 100.0% 12/06/97 65.3%
232 Jim Waters Corp. 20,000 100.0% 100.0% 02/06/98 62.5%
233 NAP NAP NAP 95.0% 03/01/98 79.2%
234 NAP NAP NAP 100.0% 12/01/98 28.9%
235 Kantonofamherst 2,350 27.7% 100.0% 09/30/98 75.6%
236 NAP NAP NAP 100.0% 03/12/98 75.0%
237 Jong Duk Yee 6,350 100.0% 100.0% 01/22/98 63.2%
238 Baker Group 2,000 40.7% 100.0% 10/01/97 54.7%
239 Children's Discovery Center 9,000 100.0% 100.0% 05/01/98 70.7%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
ANNUAL
UNDERWRITTEN
CONTROL UNDERWRITTEN NET REPLACEMENT
NUMBER 1996 NOI 1997 NOI 1998 NOI UNDERWRITTEN NOI CASH FLOW RESERVES
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 $ 3,979,276 $ 4,832,594 $ 9,722,568 $ 9,668,022 $ 8,665,996 $ 164,064
2 2,739,894 3,632,009 3,001,372 3,866,272 3,674,375 93,323
3 3,699,790 3,807,397 4,050,866 3,813,944 3,336,812 477,133
4 2,399,562 2,546,715 2,472,220 2,598,912 2,195,513 58,495
5 2,345,315 2,057,131 3,156,666 2,800,784 2,233,734 107,729
5.10 716,114 639,404 989,710 970,511 797,546 23,576
5.20 746,165 679,385 823,766 725,152 598,736 18,313
5.30 499,006 549,308 754,820 609,343 460,285
5.31 329,202 354,074 481,951 410,772 322,852 17,563
5.32 169,804 195,234 272,869 198,571 137,433 13,430
5.40 384,030 189,034 588,370 495,778 377,167 34,847
6 2,520,206 2,102,043 1,974,055 2,401,635 2,150,398 41,967
7 1,408,517 2,385,857 4,177,869 2,319,911 2,185,511 134,400
7.10 902,229 1,036,416 2,057,061 1,028,477 975,977 52,500
7.20 132,807 934,190 1,422,256 832,959 802,959 30,000
7.30 203,198 222,548 487,759 329,857 300,457 29,400
7.40 170,283 192,703 210,793 128,618 106,118 22,500
8 2,589,023 2,685,888 3,015,005 2,904,325 2,557,869 346,456
9 1,875,754 2,018,319 2,112,082 1,944,283 1,718,776 69,541
9.10 20,606 70,228 89,275 87,831 79,956 2,194
9.20 536,398 554,789 502,356 507,063 442,835 20,490
9.30 - 64,609 191,489 75,057 64,716 2,590
9.40 240,999 255,163 265,135 247,813 216,767 9,938
9.50 153,096 135,345 131,534 144,356 126,110 3,780
9.60 248,548 255,085 261,973 246,736 222,059 9,044
9.70 340,130 333,058 327,735 299,475 272,692 7,953
9.80 335,977 350,042 342,585 335,952 293,642 13,552
10 - 211,091 1,229,164 1,639,454 1,589,127 20,093
11 - 1,586,133 2,283,118 1,798,621 1,678,371 40,691
12 - 1,139,937 1,579,345 2,173,959 2,124,381 16,084
13 - 1,111,748 1,300,501 1,344,964 1,280,164 64,800
14 - - - 1,517,253 1,517,253 -
15 1,015,858 1,190,081 1,655,671 1,596,124 1,294,396 59,193
16 - 301,748 519,197 1,395,911 1,296,912 16,842
17 1,077,351 1,048,637 1,084,173 1,338,651 1,274,651 -
18 1,083,407 1,062,481 1,217,137 1,179,397 1,106,857 19,559
19 1,266,085 1,364,365 1,317,245 1,283,066 1,168,084 27,564
20 1,453,945 1,434,705 1,653,793 1,482,831 1,315,385 167,446
20.10 354,162 333,437 351,238 326,706 293,706 33,000
20.20 206,786 222,419 244,708 225,311 203,311 22,000
20.30 170,705 195,898 229,409 197,477 180,477 17,000
20.40 155,739 152,860 205,717 181,123 159,163 21,960
20.50 212,252 178,978 202,507 179,520 157,321 22,199
20.60 79,142 116,600 150,824 140,994 123,669 17,325
20.70 138,929 109,403 131,624 117,221 99,621 17,600
20.80 136,230 125,110 137,766 114,479 98,117 16,362
21 1,368,239 1,406,662 1,491,246 1,416,957 1,193,773 57,663
21.10 901,813 820,922 938,022 888,647 748,343 39,505
21.20 192,307 266,845 294,247 290,781 247,029 6,901
21.30 274,119 318,895 258,977 237,529 198,401 11,257
22 1,583,606 1,484,905 1,398,422 1,264,547 1,217,297 47,250
23 703,756 705,976 932,936 1,011,829 946,329 65,500
24 743,137 1,202,578 1,317,010 1,345,889 1,165,083 180,806
25 827,310 904,854 1,029,152 1,009,070 950,271 58,799
26 804,763 913,836 967,646 956,546 900,326 56,220
27 924,743 916,992 994,878 891,141 802,628 10,505
28 691,518 784,728 992,933 836,395 800,827 35,568
29 - - 803,341 879,137 864,823 6,579
30 - - 954,360 901,609 864,897 10,617
31 993,053 1,017,571 1,167,108 1,007,814 802,516 23,385
32 989,846 788,429 463,391 992,938 924,329 25,400
33 - - 747,896 724,072 11,513
34 1,804,638 1,921,562 1,662,366 1,438,050 1,165,065 272,985
35 920,523 1,159,316 1,352,644 1,026,246 892,740 133,506
36 - - - 1,118,947 1,052,544
36.10 - - - 1,118,947 1,052,544 18,431
36.20 - - - - - -
36.30 - - - - - -
36.40 - - - - - -
36.50 - - - - - -
36.60 - - - - - -
36.70 - - - - - -
36.80 - - - - - -
37 821,995 821,689 914,137 866,207 795,082 71,125
37.10 408,352 429,671 473,701 453,880 419,680 34,200
37.20 236,590 222,342 262,596 239,929 220,404 19,525
37.30 177,053 169,676 177,840 172,398 154,998 17,400
38 - 852,930 - 1,057,663 1,005,923
38.10 - 852,930 - 1,057,663 1,005,923 7,737
38.20 - - - - - -
38.30 - - - - - -
38.40 - - - - - -
38.50 - - - - - -
38.60 - - - - - -
38.70 - - - - - -
38.80 - - - - - -
39 999,766 1,347,917 1,110,092 1,076,088 754,414 29,248
40 739,947 779,464 768,235 796,060 704,147 27,496
41 824,611 971,459 1,269,648 856,843 740,081 31,379
43 576,819 640,276 659,831 642,987 606,387 36,600
44 - - 366,348 607,208 593,340 3,584
45 1,082,846 1,088,361 - 717,362 643,962 16,500
46 - 493,857 710,512 667,974 629,724 38,250
47 - - 792,377 756,817 636,482 54,310
48 499,537 440,836 548,026 648,353 592,353 56,000
49 728,761 696,269 688,951 756,056 651,474 20,800
50 586,749 577,596 585,288 620,397 573,397 47,000
51 555,296 622,094 684,866 719,765 622,040 15,780
52 751,636 652,385 763,512 683,161 570,624
52.10 256,858 231,460 220,494 194,682 154,563 6,254
52.20 494,778 420,925 543,018 488,479 416,061 14,026
53 562,719 599,043 585,767 586,865 556,865 30,000
54 319,282 - 693,834 602,262 589,862 12,400
55 493,323 563,946 591,509 616,830 572,624 10,332
56 - - 578,112 556,261 502,669 22,000
57 - - 320,553 605,556 532,431 13,213
58 - 501,994 755,294 774,110 702,710 19,727
59 513,749 603,213 555,234 611,085 521,175 12,010
60 - - 355,804 502,392 487,342 15,050
61 - - 78,915 492,893 478,543 14,350
62 222,227 599,218 711,051 660,697 577,550 27,891
63 620,608 610,249 648,728 645,614 585,364 60,250
63.10 248,916 246,936 256,388 260,146 236,221 23,925
63.20 215,052 210,221 226,748 226,215 207,215 19,000
63.30 156,640 153,092 165,592 159,253 141,928 17,325
64 755,143 742,059 791,965 667,255 562,274 30,516
65 - 281,041 744,531 678,809 625,665 53,144
66 - - - 950,760 849,840 34,800
67 303,309 514,096 559,901 564,414 501,714 62,700
68 365,166 428,378 505,738 514,956 474,381 40,575
68.10 274,579 328,676 369,236 377,913 349,163 28,750
68.20 90,587 99,702 136,502 137,043 125,218 11,825
69 374,336 469,169 555,979 538,006 496,006 42,000
70 254,096 251,124 398,115 493,612 448,735 10,183
71 - - - 460,933 439,101 9,925
72 157,730 402,536 538,908 567,951 443,956 18,497
73 684,427 752,380 789,460 650,053 612,057 37,996
74 - 467,652 258,421 526,438 470,941 10,052
75 - 527,268 538,297 493,170 424,769 25,638
76 663,453 688,173 681,570 623,966 566,720 57,246
77 416,830 461,450 456,932 485,798 440,548 45,250
78 183,898 226,431 397,487 424,378 406,778 17,600
79 598,827 438,587 412,557 463,240 371,187 14,082
80 375,867 487,866 486,049 475,804 447,304
80.10 149,294 168,195 177,345 168,917 163,167 5,750
80.20 226,573 319,671 308,704 306,887 284,137 22,750
81 - - 307,386 445,870 403,974 7,143
82 871,757 723,412 614,500 610,234 526,447 83,787
83 - - - 515,280 449,740 22,600
85 99,642 116,300 152,872 447,379 417,129 30,250
86 403,366 476,854 479,156 415,226 391,096 5,322
87 - - - 404,861 339,740 16,800
88 318,810 437,219 468,830 475,683 409,907 19,098
89 608,053 512,865 553,870 481,129 381,721 99,408
89.10 401,470 311,423 364,409 293,853 226,995 66,858
89.20 206,583 201,442 189,461 187,276 154,726 32,550
90 275,366 334,611 403,326 392,440 385,585
90.10 113,786 144,757 177,046 180,194 176,189 4,005
90.20 56,851 67,557 90,631 80,350 79,000 1,350
90.30 104,729 122,297 135,649 131,896 130,396 1,500
91 - 120,588 246,424 424,681 368,802 8,724
91.10 - 60,294 152,976 216,872 188,911 4,315
91.20 - 60,294 93,448 207,809 179,891 4,409
92 230,549 381,742 414,935 397,667 369,796 4,139
93 314,277 369,212 397,520 392,227 358,227 34,000
94 760,031 777,837 857,823 683,451 606,289 77,162
95 - 439,739 466,334 446,928 391,755 55,173
96 586,661 729,055 809,084 708,683 669,683 39,000
97 - 330,170 397,195 409,088 345,342 20,240
98 - 227,157 420,193 376,007 368,407 7,600
99 345,836 361,794 354,119 348,975 323,975 25,000
100 345,852 368,431 441,204 374,050 313,450 13,703
101 - 241,724 303,727 298,752 273,752 25,000
102 266,604 289,149 323,142 331,333 317,833
102.10 140,074 134,190 158,275 175,460 173,460 2,000
102.20 126,530 154,959 164,867 155,873 144,373 11,500
103 - - 288,000 411,492 371,637 13,743
104 398,096 425,239 431,813 349,339 283,636 10,196
105 203,029 276,292 314,220 400,137 391,737 8,400
106 257,799 249,555 267,102 336,670 282,533 16,590
107 - - 387,157 312,433 295,933 10,000
108 - 226,093 254,195 324,681 261,914 10,602
109 370,502 403,787 403,787 351,703 312,506 4,216
110 - - - 275,516 275,516 -
111 286,281 296,959 301,854 282,050 262,550 19,500
112 248,134 301,436 239,119 278,240 265,040 13,200
113 262,683 309,053 357,951 321,267 291,839 5,903
114 - - 235,282 229,401 1,391
115 307,984 342,894 357,218 342,101 292,946 11,699
116 35,015 284,120 243,618 280,886 257,164 3,993
117 289,241 320,578 320,957 296,548 274,288 4,203
118 247,969 259,205 258,900 240,395 229,395 11,000
119 (5,913) 192,234 326,630 312,847 280,927 15,269
120 267,450 - 291,204 312,064 276,487 8,210
121 - - 108,953 274,514 269,897 4,617
122 292,131 332,439 314,779 325,390 279,744 24,293
123 - 306,193 308,689 368,484 349,537 3,120
124 213,171 234,311 269,554 244,054 230,579 2,486
125 - - 299,931 232,678 198,616 10,150
126 224,177 256,131 266,117 291,304 241,095 12,780
127 225,681 269,571 287,983 318,720 293,292 6,323
128 245,808 308,384 121,920 283,325 239,212 9,754
129 275,172 275,125 312,863 291,835 265,160 26,675
130 - 305,296 - 287,951 272,718 3,047
131 201,965 248,013 244,598 275,529 216,538 10,003
132 80,813 200,041 286,853 272,708 235,880 6,136
133 - 246,240 281,416 261,699 240,185 5,000
134 347,167 391,402 401,449 277,803 227,298 12,706
135 277,097 286,935 303,682 285,906 259,906 26,000
136 215,679 - - 254,885 237,255 3,778
137 237,268 238,943 258,467 271,330 223,789 8,100
138 304,207 314,512 305,813 299,374 244,426 12,600
139 - - - 300,960 289,273 11,687
140 108,263 161,030 252,884 241,746 227,946 13,800
141 262,735 250,515 253,967 246,809 215,936 8,980
142 239,596 250,973 241,034 227,573 206,186 7,858
143 207,260 213,670 235,390 264,340 221,844 5,639
143.10 123,239 137,492 152,076 173,300 147,241 3,815
143.20 84,021 76,178 83,314 91,040 74,603 1,824
144 273,488 258,595 292,476 275,402 254,892 3,657
145 140,005 - 239,001 225,722 199,180 5,499
146 185,585 191,823 174,186 195,995 189,495 6,500
147 - 49,962 180,103 219,674 212,474 7,200
148 221,117 235,762 282,617 238,310 218,310 20,000
149 243,519 304,986 303,336 261,356 235,625 4,700
150 - - 392,877 313,069 289,500 16,835
151 249,331 243,762 220,124 237,266 211,016 26,250
152 338,635 249,977 229,825 211,239 202,985 5,171
153 - 183,543 210,828 210,585 196,035 4,067
154 149,293 216,858 151,547 214,704 189,972 24,732
155 - 83,321 238,784 227,621 197,321 4,559
156 187,208 190,284 215,135 194,297 179,447 14,850
157 147,562 194,931 202,597 241,849 211,089 10,983
158 193,974 179,504 176,983 173,034 161,034 12,000
159 97,077 176,961 167,769 182,244 165,522 3,423
160 - - 204,430 204,276 194,177 6,705
161 251,538 303,313 259,163 212,821 196,318 3,799
162 315,436 333,957 208,591 292,314 241,762 24,936
164 327,145 259,655 490,698 294,210 245,110 49,100
165 135,275 144,144 177,696 173,697 159,947 13,750
166 - - 173,663 222,230 210,927 2,985
167 123,413 156,930 232,028 223,931 203,831 20,100
168 205,127 202,259 197,822 195,382 181,882 13,500
169 242,020 255,641 - 218,162 203,845 14,317
170 138,163 147,554 186,896 189,628 171,203 18,425
171 182,243 194,349 202,960 190,609 170,109 20,500
172 163,182 193,169 205,163 173,737 170,137 3,600
173 155,210 159,966 154,614 139,782 130,244 9,538
174 148,793 208,646 218,006 196,383 182,838 13,545
175 147,334 149,308 167,016 180,240 164,015 16,225
176 167,644 185,283 244,429 182,210 157,154 25,056
177 142,592 151,772 165,269 151,103 141,103 10,000
178 145,317 137,919 157,080 168,531 148,779 3,984
179 183,175 182,882 - 165,002 153,139 3,085
180 66,206 103,010 174,617 173,451 140,500 5,974
181 175,850 182,874 187,326 178,264 159,014 19,250
182 172,586 204,927 228,716 170,800 139,897 5,105
183 - - - 177,782 161,088 8,656
184 - - 170,004 151,676 135,043 3,365
185 149,223 167,706 196,758 163,548 139,914 4,400
186 137,058 138,837 166,024 164,363 148,963 15,400
187 - - - 211,422 211,422 -
188 162,923 163,833 165,506 160,720 143,970 16,750
189 86,151 106,724 127,639 143,955 141,480 2,475
190 142,562 154,506 157,851 152,720 138,970 13,750
191 128,020 - - 157,994 141,494 -
192 83,135 144,981 159,057 151,885 139,521 1,317
193 - 18,402 142,781 151,121 130,748 3,873
194 (44,553) 170,352 159,401 161,146 146,257 2,800
195 - - 169,361 152,266 141,746 -
196 137,994 148,948 137,995 140,123 128,727 11,396
197 52,781 149,595 107,843 127,824 121,796 1,410
198 142,883 - 155,846 126,825 116,325 10,500
199 155,627 - - 162,969 147,969 15,000
200 136,902 142,167 134,674 124,812 107,159 3,375
201 112,848 158,596 159,799 143,594 127,899 3,139
202 122,087 162,125 130,782 125,687 115,127 10,560
203 138,572 161,645 98,679 126,080 118,080 8,000
204 199,061 200,895 209,870 210,323 174,166 10,410
205 110,230 121,638 123,196 123,200 116,600 6,600
206 92,843 141,114 85,386 144,817 139,567
206.10 51,332 79,434 61,772 88,411 84,411 1,250
206.20 41,511 61,680 23,614 56,406 55,156 4,000
207 352,264 353,988 303,272 273,751 224,211 7,761
208 121,807 121,432 121,432 115,267 113,788 1,479
209 106,779 - 121,724 109,688 102,706 3,600
210 108,580 108,205 108,205 102,821 101,501 1,321
211 122,987 148,408 148,408 119,744 113,744 6,000
212 115,913 118,812 121,288 108,356 107,295 1,061
213 100,654 105,161 104,915 79,219 76,395 2,824
214 - - - 91,391 89,677 525
215 96,183 - 99,218 85,018 79,393 1,298
216 59,242 - 155,685 98,918 71,918 27,000
217 142,833 - - 109,291 93,186 2,684
218 - - - 94,552 85,802 8,750
219 - - 87,797 84,736 81,236
219.10 - - 87,797 84,736 81,236 3,500
219.20 - - - - - -
220 - - 94,500 88,412 81,747 6,665
221 67,907 - - 75,381 67,881 7,500
222 88,116 - - 98,340 94,741 3,599
223 82,220 80,910 88,092 78,511 73,261 5,250
225 (199,458) - 56,550 98,150 79,449 4,316
226 62,815 - 69,600 65,801 63,693 1,622
227 - - 90,972 92,862 79,721 3,164
228 99,081 98,756 155,084 84,211 73,411 10,800
230 95,576 89,497 98,881 109,130 75,505 6,725
231 - 90,706 - 75,064 63,664 11,400
232 107,534 - 85,674 114,124 102,046 2,244
233 48,520 - - 54,764 49,764 5,000
234 83,205 79,632 80,382 59,769 43,769 12,600
235 40,469 50,188 - 48,120 40,338 1,266
236 41,428 57,183 65,062 51,679 45,679 6,000
237 56,225 - 58,633 47,469 46,524 945
238 31,604 - 36,597 35,891 34,909 982
239 47,204 49,500 - 39,769 33,921 1,800
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
ANNUAL
UNDERWRITTEN
REPLACEMENT UNDERWRITTEN ORIGINAL CUT-OFF
CONTROL RESERVES UNDERWRITTEN NET CASH LOAN PER DATE LOAN
NUMBER PER UNIT/SF NOI DSCR FLOW DSCR UNIT/SF PER UNIT/SF
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 $ 0.25 1.66x 1.49x $ 102.78 $ 102.78
2 0.25 1.39 1.32 93.76 93.10
3 1,878.48 1.79 1.57 88,976.38 88,845.38
4 0.25 1.59 1.34 88.31 88.02
5 0.27 1.63 1.30 49.51 48.90
5.10 0.25 1.62 1.33 73.17 72.28
5.20 0.19 1.52 1.25 57.06 56.37
5.30 0.22 1.74 1.32 29.08 28.73
5.31 0.25 1.74 1.32 37.88 37.42
5.32 0.20 1.74 1.32 19.79 19.55
5.40 0.50 1.71 1.30 47.51 46.94
6 0.20 1.53 1.37 91.03 90.43
7 300.00 1.72 1.62 33,705.36 33,521.98
7.10 300.00 1.98 1.88 33,142.86 32,962.54
7.20 300.00 1.95 1.88 47,750.00 47,490.22
7.30 300.00 1.13 1.03 33,163.27 32,982.84
7.40 300.00 1.13 0.93 17,000.00 16,907.51
8 1,124.86 2.19 1.93 48,538.96 48,212.32
9 0.14 1.60 1.42 30.02 29.80
9.10 0.10 1.60 1.42 30.85 30.63
9.20 0.15 1.60 1.42 29.46 29.24
9.30 0.15 1.60 1.42 34.33 34.07
9.40 0.15 1.60 1.42 27.61 27.41
9.50 0.15 1.60 1.42 39.92 39.63
9.60 0.15 1.60 1.42 30.95 30.72
9.70 0.10 1.60 1.42 29.67 29.45
9.80 0.15 1.60 1.42 28.55 28.34
10 0.25 1.42 1.37 180.41 180.41
11 0.15 1.36 1.26 53.52 53.11
12 0.10 1.64 1.60 87.05 84.33
13 200.00 1.29 1.23 39,351.85 39,074.93
14 - 1.53 1.53 145.26 144.55
15 0.25 1.54 1.25 52.70 52.29
16 0.15 1.48 1.38 100.86 100.69
17 - 1.71 1.63 33,125.00 32,966.51
18 0.20 1.39 1.31 105.70 105.50
19 0.25 1.48 1.35 90.70 90.45
20 274.95 1.69 1.50 127,651.08 127,337.07
20.10 248.12 1.64 1.48 16,729.32 16,688.17
20.20 250.00 1.64 1.48 17,477.27 17,434.28
20.30 257.58 1.62 1.48 20,681.82 20,630.94
20.40 366.00 1.77 1.55 19,083.33 19,036.39
20.50 277.49 1.81 1.58 13,875.00 13,840.87
20.60 275.00 1.69 1.48 14,841.27 14,804.76
20.70 275.00 1.74 1.48 11,781.25 11,752.27
20.80 297.49 1.77 1.51 13,181.82 13,149.39
21 0.21 1.60 1.35 34.96 34.89
21.10 0.24 1.58 1.33 37.83 37.75
21.20 0.15 1.71 1.45 40.76 40.67
21.30 0.16 1.55 1.29 24.39 24.33
22 250.00 1.82 1.75 47,089.95 46,927.35
23 250.00 1.40 1.31 33,396.95 33,139.59
24 1,189.51 1.75 1.51 55,921.05 55,560.90
25 549.52 1.60 1.51 76,635.51 76,237.63
26 242.33 1.50 1.41 34,482.76 34,454.49
27 0.25 1.44 1.30 182.42 181.55
28 247.00 1.51 1.44 52,430.56 52,177.28
29 0.15 1.50 1.48 171.00 170.14
30 0.15 1.49 1.43 101.72 100.95
31 0.25 1.72 1.37 74.84 74.38
32 0.15 1.62 1.51 40.45 40.38
33 0.15 1.29 1.25 87.30 86.59
34 1,325.17 2.76 2.23 31,553.40 31,336.78
35 1,296.17 1.70 1.48 63,106.80 62,491.77
36 0.35 1.73 1.63 121.96 121.96
36.10 2.71 1.73 1.63 118.24 118.24
36.20 - 1.73 1.63 146.91 146.91
36.30 - 1.73 1.63 151.23 151.23
36.40 - 1.73 1.63 91.33 91.33
36.50 - 1.73 1.63 103.48 103.48
36.60 - 1.73 1.63 101.03 101.03
36.70 - 1.73 1.63 137.88 137.88
36.80 - 1.73 1.63 142.73 142.73
37 290.31 1.54 1.41 25,706.12 25,642.89
37.10 300.00 1.53 1.41 29,157.89 29,086.17
37.20 271.18 1.54 1.41 24,250.00 24,190.35
37.30 294.92 1.57 1.41 20,813.56 20,762.36
38 0.18 1.65 1.57 143.99 143.99
38.10 2.59 1.65 1.57 154.44 154.44
38.20 - 1.65 1.57 105.67 105.67
38.30 - 1.65 1.57 174.47 174.47
38.40 - 1.65 1.57 117.71 117.71
38.50 - 1.65 1.57 207.38 207.38
38.60 - 1.65 1.57 200.66 200.66
38.70 - 1.65 1.57 74.13 74.13
38.80 - 1.65 1.57 152.52 152.52
39 0.25 2.21 1.55 50.94 50.78
40 0.36 1.55 1.37 76.59 75.95
41 0.20 1.55 1.34 38.08 36.41
43 244.00 1.46 1.37 38,000.00 37,866.99
44 0.15 1.28 1.25 236.45 235.92
45 0.25 1.39 1.25 84.92 84.74
46 250.00 1.51 1.43 36,437.91 36,221.38
47 0.10 1.63 1.37 10.33 10.28
48 200.00 1.53 1.40 19,285.71 19,186.04
49 0.10 1.75 1.50 25.24 25.06
50 250.00 1.47 1.36 27,659.57 27,502.11
51 0.25 1.53 1.32 81.59 81.16
52 0.15 1.59 1.33 36.62 36.17
52.10 0.15 1.59 1.33 36.85 36.40
52.20 0.15 1.59 1.33 36.51 36.07
53 250.00 1.52 1.44 40,333.33 40,267.02
54 200.00 1.50 1.47 77,419.35 76,639.99
55 0.25 1.43 1.33 113.72 118.41
56 0.10 1.40 1.27 21.27 21.17
57 0.20 1.58 1.39 70.38 70.17
58 0.30 1.88 1.71 70.49 70.33
59 0.23 1.58 1.35 88.09 87.64
60 175.00 1.36 1.32 53,488.37 53,089.67
61 175.00 1.40 1.36 54,878.05 54,690.40
62 0.20 1.60 1.40 32.27 32.19
63 264.25 1.61 1.46 19,653.51 19,605.16
63.10 271.88 1.59 1.45 20,727.27 20,676.28
63.20 250.00 1.62 1.48 20,539.47 20,488.95
63.30 270.70 1.62 1.45 17,125.00 17,082.87
64 0.14 1.61 1.35 21.36 21.10
65 260.51 1.69 1.56 21,585.78 21,376.93
66 0.11 2.21 1.98 13.26 13.10
67 275.00 1.67 1.49 18,859.65 18,795.04
68 238.68 1.59 1.47 24,117.65 24,035.66
68.10 250.00 1.60 1.48 26,086.96 25,998.28
68.20 215.00 1.58 1.45 20,000.00 19,932.01
69 250.00 1.69 1.55 23,809.52 23,730.62
70 0.16 1.53 1.39 60.50 60.11
71 0.15 1.33 1.27 57.43 57.31
72 0.22 1.82 1.42 45.51 45.20
73 436.74 1.90 1.79 43,103.45 42,679.06
74 0.14 1.58 1.41 53.97 53.20
75 0.10 1.50 1.29 14.35 14.20
76 330.90 1.96 1.78 21,098.27 20,998.12
77 250.00 1.52 1.38 19,889.50 19,849.78
78 200.00 1.48 1.42 40,909.09 40,704.54
79 0.25 1.58 1.26 61.25 61.16
80 791.67 1.66 1.56 95,833.33 95,668.75
80.10 250.00 1.66 1.56 50,000.00 49,914.13
80.20 1,750.00 1.66 1.56 176,923.08 176,619.23
81 0.15 1.60 1.45 72.01 71.62
82 854.97 1.73 1.49 34,693.88 34,567.53
83 0.10 1.54 1.35 15.06 14.88
85 250.00 1.50 1.40 27,272.73 27,203.29
86 0.23 1.64 1.55 142.60 141.86
87 0.15 1.54 1.29 29.29 29.19
88 0.15 1.80 1.55 26.52 26.37
89 314.58 1.58 1.25 10,316.46 10,183.09
89.10 315.37 1.62 1.25 9,716.98 9,614.20
89.20 312.98 1.51 1.25 11,538.46 11,342.74
90 263.65 1.47 1.44 123,461.54 123,249.50
90.10 267.00 1.47 1.44 94,065.93 93,904.38
90.20 270.00 1.47 1.44 134,043.96 133,813.74
90.30 250.00 1.47 1.44 188,131.87 187,808.76
91 0.15 1.73 1.50 53.30 52.97
91.10 0.15 1.64 1.43 55.62 55.14
91.20 0.15 1.82 1.58 51.03 50.85
92 0.15 1.60 1.49 111.57 111.03
93 250.00 1.54 1.41 22,058.82 22,004.20
94 964.52 2.09 1.85 37,500.00 36,779.10
95 525.46 1.60 1.40 28,571.43 28,315.93
96 325.00 2.69 2.54 24,583.33 24,385.66
97 0.38 1.72 1.45 51.14 50.70
98 200.00 1.62 1.59 71,052.63 70,705.89
99 250.00 1.47 1.37 27,000.00 26,945.19
100 0.10 1.71 1.43 19.59 19.46
101 250.00 1.37 1.26 26,500.00 26,438.22
102 250.00 1.52 1.46 48,518.52 48,435.19
102.10 250.00 1.52 1.46 163,750.00 163,468.75
102.20 250.00 1.52 1.46 28,478.26 28,429.35
103 0.10 1.63 1.48 19.21 18.95
104 0.25 1.58 1.29 63.75 63.44
105 350.00 1.71 1.67 108,333.33 108,125.21
106 0.30 1.58 1.33 45.60 45.43
107 250.00 1.56 1.48 62,500.00 62,189.31
108 0.16 1.55 1.25 37.76 37.52
109 0.15 1.65 1.46 89.27 88.70
110 - 1.37 1.37 102.98 102.60
111 250.00 1.35 1.26 30,769.23 30,705.50
112 200.00 1.48 1.41 35,606.06 35,398.15
113 0.25 1.43 1.30 97.42 97.01
114 0.10 1.29 1.26 164.33 163.54
115 0.22 1.47 1.25 41.87 41.47
116 0.16 1.47 1.35 88.15 87.24
117 0.15 1.56 1.44 77.63 76.88
118 250.00 1.43 1.37 48,863.64 48,583.78
119 0.15 1.59 1.42 21.12 21.07
120 0.15 1.61 1.43 38.37 38.06
121 0.10 1.29 1.27 45.49 44.86
122 0.15 1.61 1.38 12.66 12.64
123 0.20 1.94 1.84 132.05 129.73
124 0.25 1.39 1.31 201.13 199.34
125 0.10 1.40 1.20 19.70 19.51
126 0.15 1.57 1.30 23.24 23.19
127 0.25 1.85 1.70 77.99 76.96
128 0.33 1.57 1.32 65.57 65.40
129 272.19 1.67 1.52 19,897.96 19,849.01
130 0.10 1.74 1.65 63.99 63.52
131 0.20 1.63 1.28 38.99 38.64
132 0.15 1.58 1.36 47.67 47.28
133 0.10 1.46 1.34 38.50 38.06
134 0.20 1.74 1.42 29.91 29.72
135 250.00 1.88 1.71 18,269.23 18,178.41
136 0.15 1.40 1.30 74.45 73.42
137 0.25 1.72 1.42 57.10 56.74
138 0.31 1.89 1.54 45.24 45.03
139 0.10 1.66 1.59 15.74 15.49
140 281.63 1.65 1.55 36,734.69 36,521.65
141 0.23 1.54 1.35 45.56 45.14
142 0.16 1.42 1.29 36.65 36.29
143 0.21 1.52 1.28 66.85 66.04
143.10 0.22 1.49 1.27 68.26 67.44
143.20 0.20 1.59 1.30 64.16 63.38
144 0.15 1.84 1.70 71.77 71.33
145 0.25 1.61 1.42 79.57 79.13
146 250.00 1.33 1.29 66,538.46 65,955.15
147 300.00 1.44 1.40 70,833.33 70,753.88
148 250.00 1.85 1.70 21,250.00 21,152.53
149 0.23 1.63 1.47 83.19 82.40
150 0.10 1.63 1.50 10.25 9.90
151 250.00 1.45 1.29 15,952.38 15,710.68
152 0.34 1.41 1.35 109.15 108.91
153 0.15 1.42 1.32 61.23 61.06
154 343.50 1.58 1.39 22,777.78 22,689.81
155 0.15 1.54 1.33 52.64 52.58
156 275.00 1.52 1.41 28,703.70 28,553.15
157 0.15 1.76 1.53 20.49 20.44
158 240.00 1.41 1.31 30,000.00 29,887.88
159 0.25 1.44 1.30 109.56 108.40
160 0.10 1.42 1.35 21.88 21.64
161 0.18 1.56 1.44 70.83 70.68
162 0.48 2.33 1.92 27.91 27.69
164 481.37 2.05 1.71 13,970.59 13,947.02
165 250.00 1.31 1.21 25,818.18 25,737.25
166 0.20 1.94 1.84 93.80 93.50
167 300.00 1.87 1.70 20,895.52 20,861.30
168 245.45 1.50 1.40 25,454.55 25,206.47
169 311.24 1.94 1.81 29,293.48 28,968.18
170 275.00 1.59 1.44 19,850.75 19,801.91
171 250.00 1.56 1.40 16,219.51 16,172.95
172 50.00 1.55 1.52 18,333.33 18,241.87
173 251.00 1.45 1.35 34,210.53 34,081.16
174 246.27 1.91 1.77 23,363.64 23,203.24
175 275.00 1.58 1.44 21,593.22 21,540.10
176 348.00 1.72 1.48 17,569.44 17,434.49
177 250.00 1.52 1.42 31,250.00 31,075.90
178 0.19 1.52 1.34 59.61 58.98
179 0.10 1.53 1.42 40.36 40.07
180 0.25 1.70 1.38 51.90 51.55
181 275.00 1.61 1.44 17,642.86 17,599.46
182 0.15 1.61 1.32 35.85 35.67
183 0.10 1.51 1.37 14.15 14.02
184 0.20 1.48 1.32 70.97 70.62
185 0.25 1.65 1.41 68.18 67.73
186 275.00 1.59 1.44 20,678.57 20,627.70
187 - 1.49 1.49 148.87 146.87
188 246.32 1.62 1.45 16,352.94 16,312.71
189 275.00 1.44 1.41 123,333.33 123,096.44
190 241.23 1.55 1.41 19,298.25 19,250.77
191 - 1.58 1.42 16,727.27 16,575.84
192 0.15 1.67 1.53 125.33 124.45
193 0.19 1.57 1.36 53.97 53.45
194 0.10 1.71 1.55 40.44 40.02
195 - 1.44 1.34 41.83 41.30
196 259.00 1.40 1.29 24,431.82 24,103.19
197 0.15 1.40 1.33 111.70 110.70
198 250.00 1.37 1.26 24,523.81 24,366.62
199 250.00 1.66 1.51 16,800.00 16,632.88
200 0.25 1.43 1.23 74.07 73.41
201 0.10 1.66 1.47 31.85 31.52
202 352.00 1.48 1.36 33,333.33 32,974.40
203 250.00 1.52 1.42 30,312.50 29,991.69
204 0.15 2.48 2.06 13.69 13.63
205 275.00 1.59 1.51 39,166.67 38,961.24
206 250.00 1.87 1.80 44,285.71 44,209.67
206.10 250.00 1.87 1.80 77,731.34 77,597.86
206.20 250.00 1.87 1.80 33,833.96 33,775.86
207 0.15 2.77 2.27 17.38 17.11
208 0.10 1.22 1.20 58.21 57.87
209 211.76 1.44 1.35 47,058.82 46,569.54
210 0.10 1.22 1.20 58.16 57.82
211 250.00 1.91 1.81 31,354.17 31,005.99
212 0.15 1.45 1.43 101.07 98.83
213 0.15 1.27 1.23 35.86 35.71
214 0.15 1.38 1.36 195.37 192.54
215 0.15 1.50 1.40 70.50 69.80
216 250.00 1.72 1.25 5,472.22 5,417.79
217 0.20 1.67 1.42 44.66 43.25
218 250.00 1.54 1.40 16,857.14 16,563.39
219 437.50 1.49 1.42 72,500.00 71,521.67
219.10 875.00 1.49 1.42 64,444.44 63,574.81
219.20 - 1.49 1.42 80,555.56 79,468.52
220 0.25 1.54 1.42 20.86 20.56
221 250.00 1.49 1.34 18,666.67 18,497.67
222 46.74 1.91 1.84 7,071.43 6,990.83
223 250.00 1.58 1.47 25,523.81 25,293.90
225 0.15 1.98 1.60 17.38 17.20
226 0.50 1.31 1.27 154.18 151.55
227 0.20 1.79 1.53 29.08 28.64
228 300.00 2.01 1.75 12,500.00 12,402.16
230 0.25 2.35 1.63 16.74 16.33
231 300.00 1.94 1.65 10,657.89 10,513.16
232 0.11 1.93 1.73 20.00 18.80
233 250.00 1.51 1.37 19,000.00 18,728.01
234 350.00 1.79 1.31 9,944.44 9,866.47
235 0.15 1.58 1.32 38.28 37.99
236 300.00 1.85 1.64 15,000.00 14,882.60
237 0.15 1.62 1.59 47.24 46.78
238 0.20 1.44 1.40 52.95 52.41
239 0.20 1.56 1.33 28.61 28.39
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
REPAIR & ECONOMIC
REMEDIATION TI/LC ENVIRONMENTAL RESERVE
CONTROL PAID TO RESERVE RESERVE P&I RESERVE RESERVE (& OTHER)
NUMBER DATE HOLDBACK HOLDBACK HOLDBACK HOLDBACK HOLDBACK
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 03/01/99 $ - $ - $ - $ - $ -
2 03/01/99 64,160 - - - 8,750
3 03/01/99 - - 177,586 - -
4 03/01/99 222,925 - - - -
5 03/01/99 1,217,000 - - - 9,049
5.10 03/01/99 344,000 - - - 3,163
5.20 03/01/99 569,000 - - - 2,521
5.30 03/01/99 273,000 - - - 1,841
5.31 03/01/99
5.32 03/01/99
5.40 03/01/99 31,000 - - - 1,524
6 03/01/99 - 274,400 130,814 - 172,000
7 03/01/99 44,926 - - - -
7.10 03/01/99 30,487 - - - -
7.20 03/01/99 1,074 - - - -
7.30 03/01/99 8,084 - - - -
7.40 03/01/99 5,281 - - - -
8 03/01/99 775,900 - 110,479 5,560 63,083
9 03/01/99 206,643 - 101,060 - -
9.10 03/01/99
9.20 03/01/99
9.30 03/01/99
9.40 03/01/99
9.50 03/01/99
9.60 03/01/99
9.70 03/01/99
9.80 03/01/99
10 03/01/99 - 261,100 - - 1,600
11 03/01/99 121,974 - - 56,250 3,535
12 03/01/99 - - - - 3,500
13 03/01/99 - - - - 5,313
14 03/01/99 888 - - - -
15 03/01/99 - - - 1,161 6,449
16 03/01/99 - - 156,824 - 87,396
17 03/01/99 - - - - 662,672
18 03/01/99 31,875 31,121 - - 1,300
19 03/01/99 66,562 - - - 9,167
20 03/01/99 67,122 - - - -
20.10 03/01/99 - - - - -
20.20 03/01/99 - - - - -
20.30 03/01/99 - - - - -
20.40 03/01/99 21,375 - - - -
20.50 03/01/99 - - - - -
20.60 03/01/99 29,684 - - - -
20.70 03/01/99 - - - - -
20.80 03/01/99 16,063 - - - -
21 103,120 310,625 - 1,125 1,257
21.10 03/01/99 50,440 306,025 - - 791
21.20 03/01/99 - - - - 254
21.30 03/01/99 52,680 4,600 - 1,125 212
22 03/01/99 - - - 35,052 1,854
23 03/01/99 10,920 - 120,137 - 137,833
24 03/01/99 - - 128,518 5,525 126,174
25 03/01/99 145,763 - 52,424 - 84,167
26 03/01/99 250,000 - - 775 250
27 03/01/99 - 17,628 - - 4,067
28 03/01/99 - - - 1,144 142,993
29 03/01/99 - - 48,745 - 13,706
30 03/01/99 - - - - -
31 03/01/99 - - - - 1,775
32 03/01/99 2,117 - 51,171 - 22,583
33 03/01/99 - - - - -
34 03/01/99 22,750 - - - 3,250
35 03/01/99 - - - - 1,625
36 03/01/99 100,000 - - - 883,974
36.10 03/01/99
36.20 03/01/99
36.30 03/01/99
36.40 03/01/99
36.50 03/01/99
36.60 03/01/99
36.70 03/01/99
36.80 03/01/99
37 03/01/99 24,463 - - - -
37.10 03/01/99 24,463 - - - -
37.20 03/01/99 - - - - -
37.30 03/01/99 - - - - -
38 03/01/99 100,575 - - - 53,961
38.10 03/01/99
38.20 03/01/99
38.30 03/01/99
38.40 03/01/99
38.50 03/01/99
38.60 03/01/99
38.70 03/01/99
38.80 03/01/99
39 03/01/99 41,413 - - - -
40 03/01/99 - - - - 86,704
41 03/01/99 - - - - 2,625
43 03/01/99 - - - - 1,188
44 03/01/99 94,485 - - - 917
45 03/01/99 - 26,083 - - 2,825
46 03/01/99 - - - 2,818 1,933
47 03/01/99 350,000 - - 375 -
48 03/01/99 152,936 - - 790 875
49 03/01/99 1,733 1,153,267 36,100 - 62,586
50 03/01/99 - - - - 1,733
51 03/01/99 - - - - 12,867
52 03/01/99 275,000 - - - 2,269
52.10 03/01/99
52.20 03/01/99
53 03/01/99 - - - - 625
54 03/01/99 438 - - - -
55 03/01/99 - 94,729 - - 625
56 03/01/99 7,123 - - - -
57 03/01/99 - 19,900 - - 970
58 03/01/99 - - - - 579
59 03/01/99 - - - - 1,150
60 03/01/99 - - - - 1,875
61 03/01/99 - - - - -
62 03/01/99 1,613 - 34,410 - 13,869
63 03/01/99 40,970 - - - -
63.10 03/01/99 - - - - -
63.20 03/01/99 - - - - -
63.30 03/01/99 40,970 - - - -
64 03/01/99 - - - - 179,058
65 03/01/99 - - - - -
66 03/01/99 - - - - -
67 03/01/99 460,890 - - 26,377 896
68 03/01/99 2,900 - - - 849
68.10 03/01/99 - - - - 625
68.20 03/01/99 2,900 - - - 224
69 03/01/99 - - - - 833
70 03/01/99 - 11,260 - - 963
71 03/01/99 - - - - 475
72 03/01/99 - - - - 178,705
73 03/01/99 2,934 - - - -
74 03/01/99 - - - - 2,167
75 03/01/99 - - - - -
76 03/01/99 4,771 - - - -
77 03/01/99 30,000 - 26,566 - 91,333
78 03/01/99 102,071 - - - 1,050
79 03/01/99 - 20,400 - - 431
80 03/01/99 - - 47,868 9,375 8,750
80.10 03/01/99
80.20 03/01/99
81 03/01/99 - - - - 1,294
82 03/01/99 - - - - -
83 03/01/99 2,402 - - - -
85 03/01/99 808,521 - 24,908 - -
86 03/01/99 1,000 2,506 21,054 - 22,490
87 03/01/99 117 7,506 - - -
88 03/01/99 - - - - 1,083
89 03/01/99 38,510 - - - 815
89.10 03/01/99 27,810 - - - 515
89.20 03/01/99 10,700 - - - 300
90 03/01/99 11,750 - 44,538 938 8,750
90.10 03/01/99
90.20 03/01/99
90.30 03/01/99
91 03/01/99 - - - - 1,112
91.10 03/01/99 - - - - 799
91.20 03/01/99 - - - - 313
92 03/01/99 - - - - 875
93 03/01/99 - - - - 375
94 03/01/99 - - - - 875
95 03/01/99 13,156 - 23,254 - -
96 03/01/99 - - - - 725
97 03/01/99 15,818 - - - 917
98 03/01/99 384 - - - -
99 03/01/99 - - - - 48,684
100 03/01/99 - - - - 713
101 03/01/99 17,625 - - - 442
102 03/01/99 12,750 - 36,352 625 5,500
102.10 03/01/99
102.20 03/01/99
103 03/01/99 - - - - -
104 03/01/99 - - - - 542
105 03/01/99 700 - 19,533 - 11,250
106 03/01/99 22,753 - - - 1,248
107 03/01/99 - - - - 729
108 03/01/99 - - - - 1,000
109 03/01/99 9,805 728 35,614 - 23,279
110 03/01/99 116 - - - -
111 03/01/99 9,376 - 17,410 - 26,642
112 03/01/99 - - - - 783
113 03/01/99 - 100,000 12,852 629 383
114 03/01/99 - - 30,404 - -
115 03/01/99 - - - - 366
116 03/01/99 1,436 - - - -
117 03/01/99 - - - - 12,414
118 03/01/99 - - - - 448
119 03/01/99 37,500 100,000 16,440 - 8,385
120 03/10/99 - - - - -
121 03/01/99 - - - - 788
122 03/01/99 60,611 100,000 16,854 - -
123 03/01/99 - - 15,831 - -
124 03/01/99 - - - - -
125 03/01/99 518 - - - -
126 03/01/99 - 306,025 - - 248
127 03/01/99 - - - - 986
128 03/01/99 - - - 929 244
129 03/01/99 28,744 - - 625 -
130 03/01/99 - - - - -
131 03/01/99 9,606 - - - -
132 03/01/99 - - - - 650
133 03/01/99 - - - - 30,704
134 03/01/99 949 - - - -
135 03/01/99 - - - - 554
136 03/01/99 - - - - -
137 03/01/99 - - - - 1,000
138 03/01/99 132,172 - - - -
139 03/01/99 - - - - -
140 03/01/99 17,472 - - 2,868 -
141 03/01/99 - 190,072 - - 675
142 03/01/99 5,803 - - - -
143 03/01/99 3,128 29,444 - - -
143.10 03/01/99 2,086 24,849 - - -
143.20 03/01/99 1,042 4,595 - - -
144 03/01/99 - - - - 438
145 03/01/99 - 10,843 - - 365
146 03/01/99 - - - - 577
147 03/01/99 - - - - 142
148 03/01/99 - - - - 425
149 03/01/99 - - - - 425
150 03/01/99 54,454 - - - 938
151 03/01/99 - - - - 489
152 03/01/99 - - - - 25,302
153 03/01/99 339 917 12,355 - 8,239
154 03/01/99 - - - - 283
155 03/01/99 380 2,145 12,337 1,400 -
156 03/01/99 - - - - 323
157 03/01/99 1,313 45,000 11,470 - 21,127
158 03/01/99 2,250 - 10,233 - 64,000
159 03/01/99 - - - - 961
160 03/01/99 - - - 940 430
161 03/01/99 - - - - -
162 03/01/99 16,619 - - - -
164 03/01/99 4,092 - - - 119
165 03/01/99 - - - 1,132 43,475
166 03/01/99 160 - - - -
167 03/01/99 187,519 - 10,001 - 2,444
168 03/01/99 - - - - 350
169 03/01/99 - - - - -
170 03/01/99 72,576 - - - -
171 03/01/99 6,250 - 10,161 - 19,287
172 03/01/99 - - - - 330
173 03/01/99 - - - - 271
174 03/01/99 - - - - 321
175 03/01/99 67,625 - - - -
176 03/01/99 - - - - 369
177 03/01/99 - - - - 260
178 03/01/99 - - - - 521
179 03/01/99 - 33,024 - - 363
180 03/01/99 - - - - 310
181 03/01/99 121,575 - - - -
182 03/01/99 7,051 - - - -
183 03/01/99 17,611 - - - -
184 03/01/99 10,732 - - - -
185 03/01/99 - - - - 300
186 03/01/99 - - - - -
187 03/01/99 - - - - -
188 03/01/99 - - - - -
189 03/01/99 4,018 - 8,339 - 4,250
190 03/01/99 - - - - -
191 03/01/99 - - - - -
192 03/01/99 - - - - 458
193 03/01/99 - - - - 412
194 03/01/99 - - - - -
195 03/01/99 - - - - -
196 03/01/99 3,397 - - - -
197 03/01/99 84 - - - -
198 03/01/99 - - - - -
199 03/01/99 - - - - -
200 03/01/99 4,659 - - - -
201 03/01/99 - - - - -
202 03/01/99 3,986 - - - -
203 03/01/99 1,919 - - - -
204 03/01/99 2,192 - - - -
205 03/01/99 - - - - 196
206 03/01/99 18,875 - 12,904 - 5,250
206.10 03/01/99
206.20 03/01/99
207 03/01/99 - - - - -
208 03/01/99 1,875 - 7,902 - -
209 03/01/99 - - - - -
210 03/01/99 10,913 - 7,049 - -
211 03/01/99 - - - - -
212 03/01/99 - - - - -
213 03/01/99 - - - - -
214 03/01/99 - - - - 253
215 03/01/99 760 - - - -
216 03/01/99 98 - - - -
217 03/01/99 - - - - -
218 03/01/99 - - - - -
219 03/01/99 - - - - -
219.10 03/01/99
219.20 03/01/99
220 03/01/99 2,670 - - - 10,313
221 03/01/99 - - - - -
222 03/01/99 - - - - -
223 03/01/99 - - - - -
225 03/01/99 3,157 - - - -
226 03/01/99 105 - - - -
227 03/01/99 - - - - -
228 03/01/99 - - - - -
230 03/01/99 - - - - -
231 03/01/99 - - - - -
232 03/01/99 38,048 - - - -
233 03/01/99 4,093 - - - -
234 03/01/99 - - - - -
235 03/01/99 - - - - -
236 03/01/99 - - - - -
237 03/01/99 - - - - -
238 03/01/99 325 - - - -
239 03/01/99 - - - - -
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL MONTHLY MONTHLY MONTHLY MONTHLY
CONTROL RESERVE REPLACEMENT TAX INSURANCE TI/LC
NUMBER HOLDBACK RESERVES ESCROW ESCROW ESCROW
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 $ - $ 12,578 $ 177,616 $ 4,154 $ 70,214
2 72,910 - 65,720 1,610 -
3 $ 177,586 39,700 11,870 3,773 -
4 222,925 1,954 22,983 2,367 -
5 1,226,049 10,504 40,088 2,772 -
5.10 347,163 5,354 11,474 528 -
5.20 571,521 717 12,441 858 -
5.30 274,841 3,100 9,096 876 -
5.31
5.32
5.40 32,524 1,333 7,077 510 -
6 $ 577,214 3,450 43,000 - 12,667
7 44,926 5,948 16,664 6,602 -
7.10 30,487 2,854 5,760 2,386 -
7.20 1,074 1,074 7,322 1,520 -
7.30 8,084 964 2,315 1,517 -
7.40 5,281 1,056 1,267 1,179 -
8 $ 955,023 28,400 8,298 3,333 -
9 $ 307,703 - 47,500 - -
9.10
9.20
9.30
9.40
9.50
9.60
9.70
9.80
10 262,700 - 8,706 1,644 -
11 181,759 - 16,564 - -
12 3,500 - 13,934 1,147 -
13 5,313 - 27,724 4,893 -
14 888 888 5,400 1,662 -
15 7,610 - 15,107 1,416 -
16 $ 244,220 1,403 20,536 - -
17 662,672 - 22,260 - -
18 64,296 - 10,159 1,817 -
19 75,729 1,562 10,878 2,451 -
20 67,122 - 15,700 - -
20.10 - - 4,474 - -
20.20 - - 1,241 - -
20.30 - - 1,685 - -
20.40 21,375 - 2,359 - -
20.50 - - 2,429 - -
20.60 29,684 - 812 - -
20.70 - - 1,581 - -
20.80 16,063 - 1,119 - -
21 416,127 880 29,391 - 7,190
21.10 357,256 - 21,901 - 4,890
21.20 254 - 3,298 - -
21.30 58,617 880 4,192 - 2,300
22 36,906 - 10,964 1,227 -
23 $ 268,890 5,460 15,167 1,833 -
24 $ 260,216 15,143 11,063 26,603 -
25 $ 282,353 3,745 16,250 1,917 -
26 251,025 - 16,124 2,874 -
27 21,695 - 6,297 1,461 3,500
28 144,137 - 6,375 1,913 -
29 $ 62,451 549 - - -
30 $ - - - - -
31 1,775 - - - -
32 $ 75,871 2,117 10,083 4,167 -
33 $ - 640 - - -
34 26,000 22,750 12,743 - -
35 1,625 11,125 495 3,834 -
36 983,974 - 4,481 - -
36.10
36.20
36.30
36.40
36.50
36.60
36.70
36.80
37 24,463 - 9,125 - -
37.10 24,463 - 2,972 - -
37.20 - - 2,859 - -
37.30 - - 3,294 - -
38 154,536 - 10,322 - -
38.10
38.20
38.30
38.40
38.50
38.60
38.70
38.80
39 41,413 1,352 42,878 948 -
40 86,704 - 3,984 825 -
41 2,625 - 16,698 1,015 -
43 1,188 - 4,486 1,067 -
44 95,402 - 5,935 142 -
45 28,908 - 8,350 467 13,000
46 4,751 - 5,264 1,689 -
47 $ 350,375 3,621 9,456 1,883 833
48 154,601 - 9,618 3,152 -
49 $ 1,253,686 1,733 12,000 2,045 3,267
50 1,733 - 10,712 1,083 -
51 12,867 - 7,198 499 -
52 277,269 4,145 10,978 1,510 -
52.10
52.20
53 625 - 11,418 1,333 -
54 438 37 5,717 1,145 -
55 95,354 - 3,903 250 3,725
56 7,123 1,833 8,033 640 -
57 20,870 - 8,047 653 4,975
58 579 - - - -
59 1,150 - 7,335 432 -
60 1,875 - 3,375 1,066 -
61 - - 2,147 989 -
62 $ 49,892 2,324 6,051 1,767 6,667
63 40,970 - 8,094 - -
63.10 - - 3,233 - -
63.20 - - 2,839 - -
63.30 40,970 - 2,022 - -
64 179,058 - 4,239 1,979 -
65 - - 3,590 2,374 -
66 - 1,767 4,575 543 -
67 488,163 5,225 7,851 2,780 -
68 3,749 - 8,724 951 -
68.10 625 - 6,145 682 -
68.20 3,124 - 2,579 269 -
69 833 - 6,918 935 -
70 12,223 - - - 2,800
71 475 - 2,567 545 -
72 178,705 - 3,446 1,134 -
73 2,934 2,934 1,685 403 -
74 2,167 - 4,033 1,044 -
75 - 2,136 - - -
76 4,771 4,771 2,995 722 -
77 $ 147,900 3,775 10,250 1,917 -
78 103,121 - 4,363 988 -
79 20,831 - 6,387 844 5,200
80 $ 65,993 2,375 2,917 - -
80.10
80.20
81 1,294 - 2,538 525 -
82 - - 5,300 781 -
83 2,402 1,721 32 397 -
85 $ 833,429 2,520 - - -
86 $ 47,050 386 4,408 442 2,506
87 7,623 117 - - 2,500
88 1,083 - 9,064 1,574 -
89 39,325 - 1,395 1,175 -
89.10 28,325 - 950 725 -
89.20 11,000 - 445 450 -
90 $ 65,976 571 2,917 - -
90.10
90.20
90.30
91 1,112 - 2,993 579 -
91.10 799 - 1,748 372 -
91.20 313 - 1,245 207 -
92 875 - 5,090 338 -
93 375 - 5,825 766 -
94 875 5,144 4,823 - -
95 $ 36,410 4,316 5,333 2,068 -
96 725 - 5,671 - -
97 16,735 - 6,538 956 -
98 384 384 380 658 -
99 $ 48,684 2,083 5,919 793 -
100 713 - 2,507 1,061 -
101 18,067 - 2,205 555 -
102 $ 55,227 1,125 1,833 - -
102.10
102.20
103 - - - - -
104 542 - 4,560 403 -
105 $ 31,483 700 3,417 1,000 -
106 24,001 - 8,446 664 -
107 729 - 474 - -
108 1,000 - - - -
109 $ 69,426 514 2,561 234 728
110 116 116 - - -
111 $ 53,428 1,626 3,532 - -
112 783 - 2,472 1,299 -
113 113,864 - 4,528 378 -
114 $ 30,404 116 - - -
115 366 - 1,764 1,079 -
116 1,436 336 2,792 267 -
117 12,414 - 4,130 1,660 -
118 448 - 2,362 1,044 -
119 $ 162,326 1,272 1,088 767 2,950
120 - - 5,527 625 -
121 788 - 3,775 540 -
122 $ 177,465 2,024 1,748 1,579 1,779
123 $ 15,831 214 - - -
124 - 160 1,652 150 -
125 518 42 1,754 285 -
126 306,273 - 2,784 512 -
127 986 - 3,317 603 -
128 1,173 - 1,666 260 -
129 29,369 - 1,071 - -
130 - 148 276 155 -
131 9,606 913 3,170 313 -
132 650 - 6,054 534 -
133 $ 30,704 417 3,333 352 1,045
134 949 949 4,076 527 -
135 554 - 4,621 956 -
136 - - 1,705 1,079 -
137 1,000 - 2,310 - -
138 132,172 290 1,354 854 -
139 - - 3,651 243 -
140 20,340 570 1,388 370 -
141 190,747 - 3,890 423 -
142 5,803 645 5,019 452 -
143 32,572 423 4,832 281 1,095
143.10 26,935 281 3,054 185 715
143.20 5,637 142 1,778 96 380
144 438 - 4,664 623 -
145 11,208 - 2,575 583 3,600
146 577 - 883 655 -
147 142 - 601 476 -
148 425 - 1,834 916 -
149 425 - 2,201 521 -
150 55,392 2,221 4,843 296 -
151 489 - 1,221 517 -
152 25,302 - 1,294 898 -
153 $ 21,849 339 1,482 289 917
154 283 - 1,875 588 -
155 $ 16,262 380 6,394 420 2,145
156 323 - 1,588 423 -
157 $ 78,910 915 1,921 645 1,667
158 $ 76,483 - - - -
159 961 - 1,306 276 -
160 1,370 - 8,288 952 -
161 - - 4,429 266 -
162 16,619 650 2,661 488 -
164 4,211 4,092 2,924 1,314 -
165 44,607 - 607 413 -
166 160 160 1,545 270 -
167 $ 199,964 1,675 1,272 391 -
168 350 - 2,964 495 -
169 - 974 3,281 449 -
170 72,576 - 1,661 - -
171 $ 35,698 1708.33 2,058 1,630 -
172 330 - 2,229 250 -
173 271 - 1,849 396 -
174 321 - 1,548 923 -
175 67,625 - 1,635 - -
176 369 - 2,113 889 -
177 260 - 1,878 - -
178 521 - 1,579 356 -
179 33,387 - 3,991 239 5,455
180 310 - 2,661 459 -
181 121,575 - 2,982 - -
182 7,051 197 2,063 199 -
183 17,611 - 1,572 232 -
184 10,732 183 809 107 -
185 300 - 2,613 246 -
186 - - 1,629 - -
187 - - - - -
188 - - 1,341 - -
189 $ 16,607 206 1,250 500 -
190 - - 1,597 - -
191 - - 2,121 430 -
192 458 - 1,510 383 -
193 412 - 1,600 286 -
194 - - 1,051 199 -
195 - - 1,978 335 -
196 3,397 939 3,085 379 -
197 84 84 1,418 151 -
198 - - 1,182 273 -
199 - - 1,336 250 -
200 4,659 269 2,106 241 -
201 - - 851 241 -
202 3,986 879 736 814 -
203 1,919 640 916 581 -
204 2,192 - 1,382 869 -
205 196 - 921 329 -
206 $ 37,029 438 1,750 - -
206.10
206.20
207 - - 5,618 718 -
208 $ 9,777 - - - -
209 - - 4,144 557 -
210 $ 17,962 - - - -
211 - 402 2,721 449 -
212 - - - - -
213 - - 651 253 -
214 253 - 1,127 284 -
215 760 - 1,267 211 -
216 98 - 1,347 290 -
217 - - 1,748 98 -
218 - - 1,099 382 -
219 - - 767 205 -
219.10
219.20
220 12,983 - 1,019 739 -
221 - - 856 197 -
222 - - 3,962 135 -
223 - - 832 346 -
225 3,157 - 2,100 391 -
226 105 105 - - -
227 - - - - -
228 - - 2,455 354 -
230 - - 1,138 205 -
231 - - 2,309 410 -
232 38,048 - 1,347 119 -
233 4,093 - 678 113 -
234 - - 945 431 -
235 - - 1,563 265 -
236 - - 1,332 238 -
237 - - 578 143 -
238 325 - 332 107 -
239 - - - - -
</TABLE>
<PAGE>
ANNEX B
ADDITIONAL STEP LOAN AND INTEREST-ONLY LOAN CHARACTERISTICS
INTEREST ONLY LOANS
-------------------
<TABLE>
<CAPTION>
ORIGINAL INTEREST
CONTROL# LOAN# PROPERTY NAME ONLY PERIOD REMAINING INTEREST ONLY PERIOD
- -------- ----- ------------- ----------------- ------------------------------
<S> <C> <C> <C> <C>
1 C101 3 Park Avenue 10 7
10 2454 St. Francis Outpatient Building 23 16
30 C112 Frontier Village Phase III 6 0
33 C115 Uptons Department Store 4 0
36 5454 Captee Franchise Capital Partners LP IV 24 22
38 5453 Captee Franchise Capital Partners LP III 24 21
</TABLE>
STEP LOANS
----------
<TABLE>
<CAPTION>
STEP PAYMENT
CONTROL# LOAN# PROPERTY NAME PERIOD MONTHLY PAYMENT DATE
- -------- ----- ------------- ------ --------------- ------------
<S> <C> <C> <C> <C> <C>
51 4371 Memorial Skyway Plaza 1 $39,218.03 01/01/99
41 $35,438.37 05/01/02
</TABLE>
B-1
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
ANNEX C
AFFILIATED BORROWERS(1)
<TABLE>
<CAPTION>
PERCENT OF
CUT-OFF DATE RELATIONSHIP
LOAN NUMBERS BALANCE OF BORROWER CROSS-COLLATERALIZED AND CROSS-DEFAULTED
- --------------------------------- -------------- --------------------- ---------------------------------------------
<S> <C> <C> <C>
6026,6027,6028,6030,6226, 6231,
6232 0.98% Affiliated Entities No
6035, 6036, 6037, 6038, 6039,
6040, 6041, 6042 1.05% Affiliated Entities Cross-collateralized and Cross-defaulted
6224, 6225, 6227 0.48% Affiliated Entities Cross-collateralized and Cross-defaulted
6228, 6229, 6230 0.68% Affiliated Entities Cross-collateralized and Cross-defaulted
----
TOTAL 3.19%
- ----- ----
2493, 2494, 2495, 2496, 2497 2.62% Same Borrower Cross-collateralized and Cross-defaulted (2)
- --------------------------------- ---- --------------------- ---------------------------------------------
6273, 6274, 6275, 6276 1.62% Affiliated Entities Cross-collateralized and Cross-defaulted
- --------------------------------- ---- --------------------- ---------------------------------------------
3779, 5639 1.44% Affilated Entities No
- --------------------------------- ---- --------------------- ---------------------------------------------
5453, 5454 1.35% Affiliated Entities No
- --------------------------------- ---- --------------------- ---------------------------------------------
2752, 4022, 4923 1.05% Same Borrower Cross-collateralized and Cross-defaulted
- --------------------------------- ---- --------------------- ---------------------------------------------
2700, 3810 0.97% Affiliated Entities No
- --------------------------------- ---- --------------------- ---------------------------------------------
3291, 3701 0.94% Affiliated Entities No
- --------------------------------- ---- --------------------- ---------------------------------------------
3636, 3637 0.83% Affiliated Entities No
- --------------------------------- ---- --------------------- ---------------------------------------------
C124, C127, C132, C148 1.10% Affiliated Entities No
- --------------------------------- ---- --------------------- ---------------------------------------------
4027, 4028 0.44% Affiliated Entities Cross-collateralized and Cross-defaulted
- --------------------------------- ---- --------------------- ---------------------------------------------
3649, 3650 0.21% Affiliated Entities No
- --------------------------------- ---- --------------------- ---------------------------------------------
3145, 3151 0.35% Affiliated Entities Cross-collateralized and Cross-defaulted
- --------------------------------- ---- --------------------- ---------------------------------------------
1898, 1899 0.33% Same Borrower Cross-collateralized and Cross-defaulted
- --------------------------------- ---- --------------------- ---------------------------------------------
3922, 3932 0.29% Affiliated Entities No
- --------------------------------- ---- --------------------- ---------------------------------------------
C133, C147 0.40% Affiliated Entities No
- --------------------------------- ---- --------------------- ---------------------------------------------
3888, 3889 0.27% Affiliated Entities No
- --------------------------------- ---- --------------------- ---------------------------------------------
2396, 2397 0.23% Affiliated Entities No
- --------------------------------- ---- --------------------- ---------------------------------------------
3646, 3647 0.22% Affiliated Entities No
- --------------------------------- ---- --------------------- ---------------------------------------------
3798, 3800 0.22% Affiliated Entities No
- --------------------------------- ---- --------------------- ---------------------------------------------
6260, 6261 0.19% Affiliated Entities Cross-collateralized and Cross-defaulted
- --------------------------------- ---- --------------------- ---------------------------------------------
C149, C150 0.17% Same Borrower No
</TABLE>
(1) Affiliated Borrower means that a principal of or person that has control
of a borrower (through ownership of a controlling interest in its general
partner or managing member or otherwise) also has control of another
borrower (in any such manner).
(2) Loan #2495 is neither cross-collateralized nor cross-defaulted with any
of Loan #'s 2493, 2494, 2496 and 2497, which are cross-collateralized and
cross-defaulted with one another.
C-1
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
<TABLE>
<CAPTION>
ANNEX D
- ------------------------------------------------------------------------------------------------------------------------------------
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION
COMMERCIAL MORTGAGE PASS-THROUGH
SERIES 1999-NRF1
STATEMENT TO CERTIFICATEHOLDERS
- ------------------------------------------------------------------------------------------------------------------------------------
DIST DATE:
RECORD DATE:
- ------------------------------------------------------------------------------------------------------------------------------------
Original Beginning Prepayment Collateral Support Ending
Class Cusip # Certificate Certificate Principal Interest Penalties Deficit Total Certificate
Balance Balance Distribution Distribution (PP/YMC) Allocation/(Reimb) Distribution Balance
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
A-1 77436JEU7
A-2 77436JEV5
B 77436JEW3
C 77436JEX1
D 77436JEY9
E 77436JEZ6
F 77436JEK9
G 77436JEL7
H 77436JEM5
J 77436JEN3
K 77436JEP8
L 77436JEQ6
M 77436JER4
R-I 77436JES2
R-II 77436JETO
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ---------------------------------------------------------------------------------------------------
Original Beginning Prepayment Ending
Class Cusip # Notional Notional Interest Penalties Total Notional
Amount Amount Distribution (PP/YMC) Distribution Balance
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------
A-EC 77436JEJ2
- ------------------------------------------------------------------------------------------------------------------------------------
////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Factor Information Per $1,000
- -------------------------------------------------------------------------
Class Cusip # Principal Interest End Prin Pass Through
Distribution Distribution Balance Rate
- -------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
A-1 77436JEU7
A-2 77436JEV5
A-EC 77436JEJ2
B 77436JEW3
C 77436JEX1
D 77436JEY9
E 77436JEZ6
F 77436JEK9
G 77436JEL7
H 77436JEM5
J 77436JEN3
K 77436JEP8
L 77436JEQ6
M 77436JER4
R-I 77436JES2
R-II 77436JETO
- -------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////
- ------------------------------------------------------------------------------------------------------------------------------------
If there are any questions or comments, please contact the Administrator listed below
--------------------------------------------
| Nina Velastegui |
| The Chase Manhattan Bank |
| 450 West 33rd Street, 15th Floor |
| New York, New York 10001 |
| (212) 946-7600 |
--------------------------------------------
NATIONAL REALTY FUNDING L.C.
[CHASE LOGO] CHASE MASTER SERVICER (C) COPYRIGHT 1996, CHASE MANHATTAN CORPORATION
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
D-1
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION
COMMERCIAL MORTGAGE PASS-THROUGH
SERIES 1999-NRF1
STATEMENT TO CERTIFICATEHOLDERS
- ------------------------------------------------------------------------------------------------------------------------------------
DIST DATE:
RECORD DATE:
<S> <C>
Sec III.2(a)(iii) P & I Advances
--------------------------------
Sec III.2(a)(v) Realized Losses Class Loss Amount
--------------------------------
--------------------------------
Sec III.2(a)(vi) Aggregate Stated Principal Balance
------------------------------------------
Sec III.2(a)(viii) Principal Balance of REO Loan and REO Date Loan Number Balance Date
------------------------------------------
------------------------------------------
------------------------------------------
Sec III.2(a)(ix) REO Proceeds from Final Recovery Determination And Date Loan Number Proceeds Date
------------------------------------------
------------------------------------------
------------------------------------------
Sec III.2(a)(x) Outstanding Principal Balance of REO Loan and Appraisal Value Loan Number Balance Date
------------------------------------------
------------------------------------------
Sec III.2(a)(xi) Servicing Compensation
Sec III.2(a)(xii) Special Servicing Fee
Sec III.2(a)(xiii) Prepayment Premium
Yield Maintenance
Excess Interest
Sec III.2(b)(xiii) Default Interest
NATIONAL REALTY FUNDING L.C.
[CHASE LOGO] CHASE MASTER SERVICER (C) COPYRIGHT 1996, CHASE MANHATTAN CORPORATION
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
D-2
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION
COMMERCIAL MORTGAGE PASS-THROUGH
SERIES 1999-NRF1
STATEMENT TO CERTIFICATEHOLDERS
- ------------------------------------------------------------------------------------------------------------------------------------
DIST DATE:
DISTRIBUTION OF MORTGAGE LOAN CHARACTERISTICS
RECORD DATE:
Stratification By Current Loan Balance Stratification By Mortgage Loan Current Note Rate
- -------------------------------------------------------------------- --------------------------------------------------------------
% of Agg Weighted Average % of Agg Weighted Average
Current Scheduled # of Principal Prin --------------------- Current # of Principal Prin -----------------------
Principal Balance Loans Balance Balance WAM Note rate DSCR Note Rate Loans Balance Balance WAM Note rate DSCR
- -------------------------------------------------------------------- --------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------- -------------------------------------------------------------
TOTALS TOTALS
- --------------------------------------------------------------------- -------------------------------------------------------------
Average Principal Balance:
NATIONAL REALTY FUNDING L.C.
[CHASE LOGO] CHASE MASTER SERVICER (C) COPYRIGHT 1996, CHASE MANHATTAN CORPORATION
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
D-3
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION
COMMERCIAL MORTGAGE PASS-THROUGH
SERIES 1999-NRF1
STATEMENT TO CERTIFICATEHOLDERS
- ------------------------------------------------------------------------------------------------------------------------------------
DIST DATE:
DISTRIBUTION OF MORTGAGE LOAN CHARACTERISTICS
RECORD DATE:
Stratification By Remaining Stated Term
Stratification By Remaining Stated Term (Balloon Loans Only) (Fully Amortizing Loans Only)
- ----------------------------------------------------------------- -----------------------------------------------------------------
% of Agg Weighted Average % of Agg Weighted Average
Remaining # of Principal Prin --------------------- Remaining # of Principal Prin ---------------------
Stated Term Loans Balance Balance WAM Note rate DSCR Stated Term Loans Balance Balance WAM Note rate DSCR
- ----------------------------------------------------------------- -----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------- -----------------------------------------------------------------
TOTALS TOTALS
- ----------------------------------------------------------------- -----------------------------------------------------------------
NATIONAL REALTY FUNDING L.C.
[CHASE LOGO] CHASE MASTER SERVICER (C) COPYRIGHT 1996, CHASE MANHATTAN CORPORATION
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
D-4
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION
COMMERCIAL MORTGAGE PASS-THROUGH
SERIES 1999-NRF1
STATEMENT TO CERTIFICATEHOLDERS
- ------------------------------------------------------------------------------------------------------------------------------------
DIST DATE:
DISTRIBUTION OF MORTGAGE LOAN CHARACTERISTICS
RECORD DATE:
Stratification By Debt Service Coverage Ratio (DSCR) Stratification By Seasoning
- ----------------------------------------------------------------- -----------------------------------------------------------------
% of Agg Weighted Average % of Agg Weighted Average
Debt Service # of Principal Prin --------------------- # of Principal Prin ---------------------
Coverage Ratio Loans Balance Balance WAM Note rate DSCR Seasoning Loans Balance Balance WAM Note rate DSCR
- ----------------------------------------------------------------- -----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------- -----------------------------------------------------------------
TOTALS TOTALS
- ----------------------------------------------------------------- -----------------------------------------------------------------
Debt Coverage Service Ratios are calculated as described in the prospectus, values are updated periodically as new NOI figures
become available from borrowers on an asset level makes no representation as to the accuracy of the
data provided by the borrower for this calculation.
NATIONAL REALTY FUNDING L.C.
[CHASE LOGO] CHASE MASTER SERVICER (C) COPYRIGHT 1996, CHASE MANHATTAN CORPORATION
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
D-5
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION
COMMERCIAL MORTGAGE PASS-THROUGH
SERIES 1999-NRF1
STATEMENT TO CERTIFICATEHOLDERS
- ------------------------------------------------------------------------------------------------------------------------------------
DIST DATE:
DISTRIBUTION OF MORTGAGE LOAN CHARACTERISTICS
RECORD DATE:
Stratification By State Stratification By Property Type
- ----------------------------------------------------------------- -----------------------------------------------------------------
% of Agg Weighted Average % of Agg Weighted Average
# of Principal Prin --------------------- # of Principal Prin ---------------------
State Loans Balance Balance WAM Note rate DSCR Property Type Loans Balance Balance WAM Note rate DSCR
- ----------------------------------------------------------------- -----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------- -----------------------------------------------------------------
TOTALS TOTALS
- ----------------------------------------------------------------- -----------------------------------------------------------------
Debt Coverage Service Ratios are calculated as described in the prospectus, values are updated periodically as new NOI figures
become available from borrowers on an asset level. makes no representation as to the accuracy of the
data provided by the borrower for this calculation.
NATIONAL REALTY FUNDING L.C.
[CHASE LOGO] CHASE MASTER SERVICER (C) COPYRIGHT 1996, CHASE MANHATTAN CORPORATION
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
D-6
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION
COMMERCIAL MORTGAGE PASS-THROUGH
SERIES 1999-NRF1
STATEMENT TO CERTIFICATEHOLDERS
- ------------------------------------------------------------------------------------------------------------------------------------
DIST DATE:
MONTHLY LOAN STATUS DETAIL
RECORD DATE:
- ------------------------------------------------------------------------------------------------------------------------------------
Offering Metropolitan Neg. Beginning Ending Paid
Memorandum Property Statistical Monthly Gross Maturity Amort Scheduled Scheduled Thru
Loan ID Cross-Reference Type (I) Area State P&I Coupon Date (Y/N) Balance Balance Date
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ----------------------------------------------------
Appraisal Appraisal Has Loan Ever Loan
Reduction Reduction Been Specially Status
Date Amount Serviced?(Y/N) Code (II)
- ----------------------------------------------------
<S> <C> <C> <C>
- ----------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
(I) PROPERTY TYPE CODE (II) LOAN STATUS CODE
1. Single Family 6. Non-Exempt 12. Hotel 1. Specially Serviced 6. Discounted Payoff
2. Multi-Family 7. Church 13. Industrial 2. Foreclosure 7. Foreclosure Sale
3. Condominium or 8. School, HCF, WF 14. Industrial/Flex 3. Bankruptcy 8. Bankruptcy Sale
Co-Operative 9. Retail 15. Multiple Properties 4. REO 9. REO Disposal
4. Mobile Home 1O. Office 16. Ministorage 5. Prepayment in Full 10. Modification/Workout
5. Plan Unit Development 11. Retail/Office 17. Warehouse 11. Rehabilitated/Corrected
NATIONAL REALTY FUNDING L.C.
[CHASE LOGO] CHASE MASTER SERVICER (C) COPYRIGHT 1996, CHASE MANHATTAN CORPORATION
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
D-7
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION
COMMERCIAL MORTGAGE PASS-THROUGH
SERIES 1999-NRF1
STATEMENT TO CERTIFICATEHOLDERS
- ------------------------------------------------------------------------------------------------------------------------------------
DIST DATE:
PRINCIPAL PREPAYMENT DETAIL
RECORD DATE:
- ------------------------------------------------------------------------------------------------------------------------------------
Offering Memorandum Curtailment Net Liquidation Net Insurance Mortgage Repurchase
Loan Number Cross-Reference Amount Payoff Amount Proceeds Proceeds Price
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
NATIONAL REALTY FUNDING L.C.
[CHASE LOGO] CHASE MASTER SERVICER (C) COPYRIGHT 1996, CHASE MANHATTAN CORPORATION
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
D-8
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION
COMMERCIAL MORTGAGE PASS-THROUGH
SERIES 1999-NRF1
STATEMENT TO CERTIFICATEHOLDERS
- ------------------------------------------------------------------------------------------------------------------------------------
DIST DATE:
HISTORICAL INFORMATION
RECORD DATE:
- ------------------------------------------------------------------------------------------------------------------------------------
Delinquencies Prepayments Rates & Maturities
- ------------------------------------------------------------------------------------------------------------------------------------
1 Month 2 Months 3+ Months Foreclosure REO Modifications Curtailment Payoff Next Weighted Avg.
Distrib. ---------------------------------------------------------------------------------------------------------------------
Date # Balance # Balance # Balance # Balance # Balance # Balance # Amount # Amount Coupon Remit WAM
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
NATIONAL REALTY FUNDING L.C.
[CHASE LOGO] CHASE MASTER SERVICER (C) COPYRIGHT 1996, CHASE MANHATTAN CORPORATION
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
D-9
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION
COMMERCIAL MORTGAGE PASS-THROUGH
SERIES 1999-NRF1
STATEMENT TO CERTIFICATEHOLDERS
- ------------------------------------------------------------------------------------------------------------------------------------
DIST DATE:
ADVANCE SUMMARY
RECORD DATE:
Master Servicer P&I Advances Made
Master Servicer Unreimbursed P&I Advances Outstanding
Interest Accrued & Payable to Master Servicer in Respect of Advances Made
SERVICING FEE BREAKDOWN
Current Period Accrued Servicing Fees
Less Delinquent Servicing Fees
Plus Additional Servicing Fees
Less Reductions to Servicing Fees
Plus Servicing Fees for Delinquent Payments Received
Plus Adjustments for Prior Servicing Calculation
Total Servicing Fees Collected
ALLOCATION OF INTEREST SHORTFALLS, LOSSES & EXPENSES
- ------------------------------------------------------------------------------------------------------------------------------------
Accrued Prepayment Beginning Total Certificate Ending
Class Certificate Interest Unpaid Interest Expenses Interest Interest Unpaid
Interest Shortfall Interest Loss Payable Distributable Interest
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
NATIONAL REALTY FUNDING L.C.
[CHASE LOGO] CHASE MASTER SERVICER (C) COPYRIGHT 1996, CHASE MANHATTAN CORPORATION
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
D-10
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION
COMMERCIAL MORTGAGE PASS-THROUGH
SERIES 1999-NRF1
STATEMENT TO CERTIFICATEHOLDERS
- ------------------------------------------------------------------------------------------------------------------------------------
DIST DATE:
DELINQUENCY LOAN DETAIL
RECORD DATE:
- ------------------------------------------------------------------------------------------------------------------------------------
Offering Special
Memorandum # of Paid Servicer
Cross- Months Thru Current P&I Outstanding P&I Advance Loan Transfer
Loan Number Reference Delinq. Date Advances Advances** Description(I) Status(II) Date
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Totals
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -------------------------------------------------------------------
Current Outstanding
Property Property Outstanding
Foreclosure Protection Protection Property REO
Date Advances Advances Bankruptcy Date Date
- -------------------------------------------------------------------
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------
- -------------------------------------------------------------------
(I) ADVANCE DESCRIPTION (II) LOAN STATUS
A. P&I Advance - Loan in Grace Period 1. Specially Serviced 6. Discount Pay Off
B. P&I Advance - Late Payment but (less than) one Month Delinquent 2. Foreclosure 7. Foreclosure Sale
1. P&I Advance - Loan Delinquent 1 month 3. Bankruptcy 8. Bankruptcy Sale
2. P&I Advance - Loan Delinquent 2 months 4. REO 9. REO Dispositions
3. P&I Advance - Loan Delinquent 3 months or more 5. Prepaid in Full 10. Modification/Workout
11. Rehabilitated/Corrected
** Outstanding P & I Advances include the current period advance
NATIONAL REALTY FUNDING L.C.
[CHASE LOGO] CHASE MASTER SERVICER (C) COPYRIGHT 1996, CHASE MANHATTAN CORPORATION
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
D-11
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION
COMMERCIAL MORTGAGE PASS-THROUGH
SERIES 1999-NRF1
STATEMENT TO CERTIFICATEHOLDERS
- ------------------------------------------------------------------------------------------------------------------------------------
DIST DATE:
SPECIALLY SERVICED LOAN DETAIL
RECORD DATE:
- ------------------------------------------------------------------------------------------------------------------------------------
Offering Date of Specially Current Balance
Distrib Loan Memorandum Transfer to Serviced Scheduled Transfer Property
Date Number Cross-Reference Spec. Serv. Code (I) Balance Date Type (II) State
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -------------------------------------------------------------------
Net Remaining
Interest Operating NOI Note Maturity Amort
Rate Income Date DSCR Date Date Terms
- -------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------
(I) Specially Serviced Code (II) Property Type Code
(1) Request for waiver of Prepayment Penalty 1. Single Family 9. Commercial (Retail)
(2) Payment default 2. Multi-Family 10. Commercial (Office)
(3) Request for Loan Modification or Workout 3. Condominiumn or Co-Operative 11. Commercial (Retail/Office)
(4) Loan with Borrower Bankruptcy 4. Mobile Home 12. Commercial (Hotel)
(5) Loan in Process of Foreclosure 5. Plan Unit Development 13. Commercial (Industrial)
(6) Loan now REO Property 6. Commercial (Non-Exempt) 14. Commercial (Industrial/Flax)
(7) Loan Paid Off 7. Commercial (Church) 15. Commercial (Multiple Properties)
(8) Loan Returned to Master Servicer 8. Commercial (School, HCF, WF) 16. Commercial (Ministorage)
NATIONAL REALTY FUNDING L.C.
[CHASE LOGO] CHASE MASTER SERVICER (C) COPYRIGHT 1996, CHASE MANHATTAN CORPORATION
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
D-12
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION
COMMERCIAL MORTGAGE PASS-THROUGH
SERIES 1999-NRF1
STATEMENT TO CERTIFICATEHOLDERS
- ------------------------------------------------------------------------------------------------------------------------------------
DIST DATE:
SPECIALLY SERVICED LOAN DETAIL
RECORD DATE:
- ------------------------------------------------------------------------------------------------------------------------------------
Specially Site Other
Distribution Offering Memo Serviced Inspection Phase 1 Appraisal Appraisal REO Property Comment
Date Loan Number Cross-Reference Code (I) Date Date Date Value Revenue
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
(I) Specially Serviced Code
(1) Request for waiver of Prepayment Penalty (4) Loan with Borrower Bankruptcy (7) Loan Paid Off
(2) Payment default (5) Loan in Process of Foreclosure (8) Loan Returned to Master Servicer
(3) Request for Loan Modification or Workout (6) Loan now REO Property
NATIONAL REALTY FUNDING L.C.
[CHASE LOGO] CHASE MASTER SERVICER (C) COPYRIGHT 1996, CHASE MANHATTAN CORPORATION
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
D-13
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION
COMMERCIAL MORTGAGE PASS-THROUGH
SERIES 1999-NRF1
STATEMENT TO CERTIFICATEHOLDERS
- ------------------------------------------------------------------------------------------------------------------------------------
DIST DATE:
MODIFIED LOAN DETAIL
RECORD DATE:
- ------------------------------------------------------------------------------------------------------------------------------------
Offering Memorandum Modification
Loan Number Cross-Reference Date Modification Description
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
NATIONAL REALTY FUNDING L.C.
[CHASE LOGO] CHASE MASTER SERVICER (C) COPYRIGHT 1996, CHASE MANHATTAN CORPORATION
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
D-14
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION
COMMERCIAL MORTGAGE PASS-THROUGH
SERIES 1999-NRF1
STATEMENT TO CERTIFICATEHOLDERS
- ------------------------------------------------------------------------------------------------------------------------------------
DIST DATE:
REALIZED LOSS DETAIL
RECORD DATE:
- ------------------------------------------------------------------------------------------------------------------------------------
Offering Beginning Gross Proceeds Aggregate Net Net Proceeds
Loan Memorandum Appraisal Appraisal Scheduled Gross as a % of Liquidation Liquidation as a % of Realized
Number Cross-Reference Date Value Balance Proceeds Sched Principal Expenses* Proceeds Sched Balance Loss
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Current Total
- ------------------------------------------------------------------------------------------------------------------------------------
Cumulative
- ------------------------------------------------------------------------------------------------------------------------------------
* Aggregate liquidation expenses also include outstanding P & I advances and unpaid servicing fees, unpaid trustee fees, etc.
NATIONAL REALTY FUNDING L.C.
[CHASE LOGO] CHASE MASTER SERVICER (C) COPYRIGHT 1996, CHASE MANHATTAN CORPORATION
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
D-15
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
ANNEX E
E-1
- --------------------------------------------------------------------------------
STRUCTURAL AND COLLATERAL TERM SHEET
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION (DEPOSITOR)
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 1999-NRF1
$826,728,000 (APPROXIMATE)
- --------------------------------------------------------------------------------
The information included herein is provided solely by Prudential Securities
Incorporated ("PSI"), CIBC Oppenheimer Corp. ("CIBCOPCO") and Morgan Stanley &
Co. Incorporated ("MSDW") as Underwriters for the Prudential Securities Secured
Financing Corporation, Series 1999-NRF1 transaction. The analysis in this report
is accurate to the best of the Underwriters' knowledge and is based on
information provided by National Realty Funding L.C. ("NRF"), KeyBank National
Association ("KEY"), and CIBC Inc. ("CIBC"), collectively known as the
"Originators." Underwriters make no representations as to the accuracy of such
information. All opinions and conclusions in this report reflect Underwriters'
judgment as of this date and are subject to change. All analyses are based on
certain assumptions noted herein and different assumptions could yield
substantially different results. You are cautioned that there is no universally
accepted method for analyzing financial instruments or commercial mortgage
loans. You should review the assumptions; there may be differences between these
assumptions and your actual business practices. Further, Underwriters do not
guarantee any results and there is no guarantee as to the liquidity of the
instruments involved in this analysis. The decision to adopt any strategy
remains your responsibility. Underwriters (or any of their affiliates) or their
officers, directors, analysts or employees may have positions in securities, or
derivative instruments thereon referred to herein, and may, as principal or
agent, buy or sell such securities, or derivative instruments. In addition,
Underwriters may make a market in the securities referred to herein, but are not
obligated to do so. Finally, Underwriters have not addressed the legal,
accounting and tax implications of the analysis with respect to you and the
Underwriters strongly urge you to seek advice from your counsel, accountant and
tax advisor.
Neither the information nor the opinions expressed shall be construed to be, or
constitute, an offer to sell or buy or a solicitation of an offer to sell or buy
any securities, or derivative instruments mentioned herein.
THIS STRUCTURAL TERMSHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERMSHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERMSHEETS OR IN THE FINAL PROSPECTUS SUPPLEMENT. THIS PAGE MUST BE ACCOMPANIED
BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE CONTACT YOUR
PRUDENTIAL SECURITIES INCORPORATED FINANCIAL ADVISOR IMMEDIATELY. THE SECURITIES
DESCRIBED HEREIN ARE OFFERED ONLY PURSUANT TO A DEFINITIVE FINAL PROSPECTUS
SUPPLEMENT AND PROSPECTIVE INVESTORS WHO CONSIDER PURCHASING ANY SUCH SECURITIES
SHOULD MAKE THEIR INVESTMENT DECISION BASED ONLY UPON THE INFORMATION PROVIDED
THEREIN, CAPITALIZED TERMS USED BUT NOT DEFINED HEREIN HAVE THE MEANINGS GIVEN
TO SUCH TERMS IN THE FINAL PROSPECTUS SUPPLEMENT.
PRUDENTIAL SECURITIES CIBC WORLD MARKETS MORGAN STANLEY DEAN WITTER
- --------------------------------------------------------------------------------
<PAGE>
E-2
STRUCTURAL AND COLLATERAL TERM SHEET
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION (DEPOSITOR)
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 1999-NRF1
$826,728,000 (APPROXIMATE)
- --------------------------------------------------------------------------------
APPROXIMATE SECURITIES STRUCTURE:
- ---------------------------------
<TABLE>
<CAPTION>
Expected
Approx. Credit Weighted Principal
Expected Rating Face/Notional Support Average Life Payment
Class (Fitch/Moody's) Amount($MM) (% of UPB) (years)(a) Window (a)
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PUBLICLY OFFERED
A-1 AAA/Aaa $188,500 28.00 5.507 4/99-1/08
A-2 AAA/Aaa 480,307 28.00 9.416 1/08-1/09
B AA/Aa2 51,092 22.50 9.806 1/09-1/09
C A/A2 46,447 17.50 9.848 1/09-2/09
D BBB/Baa2 46,447 12.50 10.489 2/09-11/09
E BBB-/Baa3 13,935 11.00 10.639 11/09-11/09
PRIVATELY OFFERED
A-EC Privately Offered 928,918 N/A 9.099 N/A
NOT OFFERED
F Not Offered 20,903 8.75 10.889 11/09-9/10
G Not Offered 25,546 6.00 11.561 9/10-11/10
H Not Offered 9,291 5.00 11.697 11/10-12/10
J Not Offered 9,291 4.00 11.764 12/10-1/11
K Not Offered 15,794 2.30 13.151 1/11-9/13
L Not Offered 6,502 1.60 14.616 9/13-2/14
M Not Offered 14,863 0.00 17.104 2/14-10/18
- ----------------------------------------------------------------------------------------------
Total $928,918
</TABLE>
(a) Calculated at 0% CPR and no balloon or ARD extensions.
COLLATERAL FACTS:
Cut-off Date Balance: $928,918,344
Number of Mortgage Loans: 257
Number of Properties: 286
Average Cut-off Date Balance: $3,614,468
Weighted Average Gross Coupon: 7.361%
Weighted Average Remaining Amortization Term (months): 319.16
Weighted Average Cut-off Date DSCR: 1.45x
Weighted Average Cut-off Date LTV: 69.64%
Weighted Average Balloon/ARD LTV Ratio: 55.94%
Weighted Average Remaining Term to Balloon/Maturity (months): 121.02
SIGNIFICANT PROPERTY TYPE CONCENTRATIONS:
- -----------------------------------------
<TABLE>
<CAPTION>
Cut-off Date # of Wtd. Avg. Wtd. Avg.
Property Type Balance Properties % of Pool DSCR Coupon
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Office $ 240,877,522 34 25.93% 1.40x 7.38%
Multifamily 223,743,123 99 24.09 1.44 7.17
Retail-Anchored 139,992,537 21 15.07 1.37 7.25
Office/Industrial 76,516,529 32 8.24 1.39 7.61
Hotel 69,479,123 9 7.48 1.70 7.67
Retail-Unanchored 57,162,918 29 6.15 1.43 7.55
Industrial 42,032,540 16 4.52 1.44 7.30
Congregate Care 20,020,851 4 2.16 1.67 6.97
Nursing Home 17,944,128 5 1.93 1.77 7.61
Special Purpose 12,507,588 16 1.35 1.56 8.20
Other 28,641,486 21 3.08 1.50 7.35
- ---------------------------------------------------------------------------------------------
Total $928,918,344 286 100.00% 1.45x 7.36%
</TABLE>
COLLATERAL CONTRIBUTORS:
- ------------------------
<TABLE>
<CAPTION>
# of
Collateral Cut-off Date Mortgage Wtd. Avg. Wtd. Avg.
Contributors Balance Loans % of Pool DSCR Coupon
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NRF $462,878,238 113 49.83% 1.41x 7.13%
CIBC 274,240,616 42 29.52 1.48 7.61
KEY 191,799,490 102 20.65 1.48 7.58
- ---------------------------------------------------------------------------------------------
Total $928,918,344 257 100.00% 1.45x 7.36%
</TABLE>
<PAGE>
IMPORTANT CHARACTERISTICS:
- --------------------------
Lead Manager &
Placement Agent: Prudential Securities Incorporated ("PSI")
Co-Lead Manager &
Placement Agent: CIBC Oppenheimer Corp. ("CIBCOPCO")
Co-Manager: Morgan Stanley & Co. Incorporated ("MSDW")
Mortgage Loan Sellers: National Realty Finance L.C. ("NRFinance") CIBC
Inc. ("CIBC")
Transferor: Prudential Securities Credit Corporation ("PSCC")
Master Servicer: National Realty Funding L.C., a Missouri limited
liability company.
Special Servicer: Banc One Mortgage Capital Markets, LLC, a Delaware
limited liability company.
Special Sub-Servicer: National Realty Funding L.C., a Missouri limited
liability company.
Trustee: The Chase Manhattan Bank, a New York Banking
Corporation with its principal offices in New York.
The Trustee will be obligated to make any principal
and interest advances required to be made in the
event that the Master Servicer or Special Servicer
defaults in its performance of its obligation to
make such advances.
Pricing Date: On or about March 15, 1999
Settlement Date: On or about March 25, 1999
Cut-off Date: March 1, 1999
Determination Date: The 11th of each month, or if the 11th is not a
Business Day, the next Business Day.
First Determination Date: April 12, 1999
Distribution Date: The 15th of each month, or if the 15th day is not a
Business Day, the Business Day immediately
following the 15th day. But in no event shall it be
earlier than four Business Days after the
Determination Date.
First Distribution Date: April 16, 1999
ERISA Eligible: A-1, A-2 & A-EC
SMMEA: A-1, A-2, B & A-EC
Structure: See "Structural Overview" herein
Interest Accrual Period: Calendar month preceding distribution
Day Count: 30/360
Tax Treatment: REMIC
Rated Final
Distribution Date: November 1, 2031
Clean-up Call: 1%
Minimum Denominations: The Offered Certificates will be issued in minimum
denominations of $25,000.00 and multiples of $1.00
in excess thereof.
Pricing Assumption: All loans will be assumed to pay as scheduled to
its respective maturity or Anticipated Repayment
Date.
SIGNIFICANT STATE CONCENTRATIONS:
- ---------------------------------
<TABLE>
<CAPTION>
Cut-off Date # of Wtd. Avg.
State Balance Properties % of Pool DSCR
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
New York $114,799,017 24 12.36% 1.47x
Texas 105,497,855 27 11.36 1.38
Florida 96,137,807 20 10.35 1.38
California 68,391,270 18 7.36 1.41
Ohio 56,742,021 35 6.11 1.48
Nevada 51,060,090 9 5.50 1.38
Georgia 43,927,115 16 4.73 1.42
Massachusetts 39,022,632 16 4.20 1.63
Kentucky 27,883,244 3 3.00 1.54
Illinois 25,775,902 11 2.77 1.54
Other 299,681,392 107 32.26 1.46
- --------------------------------------------------------------------------------
Total $928,918,344 286 100.00% 1.45x
</TABLE>
THIS STRUCTURAL TERMSHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERMSHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERMSHEETS OR IN THE FINAL PROSPECTUS SUPPLEMENT. THIS PAGE MUST BE ACCOMPANIED
BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE CONTACT YOUR
PRUDENTIAL SECURITIES INCORPORATED FINANCIAL ADVISOR IMMEDIATELY. THE SECURITIES
DESCRIBED HEREIN ARE OFFERED ONLY PURSUANT TO A DEFINITIVE FINAL PROSPECTUS
SUPPLEMENT AND PROSPECTIVE INVESTORS WHO CONSIDER PURCHASING ANY SUCH SECURITIES
SHOULD MAKE THEIR INVESTMENT DECISION BASED ONLY UPON THE INFORMATION PROVIDED
THEREIN, CAPITALIZED TERMS USED BUT NOT DEFINED HEREIN HAVE THE MEANINGS GIVEN
TO SUCH TERMS IN THE FINAL PROSPECTUS SUPPLEMENT.
PRUDENTIAL SECURITIES CIBC WORLD MARKETS MORGAN STANLEY DEAN WITTER
- --------------------------------------------------------------------------------
<PAGE>
E-3
- --------------------------------------------------------------------------------
TRANSACTION HIGHLIGHTS
- --------------------------------------------------------------------------------
o Diversification:
- 257 loans secured by 286 properties
- Top 5 loans (Control #1-5) only 17.74% of pool; Top 10 (Control
#1-10) only 26.15%
- 38 states in total, including New York 12.36%, Texas 11.36%,
Florida 10.35%, California 7.36%, Ohio 6.11%, Nevada 5.50%; no
other state > 5.00%
- Balloon/ARD distribution features only 57.56% in 2008, and no
other year more than 23.53%
o Underwriting:
- 1.45x Weighted Average Cut-off Date DSCR
- 69.64% Weighted Average Cut-off Date LTV
- 55.94% Weighted Average Balloon/ARD LTV
- 26.60 Year Weighted Average Remaining Amortization Term
- --------------------------------------------------------------------------------
GENERAL POOL CHARACTERISTICS
- --------------------------------------------------------------------------------
Number of Loans: 257
Number of Properties: 286
Aggregate Cut-off Date Principal Balance: $928,918,344
Aggregate Original Principal Balance: $934,543,530
Weighted Average Gross Coupon: 7.361%
Gross Coupon Range: 6.100 - 9.470%
Weighted Average Net Coupon: 7.299%
Net Coupon Range: 6.0475- 9.4175%
Average Cut-off Date Principal Balance: $3,614,468
Average Original Principal Balance: $3,636,356
Maximum Cut-off Date Principal Balance: $67,500,000
Minimum Cut-off Date Principal Balance: $255,509
Maximum Original Principal Balance: $67,500,000
Minimum Original Principal Balance: $257,500
Weighted Average Cut-off Date DSCR: 1.45x
Cut-off Date DSCR Range: 0.93 - 2.54 (1)
Weighted Average Cut-off Date LTV: 69.64%
Cut-off Date LTV Range: 28.6 - 84.8%
Weighted Average Original LTV: 70.05%
Original LTV Range: 28.9 - 85.9%
Weighted Average Balloon/ARD LTV: 55.94%
Balloon/ARD LTV Range: 0.6 - 73.3%
Weighted Average Age (First Pay through Last Pay): 5.9 mths
Age Range: 1 - 22 mths
Weighted Avg. Remaining Amortization Term: 319.16 mths
Remaining Amortization Term Range: 109 - 360 mths
Weighted Average Original Amortization Term: 324.67 mths
Original Amortization Term Range: 120 - 360 mths
Weighted Avg. Rem. Term to Balloon/Maturity: 121.02 mths
Remaining Term Range: 75 - 235 mths
Weighted Average Original Term to Balloon/Maturity: 126.97 mths
Original Term Range: 84 - 240 mths
(1) Mortgage Loan Control #7.40, which has a 0.93x DSCR, and Mortgage Loan
Control #7.30, which has a 1.03x DSCR, are part of a cross-collateralized,
cross-defaulted pool. The pool has a Weighted Average DSCR of 1.62x.
<PAGE>
- --------------------------------------------------------------------------------
STRUCTURAL OVERVIEW
- --------------------------------------------------------------------------------
o The Mortgage Pool will be comprised of 257 mortgage loans with an
approximate Cut-off Date principal balance of $928,918,344.
- The regularly scheduled monthly principal payments from the loans
will be paid on a straight sequential basis (i.e., A-1, A-2,
etc.).
- All other principal collections from the loans will be distributed
on a straight sequential basis.
- If all Classes other than Classes A-1 and A-2 have been reduced to
zero, principal will be allocated to Class A-1 and A-2 on a
pro-rata basis.
o Each of the Classes (other than Classes A-1, A-2 and A-EC) will be
subordinate to earlier alphabetically lettered classes. Realized Losses and
Appraisal Reductions will be allocated in reverse alphabetical order to such
Classes with certificate balances, and then pro-rata to Classes A-1 and A-2.
o All Classes will pay interest on a 30/360 basis.
o Shortfalls resulting from servicer modifications or special servicer
compensation will be allocated in reverse alphabetical order to Classes with
certificate balances.
o The Special Servicer will be Banc One Mortgage Capital Markets, LLC and the
Special Sub-Servicer will be National Realty Funding L.C.
o The Special Servicer and Special Sub-Servicer will be responsible for
servicing loans that, in general, are in default or are in imminent default,
and for administering REO properties. The Special Servicer may modify such
loans -- if among other things such modifications -- in the sole good faith
of the Special Servicer, increase the recovery to Certificateholders on an
estimated net present value basis. The Special Servicer, as agent for the
trust and all Certificateholders is responsible for all collections,
modifications and extensions for defaulted loans or REO properties.
THIS STRUCTURAL TERMSHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERMSHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERMSHEETS OR IN THE FINAL PROSPECTUS SUPPLEMENT. THIS PAGE MUST BE ACCOMPANIED
BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE CONTACT YOUR
PRUDENTIAL SECURITIES INCORPORATED FINANCIAL ADVISOR IMMEDIATELY. THE SECURITIES
DESCRIBED HEREIN ARE OFFERED ONLY PURSUANT TO A DEFINITIVE FINAL PROSPECTUS
SUPPLEMENT AND PROSPECTIVE INVESTORS WHO CONSIDER PURCHASING ANY SUCH SECURITIES
SHOULD MAKE THEIR INVESTMENT DECISION BASED ONLY UPON THE INFORMATION PROVIDED
THEREIN, CAPITALIZED TERMS USED BUT NOT DEFINED HEREIN HAVE THE MEANINGS GIVEN
TO SUCH TERMS IN THE FINAL PROSPECTUS SUPPLEMENT.
PRUDENTIAL SECURITIES CIBC WORLD MARKETS MORGAN STANLEY DEAN WITTER
- --------------------------------------------------------------------------------
<PAGE>
E-4
- --------------------------------------------------------------------------------
CALL PROTECTION TABLE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
03/99 03/00 03/01 03/02 03/03 03/04 03/05 03/06 03/07 03/08
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Lockout / Defeasance 69.9% 70.0% 67.4% 64.0% 60.5% 49.0% 49.2% 49.5% 49.5% 37.1%
Greater of Yield Maintenance or Percentage Premium of:
5.00% or greater 18.5 18.4 18.3 16.8 16.7 15.7 14.2 14.6 5.9 5.8
4.00% to 4.99% 0.0 0.0 0.0 0.0 0.0 0.3 1.5 0.1 0.1 0.1
3.00% to 3.99% 5.1 5.1 5.0 4.6 4.4 5.1 5.2 6.3 3.2 1.6
2.00% to 2.99% 1.1 1.0 1.0 1.5 1.7 0.6 0.2 0.2 1.4 0.0
1.00% to 1.99% 5.6 5.5 7.5 12.3 15.9 25.8 24.7 24.0 19.8 14.1
0.00% to 0.99% 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.4 0.0
Total Yield Maintenance 30.1 30.0 31.9 35.2 38.7 47.5 45.9 45.3 30.7 21.7
Total of Yield Maintenance
and Lockout / Defeasance 100.0 100.0 99.2 99.2 99.2 96.5 95.1 94.8 80.2 58.8
Percentage Premium:
5.00% or greater 0.0 0.0 0.0 0.0 0.0 0.9 0.0 0.9 8.6 1.3
4.00% to 4.99% 0.0 0.0 0.0 0.0 0.0 0.2 0.9 0.0 0.9 0.0
3.00% to 3.99% 0.0 0.0 0.8 0.0 0.0 0.0 0.2 1.1 3.2 1.0
2.00% to 2.99% 0.0 0.0 0.0 0.8 0.0 0.3 0.3 0.4 2.5 0.0
1.00% to 1.99% 0.0 0.0 0.0 0.0 0.8 2.2 2.2 2.3 4.1 1.7
Total Percentage Premium 0.0 0.0 0.8 0.8 0.8 3.5 3.6 4.8 19.4 3.9
Open (no Call Protection) 0.0 0.0 0.0 0.0 0.0 0.0 1.4 0.5 0.4 37.3
Total All Categories 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Current Pool Balance ($MM) 928.9 917.7 905.2 891.4 876.6 860.8 843.7 797.6 774.8 717.9
Pool Factor 100.0 98.8 97.4 96.0 94.4 92.7 90.8 85.9 83.4 77.3
- ----------------------------------------------------------------------------------------------------------------
<CAPTION>
03/09 03/10 03/11 03/12 03/13 03/14 03/15 03/16 03/17 03/18
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Lockout / Defeasance 49.0% 15.4% 12.5% 13.0% 14.3% 12.2% 13.5% 23.4% 34.3% 0.0%
Greater of Yield
Maintenance or
Percentage Premium of:
5.00% or greater 16.3 19.2 16.8 16.1 14.2 3.8 3.6 5.1 0.0 0.0
4.00% to 4.99% 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
3.00% to 3.99% 5.7 0.0 0.0 0.0 0.0 4.3 4.2 5.9 0.0 0.0
2.00% to 2.99% 0.0 4.3 11.3 11.9 0.0 0.0 0.0 0.0 0.0 0.0
1.00% to 1.99% 11.0 11.7 19.0 13.0 13.5 23.6 0.0 0.0 0.0 0.0
0.00% to 0.99% 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Total Yield Maintenance 33.0 35.2 47.1 41.0 27.7 31.6 7.8 11.0 0.0 0.0
Total of Yield Maintenance
and Lockout / Defeasance 82.0 50.6 59.6 54.1 42.0 43.7 21.2 34.5 34.3 0.0
Percentage Premium:
5.00% or greater 6.4 3.8 19.2 0.0 1.7 13.9 0.0 0.0 5.2 0.0
4.00% to 4.99% 5.5 0.0 0.0 19.4 13.4 2.1 13.2 0.0 0.0 0.0
3.00% to 3.99% 1.3 8.8 0.0 0.0 7.1 0.0 0.0 18.0 0.0 0.0
2.00% to 2.99% 0.0 0.0 21.2 0.0 0.0 11.0 0.0 0.0 6.1 0.0
1.00% to 1.99% 4.2 0.0 0.0 26.5 0.0 0.0 10.6 0.0 0.0 0.0
Total Percentage Premium 17.3 12.6 40.4 45.9 22.1 27.0 23.8 18.0 11.4 0.0
Open (no Call Protection) 0.6 36.2 0.0 0.0 35.9 29.3 55.0 47.6 54.3 100.0
Total All Categories 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Current Pool Balance ($MM) 154.9 88.3 33.0 30.5 26.7 14.6 12.1 6.4 3.9 1.7
Pool Factor 16.7 9.5 3.6 3.3 2.9 1.6 1.3 0.7 0.4 0.2
</TABLE>
THIS STRUCTURAL TERMSHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERMSHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERMSHEETS OR IN THE FINAL PROSPECTUS SUPPLEMENT. THIS PAGE MUST BE ACCOMPANIED
BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE CONTACT YOUR
PRUDENTIAL SECURITIES INCORPORATED FINANCIAL ADVISOR IMMEDIATELY. THE SECURITIES
DESCRIBED HEREIN ARE OFFERED ONLY PURSUANT TO A DEFINITIVE FINAL PROSPECTUS
SUPPLEMENT AND PROSPECTIVE INVESTORS WHO CONSIDER PURCHASING ANY SUCH SECURITIES
SHOULD MAKE THEIR INVESTMENT DECISION BASED ONLY UPON THE INFORMATION PROVIDED
THEREIN, CAPITALIZED TERMS USED BUT NOT DEFINED HEREIN HAVE THE MEANINGS GIVEN
TO SUCH TERMS IN THE FINAL PROSPECTUS SUPPLEMENT.
PRUDENTIAL SECURITIES CIBC WORLD MARKETS MORGAN STANLEY DEAN WITTER
- --------------------------------------------------------------------------------
<PAGE>
E-5
- --------------------------------------------------------------------------------
ALLOCATION OF PREPAYMENT PREMIUMS AND YIELD MAINTENANCE CHARGES
- --------------------------------------------------------------------------------
All collected Prepayment Premiums and Yield Maintenance Charges associated with
principal prepayments will be allocated between the Offered Certificates and the
Class A-EC Certificates as follows:
Yield Maintenance Charges:
--------------------------
o The Yield Maintenance Charges will be allocated between such Classes of
Certificates based on the product of (a) the principal distributed to
each such Class as a percentage of the principal distributed to all
such Classes and (b) the Base Interest Fraction, with the remainder
being distributed to the Class A-EC Certificates.
Base (Pass-Through Rate - Discount Rate - Yield Maintenance Spread*)
Interest = ---------------------------------------------------------------
Fraction (Mortgage Rate - Discount Rate - Yield Maintenance Spread*)
* With the exception of one loan in the Trust, all yield maintenance
calculations are based on Treasuries flat. The one loan that calculates
yield maintenance as Treasury plus a spread (aggregate principal
Cut-off Date balance totaling $4,751,679) is assumed to have Yield
Maintenance based on Treasuries flat for pricing purposes.
o In general, this formula provides for an increase in the allocation of
yield maintenance charges to the Offered Certificates then entitled to
principal distribution relative to the Class A-EC Certificates as
interest rates decrease, and a decrease in the allocation to such
Classes as interest rates rise.
Fixed Percentage Prepayment Premiums:
-------------------------------------
o 75% of all Fixed Percentage Prepayment Premiums will be allocated to
the Class A-EC Certificates. The remaining 25% of the Fixed Percentage
Prepayment Premiums will be allocated to principal receiving bonds.
- --------------------------------------------------------------------------------
PROPERTY TYPE DISTRIBUTION BY CUT-OFF DATE PRINCIPAL BALANCE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
WEIGHTED SCHEDULED
AVERAGE WEIGHTED PRINCIPAL
NUMBER OF PERCENT OF WEIGHTED REMAINING AVERAGE WEIGHTED BALANCE
MORTGAGED CUT-OFF DATE AVERAGE TERM CUT-OFF DATE AVERAGE AS OF THE
PROPERTY TYPE PROPERTIES POOL BALANCE INTEREST RATE (MONTHS) LTV DSCR CUT-OFF DATE
- ------------- ---------- ------------ ------------- -------- --- ---- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
OFFICE 34 25.93% 7.375% 118.68 67.04% 1.40x $240,877,522
MULTIFAMILY 99 24.09 7.167 116.90 73.29 1.44 223,743,123
RETAIL-ANCHORED 21 15.07 7.250 132.78 73.01 1.37 139,992,537
OFFICE/INDUSTRIAL 32 8.24 7.611 118.36 70.38 1.39 76,516,529
HOTEL 9 7.48 7.668 111.90 65.10 1.70 69,479,123
RETAIL-UNANCHORED 29 6.15 7.548 130.33 67.70 1.43 57,162,918
INDUSTRIAL 16 4.52 7.298 120.57 71.33 1.44 42,032,540
CONGREGATE CARE 4 2.16 6.974 113.44 72.83 1.67 20,020,851
NURSING HOME 5 1.93 7.612 134.24 59.96 1.77 17,944,128
SPECIAL PURPOSE 16 1.35 8.195 120.18 53.90 1.56 12,507,588
RETAIL-SINGLE TENANT 9 1.06 7.684 137.49 68.36 1.42 9,819,068
RETAIL-SHADOW ANCHORED 4 0.70 7.227 121.67 65.51 1.41 6,488,576
MIXED USE 2 0.62 7.091 110.81 69.29 1.57 5,798,599
ASSISTED LIVING FACILITY 2 0.33 6.869 113.25 65.21 1.64 3,065,739
MOBILE HOME PARK 2 0.20 7.353 130.70 78.35 1.61 1,851,709
WAREHOUSE 1 0.10 7.560 116.00 45.03 2.06 945,674
SELF-STORAGE 1 0.07 7.970 116.00 74.68 1.23 672,122
- ------------ - ---- ----- ------ ----- ---- -------
TOTAL 286 100.00% 7.361% 121.02 69.64% 1.45x $928,918,344
=====================================================================================================================
</TABLE>
THIS STRUCTURAL TERMSHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERMSHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERMSHEETS OR IN THE FINAL PROSPECTUS SUPPLEMENT. THIS PAGE MUST BE ACCOMPANIED
BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE CONTACT YOUR
PRUDENTIAL SECURITIES INCORPORATED FINANCIAL ADVISOR IMMEDIATELY. THE SECURITIES
DESCRIBED HEREIN ARE OFFERED ONLY PURSUANT TO A DEFINITIVE FINAL PROSPECTUS
SUPPLEMENT AND PROSPECTIVE INVESTORS WHO CONSIDER PURCHASING ANY SUCH SECURITIES
SHOULD MAKE THEIR INVESTMENT DECISION BASED ONLY UPON THE INFORMATION PROVIDED
THEREIN, CAPITALIZED TERMS USED BUT NOT DEFINED HEREIN HAVE THE MEANINGS GIVEN
TO SUCH TERMS IN THE FINAL PROSPECTUS SUPPLEMENT.
PRUDENTIAL SECURITIES CIBC WORLD MARKETS MORGAN STANLEY DEAN WITTER
- --------------------------------------------------------------------------------
<PAGE>
E-6
- --------------------------------------------------------------------------------
GEOGRAPHIC DISTRIBUTION BY CUT-OFF DATE PRINCIPAL BALANCE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
WEIGHTED SCHEDULED
AVERAGE WEIGHTED PRINCIPAL
NUMBER OF PERCENT OF WEIGHTED REMAINING AVERAGE WEIGHTED BALANCE
MORTGAGED CUT-OFF DATE AVERAGE TERM CUT-OFF DATE AVERAGE AS OF THE
STATE PROPERTIES POOL BALANCE INTEREST RATE (MONTHS) LTV DSCR CUT-OFF DATE
- ----- ---------- ------------ ------------- -------- --- ---- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
NEW YORK 24 12.36% 7.623% 130.02 60.89% 1.47x $114,799,017
TEXAS 27 11.36 7.173 110.38 72.73 1.38 105,497,855
FLORIDA 20 10.35 7.263 120.98 72.40 1.38 96,137,807
CALIFORNIA 18 7.36 7.082 119.46 70.83 1.41 68,391,270
OHIO 35 6.11 7.707 113.25 68.74 1.48 56,742,021
NEVADA 9 5.50 7.168 114.85 74.45 1.38 51,060,090
GEORGIA 16 4.73 7.529 136.44 69.64 1.42 43,927,115
MASSACHUSETTS 16 4.20 7.111 119.86 62.29 1.63 39,022,632
KENTUCKY 3 3.00 8.222 117.48 70.37 1.54 27,883,244
ILLINOIS 11 2.77 7.100 112.67 72.04 1.54 25,775,902
CONNECTICUT 8 2.66 7.438 116.90 70.79 1.35 24,698,582
MICHIGAN 12 2.62 7.374 135.52 73.32 1.48 24,346,903
WASHINGTON 5 2.24 7.370 89.95 65.17 1.77 20,814,351
OREGON 3 2.18 7.120 191.47 69.30 1.67 20,218,347
MAINE 2 2.10 7.310 111.00 71.67 1.37 19,506,924
MISSOURI 5 2.09 6.953 121.65 73.25 1.50 19,407,405
COLORADO 10 2.04 7.352 117.45 67.68 1.47 18,928,052
INDIANA 8 1.99 7.802 131.37 68.45 1.40 18,509,197
PENNSYLVANIA 6 1.74 7.281 114.95 71.78 1.37 16,183,431
HAWAII 1 1.56 6.990 113.00 73.42 1.37 14,500,000
MARYLAND 4 1.43 7.238 114.83 74.62 1.41 13,290,425
TENNESSEE 5 1.42 7.786 111.85 72.91 1.59 13,175,305
NEW JERSEY 6 1.40 7.719 120.77 67.38 1.42 12,962,782
OKLAHOMA 6 1.04 7.124 137.05 69.53 1.30 9,645,201
ARIZONA 2 1.00 7.452 110.23 70.15 1.41 9,322,499
NORTH DAKOTA 1 0.93 6.680 114.00 79.30 1.31 8,682,574
LOUISIANA 1 0.69 6.970 115.00 63.42 1.48 6,436,652
UTAH 5 0.68 7.380 137.50 70.82 1.39 6,315,622
MONTANA 1 0.51 7.450 106.00 74.24 1.47 4,751,679
KANSAS 4 0.49 6.814 122.22 76.78 1.44 4,563,729
ALABAMA 1 0.41 7.800 118.00 79.57 1.27 3,791,718
VIRGINIA 3 0.37 8.357 116.61 64.29 1.49 3,409,608
IDAHO 2 0.21 6.822 113.97 59.57 1.63 1,941,388
MINNESOTA 1 0.16 7.640 234.00 72.95 1.35 1,459,038
MISSISSIPPI 1 0.15 7.720 118.00 75.10 1.70 1,397,707
VERMONT 2 0.06 8.710 105.00 84.77 1.42 572,173
NEW HAMPSHIRE 1 0.05 8.820 108.00 41.24 1.60 494,905
ALASKA 1 0.04 8.050 112.00 28.64 1.31 355,193
- ------ - ---- ----- ------ ----- ---- -------
TOTAL 286 100.00% 7.361% 121.02 69.64% 1.45x $928,918,344
================================================================================================================
</TABLE>
THIS STRUCTURAL TERMSHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERMSHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERMSHEETS OR IN THE FINAL PROSPECTUS SUPPLEMENT. THIS PAGE MUST BE ACCOMPANIED
BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE CONTACT YOUR
PRUDENTIAL SECURITIES INCORPORATED FINANCIAL ADVISOR IMMEDIATELY. THE SECURITIES
DESCRIBED HEREIN ARE OFFERED ONLY PURSUANT TO A DEFINITIVE FINAL PROSPECTUS
SUPPLEMENT AND PROSPECTIVE INVESTORS WHO CONSIDER PURCHASING ANY SUCH SECURITIES
SHOULD MAKE THEIR INVESTMENT DECISION BASED ONLY UPON THE INFORMATION PROVIDED
THEREIN, CAPITALIZED TERMS USED BUT NOT DEFINED HEREIN HAVE THE MEANINGS GIVEN
TO SUCH TERMS IN THE FINAL PROSPECTUS SUPPLEMENT.
PRUDENTIAL SECURITIES CIBC WORLD MARKETS MORGAN STANLEY DEAN WITTER
- --------------------------------------------------------------------------------
<PAGE>
E-7
- --------------------------------------------------------------------------------
BALLOON / ARD LTV RANGE (BALLOON / ARD LOANS ONLY)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
WEIGHTED SCHEDULE
PERCENT OF WEIGHTED AVERAGE WEIGHTED PRINCIPAL
NUMBER OF CUT-OFF DATE AVERAGE REMAINING AVERAGE WEIGHTED BALANCE AS OF
RANGE OF BALLOON MORTGAGE POOL INTEREST TERM CUT-OFF DATE AVERAGE THE CUT-OFF
LOAN-TO-VALUE RATIOS LOANS BALANCE RATE (MONTHS) LTV DSCR DATE
- -------------------- ----- ------- ---- -------- --- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
ZERO 7 3.12% 7.197% 226.15 69.96% 1.47x $ 28,967,915
0.57 - 15.00% 3 0.26 7.308 148.55 45.36 1.82 2,396,667
15.01 - 35.00 6 1.10 7.374 164.11 52.18 1.87 10,260,100
35.01 - 40.00 8 2.50 7.341 121.83 50.29 1.71 23,223,550
40.01 - 45.00 15 5.09 7.506 127.69 64.03 1.45 47,250,118
45.01 - 50.00 24 13.09 7.542 126.83 59.55 1.46 121,571,203
50.01 - 55.00 30 7.68 7.445 118.85 65.88 1.51 71,350,419
55.01 - 60.00 53 19.86 7.453 116.48 70.32 1.47 184,526,306
60.01 - 65.00 70 26.23 7.348 114.84 73.65 1.42 243,660,539
65.01 - 70.00 36 20.08 7.098 110.67 76.31 1.38 186,533,798
70.01 - 75.00 5 0.99 7.961 103.55 79.43 1.44 9,177,728
- ------------- - ---- ----- ------ ----- ---- ---------
TOTAL 257 100.00% 7.361% 121.02 69.64% 1.45x $928,918,344
=======================================================================================================================
</TABLE>
- --------------------------------------------------------------------------------
PAYMENT TYPES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
WEIGHTED SCHEDULED
WEIGHTED AVERAGE WEIGHTED PRINCIPAL
PERCENT OF AVERAGE REMAINING AVERAGE WEIGHTED BALANCE AS OF
NUMBER OF CUT-OFF DATE INTEREST TERM CUT-OFF DATE AVERAGE THE CUT-OFF
PAYMENT TYPES LOANS POOL BALANCE RATE (MONTHS) LTV DSCR DATE
- ------------- ----- ------------ ---- -------- --- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
AMORT. BALLOON 240 84.41% 7.33% 116.70 71.02% 1.44x $784,064,794
FULLY AMORTIZING 10 3.38 7.21 220.22 68.08 1.50 31,364,582
GRADUATED P&I BALLOON 1 0.55 7.05 141.00 67.41 1.32 5,122,956
INT. ONLY, THEN AMORT BALL. 6 11.67 7.66 122.67 60.21 1.47 108,366,011
- --------------------------- - ----- ---- ------ ----- ---- -----------
TOTAL 257 100.00% 7.36% 121.02 69.64% 1.45x $928,918,344
=======================================================================================================================
</TABLE>
THIS STRUCTURAL TERMSHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERMSHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERMSHEETS OR IN THE FINAL PROSPECTUS SUPPLEMENT. THIS PAGE MUST BE ACCOMPANIED
BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE CONTACT YOUR
PRUDENTIAL SECURITIES INCORPORATED FINANCIAL ADVISOR IMMEDIATELY. THE SECURITIES
DESCRIBED HEREIN ARE OFFERED ONLY PURSUANT TO A DEFINITIVE FINAL PROSPECTUS
SUPPLEMENT AND PROSPECTIVE INVESTORS WHO CONSIDER PURCHASING ANY SUCH SECURITIES
SHOULD MAKE THEIR INVESTMENT DECISION BASED ONLY UPON THE INFORMATION PROVIDED
THEREIN, CAPITALIZED TERMS USED BUT NOT DEFINED HEREIN HAVE THE MEANINGS GIVEN
TO SUCH TERMS IN THE FINAL PROSPECTUS SUPPLEMENT.
PRUDENTIAL SECURITIES CIBC WORLD MARKETS MORGAN STANLEY DEAN WITTER
- --------------------------------------------------------------------------------
<PAGE>
E-8
- --------------------------------------------------------------------------------
DEBT SERVICE COVERAGE RATIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
WEIGHTED SCHEDULED
WEIGHTED AVERAGE WEIGHTED PRINCIPAL
PERCENT OF AVERAGE REMAINING AVERAGE WEIGHTED BALANCE
NUMBER OF CUT-OFF DATE INTEREST TERM CUT-OFF DATE AVERAGE AS OF THE
DSCR (X) LOANS POOL BALANCE RATE (MONTHS) LTV DSCR CUT-OFF DATE
- -------- ----- ------------ ---- -------- --- ---- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
0.93 - 1.00X (1) 1 0.14% 7.620% 115.00 46.72% 0.93x $ 1,268,063
1.01 - 1.15 (1) 1 0.35 7.620 115.00 59.86 1.03 3,232,319
1.16 - 1.20 3 0.39 7.974 116.00 72.13 1.20 3,600,274
1.21 - 1.25 14 6.45 7.319 108.36 74.10 1.24 59,907,417
1.26 - 1.30 27 8.23 7.442 125.79 72.69 1.28 76,412,700
1.31 - 1.35 38 18.11 7.224 123.14 72.23 1.33 168,267,665
1.36 - 1.40 34 14.09 7.309 117.63 73.21 1.38 130,879,823
1.41 - 1.45 47 13.06 7.210 115.30 72.34 1.43 121,286,130
1.46 - 1.50 25 14.09 7.562 123.14 62.78 1.49 130,871,427
1.51 - 1.55 20 7.24 7.238 117.92 67.55 1.53 67,291,200
1.56 - 1.60 11 6.25 7.885 148.37 68.84 1.58 58,025,331
1.61 - 1.65 6 2.15 7.101 114.93 67.90 1.63 19,996,110
1.66 - 1.70 5 1.01 7.447 114.76 65.25 1.69 9,370,450
1.71 - 1.75 6 1.90 7.163 127.11 67.67 1.73 17,629,260
1.76 - 1.80 4 1.03 6.965 115.67 64.17 1.78 9,550,334
1.81 - 1.85 6 0.97 7.309 118.64 62.40 1.84 8,976,637
1.86 - 1.90 2 1.13 7.620 115.00 65.75 1.88 10,517,467
1.91 - 1.95 2 1.75 7.477 81.09 63.08 1.93 16,287,721
1.96 - 2.00 1 0.47 8.660 107.00 74.09 1.98 4,334,546
2.01 - 2.15 1 0.10 7.560 116.00 45.03 2.06 945,674
2.16 - 2.50 2 0.79 6.495 143.35 49.97 2.23 7,341,519
2.51 - 3.00 1 0.32 7.570 233.00 45.02 2.54 2,926,279
- ----------- - ---- ----- ------ ----- ---- ---------
TOTAL 257 100.00% 7.361% 121.02 69.64% 1.45x $928,918,344
===========================================================================================================
</TABLE>
(1) Mortgage Loan Control #7.40, which has a 0.93x DSCR, and Mortgage Loan
Control #7.30, which has a 1.03x DSCR, are part of a cross-collateralized,
cross-defaulted pool. The pool has a Weighted Average DSCR of 1.62x.
THIS STRUCTURAL TERMSHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERMSHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERMSHEETS OR IN THE FINAL PROSPECTUS SUPPLEMENT. THIS PAGE MUST BE ACCOMPANIED
BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE CONTACT YOUR
PRUDENTIAL SECURITIES INCORPORATED FINANCIAL ADVISOR IMMEDIATELY. THE SECURITIES
DESCRIBED HEREIN ARE OFFERED ONLY PURSUANT TO A DEFINITIVE FINAL PROSPECTUS
SUPPLEMENT AND PROSPECTIVE INVESTORS WHO CONSIDER PURCHASING ANY SUCH SECURITIES
SHOULD MAKE THEIR INVESTMENT DECISION BASED ONLY UPON THE INFORMATION PROVIDED
THEREIN, CAPITALIZED TERMS USED BUT NOT DEFINED HEREIN HAVE THE MEANINGS GIVEN
TO SUCH TERMS IN THE FINAL PROSPECTUS SUPPLEMENT.
PRUDENTIAL SECURITIES CIBC WORLD MARKETS MORGAN STANLEY DEAN WITTER
- --------------------------------------------------------------------------------
<PAGE>
E-9
- --------------------------------------------------------------------------------
MORTGAGE INTEREST RATES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
WEIGHTED SCHEDULED
WEIGHTED AVERAGE WEIGHTED PRINCIPAL
PERCENT OF AVERAGE REMAINING AVERAGE WEIGHTED BALANCE
RANGE OF NUMBER OF CUT-OFF DATE INTEREST TERM CUT-OFF DATE AVERAGE AS OF THE
MORTGAGE RATES LOANS POOL BALANCE RATE (MONTHS) LTV DSCR CUT-OFF DATE
- -------------- ----- ------------ ---- -------- --- ---- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
6.0001 - 6.2500% 2 1.04% 6.186% 115.22 78.16% 1.42x $ 9,651,215
6.2501 - 6.5000 10 3.58 6.315 120.86 68.74 1.64 33,270,011
6.5001 - 6.7500 12 4.56 6.650 114.75 72.30 1.46 42,353,363
6.7501 - 7.0000 37 21.60 6.926 119.15 74.14 1.40 200,635,633
7.0001 - 7.2500 37 15.77 7.150 129.39 71.02 1.41 146,464,954
7.2501 - 7.5000 38 17.66 7.364 116.94 70.06 1.44 164,002,969
7.5001 - 7.7500 46 11.46 7.607 123.56 67.97 1.46 106,441,489
7.7501 - 8.0000 13 11.51 7.808 123.68 61.49 1.46 106,947,915
8.0001 - 8.2500 20 5.92 8.154 118.61 66.17 1.50 55,010,546
8.2501 - 8.5000 19 3.97 8.389 123.69 66.69 1.47 36,876,008
8.5001 - 8.7500 15 2.33 8.656 109.34 71.12 1.48 21,611,545
8.7501 - 9.0000 4 0.20 8.912 104.03 61.51 1.42 1,823,072
9.0001 - 9.2500 2 0.17 9.090 99.00 72.94 1.41 1,583,094
9.2501 - 9.5000 2 0.24 9.447 98.00 63.39 1.47 2,246,530
- --------------- - ---- ----- ----- ----- ---- ---------
TOTAL 257 100.00% 7.361% 121.02 69.64% 1.45x $928,918,344
==============================================================================================================
</TABLE>
THIS STRUCTURAL TERMSHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERMSHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERMSHEETS OR IN THE FINAL PROSPECTUS SUPPLEMENT. THIS PAGE MUST BE ACCOMPANIED
BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE CONTACT YOUR
PRUDENTIAL SECURITIES INCORPORATED FINANCIAL ADVISOR IMMEDIATELY. THE SECURITIES
DESCRIBED HEREIN ARE OFFERED ONLY PURSUANT TO A DEFINITIVE FINAL PROSPECTUS
SUPPLEMENT AND PROSPECTIVE INVESTORS WHO CONSIDER PURCHASING ANY SUCH SECURITIES
SHOULD MAKE THEIR INVESTMENT DECISION BASED ONLY UPON THE INFORMATION PROVIDED
THEREIN, CAPITALIZED TERMS USED BUT NOT DEFINED HEREIN HAVE THE MEANINGS GIVEN
TO SUCH TERMS IN THE FINAL PROSPECTUS SUPPLEMENT.
PRUDENTIAL SECURITIES CIBC WORLD MARKETS MORGAN STANLEY DEAN WITTER
- --------------------------------------------------------------------------------
<PAGE>
E-10
- --------------------------------------------------------------------------------
SUMMARIES OF THE TEN LARGEST MORTGAGE LOANS
- --------------------------------------------------------------------------------
CONTROL #: 1 LOAN #: C101 - THREE PARK AVENUE
- ---------------------------------------------
- --------------------------------------------------------------------------------
Cut-off Date Balance: $67,500,000
Loan Type: Interest Only Year One; Principal and Interest;
Hyper-Amortization
Origination Date: November 30, 1998
Maturity Date: November 1, 2029
Anticipated Repay Date: November 1, 2009
Mortgage Rate: 7.76%
Annual Debt Service: $5,808,538
DSCR: 1.49x
Underwritten Cash Flow: $8,665,996
Balance at Maturity: $59,950,487
Property Type: Class-A Office
Location: New York, NY
Year Built/Renovated: 1975/1997
Square Footage: 656,761
Cut-off Date Balance/sf: $102.78
Appraised Value: $120,000,000
Current LTV: 56.3%
Balance at Maturity LTV: 50.0%
Percent Occupied: 98.7%
Occupancy as of Date: January 1999
- --------------------------------------------------------------------------------
THE LOAN
The Three Park Avenue Loan (the "Three Park Avenue Loan") is secured by a first
mortgage on a 656,761 square foot office building located in New York, New York
(the "Three Park Property"). The Three Park Avenue Loan was originated by CIBC
Inc., on November 30, 1998 to refinance existing debt.
BORROWER. The borrower is Three Park Avenue Building Co., L.P, a
Delaware Limited Partnership (the "Three Park Avenue Borrower"). The
Mortgage Loan Documents limit the Three Park Avenue Borrower to the
acquisition, operation, and disposition of the Three Park Avenue
Property. The Three Park Avenue Borrower is a single-purpose
bankruptcy-remote entity.
SECURITY. The Three Park Avenue Loan is secured by a mortgage and
security agreement, assignment of leases and rents, UCC financing
statements and certain additional security documents. The Mortgage is a
first lien on the leasehold interest in the Three Park Avenue Property.
The Three Park Avenue Loan is non-recourse, subject to certain limited
exceptions.
PAYMENT TERMS. The Mortgage Rate is fixed at 7.760%. The Three
Park Avenue Loan requires monthly payments of interest only, in the
amount of $442,562.50 on each Due Date through and including October 1,
1999. Beginning with the November 1, 1999 Due Date, Monthly Payments of
$484,044.80 (includes principal and interest) are due until its
Anticipated Repayment Date of November 1, 2009, whereafter the interest
rate increases as set forth in the note and all cash flow is swept by
the lender in order to accelerate the amortization of principal
(hyper-amortization). The Three Park Avenue Loan accrues interest
computed on the basis of actual number of days elapsed each month in a
360-day year.
PREPAYMENT. By its terms, the Three Park Avenue Loan may not be
prepaid in whole or in part during the loan term, except that it may be
paid without a Prepayment Premium during the last 6 months prior to the
Anticipated Repayment Date. The Three Park Avenue Loan may be defeased
on or after the earlier of (i) 2 years after the Closing Date or (ii) 5
years after the closing of the Three Park Avenue Loan.
If there is an event of default and the lender accelerates the
Three Park Avenue Loan, the note requires the Three Park Avenue
Borrower to pay the lender a Yield Maintenance Charge (at treasuries
flat) calculated by reference to the U.S. Treasury obligations. There
is a 5% late fee for overdue installments, and the Three Park Avenue
Loan accrues interest at the Mortgage Rate plus 4% per annum while the
Three Park Avenue Loan is in default. Should the Three Park Avenue Loan
not be repaid at the Anticipated Repayment Date, interest shall accrue
at the Mortgage Rate plus 2% or the treasury rate plus 2%, whichever is
greater.
TRANSFER OF PROPERTY OR INTEREST IN BORROWER. The Three Park
Avenue Loan becomes immediately due and payable upon the transfer of
the Three Park Avenue Property or any majority ownership interest in
the Three Park Avenue Borrower, provided, however, the Three Park
Avenue Borrower has the right to one transfer of the Three Park Avenue
Property subject to the terms of the Mortgage and upon the approval of
the lender.
ESCROWS/RESERVES. There is a tax escrow which requires monthly
deposits in an amount sufficient to pay estimated taxes when due. There
is also an escrow required for capital expenditures which is required
to be funded monthly in the amount of $12,578.22, an escrow required
for tenant improvements and leasing costs which is required to be
funded in the monthly amount of $70,214 (until such times as this
account equals $3,000,000), and an escrow required for insurance which
is to be funded in the monthly amount of $4,154. Additionally, reserves
for tenant holdbacks and punch list items total $675,000 and
$611,970.41, respectively.
SUBORDINATE/OTHER DEBT. The Mortgage Loan Documents prohibit the
Three Park Avenue Borrower from incurring any subordinate indebtedness
or encumbrances.
THE PROPERTY
The Three Park Avenue Property is a 656,761 square foot office building located
in New York, New York. The Three Park Avenue Property was 98.7% occupied as of
January 1999 to 60 tenants based on a rent roll provided by the Three Park
Avenue Borrower. The Three Park Avenue Property was completed in 1975 and is a
42-story steel and brick building. The property was renovated in 1997. Per the
January 1999 rent roll, the average base rental rate was $24.98.
THE MANAGEMENT
Cohen Brothers Realty Corporation, an affiliate of the Three Park Avenue
Borrower, is the property manager.
THIS STRUCTURAL TERMSHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERMSHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERMSHEETS OR IN THE FINAL PROSPECTUS SUPPLEMENT. THIS PAGE MUST BE ACCOMPANIED
BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE CONTACT YOUR
PRUDENTIAL SECURITIES INCORPORATED FINANCIAL ADVISOR IMMEDIATELY. THE SECURITIES
DESCRIBED HEREIN ARE OFFERED ONLY PURSUANT TO A DEFINITIVE FINAL PROSPECTUS
SUPPLEMENT AND PROSPECTIVE INVESTORS WHO CONSIDER PURCHASING ANY SUCH SECURITIES
SHOULD MAKE THEIR INVESTMENT DECISION BASED ONLY UPON THE INFORMATION PROVIDED
THEREIN, CAPITALIZED TERMS USED BUT NOT DEFINED HEREIN HAVE THE MEANINGS GIVEN
TO SUCH TERMS IN THE FINAL PROSPECTUS SUPPLEMENT.
PRUDENTIAL SECURITIES CIBC WORLD MARKETS MORGAN STANLEY DEAN WITTER
- --------------------------------------------------------------------------------
<PAGE>
E-11
CONTROL #: 2 LOAN #: 2172 - TOWER SHOPS
- ---------------------------------------
- --------------------------------------------------------------------------------
Cut-off Date Balance: $34,753,057
Loan Type: Amortizing Balloon
Origination Date: May 28,1998
Maturity Date: June 1, 2008
Anticipated Repay Date: NAP
Mortgage Rate: 6.93%
Annual Debt Service: $2,774,553
DSCR: 1.32x
Underwritten Cash Flow: $3,674,375
Balance at Maturity: $30,473,197
Property Type: Retail-Anchored
Location: Davie, Florida
Year Built/Renovated: 1990
Square Footage: 373,290
Cut-off Date Balance/sf: $93.76
Appraised Value: $45,000,000
Current LTV: 77.2%
Balance at Maturity LTV: 67.7%
Percent Occupied: 96.4%
Occupancy as of Date: December 7, 1998
- --------------------------------------------------------------------------------
THE LOAN
The Tower Shops loan (the "Tower Shops Loan") is secured by a first mortgage on
a 373,290 square foot shopping center located in the City of Davie, Broward
County, Florida (the "Tower Shops Property"). The Tower Shops Loan was
originated by National Realty Funding L.C. on May 28, 1998 and subsequently
acquired by National Realty Finance L.C.
BORROWER. The borrower is Tri-County Plaza Associates, Ltd., a
Florida limited partnership (the "Tower Shops Borrower"), that was
formed in October 1988 as a single purpose entity to purchase the Tower
Shops Property. The Tower Shops Borrower, a bankruptcy remote entity,
operates under the umbrella of Turnberry Associates, one of the largest
owners and developers of real estate in the Southeast United States.
SECURITY. The Tower Shops Loan is secured by an amended and
restated mortgage, assignment of leases and rents, security agreement,
and fixture filing, UCC financing statements, and certain additional
security documents. 29,252 square feet of the Tower Shops Property has
been master leased by the Tower Shops Borrower to the 1990
Sofer-Schwartz Children's Trust U/T/A September 3, 1990 (the "Trust").
The obligations of the Trust under the master lease have been
guaranteed by Jeffrey Soffer. The master lease has an anticipated
release date of April 30, 1999 provided Ross Stores occupies the space.
PAYMENT TERMS. The Mortgage Rate is fixed at 6.930%. The Tower
Shops Loan requires monthly payments of $231,212.79 (includes principal
and interest) until its maturity on June 1, 2008, at which time all
unpaid principal and accrued and unpaid interest is due. The interest
on the Tower Shops Loan accrues on an actual/360 basis.
PREPAYMENT. The terms of the note provide that the Tower Shops
Loan may not be prepaid in whole or in part during the loan term,
except that it may be paid without penalty during the last six months
of the loan term. The Tower Shops Loan may be defeased after March 1,
2002.
All payments are due on the first day of the month. There is a
late fee of 5% charged on any monthly installments paid more than 10
days after the due date. In the event of default, the Tower Shops Loan
accrues interest at a rate of 4% over the Mortgage Rate.
TRANSFER OF PROPERTY OR INTEREST IN BORROWER. The Tower Shops Loan
becomes immediately due and payable upon transfer of the Tower Shops
Property or any majority ownership interest in the Tower Shops
Borrower, unless the Tower Shops Borrower obtains the prior written
consent of the lender provided however transfers of partnership
interests for estate planning purposes to or for the benefit of family
members of the current partners of the Tower Shops Borrower are
permitted.
ESCROWS/RESERVES. There is a tax and insurance escrow, which
requires monthly deposits in an amount sufficient to pay estimated
taxes and insurance, when due. An escrow account was also established
at closing in the original amount of $62,371, with a current balance of
$64,160, for completion of deferred maintenance items as stated in the
property condition report.
SUBORDINATE/OTHER DEBT. The Mortgage Loan Documents prohibit the
Tower Shops Borrower from incurring any subordinate indebtedness or
encumbrances.
THE PROPERTY
The Tower Shops Property is a power center built in 1990 and located in the City
of Davie, Broward County, Florida. The property consists of 373,290 square feet
of rentable area contained in an L-shaped, single story structure, constructed
of concrete block covered with stucco and/or tilt up panels with a flat roof and
tiled mansard. The Tower Shops Property also includes seven of the ten
out-parcels. Including the tenancy of the Ross Dress for Less space, the center
is 96% occupied with a total of 44 tenants. Major tenants include Office Depot,
J.C. Penney Home Store, Michaels, Uptons, T.J. Maxx, and Pep Boys.
THE MANAGEMENT
Turnberry Associates, an affiliate of the Tower Shops Borrower, is the property
manager. Turnberry owns and manages ten retail properties totaling more than 6.9
million square feet, including a 2.3 million square foot mall. Turnberry has
managed the Tower Shops property since it was acquired in 1998.
THIS STRUCTURAL TERMSHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERMSHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERMSHEETS OR IN THE FINAL PROSPECTUS SUPPLEMENT. THIS PAGE MUST BE ACCOMPANIED
BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE CONTACT YOUR
PRUDENTIAL SECURITIES INCORPORATED FINANCIAL ADVISOR IMMEDIATELY. THE SECURITIES
DESCRIBED HEREIN ARE OFFERED ONLY PURSUANT TO A DEFINITIVE FINAL PROSPECTUS
SUPPLEMENT AND PROSPECTIVE INVESTORS WHO CONSIDER PURCHASING ANY SUCH SECURITIES
SHOULD MAKE THEIR INVESTMENT DECISION BASED ONLY UPON THE INFORMATION PROVIDED
THEREIN, CAPITALIZED TERMS USED BUT NOT DEFINED HEREIN HAVE THE MEANINGS GIVEN
TO SUCH TERMS IN THE FINAL PROSPECTUS SUPPLEMENT.
PRUDENTIAL SECURITIES CIBC WORLD MARKETS MORGAN STANLEY DEAN WITTER
- --------------------------------------------------------------------------------
<PAGE>
E-12
CONTROL #: 3 LOAN #: C102 - LOUISVILLE MARRIOTT EAST
- ----------------------------------------------------
- --------------------------------------------------------------------------------
Cut-off Date Balance: $22,566,728
Loan Type: Principal and Interest; Hyper-Am
Origination Date: January 15, 1999
Maturity Date: February 1, 2024
Anticipated Repay Date: February 1, 2009
Mortgage Rate: 8.21%
Annual Debt Service: $2,131,033
DSCR: 1.57x
Underwritten Cash Flow: $3,336,812
Balance at Maturity: $18,734,172
Property Type: Full Service Hotel
Location: Louisville, KY
Year Built/Renovated: 1985
Number of Rooms: 254
Cut-off Date Balance/room: $88,845
Appraised Value: $32,000,000
Current LTV: 70.5%
Balance at Maturity or ARD LTV: 58.5%
Percent Occupied: 76.6%
Occupancy as of Date: July 1998
- --------------------------------------------------------------------------------
THE LOAN
The Louisville Marriott Loan (the "Louisville Marriott Loan") is secured by a
first mortgage on a 254-room full-service hotel located in Louisville, Kentucky
(the "Louisville Marriott Property"). The Louisville Marriott Loan was
originated by CIBC Inc., on January 15, 1999 to refinance existing debt.
BORROWER. The borrower is Columbia Properties Louisville, Ltd., a
Kentucky limited partnership (the "Louisville Marriott Borrower"). The
loan documents limit the Louisville Marriott Borrower to the
acquisition, operation, and disposition of the Louisville Marriott
Property. The Louisville Marriott Borrower is a single-purpose
bankruptcy-remote entity.
SECURITY. The Louisville Marriott Loan is secured by a mortgage
and security agreement, assignment of leases and rents, UCC financing
statements and certain additional security documents. The Mortgage is a
first lien on the fee interest in the Louisville Marriott Property. The
Louisville Marriott Loan is non-recourse, subject to certain limited
exceptions.
PAYMENT TERMS. The Mortgage Rate is fixed at 8.210%. The
Louisville Marriott Loan requires monthly payments of $177,586.06
(includes principal and interest), which are due until its Anticipated
Repayment Date of February 1, 2009, whereafter the interest rate
increases as set forth in the note and all cash flow is swept by the
lender in order to accelerate the amortization of principal
(hyper-amortization). The Louisville Marriott Loan accrues interest
computed on the basis of actual number of days elapsed each month in a
360-day year.
PREPAYMENT. By its terms, the Louisville Marriott Loan may not be
prepaid in whole or in part during the loan term, except that it may be
repaid without a Prepayment Premium during the last 6 months prior to
the Anticipated Repayment Date. The Louisville Marriott Loan may be
defeased on or after the earlier of (i) 2 years after the Closing Date
or (ii) 4 years after the closing of the Louisville Marriott Loan.
If there is an event of default and the lender accelerates the
Louisville Marriott Loan, the note requires the Louisville Marriott
Borrower to pay the lender a Yield Maintenance Charge (at treasuries
flat) calculated by reference to the U.S. treasury obligations. There
is a 5% late fee for overdue installments, and the Louisville Marriott
Loan accrues interest at the Mortgage Rate plus 4% per annum while the
Louisville Marriott Loan is in default. Should the Louisville Marriott
Loan not be repaid at the Anticipated Repayment Date, interest shall
accrue at the Mortgage Rate plus 2% or the treasury rate plus 2%,
whichever is greater.
TRANSFER OF PROPERTY OR INTEREST IN BORROWER. The Louisville
Marriott Loan becomes immediately due and payable upon the transfer of
the Louisville Marriott Property or any general partnership interest in
the Louisville Marriott Borrower, provided, however, the Louisville
Marriott Borrower has the right to one transfer of the Louisville
Marriott Property subject to the terms of the Mortgage and upon the
approval of the lender.
ESCROWS/RESERVES. There is a tax escrow, which requires monthly
deposits in an amount sufficient to pay estimated taxes when due. There
is also an escrow required for FF&E, which is required to be funded
monthly in the amount of $39,700, and an escrow required for insurance,
which is to be funded in the monthly amount of $3,773.
SUBORDINATE/OTHER DEBT. The Mortgage Loan Documents prohibit the
Louisville Marriott Borrower from incurring any subordinate
indebtedness or encumbrances.
THE PROPERTY
The Louisville Marriott Property is a 254-room full-service hotel located in
Louisville, Kentucky. The Louisville Marriott Property exhibited an occupancy
rate of 76.6% as of July 31, 1998 based on an activity report provided by the
Louisville Marriott Borrower. The Louisville Marriott Property was completed in
1985 and is a 10-story concrete, brick, and glass building. Per the trailing
twelve month activity report dated August 31, 1998, the average daily room rate
was $107.75.
THE MANAGEMENT
Columbia Sussex Corporation, an affiliate of the Louisville Marriott Borrower,
is the property manager.
THIS STRUCTURAL TERMSHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERMSHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERMSHEETS OR IN THE FINAL PROSPECTUS SUPPLEMENT. THIS PAGE MUST BE ACCOMPANIED
BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE CONTACT YOUR
PRUDENTIAL SECURITIES INCORPORATED FINANCIAL ADVISOR IMMEDIATELY. THE SECURITIES
DESCRIBED HEREIN ARE OFFERED ONLY PURSUANT TO A DEFINITIVE FINAL PROSPECTUS
SUPPLEMENT AND PROSPECTIVE INVESTORS WHO CONSIDER PURCHASING ANY SUCH SECURITIES
SHOULD MAKE THEIR INVESTMENT DECISION BASED ONLY UPON THE INFORMATION PROVIDED
THEREIN, CAPITALIZED TERMS USED BUT NOT DEFINED HEREIN HAVE THE MEANINGS GIVEN
TO SUCH TERMS IN THE FINAL PROSPECTUS SUPPLEMENT.
PRUDENTIAL SECURITIES CIBC WORLD MARKETS MORGAN STANLEY DEAN WITTER
- --------------------------------------------------------------------------------
<PAGE>
E-13
CONTROL #: 4 LOAN #: 4803 - BANK OF AMERICA
- -------------------------------------------
- --------------------------------------------------------------------------------
Cut-off Date Balance: $20,432,272
Loan Type: Amortizing Balloon
Origination Date: October 29, 1998
Maturity Date: November 1, 2008
Anticipated Repay Date: NAP
Mortgage Rate: 7.000%
Annual Debt Service: $1,636,644
DSCR: 1.34x
Underwritten Cash Flow: $2,195,513
Balance at Maturity: $17,878,247
Property Type: Office
Location: Reno, NV
Year Built/Renovated: 1980 / NA
Square Footage: 232,130
Cut-off Date Balance/sf: $88.02
Appraised Value: $27,500,000
Current LTV: 74.3%
Balance at Maturity LTV: 65.0%
Percent Occupied: 90%
Occupancy as of Date: January 27, 1999
- --------------------------------------------------------------------------------
THE LOAN
The Bank of America Loan (the "Bank of America Loan") is secured by a first
mortgage on a three-building office complex and parking structure in Reno,
Nevada's Downtown District. The Bank of America Loan was originated by Keybank
National Association and subsequently assigned to National Realty Finance L.C.
BORROWER. The borrower is Liberty West Holdings, L.L.C., a
Delaware limited liability company (the "Bank of America Borrower")
which was formed for the sole purpose of owning, managing and operating
the subject property. The Bank of America Loan provided 75% of the Bank
of America Borrower's $27.5 million acquisition cost.
SECURITY. The Bank of America Loan is secured by a deed of trust,
assignment of rents and security agreement and fixture filing (the
"Deed of Trust"), UCC financing statements and certain additional
security documents. The Deed of Trust is a first lien on a fee simple
interest in the Bank of America property. The Bank of America Loan is
non-recourse, subject to certain limited exceptions.
PAYMENT TERMS. The Mortgage Rate is fixed at 7.000%. The Bank of
America Loan requires Monthly Payments of principal and interest of
$136,387.01 until its maturity on November 1, 2008, at which time all
unpaid principal and interest is due. The Bank of America Loan accrues
interest computed on the basis of the actual number of days elapsed
each month in a 360-day year.
PREPAYMENT. By its terms, the Bank of America Loan may not be
prepaid prior to the sixth loan year. During the sixth loan year or any
time thereafter the loan may be prepaid in whole, but not in part, with
the payment of a Prepayment Premium. The Prepayment Premium shall be
equal to the greater of (i) one percent (1%) of the principal balance
of the Note, or (ii) Yield Maintenance Charge. No Prepayment Premium is
due if prepayment occurs during the three months prior to maturity.
If there is an event of default and the lender accelerates the
Bank of America Loan, the note requires the Bank of America Borrower to
pay a Yield Maintenance. There is a 5% 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 Bank of America
Loan becomes immediately due and payable upon transfer of the property
or any ownership interest in the Bank of America Borrower, except in
connection with the rights of transfer described below.
The Bank of America Borrower has the right to one transfer of the
property upon approval of the lender and payment of a 1% assumption
fee.
ESCROWS/RESERVES. There is an escrow for both taxes and insurance,
which requires monthly deposits in an amount sufficient to pay
estimated taxes and insurance when due. A critical repairs escrow was
established at closing with an original balance of $222,925 and a
current balance of $215,066, primarily for replacement of the roof. A
replacement reserve account was also set up at closing with a monthly
installment of $1,954.
SUBORDINATE/OTHER DEBT. The Mortgage Loan Documents prohibit the
Bank of America Borrower from incurring any subordinate indebtedness or
encumbrances without prior consent.
THE PROPERTY
The Bank of America Property is a three-building office complex and parking
garage located in the Downtown District of Reno, Nevada. The property was 90%
occupied as of January 27, 1999 with 39 tenants including Bank of America (22%),
Norwest Bank (16%) and New York Life Insurance. Based on the January 1999 rent
roll provided by the Bank of America Borrower, the average base rental rate is
$16.46 per square foot which includes pass throughs. Recent lease transactions
within the subject average $20.94 per square foot. The property was built in
1980.
THE MANAGEMENT
Wattson Breevast, LLC is responsible for the leasing and property management of
the Bank of America Property and is controlled by the beneficial owners of
Liberty West Holdings. Wattson Breevast, with over 20 years experience in
property management, currently manages approximately 1.4 million square feet of
commercial real estate, including office property located in California, Nevada
and Calgary, Alberta in Canada.
THIS STRUCTURAL TERMSHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERMSHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERMSHEETS OR IN THE FINAL PROSPECTUS SUPPLEMENT. THIS PAGE MUST BE ACCOMPANIED
BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE CONTACT YOUR
PRUDENTIAL SECURITIES INCORPORATED FINANCIAL ADVISOR IMMEDIATELY. THE SECURITIES
DESCRIBED HEREIN ARE OFFERED ONLY PURSUANT TO A DEFINITIVE FINAL PROSPECTUS
SUPPLEMENT AND PROSPECTIVE INVESTORS WHO CONSIDER PURCHASING ANY SUCH SECURITIES
SHOULD MAKE THEIR INVESTMENT DECISION BASED ONLY UPON THE INFORMATION PROVIDED
THEREIN, CAPITALIZED TERMS USED BUT NOT DEFINED HEREIN HAVE THE MEANINGS GIVEN
TO SUCH TERMS IN THE FINAL PROSPECTUS SUPPLEMENT.
PRUDENTIAL SECURITIES CIBC WORLD MARKETS MORGAN STANLEY DEAN WITTER
- --------------------------------------------------------------------------------
<PAGE>
E-14
CONTROL #: 5 - THE AIP LOANS AND PROPERTIES
- -------------------------------------------
CONTROL #: 5.10 LOAN #: 2493 - SPRING VALLEY BUSINESS PARK, #6
CONTROL #: 5.20 LOAN #: 2496 - 109-111 INVERNESS
CONTROL #: 5.30 LOAN #: 2494 - CENTRAL PARK & SKYWAY ROLLUP
CONTROL #: 5.31 LOAN #: 2494A - CENTRAL PARK OFFICE TECH CENTER
CONTROL #: 5.32 LOAN #: 2494B - SKYWAY BUSINESS CENTER
CONTROL #: 5.40 LOAN #: 2497 - AVION BUSINESS CENTER
- --------------------------------------------------------------------------------
Cut-off Date Balance: $19,502,430
Loan Type: Principal and Interest; Balloon
Origination Date: April 14, 1998
Maturity Date: May 1, 2008
Anticipated Repay Date: NAP
Mortgage Rate: 7.280%
Annual Debt Service: $1,716,940
DSCR: 1.30x
Underwritten Cash Flow: $2,233,734
Balance at Maturity: $15,644,589
Property Type: See Below
Location: See Below
Year Built/Renovated: See Below
Square Footage: 398,786
Cut-off Date Balance/sf: $48.90
Appraised Value: $28,260,000
Current LTV: 69.5%
Balance at Maturity LTV: 55.8%
Percent Occupied: 96.6%
Occupancy as of Date: September/October 1998
- --------------------------------------------------------------------------------
THE LOAN GROUP
The four (4) American Industrial Properties REIT loans include Spring Valley
Business Park, #6, Central Park Office Tech Center, Skyway Business Center,
109-111 Inverness and Avion Business Center (the "AIP Loans"). The AIP Loans are
secured by first mortgages on five (5) properties (collectively, the "AIP
Mortgaged Properties"). The AIP Mortgaged Properties are located in Irving,
Richardson and Carrollton, Texas and Englewood, Colorado. The AIP Loans are
cross-collateralized and cross-defaulted with each other. Prudential Securities
Credit Corporation originated the AIP loans and National Realty Funding L.C.
purchased and modified the existing AIP Loans on April 14, 1998.
BORROWER. The Borrower is American Industrial Properties REIT, a
Texas real estate investment trust, formed in 1985 (the "AIP
Borrower"). The REIT acquires, owns, operates and develops commercial
and industrial properties. The AIP borrower owns 5,710,000 square feet
of commercial and industrial space, which has an overall occupancy of
92%.
SECURITY. The AIP Loans are each secured by an Assignment and
First Modification of Deed of Trust and Assignment of Leases and Rents
and certain additional security. The collateral for each loan is
described below in the Properties section. The AIP Loans are
non-recourse, subject to certain limited exceptions.
PAYMENT TERMS. The Mortgage Rate is fixed at 7.280%. The AIP Loans
require Monthly Payments of principal and interest until maturity on
May 1, 2008, at which time all unpaid principal and accrued but unpaid
interest is due. The AIP Loans accrue interest on the basis of a thirty
(30) day month/ three hundred sixty (360) day year.
PREPAYMENT. By their terms, the notes may be prepaid in whole, but
not in part, during their respective terms subject to the following: i)
no event of default exists, ii) the note holder receives written notice
of the prepayment date and iii) any applicable Prepayment Premium is
tendered with the prepayment.
The Prepayment Premium for Years 1 through 8 of the notes is the
greater of one percent (1%) of the outstanding balance at the time of
prepayment, or the Yield Maintenance Amount. The Prepayment Premium for
Year 9 of the notes is three percent (3%) of the outstanding Mortgage
balance. There is no Prepayment Premium in Year 10 of the Notes.
Any prepayment made after an event of default under the Mortgage
Loan Documents and prior to a sale of the applicable property through
foreclosure or other remedies available to the lender will be
considered voluntary and must include the applicable Prepayment Premium
as of the date of the occurrence of the event of default.
TRANSFER OF PROPERTY OR INTEREST IN BORROWER. The Mortgage Loan
Documents prohibit the AIP Borrower from transferring any of the AIP
Mortgaged Properties, including by change of ownership of the AIP
Borrower, unless i) the noteholder receives and approves a written
request for such transfer or change in ownership, ii) no event of
default has occurred, iii) any proposed new owner meets all applicable
underwriting standards, iv) the AIP Mortgaged Property meets all of the
lender's underwriting standards related to its financial and physical
condition, management, and operation and v) the AIP Borrower reimburses
the noteholder for all reasonable transfer costs and an assumption fee
of 1% of the outstanding Mortgage Balance.
ESCROWS/RESERVES. There are monthly tax and insurance escrows for
each of the AIP Loans, as well as initial deposits and monthly deposits
for replacement reserves. The monthly escrow/reserve amounts are as
follows:
#2493 Spring Valley Business Park, #6. A tax escrow of $11,474.24
per month and insurance escrow of $527.50 per month. Initial
replacement reserves totaled $344,000 with monthly deposits of $5,354
for 24 months from the first payment.
#2494 Central Park Office Technology Center/Skyway Business
Center. A tax escrow of $9,096.26 per month and insurance escrow of
$876.25 per month. Initial replacement reserves totaled $273,000 with
monthly deposits of $3,100 for 24 months from the first payment.
THIS STRUCTURAL TERMSHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERMSHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERMSHEETS OR IN THE FINAL PROSPECTUS SUPPLEMENT. THIS PAGE MUST BE ACCOMPANIED
BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE CONTACT YOUR
PRUDENTIAL SECURITIES INCORPORATED FINANCIAL ADVISOR IMMEDIATELY. THE SECURITIES
DESCRIBED HEREIN ARE OFFERED ONLY PURSUANT TO A DEFINITIVE FINAL PROSPECTUS
SUPPLEMENT AND PROSPECTIVE INVESTORS WHO CONSIDER PURCHASING ANY SUCH SECURITIES
SHOULD MAKE THEIR INVESTMENT DECISION BASED ONLY UPON THE INFORMATION PROVIDED
THEREIN, CAPITALIZED TERMS USED BUT NOT DEFINED HEREIN HAVE THE MEANINGS GIVEN
TO SUCH TERMS IN THE FINAL PROSPECTUS SUPPLEMENT.
PRUDENTIAL SECURITIES CIBC WORLD MARKETS MORGAN STANLEY DEAN WITTER
- --------------------------------------------------------------------------------
<PAGE>
E-15
#2496 109-111 Inverness. A tax escrow of $12,441.01 per month and
insurance escrow of $858.33 per month. Initial replacement reserves
totaled $569,000 with monthly deposits of $717 for 24 months from the
first payment.
#2497 Avion Business Center. A tax escrow of $7,077.26 per month
and insurance escrow of $510.08 per month. Initial replacement reserves
totaled $31,000 with monthly deposits of $1,333 for 24 months from the
first payment.
SUBORDINATE/OTHER DEBT. Subordinate indebtedness and encumbrances
are prohibited.
THE PROPERTIES
The four AIP Loans are secured by first mortgages on the following five (5)
properties: Spring Valley Business Park, #6, Central Park Office Tech Center and
Skyway Business Center, 109-111 Inverness, and Avion Business Center.
PROPERTY 1: LOAN #2493 / CONTROL #5.10 - SPRING VALLEY BUSINESS PARK, #6
- --------------------------------------------------------------------------------
Location: Richardson, TX
Construction: Concrete
Year Built/Renovated: 1980
Square Footage: 94,304
Percent Occupied: 100.0% as of 10/25/98
Appraised Value: $9,250,000
- --------------------------------------------------------------------------------
PROPERTY 2: LOAN #2494A / CONTROL #5.31 - CENTRAL PARK OFFICE TECH CENTER
- --------------------------------------------------------------------------------
Location: Richardson, TX
Construction: Concrete
Year Built/Renovated: 1985
Square Footage: 70,965
Percent Occupied: 85.0% as of 9/30/98
Appraised Value: $4,450,000
- --------------------------------------------------------------------------------
PROPERTY 3: LOAN #2494B / CONTROL #5.32 - SKYWAY BUSINESS CENTER
- --------------------------------------------------------------------------------
Location: Irving, TX
Construction: Concrete
Year Built/Renovated: 1981
Square Footage: 67,150
Percent Occupied: 100.0% as of 9/30/98
Appraised Value: $2,200,000
- --------------------------------------------------------------------------------
PROPERTY 4: LOAN #2496 / CONTROL #5.20 - 109-111 INVERNESS
- --------------------------------------------------------------------------------
Location: Englewood, CO
Construction: Masonry
Year Built/Renovated: 1980
Square Footage: 96,386
Percent Occupied: 100.0% as of 11/01/98
Appraised Value: $7,400,000
- --------------------------------------------------------------------------------
PROPERTY 5: LOAN # 2497 / CONTROL #5.40 - AVION BUSINESS CENTER
- --------------------------------------------------------------------------------
Location: Carrollton, TX
Construction: Masonry
Year Built/Renovated: 1985
Square Footage: 69,981
Percent Occupied: 92.1% as of 11/03/98
Appraised Value: $4,960,000
- --------------------------------------------------------------------------------
THE MANAGEMENT
Trammel Crow is the current property manager for all AIP Mortgaged Properties
except 109-111 Inverness in Englewood.
THIS STRUCTURAL TERMSHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERMSHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERMSHEETS OR IN THE FINAL PROSPECTUS SUPPLEMENT. THIS PAGE MUST BE ACCOMPANIED
BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE CONTACT YOUR
PRUDENTIAL SECURITIES INCORPORATED FINANCIAL ADVISOR IMMEDIATELY. THE SECURITIES
DESCRIBED HEREIN ARE OFFERED ONLY PURSUANT TO A DEFINITIVE FINAL PROSPECTUS
SUPPLEMENT AND PROSPECTIVE INVESTORS WHO CONSIDER PURCHASING ANY SUCH SECURITIES
SHOULD MAKE THEIR INVESTMENT DECISION BASED ONLY UPON THE INFORMATION PROVIDED
THEREIN, CAPITALIZED TERMS USED BUT NOT DEFINED HEREIN HAVE THE MEANINGS GIVEN
TO SUCH TERMS IN THE FINAL PROSPECTUS SUPPLEMENT.
PRUDENTIAL SECURITIES CIBC WORLD MARKETS MORGAN STANLEY DEAN WITTER
- --------------------------------------------------------------------------------
<PAGE>
E-16
CONTROL #: 6 LOAN #: C104 - ONE CITY CENTER
- ------------------------------------------------------
- --------------------------------------------------------------------------------
Cut-off Date Balance: $18,975,752
Loan Type: Principal and Interest; Hyper-Amortization
Origination Date: May 14, 1998
Maturity Date: June 1, 2028
ARD Date: June 1, 2008
Mortgage Rate: 7.29%
Annual Debt Service: $1,569,771
DSCR: 1.37x
Underwritten Cash Flow: $2,150,398
Balance at Maturity or ARD: $16,787,487
Property Type: Office
Location: Portland, ME
Year Built/Renovated: 1986
Square Footage: 209,832
Cut-off Date Balance/sf: $90.43
Appraised Value: $26,500,000
Current LTV: 71.6%
Balance at Maturity LTV: 63.3%
Percent Occupied: 99.8%
Occupancy as of Date: September 1998
- --------------------------------------------------------------------------------
THE LOAN
The One City Center Loan (the "One City Center Loan") is secured by a first
mortgage on a 209,832 square foot office building located in Portland, Maine
(the "One City Center Property"). The One City Center Loan was originated by
CIBC Inc. on May 14, 1998 to refinance existing debt.
BORROWER. The borrower is One City Center Associates, a Maine
limited partnership (the "One City Center Borrower"). The One City
Center Borrower is a single purpose entity.
SECURITY. The One City Center Loan is secured by a mortgage and
security agreement, assignment of leases and rents, UCC financing
statements and certain additional security documents. The Mortgage is a
first lien on the fee interest in the One City Center Property. The One
City Center Loan is non-recourse, subject to certain limited
exceptions.
PAYMENT TERMS. The Mortgage Rate is fixed at 7.290%. The One City
Center Loan requires Monthly Payments of $130,814.27 (includes
principal and interest) until its Anticipated Repayment Date on June 1,
2008, whereafter the interest rate increases as set forth in the note
and all cash flow is swept by the lender in order to accelerate the
amortization of principal (hyper-amortization). The One City Center
Loan accrues interest computed on the basis of actual number of days
elapsed each month in a 360-day year.
PREPAYMENT. By its terms, the One City Center Loan may not be
prepaid in whole or in part during the loan term, except that it may be
repaid without a Prepayment Premium during the last 6 months prior to
the Anticipated Repayment Date. The One City Center Loan may be
defeased on or after the earlier of (i) 2 years after the Closing Date
or (ii) 4 years after the closing of the One City Center Loan.
If there is an event of default and the lender accelerates the One
City Center Loan, the note requires the One City Center Borrower to pay
the lender a Yield Maintenance Charge (at treasuries flat) calculated
by reference to the U.S. treasury obligations. There is a 5% late fee
for overdue installments, and the One City Center Loan accrues interest
at the Mortgage Rate plus 4% per annum while the One City Center Loan
is in default. Should the One City Center Loan not be repaid at the
Anticipated Repayment Date, interest shall accrue at the Mortgage Rate
plus 5% or the treasury rate plus 5%, whichever is greater.
TRANSFER OF PROPERTY OR INTEREST IN BORROWER. The One City Center
Loan becomes immediately due and payable upon the transfer of the One
City Center Property or any general partnership interest in the One
City Center Borrower (except to a wholly-owned subsidiary of Mr. Burton
Fisher, the current general partner), provided, however, the One City
Center Borrower has the right to one transfer of the One City Center
Property subject to the terms of the Mortgage and upon the approval of
the lender.
ESCROWS/RESERVES. There is a tax escrow which requires monthly
deposits in an amount sufficient to pay estimated taxes when due. There
is also an escrow required for capital expenditures which is required
to be funded monthly in the amount of $3,450 and an escrow required for
tenant improvements and leasing costs which is required to be funded in
the monthly amount of $12,666.67 subject to a cap of $300,000. There is
no insurance escrow provided that the One City Center Borrower pays the
annual insurance premium one year in advance and provides the lender
with evidence of such prepayment.
SUBORDINATE/OTHER DEBT. The Mortgage Loan Documents prohibit the
One City Center Borrower from incurring any subordinate secured
indebtedness or encumbrances.
THE PROPERTY
The One City Center Property is a 209,832 square foot office building located in
Portland, Maine. The One City Center Property was 99.9% occupied as of September
1998 to 52 tenants based on a rent roll provided by the One City Center
Borrower. The One City Center Property was completed in 1986 and is a 13-story
steel and brick building. The average base rental rate was $16.12 per the
September 1998 rent roll.
THE MANAGEMENT
Dirigo Property Management is the property manager and has an office at the One
City Center Property.
THIS STRUCTURAL TERMSHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERMSHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERMSHEETS OR IN THE FINAL PROSPECTUS SUPPLEMENT. THIS PAGE MUST BE ACCOMPANIED
BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE CONTACT YOUR
PRUDENTIAL SECURITIES INCORPORATED FINANCIAL ADVISOR IMMEDIATELY. THE SECURITIES
DESCRIBED HEREIN ARE OFFERED ONLY PURSUANT TO A DEFINITIVE FINAL PROSPECTUS
SUPPLEMENT AND PROSPECTIVE INVESTORS WHO CONSIDER PURCHASING ANY SUCH SECURITIES
SHOULD MAKE THEIR INVESTMENT DECISION BASED ONLY UPON THE INFORMATION PROVIDED
THEREIN, CAPITALIZED TERMS USED BUT NOT DEFINED HEREIN HAVE THE MEANINGS GIVEN
TO SUCH TERMS IN THE FINAL PROSPECTUS SUPPLEMENT.
PRUDENTIAL SECURITIES CIBC WORLD MARKETS MORGAN STANLEY DEAN WITTER
- --------------------------------------------------------------------------------
<PAGE>
E-17
CONTROL #: 7 - THE NURSING CENTER LOANS
- ---------------------------------------
CONTROL #: 7.10 LOAN #: 6275 - HICKORY OF ATHENS NURSING CENTER
CONTROL #: 7.20 LOAN #: 6276 - SOUTHERN HILLS HEALTH & REHABILITATION CENTER
CONTROL #: 7.30 LOAN #: 6274 - SCENIC HILLS NURSING CENTER
CONTROL #: 7.40 LOAN #: 6273 - ARCADIA NURSING CENTER
- --------------------------------------------------------------------------------
Cut-off Date Balance: $15,017,849
Loan Type: Principal and Interest Balloon
Origination Date: September 23, 1998
Maturity Date: October 1,2008
Anticipated Repay Date: NAP
Mortgage Rate: 7.620%
Annual Debt Service: $1,353,227
DSCR: 1.62x
Underwritten Cash Flow: $2,185,511
Balance at Maturity: $12,310,745
Property Type: Congregate / Skilled Care
Location: See Below
Year Built/Renovated: See Below
Beds: 448
Cut-off Date Balance/sf: $33.52
Appraised Value: $24,115,000
Current LTV: 62.87%
Balance at Maturity LTV: 51.54%
Percent Occupied: 90.04%
Occupancy as of Date: June/August/September 1998
- --------------------------------------------------------------------------------
THE LOAN GROUP
The Nursing Center loans ("Nursing Center Loans") include the following four
loans:
The Arcadia Nursing Center Loan ("Arcadia Loan") is secured by a first mortgage
on a 26-bed intermediate care facility in Coolville, OH.
The Scenic Hills Nursing Center Loan ("Scenic Hills Loan") is secured by a first
mortgage on a 98-bed intermediate care facility in Bidwell, OH.
The Hickory of Athens Nursing Center Loan ("Hickory of Athens Loan") is secured
by a first mortgage on a 175-bed intermediate care facility in The Plains, OH.
The Southern Hills Health & Rehabilitation Center ("Southern Hills Loan") is
secured by a first mortgage on a 100-bed skilled nursing facility in Middleburg
Heights, OH.
All four Nursing Center Loans were originated by Keycorp Real Estate Capital
Markets, Inc. on September 23, 1998 and subsequently acquired by National Realty
Funding, L.C.
BORROWER. The borrowers of the Nursing Center Loans 6273, 6274,
6275 and 6276 are respectively: Arcadia Nursing Center, Inc.; Scenic
Hills Nursing Center, Inc.; Hickory Creek of Athens, Inc.; and Southern
Hills Health and Rehabilitation Center, Inc. All of the outstanding
stock of these companies is owned by The Jack S. Semelsberger, Sr.
Trust.
SECURITY. Each Nursing Center Loan is secured by a Mortgage and
Security Agreement. The four Nursing Center Loans are
cross-collateralized and cross-defaulted. They are also non-recourse,
subject to certain limited exceptions.
PAYMENT TERMS. The Mortgage Rate is fixed for all Nursing Center
Loans at 7.620% with principal and interest payments due the first of
each month beginning November 1, 1998 and all unpaid principal and
accrued interest due October 1, 2008. The Nursing Center Loans accrue
interest computed on the basis of the actual number of days elapsed
each month in a 360-day year.
PREPAYMENT. By their terms, the Nursing Center Loans may not be
prepaid prior to the sixth loan year. During the sixth loan year or any
time thereafter the Nursing Center Loans may be prepaid in whole, but
not in part, with the payment of a Prepayment Premium. The Prepayment
Premium shall be equal to the greater of (a) one percent (1%) of the
principal balance of the note, or (b) the Yield Maintenance Charge. No
Prepayment Premium is due if prepayment occurs during the three months
prior to maturity.
If there is an event of default and the Lender accelerates a loan,
the note requires the borrower to pay a yield maintenance premium.
There is a 5% late fee on overdue installments, and the loans accrue
interest at the Mortgage Rate plus 5% per annum while the Nursing
Center Loan is in default.
TRANSFER OF PROPERTY OR INTEREST IN BORROWER. The Nursing Center
Loans become immediately due and payable upon transfer of the property
or any ownership interest in the borrower, except in connection with
the rights of transfer described below. The borrower has the right to
one transfer of the properties upon approval of the Lender and payment
of a 1% assumption fee.
ESCROWS/RESERVES. The following monthly escrow / reserve payments
are required:
<TABLE>
<CAPTION>
REPLACEMENT
RESERVES TAXES INSURANCE
-------- ----- ---------
<S> <C> <C> <C>
Arcadia Loan: $1,056.42 $1,266.67 $1,178.50
Scenic Hills Loan: $963.61 $2,314.78 $1,516.50
Hickory of Athens Loan: $2,854.00 $5,759.66 $2,386.25
Southern Hills Loan: $1,073.96 $7,321.68 $1,520.33
</TABLE>
SUBORDINATE/OTHER DEBT. Subordinate indebtedness and encumbrances
are prohibited.
THIS STRUCTURAL TERMSHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERMSHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERMSHEETS OR IN THE FINAL PROSPECTUS SUPPLEMENT. THIS PAGE MUST BE ACCOMPANIED
BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE CONTACT YOUR
PRUDENTIAL SECURITIES INCORPORATED FINANCIAL ADVISOR IMMEDIATELY. THE SECURITIES
DESCRIBED HEREIN ARE OFFERED ONLY PURSUANT TO A DEFINITIVE FINAL PROSPECTUS
SUPPLEMENT AND PROSPECTIVE INVESTORS WHO CONSIDER PURCHASING ANY SUCH SECURITIES
SHOULD MAKE THEIR INVESTMENT DECISION BASED ONLY UPON THE INFORMATION PROVIDED
THEREIN, CAPITALIZED TERMS USED BUT NOT DEFINED HEREIN HAVE THE MEANINGS GIVEN
TO SUCH TERMS IN THE FINAL PROSPECTUS SUPPLEMENT.
PRUDENTIAL SECURITIES CIBC WORLD MARKETS MORGAN STANLEY DEAN WITTER
- --------------------------------------------------------------------------------
<PAGE>
E-18
THE PROPERTIES
The Nursing Center Loans are secured by four separate congregate/skilled care
facilities, as indicated below.
PROPERTY 1: LOAN # 6273 / CONTROL #7.40 - ARCADIA NURSING CENTER
- --------------------------------------------------------------------------------
Location: Coolville, OH
Construction: Wood
Yr. Built/Renovated 1955 / 1976
Number of Beds (Units): 26
Percent Occupied: 77.3% as of 6/05/98
Appraised Value: $2,714,000
- --------------------------------------------------------------------------------
PROPERTY 2: LOAN #6274 / CONTROL #7.30 - SCENIC HILLS NURSING CENTER
- --------------------------------------------------------------------------------
Location: Bidwell, OH
Construction: Wood
Yr. Built/Renovated: 1981 / 1997
Number of Beds (Units): 98
Percent Occupied: 91.83% as of 8/25/98
Appraised Value: $5,400,000
- --------------------------------------------------------------------------------
PROPERTY 3: LOAN #6275 / CONTROL #7.10 - HICKORY OF ATHENS NURSING CENTER
- --------------------------------------------------------------------------------
Location: The Plains, OH
Construction: Wood
Yr. Built/Renovated: 1980, 1985, 1991
Number of Beds (Units): 175
Percent Occupied: 88.57% as of 9/30/98
Appraised Value: 8,901,000
- --------------------------------------------------------------------------------
PROPERTY 4: LOAN # 6276 / CONTROL #7.20 - SOUTHERN HILLS HEALTH & REHABILITATION
CENTER
- --------------------------------------------------------------------------------
Location: Middleburg Heights, OH
Construction: Wood
Yr. Built/Renovated: 1995
Number of Beds (Units): 100
Percent Occupied: 94.0% as of 8/25/98
Appraised Value: $7,100,000
- --------------------------------------------------------------------------------
THE MANAGEMENT
All four properties are managed by Integrated Health Services.
THIS STRUCTURAL TERMSHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERMSHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERMSHEETS OR IN THE FINAL PROSPECTUS SUPPLEMENT. THIS PAGE MUST BE ACCOMPANIED
BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE CONTACT YOUR
PRUDENTIAL SECURITIES INCORPORATED FINANCIAL ADVISOR IMMEDIATELY. THE SECURITIES
DESCRIBED HEREIN ARE OFFERED ONLY PURSUANT TO A DEFINITIVE FINAL PROSPECTUS
SUPPLEMENT AND PROSPECTIVE INVESTORS WHO CONSIDER PURCHASING ANY SUCH SECURITIES
SHOULD MAKE THEIR INVESTMENT DECISION BASED ONLY UPON THE INFORMATION PROVIDED
THEREIN, CAPITALIZED TERMS USED BUT NOT DEFINED HEREIN HAVE THE MEANINGS GIVEN
TO SUCH TERMS IN THE FINAL PROSPECTUS SUPPLEMENT.
PRUDENTIAL SECURITIES CIBC WORLD MARKETS MORGAN STANLEY DEAN WITTER
- --------------------------------------------------------------------------------
<PAGE>
E-19
CONTROL#: 8 LOAN #: C105 - SEA TAC HOTEL
- ----------------------------------------
- --------------------------------------------------------------------------------
Cut-off Date Balance: $14,849,396
Loan Type: Principal and Interest;
Hyper-Amortization
Origination Date: August 27, 1998
Maturity Date: September 1, 2023
ARD Date: September 1, 2005
Mortgage Rate: 7.50%
Annual Debt Service: $1,325,750
DSCR: 1.93x
Underwritten Cash Flow: $2,557,869
Balance at Maturity: $13,217,568
Property Type: Full Service Hotel
Location: Sea Tac, WA
Year Built/Renovated: 1960/1998
Number of Rooms: 308
Cut-off Date Balance/room: $48,212
Appraised Value: $23,400,000
Current LTV: 63.5%
Balance at Maturity or ARD LTV: 56.5%
Percent Occupied: 68.6%
Occupancy as of Date: January 1, 1999
- --------------------------------------------------------------------------------
THE LOAN
The Sea Tac Hotel Loan (the "Sea Tac Hotel Loan") is secured by a first mortgage
on a 308-room full-service hotel located in Sea Tac, Washington (the "Sea Tac
Hotel Property"). The Sea Tac Hotel Loan was originated by CIBC Inc. on August
27, 1998 to refinance existing debt and acquire the property.
BORROWER. The borrower is CHIP REIT No. 25 Sea-Tac Ltd., a
Washington corporation (the "Sea Tac Hotel Borrower"). The Sea Tac
Hotel Borrower is a single purpose entity.
SECURITY. The Sea Tac Hotel Loan is secured by a deed of trust and
security agreement, assignment of leases and rents, UCC financing
statements and certain additional security documents. The first
mortgage is a first lien on the fee interest in the Sea Tac Hotel
Property. The Sea Tac Hotel Loan is non-recourse, subject to certain
limited exceptions.
PAYMENT TERMS. The Mortgage Rate is fixed at 7.50%. The Sea Tac
Hotel Loan requires monthly payments of $110,479.18 (includes principal
and interest) until its anticipated repayment date on September 1,
2005, whereafter the interest rate increases as set forth in the note
and all cash flow is swept by the lender in order to accelerate the
amortization of principal (hyper-amortization). The Sea Tac Hotel Loan
accrues interest computed on the basis of actual number of days elapsed
each month in a 360-day year.
PREPAYMENT. By its term, the Sea Tac Hotel Loan may not be prepaid
prior to the sixth loan year. During the sixth loan year or any time
thereafter the loan may be prepaid in whole, but not in part, with the
payment of a Prepayment Premium. The Prepayment Premium shall be equal
to the greater of (a) one percent (1%) of the principal balance of the
note, or (b) the Yield Maintenance Charge. No Prepayment Premium is due
if prepayment occurs during the six months prior to maturity.
If there is an event of default and the lender accelerates the Sea
Tac Hotel Loan, the note requires the Sea Tac Hotel Borrower to pay the
lender a yield maintenance charge (at treasuries flat) calculated by
reference to the U.S. treasury obligations. There is a 5% late fee for
overdue installments, and the Sea Tac Hotel Loan accrues interest at
the Mortgage Rate plus 4% per annum while the Sea Tac Hotel Loan is in
default. Should the Sea Tac Hotel Loan not be repaid at the Anticipated
Repayment Date, interest shall accrue at the Mortgage Rate plus 2% or
the treasury rate plus 2%, whichever is greater.
TRANSFER OF PROPERTY OR INTEREST IN BORROWER. The Sea Tac Hotel
Loan becomes immediately due and payable upon the transfer of the Sea
Tac Hotel Property or more than a ten percent (10%) interest in the Sea
Tac Hotel Borrower, except in connection with the rights of transfer
described below. The Sea Tac Hotel Borrower has the right to one
transfer of the Sea Tac Hotel Property subject to the related Mortgage
upon the approval by the lender.
ESCROWS/RESERVES. There are tax and insurance escrows which
require monthly deposits in an amount sufficient to pay estimated taxes
and insurance premiums when due. There is also an escrow required for
capital expenditures based on 5% of prior year's gross revenue which is
required to be funded monthly. As of the Closing Date, $5,560 was
escrowed for environmental reserve holdback. In addition, $747,500 was
escrowed as of the Closing Date to aid in the conversion of the Quality
Inn portion of the property to the Radisson flag and for other capital
improvements.
SUBORDINATE/OTHER DEBT. The related Mortgage Loan Documents
prohibit the Sea Tac Hotel Borrower from incurring any secured
subordinate indebtedness or encumbrances.
DISCLOSURE OF POSSIBLE CONDEMNATION. The Mortgage Loan Seller has
been advised that the Port of Seattle, a municipal corporation (the
"Port") that operates the Seattle-Tacoma International Airport (the
"Airport") is anticipating constructing a new intermodal transportation
center (the "Center") to service the Airport. The Mortgage Loan Seller
also has been advised that if the Center is constructed in accordance
with its current plans, the Center would include all or substantially
all of the Sea Tac Hotel Property and that therefore a partial or total
condemnation of the Sea Tac Hotel Property is possible.
The Mortgage Loan Seller has been advised that the Puget Sound
Transit Authority (the "STA") is also contemplating construction of a
new light rail line (the "Rail Line") to provide access to the Airport
whether or not the Center is constructed. The Mortgage Loan Seller also
has been advised that various proposals are currently being considered
with respect to the Rail Line, some of which may require a partial or
total condemnation of the Sea Tac Hotel Property, but that the STA's
preferred route would
THIS STRUCTURAL TERMSHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERMSHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERMSHEETS OR IN THE FINAL PROSPECTUS SUPPLEMENT. THIS PAGE MUST BE ACCOMPANIED
BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE CONTACT YOUR
PRUDENTIAL SECURITIES INCORPORATED FINANCIAL ADVISOR IMMEDIATELY. THE SECURITIES
DESCRIBED HEREIN ARE OFFERED ONLY PURSUANT TO A DEFINITIVE FINAL PROSPECTUS
SUPPLEMENT AND PROSPECTIVE INVESTORS WHO CONSIDER PURCHASING ANY SUCH SECURITIES
SHOULD MAKE THEIR INVESTMENT DECISION BASED ONLY UPON THE INFORMATION PROVIDED
THEREIN, CAPITALIZED TERMS USED BUT NOT DEFINED HEREIN HAVE THE MEANINGS GIVEN
TO SUCH TERMS IN THE FINAL PROSPECTUS SUPPLEMENT.
PRUDENTIAL SECURITIES CIBC WORLD MARKETS MORGAN STANLEY DEAN WITTER
- --------------------------------------------------------------------------------
<PAGE>
E-20
require only a non-material partial condemnation of the Sea Tac
Hotel Property that would not adversely affect the use and enjoyment of
the Sea Tac Hotel Property.
The Mortgage Loan Seller has been advised that the development of
the Center and the Rail Line are still subject to (i) final approval
from the applicable governmental bodies, (ii) submission, review and
approval of the environmental impact study, (iii) determinations of the
fair market value of the Sea Tac Hotel Property (or portions to be
condemned), (iv) arrangement of financing of the projects (including
relevant condemnation awards) and (v) the outcome of any litigation
brought to challenge the construction of the Center or the Rail Line.
No assurance can be given by the Mortgage Loan Seller as to
whether the Center or the Rail Line will be constructed and, if any
such construction does proceed, when and if any resulting condemnation
will occur.
The related Mortgage Loan Documents provide that proceeds of a
total condemnation shall be paid to the holder of the Sea Tac Hotel
Loan to be used to satisfy all obligations due under the Sea Tac Hotel
Loan (including the outstanding principal balance, accrued interest and
any Yield Maintenance Charge). The related Mortgage Loan Documents
provide that the proceeds of a partial condemnation may be paid to the
related borrower to improve the Sea Tac Hotel if certain conditions are
satisfied including: (i) sufficient condemnation proceeds being
received to complete such reconstruction or improvements; (ii) the
borrower providing evidence that the hotel can be rebuilt or improved
to include substantially the same amenities and with the same hotel
flag; and (iii) in the Mortgage Loan Seller's reasonable judgement, the
maintenance, after such reconstruction or improvement, of a debt
service coverage ratio of at least 1.4:1 and an LTV no greater than
70%. If such conditions are not satisfied, the holder of the Sea Tac
Hotel Loan may accelerate the entire indebtedness and declare any
associated Yield Maintenance Charge due. The related Mortgage Loan
Documents provide that any condemnation proceeds remaining after any
such reconstruction or improvement will be used to partially prepay the
Sea Tac Hotel Loan.
The related Mortgage Loan Documents also provide that a Yield
Maintenance Charge will be due in connection with any partial or total
prepayment caused by a condemnation of the Sea Tac Hotel Property if an
acceleration occurs not less than 6 months prior to the Anticipated
Repayment Date. Such Yield Maintenance Charge would be at least 1.00%
of the amount of such principal prepayment and is an obligation of the
Sea Tac Hotel Borrower secured by the related mortgage. Canadian Hotel
Income Properties Real Estate Investment Trust, a publicly traded
Canadian real estate investment trust, the ultimate parent company of
the Sea Tac Hotel Borrower, has agreed to make payment of any such
Yield Maintenance Charge up to a maximum of $3,000,000.
THE PROPERTY
The Sea Tac Hotel Property is a 308 room, 2-story, full-service hotel with
interior corridors. The property contains two distinct buildings; one building
was flagged as a Radisson Hotel and the other carried the Quality Inn flag.
Effective December 1998, the Sea Tac Hotel Borrower re-flagged the Quality Inn
portion of the hotel as a Radisson. Renovations are currently underway to
upgrade the former Quality Inn guest rooms to comply with Radisson standards.
All renovations are to be completed before the end of first quarter 1999. The
hotel contains a full-service restaurant, a lounge as well as a pool area. The
average daily room rate for the one year period ending in January 1999 was
$85.70.
THE MANAGEMENT
The property manager is O'Neill Hotels and Resorts. O'Neill is the exclusive
manager of the 40-property/6,500-guest room portfolio owned by Canadian Hotel
Income Properties REIT, an affiliate of the Sea Tac Hotel Borrower.
THIS STRUCTURAL TERMSHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERMSHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERMSHEETS OR IN THE FINAL PROSPECTUS SUPPLEMENT. THIS PAGE MUST BE ACCOMPANIED
BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE CONTACT YOUR
PRUDENTIAL SECURITIES INCORPORATED FINANCIAL ADVISOR IMMEDIATELY. THE SECURITIES
DESCRIBED HEREIN ARE OFFERED ONLY PURSUANT TO A DEFINITIVE FINAL PROSPECTUS
SUPPLEMENT AND PROSPECTIVE INVESTORS WHO CONSIDER PURCHASING ANY SUCH SECURITIES
SHOULD MAKE THEIR INVESTMENT DECISION BASED ONLY UPON THE INFORMATION PROVIDED
THEREIN, CAPITALIZED TERMS USED BUT NOT DEFINED HEREIN HAVE THE MEANINGS GIVEN
TO SUCH TERMS IN THE FINAL PROSPECTUS SUPPLEMENT.
PRUDENTIAL SECURITIES CIBC WORLD MARKETS MORGAN STANLEY DEAN WITTER
- --------------------------------------------------------------------------------
<PAGE>
E-21
CONTROL #: 9 LOAN #: C103 - PRIME GROUP PORTFOLIO
- -------------------------------------------------
CONTROL #: 9.10 LOAN #: C103I - 11039 GAGE AVENUE
CONTROL #: 9.20 LOAN #: C103B - 11045 GAGE AVENUE
CONTROL #: 9.30 LOAN #: C103J - 1401 SOUTH JEFFERSON STREET
CONTROL #: 9.40 LOAN #: C103G - 200 E. FULLERTON AVENUE
CONTROL #: 9.50 LOAN #: C103H - 350 RANDY ROAD
CONTROL #: 9.60 LOAN #: C103F - 370 CAROL LANE
CONTROL #: 9.70 LOAN #: C103C - 4160-4190 MADISON STREET
CONTROL #: 9.80 LOAN #: C103D - 4211 MADISON STREET
- --------------------------------------------------------------------------------
Cut-off Date Balance: $14,823,814
Loan Type: Principal and Interest; Hyper-Amortization
Origination Date: May 1, 1998
Maturity Date: May 1, 2028
Anticipated Repay Date: May 1, 2008
Mortgage Rate: 7.17%
Annual Debt Service: $1,212,724
DSCR: 1.42x
Underwritten Cash Flow: $1,718,776
Balance at ARD: $13,086,222
Property Type: Industrial
Locations: Metropolitan Chicago, IL
Year Built/Renovated: See Below
Square Footage: 497,420
Cut-off Date Balance/sf: $29.80
Appraised Value: $20,410,000
Current LTV: 72.6%
Balance at Maturity LTV: 64.1%
Percent Occupied: 100%
Occupancy as of Date: December 1998
- --------------------------------------------------------------------------------
THE LOAN GROUP
The Prime Industrial Portfolio Loan (the "Prime Loan") is secured by a first
mortgage on eight cross-collateralized cross-defaulted industrial buildings with
an aggregate square footage of 497,420 located in the Metropolitan Chicago,
Illinois area (the "Prime Properties"). The Prime Loan was originated by CIBC
Inc., on May 1, 1998 to refinance existing debt.
BORROWER. The borrower of the Prime Loan consists of eight
Delaware limited liability companies (each, a "Prime Borrower"), all of
which are controlled by Prime Group Realty Trust ("Prime"). The
Mortgage Loan Documents limit each Prime Borrower to the acquisition,
operation, and disposition of one of the eight cross-collateralized
properties. Each Prime Borrower is a single-purpose bankruptcy-remote
entity.
SECURITY. The Prime Loan is secured by a mortgage and security
agreement, assignment of leases and rents, UCC financing statements and
certain additional security documents. The Mortgage is a first lien on
the fee interest in the Prime Properties. The Prime Loan is
non-recourse, subject to certain limited exceptions.
PAYMENT TERMS. The Mortgage Rate is fixed at 7.170%. The Prime
Loan requires Monthly Payments of $101,060.35 (includes principal and
interest), which are due until its Anticipated Repayment Date of May 1,
2008, whereafter the interest rate increases as set forth in the note
and all cash flow is swept by the lender in order to accelerate the
amortization of principal (hyper-amortization). The Prime Loan accrues
interest computed on the basis of actual number of days elapsed each
month in a 360-day year.
PREPAYMENT. By its terms, the Prime Loan may not be prepaid in
whole or in part during the loan term, except that it may be repaid
without a Prepayment Premium during the last 6 months prior to the
Anticipated Repayment Date. The Prime Loan may be defeased on or after
the earlier of (i) 2 years after the Closing Date or (ii) 4 years after
the closing of the Prime Loan.
If there is an event of default and the lender accelerates the
Prime Loan, the note requires the Prime Borrower to pay the lender a
Yield Maintenance Charge (at treasuries flat) calculated by reference
to the U.S. treasury obligations. There is a 5% late fee for overdue
installments, and the Prime Loan accrues interest at the Mortgage Rate
plus 4% per annum while the Prime Loan is in default. Should the Prime
Loan not be repaid at the Anticipated Repayment Date, interest shall
accrue at the Mortgage Rate plus 5% or the treasury rate plus 5%,
whichever is greater.
TRANSFER OF PROPERTY OR INTEREST IN BORROWER. The Prime Loan
becomes immediately due and payable upon the transfer of the Prime
Properties or any majority ownership interest in the Prime Borrower,
provided, however, the Prime Borrower has the right to one transfer of
the Prime Properties subject to the terms of the mortgage and upon the
approval of the lender. Notwithstanding the foregoing, transfers are
permitted without consent so long as Prime Realty Trust owns at least a
30% stake in the Prime Borrower, and controls the Prime Borrower
post-transfer to the same extent as pre-transfer.
ESCROWS/RESERVES. There is a tax escrow, which requires monthly
deposits in an amount sufficient to pay estimated taxes when due. Prime
has provided an unconditional payment guarantee to ensure that adequate
funds will be available for capital repairs and tenant
improvements/leasing commissions in the monthly amounts of $6,218 and
$17,475, respectively.
SUBORDINATE/OTHER DEBT. The Mortgage Loan Documents prohibit each
Prime Borrower from incurring any subordinate indebtedness or
encumbrances.
THIS STRUCTURAL TERMSHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERMSHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERMSHEETS OR IN THE FINAL PROSPECTUS SUPPLEMENT. THIS PAGE MUST BE ACCOMPANIED
BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE CONTACT YOUR
PRUDENTIAL SECURITIES INCORPORATED FINANCIAL ADVISOR IMMEDIATELY. THE SECURITIES
DESCRIBED HEREIN ARE OFFERED ONLY PURSUANT TO A DEFINITIVE FINAL PROSPECTUS
SUPPLEMENT AND PROSPECTIVE INVESTORS WHO CONSIDER PURCHASING ANY SUCH SECURITIES
SHOULD MAKE THEIR INVESTMENT DECISION BASED ONLY UPON THE INFORMATION PROVIDED
THEREIN, CAPITALIZED TERMS USED BUT NOT DEFINED HEREIN HAVE THE MEANINGS GIVEN
TO SUCH TERMS IN THE FINAL PROSPECTUS SUPPLEMENT.
PRUDENTIAL SECURITIES CIBC WORLD MARKETS MORGAN STANLEY DEAN WITTER
- --------------------------------------------------------------------------------
<PAGE>
E-22
THE PROPERTIES
The Mortgaged Properties are comprised on eight cross-collateralized industrial
properties located in the Metropolitan Chicago, Illinois area. The Prime
Properties consist of the following eight (8) industrial buildings.
PROPERTY 1: LOAN #C103I / CONTROL #9.10 - 11039 GAGE AVENUE
- --------------------------------------------------------------------------------
Location: Franklin Park, IL
Construction: Steel Frame
Yr. Built/Renovated: 1964 / 93
Square Footage: 21,935
Percent Occupied: 100% as of 12/01/98
Appraised Value: $925,000
- --------------------------------------------------------------------------------
PROPERTY 2: LOAN #C103B / CONTROL #9.20 - 11045 GAGE AVENUE
- --------------------------------------------------------------------------------
Location: Franklin Park, IL
Construction: Steel Frame
Yr. Built/Renovated: 1964 / 93
Square Footage: 136,600
Percent Occupied: 100% as of 12/01/98
Appraised Value: $5,500,000
- --------------------------------------------------------------------------------
PROPERTY 3: LOAN #C103J / CONTROL #9.30 - 1401 SOUTH JEFFERSON STREET
- --------------------------------------------------------------------------------
Location: Chicago, IL
Construction: Steel/Brick
Yr. Built/Renovated: 1964
Square Footage: 17,265
Percent Occupied: 100% as of 12/1/98
Appraised Value: $810,000
- --------------------------------------------------------------------------------
PROPERTY 4: LOAN #C103G / CONTROL #9.40 - 200 EAST FULLERTON AVENUE
- --------------------------------------------------------------------------------
Location: Carol Stream, IL
Construction: Steel Frame
Yr. Built/Renovated: 1968 / 93
Square Footage: 66,254
Percent Occupied: 100% as of 12/1/98
Appraised Value: $2,500,000
- --------------------------------------------------------------------------------
PROPERTY 5: LOAN #C103H / CONTROL #9.50 - 350 RANDY ROAD
- --------------------------------------------------------------------------------
Location: Carol Stream, IL
Construction: Brick / Steel
Yr. Built/Renovated: 1974
Square Footage: 25,200
Percent Occupied: 100% as of 12/01/98
Appraised Value: $1,375,000
- --------------------------------------------------------------------------------
PROPERTY 6: LOAN #C103F / CONTROL #9.60 - 370 CAROL LANE
- --------------------------------------------------------------------------------
Location: Elmhurst, IL
Construction: Steel Frame
Yr. Built/Renovated: 1977 / 94
Square Footage: 60,290
Percent Occupied: 100% as of 12/1/98
Appraised Value: $2,550,000
- --------------------------------------------------------------------------------
PROPERTY 7: LOAN #C103C / CONTROL #9.70 - 4160-4190 MADISON STREET
- --------------------------------------------------------------------------------
Location: Hillside, IL
Construction: Steel/Brick
Yr. Built/Renovated: 1973 / 92
Square Footage: 79,532
Percent Occupied: 100% as of 12/1/98
Appraised Value: $3,225,000
- --------------------------------------------------------------------------------
PROPERTY 8: LOAN #C103D / CONTROL #9.80 - 4211 MADISON STREET
- --------------------------------------------------------------------------------
Location: Hillside, IL
Construction: Steel/Masonry
Yr. Built/Renovated: 1977 / 93
Square Footage: 90,344
Percent Occupied: 100% as of 12/01/98
Appraised Value: $3,525,000
- --------------------------------------------------------------------------------
THE MANAGEMENT
The Prime Borrower is the property manager.
THIS STRUCTURAL TERMSHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERMSHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERMSHEETS OR IN THE FINAL PROSPECTUS SUPPLEMENT. THIS PAGE MUST BE ACCOMPANIED
BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE CONTACT YOUR
PRUDENTIAL SECURITIES INCORPORATED FINANCIAL ADVISOR IMMEDIATELY. THE SECURITIES
DESCRIBED HEREIN ARE OFFERED ONLY PURSUANT TO A DEFINITIVE FINAL PROSPECTUS
SUPPLEMENT AND PROSPECTIVE INVESTORS WHO CONSIDER PURCHASING ANY SUCH SECURITIES
SHOULD MAKE THEIR INVESTMENT DECISION BASED ONLY UPON THE INFORMATION PROVIDED
THEREIN, CAPITALIZED TERMS USED BUT NOT DEFINED HEREIN HAVE THE MEANINGS GIVEN
TO SUCH TERMS IN THE FINAL PROSPECTUS SUPPLEMENT.
PRUDENTIAL SECURITIES CIBC WORLD MARKETS MORGAN STANLEY DEAN WITTER
- --------------------------------------------------------------------------------
<PAGE>
E-23
CONTROL #: 10 LOAN #: 2454 - ST. FRANCIS OUTPATIENT BUILDING
- ------------------------------------------------------------
- --------------------------------------------------------------------------------
Cut-off Date Balance: $14,500,000
Loan Type: IO then Amortizing Balloon
Origination Date: July 17,1998
Maturity Date: August 1,2008
Anticipated Repay Date: NAP
Mortgage Rate: 6.99%
Annual Debt Service: $1,156,458
DSCR: 1.37x
Underwritten Cash Flow: $1,589,127
Balance at Maturity: $12,973,937
Property Type: Office
Location: Honolulu, Hawaii
Year Built/Renovated: 1997
Square Footage: 80,371
Cut-off Date Balance/sf: $180.41
Appraised Value: $19,750,000
Current LTV: 73.4%
Balance at Maturity LTV: 65.7%
Percent Occupied: 92.7%
Occupancy as of Date: December 22, 1998
- --------------------------------------------------------------------------------
THE LOAN
The St. Francis Outpatient Building Loan (the "St. Francis Outpatient Building
Loan") is secured by a leasehold mortgage on a five-story medical office
building containing 80,371 square feet located in Honolulu, Hawaii (the "St.
Francis Outpatient Building Property"). The St. Francis Outpatient Building Loan
was originated by National Realty Funding, L.C. on July 17, 1998 and
subsequently acquired by National Realty Finance, L.C.
THE BORROWER. The borrower is Liliha Partners, L.P. dba Liliha LMP
Company, a California limited partnership (the "St. Francis Outpatient
Building Borrower"). The partnership was formed to own and operate the
St. Francis Outpatient Building Property.
SECURITY. The St. Francis Outpatient Building Loan is secured by a
Leasehold Mortgage, Assignment of Leases and Rents, Security Agreement,
and Fixture Filing (the "Security Instrument"), UCC financing
statements and certain additional security documents. The fee interest
is encumbered by an unsubordinated ground lease with a 50-year term,
expiring in 2044, with no renewal options. The lease is in compliance
with NRF underwriting guidelines. St. Francis Hospital is the lessor
and the primary tenant in the building.
PAYMENT TERMS. The Mortgage Rate is fixed at 6.99%. The St.
Francis Outpatient Building Loan requires monthly interest only
payments of $84,462.50 for the first two years, then monthly principal
and interest payments of $96,371.50 which will fully amortize the St.
Francis Outpatient Building over 30 years. The note provides for a
maturity date of August 1, 2008 at which time all unpaid principal and
accrued but unpaid interest is due. The St. Francis Outpatient Building
Loan accrues interest computed on the basis of a 30 day month in a 360
day year except for the last 6 months.
PREPAYMENT. By its terms, the St. Francis Outpatient Building Loan
allows the Borrower to prepay the entire principal balance of the St.
Francis Outpatient Building Loan in whole, but not in part, without a
Prepayment Premium during the six (6) month period preceding the
maturity date. The St. Francis Outpatient Building Loan may be fully
defeased on or after the day which is two (2) years after the Closing
Date. The St. Francis Outpatient Building Borrower may cause a partial
defeasance in the event St. Francis Hospital (largest tenant and fee
owner of the land) exercises its right to reduce base rents for a
payment, and upon satisfaction of certain other conditions.
TRANSFER OF PROPERTY OR INTEREST IN BORROWER. The St. Francis
Outpatient Building Loan becomes immediately due and payable upon the
transfer of the St. Francis Outpatient Building Property or any
ownership interest in the St. Francis Outpatient Building Borrower,
except in the connection with the rights of transfer described below.
The St. Francis Outpatient Building Borrower must receive the lender's
prior written consent, subject to conditions including 1) lender
approval of the new borrower, 2)The St. Francis Outpatient Building
Property meets all lender underwriting standards and 3) no event of
default has occurred. In addition, the St. Francis Outpatient Building
Borrower must reimburse the lender for transfer expenses and pay an
assumption fee of one percent (1%) of the outstanding Mortgage Balance.
ESCROWS/RESERVES. There is a tax escrow and insurance escrow
requiring monthly deposits in an amount sufficient to pay estimated
taxes and insurance when due. There is also a tenant
improvement/leasing commissions reserve deposit of $50 per square foot
of the remaining "shell space" of the building. $25 per square foot
will be released upon execution of a tenant lease and submission of a
construction contract, with the remaining $25 per square foot released
upon completion of the improvements.
SUBORDINATE/OTHER DEBT. The Mortgage Loan Documents prohibit the
St. Francis Outpatient Building Borrower from incurring any subordinate
indebtedness or encumbrances.
THE PROPERTY
The St. Francis Outpatient Building Property is a five story (with two levels
below ground) medical office building containing 89,173 rentable square feet
located in Honolulu, Hawaii. Current net rentable square feet is 80,371 due to
use of 8,802 square feet that is only generating rental income of $1 per year
plus a pro-rata share of reimbursements. The site is part of an 8.4 acre parcel
that is owned and occupied by St. Francis Medical Center, and is located
approximately two miles northwest of the Honolulu Central Business District.
Construction of supporting walls is concrete and concrete block. The upper
floors utilize an open web steel joist forming with corrugated metal decking,
finished with a concrete topping.
The St. Francis Outpatient Building was 92.7% occupied as of December 22, 1998
by 20 tenants based on a rent roll provided by the St. Francis Outpatient
Building Borrower. The average base rental rate is $25.21 per square foot at
December 22, 1998. The primary tenant is St. Francis Hospital, which occupies
about 65% of the rentable square footage. Breakeven occupancy is 69.1% and cash
flow from the St. Francis lease alone covers the majority of debt service.
THE MANAGEMENT
The St. Francis Outpatient Building Borrower is the property manager.
THIS STRUCTURAL TERMSHEET SUPERSEDES ANY PREVIOUS STRUCTURAL TERMSHEETS, AND
WILL BE SUPERSEDED BY THE STRUCTURAL INFORMATION IN ANY SUBSEQUENT STRUCTURAL
TERMSHEETS OR IN THE FINAL PROSPECTUS SUPPLEMENT. THIS PAGE MUST BE ACCOMPANIED
BY A DISCLAIMER. IF YOU DID NOT RECEIVE SUCH A DISCLAIMER, PLEASE CONTACT YOUR
PRUDENTIAL SECURITIES INCORPORATED FINANCIAL ADVISOR IMMEDIATELY. THE SECURITIES
DESCRIBED HEREIN ARE OFFERED ONLY PURSUANT TO A DEFINITIVE FINAL PROSPECTUS
SUPPLEMENT AND PROSPECTIVE INVESTORS WHO CONSIDER PURCHASING ANY SUCH SECURITIES
SHOULD MAKE THEIR INVESTMENT DECISION BASED ONLY UPON THE INFORMATION PROVIDED
THEREIN, CAPITALIZED TERMS USED BUT NOT DEFINED HEREIN HAVE THE MEANINGS GIVEN
TO SUCH TERMS IN THE FINAL PROSPECTUS SUPPLEMENT.
PRUDENTIAL SECURITIES CIBC WORLD MARKETS MORGAN STANLEY DEAN WITTER
- --------------------------------------------------------------------------------
<PAGE>
PROSPECTUS
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION
Depositor
COMMERCIAL/MULTIFAMILY MORTGAGE PASS-THROUGH CERTIFICATES
(Issuable in Series)
--------------
Prudential Securities Secured Financing Corporation (the "Depositor") from
time to time will offer Commercial/
Multifamily Mortgage Pass-Through Certificates (the "Offered Certificates") in
"Series" by means of this Prospectus and a separate Prospectus Supplement for
each Series. The Offered Certificates, together with any other
Commercial/Multifamily Mortgage Pass-Through Certificates of such Series, are
collectively referred to herein as the "Certificates."
The Certificates of each Series will evidence beneficial ownership
interests in a trust fund (the "Trust Fund") to be established by the
Depositor. The Certificates of a Series may be divided into two or more
"Classes' which may have different interest rates and which may receive
principal payments in differing proportions and at different times. In
addition, rights of the holders of certain Classes to receive principal and
interest may be subordinated to those of other Classes.
Each Trust Fund will consist of a pool (the "Mortgage Pool") of one or
more mortgage loans secured by first or junior liens on fee simple or leasehold
interests in commercial real estate properties, multifamily residential
properties and/or mixed residential/commercial properties and related property
and interests, conveyed to such Trust Fund by the Depositor, and other assets,
including any Credit Enhancement described in the related Prospectus
Supplement. If so specified in the related Prospectus Supplement, the Mortgage
Pool may also include participation interests in such types of mortgage loans,
installment contracts for the sale of such types of properties and/or mortgage
pass-through certificates (including private mortgage-pass-through
certificates, Certificates issued or guaranteed by FHLMC, Fannie Mae or GNMA or
mortgage pass-through certificates previously created by the Depositor). Such
mortgage loans, participation interests, installment contracts and mortgage
pass-through certificates are hereinafter referred to as the "Mortgage Loans."
The Mortgage Loans will have fixed or adjustable interest rates. Some
Mortgage Loans will fully amortize over their remaining terms to maturity and
others will provide for balloon payments at maturity. The Mortgage Loans will
provide for recourse against only the Mortgaged Properties, or provide for
recourse against the other assets of the obligors thereunder. The Mortgage
Loans will be newly originated or seasoned, and will be acquired by the
Depositor either directly or through one or more affiliates. Information
regarding each Series of Certificates, including interest and principal payment
provisions for each Class, as well as information regarding the size,
composition and other characteristics of the Mortgage Pool relating to such
Series, will be furnished in the related Prospectus Supplement. The Mortgage
Loans will be serviced by a Master Servicer identified in the related
Prospectus Supplement.
The Certificates do not represent an obligation of or an interest in the
Depositor or any affiliate thereof. Unless so specified in the related
Prospectus Supplement, neither the Certificates nor the Mortgage Loans are
insured or guaranteed by any governmental agency or instrumentality or by any
other person or entity.
PROSPECTIVE INVESTORS SHOULD CONSIDER THE FACTORS DISCUSSED HEREIN UNDER
"RISK FACTORS" AT PAGE 12 AND SUCH INFORMATION AS MAY BE SET FORTH UNDER THE
CAPTION "RISK FACTORS" IN THE RELATED PROSPECTUS SUPPLEMENT BEFORE PURCHASING
ANY OF THE OFFERED CERTIFICATES.
The Depositor, as specified in the related Prospectus Supplement, may
elect to treat all of a specified portion of the collateral securing any Series
of Certificates or the arrangement by which a Series of Certificates is issued
as a "real estate mortgage investment conduit" (a "REMIC"). If such election is
made, each Class of Certificates of a Series will be either Regular
Certificates or Residual Certificates, as specified in the related Prospectus
Supplement.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Offers of the Certificates may be made through one or more different
methods, including offerings through underwriters, as more fully described
under "PLAN OF DISTRIBUTION" herein and in the related Prospectus Supplement.
Certain offerings of the Certificates, as specified in the related Prospectus
Supplement, may be made in one or more transactions exempt from the
registration requirements of the Securities Act of 1933, as amended. Such
offerings are not being made pursuant to the Registration Statement of which
this Prospectus forms a part.
With respect to each Series, all of the Offered Certificates will be rated
in one of the four highest ratings categories by one or more nationally
recognized statistical rating organizations. There will have been no public
market for the Certificates of any Series prior to the offering thereof. No
assurance can be given that such a secondary market will develop as a result of
such offering or, if it does develop, that it will provide the holders of
Certificates with liquidity of investment or that it will continue.
RETAIN THIS PROSPECTUS FOR FUTURE REFERENCE. THIS PROSPECTUS MAY NOT BE
USED TO CONSUMMATE SALES OF THE CERTIFICATES OFFERED HEREBY UNLESS ACCOMPANIED
BY A PROSPECTUS SUPPLEMENT.
The date of this Prospectus is October 29, 1998.
<PAGE>
PROSPECTUS SUPPLEMENT
The Prospectus Supplement relating to each Series of Certificates will,
among other things, set forth with respect to such Series of Certificates: (i)
the identity of each Class within such Series; (ii) the initial aggregate
principal amount, the interest rate (the "Pass-Through Rate") (or the method
for determining it) and the authorized denominations of each Class of
Certificates of such Series; (iii) certain information concerning the Mortgage
Loans relating to such Series, including the principal amount, type and
characteristics of such Mortgage Loans on the date of issue of such Series of
Certificates; (iv) the circumstances, if any, under which the Certificates of
such Series are subject to redemption prior to maturity; (v) the final
scheduled distribution date of each Class of Certificates of such Series; (vi)
the method used to calculate the aggregate amount of principal available and
required to be applied to the Certificates of such Series on each Distribution
Date; (vii) the order of the application of principal and interest payments to
each Class of Certificates of such Series and the allocation of principal to be
so applied; (viii) the extent of subordination of any Subordinate Certificates;
(ix) the principal amount of each Class of Certificates of such Series that
would be outstanding on specified Distribution Dates, if the Mortgage Loans
relating to such Series were prepaid at various assumed rates; (x) the
Distribution Dates for each Class of Certificates of such Series; (xi) relevant
financial information with respect to the Mortgagor(s) and the Mortgaged
Properties underlying the Mortgage Loans relating to such Series, if
applicable; (xii) information with respect to the terms of the Subordinate
Certificates or Residual Certificates, if any, of such Series; (xiii)
additional information with respect to the Credit Enhancement, if any, relating
to such Series; (xiv) additional information with respect to the plan of
distribution of such Series; and (xv) whether the Certificates of such Series
will be registered in the name of the nominee of The Depository Trust Company
or another depository.
ADDITIONAL INFORMATION
This Prospectus contains, and the Prospectus Supplement for each Series of
Certificates will contain, a summary of the material terms of the documents
referred to herein and therein, but neither contains nor will contain all of
the information set forth in the Registration Statement (the "Registration
Statement") of which this Prospectus and the related Prospectus Supplement is a
part. For further information, reference is made to such Registration Statement
and the exhibits thereto which the Depositor has filed with the Securities and
Exchange Commission (the "Commission"), under the Securities Act of 1933, as
amended (the "1933 Act"). Statements contained in this Prospectus and any
Prospectus Supplement as to the contents of any contract or other document
referred to are summaries and in each instance reference is made to the copy of
the contract or other document filed as an exhibit to the Registration
Statement, each such statement being qualified in all respects by such
reference. Copies of the Registration Statement may be obtained from the
Commission, upon payment of the prescribed charges, or may be examined free of
charge at the Commission's offices. Reports and other information filed with
the Commission can be inspected and copied at prescribed rates at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the Regional Offices of the Commission at Seven
World Trade Center, 13th Floor, New York, New York 10048; and Northwestern
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of the Agreement pursuant to which a Series of Certificates is issued
will be provided to each person to whom a Prospectus and the related Prospectus
Supplement are delivered, upon written or oral request directed to: Prudential
Securities Secured Financing Corporation, One New York Plaza, New York, New
York 10292 attention, David Rodgers, (212) 214-1000.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
With respect to the Trust Fund for each Series, there are incorporated
herein by reference all documents and reports filed or caused to be filed by
the Depositor with respect to such Trust Fund pursuant to Section 13(a), 13(c),
14 or 15(d) of the Securities Exchange Act of 1934, after the date of this
Prospectus and prior to the termination of the offering of the Offered
Certificates evidencing an interest in such Trust Fund. The Depositor will
provide or cause to be provided without charge to each person to whom this
Prospectus is delivered in connection with the offering of one or more Classes
of Certificates,
2
<PAGE>
upon request, a copy of any or all such documents or reports incorporated
herein by reference, in each case to the extent such documents or reports
relate to one or more of such Classes of such Certificates, other than the
exhibits to such documents (unless such exhibits are specifically incorporated
by reference in such documents). The Depositor has determined that its
financial statements are not material to the offering of any of the Offered
Certificates. See "FINANCIAL INFORMATION." Requests to the Depositor should be
directed to: Prudential Securities Secured Financing Corporation, One New York
Plaza, New York, New York 10292, attention, David Rodgers, (212) 214-1000.
REPORTS
In connection with each distribution and annually, Certificateholders will
be furnished with statements containing information with respect to principal
and interest payments and the related Trust Fund, as described herein and in
the applicable Prospectus Supplement for such Series. Any financial information
contained in such reports most likely will not have been examined or reported
upon by an independent public accountant. See "DESCRIPTION OF THE
CERTIFICATES--Reports to Certificateholders." The Master Servicer for each
Series will furnish periodic statements setting forth certain specified
information relating to the Mortgage Loans to the related Trustee, and, in
addition, annually will furnish such Trustee with a statement from a firm of
independent public accountants with respect to the examination of certain
documents and records relating to the servicing of the Mortgage Loans in the
related Trust Fund. See "SERVICING OF THE MORTGAGE LOANS--Evidence of
Compliance." Copies of the monthly and annual statements provided by the Master
Servicer to the Trustee will be furnished to Certificateholders of each Series
upon request addressed to the Depositor's principal executive offices are
located at Prudential Securities Secured Financing Corporation, One New York
Plaza, New York, New York 10292, attention David Rodgers, (212) 214-1000.
3
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
PROSPECTUS SUPPLEMENT .................................................................... 2
ADDITIONAL INFORMATION ................................................................... 2
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE ........................................ 2
REPORTS .................................................................................. 3
SUMMARY OF PROSPECTUS .................................................................... 7
RISK FACTORS ............................................................................. 12
Limited Liquidity ....................................................................... 12
Limited Assets .......................................................................... 12
Average Life of Certificates; Prepayments; Yields ....................................... 12
Limited Nature of Ratings ............................................................... 13
Risks Associated with Lending on Income Producing Properties ............................ 13
Material Federal Tax Considerations Regarding Residual Certificates ..................... 14
Material Federal Tax Considerations Regarding Original Issue Discount ................... 14
Certain Tax Considerations of Variable Rate Certificates ................................ 15
Nonrecourse Mortgage Loans .............................................................. 15
Delinquent Mortgage Loans ............................................................... 15
Junior Mortgage Loans ................................................................... 15
Balloon Payments ........................................................................ 15
Extensions and Modifications of Defaulted Mortgage Loans; Additional Servicing Fees ..... 15
Risks Related to the Mortgagor's Form of Entity and Sophistication ...................... 16
Credit Enhancement Limitations .......................................................... 16
Risks to Subordinated Certificateholders ................................................ 17
Taxable Income in Excess of Distributions Received ...................................... 17
Due-on-Sale Clauses and Assignments of Leases and Rents ................................. 17
Environmental Risks ..................................................................... 18
ERISA Considerations .................................................................... 18
Control ................................................................................. 18
Book-Entry Registration ................................................................. 18
THE DEPOSITOR ............................................................................ 19
USE OF PROCEEDS .......................................................................... 19
DESCRIPTION OF THE CERTIFICATES .......................................................... 19
General ................................................................................. 19
Distributions on Certificates ........................................................... 20
Accounts ................................................................................ 21
Amendment ............................................................................... 23
Termination ............................................................................. 24
Reports to Certificateholders ........................................................... 24
The Trustee ............................................................................. 24
THE MORTGAGE POOLS ....................................................................... 25
General ................................................................................. 25
Assignment of Mortgage Loans ............................................................ 26
Representations and Warranties .......................................................... 27
SERVICING OF THE MORTGAGE LOANS .......................................................... 29
General ................................................................................. 29
Collections and Other Servicing Procedures .............................................. 29
Insurance ............................................................................... 30
Fidelity Bonds and Errors and Omissions ................................................. 31
Servicing Compensation and Payment of Expenses .......................................... 31
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Advances ................................................................................ 32
Modifications, Waivers and Amendments ................................................... 32
Evidence of Compliance .................................................................. 32
Certain Matters with Respect to the Master Servicer, the Special Servicer, the Trustee
and
the Depositor ......................................................................... 33
Events of Default ....................................................................... 34
Rights upon Event of Default ............................................................ 34
CREDIT ENHANCEMENT ....................................................................... 36
General ................................................................................. 36
Enhancement Limitations ................................................................. 36
Subordinate Certificates ................................................................ 36
Reserve Funds ........................................................................... 37
Cross-Support Features .................................................................. 37
Certificate Guarantee Insurance ......................................................... 38
Limited Guarantee ....................................................................... 38
Letter of Credit ........................................................................ 38
Pool Insurance Policies; Special Hazard Insurance Policies .............................. 38
Surety Bonds ............................................................................ 38
Fraud Coverage .......................................................................... 38
Mortgagor Bankruptcy Bond ............................................................... 39
CERTAIN LEGAL ASPECTS OF THE MORTGAGE LOANS .............................................. 39
General ................................................................................. 39
Types of Mortgage Instruments ........................................................... 39
Personality ............................................................................. 40
Installment Contracts ................................................................... 40
Junior Mortgages; Rights of Senior Mortgagees or Beneficiaries .......................... 40
Foreclosure ............................................................................. 42
Environmental Risks ..................................................................... 47
Enforceability of Certain Provisions .................................................... 50
Soldiers' and Sailors' Relief Act ....................................................... 51
Applicability of Usury Laws ............................................................. 52
Alternative Mortgage Instruments ........................................................ 52
Leases and Rents ........................................................................ 53
Secondary Financing; Due-on-Encumbrance Provisions ...................................... 53
Certain Laws and Regulations ............................................................ 53
Type of Mortgaged Property .............................................................. 54
Criminal Forfeitures .................................................................... 54
Americans With Disabilities Act ......................................................... 54
MATERIAL FEDERAL INCOME TAX CONSEQUENCES ................................................. 55
Federal Income Tax Consequences for REMIC Certificates .................................. 55
Taxation of Regular Certificates ........................................................ 58
Taxation of Residual Certificates ....................................................... 64
Taxes that may be Imposed on the REMIC Pool ............................................. 71
Liquidation of the REMIC Pool ........................................................... 71
Administrative Matters .................................................................. 72
Limitations on Deduction of Certain Expenses ............................................ 72
Taxation of Certain Foreign Investors ................................................... 72
Backup Withholding ...................................................................... 73
Reporting Requirements .................................................................. 73
</TABLE>
5
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<TABLE>
<CAPTION>
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<S> <C>
Federal Income Tax Consequences for Certificates as to Which No REMIC Election is Mad 74
Standard Certificates .......................................................... 74
Stripped Certificates .......................................................... 77
Federal Income Tax Consequences for FASIT Certificates ........................... 80
Reporting Requirements and Backup Withholding .................................... 80
Taxation of Certain Foreign Investors ............................................ 80
STATE AND OTHER TAX CONSIDERATIONS ................................................ 81
ERISA CONSIDERATIONS .............................................................. 81
Prohibited Transactions .......................................................... 81
Unrelated Business Taxable Income-Residual Interests ............................. 83
LEGAL INVESTMENT .................................................................. 83
PLAN OF DISTRIBUTION .............................................................. 85
LEGAL MATTERS ..................................................................... 86
FINANCIAL INFORMATION ............................................................. 86
RATING ............................................................................ 86
</TABLE>
6
<PAGE>
SUMMARY OF PROSPECTUS
The following summary of certain pertinent information is qualified in its
entirety by reference to the more detailed information appearing elsewhere in
this Prospectus and by reference to the information with respect to each Series
of Certificates contained in the Prospectus Supplement to be prepared and
delivered in connection with the offering of such Series. An Index of
Significant Definitions is included at the end of this Prospectus.
Title of Certificates....... Commercial/Multifamily Mortgage Pass-Through
Certificates, issuable in Series (the
"Certificates").
Depositor................... Prudential Securities Secured Financing
Corporation, One New York Plaza, New York, New
York 10292. Its telephone number is (212)
214-1000.
Master Servicer............. The Master Servicer for each Series of
Certificates will be named in the related
Prospectus Supplement. See "SERVICING OF THE
MORTGAGE LOANS--General."
Special Servicer............ The special servicer (the "Special Servicer"),
if any, for each Series of Certificates, will be
named, or the circumstances in accordance with
which a Special Servicer will be appointed, will
be described in the related Prospectus
Supplement. See "SERVICING OF THE MORTGAGE
LOANS--General."
Trustee..................... The trustee (the "Trustee") for each Series of
Certificates will be named in the related
Prospectus Supplement. See "DESCRIPTION OF THE
CERTIFICATES--The Trustee."
The Trust Fund.............. Each Series of Certificates will represent in
the aggregate the entire beneficial ownership
interest in a Trust Fund consisting primarily of
the following:
A. Mortgage Pool........... The primary assets of each Trust Fund will
consist of a pool of mortgage loans (the
"Mortgage Pool") secured by first or junior
mortgages, deeds of trust or similar security
instruments (each, a "Mortgage") on, or
installment contracts ("Installment Contracts")
for the sale of, fee simple or leasehold
interests in property improved by office
buildings, health-care related properties,
congregate care facilities, hotels and motels,
industrial properties, warehouse, mini-warehouse,
and self-storage facilities, mobile home parks,
multifamily properties, cooperative apartment
buildings, nursing homes, office/retail
properties, anchored retail properties,
single-tenant retail properties, unanchored
retail properties and other commercial real
estate properties, multifamily residential
properties and/or mixed residential commercial
properties (each, a "Mortgaged Property"). A
Mortgage Pool may also include any or all of the
participation interests in such types of mortgage
loans, private-label mortgage pass-through or
collateralized mortgaged obligations
certificates, certificates issued or guaranteed
by FHLMC, Fannie Mae or GNMA. Each such mortgage
loan, Installment Con-
7
<PAGE>
tract, participation interest or certificate or
collateralized mortgage obligation is herein
referred to as a "Mortgage Loan." The Mortgage
Loans will not be guaranteed or insured by the
Depositor or any of its affiliates. The
Prospectus Supplement will indicate whether the
Mortgage Loans will be guaranteed or insured by
any governmental agency or instrumentality or
other person. The Mortgage Loans will have the
additional characteristics described under "THE
MORTGAGE POOLS" herein and "DESCRIPTION MORTGAGE
POOL" in the related Prospectus Supplement. All
Mortgage Loans will have been purchased, either
directly or indirectly, by the Depositor on or
before the date of initial issuance of the
related Series of Certificates.
All Mortgage Loans will be of one or more of the
following types: Mortgage Loans with fixed
interest rates; Mortgage Loans with adjustable
interest rates; Mortgage Loans whose principal
balances fully amortize over their remaining
terms to maturity. Mortgage Loans whose
principal balances do not fully amortize, but
instead provide for a substantial principal
payment at the stated maturity of the loan;
Mortgage Loans that provide for recourse against
only the Mortgaged Properties; Mortgage Loans
that provide for recourse against the other
assets of the related mortgagors; and any other
types of Mortgages described in the related
Prospectus Supplement.
Certain Mortgage Loans may provide that
scheduled interest and principal payments
thereon are applied first to interest accrued
from the last date to which interest has been
paid to the date such payment is received and
the balance thereof is applied to principal. and
other Mortgage Loans may provide for payment of
interest in advance rather than in arrears. Each
Mortgage Loan may contain prohibitions on
prepayment or require payment of a premium or a
yield maintenance penalty in connection with a
prepayment, in each case as described in the
related Prospectus Supplement. The Mortgage
Loans may provide for payments of principal,
interest or both, on due dates that occur
monthly, quarterly, semi-annually or at such
other interval as is specified in the related
Prospectus Supplement.
B. Accounts................ A Collection Account and a Distribution
Account. The Master Servicer generally will be
required to establish and maintain an account
(the "Collection Account") in the name of the
Trustee on behalf of the Certificateholders into
which the Master Servicer will, to the extent
described herein and in the related Prospectus
Supplement, deposit all payments and collections
received or advanced with respect to the Mortgage
Loans. The Trustee generally will be required to
establish an account (the "Distribution Account")
into which the Master Servicer will deposit
amounts held in the Collection Account from which
distributions of principal and interest will be
made. Such distributions will be made to the
Certificateholders in the
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manner described in the related Prospectus
Supplement. Funds held in the Collection Account
and Distribution Account may be invested in
certain short-term, investment grade
obligations.
C. Credit Enhancement...... If so provided in the related Prospectus
Supplement, credit enhancement with respect to
one or more Classes of Certificates of a Series
or the related Mortgage Loans ("Credit
Enhancement"). Credit Enhancement may be in the
form of a letter of credit, the subordination of
one or more Classes of the Certificates of such
Series, the establishment of one or more reserve
funds, surety bonds, certificate guarantee
insurance, limited guarantees, or another type of
credit support, or a combination thereof. It is
unlikely that Credit Enhancement will protect
against all risks of loss or guarantee repayment
of the entire principal balance of the
Certificates and interest thereon. The amount and
types of coverage, the identification of the
entity providing the coverage (if applicable) and
related information with respect to each type of
Credit Enhancement, if any, will be described in
the applicable Prospectus Supplement for a Series
of Certificates. See "RISK FACTORS--Credit
Enhancement Limitations" and "CREDIT
ENHANCEMENT--General."
Description of
Certificates................ The Certificates of each Series will be issued
pursuant to a Pooling and Servicing Agreement
(the "Agreement"). If so specified in the
applicable Prospectus Supplement, Certificates of
a given Series may be issued in several Classes,
which may pay interest at different rates, may
represent different allocations of the right to
receive principal and interest payments, and
certain of which may be subordinated to other
Classes in the event of shortfalls in available
cash flow from the underlying mortgage loans.
Alternatively, or in addition, Classes may be
structured to receive principal payments in
sequence. Each Class in a group of sequential pay
Classes would be entitled to be paid in full
before the next Class in the group is entitled to
receive any principal payments. A Class of
Certificates may also provide for payments of
principal only or interest only or for
disproportionate payments of principal and
interest. Each Series of Certificates (including
any Class or Classes of Certificates of such
Series not offered hereby) will represent in the
aggregate the entire beneficial ownership
interest in the Trust Fund. See "PROSPECTUS
SUPPLEMENT" for a listing of additional
characteristics of the Certificates that will be
included in the Prospectus Supplement for each
The Certificates will not be guaranteed or
insured by the Depositor or any of its
affiliates. Unless so specified in the related
Prospectus Supplement, neither the Certificates
nor the Mortgage Loans are insured or guaranteed
by any governmental agency or instrumentality or
by any other person or entity. See "RISK
FACTORS--Limited Assets" and "DESCRIPTION OF THE
CERTIFICATES."
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Distributions on
Certificates................ Distributions of principal and interest on the
Certificates of each Series will be made to the
registered holders thereof on the day (the
"Distribution Date") specified in the related
Prospectus Supplement, beginning in the period
specified in the related Prospectus Supplement
following the establishment related Trust Fund.
With respect to each Series of Certificates on
each Distribution Date, the Trustee (or such
other paying agent as may be identified in the
applicable Prospectus Supplement) will
distribute to the Certificateholders the amounts
described in the related Prospectus Supplement
that are due to be paid on such Distribution
Date. In general, such amounts will include
previously undistributed payments of principal
(including principal prepayments, if any) and
interest on the Mortgage Loans received by the
Master Servicer or the Special Servicer, if any,
after a date specified in the related Prospectus
Supplement (the "Cut-off Date") and prior to the
day preceding each Distribution Date specified
in the related Prospectus Supplement.
Advances.................... The related Prospectus Supplement will set
forth the obligations, if any, of the Master
Servicer and the Special Servicer, if any, as
part of their servicing responsibilities, to make
certain advances with respect to delinquent
payments on the Mortgage Loans, payments of
taxes, assessments, insurance premiums and other
required payments. See "DESCRIPTION OF THE
CERTIFICATES--Advances."
Termination................. The obligations of the parties to the Agreement
for each Series will terminate upon: (i) the
purchase of all of the assets of the related
Trust Fund, as described in the related
Prospectus Supplement; (ii) the later of (a) the
distribution to Certificateholders of that Series
of final payment with respect to the last
outstanding Mortgage Loan or (b) the disposition
of all property acquired upon foreclosure or
deed-in-lieu of foreclosure with respect to the
last outstanding Mortgage Loan and the remittance
to the Certificateholders of all funds due under
the Agreement; (iii) the sale of the assets of
the related Trust Fund after the principal
amounts of all Certificates have been reduced to
zero under circumstances set forth in the
Agreement; or (iv) mutual consent of the parties
and all Certificateholders. With respect to each
Series, the Trustee will give or cause to be
given written notice of termination of the
Agreement to each Certificateholder and, unless
otherwise specified in the applicable Prospectus
Supplement, the final distribution under the
Agreement will be made only upon surrender and
cancellation of the related Certificates at an
office or agency specified in the notice of
termination. See "DESCRIPTION OF THE
CERTIFICATES--Termination."
Tax Status of
the Certificates............ The Certificates of each Series will constitute
either (i) "Regular Interests" ("Regular
Certificates") and "Residual Interests"
("Residual Certificates") in a Trust Fund treated
as a REMIC under
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Sections 860A through 860G of the Internal
Revenue Code of 1986 (the "Code"), or (ii)
interests in a Trust Fund treated as a grantor
trust under applicable provisions of the Code.
For the treatment of Regular Certificates,
Residual Certificates or grantor trust
certificates under the Code, see "MATERIAL
FEDERAL INCOME TAX CONSEQUENCES" herein and in
the related Prospectus Supplement.
ERISA Considerations........ Fiduciaries of employee benefit plans or of
certain other retirement plans and arrangements
that are subject to the Employee Retirement
Income Security Act of 1974, as amended
("ERISA"), or Section 4975 of the Code should
carefully review with their legal advisors
whether the purchase or holding of Certificates
may give rise to a transaction that is prohibited
or is not otherwise permissible either under
ERISA or Section 4975 of the Code. See "ERISA
CONSIDERATIONS" herein and in the related
Prospectus Supplement.
Legal Investment............ The related Prospectus Supplement will indicate
whether the Offered Certificates will constitute
"mortgage related securities" for purposes of the
Secondary Mortgage Market Enhancement Act of
1984. Accordingly, investors whose investment
authority is subject to legal restrictions should
consult their own legal advisors to determine
whether and to what extent the Certificates
constitute legal investments for them. See "LEGAL
INVESTMENT" herein and in the related Prospectus
Supplement.
Rating...................... At the date of issuance, as to each Series,
each Class of Offered Certificates will be rated
not lower than investment grade by one or more
nationally recognized statistical rating agencies
(each a "Rating Agency"). See "RATING" herein and
"RATINGS" in the related Prospectus Supplement.
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RISK FACTORS
Investors should consider, in connection with the purchase of Offered
Certificates, among other things, the following factors and certain other
factors as may, be set forth in "RISK FACTORS" in the related Prospectus
Supplement.
LIMITED LIQUIDITY
There can be no assurance that a secondary market for the Certificates of
any Series will develop or, if it does develop, that it will provide holders
with liquidity of investment or will continue while Certificates of such Series
remain outstanding. The market value of Certificates will fluctuate with
changes in prevailing rates of interest. Consequently, any sale of Certificates
by a holder in any secondary market that may develop may be at a discount from
100% of their original principal balance or from their purchase price.
Furthermore, secondary market purchasers may look only hereto, to the related
Prospectus Supplement and to the reports to Certificateholders delivered
pursuant to the Agreement as described herein under the heading "DESCRIPTION OF
THE CERTIFICATES--Reports to Certificateholders" and "SERVICING OF THE MORTGAGE
LOANS--Evidence of Compliance" for information concerning the Certificates.
Certificateholders will have only those redemption rights and the Certificates
will be subject to early retirement only under the circumstances described
herein or in the related Prospectus Supplement. See "DESCRIPTION OF THE
CERTIFICATES--Termination."
LIMITED ASSETS
A Series of Certificates will have a claim against or security interest in
the Trust Funds for another Series only if so specified in the related
Prospectus Supplement. If the related Prospectus Supplement does not specify
that a Series of Certificates will have a claim against or security interest in
the Trust Funds for another Series and the related Trust Fund is insufficient
to make payments on such Certificates, no other assets will be available for
payment of the deficiency. Additionally, certain amounts remaining in certain
funds or accounts, including the Distribution Account, the Collection Account
and any accounts maintained as Credit Enhancement, may be withdrawn under
certain conditions, as described in the related Prospectus Supplement. In the
event of such withdrawal, such amounts will not be available for future payment
of principal of or interest on the Certificates. If so provided in the
Prospectus Supplement for a Series of Certificates consisting of one or more
Classes of Subordinate Certificates, on any Distribution Date in respect of
which losses or shortfalls in collections on the Mortgaged Properties have been
realized, the amount of such losses or shortfalls will be borne first by one or
more Classes of the Subordinate Certificates, and, thereafter, by the remaining
Classes of Certificates in the priority and manner and subject to the
limitations specified in such Prospectus Supplement.
AVERAGE LIFE OF CERTIFICATES; PREPAYMENTS; YIELDS
Prepayments on the Mortgage Loans in any Trust Fund generally will result
in a faster rate of principal payments on one or more Classes of the related
Certificates than if payments on such Mortgage Loans were made as scheduled.
Thus, the prepayment experience on the Mortgage Loans may affect the average
life of each Class of related Certificates. The rate of principal payments on
pools of mortgage loans varies between pools and from time to time is
influenced by a variety of economic, demographic, geographic, social, tax,
legal and other factors. There can be no assurance as to the rate of prepayment
on the Mortgage Loans in any Trust Fund or that the rate of payments will
conform to any model described in any Prospectus Supplement. If prevailing
interest rates fall significantly below the applicable rates borne by the
Mortgage Loans included in a Trust Fund, principal prepayments are likely to be
higher than if prevailing rates remain at or above the rates home by those
Mortgage Loans. As a result, the actual maturity of any Class of Certificates
could occur significantly earlier than expected. Alternatively, the actual
maturity of any Class of Certificates could occur significantly later than
expected as a result of prepayment premiums or the existence of defaults on the
Mortgage Loans, particularly at or near their maturity dates. In addition, the
Master Servicer or the Special Servicer, if any, may have the option under the
Agreement for such Series to extend the maturity of the Mortgage Loans
following a default in the payment of a balloon payment, which would also have
the effect of extending the average life of each
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Class of related Certificates. A Series of Certificates may include one or more
Classes of Certificates with priorities of payment and, as a result, yields on
other Classes of Certificates, including Classes of Offered Certificates, of
such Series may be more sensitive to prepayments on Mortgage Loans. A Series of
Certificates may include one or more Classes offered at a significant premium
or discount. Yields on such Classes of Certificates will be sensitive, and in
some cases extremely sensitive, to prepayments on Mortgage Loans. With respect
to interest only or disproportionately interest weighted Classes purchased at a
premium, such Classes may not return their purchase Prices under rapid
repayment scenarios. See "YIELD AND MATURITY CONSIDERATIONS" in the related
Prospectus Supplement.
LIMITED NATURE OF RATINGS
Any rating assigned by a Rating Agency to a Class of Certificates will
reflect such Rating Agency's assessment solely of the likelihood that holders
of Certificates of such Class will receive payments to which such
Certificateholders are entitled under the related Agreement. Such rating will
not constitute an assessment of the likelihood that principal prepayments on
the related Mortgage Loans will be made, the degree to which the rate of such
prepayments might differ from that originally anticipated or the likelihood of
early optional termination of the Series Of Certificates. Such rating will not
address the possibility that prepayment at higher or lower rates than
anticipated by an investor may cause such investor to experience a lower than
anticipated yield or that an investor purchasing a Certificate at a significant
premium, or a Certificate that is entitled to disproportionately low, nominal
or no principal distributions, might fail to recoup its initial investment
under certain prepayment scenarios. Each Prospectus Supplement will identify
any payment to which holders of Offered Certificates of the related Series are
entitled that is not covered by the applicable rating. See "Credit Enhancement
Limitations."
RISKS ASSOCIATED WITH LENDING ON INCOME PRODUCING PROPERTIES
Mortgage loans made with respect to multifamily or commercial property may
entail risks of delinquency and foreclosure, and risks of loss in the event
thereof, that are greater than similar risks associated with single-family
property. For example, the ability of a mortgagor to repay a loan secured by an
income-producing property typically is dependent primarily upon the successful
operation of such property rather than any independent income or assets of the
mortgagor; thus, the value of an income-producing property is directly related
to the net operating income, as defined in the prospectus supplement, derived
from such property. In contrast, the ability of a mortgagor to repay a
single-family loan typically is dependent primarily upon the mortgagor's
household income, rather than the capacity of the property to produce income;
thus, other than in geographical areas where employment is dependent upon a
particular employer or an industry, the mortgagor's income tends not to reflect
directly the value of such property. A decline in the net operating income of
an income-producing property will likely affect both the performance of the
related loan as well as the liquidation value of such property, whereas a
decline in the income of a mortgagor on a single-family property will likely
affect the performance of the related loan but may not affect the liquidation
value of such property.
Further, the concentration of default foreclosure and loss risks for
Mortgage Loans in a particular Trust Fund or the related Mortgaged Properties
will generally be greater than for pools of single-family loans both because
the Mortgage Loans in a Trust Fund will generally consist of a smaller number
of loans than would a single-family pool of comparable aggregate unpaid
principal balance and because of the higher principal balance of individual
Mortgage Loans.
The performance of a mortgage loan secured by an income-producing property
leased by the mortgagor to tenants as well as the liquidation value of such
property may be dependent upon the business operated by such tenants in
connection with such property, the creditworthiness of such tenants or both;
the risks associated with such loans may be offset by the number of tenants or,
if applicable, a diversity of types of business operated by such tenants. A
number of the Mortgage Loans may be secured by liens on owner-occupied
Mortgaged Properties or on Mortgaged Properties leased to a single tenant.
Accordingly, a decline in the financial condition of the borrower or single
tenant, as applicable, may have a disproportionately greater effect on the net
operating income from such Mortgaged Properties than would be the case with
respect to Mortgaged Properties with multiple tenants. Furthermore, the value
of
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any mortgaged property may be adversely affected by risks generally incident to
interests in real property, including changes in general or local economic
conditions and/or specific industry segments, declines in real estate values;
declines in rental or occupancy rates; increases in interest rates, real estate
tax rates and other operating expenses; changes in governmental rules,
regulations and fiscal policies, including environmental legislation; natural
disasters; and other factors beyond the control of the Master Servicer or the
Special Servicer, if any.
Additional risk may be presented by the type and use of a particular
mortgaged property. For instance, mortgaged properties that operate as
hospitals, nursing homes or convalescent homes may present special risks to
mortgagees due to the significant governmental regulation of the ownership,
operation, maintenance, control and financing of health care institutions.
Mortgages encumbering mortgaged properties that are owned by the mortgagor
under a condominium form of ownership are subject to the declaration, by-laws
and other rules and regulations of the condominium association. Hotel and motel
properties are often operated pursuant to franchise, management or operating
agreements that may be terminable by the franchiser or operator. Moreover, the
transferability of a hotel's operating, liquor and other licenses upon a
transfer of the hotel, whether through purchase or foreclosure, is subject to
local law requirements. In addition, mortgaged properties that are multifamily
residential properties or cooperatively owned multifamily properties may be
subject to rent control laws, which could impact the future cash flows of such
properties. Any such risks will be more fully described in the related
Prospectus Supplement under the captions "RISK FACTORS" and "DESCRIPTION OF THE
MORTGAGE POOL."
If applicable, certain legal aspects of the Mortgage Loans for a Series of
Certificates may be described in the related Prospectus Supplement. See also
"CERTAIN LEGAL ASPECTS OF THE MORTGAGE LOANS."
MATERIAL FEDERAL TAX CONSIDERATIONS REGARDING RESIDUAL CERTIFICATES
Holders of Residual Certificates will be required to report on their
federal income tax returns as ordinary income their pro rata share of the
taxable income of the REMIC, regardless of the amount or timing of their
receipt of cash payments, as described in "Material Federal Income Tax
Consequences--Federal Income Tax Consequences for REMIC Certificates".
Accordingly, under certain circumstances, holders of Offered Certificates that
constitute Residual Certificates may have taxable income and tax liabilities
arising from such investment during a taxable year in excess of the cash
received during such period. The requirement that holders of Residual
Certificates report their pro rata share of the taxable income and net loss of
the REMIC will continue until the Certificate Balances of all classes of
Certificates of the related series have been reduced to zero, even though
holders of Residual Certificates have received full payment of their stated
interest and principal. A portion (or, in certain circumstances, all) of such
Certificateholder's share of the REMIC taxable income may be treated as "excess
inclusion" income to such holder which (i) generally, will not be subject to
offset by losses from other activities, (ii) for a tax-exempt holder, will be
treated as unrelated business taxable income and (iii) for a foreign holder,
will not qualify for exemption from withholding tax. Individual holders of
Residual Certificates may be limited in their ability to deduct servicing fees
and other expenses of the REMIC. In addition, Residual Certificates are subject
to certain restrictions on transfer. Because of the special tax treatment of
Residual Certificates, the taxable income arising in a given year on a Residual
Certificate will not be equal to the taxable income associated with investment
in a corporate bond or stripped instrument having similar cash flow
characteristics and pre-tax yield. Therefore, the after-tax yield on the
Residual Certificate may be significantly less than that of a corporate bond or
stripped instrument having similar cash flow characteristics.
MATERIAL FEDERAL TAX CONSIDERATIONS REGARDING ORIGINAL ISSUE DISCOUNT
Accrual Certificates will be, and certain of the other Classes of
Certificates of a series may be, issued with "original issue discount" for
federal income tax purposes, which generally will result in recognition of some
taxable income in advance of the receipt of cash attributable to such income.
See "Material Federal Income Tax Consequences--Federal Income Tax Consequences
for REMIC Certificates--Taxation of Regular Certificates."
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CERTAIN TAX CONSIDERATIONS OF VARIABLE RATE CERTIFICATES
There are certain tax matters as to which counsel to the Depositor is
unable to opine at the time of the issuance of the Prospectus due to
uncertainty in the law. Specifically, the treatment of Interest Weighted
Certificates and Variable Rate Regular Interests are subject to unsettled law
which creates uncertainty as to the exact method of income accrual which should
control. The REMIC will accrue income using a method which is consistent with
certain regulations; however, there can be no assurance that such method will
be controlling.
NONRECOURSE MORTGAGE LOANS
It is anticipated that a substantial portion of the Mortgage Loans
included in any Trust Fund will be nonrecourse loans or loans for which
recourse may be restricted or unenforceable. As to such Mortgage Loans, in the
event of mortgagor default, recourse may he had only against the specific
multifamily or commercial property and such other assets, if any, as have been
pledged to secure the Mortgage Loan. With respect. to those Mortgage Loans that
provide for recourse against the mortgagor and its assets generally, there can
be no assurance that such recourse will ensure a recovery in respect of a
defaulted Mortgage Loan greater than the liquidation value of the related
Mortgaged Property.
DELINQUENT MORTGAGE LOANS
If so provided in the related Prospectus Supplement, the Trust Fund for a
particular Series of Certificates may include Mortgage Loans that are
delinquent; provided, however, that such delinquent Mortgage Loans may only
constitute up to, but not including, 20% (by principal balance) of the Trust
Fund. If so specified in the related Prospectus Supplement, the servicing of
such Mortgage Loans will be performed by a Special Servicer. Credit
Enhancement, if provided with respect to a particular Series of Certificates,
may not cover all losses related to such delinquent Mortgage Loans, and
investors should consider the risk that the inclusion of such Mortgage Loans in
the Trust Fund may adversely affect the rate of defaults and prepayments on
Mortgaged Properties and the yield on the Certificates of such Series.
JUNIOR MORTGAGE LOANS
Certain of the Mortgage Loans may be junior mortgage loans. The primary
risk to holders of mortgage loans secured by junior liens is the possibility
that a foreclosure of a related senior lien would extinguish the junior lien
and that adequate funds will not be received in connection with such
foreclosure to pay the debt held by the holder of such junior mortgage loan
after satisfaction of all related senior liens.
See "CERTAIN LEGAL ASPECTS OF THE MORTGAGE LOANS--Junior Mortgages; Rights
of Senior Mortgagees or Beneficiaries" and "--Foreclosure" for a discussion of
additional risks to holders of mortgage loans secured by junior liens.
BALLOON PAYMENTS
Certain of the Mortgage Loans as of the Cut-off Date may not be fully
amortizing over their terms to maturity and, thus, will require substantial
principal payments (i.e., balloon payments) at their stated maturity. Mortgage
loans with balloon payments involve a greater degree of risk because the
ability of a mortgagor to make a balloon payment typically will depend upon its
ability either to refinance the loan or to sell the related mortgaged property
in a timely manner. The ability of a mortgagor to accomplish either of these
goals will be affected by a number of factors, including the level of available
mortgage rates at the time of sale or refinancing, the mortgagor's equity in
the related mortgaged property, the financial condition and operating history
of the mortgagor and the related mortgaged property, tax laws, rent control
laws (with respect to certain multifamily properties and mobile home parks),
reimbursement rates (with respect to certain hospitals, nursing homes and
congregate care facilities), renewability of operating licenses, prevailing
general economic conditions and the availability of credit for commercial or
multifamily, as the case may be, real properties generally.
EXTENSIONS AND MODIFICATIONS OF DEFAULTED MORTGAGE LOANS; ADDITIONAL SERVICING
FEES
In order to maximize recoveries on defaulted Mortgage Loans, a Master
Servicer or Special Servicer, if any, will be permitted (within the parameters
specified in the related Prospectus Supplement) to extend and modify Mortgage
Loans that are in default or as to which a payment default is reasonably
foreseeable,
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including in particular with respect to balloon payments. In addition, a Master
Servicer or a Special Servicer, if any, may receive workout fees, management
fees, liquidation fees or other similar fees based on receipts from or proceeds
of such Mortgage Loans. Although a Master Servicer or Special Servicer, if any,
generally will be required to determine that any such extension or modification
is reasonably likely to produce a greater recovery amount than liquidation,
there can be no assurance that such flexibility with respect to extensions or
modifications or payment of a workout fee will increase the amount of receipts
from or proceeds of Mortgage Loans that are in default or as to which a payment
default is reasonably foreseeable.
RISKS RELATED TO THE MORTGAGOR'S FORM OF ENTITY AND SOPHISTICATION
Mortgage loans made to partnerships, corporations or other entities may
entail risks of loss from delinquency and foreclosure that are greater than
those of mortgage loans made to individuals. For example, an entity, as opposed
to an individual, may be more inclined to seek legal protection from its
creditors, such as a mortgagee, under the bankruptcy laws. Unlike individuals
involved in bankruptcies, various types of entities generally do not have
personal assets and creditworthiness at stake. The bankruptcy of a mortgagor
may impair the ability of the mortgagee to enforce its rights and remedies
under the related mortgage. See "CERTAIN LEGAL ASPECTS OF THE MORTGAGE LOANS--
Foreclosure--Bankruptcy Law." The mortgagor's sophistication may increase the
likelihood of protracted litigation or bankruptcy in default situations. The
more sophisticated a mortgagor is, the more likely it will be aware of its
rights, remedies and defenses against its mortgagee and the more likely it will
have the resources to make effective use of all of its rights, remedies and
defenses.
CREDIT ENHANCEMENT LIMITATIONS
The Prospectus Supplement for a Series of Certificates will describe any
Credit Enhancement in the related Trust Fund, which may include letters of
credit, insurance policies, surety bonds, limited guarantees, reserve funds or
other types of credit support, or combinations thereof. Use of Credit
Enhancement will be subject to the conditions and limitations described herein
and in the related Prospectus Supplement and is not expected to cover all
potential losses or risks or guarantee repayment of the entire principal
balance of the Certificates and interest thereon.
A Series of Certificates may include one or more Classes of Subordinate
Certificates (which may include Offered Certificates), if so provided in the
related Prospectus Supplement. Although subordination is intended to reduce the
risk to holders of Senior Certificates of delinquent distributions or ultimate
losses, the amount of subordination will be limited and may decline or be
reduced to zero under certain circumstances. In addition, if principal payments
on one or more Classes of Certificates of a Series are made in a specified
order of priority, any limits with respect to the aggregate amount of claims
under any related Credit Enhancement may be exhausted before the principal of
the lower priority Classes of Certificates of such Series has been repaid. As a
result, the impact of significant losses and shortfalls on the Mortgaged
Properties may fall primarily upon those Classes of Certificates having a lower
priority of payment. Moreover, if a form of Credit Enhancement covers more than
one Series of Certificates, holders of Certificates of one Series will be
subject to the risk that such Credit Enhancement will be exhausted by the
claims of the holders of Certificates of one or more other Series.
The amount, type and nature of Credit Enhancement, if any, established
with respect to a Series of Certificates will be determined on the basis of
criteria established by each Rating Agency rating Classes of the Certificates
of such Series. Such criteria are sometimes based upon an actuarial analysis of
the behavior of mortgage loans in a larger group. Such analysis is often the
basis upon which each Rating Agency determines the amount of Credit Enhancement
required with respect to each such Class. There can be no assurance that the
historical data supporting any such actuarial analysis will accurately reflect
future experience nor any assurance that the data derived from a large pool of
mortgage loans accurately predicts the delinquency, foreclosure or loss
experience of any particular pool of Mortgage Loans. No assurance can be given
with respect to any Mortgage Loan that the appraised value of the related
Mortgaged Property has remained or will remain at its level as of the
origination date of such Mortgage Loan. Moreover, there is no assurance that
appreciation of real estate values generally will limit loss experiences on
commercial or multifamily properties. If the commercial or multifamily
residential real
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estate markets should experience an overall decline in property values such
that the outstanding principal balances of the Mortgage Loans in a particular
Trust Fund and any secondary financing on the related Mortgaged Properties
become equal to or greater than the value of the Mortgaged Properties, the
rates of delinquencies, foreclosures and losses could be higher than those now
generally experienced by institutional lenders for similar mortgage loans. In
addition, adverse economic conditions (which may or may not affect real
property values) may affect the timely payment by mortgagors of scheduled
payments of principal and interest on the Mortgage Loans and, accordingly, the
rates of delinquencies, foreclosures and losses with respect to any Trust Fund.
To the extent that such losses are not covered by Credit Enhancement, such
losses will be borne, at least in part, by the holders of one or more Classes
of the Certificates of the related Series. See "Limited Nature of Ratings,"
"DESCRIPTION OF THE CERTIFICATES" and "CREDIT ENHANCEMENT."
RISKS TO SUBORDINATED CERTIFICATEHOLDERS
If so provided in the related Prospectus Supplement, a Series of
Certificates may include one or more Classes of Subordinate Certificates (which
may include Offered Certificates). If losses or shortfalls in collections on
Mortgaged Properties are realized, the amount of such losses or shortfalls will
be borne first by one or more Classes of the Subordinate Certificates. The
remaining amount of such losses or shortfalls, if any, will be borne by the
remaining Classes of Certificates in the priority and subject to the
limitations specified in such Prospectus Supplement. In addition to the
foregoing, any Credit Enhancement, if applicable, may be used by the
Certificates of a higher priority of payment before the principal of the lower
priority Classes of Certificates of such Series has been repaid. Therefore, the
impact of significant losses and shortfalls on the mortgaged properties may
fall primarily upon those Classes of Certificates with a lower payment
priority.
TAXABLE INCOME IN EXCESS OF DISTRIBUTIONS RECEIVED
A holder of a certificate in a Class of Subordinate Certificates could be
allocated taxable income attributable to accruals of interest and original
issue discount in excess of cash distributed to such holder if mortgage loans
were in default giving rise to delays in distributions. See "MATERIAL FEDERAL
INCOME TAX CONSEQUENCES--Taxation of Regular Interests--Treatment of
Subordinate Certificates" herein.
DUE-ON-SALE CLAUSES AND ASSIGNMENTS OF LEASES AND RENTS
Mortgages may contain a due-on-sale clause, which permits the mortgagee to
accelerate the maturity of the mortgage loan if the mortgagor sells, transfers
or conveys the related mortgaged property or its interest in the mortgaged
property. Mortgages may also include a debt-acceleration clause, which permits
the mortgagee to accelerate the debt upon a monetary or non-monetary default of
the mortgagor. Such clauses are generally enforceable subject to certain
exceptions. The courts of all states will enforce clauses providing for
acceleration in the event of a material payment default. The equity courts of
any state, however, may refuse the foreclosure of a mortgage or deed of trust
when an acceleration of the indebtedness would be inequitable or unjust or the
circumstances would render the acceleration unconscionable.
The related Prospectus Supplement will describe whether and to what extent
the Mortgage Loans will be secured by an assignment of leases and rents
pursuant to which the mortgagor typically assigns its right, title and interest
as landlord under the leases on the related Mortgaged Property and the income
derived therefrom to the mortgagee as further security for the related Mortgage
Loan, while retaining a license to collect rents for so long as there is no
default. In the event the mortgagor defaults, the license terminates and the
mortgagee is entitled to collect rents. Such assignments are typically not
perfected as security interests prior to the mortgagee's taking possession of
the related mortgaged property and/or appointment of a receiver. Some state
laws may require that the mortgagee take possession of the mortgaged property
and obtain a judicial appointment of a receiver before becoming entitled to
collect the rents. In addition, if bankruptcy or similar proceedings are
commenced by or in respect of the mortgagor, the mortgagee's ability to collect
the Tents may be adversely affected. See "CERTAIN LEGAL ASPECTS OF THE MORTGAGE
LOANS--Leases and Rents."
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ENVIRONMENTAL RISKS
Real property pledged as security for a mortgage loan may be subject to
certain environmental risks. Under the laws of certain states, contamination of
a property may give rise to a lien on the property to assure the costs of
cleanup. In several states. such a lien has priority over the lien of an
existing mortgage against such property. In addition, under the laws of some
states and under the federal Comprehensive Environmental Response, Compensation
and Liability Act of 1980 ("CERCLA"), a mortgagee may be liable as an "owner"
or "operator" for costs of addressing releases or threatened releases of
hazardous substances that require remedy at a property. if agents or employees
of the mortgagee have become sufficiently involved in the operations of the
mortgagor, regardless of whether the environmental damage or threat was caused
by a prior owner. A mortgagee also risks such liability on foreclosure of the
mortgage. Each Agreement will generally provide that the Master Servicer or the
Special Servicer, if any, acting on behalf of the Trust Fund, may not acquire
title to a Mortgaged Property securing a Mortgage Loan or take over its
operation unless the Master Servicer or Special Servicer, as applicable, has
previously determined, based upon a report prepared by a person who regularly
conducts environmental audits, that: (i) the Mortgaged Property is in
compliance with applicable environmental laws, and there are no circumstances
present at the Mortgaged Property relating to the use, management or disposal
of any hazardous substances, hazardous materials, wastes or petroleum based
materials for which investigation, testing, monitoring, containment, clean-up
or remediation could be required under any federal, state or local law or
regulation; or (ii) if the Mortgaged Property is not so in compliance or such
circumstances are so present, then it would be in the best economic interest of
the Trust Fund to acquire title to the Mortgaged Property and further to take
such actions as would be necessary and appropriate to effect such compliance
and/or respond to such circumstances, which may include obtaining an
environmental insurance policy. The related Prospectus Supplement may impose
additional restrictions on the ability of the Master Servicer or the Special
Servicer, if any, to take any of the foregoing actions. See "CERTAIN LEGAL
ASPECTS OF THE MORTGAGE LOANS--Environmental Risks."
ERISA CONSIDERATIONS
Generally, title I of ERISA and certain sections of the Code apply to
investments made by employee benefit plans and transactions involving the
assets of such plans. Due to the complexity of regulations that govern such
plans, prospective benefit plan investors that are subject to ERISA or the Code
are urged to consult their own counsel regarding consequences under ERISA of
acquisition, ownership and disposition of the Offered Certificates of any
Series. See "ERISA CONSIDERATIONS."
CONTROL
Under certain circumstances, the consent or approval of the holders of a
specified percentage of the aggregate Certificate Balance of all outstanding
Certificates of a Series or a similar means of allocating decision-making under
the related Agreement, which will be specified in the related Prospectus
Supplement ("Voting Rights"), will be required to direct, and will be
sufficient to bind all Certificateholders of such Series to, certain actions,
including amending the related Agreement in certain circumstances. See
"SERVICING OF THE MORTGAGE LOANS--Events of Default," "--Rights Upon Event of
Default" and "DESCRIPTION OF THE CERTIFICATES--Amendment."
BOOK-ENTRY REGISTRATION
The related Prospectus Supplement may provide that one or more Classes of
the Certificates initially will be represented by one or more certificates
registered in the name of the nominee for The Depository Trust Company, and
will not be registered in the names of the Certificateholders or their
nominees. Because of this, unless and until definitive certificates, as defined
in the Prospectus Supplement, are issued, beneficial owners of the Certificates
of such Class or Classes will not be recognized by the Trustee as
"Certificateholders" (as that term is to be used in the related Agreement).
Hence, until such time as definitive certificates are issued, the beneficial
owners will be able to exercise the rights of Certificateholders only
indirectly through The Depository Trust Company and its participating
organizations. See "DESCRIPTION OF THE CERTIFICATES--General."
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THE DEPOSITOR
Prudential Securities Financing Corp. was incorporated in the State of
Delaware on August 26, 1988 as a wholly owned, limited purpose finance
subsidiary of Prudential Securities Group. The principal executive offices of
the Depositor are located at One New York Plaza, New York, New York 10292,
attention David Rodgers, (212) 214-1000.
The Depositor will have no servicing obligations or responsibilities with
respect to any Series of Certificates, Mortgage Pool or Trust Fund. The
Depositor does not have, nor is it expected in the future to have, any
significant assets.
The Depositor was organized, among other things, for the purposes of
establishing trusts, selling beneficial interests therein and acquiring and
selling mortgage assets to such trusts. Neither the Depositor, its parent nor
any of the Depositor's affiliates will insure or guarantee distributions on the
Certificates of any Series.
Unless otherwise specified in the applicable Prospectus Supplement, the
assets of the Trust Funds will be acquired by the Depositor directly or through
one or more affiliates.
USE OF PROCEEDS
The Depositor will apply all or substantially all of the net proceeds from
the sale of each Series of Offered Certificates to purchase the Mortgage Loans
relating to such Series, to repay indebtedness that has been incurred to obtain
funds to acquire Mortgage Loans, to obtain Credit Enhancement, if any, for the
Series and to pay costs of structuring, issuing and underwriting the
Certificates. If so specified in the related Prospectus Supplement,
Certificates may be exchanged by the Depositor for Mortgage Loans.
DESCRIPTION OF THE CERTIFICATES
The Certificates of each Series will he issued pursuant to a separate
Pooling and Servicing Agreement (the "Agreement") to be entered into among the
Depositor, the Master Servicer, the Special Servicer, if any, and the Trustee
for that Series and any other parties described in the applicable Prospectus
Supplement, substantially in the form filed as an exhibit to the Registration
Statement of which this Prospectus is a part or in such other form as may be
described in the applicable Prospectus Supplement. The following summaries
describe certain provisions expected to be common to each Series and the
Agreement with respect to the underlying Trust Fund. However, the Prospectus
Supplement for each Series will describe more fully the Certificates and the
provisions of the related Agreement, which may be different from the summaries
set forth below.
At the time of issuance, the Offered Certificates of each Series will be
rated "investment grade," typically one of the four highest generic rating
categories, by at least one nationally recognized statistical rating
organization. Each of such rating organizations specified in the applicable
Prospectus Supplement as rating the Offered Certificates of the related Series
is hereinafter referred to as a "Rating Agency." A security rating is not a
recommendation to buy, sell or hold securities and may be subject to revision
or withdrawal at any time by the assigning Rating Agency.
GENERAL
The Certificates of each Series will be issued in registered or book-entry
form and will represent beneficial ownership interests in the trust fund (the
"Trust Fund") created pursuant to the Agreement for such Series. The Trust Fund
for each Series will primarily comprise, to the extent provided in the
Agreement: (i) the Mortgage Loans conveyed to the Trustee pursuant to the
Agreement; (ii) all payments on or collections in respect of the Mortgage Loans
due after the Cut-off Date; (iii) any REO property, as defined in the
Prospectus Supplement; (iv) all revenue received in respect of REO Property;
(v) insurance policies with respect to such Mortgage Loans; (vi) any
assignments of leases, rents and profits and security agreements; (vii) any
indemnities or guaranties given as additional security for such Mortgage Loans;
(viii) the Trustee's right, title and interest in and to any reserve or escrow
accounts established pursuant to any of the Mortgage Loan documents (each, a
"Reserve Account"); (ix) the Collection Account;
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(x) the Distribution Account and the REO Account; (xi) any environmental
indemnity agreements relating to such Mortgaged Properties; (xii) the rights
and remedies under the Mortgage Loan Purchase and Sale Agreement; (xiii) the
proceeds of any of the foregoing (excluding interest earned on deposits in any
Reserve Account, to the extent such interest belongs to the related mortgagor);
and (xiv) such other assets or rights as are described in the related
Prospectus Supplement. In addition, the Trust Fund for a Series may include
private mortgage pass-through certificates, certificates issued or guaranteed
by the Federal Home Loan Mortgage Corporation ("FHLMC"), the Federal National
Mortgage Association ("Fannie Mae") or the Governmental National Mortgage
Association ("GNMA") or mortgage pass-through certificates previously created
by the Depositor, as well as various forms of Credit Enhancement. See "CREDIT
ENHANCEMENT." Such other assets will be described more fully in the related
Prospectus Supplement.
If so specified in the applicable Prospectus Supplement, Certificates of a
given Series may be issued in several Classes, which may pay interest at
different rates, may represent different allocations of the right to receive
principal and interest payments, and certain of which may be subordinated to
other Classes in the event of shortfalls in available cash flow from the
underlying Mortgage Loans. Alternatively, or in addition, Classes may be
structured to receive principal payments in sequence. Each Class in a group of
sequential pay Classes would be entitled to be paid in full before the next
Class in the group is entitled to receive any principal payments. A Class of
Certificates may also provide for payments of principal only or interest only
or for disproportionate payments of principal and interest. Subordinate
Certificates of a given Series of Certificates may he offered in the same
Prospectus Supplement as the Senior Certificates of such Series or may be
offered in a separate offering document. Each Class of Certificates of a Series
will be issued in the minimum denominations specified in the related Prospectus
Supplement.
The Prospectus Supplement for any Series including Classes similar to any
of those described above will contain a complete description of their
characteristics and risk factors, including, as applicable,
(i) mortgage principal prepayment effects on the weighted average lives of
Classes; (ii) the risk that interest only, or disproportionately interest
weighted, Classes purchased at a premium may not return their purchase prices
under rapid prepayment scenarios; and (iii) the degree to which an investor's
yield is sensitive to principal prepayments.
The Offered Certificates of each Series will be freely transferable and
exchangeable at the office specified in the related Agreement and Prospectus
Supplement, provided, however, that certain Classes of Certificates may be
subject to transfer restrictions described in the related Prospectus
Supplement. If specified in the related Prospectus Supplement, the Certificates
may be transferable only on the books of The Depository Trust Company or
another deposition, identified in such Prospectus Supplement.
DISTRIBUTIONS ON CERTIFICATES
Distributions of principal and interest on the Certificates of each Series
will be made to the registered holders thereof ("Certificateholders") by the
Trustee (or such other paying agent as may be identified in the related
Prospectus Supplement) on the day (the "Distribution Date") specified in the
related Prospectus Supplement, beginning in the period specified in the related
Prospectus Supplement following the establishment of the related Trust Fund.
Distributions for each Series will be made by check mailed to the address of
the person entitled thereto as it appears on the certificate register for such
Series maintained by the Trustee or by wire transfer if so specified in the
related Prospectus Supplement. The final distribution in retirement of the
Certificates of each Series will be made only upon presentation and surrender
of the Certificates at the office or agency specified in the notice to the
Certificateholders of such final distribution. In addition, the Prospectus
Supplement relating to each Series will set forth the applicable due period,
prepayment period, record date, Cut-off Date and determination date in respect
of each Series of Certificates.
With respect to each Series of Certificates on each Distribution Date, the
Trustee (or such other paying agent as may be identified in the applicable
Prospectus Supplement) will distribute to the Certificateholders the amounts
described in the related Prospectus Supplement that are due to be paid on such
Distribution Date. In general, such amounts will include previously
undistributed payments of
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principal (including principal prepayments, if any) and interest on the
Mortgage Loans received by the Master Servicer or the Special Servicer, if any,
after a date specified in the related Prospectus Supplement (the "Cut-off
Date") and prior to the day preceding each Distribution Date specified in the
related Prospectus Supplement.
ACCOUNTS
It is expected that the Agreement for each Series of Certificates will
provide that the Trustee establish an account (the "Distribution Account") into
which the Master Servicer will deposit amounts held in the Collection Account
from which Certificateholder distributions will be made with respect to a given
Distribution Date. On each Distribution Date, the Trustee will apply amounts on
deposit in the Distribution Account generally to make distributions of interest
and principal to the Certificateholders in the manner described in the related
Prospectus Supplement.
It is also expected that the Agreement for each Series of Certificates
will provide that the Master Servicer establish and maintain an account (the
"Collection Account") in the name of the Trustee for the benefit of
Certificateholders. The Master Servicer will generally be required to deposit
into the Collection Account all amounts received on or in respect of the
Mortgage Loans. The Master Servicer will be entitled to make certain
withdrawals from the Collection Account to, among other things: (i) remit
certain amounts for the related Distribution Date into the Distribution
Account; (ii) pay Property Protection Expenses, taxes, assessments and
insurance premiums and certain third-party expenses in accordance with the
Agreement; (iii) pay accrued and unpaid servicing fees and other servicing
compensation to the Master Servicer and the Special Servicer, if any, and (iv)
reimburse the Master Servicer, the Special Servicer, if any, the Trustee and
the Depositor for certain expenses and provide indemnification to the
Depositor. the Master Servicer and the Special Servicer, if any, as described
in the Agreement. "Property Protection Expenses" comprise certain costs and
expenses incurred in connection with defaulted Mortgage Loans, acquiring title
to, or management of, REO Property or the sale of defaulted Mortgage Loans or
REO Properties, as more fully described in the related Agreement. The
applicable Prospectus Supplement may provide for additional circumstances in
which the Master Servicer will be entitled to make withdrawals from the
Collection Account.
The amount at any time credited to the Collection Account or the
Distribution Account may be invested in Permitted Investments that are payable
on demand or in general mature or are subject to withdrawal or redemption on or
before the business day preceding the next succeeding Master Servicer
Remittance Date, in the case of the Collection Account, or the business day
preceding the next succeeding Distribution Date, in the case of the
Distribution Account. The Master Servicer will be required to remit amounts on
deposit in the Collection Account that are required for distribution to
Certificateholders to the Distribution Account on or before the business day
preceding the related Distribution Date (the "Master Servicer Remittance
Date"). The income from the investment of funds in the Collection Account and
the Distribution Account in Permitted Investments will constitute additional
servicing compensation for the Master Servicer, and the risk of loss of funds
in the Collection Account and the Distribution Account resulting from such
investments will be home by the Master Servicer. The amount of each such loss
will be required to be deposited by the Master Servicer in the Collection
Account or the Distribution Account, as the case may be, promptly as realized.
It is expected that the Agreement for each Series of Certificates will
provide that an account (the "REO Account") will be established and maintained
in order to be used in connection with REO Properties and, if specified in the
related Prospectus Supplement, certain other Mortgaged Properties. To the
extent set forth in the Agreement, certain withdrawals from the REO Account
will be made to, among other things, (i) make remittances to the Collection
Account as required by the Agreement; (ii) pay taxes, assessments, insurance
premiums, other amounts necessary for the proper operation, management and
maintenance of the REO Properties and such Mortgaged Properties and certain
third-party expenses in accordance with the Agreement; and (iii) provide for
the reimbursement of certain expenses in respect of the REO Properties and such
Mortgaged Properties.
The amount at any time credited to the REO Account may be invested in
Permitted Investments that are payable on demand or mature, or are subject to
withdrawal or redemption, on or before the business
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day preceding the day on which such amounts are required to be remitted to the
Master Servicer for deposit in the Collection Account. The income from the
investment of funds in the REO Account in Permitted Investments will be for the
benefit of the Master Servicer, or the Special Servicer, if applicable, and the
risk of loss of funds in the REO Account resulting from such investments will
be borne by the Master Servicer, or the Special Servicer, if applicable.
"Permitted Investments" will generally consist of one or more of the
following, unless the Rating Agencies rating Certificates of a Series require
other or additional investments:
(i) direct obligations of, or guarantees as to timely payment of
principal and interest by, the United States or any agency or
instrumentality thereof, provided that such obligations are backed by the
full faith and credit of the United States of America;
(ii) direct obligations of the FHLMC (debt obligations only), Fannie Mae
(debt obligations only), the Federal Farm Credit System (consolidated
system-wide bonds and notes only), the Federal Home Loan Banks
(consolidated debt obligations only), the Student Loan Marketing
Association (debt obligations only), the Financing Corp. (consolidated debt
obligations only) and the Resolution Funding Corp. (debt obligations only);
(iii) federal funds time deposits in, or certificates of deposit of, or
bankers' acceptances, or repurchase obligations, all having maturities of
not more than 365 days, issued by any bank or trust company, savings and
loan association or savings bank, depositing institution or trust company
having the highest short-term debt obligation from Standard & Poor's Rating
Services, a division of the McGraw-Hill Companies, Inc. ("S&P") or A+1, at
least one of the Rating Agencies rating such Certificates, or such lower
rating as will not result in the downgrade or withdrawal of the rating or
ratings then assigned to the Certificates by any Rating Agency rating such
Certificates;
(iv) commercial paper having a maturity of 365 days or less (including
both non-interest-bearing discount obligations and interest-bearing
obligations payable on demand or on a specified date not more than one year
after the date of issuance thereof and demand notes that constitute
vehicles for investment in commercial paper) that is rated by each Rating
Agency rating such Certificates in its highest short-term unsecured rating
category;
(v) units of taxable money market funds or mutual funds, which funds seek
to maintain a constant asset value and have been rated by each Rating
Agency rating such Certificates as Permitted Investments with respect to
this definition;
(vi) if previously confirmed in writing to the Trustee, any other demand,
money market or time deposit, or any other obligation, security or
investment. as may be acceptable to each Rating Agency rating such
Certificates as a permitted investment of funds backing securities having
ratings equivalent to each Rating Agency's highest initial rating of the
Certificates; and
(vii) such other obligations as are acceptable as Permitted Investments
to each Rating Agency rating such Certificates;
provided, however, that (a) if S&P is rating such Certificates, none of
such obligations or securites listed above may have an "r" highlighter affixed
to its rating if rated by S&P; (b) except with respect to units of money
market funds pursuant to clause (v) above, each such obligation or security
will have a fixed dollar amount of principal due at maturity which cannot vary
or change; (c) except with respect to units of money market funds pursuant to
clause (v) above, if any such obligation or security provides for a variable
rate of interest, interest will be tied to a single interest rate index plus a
single fixed spread (if any) and move proportionately with that index; and (d)
if any of the obligations or securities listed in paragraphs (iii)-(vi) above
are not rated by each Rating Agency rating such Certificates, such investment
will nonetheless qualify as a Permitted Investment if it is rated by one of the
Rating Agencies rating such Certificates and one other nationally recognized
statistical rating organization; and provided, further, that such instrument
continues to qualify as a "cash flow investment" pursuant to Code Section
860G(a)(6) earning a passive return in the nature of interest and that no
instrument or
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security will be a Permitted Investment if (i) such instrument or security
evidences a right to receive only interest payments or (ii) the right to
receive principal and interest payments derived from the underlying investment
provides a yield to maturity in excess of 120% of the yield to maturity at par
of such underlying investment as of the date of its acquisition.
AMENDMENT
Generally, the Agreement for each Series will provide that it may be
amended from time to time by the parties thereto, without the consent of any of
the Certificateholders, (i) to cure any ambiguity, (ii) to correct or
supplement any provisions therein that may be inconsistent with any other
provisions therein, (iii) to amend any provision thereof to the extent
necessary or desirable to maintain the rating or ratings assigned to each of
the Classes of Certificates by each Rating Agency or (iv) to make any other
provisions with respect to matters or questions arising under the Agreement
that will not (a) be inconsistent with the provisions of the Agreement, (b)
result in the downgrading, withdrawal or qualification of the rating or ratings
then assigned to any outstanding Class of Certificates and (c) adversely affect
in any material respect the interests of any Certificateholder, as evidenced by
an opinion of counsel.
Each Agreement will also provide that it may be amended from time to time
by the parties thereto with the consent of the holders of each of the Classes
of Regular Certificates representing not less than a percentage specified in
the related Agreement of each Class of Certificates affected by the amendment
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of the Agreement or of modifying in any
manner the rights of the Certificateholders; provided, however, that no such
amendment shall: (i) reduce in any manner the amount of, or delay the timing
of, payments received on Mortgage Loans that are required to be distributed on
any Certificate without the consent of each affected Certificateholder; (ii)
change the percentage of Certificates the holders of which are required to
consent to any action or inaction under the Agreement, without the consent of
the holders of all Certificates then outstanding; or (iii) alter the
obligations of the Master Servicer or the Trustee to make an advance without
the consent of the holders of all Certificates representing all of the Voting
Rights of the Class or Classes affected thereby.
Further, the Agreement for each Series may provide that the parties
thereto, at any time and from time to time, without the consent of the
Certificateholders, may amend the Agreement to modify, eliminate or add to any
of its provisions to such extent as shall be necessary to maintain the
qualification of any REMIC related to such Series or to prevent the imposition
of any additional material state or local taxes, at all times that any of the
Certificates are outstanding, provided, however, that such action, as evidenced
by an opinion of counsel, is necessary or helpful to maintain such
qualification or to prevent the imposition of any such taxes, and would not
adversely affect in any material respect the interest of any Certificateholder.
The related Prospectus Supplement will specify the method for allocating
Voting Rights among holders of Certificates of a Class. Any Certificate
beneficially owned by the Depositor, the Master Servicer, the Special Servicer
(if any), any mortgagor, the Trustee, a manager or any of their respective
affiliates will be deemed not to be outstanding; provided, however, that,
Certificates beneficially owned by the Master Servicer, the Special Servicer
(if any), or any affiliate thereof will be deemed to be outstanding in
connection with any required consent to an amendment of the Agreement that
relates to an action that would materially adversely affect in any material
respect the interests of the Certificateholders of any Class while the Master
Servicer, the Special Servicer (if any), or any such affiliate owns not less
than a percentage specified in the related Agreement of such Class.
The Agreement relating to each Series may provide that no amendment to
such Agreement will be made unless there has been delivered in accordance with
such Agreement an opinion of counsel to the effect that such amendment will not
cause such Series to fail to qualify as a REMIC at any time that any of the
Certificates are outstanding.
The Prospectus Supplement for a Series may describe other or different
provisions concerning the amendment of the related Agreement required by the
Rating Agencies rating Certificates of such Series.
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TERMINATION
The obligations of the parties to the Agreement for each Series will
terminate upon: (i) the purchase of all of the assets of the related Trust
Fund, as described in the related Prospectus Supplement; (ii) the later of (a)
the distribution to Certificateholders of that Series of final payment with
respect to the last outstanding Mortgage Loan or (b) the disposition of all
property acquired upon foreclosure or deed-in-lieu of foreclosure with respect
to the last outstanding Mortgage Loan and the remittance to the
Certificateholders of all funds due under the Agreement; (iii) the sale of the
assets of the related Trust Fund after the principal amounts of all
Certificates have been reduced to zero under circumstances set forth in the
Agreement; or (iv) mutual consent of the parties and all Certificateholders.
With respect to each Series, the Trustee will give or cause to be given written
notice of termination of the Agreement to each Certificateholder and the final
distribution under the Agreement will be made only upon surrender and
cancellation of the related Certificates at an office or agency specified in
the notice of termination.
REPORTS TO CERTIFICATEHOLDERS
Concurrently with each distribution for each Series, the Trustee (or such
other paying agent as may be identified in the applicable Prospectus
Supplement) will forward to each Certificateholder a statement setting forth
such information relating to such distribution as is specified in the Agreement
and described in the applicable Prospectus Supplement.
THE TRUSTEE
The Depositor will select a bank or trust company to act as trustee (the
"Trustee") under the Agreement for each Series and the Trustee will be
identified, and its obligations under that Agreement will be described, in the
applicable Prospectus Supplement. The Rating Agencies rating Certificates of a
Series may require the appointment of a Fiscal Agent to guarantee certain
obligations of the Trustee. Such Fiscal Agent will be a party to the Agreement.
In such event, the Fiscal Agent will be identified, and its obligations under
the Agreement will be described, in the applicable Prospectus Supplement. See
"SERVICING OF THE MORTGAGE LOAN--Certain Matters with Respect to the Master
Servicer, the Special Servicer, the Trustee and the Depositor."
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THE MORTGAGE POOLS
GENERAL
Each Mortgage Pool will consist of mortgage loans secured by first or
junior mortgages, deeds of trust or similar security instruments (each, a
"Mortgage") on, or installment contracts ("Installment Contracts") for the sale
of, fee simple or leasehold interests in properties improved by office
buildings, health-care related properties, congregate care facilities, hotels
and motels, industrial properties, warehouse, mini-warehouse, and self-storage
facilities, mobile home parks, multifamily properties, cooperative apartment
buildings, nursing homes, office/retail properties, anchored retail properties,
single-tenant retail properties, unanchored retail properties and other
commercial real estate properties, multifamily residential properties and/or
mixed residential commercial properties (each, a "Mortgaged Property"). A
Mortgage Pool may also include participation interests in such types of
mortgage loans, private-label mortgage pass-through certificates, certificates
issued or guaranteed by FHLMC, Fannie Mae or GNMA, mortgage pass-through
certificates, or collateralized mortgage obligations. Each such mortgage loan,
Installment Contract, participation interest, certificate, or collateralized
mortgage obligation is herein referred to as a "Mortgage Loan."
All Mortgage Loans will be of one or more of the following types:
1. Mortgage Loans with fixed interest rates;
2. Mortgage Loans with adjustable interest rates;
3. Mortgage Loans whose principal balances fully amortize over their
remaining terms to maturity;
4. Mortgage Loans whose principal balances do not fully amortize, but
instead provide for a substantial principal payment at the stated
maturity of the loan;
5. Mortgage Loans that provide for recourse against only the Mortgaged
Properties;
6. Mortgage Loans that provide for recourse against the other assets of
the related mortgagors; and
7. Any other types of Mortgage Loans described in the applicable
Prospectus Supplement.
Mortgage Loans may also be secured by one or more assignments of leases
and rents, management agreements or operating agreements relating to the
Mortgaged Property and in some cases by certain letters of credit, personal
guarantees or both. Pursuant to an assignment of leases and rents, the obligor
on the related promissory note, bond, mortgage consolidation agreement,
installment contract or other similar instrument (each, a "Note") assigns its
right, title and interest as landlord under each lease and the income derived
therefrom to the related mortgagee, while retaining a license to collect the
rents for so long as there is no default. If the obligor defaults, the license
terminates and the related mortgagee is entitled to collect the rents from
tenants to he applied to the monetary obligations of the obligor. State law may
limit or restrict the enforcement of the assignment of leases and rents by a
mortgagee until the mortgagee takes possession of the related mortgaged
property and/or a receiver is appointed. See "CERTAIN LEGAL ASPECTS OF THE
MORTGAGE LOANS--Leases and Rents."
If so specified in the related Prospectus Supplement, a Trust Fund may
include a number of Mortgage Loans with a single obligor or related obligors
thereunder; provided, however, that the principal balance of the mortgage loans
to a single obligor or group of related obligors will not exceed 45% of the
initial principal amount of the Certificates for a Series. In addition, in the
event that the Mortgage Pool securing Certificates for any Series includes a
Mortgage Loan or mortgage-backed security or a group of Mortgage Loans or
mortgage-backed securities of a single obligor or group of affiliated obligors
representing 10% or more, but less than 45%, of the principal amount of such
Certificates, the Prospectus Supplement will contain information, including
financial information, regarding the credit quality of the obligors. The
Mortgage Loans will be newly originated or seasoned, and will be acquired by
the Depositor either directly or through one or more affiliates.
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Unless otherwise specified in the Prospectus Supplement for a Series, the
Mortgage Loans will not be insured or guaranteed by the United States, any
governmental agency, any private mortgage insurer or any other person or
entity.
The Prospectus Supplement relating to each Series will specify the
Mortgage Loan Seller or Mortgage Loan Sellers relating to the Mortgage Loans,
which may include, among others, Real Estate Investment Trusts ("REITs"),
commercial banks, savings and loan associations, other financial institutions,
mortgage banks, credit companies, insurance companies, real estate developers
or other HUD approved lenders, and the underwriting criteria to the extent
available in connection with originating the Mortgage Loans. The criteria
applied by the Depositor in selecting the Mortgage Loans to be included in a
Mortgage Pool will vary from Series to Series. The Prospectus Supplement
relating to each Series also will provide specific information regarding the
characteristics of the Mortgage Loans, as of the Cut-off Date, including, among
other things: (i) the aggregate principal balance of the Mortgage Loans; (ii)
the types of properties securing the Mortgage Loans and the aggregate principal
balance of the Mortgage Loans secured by each type of property; (iii) the
interest rate or range of interest rates of the Mortgage Loans; (iv) the
origination dates and the original and, with respect to seasoned Mortgage
Loans, remaining terms to stated maturity of the Mortgage Loans; (v) the
loan-to-value ratios at origination and, with respect to seasoned Mortgage
Loans, current loan balance-to-original value ratios of the Mortgage Loans;
(vi) the geographic distribution of the Mortgaged Properties underlying the
Mortgage Loans;
(vii) the minimum interest rates, margins, adjustment caps, adjustment
frequencies, indices and other similar information applicable to adjustable
rate Mortgage Loans; (viii) the debt service coverage ratios relating to the
Mortgage Loans; and (ix) payment delinquencies, if any, relating to the
Mortgage Loans. The applicable Prospectus Supplement will also specify any
materially inadequate, incomplete or obsolete documentation relating to the
Mortgage Loans and other characteristics of the Mortgage Loans relating to each
Series. If specified in the applicable Prospectus Supplement, the Depositor may
segregate the Mortgage Loans in a Mortgage Pool into separate "Mortgage Loan
Groups" (as described in the related Prospectus Supplement) as part of the
structure of the payments of principal and interest on the Certificates of a
Series. In such case, the Depositor will disclose the above-specified
information by Mortgage Loan Group.
The Depositor will file a current report on Form 8-K (the "Form 8-K") with
the Commission within 15 days after the initial issuance of each Series of
Certificates (each, a "Closing Date"), as specified in the related Prospectus
Supplement, which will set forth information with respect to the Mortgage Loans
included in the Trust Fund for a Series as of the related Closing Date. The
Form 8-K will be available to the Certificateholders of the related Series
promptly after its filing.
ASSIGNMENT OF MORTGAGE LOANS
At the time of issuance of the Certificates of each Series, the Depositor
will cause the Mortgage Loans to be assigned to the Trustee, together with all
scheduled payments of interest and principal due after the Cut-off Date
(whether received) and all payments of interest and principal received by the
Depositor or the Master Servicer on or with respect to the Mortgage Loans after
the Cut-off Date. The Trustee, concurrently with such assignment, will execute
and deliver Certificates evidencing the beneficial ownership interests in the
related Trust Fund to the Depositor in exchange for the Mortgage Loans. Each
Mortgage Loan will be identified in a schedule appearing as an exhibit to the
Agreement for the related Series (the "Mortgage Loan Schedule"). The Mortgage
Loan Schedule will include, among other things, as to each Mortgage Loan,
information as to its outstanding principal balance as of the close of business
on the Cut-off Date, as well as information respecting the interest rate, the
scheduled monthly (or other periodic) payment of principal and interest as of
the Cut-off Date, the maturity date of each Note and the address of the
property securing the Note.
In addition, the Depositor will, as to each Mortgage Loan, deliver to the
Trustee: (i) the Note, endorsed to the order of the Trustee without recourse;
(ii) the Mortgage and an executed assignment thereof in favor of the Trustee or
otherwise as required by the Agreement; (iii) any assumption, modification or
substitution agreements relating to the Mortgage Loan; (iv) a mortgagee's title
insurance policy (or owner's policy in the case of an Installment Contract),
together with its endorsements, or an
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attorney's opinion of title issued as of the date of origination of the
Mortgage Loan; (v) if the security losses are not covered by the methods of
Credit Enhancement or the insurance policies described herein and/or in the
related Prospectus Supplement, the ability of the Trust Fund to pay principal
of and interest on the Certificates may be adversely affected. Even if credit
support covers all losses resulting from defaults and foreclosure, the effect
of defaults and foreclosures may be to increase prepayment experience on the
Mortgage Loans, thus shortening weighted average life and affecting yield to
maturity.
REPRESENTATIONS AND WARRANTIES
The seller of a Mortgage Loan to the Depositor (the "Mortgage Loan
Seller"), which may be an affiliate of the Depositor, will have made
representations and warranties in respect of the Mortgage Loans sold by such
Mortgage Loan Seller to the Depositor. Such representations and warranties will
generally include, among other things: (i) with respect to each Mortgaged
Property, that title insurance (or in the case of Mortgaged Properties located
in areas where such policies are generally not available, an attorney's opinion
of title) and any required hazard insurance was effective at the origination of
each Mortgage Loan, and that each policy (or opinion of title) remained in
effect on the date of purchase of the Mortgage Loan from the Mortgage Loan
Seller, (ii) that the Mortgage Loan Seller had good and marketable (or
indefeasible, in the case of real property located in Texas) title to each such
Mortgage Loan, (iii) with respect to each Mortgaged Property, that each
mortgage constituted a valid first lien on the Mortgaged Property (subject only
to permissible title insurance exceptions); (iv) that there were no delinquent
tax or assessment liens against the Mortgaged Property; and (v) that each
Mortgage Loan was current as to all required payments. The Prospectus
Supplement for a Series will specify the representations and warranties being
made by the Mortgage Loan Seller.
All of the representations and warranties of a Mortgage Loan Seller in
respect of a Mortgage Loan generally will have been made as of the date on
which such Mortgage Loan Seller sold the Mortgage Loan to the Depositor. The
related Prospectus Supplement will indicate if a different date is applicable.
A substantial period of time may have elapsed between such date and the date of
the initial issuance of the Series of Certificates evidencing an interest in
such Mortgage Loan. Since the representations and warranties of the Mortgage
Loan Seller do not address events that may occur following the sale of a
Mortgage Loan by the Mortgage Loan Seller, the repurchase obligation of the
Mortgage Loan Seller described below will not arise if, on or after the date of
the sale of a Mortgage Loan by the Mortgage Loan Seller to the Depositor, the
relevant event occurs that would have given rise to such an obligation.
However, the Depositor will not include any Mortgage Loan in the Trust Fund for
any Series of Certificates if anything has come to the Depositor's attention
that would cause it to believe that the representations and warranties of the
Mortgage Loan Seller will not be accurate and complete in all material respects
in respect of such Mortgage Loan as of the related Cut-off Date. If so
specified in the related Prospectus Supplement, the Depositor will make certain
representations and warranties for the benefit of Certificateholder of a Series
in respect of a Mortgage Loan that relate to the period commencing on the date
of sale of such Mortgage Loan to the Depositor.
Upon the discovery of the breach of any representation or warranty made by
the Mortgage Loan Seller in respect of a Mortgage Loan that materially and
adversely affects the interests of the Certificateholders of the related
Series. Such Mortgage Loan Seller generally will be obligated to repurchase
such Mortgage Loan at a purchase price equal to 100% of the unpaid principal
balance thereof at the date of repurchase or, in the case of a Series of
Certificates as to which the Depositor has elected to treat the related Trust
Fund as a REMIC, as defined in the Code, at such other price as may be
necessary to avoid a tax on a prohibited transaction, as described in Section
860F(a) of the Code, in each case together with accrued interest at the
interest rate for such Mortgage Loan, to the first day of the month following
such repurchase and the amount of any unreimbursed advances made by the Master
Servicer in respect of such Mortgage Loan, together with interest thereon at
the reimbursement rate. The Master Servicer will be required to enforce such
obligation of the Mortgage Loan Seller for the benefit of the Trustee and the
Certificateholders, following the practices it would employ in its good faith
business judgment were it the owner of such Mortgage Loan. This repurchase
obligation will generally constitute the sole remedy available to the
Certificateholders of such Series for a breach of a representation or warranty
by a Mortgage Loan Seller and the Depositor and the Master Servicer will have
no liability to
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the Trust Fund for any such breach. The applicable Prospectus Supplement will
indicate whether any additional remedies will be available to the
Certificateholders. No assurance can be given that a Mortgage Loan Seller will
carry out its repurchase obligation with respect to the Mortgage Loans.
If specified in the related Prospectus Supplement, the Mortgage Loan
Seller may deliver to the Trustee within a specified number of days following
the issuance of a Series of Certificates Mortgage Loans in substitution for any
one or more of the Mortgage Loans initially included in the Trust Fund but
which do not conform in one or more respects to the description thereof
contained in the related Prospectus Supplement, as to which a breach of a
representation or warranty is discovered, which breach materially and adversely
affects the interests of the Certificateholders, or as to which a document in
the related Mortgage Loan File is defective in any material respect. The
related Prospectus Supplement will describe any required characteristics of any
such substituted Mortgage Loans.
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SERVICING OF THE MORTGAGE LOANS
GENERAL
The servicer of the Mortgage Loans (the "Master Servicer") will be
specified in the applicable Prospectus Supplement and may be an affiliate of
the Depositor. The Prospectus Supplement for the related Series will set forth
certain information concerning the Master Servicer. The Master Servicer will be
responsible for servicing the Mortgage Loans pursuant to the Agreement for the
related Series. To the extent so specified in the related Prospectus
Supplement, one or more Special Servicers may be a party to the related
Agreement or may be appointed by holders of certain Classes of Regular
Certificates representing a certain percentage specified in the related
Agreement of such Class or Classes of Certificates or by another specified
party. Certain information with respect to the Special Servicer will be set
forth in such Prospectus Supplement. A Special Servicer for any Series of
Certificates may be an affiliate of the Depositor or the Master Servicer and
may hold, or be affiliated with the holder of, Subordinate Certificates of such
Series. A Special Servicer may be entitled to any of the rights, and subject to
any of the obligations, described herein in respect of a Master Servicer. In
general, a Special Servicer's duties will relate to defaulted Mortgage Loans or
those Mortgage Loans that otherwise require special servicing ("Specially
Serviced Mortgage Loans"), including instituting foreclosures and negotiating
work-outs and will also include asset management activities with respect to any
REO Property. The related Prospectus Supplement will describe the rights,
obligations and compensation of any Special Servicer for a particular Series of
Certificates. The Master Servicer or Special Servicer generally may subcontract
the servicing of all or a portion of the Mortgage Loans to one or more
sub-servicers provided certain conditions are met. Such sub-servicer may be an
affiliate of the Depositor and may have other business relationships with
Depositor and its affiliates.
COLLECTIONS AND OTHER SERVICING PROCEDURES
The Master Servicer and the Special Servicer, if any, will make reasonable
efforts to collect all payments called for under the Mortgage Loans and will,
consistent with the related Agreement, follow such collection procedures as it
deems necessary or desirable. Consistent with the above and unless otherwise
specified in the related Prospectus Supplement. The Master Servicer or the
Special Servicer, if applicable, may, in its discretion, waive any late payment
charge or penalty fees in connection with a late payment of a Mortgage Loan
and, if so specified in the related Prospectus Supplement, may extend the due
dates for payments due on a Note.
It is expected that the Agreement for each Series will provide that the
Master Servicer establish and maintain an escrow account (the "Escrow Account")
in which the Master Servicer will be required to deposit amounts received from
each mortgagor, if required by the terms of the related Mortgage Loan
documents, for the payment of taxes, assessments, certain mortgage and hazard
insurance premiums and other comparable items ("Escrow Payments"). The Special
Servicer, if any, will be required to remit amounts received for such purposes
on Mortgage Loans serviced by it to the Master Servicer for deposit into the
Escrow Account, and will be entitled to direct the Master Servicer to make
withdrawals from the Escrow Account as may be required for servicing of such
Mortgage Loans. Withdrawals from the Escrow Account generally may be made to
(i) effect timely payment of taxes, assessments, mortgage and hazard insurance
premiums and other comparable items, (ii) to transfer funds to the Collection
Account to reimburse the Master Servicer or the Trustee, as applicable, for any
advance with interest thereon relating to Escrow Payments, (iii) to restore or
repair the Mortgaged Properties, (iv) to clear and terminate such account, (v)
to pay interest to mortgagors on balances in the Escrow Account, if required by
the terms of the related Mortgage Loan documents or by applicable law, (vi) to
remit to the related borrower the Financial Lease and Reporting Fee as and when
required by the related Mortgage, and (vii) to remove amounts not required to
be deposited therein. The related Prospectus Supplement may provide for other
permitted withdrawals from the Escrow Account. The Master Servicer will be
entitled to all income on the funds in the Escrow Account invested in Permitted
Investments not required to be paid to mortgagors by the terms of the related
Mortgage Loan documents or by applicable law. The Master Servicer will be
responsible for the administration of the Escrow Account.
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INSURANCE
The Agreement for each Series will require that the Master Servicer use
its reasonable efforts to or require each mortgagor to maintain insurance in
accordance with the related Mortgage Loan documents, which generally will
include a standard fire and hazard insurance policy with extended coverage. To
the extent required by the related Mortgage Loan, the coverage of each such
standard hazard insurance policy will be in an amount that is at least equal to
the lesser of (i) the full replacement cost of the improvements and equipment
securing such Mortgage Loan or (ii) the outstanding principal balance owing on
such Mortgage Loan or such amount as is necessary to prevent any reduction in
such policy by reason of the application of co-insurance and to prevent the
Trustee thereunder from being deemed to be a co-insurer, in each case with a
replacement cost rider. The Master Servicer will also use its reasonable
efforts to require each mortgagor to maintain (i) insurance providing coverage
against 12 months of rent interruptions and (ii) such other insurance as
provided in the related Mortgage Loan. Subject to the requirements for
modification, waiver or amendment of a Mortgage Loan (See "Modifications,
Waivers and Amendments"), the Master Servicer may in its reasonable discretion
consistent with the servicing standard set forth in the related Agreement waive
the requirement of a Mortgage Loan that the related mortgagor maintain
earthquake insurance on the related Mortgaged Property.
If a Mortgaged Property is located at the time of origination of the
related Mortgage Loan in a federally designated special flood hazard area, the
Master Servicer will also use its reasonable efforts to require the related
mortgagor to maintain flood insurance in an amount equal to the lesser of the
unpaid principal balance of the related Mortgage Loan and the maximum amount
obtainable with respect to the Mortgage Loan. The related Agreement will
provide that the Master Servicer will be required to maintain the foregoing
insurance if the related mortgagor fails to maintain such insurance to the
extent such insurance is available at commercially reasonable rates and to the
extent the Trustee, as mortgagee, has an insurable interest. The cost of any
such insurance maintained by the Master Servicer will be advanced by the Master
Servicer. The Master Servicer or the Special Servicer, if any, will cause to be
maintained fire and hazard insurance with extended coverage on each REO
Property in an amount that is at least equal to the full replacement cost of
the improvements and equipment. The cost of any such insurance with respect to
an REO Property will be payable out of amounts on deposit in the related REO
Account or will be advanced by the Master Servicer. The Master Servicer or the
Special Servicer, if any, will maintain flood insurance providing substantially
the same coverage as described above on any REO Property that was located in a
federally designated special flood hazard area at the time the related mortgage
loan was originated. The Master Servicer or the Special Servicer, if any, will
maintain with respect to each REO Property (i) public liability insurance, (ii)
loss of rent endorsements and (iii) such other insurance as provided in the
related Mortgage Loan. Any such insurance that is required to be maintained
with respect to any REO Property will only be so required to the extent such
insurance is available at commercially reasonable rates. The related Agreement
will provide that the Master Servicer or Special Servicer, if any, may satisfy
its obligation to cause hazard insurance policies to be maintained by
maintaining a master force placed insurance policy insuring against losses on
the Mortgage Loans or REO Properties, as the case may be. The incremental cost
of such insurance allocable to any particular Mortgage Loan or REO Property, if
not home by the related mortgagor, will be an expense of the Trust Fund.
Alternatively, the Master Servicer or Special Servicer, if any, may satisfy its
obligation by maintaining, at its expense, a blanket policy (i.e., not a master
force placed policy) insuring against losses on the Mortgage Loans or REO
Properties, as the case may be. If such a blanket or master force placed policy
contains a deductible clause, the Master Servicer or the Special Servicer, if
any, will be obligated to deposit in the Collection Account all sums that would
have been deposited therein but for such clause to the extent any such
deductible exceeds the deductible limitation that pertained to the related
Mortgage Loan, or in the absence of any such deductible limitation, the
deductible limitation that is consistent with the servicing standard under the
related Agreement.
In general, the standard form of fire and hazard extended coverage
insurance policy will cover physical damage to, or destruction of, the
improvements on the Mortgaged Property caused by fire, lightning, explosion,
smoke, windstorm, hail, riot, strike and civil commotion, subject to the
conditions and exclusions particularized in each policy. Since the standard
hazard insurance policies relating to the
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Mortgage Loans will be underwritten by different insurers and will cover
Mortgaged Properties located in various states, such policies will not contain
identical terms and conditions. The most significant terms thereof, however,
generally will be determined by state law and conditions. Most such policies
typically will not cover any physical damage resulting from war, revolution,
governmental actions, floods and other water-related causes, earth movement
(including earthquakes, landslides and mudflows), nuclear reaction, wet or dry
rot, vermin, rodents, insects or domestic animals, theft and, in certain cases,
vandalism. The foregoing list is merely indicative of certain kinds of
uninsured risks and is not intended to be all-inclusive. Any losses incurred
with respect to Mortgage Loans due to uninsured risks (including earthquakes,
mudflows and floods) or insufficient hazard insurance proceeds could affect
distributions to the Certificateholders.
The standard hazard insurance policies covering Mortgaged Properties
securing Mortgage Loans typically will contain a "coinsurance" clause which, in
effect, will require the insured at all times to carry insurance of a specified
percentage (generally 80% to 90%) of the full replacement value of the
dwellings, structures and other improvements on the Mortgaged Property in order
to recover the full amount of any partial loss. If the insured's coverage falls
below this specified percentage, such clause will provide that the insurer's
liability in the event of partial loss will not exceed the greater of (i) the
actual cash value (the replacement cost less physical depreciation) of the
structures and other improvements damaged or destroyed and (ii) such proportion
of the loss, without deduction for depreciation, as the amount of insurance
carried bears to the specified percentage of the full replacement cost of such
dwellings, structures and other improvements.
The Prospectus Supplement may describe other provisions concerning the
insurance policies required to be maintained under the related Agreement.
Unless otherwise specified in the applicable Prospectus Supplement, no
pool insurance policy, special hazard insurance policy, bankruptcy bond,
repurchase bond or guarantee insurance will be maintained with respect to the
Mortgage Loans nor will any Mortgage Loan be subject to FHA insurance.
The FHA is responsible for administering various federal programs,
including mortgage insurance, authorized under the National Housing Act of
1934, as amended, and the United States Housing Act of 1937, as amended. To the
extent specified in the related Prospectus Supplement, all or a portion of the
Mortgage Loans may be insured by the FHA. The Master Servicer will be required
to take such steps as are reasonably necessary to keep such insurance in full
force and effect.
FIDELITY BONDS AND ERRORS AND OMISSIONS
The Agreement for each Series will generally require that the Master
Servicer and the Special Servicer, if applicable, obtain and maintain in effect
a fidelity bond or similar form of insurance coverage (which may provide
blanket coverage) or any combination thereof insuring against loss occasioned
by fraud, theft or other intentional misconduct of the officers and employees
of the Master Servicer and the Special Servicer, if applicable. The related
Agreement will allow the Master Servicer and the Special Servicer, if
applicable, to self-insure against loss occasioned by the errors and omissions
of the officers and employees of the Master Servicer and the Special Servicer,
if applicable, so long as certain criteria set forth in the Agreement are met.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
The Master Servicer's principal compensation for its activities under the
Agreement for each Series will come from the payment to it or retention by it,
with respect to each Mortgage Loan, of a "Servicing Fee" (as defined in the
related Prospectus Supplement). The exact amount and calculation of such
Servicing Fee will be established in the Prospectus Supplement and Agreement
for the related Series. Since the aggregate unpaid principal balance of the
Mortgage Loans will generally decline over time, the Master Servicer's
servicing compensation will ordinarily decrease as the Mortgage Loans amortize.
In addition, the Agreement for a Series may provide that the Master
Servicer be entitled to receive, as additional compensation, (i) Prepayment
Premiums, late fees and certain other fees collected from
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mortgagors and (ii) any interest or other income earned on funds deposited in
the Collection Account and Distribution Account (as described under
"DESCRIPTION OF THE CERTIFICATES--Accounts") and, except to the extent such
income is required to be paid to the related mortgagors, the Escrow Account.
The Master Servicer will generally pay the fees and expenses of the
Trustee.
The amount and calculation of the fee for the servicing of Specially
Serviced Mortgage Loans (the "Special Servicing Fee") will be described in the
Prospectus Supplement and Agreement for the related Services.
In addition to the compensation described above, the Master Servicer and
the Special Servicer, if applicable (or any other party specified in the
applicable Prospectus Supplement) may retain, or be entitled to the
reimbursement of, such other amounts and expenses as are described in the
applicable Prospectus Supplement.
ADVANCES
The applicable Prospectus Supplement will set forth the obligations, if
any, of the Master Servicer and the Special Servicer, if applicable, to make
any advances with respect to delinquent payments on Mortgage Loans, payments of
taxes, assessments, insurance premiums and Property Protection Expenses or
otherwise. Any such advances will be made in the form and manner described in
the Prospectus Supplement and Agreement for the related Series.
MODIFICATIONS, WAIVERS AND AMENDMENTS
The Agreement for each Series will provide the Master Servicer or the
Special Servicer, if any, with the discretion to modify, waive or amend certain
of the terms of any Mortgage Loan without the consent of the Trustee or any
Certificateholder subject to certain conditions set forth therein, including
the condition that such modification, waiver or amendment will not result in
such Mortgage Loan ceasing to be a "qualified mortgage" under the REMIC
Regulations.
EVIDENCE OF COMPLIANCE
The Agreement for each Series will generally provide that on or before a
specified date in each year, beginning the first such date that is at least a
specified number of months after the Cut-off Date, there will be furnished to
the related Trustee a report of a firm of independent certified public
accountants stating that (i) it has obtained a letter of representation
regarding certain matters from the management of the Master Servicer or Special
Servicer, if any, which includes an assertion that the Master Servicer or
Special Servicer, if any, has complied with certain minimum mortgage loan
servicing standards (to the extent applicable to commercial and multifamily
mortgage loans), identified in the Uniform Single Attestation Program for
Mortgage Bankers established by the Mortgage Bankers Association of America,
with respect to the Master Servicer's or, if applicable, the Special Servicer's
servicing of commercial and multifamily mortgage loans during the most recently
completed calendar year and (ii) on the basis of an examination conducted by
such firm in accordance with standards established by the American Institute of
Certified Public Accountants, such representation is fairly stated in all
material respects, subject to such exceptions and other qualifications that, in
the opinion of such firm, such standards require it to report.
In rendering its report such firm may rely, as to the matters relating to
the direct servicing of commercial and multifamily mortgage loans by
sub-services, upon comparable reports of firms of independent public
accountants rendered on the basis of examination conducted in accordance with
the same standards (rendered within one year of such report) with respect to
those sub-servicers. The Prospectus Supplement may provide that additional
reports of independent certified public accountants relating to the servicing
of mortgage loans may be required to be delivered to the Trustee.
In addition, the Agreement for each Series will generally provide that the
Master Servicer and the Special Servicer, if any, will each deliver to the
Trustee, the Depositor and each Rating Agency, annually on or before a date
specified in the Agreement, a statement signed by an officer of the Master
Servicer
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or the Special Servicer, as applicable, to the effect that, based on a review
of its activities during the preceding calendar year, to the best of such
officer's knowledge, the Master Servicer or the Special Servicer, as
applicable, has fulfilled in all material respects its obligations under the
Agreement throughout such year or, if there has been a default in the
fulfillment of any such obligation, specifying each default known to such
officer.
CERTAIN MATTERS WITH RESPECT TO THE MASTER SERVICER, THE SPECIAL SERVICER, THE
TRUSTEE AND THE DEPOSITOR
The Agreement for each Series will also provide that none of the
Depositor, the Master Servicer, the Special Servicer, if any, or any partner,
director, officer, employee or agent of the Depositor, the Master Servicer or
the Special Servicer, if any (or any general partner thereof), will be under
any liability to the Trust Fund or the Certificateholders for any action taken,
or for refraining from the taking of any action, in good faith pursuant to the
Agreement, or for errors in judgment; provided, however, that neither the
Depositor, the Master Servicer, the Special Servicer, if any, nor any such
person will be protected against any liability for a breach of any
representations or warranties under the Agreement or that would otherwise be
imposed by reason of willful misfeasance, bad faith or negligence (or, in the
case of the Master Servicer or Special Servicer, if any, a breach of the
servicing standards set forth in the Agreement) in the performance of its
duties or by reason of negligent disregard of its obligations and duties
thereunder. The Agreement will further provide that the Depositor, the Master
Servicer, the Special Servicer, if any, and any director, officer, employee or
agent of the Depositor, the Master Servicer, the Special Servicer, if any (and
any general partner thereof), will be entitled to indemnification by the Trust
Fund for any loss, liability or expense incurred in connection with any legal
action relating to the Agreement or the Certificates, other than any loss,
liability or expense incurred by reason of its respective willful misfeasance,
bad faith, fraud or negligence (or, in the case of the Master Servicer or the
Special Servicer, if any, a breach of the servicing standard set forth in the
Agreement) in the performance of duties thereunder or by reason of negligent
disregard of its respective obligations and duties thereunder. Any loss
resulting from such indemnification will reduce amounts distributable to
Certificateholders. The Prospectus Supplement will specify any variations to
the foregoing required by the Rating Agencies rating Certificates of a Series.
In addition, the Agreement will generally provide that none of the
Depositor, the Special Servicer or the Master Servicer, if any, will be under
any obligation to appear in, prosecute or defend any legal action unless such
action is related to its duties under the Agreement and which in its opinion
does not involve it in any expense or liability. The Master Servicer or the
Special Servicer, if any, may, however, in its discretion undertake any such
action that is related to its respective obligations under the related
Agreement and that it may deem necessary or desirable with respect to the
Agreement and the rights and duties of the parties thereto and the interests of
the holders of Certificates thereunder. In such event, the legal expenses and
costs of such action and any liability resulting therefrom (except any
liability related to the Master Servicer's or the Special Servicer's, if any
obligations to service the Mortgage Loans in accordance with the servicing
standard under the Agreement) will be expenses, costs and liabilities of the
Trust Fund, and the Master Servicer or Special Servicer, if applicable, will be
entitled to be reimbursed therefor and to charge the Collection Account.
Any person into which the Master Servicer or the Special Servicer, if any,
may be merged or consolidated, or any person resulting from any merger or
consolidation to which the Master Servicer or the Special Servicer, if any, is
a party, or any person succeeding to the business of the Master Servicer or the
Special Servicer, if any, will be the successor of the Master Servicer or the
Special Servicer, as applicable, under the Agreement, and will be deemed to
have assumed all of the liabilities and obligations of the Master Servicer or
the Special Servicer, as applicable, under the Agreement, if each of the Rating
Agencies has confirmed in writing that such merger or consolidation and
succession will not result in a downgrading, withdrawal or qualification of the
rating then assigned by such Rating Agency to any Class of the Certificates.
The related Prospectus Supplement will describe any additional restrictions on
such a merger or consolidation.
Generally, the Master Servicer or the Special Servicer, if any, may assign
its rights and delegate its duties and obligations under the Agreement in
connection with the sale or transfer of a substantial portion
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of its mortgage servicing or asset management portfolio; provided that certain
conditions are met, including the written consent of the Trustee and written
confirmation by each of the Rating Agencies that such assignment and delegation
by the Master Servicer or the Special Servicer, as applicable, will not, in and
of itself, result in a downgrading, withdrawal or qualification of the rating
then assigned by such Rating Agency to any Class of Certificates. The related
Prospectus will describe any additional restrictions on such assignment.
The Agreement will also provide that the Master Servicer or the Special
Servicer, if any, may not otherwise resign from its obligations and duties as
Master Servicer or Special Servicer thereunder, except upon the determination
that performance of its duties is no longer permissible under applicable law
and provided that such determination is evidenced by an opinion of counsel
delivered to the Trustee. No such resignation or removal may become effective
until the Trustee or a successor Master Servicer or Special Servicer, as the
case may be, has assumed the obligations of the Master Servicer or the Special
Servicer, as applicable, under the Agreement.
The Trustee under each Agreement will be named in the applicable
Prospectus Supplement. The commercial bank or trust company serving as Trustee
may have normal banking relationships with the Depositor, the Master Servicer,
the Special Servicer, if any, and/or any of their respective affiliates.
The Trustee may resign from its obligations under the Agreement at any
time, in which event a successor Trustee will be appointed. In addition, the
Depositor may remove the Trustee if the Trustee ceases to be eligible to act as
Trustee under the Agreement or if the Trustee becomes insolvent, at which time
the Depositor will become obligated to appoint a successor Trustee. The Trustee
may also be removed at any time by the holders of Certificates evidencing the
percentage of Voting Rights specified in the applicable Prospectus Supplement.
Any resignation and removal of the Trustee, and the appointment of a successor
Trustee, will not become effective until acceptance of such appointment by the
successor Trustee.
The Depositor is not obligated to monitor or supervise the performance of
the Master Servicer, Special Servicer, if any, or the Trustee under the
Agreement.
EVENTS OF DEFAULT
Events of default with respect to the Master Servicer or the Special
Servicer, if any, as applicable (each, an "Event of Default") under the
Agreement for each Series will consist of, in summary form, (i) any failure by
the Master Servicer or the Special Servicer, if any, to remit to the Collection
Account or any failure by the Master Servicer to remit to the Trustee for
deposit into the Distribution Account any amount required to be so remitted
pursuant to the Agreement; (ii) any failure by the Master Servicer or Special
Servicer, as applicable, duly to observe or perform in any material respect any
of its other covenants or agreements or the breach of its representations or
warranties (which breach materially and adversely affects the interests of the
Certificateholders, the Trustee, the Master Servicer or the Special Servicer,
if any, with respect to any Mortgage Loan) under the Agreement, which in each
case continues unremedied for 30 days after the giving of written notice of
such failure to the Master Servicer or the Special Servicer, as applicable, by
the Depositor or the Trustee, or to the Master Servicer or Special Servicer, if
any, the Depositor and the Trustee by the holders of Certificates evidencing
Voting Rights of at least 25% of any affected Class; (iii) confirmation in
writing by any of the Rating Agencies that the then current rating assigned to
any Class of Certificates would be withdrawn, downgraded or qualified unless
the Master Servicer or Special Servicer, as applicable, is removed; (iv)
certain events of insolvency, readjustment of debt, marshaling of assets and
liabilities or similar proceedings and certain actions by, on behalf of or
against the Master Servicer or Special Servicer, as applicable, indicating its
insolvency or inability to pay its obligations; or (v) any failure by the
Master Servicer to make a required advance. The related Prospectus Supplement
may provide for other Events of Default to the extent required by the Rating
Agencies rating Certificates of a Series.
RIGHTS UPON EVENT OF DEFAULT
As long as an Event of Default remains unremedied, the Trustee may, and at
the written direction of the holders of Certificates entitled to 25% of the
aggregate Voting Rights of all Certificates will,
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terminate all of the rights and obligations of the Master Servicer or Special
Servicer, as the case may be. Notwithstanding the foregoing, upon any
termination of the Master Servicer or the Special Servicer, as applicable,
under the Agreement the Master Servicer or the Special Servicer, as applicable,
will continue to be entitled to receive all accrued and unpaid servicing
compensation through the date of termination plus, in the case of the Master
Servicer, all advances and interest thereon as provided in the Agreement.
The holders of Certificates evidencing not less than 66 2/3% of the
aggregate Voting Rights of the Certificates may, on behalf of all holders of
Certificates, waive any default by the Master Servicer or Special Servicer, if
any, in the performance of its obligations under the Agreement and its
consequences, except a default in making any required deposits to (including
advances) or payments from the Collection Account or the Distribution Account
or in remitting payments as received, in each case in accordance with the
Agreement. Upon any such waiver of a past default, such default will cease to
exist, and any Event of Default arising therefrom will be deemed to have been
remedied for every purpose of the Agreement. No such waiver will extend to any
subsequent or other default or impair any right consequent thereon.
On and after the date of termination, the Trustee will succeed to all
authority and power of the Master Servicer or the Special Servicer, as
applicable, under the Agreement and will be entitled to similar compensation
arrangements to which the Master Servicer or the Special Servicer, as
applicable, would have been entitled. If the Trustee is unwilling or unable so
to act, or if the holders of Certificates evidencing a majority of the
aggregate Voting Rights so request or if the Trustee is not rated in one of its
two highest long-term debt rating categories by each of the Rating Agencies or
if the Trustee is not approved as a servicer by the Rating Agencies, the
Trustee must appoint, or petition a court of competent jurisdiction for the
appointment of, an established mortgage loan servicing institution with a net
worth of at least $10,000,000 and which is either Fannie Mae or FHLMC approved,
the appointment of which will not result in the downgrading, withdrawal or
qualification of the rating or ratings then assigned to any Class of
Certificates as evidenced in writing by each Rating Agency, to act as successor
to the Master Servicer or the Special Servicer, as applicable, under the
Agreement. Pending such appointment, the Trustee will be obligated to act in
such capacity. The Trustee and any such successor may agree upon the servicing
compensation to be paid, which in no event may be greater than the compensation
payable to the Master Servicer or the Special Servicer, as the case may be,
under the Agreement.
No Certificateholder will have any right under the Agreement to institute
any proceeding with respect to the Agreement or the Mortgage Loans, unless,
with respect to the Agreement, such holder previously shall have given to the
Trustee a written notice of a default under the Agreement and of the
continuance thereof, and unless also the holders of Certificates representing a
majority of the aggregate Voting Rights allocated to each affected Class have
made written request of the Trustee to institute such proceeding in its own
name as Trustee under the Agreement and have offered to the Trustee such
reasonable indemnity as it may require against the costs, expenses and
liabilities to be incurred therein or thereby, and the Trustee, for 30 days
after its receipt of such notice, request and offer of indemnity, has neglected
or refused to institute such proceeding.
The Trustee will have no obligation to institute, conduct or defend any
litigation under the Agreement or in relation thereto at the request, order or
direction of any of the holders of Certificates, unless such holders of
Certificates have offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities which may be incurred therein or
thereby.
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CREDIT ENHANCEMENT
GENERAL
If specified in the related Prospectus Supplement for any Series, credit
enhancement may be provided with respect to one or more Classes thereof or the
related Mortgage Loans ("Credit Enhancement"). Credit Enhancement may be in the
form of a letter of credit, the subordination of one or more Classes of the
Certificates of such Series, the establishment of one or more reserve funds,
surety bonds, certificate guarantee insurance, the use of cross-support
features, limited guarantees or another method of Credit Enhancement described
in the related Prospectus Supplement, or any combination of the foregoing.
It is unlikely that Credit Enhancement will provide protection against all
risks of loss or guarantee repayment of the entire principal balance of the
Certificates and interest thereon. If losses occur that exceed the amount
covered by Credit Enhancement or that are not covered by Credit Enhancement,
Certificateholders will bear their allocable share of deficiencies. See "RISK
FACTORS--Credit Enhancement Limitations."
ENHANCEMENT LIMITATIONS
If Credit Enhancement is provided with respect to a Series, or the related
Mortgage Loans, the applicable Prospectus Supplement will include a description
of (a) the amount payable under such Credit Enhancement, (b) any conditions to
payment thereunder not otherwise described herein, (c) the conditions (if any)
under which the amount payable under such Credit Enhancement may be reduced and
under which such Credit Enhancement may be terminated or replaced and (d) the
material provisions of any agreement relating to such Credit Enhancement.
Additionally, the applicable Prospectus Supplement will set forth certain
information with respect to the issuer of any third-party Credit Enhancement,
including (i) a brief description of its principal business activities, (ii)
its principal place of business, the jurisdiction of organization and the
jurisdictions under which it is chartered or licensed to do business, (iii) if
applicable, the identity of regulatory agencies that exercise primary
jurisdiction over the conduct of its business and (iv) its total assets and its
stockholders' or policyholders' surplus, if applicable, as of the date
specified in such Prospectus Supplement. If the holders of any Certificates of
any Series will be materially dependent upon the issuer of any third party
Credit Enhancement for timely payment of interest and/or principal on their
Certificates, the Depositor will file a current report on Form 8-K within 15
days after the initial issuance of such Certificates, which will include any
material information regarding such issuer, including audited financial
statements to the extent required.
SUBORDINATE CERTIFICATES
If so specified in the related Prospectus Supplement, one or more Classes
of a Series may be Subordinate Certificates. If so specified in the related
Prospectus Supplement, the rights of the holders of subordinate Certificates
(the "Subordinate Certificates") to receive distributions of principal and
interest from the Distribution Account on any Distribution Date will be
subordinated to such rights of the holders of senior Certificates (the "Senior
Certificates") to the extent specified in the related Prospectus Supplement. In
addition, subordination may be effected by the allocation of losses first to
Subordinate Certificates in reduction of the principal balance of such
Certificates until the principal balance thereof is reduced to zero before any
losses are allocated to Senior Certificates. The Agreement may require a
trustee that is not the Trustee to be appointed to act on behalf of holders of
Subordinate Certificates.
A Series may include one or more Classes of Subordinate Certificates
entitled to receive cash flows remaining after distributions are made to all
other Classes designated as being senior thereto. Such right to receive
payments will effectively be subordinate to the rights of holders of such
senior designated Classes of Certificates. A Series may also include one or
more Classes of Subordinate Certificates that will be allocated losses prior to
any losses being allocated to Classes of Subordinate Certificates designated as
being senior thereto. If so specified in the related Prospectus Supplement, the
subordination of a Class may apply only in the event of (or may be limited to)
certain types of losses not covered by insurance policies or other Credit
Enhancement, such as losses arising from damage to property securing a Mortgage
Loan not covered by standard hazard insurance policies.
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The related Prospectus Supplement will describe any such subordination in
greater detail and set forth information concerning, among other things. to the
extent applicable, (i) the amount of subordination of a Class or Classes of
Subordinate Certificates in a Series, (ii) the circumstances in which such
subordination will be applicable, (iii) the manner, if any, in which the amount
of subordination will decrease over time, (iv) the manner of funding any
related reserve fund, (v) the conditions under which amounts in any applicable
reserve fund will be used to make distributions to holders of Senior
Certificates and/or to holders of Subordinate Certificates or be released from
the applicable Trust Fund and (vi) if one or more Classes of Subordinate
Certificates of a Series are offered Certificates, the sensitivity of
distributions on such Certificates based on certain default assumptions. See
"RISK FACTORS--Risks to Subordinated Certificateholders" herein.
RESERVE FUNDS
If specified in the related Prospectus Supplement, one or more reserve
funds (each, a "Reserve Fund") may be established with respect to one or more
Classes of the Certificates of a Series, in which cash, a letter of credit,
Permitted Investments or a combination thereof, in the amounts, if any, so
specified in the related Prospectus Supplement will be deposited. Such Reserve
Funds may also be funded over time by depositing therein a specified amount of
the distributions received on the applicable Mortgage Loans if specified in the
related Prospectus Supplement. The Depositor may pledge the Reserve Funds to a
separate collateral agent specified in the related Prospectus Supplement.
Amounts on deposit in any Reserve Fund for one or more Classes of
Certificates of a Series will be applied by the Trustee for the purposes, in
the manner, and to the extent specified in the related Prospectus Supplement. A
Reserve Fund may be provided to increase the likelihood of timely payments of
principal of and interest on the Certificates, if required as a condition to
the rating of such Series by any Rating Agency. If so specified in the related
Prospectus Supplement, Reserve Funds may be established to provide limited
protection, in an amount satisfactory to a Rating Agency, against certain types
of losses not covered by insurance policies or other Credit Enhancement.
Reserve Funds may also be established for other purposes and in such amounts as
will be specified in the related Prospectus Supplement. Following each
Distribution Date amounts in any Reserve Fund in excess of any amount required
to be maintained therein may be released from the Reserve Fund under the
conditions and to the extent specified in the related Prospectus Supplement and
will not be available for further application by the Trustee.
Moneys deposited in any Reserve Fund generally will be permitted to be
invested in Permitted Investments. Generally, any reinvestment income or other
gain from such investments will be credited to the related Reserve Fund for
such Series, and any loss resulting from such investments will be charged to
such Reserve Fund. If specified in the related Prospectus Supplement, such
income or other gain may be payable to the Servicer as additional servicing
compensation, and any loss resulting from such investment will be borne by the
Servicer. The Reserve Fund, if any for a Series will be a part of the Trust
Fund only if the related Prospectus Supplement so specifies. If the Reserve
Fund is not a part of the Trust Fund, the right of the Trustee to make draws on
the Reserve Fund will be an asset of the Trust Fund.
Additional information concerning any Reserve Fund will be set forth in
the related Prospectus Supplement, including the initial balance of such
Reserve Fund, the balance required to be maintained in the Reserve Fund, the
manner in which such required balance will decrease over time, the manner of
funding such Reserve Fund, the purpose for which funds in the Reserve Fund may
be applied to make distributions to Certificateholders and use of investment
earnings, if any, from the Reserve Fund.
CROSS-SUPPORT FEATURES
If the Mortgage Pool for a Series is divided into separate Mortgage Loan
Groups, each securing a separate Class or Classes of a Series, Credit
Enhancement may be provided by a cross-support feature that requires that
distributions be made on Senior Certificates secured by one Mortgage Loan Group
prior to distributions on Subordinate Certificates secured by another Mortgage
Loan Group within the Trust Fund. The related Prospectus Supplement for a
Series that includes a cross-support feature will describe the manner and
conditions for applying such cross-support feature.
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CERTIFICATE GUARANTEE INSURANCE
If so specified in the related Prospectus Supplement, certificate
guarantee insurance, if any, with respect to a Series of Certificates will be
provided by one or more insurance companies. Such certificate guarantee
insurance will guarantee, with respect to one or more Classes of Certificates
of the applicable Series, timely distributions of interest and full
distributions of principal on the basis of a schedule of principal
distributions set forth in or determined in the manner specified in the related
Prospectus Supplement. If so specified in the related Prospectus Supplement,
the certificate guarantee insurance will also guarantee against any payment
made to a Certificateholder that is subsequently recovered as a "voidable
preference" payment under the Bankruptcy Code. A copy of the certificate
guarantee insurance for a Series, if any, will be filed with the Commission as
an exhibit to the Form 8-K to be filed with the Commission within 15 days of
issuance of the Certificates of the applicable Series.
LIMITED GUARANTEE
If so specified in the Prospectus Supplement with respect to a Series of
Certificates, Credit Enhancement may be provided in the form of a limited
guarantee issued by a guarantor named therein.
LETTER OF CREDIT
Alternative Credit Enhancement with respect to one or more Classes of
Certificates of a Series of Certificates may be provided by the issuance of a
letter of credit by the bank or financial institution specified in the
applicable Prospectus Supplement. The coverage, amount and frequency of any
reduction in coverage provided by a letter of credit issued with respect to one
or more Classes of Certificates of a Series will be set forth in the Prospectus
Supplement relating to such Series.
POOL INSURANCE POLICIES; SPECIAL HAZARD INSURANCE POLICIES
If so specified in the Prospectus Supplement relating to a Series of
Certificates, the Depositor will obtain a pool insurance policy for the
Mortgage Loans in the related Trust Fund. The pool insurance policy will cover
any loss (subject to the limitations described in a related Prospectus
Supplement) by reason of default to the extent a related Mortgage Loan is not
covered by any primary mortgage insurance policy. The amount and terms of any
such coverage will be set forth in the Prospectus Supplement.
If so specified in the applicable Prospectus Supplement, for each Series
of Certificates as to which a pool insurance policy is provided, the Depositor
will also obtain a special hazard insurance policy for the related Trust Fund
in the amount set forth in such Prospectus Supplement. The special hazard
insurance policy will, subject to the limitations described in the applicable
Prospectus Supplement, protect against loss by reason of damage to Mortgaged
Properties caused by certain hazards not insured against under the standard
form of hazard insurance policy for the respective states in which the
Mortgaged Properties are located. The amount and terms of any such coverage
will be set forth in the Prospectus Supplement.
SURETY BONDS
If so specified in the Prospectus Supplement relating to a Series of
Certificates, Credit Enhancement with respect to one or more Classes of
Certificates of a Series may be provided by the issuance of a surety bond
issued by a financial guarantee insurance company specified in the applicable
Prospectus Supplement. The coverage, amount and frequency or any reduction in
coverage provided by a surety bond will be set forth in the Prospectus
Supplement relating to such Series.
FRAUD COVERAGE
If so specified in the applicable Prospectus Supplement, losses resulting
from fraud, dishonesty or misrepresentation in connection with the origination
or sale of the Mortgage Loans may be covered to a limited extent by (i)
representations and warranties to the effect that no such fraud, dishonesty or
misrepresentation had occurred, (ii) a Reserve Fund, (iii) a letter of credit
or (iv) some other method. The amount and terms of any such coverage will be
set forth in the Prospectus Supplement.
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MORTGAGOR BANKRUPTCY BOND
If so specified in the applicable Prospectus Supplement, losses resulting
from a bankruptcy proceeding relating to a mortgagor or obligor affecting the
Mortgage Loans in a Trust Fund with respect to a Series of Certificates will be
covered under a mortgagor bankruptcy bond (or any other instrument that will
not result in a withdrawal, downgrading or qualification of the rating of the
Certificates of a Series by any of the Rating Agencies that rated any
Certificates of such Series). Any mortgagor bankruptcy bond or such other
instrument will provide for coverage in an amount and with such terms meeting
the criteria of the Rating Agencies rating any Certificates of the related
Series, which amount and terms will be set forth in the related Prospectus
Supplement.
CERTAIN LEGAL ASPECTS OF THE MORTGAGE LOANS
The following discussion contains summaries of certain legal aspects of
mortgage loans that are general in nature. Because many of the legal aspects of
mortgage loans are governed by applicable state laws (which may vary
substantially), the following summaries do not purport to be complete, to
reflect the laws of any particular state, to reflect all the laws applicable to
any particular Mortgage Loan or to encompass the laws of all states in which
the properties securing the Mortgage Loans are situated. The summaries are
qualified in their entirety by reference to the applicable federal and state
laws governing the Mortgage Loans.
GENERAL
All of the Mortgage Loans are loans evidenced by (or, in the case of
mortgage pass-through certificates, supported by) a note or bond that is
secured by a lien and security interest in property created under related
security instruments, which may be mortgages, deeds of trust or deeds to secure
debt, depending upon the prevailing practice and law in the state in which the
Mortgaged Property is located. As used herein, unless the context otherwise
requires, the term "Mortgage" includes mortgages, deeds of trust and deeds to
secure debt. Any of the foregoing mortgages will create a lien upon, or grant a
title interest in, the mortgaged property, the priority of which will depend on
the terms of the mortgage, the existence of any separate contractual
arrangements with others holding interests in the mortgaged property, the order
of recordation of the mortgage in the appropriate public recording office and
the actual or constructive knowledge of the mortgagee as to any unrecorded
liens, leases or other interests affecting the mortgaged property, Mortgages
typically do not possess priority over governmental claims for real estate
taxes, assessments and, in some states, for reimbursement of remediation costs
of certain environmental conditions. See "Environmental Risks." In addition,
the Code provides priority to certain tax liens over the lien of the mortgage.
The mortgagor is generally responsible for maintaining the property in good
condition and for paying real estate taxes, assessments and hazard insurance
premiums associated with the property.
TYPES OF MORTGAGE INSTRUMENTS
A mortgage either creates a lien against or constitutes a conveyance of an
interest in real property between two parties--a mortgagor (the borrower and
usually the owner of the subject property) and a mortgagee (the lender). A deed
of trust is a three-party instrument, wherein a trustor (the equivalent of a
mortgagor), grants the property to a trustee, in trust with a power of sale,
for the benefit of a beneficiary (the lender) as security for the payment of
the secured indebtedness. A deed to secure debt is a two party instrument
wherein the grantor (the equivalent of a mortgagor) conveys title to, as
opposed to merely creating a lien upon, the subject property to the grantee
(the lender) until such time as the underlying debt is repaid, generally with a
power of sale as security for the indebtedness evidenced by the related note.
As used herein, unless the context otherwise requires, the term "mortgagor"
includes a mortgagor under a mortgage, a trustor under a deed of trust and a
grantor under a deed to secure debt, and the term "mortgagee" includes a
mortgagee under a mortgage, a beneficiary under a deed of trust and a grantee
under a deed to secure debt. The mortgagee's authority under a mortgage, the
trustee's authority under a deed of trust and the grantee's authority under a
deed to secure debt are governed by the express
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provisions of the mortgage, the law of the state in which the real property is
located, certain federal laws and, in some cases, in deed of trust
transactions, the directions of the beneficiary. The Mortgage Loans (other than
Installment Contracts) will consist of (or, in the case of mortgage
pass-through certificates, be supported by) loans secured by mortgages.
The real property covered by a mortgage is most often the fee estate in
land and improvements. However, a mortgage may encumber other interests in real
property such as a tenant's interest in a lease of land, leasehold improvements
or both, and the leasehold estate created by such lease. A mortgage covering an
interest in real property other than the fee estate requires special provisions
in the instrument creating such interest, in the mortgage or in a separate
agreement with the landlord or other party to such instrument, to protect the
mortgagee against termination of such interest before the mortgage is paid.
PERSONALITY
Certain types of mortgaged properties, such as nursing homes, hotels,
motels and industrial plants, are likely to derive a significant part of their
value from personal property that does not constitute "fixtures" under
applicable state real property law. and hence, would not be subject to the lien
of a mortgage. Such property is generally pledged or assigned as security to
the mortgagee under the Uniform Commercial Code ("UCC"). In order to perfect
its security interest therein, the mortgagee generally must file UCC financing
statements and, to maintain perfection of such security interest, file
continuation statements generally every five years.
INSTALLMENT CONTRACTS
The Mortgage Loans may also consist of Installment Contracts (also
sometimes called contracts for deed). Under an Installment Contract, the seller
(referred to in this Section as the "mortgagee") retains legal title to the
property and enters into an agreement with the purchaser (referred to in this
Section as the "mortgagor") for the payment of the purchase price plus
interest, over the term of such Installment Contract. Only after full
performance by the mortgagor of the Installment Contract is the mortgagee
obligated to convey title to the property to the mortgagor. As with mortgage or
deed of trust financing, during the effective period of the Installment
Contract, the mortgagor is generally responsible for maintaining the property
in good condition and for paying real estate taxes, assessments and hazard
insurance premiums associated with the property.
The method of enforcing the rights of the mortgagee under an Installment
Contract varies on a state-by-state basis depending upon the extent to which
state courts are willing or able to enforce the Installment Contract strictly
according to its terms. The terms of Installment Contracts generally provide
that upon a default by the mortgagor, the mortgagor loses his or her right to
occupy the property, the entire indebtedness is accelerated and the mortgagor's
equitable interest in the property is forfeited. The mortgagee in such a
situation does not have to foreclose in order to obtain title to the property,
although in some cases both a quiet title action to clear title to the property
(if the mortgagor has recorded notice of the Installment Contract) and an
ejectment action to recover possession may be necessary. In a few states,
particularly in cases of a default during the early years of an Installment
Contract, ejectment of the mortgagor and a forfeiture of his or her interest in
the properly will be permitted. However, in most states, laws (analogous to
mortgage laws) have been enacted to protect mortgagors under Installment
Contracts from the harsh consequences of forfeiture. These laws may require the
mortgagee to pursue a judicial or nonjudicial foreclosure with respect to the
property, give the mortgagor a notice of default and some grace period during
which the Installment Contract may be reinstated upon full payment of the
default amount. Additionally, the mortgagor may have a post-foreclosure
statutory redemption right, and, in some states, a mortgagor with a significant
equity investment in the property may be permitted to share in the proceeds of
any sale of the property after the indebtedness is repaid or may otherwise be
entitled to a prohibition of the enforcement of the forfeiture clause.
JUNIOR MORTGAGES; RIGHTS OF SENIOR MORTGAGEES OR BENEFICIARIES
Some of the Mortgage Loans may be secured by junior mortgages that are
subordinate to senior mortgages held by other lenders or institutional
investors. In such cases, the rights of the Trust Fund (and
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therefore the Certificateholders), as mortgagee under a junior mortgage, will
be subordinate to those of the mortgagee under the senior mortgage, including
the Prior rights of the senior mortgagee to: (i) receive rents, hazard
insurance proceeds and condemnation proceeds; and (ii) cause the property
securing the Mortgage Loan to be sold upon the occurrence of a default under
the senior mortgage, thereby extinguishing the lien of the junior mortgage,
unless the Master Servicer or Special Servicer, if applicable, either asserts
such subordinate interest in the related property in the foreclosure of the
senior mortgage or satisfies the defaulted senior loan. As discussed more fully
below, in many states a junior mortgagee may satisfy a defaulted senior loan in
full, or may cure such default and bring the senior loan current, in either
event adding the amounts expended to the balance due on the junior loan. Absent
a provision in the senior mortgage or the existence of a recorded request for
notice in compliance with applicable state law (if any), no notice of default
is typically required to be given to the junior mortgagee.
The form of the mortgage used by many institutional lenders confers on the
mortgagee the right both to receive all proceeds collected under any hazard
insurance Policy and all awards made in connection with any condemnation
proceedings, and to apply such proceeds and awards to any indebtedness secured
by such mortgage in such order as the mortgagee may determine. Thus, in the
event improvements on the property are damaged or destroyed by fire or other
casualty, or in the event the property (or any part thereof) is taken by
condemnation, the mortgagee under the senior mortgage will have the prior right
to collect any applicable insurance proceeds and condemnation awards and to
apply the same to the indebtedness secured by the senior mortgage. However, the
laws of certain states may provide that, unless the security of the mortgagee
has been impaired, the mortgagor must be allowed to use any applicable
insurance proceeds or partial condemnation awards to restore the property.
The form of mortgage used by many institutional lenders also typically
contains a "future advance" clause that provides that additional amounts
advanced to or on behalf of the mortgagor by the mortgagee are to be secured by
the mortgage. Such a clause is valid under the laws of most states. In some
states, however, the priority of any advance made under the clause depends upon
whether the advance was an "obligatory" or "optional" advance. If the mortgagee
is obligated to advance the additional amounts, the advance may be entitled to
receive the same priority as amounts initially made under the mortgage,
notwithstanding that other junior mortgages or other liens may have encumbered
the property between the date of recording of the senior mortgage and the date
of the future advance, and that the mortgagee had actual knowledge of such
intervening junior mortgages or other liens at the time of the advance. If the
mortgagee is not obligated to advance the additional amounts and has actual
knowledge of any such intervening junior mortgages or other liens. the advance
may be subordinate to such intervening junior mortgages or other liens. In many
other states, all advances under a "future advance" clause are given the same
priority as amounts initially made under the mortgage so long as such advances
do not exceed a specified "credit limit" amount stated in the recorded
mortgage.
Another provision typically found in the form of the mortgage used by many
institutional lenders obligates the mortgagor: (i) to pay all taxes and
assessments affecting the property prior to delinquency; (ii) to pay, when due,
all other encumbrances, charges and liens affecting the property that may be
prior to the lien of the mortgage; (iii) to provide and maintain hazard
insurance on the property; (iv) to maintain and repair the property and not to
commit or permit any waste thereof; and (v) to appear in and defend any action
or proceeding purporting to affect the property or the rights of the mortgagee
under the mortgage. Upon a failure of the mortgagor to perform any of these
obligations, the mortgage typically provides the mortgagee the option to
perform the obligation itself, with the mortgagor agreeing to reimburse the
mortgagee for any sums expended by the mortgagee in connection therewith. All
sums so expended by the mortgagee also typically become part of the
indebtedness secured by the mortgage. The form of mortgage used by many
institutional lenders also typically requires the mortgagor to obtain the
consent of the mortgagee as to all actions affecting the mortgaged property,
including, without limitation, all leasing activities (including new leases and
termination or modification of existing leases), any alterations, modifications
or improvements to the buildings and other improvements forming a part of the
mortgaged property and all property management activities affecting the
mortgaged property (including new management or leasing agreements or any
termination or modification of existing management or leasing agreements).
Tenants will often refuse to execute a lease unless the mortgagee executes a
written
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agreement with the tenant not to disturb the tenant's possession of its
premises in the event of a foreclosure. A senior mortgagee may refuse to
consent to matters approved by a junior mortgagee with the result that the
value of the security for the junior mortgage is diminished. For example, a
senior mortgagee may decide not to approve a lease or refuse to grant to a
tenant such a non-disturbance agreement. If, as a result, the lease is not
executed, the value of the mortgaged property may be diminished.
FORECLOSURE
Foreclosure is a legal procedure that allows the mortgagee to recover its
mortgage debt by enforcing its rights and available legal remedies under the
mortgage. If the mortgagor defaults in payment or performance of its
obligations under the note or mortgage and, by reason thereof, the indebtedness
has been accelerated, the mortgagee has the right to institute foreclosure
proceedings to sell the mortgaged property at public auction to satisfy the
indebtedness. Foreclosure procedures with respect to the enforcement of a
mortgage vary from state to state. Although there are other foreclosure
procedures available in some states that are either infrequently used or
available only in certain limited circumstances, the two primary methods of
foreclosing a mortgage are judicial foreclosure and non-judicial foreclosure
pursuant to a power of sale granted in the mortgage. In either case, the actual
foreclosure of the mortgage will be accomplished pursuant to a public sale of
the mortgaged property by a designated official or by the trustee under a deed
of trust. The purchaser at any such sale acquires only the estate or interest
in the mortgaged property encumbered by the mortgage. For example, if the
mortgage only encumbered a tenant's leasehold interest in the property, such
purchaser will only acquire such leasehold interest, subject to the tenant's
obligations under the lease to pay rent and perform other covenants contained
therein.
Judicial Foreclosure. A judicial foreclosure of a mortgage is a judicial
action initiated by the service of legal pleadings upon all necessary parties
having an interest in the real property.
Delays in completion of foreclosure may occasionally result from
difficulties in locating the necessary parties to the action. As a judicial
foreclosure is a lawsuit, it is subject to all of procedures, delays and
expenses attendant to litigation, sometimes requiring up to several years to
complete if contested. At the completion of a judicial foreclosure, if the
mortgagee prevails, the court ordinarily issues a judgment of foreclosure and
appoints a referee or other designated official to conduct a public sale of the
property. Such sales are made in accordance with procedures that vary from
state to state.
Non-Judicial Foreclosure. In the majority of cases, foreclosure of a deed
of trust (and in some instances, other types of mortgage instruments) is
accomplished by a non-judicial trustee's sale pursuant to a provision in the
deed of trust that authorizes the trustee, generally following a request from
the beneficiary, to sell the mortgaged property at public sale upon any default
by the mortgagor under the terms of the note or deed of trust. In addition to
the specific contractual requirements set forth in the deed of trust, a
non-judicial trustee's sale is also typically subject to any applicable
judicial or statutory requirements imposed in the state where the mortgaged
property is located. The specific requirements that must be satisfied by a
trustee prior to the trustee's sale vary from state to state. Examples of the
varied requirements imposed by certain states are: (i) that notices of both the
mortgagor's default and the mortgagee's acceleration of the debt be provided to
the mortgagor; (ii) that the trustee record a notice of default and send a copy
of such notice to the mortgagor, any other person having an interest in the
real property, including any junior lienholders. any person who has recorded a
request for a copy of a notice of default and notice of sale, any successor in
interest to the mortgagor and to certain other persons; (iii) that the
mortgagor, or any other person having a junior encumbrance on the real estate,
may, during a reinstatement period, cure the default by paying the entire
amount in arrears, plus, in certain states, certain allowed costs and expenses
incurred by the mortgagee in connection with the default; and (iv) the method
(publication, posting, recording, etc.), timing, content, location and other
particulars as to any required public notices of the trustee's sale.
Foreclosure of a deed to secure debt is also generally accomplished by a
non-judicial sale similar to that required by a deed of trust, except that the
mortgagee or its agent, rather than a trustee, is typically empowered to
perform the sale in accordance with the terms of the deed to secure debt and
applicable law.
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Limitations on Mortgagee's Rights. Because of the difficulty a potential
buyer at any foreclosure sale might have in determining the exact status of
title to the mortgaged property, the potential existence of redemption rights
(see "Rights of Redemption" below) and because the physical condition and
financial performance of the mortgaged property may have deteriorated during
the foreclosure proceedings and/or for a variety of other reasons, a third
party may be unwilling to purchase the property at the foreclosure sale. Some
states require that the mortgagee disclose all known facts materially affecting
the value of the mortgaged property to potential bidders at a trustee's sale.
Such disclosure may have an adverse affect on the trustee's ability to sell the
mortgaged property or the sale price thereof. Potential buyers may be reluctant
to purchase property at a foreclosure sale as a result of the 1980 decision of
the United States Court of Appeals for the Fifth Circuit in Durrett v.
Washington National Insurance Company and other decisions that have followed
its reasoning. The court in Durrett held that even a non-collusive, regularly
conducted foreclosure sale was a fraudulent transfer under the federal
Bankruptcy Code, as amended from time to time (11 U.S.C.) (the "Bankruptcy
Code"), and, therefore, could be rescinded in favor of the bankrupt's estate,
if, (i) the foreclosure sale was held while the debtor was insolvent and not
more than one year prior to the filing of the bankruptcy petition; and (ii) the
price paid for the foreclosed property did not represent "fair consideration"
("reasonably equivalent value" under the Bankruptcy Code). Although the
reasoning and result of Durrett in respect of the Bankruptcy Code was rejected
by the United States Supreme Court in May 1994, the case could nonetheless be
persuasive to a court applying a state fraudulent conveyance law that has
provisions similar to those construed in Durrett. Furthermore, a bankruptcy
trustee or debtor in possession could possibly avoid a foreclosure sale by
electing to proceed under state fraudulent conveyance law, and the period of
time for which a foreclosure sale could be subject to avoidance under such law
is often greater than one year. For these reasons, it is common for the
mortgagee to purchase the property from the trustee, referee or other
designated official for an amount equal to the outstanding principal amount of
the secured indebtedness, together with accrued and unpaid interest and the
expenses of foreclosure, in which event, if the amount bid by the mortgagee
equals the full amount of such debt, interest and expenses, the secured debt
would be extinguished. Thereafter, the mortgagee assumes the burdens of
ownership and management of the property (frequently, through the employment of
a third party management company), including third party liability, paying
operating expenses and real estate taxes and making repairs, until a sale of
the property to a third party can be arranged. The costs of operating and
maintaining commercial property may be significant and may be greater than the
income derived from that property. The costs of management and operation of
those mortgaged properties that are hotels, motels or nursing or convalescent
homes or hospitals may be particularly significant, because of the expertise,
knowledge and, with respect to nursing or convalescent homes or hospitals,
regulatory compliance required to run such operations and the effect that
foreclosure and a change in ownership may have on the public's and the
industry's (including franchisers') perception of the quality of such
operations. The mortgagee will commonly obtain the services of a real estate
broker and pay the broker's commission in connection with the sale of the
property. Depending upon market conditions, the ultimate proceeds of the sale
of the property may not equal the mortgagee's investment in the property.
Moreover, a mortgagee commonly incurs substantial legal fees and court costs in
acquiring a mortgaged property through contested foreclosure and/or bankruptcy
proceedings. In addition, a mortgagee may be responsible under federal or state
law for the cost of cleaning up a mortgaged property that is environmentally
contaminated. See "--Environmental Risks" below. As a result, a mortgagee could
realize an overall loss on a mortgage loan even if the related mortgaged
property is sold at foreclosure or resold after it is acquired through
foreclosure for an amount equal to the full outstanding principal amount of the
mortgage loan, plus accrued interest.
Courts may also apply general equitable principles in connection with
foreclosure proceedings to limit a mortgagee's remedies. These equitable
principles are generally designed to relieve the mortgagor from the legal
effect of his defaults under the loan documents to the extent such effect is
determined to be harsh or unfair. Examples of judicial remedies that have been
fashioned include requiring mortgagees to undertake affirmative and expensive
actions to determine the causes of the mortgagor's default and the likelihood
that the mortgagor will be able to reinstate the loan, requiring the mortgagees
to reinstate loans or recast payment schedules in order to accommodate
mortgagors who are suffering from temporary financial disability, and limiting
the rights of mortgagees to foreclose if the default under the mortgage
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instrument is not monetary, such as the mortgagor's failing to maintain the
property adequately or executing a second mortgage affecting the property.
Finally, some courts have been faced with the issue of whether federal or state
constitutional provisions reflecting due process concerns for adequate notice
require that mortgagors under deeds of trust or mortgages receive notices in
addition to the statutorily prescribed minimum. For the most part, these cases
have upheld the notice provisions as being reasonable or have found that the
sale by a trustee under a deed of trust, or under a mortgage having a power of
sale, does not involve sufficient state action to afford constitutional
protections to the mortgagor.
Under the REMIC Regulations and the related Agreement, the Master Servicer
or Special Servicer, if any, may be permitted (and in some cases may be
required) to hire an independent contractor to operate any REO Property. The
costs of such operation may be significantly greater than the costs of direct
operation by the Master Servicer or Special Servicer, if any. See "SERVICING OF
THE MORTGAGE LOANS--Collections and Other Servicing Procedures."
Rights of Redemption. The purposes of a foreclosure are to enable the
mortgagee to realize upon its security and to bar the mortgagor, and all
persons who have an interest in the property that is subordinate to the
mortgage being foreclosed, from any exercise of their "equity of redemption."
The doctrine of equity of redemption provides that, until the property covered
by a mortgage has been sold in accordance with a properly conducted foreclosure
sale, those having an interest that is subordinate to that of the foreclosing
mortgagee have an equity of redemption and may redeem the property by paying
the entire debt with interest. In addition, in some states, when a foreclosure
action has been commenced, the redeeming party must pay certain costs of such
action. Those having an equity of redemption must generally be made parties and
joined in the foreclosure proceeding in order for their equity of redemption to
be cut off and terminated. Equity of redemption is generally a common-law
(non-statutory) right that only exists prior to completion of the foreclosure
sale is not waivable by the mortgagor and must be exercised prior to
foreclosure sale.
In contrast to the doctrine of equity of redemption, in some states, the
mortgagor and foreclosed junior lienors are given a statutory period after the
completion of a foreclosure in which to redeem the property from the
foreclosure sale by payment of a redemption price. The required redemption
price varies from state to state. Some states require the payment of the entire
principal balance of the loan, accrued interest and expenses of foreclosure,
others require the payment of the foreclosure sale price, while other states
require the payment of only a portion of the sums due. The effect of a
statutory right of redemption is to diminish the ability of the mortgagee to
sell the foreclosed property. The exercise of a statutory right of redemption
may defeat the title of any purchaser at a foreclosure sale or any purchaser
from the mortgagee subsequent to a foreclosure sale.
Consequently, the practical effect of the redemption right is often to
force the mortgagee to retain the property and pay the expenses of ownership
until the redemption period has run. Certain states permit a mortgagee to
invalidate an attempted exercise of a statutory redemption right by waiving its
right to any deficiency judgment. In some states, there is no right to redeem
property after a trustee's sale under a deed of trust.
Under the REMIC Regulations currently in effect, property acquired by
foreclosure generally must not be held for more than two years. With respect to
a Series of Certificates for which an election is made to qualify the Trust
Fund or a part thereof as a REMIC. The Agreement will permit foreclosed
property to be held for more than two years if the Trustee receives (i) an
extension from the IRS or (ii) an opinion of counsel to the effect that holding
such property for such period is permissible under the REMIC Regulations.
Mortgagors under Installment Contracts generally do not have the benefits
of redemption periods such as those that exist in the same jurisdiction for
mortgage loans. If redemption statutes do exist under state laws for
Installment Contracts, the redemption period may be shorter than for mortgages.
Anti-Deficiency Legislation. Some of the Mortgage Loans will be
nonrecourse loans as to which, in the event of default by a mortgagor, recourse
may be had only against the specific property pledged to secure the related
Mortgage Loan and not against the mortgagor's other assets. Even if a mortgage
by its
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terms provides for recourse against the mortgagor, certain states have imposed
prohibitions against or limitations upon such recourse. For example, some state
statutes limit the right of the mortgagee to obtain a deficiency judgment
against the mortgagor following foreclosure or sale under a deed of trust. A
deficiency judgment is a personal judgment against the former mortgagor equal
in most cases to the difference between the net amount realized upon the public
sale of the real property and the amount due to the mortgagee. Other statutes
require the mortgagee to exhaust the security afforded under a mortgage by
foreclosure in an attempt to satisfy the full debt before bringing a personal
action against the mortgagor. In certain states, the mortgagee has the option
of bringing a personal action against the mortgagor on the debt without first
exhausting its security, however, in some of these states, a mortgagee choosing
to pursue such an action may be deemed to have elected its remedy and may be
precluded from exercising any remedies with respect to the security.
Consequently, the practical effect of the election requirement, when
applicable, is that mortgagees will usually proceed first against the security
rather than bringing personal action against the mortgagor. Other statutory
provisions limit any deficiency judgment against the former mortgagor following
a judicial sale to the excess of the outstanding debt over the fair market
value of the property at the time of the public sale. The purpose of these
statutes is generally to prevent a mortgagee from obtaining a large deficiency
judgment against the former mortgagor as a result of low bids, or the absence
of bids, at the judicial sale.
Leasehold Risks. Certain of the Mortgage Loans may be secured by a
mortgage encumbering the mortgagor's leasehold interest under a ground lease.
Leasehold mortgages are subject to certain risks not associated with mortgages
encumbering a fee ownership interest in the mortgaged property. The most
significant of these risks is that the ground lease creating the leasehold
estate could terminate, thereby depriving the leasehold mortgagee of its
security. The ground lease may terminate if, among other reasons, the ground
lessee breaches or defaults in its obligations under the ground lease or there
is a bankruptcy of the ground lessee or the ground lessor. Examples of
protective provisions that may be included in the related ground lease, or a
separate agreement between the ground lessee, the ground lessor and the
mortgagee, in order to minimize such risk are the right of the mortgagee to
receive notices from the ground lessor of any defaults by the mortgagor, the
right to cure such defaults, with adequate cure periods; if a default is not
susceptible of cure by the mortgagee, the right to acquire the leasehold estate
through foreclosure or otherwise prior to any termination of the ground lease;
the ability of the ground lease to be assigned to and by the mortgagee or a
purchaser at a foreclosure sale and for a release of the assigning ground
lessee's liabilities thereunder, the right of the mortgagee to enter into a
ground lease with the ground lessor on the same terms and conditions as the old
ground lease in the event of a termination thereof; and provisions for
disposition of any insurance proceeds or condemnation awards payable upon a
casualty to, or condemnation of, the mortgaged property. In addition to the
foregoing protections, the leasehold mortgage may prohibit the ground lessee
from treating the ground lease as terminated in the event of the ground
lessor's bankruptcy and rejection of the ground lease by the trustee for the
debtor-ground lessor, and may assign to the mortgagee the debtor-ground
lessee's right to reject a lease pursuant to Section 365 of the Bankruptcy
Code, although the enforceability of such assignment has not been established.
An additional manner in which to obtain protection against the termination of
the ground lease is to have the ground lessor enter into a mortgage encumbering
the fee estate in addition to the mortgage encumbering the leasehold interest
under the ground lease. Additional protection is afforded to the mortgagee,
because if the ground lease is terminated, the mortgagee may nonetheless
possess rights contained in the fee mortgage. Without the protections described
in this paragraph, a leasehold mortgagee may be more likely to lose the
collateral securing its leasehold mortgage. No assurance can be given that any
or all of the above described provisions will be obtained in connection with
any particular Mortgage Loan.
Bankruptcy Laws. Mortgagors often file bankruptcy to delay or prevent
exercise of remedies under loan documents. Numerous statutory and common law
provisions, including the Bankruptcy Code and state laws affording relief to
debtors, may interfere with and delay the ability of a mortgagee to obtain
payment of the loan, to realize upon collateral and/or to enforce a deficiency
judgment. For example, under the Bankruptcy Code virtually all actions
(including foreclosure actions and deficiency judgment proceedings) are
automatically stayed upon the filing of the bankruptcy petition and often no
interest or principal payments are made during the course of the bankruptcy
proceeding (although "adequate
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protection" payments for anticipated diminution, if any, in the value of the
mortgaged property may be made). The delay and consequences thereof caused by
such automatic stay can be significant. A particular mortgagor may become
subject to the Bankruptcy Code either by a voluntary or involuntary petition
with respect to such mortgagor or, by virtue of the doctrine of "substantive
consolidation" by an affiliate of such mortgagor becoming a debtor under the
Bankruptcy Code. Additionally, the filing of a petition in bankruptcy by or on
behalf of a junior lienor or junior mortgagee may stay the senior mortgagee
from taking action to foreclose out such junior lien.
Under the Bankruptcy Code, provided certain substantive and procedural
safeguards for the mortgagee are met, the amount and terms of a mortgage or
deed of trust secured by property of the debtor may be modified under certain
circumstances. The outstanding amount of the loan secured by the real property
may be reduced to the then current value of the property (with a corresponding
partial reduction of the amount of the mortgagee's security interest), thus
leaving the mortgagee a general unsecured creditor for the difference between
such value and the outstanding balance of the loan. Other modifications may
include the reduction in the amount of each monthly payment, which reduction
may result from a reduction in the rate of interest and/or the alteration of
the repayment schedule (with or without affecting the unpaid principal balance
of the loan) and/or an extension (or acceleration) of the final maturity date.
Some bankruptcy courts have approved plans, based on the particular facts of
the reorganization case before them, that affected the curing of a mortgage
loan default by paying arrearages over a number of years. A bankruptcy court
may also permit a debtor to de-accelerate a secured loan and to reinstate the
loan even though the mortgagee had accelerated such loan and final judgment of
foreclosure had been entered in state court (provided no sale of the property
had yet occurred) prior to the filing of the debtor's petition, even if the
full amount due under the original loan is never repaid. Other types of
significant modifications to the terms of the mortgage may be acceptable to the
bankruptcy court, often depending on the particular facts and circumstances of
the specific case.
Federal bankruptcy law may also interfere with or affect the ability of a
mortgagee to enforce an assignment of rents and leases or a security interest
in hotel revenues related to the mortgaged property. In connection with a
bankruptcy proceeding involving a mortgagor, Section 362 of the Bankruptcy Code
automatically stays any attempts by the mortgagee to enforce any such
assignment or security interest. The legal proceedings necessary to resolve
such a situation can be time-consuming and may result in significant delays in
the receipt of the rents or hotel revenues. Rents or hotel revenues may also be
lost (i) if the assignment or security interest is not fully documented or
perfected under state law prior to commencement of the bankruptcy proceeding,
(ii) to the extent such rents or hotel revenues are used by the mortgagor to
maintain the mortgaged property or for other court authorized expenses; (iii)
to the extent other collateral may be substituted therefor; and (iv) if the
bankruptcy court determines that it is necessary or appropriate "based on the
equities of the case."
To the extent a mortgagor's ability to make payment on a mortgage loan is
dependent on payments under a lease of the related property, such ability may
he impaired by the commencement of a bankruptcy proceeding relating to the
lessee under such lease. Under the Bankruptcy Code, the filing of a petition in
bankruptcy by or on behalf of a lessee results in an automatic stay barring the
commencement or continuation of any state court proceeding for past due rent,
for accelerated rent, for damages or for a summary eviction order with respect
to a default under the lease that occurred prior to the filing of the lessee's
petition.
In addition, the Bankruptcy Code generally provides that a bankruptcy
trustee or debtor in possession may, subject to approval of the bankruptcy
court, either (i) assume the lease and retain it or assign it to a third party
or (ii) reject the lease. If the lease is assumed, the bankruptcy trustee or
debtor in possession (or assignee, if applicable) must cure any defaults under
the lease, compensate the lessor for its losses and provide the lessor with
"adequate assurance" of future performance. Such remedies may be insufficient,
however, as the lessor may be forced to continue under the lease with a lessee
that is a poor credit risk or an unfamiliar tenant if the lease was assigned,
and any assurances provided to the lessor may, in fact, be inadequate.
Furthermore, there may be a significant period of time between the date that a
lessee files a bankruptcy petition and the date that the lease is assumed or
rejected. Although the lessee is obligated to make all lease payments currently
with respect to the post-petition period, there is a risk
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that such payments will not be made due to the lessees poor financial
condition. If the lease is rejected, the lessor will be treated as an unsecured
creditor with respect to its claim for damages for termination of the lease,
and the lessor must relet the mortgaged property before the flow of lease
payments will recommence. In addition, pursuant to Section 502(b)(6) of the
Bankruptcy Code, a lessor's damages for lease rejection are limited.
In a bankruptcy or similar proceeding, action may be taken seeking the
recovery, as a preferential transfer, of certain payments made by the mortgagor
under the related Mortgage Loan to the Trust Fund. Payments on long-term debt
may be protected from recovery as preferences if they are payments in the
ordinary course of business made on debts incurred in the ordinary course of
business. Whether any particular payment would be protected depends upon the
facts specific to a particular transaction. If a Mortgage Loan includes any
guaranty, and the guaranty waives any rights of subrogation or contribution,
then certain payments by the mortgagor to the Trust Fund also may be avoided
and recovered as fraudulent conveyances.
A trustee in bankruptcy or a debtor in possession or various creditors who
extend credit after a case is filed, in some cases, may be entitled to collect
costs and expenses in preserving or selling the mortgaged property ahead of
payment to the mortgagee. In certain circumstances, a trustee in bankruptcy or
debtor in possession may have the power to grant liens senior to or pari passu
with the lien of a mortgage, and analogous state statutes and general
principles of equity may also provide a mortgagor with means to halt a
foreclosure proceeding or sale and enforce a restructuring of a mortgage loan
on terms a mortgagee would not otherwise accept.
A trustee in bankruptcy or a debtor in possession, in some cases, also may
be entitled to subordinate the lien created by the mortgage loan to other liens
or the claims of general unsecured creditors. Generally, this requires proof of
"unequitable conduct" by the mortgagee. However, various courts have expanded
the grounds for equitable subordination to apply to various non-pecuniary
claims for such items as penalties and fines. A court may find that any
prepayment charge, various late payment charges and other claims by mortgagees
may be subject to equitable subordination on these grounds.
A trustee in bankruptcy or a debtor in possession, in some cases, also may
be entitled to avoid all or part of any claim or lien by the mortgagee if and
to the extent a judgment creditor, or a bona fide purchaser of real estate,
could have done so outside of bankruptcy.
Generally, this involves some defect in the language, execution or
recording of the mortgage loan documents.
ENVIRONMENTAL RISKS
Real property pledged as security to a mortgagee may be subject to
environmental risks arising from the presence of hazardous or toxic substances
on, under, adjacent to, or in such property. The environmental condition of
mortgaged properties may be affected by the actions and operations of tenants
and occupants of such properties. Of particular concern may be those mortgaged
properties that are, or have been, the site of manufacturing, industrial or
disposal activity or have been built with or contain asbestos-containing
material or other indoor pollutants. In addition, current and future
environmental laws, ordinances or regulations, including new requirements
developed by federal agencies pursuant to the mandates of the Clean Air Act
Amendments of 1990, may impose additional compliance obligations on business
operations that can he met only by significant capital expenditures.
A mortgagee may be exposed to risks related to environmental conditions
such as the following: (i) a diminution in the value of a mortgaged property;
(ii) the potential that the mortgagor may default on a mortgage loan due to the
mortgagor's inability to pay high remediation costs or difficulty in bringing
its operations into compliance with environmental laws; (iii) in certain
circumstances as more fully described below, liability for clean-up costs or
other remedial actions, which liability could exceed the value of such
mortgaged property or the unpaid balance of the related mortgage loan; or (iv)
the inability to sell the related Mortgage Loan in the secondary market. In
certain circumstances, a mortgagee may choose not to foreclose on contaminated
property rather than risk incurring liability for remedial actions.
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In addition, a mortgagee may be obligated to disclose environmental
conditions on a property to government entities and/or to prospective buyers
(including prospective buyers at a foreclosure sale or following foreclosure).
Such disclosure may decrease the amount that prospective buyers are willing to
pay for the affected property, sometimes substantially, and thereby decrease
the ability of the mortgagee to recoup its investment in a loan upon
foreclosure.
In certain states, transfers of some types of properties are conditioned
upon cleanup of contamination prior to transfer. In these cases, a mortgagee
that becomes the owner of a property through foreclosure, deed in lieu of
foreclosure or otherwise, may be required to clean up the contamination before
selling or otherwise transferring the property.
Under federal and certain states' laws, the owner's failure to perform
remedial actions required under environmental laws may in certain circumstances
give rise to a lien on the mortgaged property to ensure the reimbursement of
remedial costs incurred by federal and state regulatory agencies. In several
states such lien has priority over the lien of an existing mortgage against
such property. Since the costs of remedial action could be substantial, the
value of a mortgaged property as collateral for a mortgage loan could be
adversely affected by the existence of an environmental condition giving rise
to a lien.
Under certain circumstances, it is possible that environmental cleanup
costs, or the obligation to take remedial actions, can be imposed on a
mortgagee such as the Trust Fund with respect to each Series. Under the laws of
some states and under the federal Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended ("CERCLA"), strict liability
may be imposed on present and past "owners" and "operators" of contaminated
real property for the costs of clean-up. Excluded from CERCLA's definition of
"owner" or "operator", however, is a person "who without participating in the
management of the facility, holds indicia of ownership primarily to protect his
security interest". This is known as the "secured creditor exemption." Judicial
decisions interpreting the secured creditor exemption had varied widely, and
one decision, United States v. Fleet Factors Corp., 901 F.2d 1550 (11th Cir.
1990), cert. denied, 498 U.S. 1046 (1991), had indicated that a lender's mere
power to affect and influence a borrower's operations might be sufficient to
lead to liability on the part of the lender. However, on September 30, 1996,
the Asset Conservation, Lender Liability, and Deposit Insurance Protection Act
of 1996 (the "Lender Liability Act") became law. The Lender Liability Act
clarifies the secured creditor exemption to impose liability only on a secured
lender who exercises control over operational aspects of the facility and thus
is "participating in management". A number of environmentally related
activities before the loan is made and during its pendency as well as "workout"
steps to protect a security interest, are identified as permissible to protect
a security interest without triggering liability. The Lender Liability Act also
identifies the circumstances in which foreclosure and post-closure activities
will not trigger CERCLA liability. The Lender Liability Act also amends the
Solid Waste Disposal Act to limit the liability of lenders holding a security
interest for costs of cleaning up contamination from underground storage tanks.
However, the Lender Liability Act has no effect on state environmental laws
similar to CERCLA that may impose liability on mortgagees and other persons,
and not all of those laws provide for a secured creditor exemption. Liability
under many of these federal and state laws may exist even if the mortgagee did
not cause or contribute to the contamination and regardless of whether the
mortgagee has actually taken possession of a mortgaged property through
foreclosure, deed in lieu of foreclosure or otherwise. Moreover, such liability
is not limited to the original or unamortized principal balance of a loan or to
the value of the property securing a loan.
CERCLA's "innocent landowner" defense to strict liability may be available
to a mortgagee that has taken title to a mortgaged property and has performed
an appropriate environmental site assessment that does not disclose existing
contamination and that meets other requirements of the defense. However, it is
unclear whether the environmental site assessment must be conducted upon loan
origination, prior to foreclosure or both, and uncertainty exists as to what
kind of environmental site assessment must be performed in order to qualify for
the defense.
Beyond statute-based environmental liability, there exist common law
causes of action that can be asserted to redress hazardous environmental
conditions on a property (e.g., actions based on nuisance for so called toxic
torts resulting in death, personal injury or damage to property). Although it
may be more
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difficult to hold a mortgagee liable in such cases, unanticipated or uninsured
liabilities of the mortgagor may jeopardize the mortgagor ability to meet its
loan obligations. At the time the Mortgage Loans were originated, it is
possible that no environmental assessment or a very limited environmental
assessment of the Mortgaged Properties was conducted.
The related Agreement will provide that the Master Servicer or the Special
Servicer, if any, acting on behalf of the Trust Fund, may not acquire title to
any Mortgaged Property or take over its operation unless the Master Servicer or
the Special Servicer, if any, has previously determined, based upon a phase I
or other specified environmental assessment prepared by a person who regularly
conducts such environmental assessments, that (a) the Mortgaged Property is in
compliance with applicable environmental laws or that it would be in the best
economic interest of the Trust Fund to take the actions necessary to comply
with such laws and (b) there are no circumstances or conditions present at the
Mortgaged Property relating to hazardous substances for which some
investigation, remediation or clean-up action could be required or that it
would be in the best economic interest of the Trust Fund to take such actions
with respect to such Mortgaged Property. This requirement effectively precludes
enforcement of the security for the related Note until a satisfactory
environmental assessment is obtained and/or any required remedial action is
taken. This requirement will reduce the likelihood that a given Trust Fund will
become liable for any environmental conditions affecting a Mortgaged Property,
but will make it more difficult to realize on the security for the Mortgage
Loan. There can be no assurance that any environmental assessment obtained by
the Master Servicer or the Special Servicer, if any, will detect all possible
environmental conditions or that the other requirements of the Agreement, even
if fully observed by the Master Servicer or the Special Servicer, if any, will
in fact insulate a given Trust Fund from liability for environmental
conditions.
"Hazardous Materials" are generally defined as any dangerous, toxic or
hazardous pollutants, chemicals, wastes or substances, including, without
limitation, those so identified pursuant to CERCLA or any other environmental
laws now existing. and specifically including, without limitation, asbestos and
asbestos-containing materials, polychlorinated biphenyls, radon gas, petroleum
and petroleum products, urea formaldehyde and any substances classified as
being "in inventory," "usable work in process" or similar classification that
would, if classified as unusable, be included in the foregoing definition.
If a mortgagee is or becomes liable for clean-up costs, it may bring an
action for contribution against the current owners or operators, the owners or
operators at the time of on-site disposal activity or any other party who
contributed to the environmental hazard, but such persons or entities may be
without substantial assets, bankrupt or otherwise judgment proof. Furthermore,
such action against the mortgagor may be adversely affected by the limitations
on recourse in the loan documents. Similarly, in some states anti-deficiency
legislation and other statutes requiring the mortgagee to exhaust its security
before bringing a personal action against the mortgagor (see "Anti-Deficiency
Legislation" above) may curtail the mortgagee's ability to recover from its
mortgagor the environmental clean-up and other related costs and liabilities
incurred by the mortgagee. Accordingly, it is possible that such costs could
become a liability of the Trust Fund and occasion a loss to the
Certificateholders. Shortfalls occurring as the result of imposition of any
clean-up costs will be addressed in the Prospectus Supplement and Agreement for
the related Series.
Other environmental laws that may affect the value of a mortgaged
property, or impose cleanup costs or liabilities, including those related to
asbestos, radon, lead paint and underground storage tanks.
Certain federal, state and local laws, regulations and ordinances govern
the removal, encapsulation or disturbance of asbestos-containing materials
("ACMs") in the event of the remodeling, renovation or demolition of a
building. Such laws, as well as common law standards, may impose liability for
releases of ACMs and may allow third parties to seek recovery from owners or
operators of real properties for personal injuries associated with such
releases. In addition, federal law requires that building owners inspect their
facilities for ACMs and presumed ACMs (consisting of thermal system insulation,
surfacing materials and asphalt and vinyl flooring in buildings constructed
prior to 1981) and transfer all information regarding ACMs and presumed ACMs in
their facilities to successive owners.
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The United States Environmental Protection Agency (the "EPA") has
concluded that radon gas, a naturally occurring substance, is linked to
increased risks of lung cancer. Although there are no current federal or state
requirements mandating radon gas testing, the EPA and the United States Surgeon
General recommend testing residences for the presence of radon and that
abatement measures be undertaken if radon concentrations in indoor air meet or
exceed four picocuries per liter.
The Residential Lead-Based Paint Hazard Reduction Act of 1992 (the "Lead
Paint Act") requires federal agencies to promulgate regulations that will
require owners of residential housing constructed prior to 1978 to disclose to
potential residents or purchasers any known lead-paint hazards. The Lead Paint
Act creates a private right of action with treble damages available for any
failure to so notify. Federal agencies have issued regulations delineating the
scope of this disclosure obligation which became effective in September of 1996
for owners of more than four residential dwellings and [are to take effect in
December of 1996 for owners of one to four residential dwellings.] In addition,
the ingestion of lead-based paint chips or dust particles by children can
result in lead poisoning, and the owner of a property where such circumstances
exist may be held liable for such injuries. Finally, federal law mandates that
detailed worker safety standards must be complied with where construction,
alteration, repair or renovation of structures that contain lead, or materials
that contain lead, is contemplated.
Underground storage tanks ("USTs") are, and in the past have been,
frequently located at properties used for industrial, retail and other business
purposes. Federal law, as well as the laws of most states, currently require
USTs used for the storage of fuel or hazardous substances and waste to meet
certain standards designed to prevent releases from the USTs into the
environment. USTs installed prior to the implementation of these standards, or
that otherwise do not meet these standards, are potential sources of
contamination to the soil and groundwater. Land owners may be liable for the
costs of investigating and remediating soil and groundwater contamination that
may emanate from leaking USTs.
ENFORCEABILITY OF CERTAIN PROVISIONS
Default Interest; Late Charges; and Prepayment Fees. Some of the Mortgage
Loans may contain provisions requiring the mortgagor to pay late charges or
additional interest if required payments are not timely made. In certain states
there may be limitations upon the enforceability of such provisions, and no
assurance can be given that any of such provisions related to any Mortgage Loan
will be enforceable. Some of the Mortgage Loans may also contain provisions
prohibiting any prepayment of the loan prior to maturity or requiring the
payment of a prepayment fee in connection with any such prepayment. Even if
enforceable, a requirement for such prepayment fees may not deter mortgagors
from prepaying their mortgage loans. Although certain states will allow the
enforcement of such provisions upon a voluntary prepayment of a mortgage loan,
in other states such provisions may be unenforceable after a mortgage loan has
been outstanding for a certain number of years or if enforcement would be
unconscionable, or the allowed amount of any prepayment fee may be limited
(i.e., to a specified percentage of the original principal amount of the
mortgage loan, to a specified percentage of the outstanding principal balance
of a mortgage loan or to a fixed number of months' interest on the prepaid
amount). In certain states there may be limitations upon the enforceability of
prepayment fee provisions applicable in connection with a default by the
mortgagor or an involuntary acceleration of the secured indebtedness, and no
assurance can be given that any of such provisions related to a mortgage loan
will be enforceable under such circumstances. The applicable laws of certain
states may also treat certain prepayment fees as usurious if in excess of
statutory limits. See "--Applicability of Usury Laws."
Due-on-Sale Provisions. The enforceability of due-on-sale provisions has
been the subject of legislation or litigation in many states, and in some
cases, typically involving single family residential mortgage transactions,
their enforceability has been limited or denied. In any event, the Garn-St
Germain Depository Institutions Act of 1982 (the "Garn-St Germain Act")
preempts state constitutional, statutory and case law that prohibits the
enforcement of due-on-sale clauses and permits mortgagees to enforce these
clauses in accordance with their terms, subject to certain exceptions. As a
result, due-on-sale clauses have become generally enforceable except in those
states whose legislatures exercised their authority to regulate the
enforceability of such clauses with respect to mortgage loans that were: (i)
originated or assumed during the "window period" under the Garn-St Germain Act,
which ended in all cases not later
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than October 15, 1982; and (ii) originated by lenders other than national
banks, federal savings institutions or federal credit unions. The Federal Home
Loan Mortgage Corporation has taken the position in its published mortgage
servicing standards that, out of a total of eleven "window period states," five
states (Arizona, Michigan, Minnesota, New Mexico and Utah) have enacted
statutes extending, on various terms and for varying periods, the prohibition
on enforcement of due-on-sale clauses with respect to certain categories of
loans that were originated or assumed during the "window period" applicable to
such state. Also, the Garn-St Germain Act does "encourage" lenders to permit
assumption of loans at the original rate of interest or at some other rate less
than the average of the original rate and the market rates.
The Agreement for each Series generally will provide that if any Mortgage
Loan contains a provision in the nature of a "Due-on-Sale" clause, which by its
terms provides that: (i) such Mortgage Loan shall (or may at the mortgagee's
option) become due and payable upon the sale or other transfer of an interest
in the related Mortgaged Property or (ii) such Mortgage Loan may not be assumed
without the consent of the related mortgagee in connection with any such sale
or other transfer, then, for so long as such Mortgage Loan is included in the
Trust Fund, the Master Servicer or the Special Servicer, if any, on behalf of
the Trustee, shall take such actions as it deems to be in the best interest of
the Trust Fund in accordance with the servicing standard set forth in the
Agreement, and may waive or enforce any due-on-sale clause contained in the
related Note or Mortgage.
In addition, under the federal Bankruptcy Code, due-on-sale clauses may
not be enforceable in bankruptcy proceedings and may, under certain
circumstances, be eliminated in any modified mortgage resulting from such
bankruptcy proceeding.
Acceleration on Default. It is expected that the Mortgage Loans will
include a "Debt-Acceleration" clause, which permits the mortgagee to accelerate
the full debt upon a monetary or nonmonetary default of the mortgagor. The
courts of all states will enforce such acceleration clauses in the event of a
material payment default if appropriate notices of default have been
effectively given. However, the equity courts of any state may refuse to
foreclose a mortgage when an acceleration of the indebtedness would be
inequitable or unjust or the circumstances would render the acceleration
unconscionable. Furthermore, in some states, the mortgagor may avoid
foreclosure and reinstate an accelerated loan by paying only the defaulted
amounts and, in certain states, the costs and attorneys' fees incurred by the
mortgagee in collecting such defaulted payments.
State courts also are known to apply various legal and equitable
principles to avoid enforcement of the forfeiture provisions of Installment
Contracts. For example, a mortgagee's practice of accepting late payments from
the mortgagor may be deemed a waiver of the forfeiture clause. State courts
also may impose equitable grace periods for payment of arrearages or otherwise
permit reinstatement of the Installment Contract following a default. Not
infrequently, if a mortgagor under an Installment Contract has significant
equity in the property, equitable principles will be applied to reform or
reinstate the Installment Contract or to permit the mortgagor to share the
proceeds upon a foreclosure sale of the property if the sale price exceeds the
debt.
SOLDIERS' AND SAILORS' RELIEF ACT
Under the terms of the Soldiers' and Sailors' Civil Relief Act of 1940, as
amended (the "Relief Act"), a mortgagor who enters military service (including
the Army, Navy, Air Force, Marines, Coast Guard, members of the National Guard
or any Reserves who are called to active duty status after the origination of
their mortgage loan and officers of the U.S. Public Health Service assigned to
duty with the military) after the origination of such mortgagor's mortgage loan
may not be charged interest (including fees and charges) above an annual rate
of 6% during the period of such mortgagor's active duty status, unless a court
orders otherwise upon application of the mortgagee. Any shortfall in interest
collections resulting from the application of the Relief Act. to the extent not
covered by any applicable Credit Enhancement, could result in losses to the
holders of the Certificates. In addition, the Relief Act imposes limitations
that would impair the ability of the Master Servicer or the Special Servicer,
if any, to foreclose on an affected Mortgage Loan during the mortgagor's period
of active duty status and, under certain circumstances, during an additional
three months thereafter. Thus, in the event that such a Mortgage Loan goes into
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default, there may be delays and losses occasioned by the inability to realize
upon the Mortgaged Property in a timely fashion. Because the Relief Act applies
to mortgagors who enter military service (including reservists who are later
called to active duty) after origination of their mortgage loan, no information
can be provided as to the number of Mortgage Loans that may be affected by the
Relief Act. The Relief Act may also be applicable if the mortgagor is an entity
owned or controlled by a person in a military service.
APPLICABILITY OF USURY LAWS
State and federal usury laws limit the interest that mortgagees are
entitled to receive on a mortgage loan. In determining whether a given
transaction is usurious, courts may include charges in the form of "points" and
"fees" in the determination of the "interest" charged in connection with a
loan. If, however, the amount charged for the use of the money loaned is found
to exceed a statutorily established maximum rate, the form employed and the
degree of overcharge are both immaterial. Statutes differ in their provision as
to the consequences of a usurious loan. One type of statute requires the
mortgagee to forfeit the interest above the applicable limit or imposes a
specified penalty. Under this statutory scheme, the mortgagor may have the
recorded mortgage or deed of trust canceled upon paying its debt with lawful
interest, or the mortgagee may foreclose, but only for the debt plus lawful
interest, in either case, subject to any applicable credit for excessive
interest collected from the mortgagor and any penalty owed by the mortgagee. A
second type of statute is more severe. A violation of this type of usury law
results in the invalidation of the transaction, thereby permitting the
mortgagor to have the recorded mortgage or deed of trust canceled without any
payment and prohibiting the mortgagee from foreclosing.
Title V of the Depository Institutions Deregulation and Monetary Control
Act of 1980, as amended ("Title V"), provides that state usury limitations do
not apply to certain types of residential (including multifamily, but not other
commercial) first mortgage loans originated by certain lenders after March 31,
1980. A similar federal statute was in effect with respect to mortgage loans
made during the first three months of 1980. The statute authorized any state to
reimpose interest rate limits by adopting, before April 1, 1983, a law or
constitutional provision that expressly rejects application of the federal law.
In addition, even where Title V is not so rejected, any state is authorized by
law to adopt a provision limiting discount points or other charges on mortgage
loans covered by Title V. Certain states have taken action to reimpose interest
rate limits and/or to limit discount points or other charges.
ALTERNATIVE MORTGAGE INSTRUMENTS
Alternative mortgage instruments, including adjustable rate mortgage
loans, originated by nonfederally chartered lenders have historically been
subjected to a variety of restrictions. Such restrictions differed from state
to state, resulting in difficulties in determining whether a particular
alternative mortgage instrument originated by a state-chartered lender was in
compliance with applicable law. These difficulties were alleviated
substantially with respect to residential (including multifamily, but not other
commercial) mortgage loans as a result of the enactment of Title VIII of the
Garn-St Germain Act ("Title VIII"). Title VIII provides that, notwithstanding
any state law to the contrary: (i) state-chartered banks may originate
alternative mortgage instruments in accordance with regulations promulgated by
the Comptroller of the Currency with respect to origination of alternative
mortgage instruments by national banks; (ii) state-chartered credit unions may
originate alternative mortgage instruments in accordance with regulations
promulgated by the National Credit Union Administration (the "NCUN") with
respect to origination of alternative mortgage instruments by federal credit
unions; and (iii) all other nonfederally chartered housing creditors, including
state-chartered savings and loan associations, state chartered savings banks
and mortgage banking companies may originate alternative mortgage instruments
in accordance with the regulations promulgated by the Federal Home Loan Bank
Board (now the Office, of Thrift Supervision) with respect to origination of
alternative mortgage instruments by federal savings and loan associations.
Title VIII authorized any state to reject applicability of the provisions of
Title VIII by adopting, prior to October 15, 1985, a law or constitutional
provision expressly rejecting the applicability of such provisions. Certain
states have taken such action. A mortgagee's failure to comply with the
applicable federal regulations in connection with the origination of an
alternative mortgage instrument could subject such mortgage loan to state
restrictions that would not otherwise be applicable.
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LEASES AND RENTS
Some of the Mortgage Loans may be secured by an assignment of leases and
rents, either through assignment provisions incorporated in the mortgage,
through a separate assignment document or both. Under an assignment of leases
and rents, the mortgagor typically assigns to the mortgagee the mortgagor's
right, title and interest as landlord under each lease and the income derived
therefrom, while retaining a revocable license to collect the rents for so long
as there is no default under the mortgage loan documentation. In the event of
such a default, the license terminates and the mortgagee may be entitled to
collect rents. A mortgagee's failure to perfect properly its interest in rents
may result in the loss of a substantial pool of funds that could otherwise
serve as a source of repayment for the loan. Some state laws may require that
in addition to recording properly the assignment of leases and rents, the
mortgagee must also take possession of the property and/or obtain judicial
appointment of a receiver before such mortgagee is entitled to collect rents.
Although mortgagees actually taking possession of the property may become
entitled to collect the rents therefrom, such mortgagees may also incur
potentially substantial risks attendant to such possession, including liability
for environmental clean-up costs and other risks inherent to property ownership
and operation. In addition, if a bankruptcy or similar proceeding is commenced
by or in respect of the mortgagor, the mortgagee's ability to collect the rents
may also be adversely affected.
SECONDARY FINANCING; DUE-ON-ENCUMBRANCE PROVISIONS
Some of the Mortgage Loans may not restrict secondary financing, thereby
permitting the mortgagor to use the Mortgaged Property as security for one or
more additional loans. Some of the Mortgage Loans may preclude secondary
financing (often by permitting the senior mortgagee to accelerate the maturity
of its loan if the mortgagor further encumbers the Mortgaged Property) or may
require the consent of the senior mortgagee, however, such provisions may be
unenforceable in certain jurisdictions under certain circumstances. The
Agreement for each Series will generally provide that if any Mortgage Loan
contains a provision in the nature of a "Due-on-Encumbrance" clause, which by
its terms: (i) provides that such Mortgage Loan will (or may at the mortgagee's
option) become due and payable upon the creation of any lien or other
encumbrance on the related Mortgaged Property, or (ii) requires the consent of
the related mortgagee to the creation of any such lien or other encumbrance on
the related Mortgaged Property; then for so long as such Mortgage Loan is
included in a given Trust Fund, the Master Servicer or, if such Mortgage Loan
is a Specially Serviced Mortgage Loan, the Special Servicer, if any, on behalf
of such Trust Fund, will exercise (or decline to exercise) any right it may
have as the mortgagee of record with respect to such Mortgage Loan to (x)
accelerate the payments thereon or (y) withhold its consent to the creation of
any such lien or other encumbrance, in a manner consistent with the servicing
standard set forth in the Agreement.
If a mortgagor encumbers a mortgaged property with one or more junior
liens, the senior mortgagee is subjected to additional risk, such as the
following. First, the mortgagor may have difficulty servicing and repaying
multiple loans. In addition, if the junior loan permits recourse to the
mortgagor and the senior loan does not, a mortgagor may be more likely to repay
sums due on the junior loan than those due on the senior loan. Second, acts of
the senior mortgagee that prejudice the junior mortgagee or impair the junior
mortgagee's security may create a superior equity in favor of the junior
mortgagee. For example, if the mortgagor and the senior mortgagee agree to an
increase in the principal amount of, or the interest rate payable on, the
senior loan, the senior mortgagee may lose its priority to the extent an
existing junior mortgagee is prejudiced or the mortgagor is additionally
burdened. Third, if the mortgagor defaults on the senior loan and/or any junior
loan or loans, the existence of junior loans and actions taken by junior
mortgagees can impair the security available to the senior mortgagee and can
interfere with, delay and in certain circumstances even prevent the taking of
action by the senior mortgagee. Fourth, the bankruptcy of a junior mortgagee
may operate to stay foreclosure or similar proceedings by the senior mortgagee.
CERTAIN LAWS AND REGULATIONS
The Mortgaged Properties will be subject to compliance with various
federal, state and local statutes and regulations. Failure to comply (together
with an inability to remedy any such failure) could result in
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material diminution in the value of a Mortgaged Property, which could, together
with the possibility of limited alternative uses for a particular Mortgaged
Property (e.g., a nursing or convalescent home or hospital), result in a
failure to realize the full principal amount of and interest on the related
Mortgage Loan.
TYPE OF MORTGAGED PROPERTY
A mortgagee may be subject to additional risk depending upon the type and
use of the mortgaged property in question. For instance, mortgaged properties
that are hospitals, nursing homes or convalescent homes may present special
risks to mortgagees in large part due to significant governmental regulation of
the ownership, operation, maintenance, control and financing of health care
institutions. Mortgages encumbering mortgaged properties that are owned by the
mortgagor under a condominium form of ownership are subject to the declaration,
by-laws and other rules and regulations of the condominium association.
Mortgaged properties that are hotels or motels may present additional risk to
the mortgagee in that: (i) hotels and motels are typically operated pursuant to
franchise, management and operating agreements that may be terminable by the
operator; and (ii) the transferability of the hotel's operating, liquor and
other licenses to the entity acquiring the hotel either through purchase or
foreclosure is subject to the vagaries of local law requirements. In addition,
mortgaged properties that are multifamily residential properties or
cooperatively owned multifamily properties may be subject to rent control laws,
which could impact the future cash flows of such properties. See "RISK
FACTORS--Risks Associated with Lending on Income Producing Properties."
CRIMINAL FORFEITURES
Various federal and state laws (collectively, the "Forfeiture Laws")
provide for the civil or criminal forfeiture of certain property (including
real estate) used or intended to be used to commit or facilitate the commission
of a violation of certain laws (typically criminal laws), or purchased with the
proceeds of such violations. Even though the Forfeiture Laws were originally
intended as tools to fight organized crime and drug related crimes, the current
climate appears to be to expand the scope of such laws. Certain of the
Forfeiture Laws (i.e., the Racketeer Influenced and Corrupt Organizations law
and the Comprehensive Crime Control Act of 1984) provide for notice,
opportunity to be heard and for certain defenses for "innocent lienholders."
However, given the uncertain scope of the Forfeiture Laws and their
relationship to existing constitutional protections afforded property owners,
no assurance can be made that enforcement of a Forfeiture Law with respect to
any Mortgaged Property would not deprive the Trust Fund of its security for the
related Mortgage Loan.
AMERICANS WITH DISABILITIES ACT
Under Title III of the Americans with Disabilities Act of 1990 and rules
promulgated thereunder (collectively, the "ADA"), in order to protect
individuals with disabilities, public accommodations (such as hotels,
restaurants, shopping centers, hospitals, schools and social service center
establishments) must remove structural, architectural and communication
barriers from existing places of public accommodation to the extent "readily
achievable." In addition, under the ADA, alterations to a place of public
accommodation or a commercial facility are to be made so that, to the maximum
extent feasible, such altered portions are readily accessible to and usable by
disabled individuals. The "readily achievable" standard takes into account,
among other factors, the financial resources of the affected site, owner,
landlord or other applicable person. In addition to imposing a possible
financial burden on the mortgagor in its capacity as owner or landlord, the ADA
may also impose such requirements on a foreclosing mortgagee who succeeds to
the interest of the mortgagor as owner or landlord. Furthermore, since the
"readily achievable" standard may vary depending on the financial condition of
the owner or landlord, a foreclosing mortgagee who is financially more capable
than the mortgagor of complying with the requirements of the ADA may be subject
to more stringent requirements than those to which the mortgagor is subject.
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MATERIAL FEDERAL INCOME TAX CONSEQUENCES
The following is a general discussion of the anticipated material federal
income tax consequences of the purchase, ownership and disposition of
Certificates. The discussion below does not purport to address all federal
income tax consequences that may be applicable to particular categories of
investors, some of which may be subject to special rules. The authorities on
which this discussion is based are subject to change or differing
interpretations, and any such change or interpretation could apply
retroactively. This discussion reflects the applicable provisions of the
Internal Revenue Code of 1986, as amended (the "Code"), as well as regulations
(the "REMIC Regulations") promulgated by the U.S. Department of Treasury (the
"Treasury"). Investors should consult their own tax advisors in determining the
federal, state, local and other tax consequences to them of the purchase,
ownership and disposition of Certificates.
FEDERAL INCOME TAX CONSEQUENCES FOR REMIC CERTIFICATES
General. With respect to a particular Series of Certificates, an election
may be made to treat the Trust Fund or one or more segregated pools of assets
therein as one or more REMICs within the meaning of Code Section 860D. A Trust
Fund or a portion thereof as to which a REMIC election will be made will be
referred to as a "REMIC Pool". For purposes of this discussion, Certificates of
a series as to which one or more REMIC elections are made are referred to as
"REMIC Certificates" and will consist of one or more Classes of "Regular
Certificates" and one Class of "Residual Certificates" in the case of each
REMIC Pool. Qualification as a REMIC requires ongoing compliance with certain
conditions. With respect to each series of REMIC Certificates, O'Melveny &
Myers LLP, counsel to the Depositor, has advised the Depositor that in the
firm's opinion, assuming (i) the making of such an election, (ii) compliance
with the Pooling Agreement and (iii) compliance with any changes in the law,
including any amendments to the Code or applicable Treasury regulations
thereunder, each REMIC Pool will qualify as a REMIC. In such case, the Regular
Certificates will be considered to be "regular interests" in the REMIC Pool and
generally will be treated for federal income tax purposes as if they were newly
originated debt instruments, and the Residual Certificates will be considered
to be "residual interests" in the REMIC Pool. The Prospectus Supplement for
each series of Certificates will indicate whether one or more REMIC elections
will be made with respect to the related Trust Fund, in which event references
to "REMIC" or "REMIC Pool" herein shall be deemed to refer to each such REMIC
Pool. If so specified in the applicable Prospectus Supplement, the portion of a
Trust Fund as to which a REMIC election is not made may be treated as either a
financial asset securitization investment trust (a "FASIT") or as a grantor
trust for federal income tax purposes. See "--Federal Income Tax Consequences
for FASIT Certificates and "--Federal Income Tax Consequences for Certificates
as to Which No REMIC Election Is Made".
Status of REMIC Certificates. REMIC Certificates held by a domestic
building and loan association will constitute "a regular or residual interest
in a REMIC" within the meaning of Code Section 7701(a)(19)(C)(xi), but only in
the same proportion that the assets of the REMIC Pool would be treated as
"loans . . . secured by an interest in real property which is . . . residential
real property" (such as single family or multifamily properties, but not
commercial properties) within the meaning of Code Section 7701(a)(19)(C)(v) or
as other assets described in Code Section 7701(a)(19)(C), and otherwise will
not qualify for such treatment. REMIC Certificates held by a real estate
investment trust will constitute "real estate assets" within the meaning of
Code Section 856(c)(4)(A), and interest on the Regular Certificates and income
with respect to Residual Certificates will be considered "interest on
obligations secured by mortgages on real property or on interests in real
property" within the meaning of Code Section 856(c)(3)(B) in the same
proportion that, for both purposes, the assets of the REMIC Pool would be so
treated. If at all times 95% or more of the assets of the REMIC Pool qualify
for each of the foregoing respective treatments, the REMIC Certificates will
qualify for the corresponding status in their entirety. For purposes of Code
Section 856(c)(4)(A), payments of principal and interest on the Mortgage Loans
that are reinvested pending distribution to holders of REMIC Certificates
qualify for such treatment. Where two REMIC Pools are a part of a tiered
structure they will be treated as one REMIC for purposes of the tests described
above respecting asset ownership of more or less than 95%. REMIC Certificates
held by a regulated investment company will not constitute "Government
Securities" within the meaning of Code Section 851(b)(3)(A)(i). REMIC
Certificates held certain financial institutions will constitute an "evidence
of indebtedness" within the meaning of Code Section 582(c)(1). The Small
Business Job
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Protection Act of 1996 (the "SBJPA of 1996") repealed the reserve method for
bad debts of domestic building and loan associations and mutual savings banks,
and thus has eliminated the asset category of "qualifying real property loans"
in former Code Section 593(d) for taxable years beginning after December 31,
1995. The requirement in the SBJPA of 1996 that such institutions must
"recapture" a portion of their existing bad debt reserves is suspended if a
certain portion of their assets are maintained in "residential loans" under
Code Section 7701(a)(19)(C)(v), but only if such loans were made to acquire,
construct or improve the related real property and not for the purpose of
refinancing. However, no effort will be made to identify the portion of the
Mortgage Loans of any Series meeting this requirement, and no representation is
made in this regard.
Qualification as a REMIC. In order for the REMIC Pool to qualify as a
REMIC, there must be ongoing compliance on the part of the REMIC Pool with the
requirements set forth in the Code. The REMIC Pool must fulfill an asset test,
which requires that no more than a de minimis portion of the assets of the
REMIC Pool, as of the close of the third calendar month beginning after the
"Startup Day" (which for purposes of this discussion is the date of issuance of
the REMIC Certificates) and at all times thereafter, may consist of assets
other than "qualified mortgages" and "permitted investments". The REMIC
Regulations provide a safe harbor pursuant to which the de minimis requirement
is met if at all times the aggregate adjusted basis of the nonqualified assets
is less than 1% of the aggregate adjusted basis of all the REMIC Pool's assets.
An entity that fails to meet the safe harbor may nevertheless demonstrate that
it holds no more than a de minimis amount of nonqualified assets. A REMIC also
must provide "reasonable arrangements" to prevent its residual interest from
being held by "disqualified organizations" and must furnish applicable tax
information to transferors or agents that violate this requirement. The Pooling
Agreement for each Series will contain a provision designed to meet this
requirement. See "Taxation of Residual Certificates--Tax-Related Restrictions
on Transfer of Residual Certificates
- --Disqualified Organizations".
A qualified mortgage is any obligation that is principally secured by an
interest in real property and that is either transferred to the REMIC Pool on
the Startup Day in exchange for Regular Certificates or Residual Certificates
or is purchased by the REMIC Pool within a three-month period thereafter
pursuant to a fixed price contract in effect on the Startup Day. Qualified
mortgages include whole mortgage loans, such as the Mortgage Loans,
certificates of beneficial interest in a grantor trust that holds mortgage
loans, regular interests in another REMIC, loans secured by timeshare interests
and loans secured by shares held by a tenant stockholder in a cooperative
housing corporation, provided, in general, (i) the fair market value of the
real property securing the mortgage (including buildings and structural
components thereof) is at least 80% of the principal balance of the related
Mortgage Loan or underlying mortgage loan either at origination of the relevant
loan or as of the Startup Day (an original loan-to-value ratio of not more than
125% with respect to the real property securing the mortgage) or (ii)
substantially all the proceeds of the Mortgage Loan or the underlying mortgage
loan were used to acquire, improve or protect an interest in real property
that, at the origination date, was the only security for the Mortgage Loan or
underlying mortgage loan. If the Mortgage Loan has been substantially modified
other than in connection with a default or reasonably foreseeable default, it
must meet the loan-to-value test in (i) of the preceding sentence as of the
date of the last such modification or at closing. A qualified mortgage includes
a qualified replacement mortgage, which is any property that would have been
treated as a qualified mortgage if it were transferred to the REMIC Pool on the
Startup Day and that is received either (i) in exchange for any qualified
mortgage within a three-month period thereafter or (ii) in exchange for a
"defective obligation" within a two-year period thereafter. A "defective
obligation" includes (i) a mortgage in default or as to which default is
reasonably foreseeable, (ii) a mortgage as to which a customary representation
or warranty made at the time of transfer to the REMIC Pool has been breached,
(iii) a mortgage that was fraudulently procured by the mortgagor, and (iv) a
mortgage that was not in fact principally secured by real property (but only if
such mortgage is disposed of within 90 days of discovery). A Mortgage Loan that
is "defective" as described in clause (iv) that is not sold or, if within two
years of the Startup Day, exchanged, within 90 days of discovery, ceases to be
a qualified mortgage after such 90-day period. A qualified mortgage also
includes any regular interest in a FASIT transferred to the REMIC Pool on the
Startup Day in exchange for Regular Certificates or Residual Certificates, or
purchased by the REMIC Pool within three months after the Startup Day pursuant
to a fixed price
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contract in effect on the Startup Day, provided that at least 95% of the value
of the FASIT assets is at all times attributable to obligations principally
secured by interests in real property and which are transferred to, or
purchased by, a REMIC as provided in this sentence.
Permitted investments include cash flow investments, qualified reserve
assets, and foreclosure property. A cash flow investment is an investment,
earning a return in the nature of interest, of amounts received on or with
respect to qualified mortgages for a temporary period, not exceeding 13 months,
until distributed to holders of interests in the REMIC Pool. A qualified
reserve asset is any intangible property (other than a REMIC residual interest)
held for investment that is part of any reasonably required reserve maintained
by the REMIC Pool to provide for payments of expenses of the REMIC Pool or
amounts due on the regular or residual interests in the event of defaults
(including delinquencies) on the qualified mortgages, lower than expected
reinvestment returns, prepayment interest shortfalls and certain other
contingencies. The reserve fund will be disqualified if more than 30% of the
gross income from the assets in such fund for the year is derived from the sale
or other disposition of property held for less than three months, unless
required to prevent a default on the regular interests caused by a default on
one or more qualified mortgages. A reserve fund must be reduced "promptly and
appropriately" as payments on the Mortgage Loans are received. Foreclosure
property is real property acquired by the REMIC Pool in connection with the
default or imminent default of a qualified mortgage and generally held beyond
the close of the third calendar year following the acquisition of the property
by REMIC Pool for not more than two years, with possible extensions granted by
the Internal Revenue Service (the "Service") of up to an additional four years.
In addition to the foregoing requirements, the various interests in a
REMIC Pool also must meet certain requirements. All of the interests in a REMIC
Pool must be either of the following: (i) one or more classes of regular
interests or (ii) a single class of residual interests on which distributions,
if any, are made pro rata. A regular interest is an interest in a REMIC Pool
that is issued on the Startup Day with fixed terms, is designated as a regular
interest, and unconditionally entitles the holder to receive a specified
principal amount (or other similar amount), and provides that interest payments
(or other similar amounts), if any, at or before maturity either are payable
based on a fixed rate or a qualified variable rate, or consist of a specified,
nonvarying portion of the interest payments on qualified mortgages. Such a
specified portion may consist of a fixed number of basis points, a fixed
percentage of the total interest, or a fixed or qualified variable or inverse
variable rate on some or all of the qualified mortgages minus a different fixed
or qualified variable rate. The specified principal amount of a regular
interest that provides for interest payments consisting of a specified,
nonvarying portion of interest payments on qualified mortgages may be zero. A
residual interest is an interest in a REMIC Pool other than a regular interest
that is issued on the Startup Day and that is designated as a residual
interest. An interest in a REMIC Pool may be treated as a regular interest even
if payments of principal with respect to such interest are subordinated to
payments on other regular interests or the residual interest in the REMIC Pool,
and are dependent on the absence of defaults or delinquencies on qualified
mortgages or permitted investments, lower than reasonably expected returns on
permitted investments, unanticipated expenses incurred by the REMIC Pool or
prepayment interest shortfalls. Accordingly, the Regular Certificates of a
series will constitute one or more classes of regular interests, and the
Residual Certificates with respect to that series will constitute a single
class of residual interests on which distributions are made pro rata.
If an entity, such as the REMIC Pool, fails to comply with one or more of
the ongoing requirements of the Code for REMIC status during any taxable year,
the Code provides that the entity will not be treated as a REMIC for such year
and thereafter. In this event, an entity with multiple classes of ownership
interests may be treated as a separate association taxable as a corporation
under Treasury regulations, and the Regular Certificates may be treated as
equity interests therein. The Code, however, authorizes the Treasury Department
to issue regulations that address situations where failure to meet one or more
of the requirements for REMIC status occurs inadvertently and in good faith,
and disqualification of the REMIC Pool would occur absent regulatory relief.
Investors should be aware, however, that the Conference Committee Report to the
Tax Reform Act of 1986 (the "1986 Act") indicates that the relief may be
accompanied by sanctions, such as the imposition of a corporate tax on all or a
portion of the REMIC Pool's income for the period of time in which the
requirements for REMIC status are not satisfied.
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TAXATION OF REGULAR CERTIFICATES
General
In general, interest, original issue discount and market discount on a
Regular Certificate will be treated as ordinary income to a holder of the
Regular Certificate (the "Regular Certificateholder") as they accrue, and
principal payments on a Regular Certificate will be treated as a return of
capital to the extent of the Regular Certificateholder's basis in the Regular
Certificate allocable thereto. Regular Certificateholders must use the accrual
method of accounting with regard to Regular Certificates, regardless of the
method of accounting otherwise used by such Regular Certificateholders.
Original Issue Discount
Certificates on which interest is not paid currently ("Compound Interest
Certificates") will be, and other Classes of Regular Certificates may be,
issued with "original issue discount" within the meaning of Code Section
1273(a). Holders of any Class of Regular Certificates having original issue
discount generally must include original issue discount in ordinary income for
federal income tax purposes as it accrues, in accordance with the constant
yield method that takes into account the compounding of interest, in advance of
receipt of the cash attributable to such income. The following discussion is
based in part on temporary and final Treasury regulations issued on February 2,
1994, as amended on June 14, 1996, (the "OID Regulations") under Code Sections
1271 through 1273 and 1275 and in part on the provisions of the 1986 Act.
Regular Certificateholders should be aware, however, that the OID Regulations
do not adequately address certain issues relevant to prepayable securities,
such as the Regular Certificates. To the extent such issues are not addressed
in such regulations, the Depositor intends to apply the methodology described
in the Conference Committee Report to the 1986 Act. No assurance can be
provided that the Service will not take a different position as to those
matters not currently addressed by the OID Regulations. Moreover, the OID
Regulations include an anti-abuse rule allowing the Service to apply or depart
from the OID Regulations where necessary or appropriate to ensure a reasonable
tax result in light of the applicable statutory provisions. A tax result will
not be considered unreasonable under the anti-abuse rule in the absence of a
substantial effect on the present value of a taxpayer's tax liability.
Investors are advised to consult their own tax advisors as to the discussion
herein and the appropriate method for reporting interest and original issue
discount with respect to the Regular Certificates.
Each Regular Certificate will be treated as a single installment
obligation for purposes of determining the original issue discount includible
in a Regular Certificateholder's income. The total amount of original issue
discount on a Regular Certificate is the excess of the "stated redemption price
at maturity" of the Regular Certificate over its "issue price". The issue price
of a Class of Regular Certificates offered pursuant to this Prospectus
generally is the first price at which a substantial amount of Regular
Certificates of that Class is sold to the public (excluding bond houses,
brokers and underwriters). Although unclear under the OID Regulations, the
Depositor intends to treat the issue price of a Class as to which there is no
substantial sale as of the issue date or that is retained by the Depositor as
the fair market value of that Class as of the issue date. The issue price of a
Regular Certificate also includes the amount paid by an initial Regular
Certificateholder for accrued interest that relates to a period prior to the
issue date of the Regular Certificate, unless the Regular Certificateholder
elects on its federal income tax return to exclude such amount from the issue
price and to recover it on the first Distribution Date. The stated redemption
price at maturity of a Regular Certificate always includes the original
principal amount of the Regular Certificate, but generally will not include
distributions of stated interest if such interest distributions constitute
"qualified stated interest". Under the OID Regulations, qualified stated
interest generally means interest payable at a single fixed rate or a qualified
variable rate (as described below) provided that such interest payments are
unconditionally payable at intervals of one year or less during the entire term
of the Regular Certificate. Because there is no penalty or default remedy in
the case of nonpayment of interest with respect to a Regular Certificate, it is
possible that no interest on any Class of Regular Certificates will be treated
as qualified stated interest. However, except as provided in the following
three sentences or in the applicable Prospectus Supplement, because the
underlying Mortgage
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Loans provide for remedies in the event of default, the Depositor intends to
treat interest with respect to the Regular Certificates as qualified stated
interest. Distributions of interest on a Compound Interest Certificate, or on
other Regular Certificates with respect to which deferred interest will accrue,
will not constitute qualified stated interest, in which case the stated
redemption price at maturity of such Regular Certificates includes all
distributions of interest as well as principal thereon. Likewise, the Depositor
intends to treat an "interest only" class, or a class on which interest is
substantially disproportionate to its principal amount (a so-called
"super-premium" class) as having no qualified stated interest. Where the
interval between the issue date and the first Distribution Date on a Regular
Certificate is shorter than the interval between subsequent Distribution Dates,
the interest attributable to the additional days will be included in the stated
redemption price at maturity.
Under a de minimis rule, original issue discount on a Regular Certificate
will be considered to be zero if such original issue discount is less than
0.25% of the stated redemption price at maturity of the Regular Certificate
multiplied by the weighted average maturity of the Regular Certificate. For
this purpose, the weighted average maturity of the Regular Certificate is
computed as the sum of the amounts determined by multiplying the number of full
years (i.e., rounding down partial years) from the issue date until all
distributions in reduction of are scheduled to be made by a fraction, the
numerator of which is the amount of each distribution included in the stated
redemption price at maturity of the Regular Certificate and the denominator of
which is the stated redemption price at maturity of the Regular Certificate.
The Conference Committee Report to the 1986 Act provides that the schedule of
such distributions should be determined in accordance with the assumed rate of
prepayment of the Mortgage Loans (the "Prepayment Assumption") and the
anticipated reinvestment rate, if any, relating to the Regular Certificates.
The Prepayment Assumption with respect to a Series of Regular Certificates will
be set forth in the related Prospectus Supplement. Holders generally must
report de minimis original issue discount pro rata as principal payments are
received, and such income will be capital gain if the Regular Certificate is
held as a capital asset. However, under the OID Regulations, Regular
Certificateholders may elect to accrue all de minimis original issue discount
as well as market discount and market premium under the constant yield method.
See "Election to Treat All Interest Under the Constant Yield Method".
A Regular Certificateholder generally must include in gross income for any
taxable year the sum of the "daily portions," as defined below, of the original
issue discount on the Regular Certificate accrued during an accrual period for
each day on which it holds the Regular Certificate, including the date of
purchase but excluding the date of disposition. The Depositor will treat the
monthly period ending on the day before each Distribution Date as the accrual
period. With respect to each Regular Certificate, a calculation will be made of
the original issue discount that accrues during each successive full accrual
period (or shorter period from the date of original issue) that ends on the day
before the related Distribution Date on the Regular Certificate. The Conference
Committee Report to the 1986 Act states that the rate of accrual of original
issue discount is intended to be based on the Prepayment Assumption. The
original issue discount accruing in a full accrual period would be the excess,
if any, of (i) the sum of (a) the present value of all of the remaining
distributions to be made on the Regular Certificate as of the end of that
accrual period that are included in the Regular Certificate's stated redemption
price at maturity and (b) the distributions made on the Regular Certificate
during the accrual period that are included in the Regular Certificate's stated
redemption price at maturity, over (ii) the adjusted issue price of the Regular
Certificate at the beginning of the accrual period. The present value of the
remaining distributions referred to in the preceding sentence is calculated
based on (i) the yield to maturity of the Regular Certificate at the issue
date, (ii) events (including actual prepayments) that have occurred prior to
the end of the accrual period and (iii) the Prepayment Assumption. For these
purposes, the adjusted issue price of a Regular Certificate at the beginning of
any accrual period equals the issue price of the Regular Certificate, increased
by the aggregate amount of original issue discount with respect to the Regular
Certificate that accrued in all prior accrual periods and reduced by the amount
of distributions included in the Regular Certificate's stated redemption price
at maturity that were made on the Regular Certificate in such prior periods.
The original issue discount accruing during any accrual period (as determined
in this paragraph) will then be divided by the number of days in the period to
determine the daily portion of original issue discount for each day in the
period. With respect to an initial accrual period shorter than a full accrual
period, the daily portions of original issue discount must be determined
according to an appropriate allocation under any reasonable method.
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Under the method described above, the daily portions of original issue
discount required to be included in income by a Regular Certificateholder
generally will increase to take into account prepayments on the Regular
Certificates as a result of prepayments on the Mortgage Loans that exceed the
Prepayment Assumption, and generally will decrease (but not below zero for any
period) if the prepayments are slower than the Prepayment Assumption. An
increase in prepayments on the Mortgage Loans with respect to a Series of
Regular Certificates can result in both a change in the priority of principal
payments with respect to certain Classes of Regular Certificates and either an
increase or decrease in the daily portions of original issue discount with
respect to such Regular Certificates.
Acquisition Premium
A purchaser of a Regular Certificate at a price greater than its adjusted
issue price but less than its stated redemption price at maturity will be
required to include in gross income the daily portions of the original issue
discount on the Regular Certificate reduced pro rata by a fraction, the
numerator of which is the excess of its purchase price over such adjusted issue
price and the denominator of which is the excess of the remaining stated
redemption price at maturity over the adjusted issue price. Alternatively, such
a subsequent purchaser may elect to treat all such acquisition premium under
the constant yield method, as described below under the heading "Election to
Treat All Interest Under the Constant Yield Method".
Variable Rate Regular Certificates
Regular Certificates may provide for interest based on a variable rate.
Under the OID Regulations, interest is treated as payable at a variable rate
if, generally, (i) the issue price does not exceed the original principal
balance by more than a specified de minimis amount and (ii) the interest
compounds or is payable at least annually at current values of (a) one or more
"qualified floating rates", (b) a single fixed rate and one or more qualified
floating rates, (c) a single "objective rate", or (d) a single fixed rate and a
single objective rate that is a "qualified inverse floating rate". A floating
rate is a qualified floating rate if variations in the rate can reasonably be
expected to measure contemporaneous variations in the cost of newly borrowed
funds, or where such rate is subject to a fixed multiple that is greater than
0.65, but not more than 1.35. Such rate may also be increased or decreased by a
fixed spread or subject to a fixed cap or floor, or a cap or floor that is not
reasonably expected as of the issue date to affect the yield of the instrument
significantly. Two or more qualified floating rates will be treated as a single
qualified floating rate if all such qualified floating rates can reasonably be
expected to have approximately the same values throughout the terms of the
instrument. This requirement will be conclusively presumed to be satisfied if
the values of all such qualified floating rates are within 0.25% of each other
on the issue date. An objective rate (other than a qualified floating rate) is
a rate that is determined using a single fixed formula and that is based on
objective financial or economic information, provided that such information is
not (i) within the control of the issuer or a related party or (ii) unique to
the circumstances of the issuer or a related party. A qualified inverse
floating rate is an objective rate that is equal to a fixed rate minus a
qualified floating rate that inversely reflects contemporaneous variations in
the cost of newly borrowed funds; an inverse floating rate that is not a
qualified floating rate may nevertheless be an objective rate. A Class of
Regular Certificates may be issued under this Prospectus that does not have a
variable rate under the OID Regulations, for example, a Class that bears
different rates at different times during the period it is outstanding such
that it is considered significantly "front-loaded" or "back-loaded" within the
meaning of the OID Regulations. It is possible that such a Class may be
considered to bear "contingent interest" within the meaning of the OID
Regulations. The OID Regulations, as they relate to the treatment of contingent
interest, are by their terms not applicable to Regular Certificates. However,
if final regulations dealing with contingent interest with respect to Regular
Certificates apply the same principles as the OID Regulations, such regulations
may lead to different timing of income inclusion than would be the case under
the OID Regulations. Furthermore, application of such principles could lead to
the characterization of gain on the sale of contingent interest Regular
Certificates as ordinary income. Investors should consult their tax advisors
regarding the appropriate treatment of any Regular Certificate that does not
pay interest at a fixed rate or variable rate as described in this paragraph.
Under the REMIC Regulations, a Regular Certificate (i) bearing a rate that
qualifies as a variable rate under the OID Regulations that is tied to current
values of a variable rate (or the highest, lowest or
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average of two or more variable rates), including a rate based on the average
cost of funds of one or more financial institutions, or a positive or negative
multiple of such a rate (plus or minus a specified number of basis points), or
that represents a weighted average of rates on some or all of the Mortgage
Loans which bear interest at a fixed rate or at a qualifying variable rate
under the REMIC Regulations, including such a rate that is subject to one or
more caps or floors, or (ii) bearing one or more such variable rates for one or
more periods or one or more fixed rates for one or more periods, and a
different variable rate or fixed rate for other periods qualifies as a regular
interest in a REMIC. Accordingly, unless otherwise indicated in the applicable
Prospectus Supplement, the Depositor intends to treat Regular Certificates that
qualify as regular interests under this rule in the same manner as obligations
bearing a variable rate for original issue discount reporting purposes.
The amount of original issue discount with respect to a Regular
Certificate bearing a variable rate of interest will accrue in the manner
described above under "Original Issue Discount" with the yield to maturity and
future payments on such Regular Certificate generally to be determined by
assuming that interest will be payable for the life of the Regular Certificate
based on the initial rate (or, if different, the value of the applicable
variable rate as of the pricing date) for the relevant Class. Unless otherwise
specified in the applicable Prospectus Supplement, the Depositor intends to
treat such variable interest as qualified stated interest, other than variable
interest on an interest-only or super-premium Class, which will be treated as
non-qualified stated interest includible in the stated redemption price at
maturity. Ordinary income reportable for any period will be adjusted based on
subsequent changes in the applicable interest rate index.
Although unclear under the OID Regulations, unless required otherwise by
applicable final regulations, the Depositor intends to treat Regular
Certificates bearing an interest rate that is a weighted average of the net
interest rates on Mortgage Loans or Mortgage Certificates having fixed or
adjustable rates, as having qualified stated interest, except to the extent
that initial "teaser" rates cause sufficiently "back-loaded" interest to create
more than de minimis original issue discount. The yield on such Regular
Certificates for purposes of accruing original issue discount will be a
hypothetical fixed rate based on the fixed rates, in the case of fixed rate
Mortgage Loans, and initial "teaser rates" followed by fully indexed rates, in
the case of adjustable rate Mortgage Loans. In the case of adjustable rate
Mortgage Loans, the applicable index used to compute interest on the Mortgage
Loans in effect on the pricing date (or possibly the issue date) will be deemed
to be in effect beginning with the period in which the first weighted average
adjustment date occurring after the issue date occurs. Adjustments will be made
in each accrual period either increasing or decreasing the amount of ordinary
income reportable to reflect the actual Pass-Through Rate on the Regular
Certificates.
Deferred Interest
Under the OID Regulations, all interest on a Regular Certificate as to
which there may be deferred interest is includible in the stated redemption
price at maturity thereof. Accordingly, any deferred interest that accrues with
respect to a Class of Regular Certificates may constitute income to the holders
of such Regular Certificates prior to the time distributions of cash with
respect to such deferred interest are made.
Market Discount
A purchaser of a Regular Certificate also may be subject to the market
discount rules of Code Section 1276 through 1278. Under these Code sections and
the principles applied by the OID Regulations in the context of original issue
discount, "market discount" is the amount by which the purchaser's original
basis in the Regular Certificate (i) is exceeded by the then-current principal
amount of the Regular Certificate or (ii) in the case of a Regular Certificate
having original issue discount, is exceeded by the adjusted issue price of such
Regular Certificate at the time of purchase. Such purchaser generally will be
required to recognize ordinary income to the extent of accrued market discount
on such Regular Certificate as distributions includible in the stated
redemption price at maturity thereof are received, in an amount not exceeding
any such distribution. Such market discount would accrue in a manner to be
provided in Treasury regulations and should take into account the Prepayment
Assumption. The Conference Committee Report to the 1986 Act provides that until
such regulations are issued, such market discount
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would accrue either (i) on the basis of a constant interest rate or (ii) in the
ratio of stated interest allocable to the relevant period to the sum of the
interest for such period plus the remaining interest as of the end of such
period, or in the case of a Regular Certificate issued with original issue
discount, in the ratio of original issue discount accrued for the relevant
period to the sum of the original issue discount accrued for such period plus
the remaining original issue discount as of the end of such period. Such
purchaser also generally will be required to treat a portion of any gain on a
sale or exchange of the Regular Certificate as ordinary income to the extent of
the market discount accrued to the date of disposition under one of the
foregoing methods, less any accrued market discount previously reported as
ordinary income as partial distributions in reduction of the stated redemption
price at maturity were received. Such purchaser will be required to defer
deduction of a portion of the excess of the interest paid or accrued on
indebtedness incurred to purchase or carry a Regular Certificate over the
interest distributable thereon. The deferred portion of such interest expense
in any taxable year generally will not exceed the accrued market discount on
the Regular Certificate for such year. Any such deferred interest expense is,
in general, allowed as a deduction not later than the year in which the related
market discount income is recognized or the Regular Certificate is disposed of.
As an alternative to the inclusion of market discount in income on the
foregoing basis, the Regular Certificateholder may elect to include market
discount in income currently as it accrues on all market discount instruments
acquired by such Regular Certificateholder in that taxable year or thereafter,
in which case the interest deferral rule will not apply. See "Election to Treat
All Interest Under the Constant Yield Method" below regarding an alternative
manner in which such election may be deemed to be made.
Market discount with respect to a Regular Certificate will be considered
to be zero if such market discount is less than 0.25% of the remaining stated
redemption price at maturity of such Regular Certificate multiplied by the
weighted average maturity of the Regular Certificate (determined as described
above in the third paragraph under "Original Issue Discount") remaining after
the date of purchase. It appears that de minimis market discount should be
reported in a manner similar to de minimis original issue discount. See
"Original Issue Discount" above. Treasury regulations implementing the market
discount rules have not yet been issued, and therefore investors should consult
their own tax advisors regarding the application of these rules. Investors
should also consult Revenue Procedure 92-67 concerning the elections to include
market discount in income currently and to accrue market discount on the basis
of the constant yield method.
Premium
A Regular Certificate purchased at a cost greater than its remaining
stated redemption price at maturity generally is considered to be purchased at
a premium. If the Regular Certificateholder holds such Regular Certificate as a
"capital asset" within the meaning of Code Section 1221, the Regular
Certificateholder may elect under Code Section 171 to amortize such premium
under the constant yield method. The Conference Committee Report to the 1986
Act indicates a Congressional intent that the same rules that will apply to the
accrual of market discount on installment obligations will also apply to
amortizing bond premium under Code Section 171 on installment obligations such
as the Regular Certificates, although it is unclear whether the alternatives to
the constant yield method described above under "Market Discount" are
available. Amortizable bond premium will be treated as an offset to interest
income on a Regular Certificate rather than as a separate deduction item. See
"Election to Treat All Interest Under the Constant Yield Method" below
regarding an alternative manner in which the Code Section 171 election may be
deemed to be made.
Election to Treat All Interest Under the Constant Yield Method
A holder of a debt instrument such as a Regular Certificate may elect to
treat all interest that accrues on the instrument using the constant yield
method, with none of the interest being treated as qualified stated interest.
For purposes of applying the constant yield method to a debt instrument subject
to such an election, (i) "interest" includes stated interest, original issue
discount, de minimis original issue discount, market discount and de minimis
market discount, as adjusted by any amortizable bond premium or acquisition
premium and (ii) the debt instrument is treated as if the instrument were
issued on the
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holder's acquisition date in the amount of the holder's adjusted basis
immediately after acquisition. It is unclear whether, for this purpose, the
initial Prepayment Assumption would continue to apply or if a new prepayment
assumption as of the date of the holder's acquisition would apply. A holder
generally may make such an election on an instrument by instrument basis or for
a class or group of debt instruments. However, if the holder makes such an
election with respect to a debt instrument with amortizable bond premium or
with market discount, the holder is deemed to have made elections to amortize
bond premium or to report market discount income currently as it accrues under
the constant yield method, respectively, for all debt instruments acquired by
the holder in the same taxable year or thereafter. The election is made on the
holder's federal income tax return for the year in which the debt instrument is
acquired and is irrevocable except with the approval of the Service. Investors
should consult their own tax advisors regarding the advisability of making such
an election.
Sale or Exchange of Regular Certificates
If a Regular Certificateholder sells or exchanges a Regular Certificate,
the Regular Certificateholder will recognize gain or loss equal to the
difference, if any, between the amount received and its adjusted basis in the
Regular Certificate. The adjusted basis of a Regular Certificate generally will
equal the cost of the Regular Certificate to the seller, increased by any
original issue discount or market discount previously included in the seller's
gross income with respect to the Regular Certificate and reduced by amounts
included in the stated redemption price at maturity of the Regular Certificate
that were previously received by the seller, by any amortized premium and by
previously recognized losses.
Except as described above with respect to market discount, and except as
provided in this paragraph, any gain or loss on the sale or exchange of a
Regular Certificate realized by an investor who holds the Regular Certificate
as a capital asset will be capital gain or loss and will be long-term or
short-term depending on whether the Regular Certificate has been held for the
long-term capital gain holding period (currently more than one year). Such gain
will be treated as ordinary income (i) if a Regular Certificate is held as part
of a "conversion transaction" as defined in Code Section 1258(c), up to the
amount of interest that would have accrued on the Regular Certificateholder's
net investment in the conversion transaction at 120% of the appropriate
applicable Federal rate under Code Section 1274(d) in effect at the time the
taxpayer entered into the transaction minus any amount previously treated as
ordinary income with respect to any prior distribution of property that was
held as a part of such transaction, (ii) in the case of a non-corporate
taxpayer, to the extent such taxpayer has made an election under Code Section
163(d)(4) to have net capital gains taxed as investment income at ordinary
rates, or (iii) to the extent that such gain does not exceed the excess, if
any, of (a) the amount that would have been includible in the gross income of
the holder if its yield on such Regular Certificate were 110% of the applicable
Federal rate as of the date of purchase, over (b) the amount of income actually
includible in the gross income of such holder with respect to the Regular
Certificate. In addition, gain or loss recognized from the sale of a Regular
Certificate by certain banks or thrift institutions will be treated as ordinary
income or loss pursuant to Code Section 582(c). Capital gains of certain
non-corporate taxpayers are subject to a lower maximum tax rate (28%) than
ordinary income of such taxpayers (39.6%), and still a lower maximum rate (20%)
for property held for more than 18 months. The maximum tax rate for
corporations is the same with respect to both ordinary income and capital
gains.
Treatment of Losses
Holders of Regular Certificates will be required to report income with
respect to Regular Certificates on the accrual method of accounting, without
giving effect to delays or reductions in distributions attributable to defaults
or delinquencies on the Mortgage Loans allocable to a particular class of
Regular Certificates, except to the extent it can be established that such
losses are uncollectible. Accordingly, the holder of a Regular Certificate may
have income, or may incur a diminution in cash flow as a result of a default or
delinquency, but may not be able to take a deduction (subject to the discussion
below) for the corresponding loss until a subsequent taxable year. In this
regard, investors are cautioned that while they may generally cease to accrue
interest income if it reasonably appears that the interest will be
uncollectible, the Internal Revenue Service may take the position that original
issue discount must
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continue to be accrued in spite of its uncollectibility until the debt
instrument is disposed of in a taxable transaction or becomes worthless in
accordance with the rules of Code Section 166. To the extent the rules of Code
Section 166 regarding bad debts are applicable, it appears that holders of
Regular Certificates that are corporations or that otherwise hold the Regular
Certificates in connection with a trade or business should in general be
allowed to deduct as an ordinary loss any such loss sustained during the
taxable year on account of any such Regular Certificates becoming wholly or
partially worthless, and that, in general, holders of Regular Certificates that
are not corporations and do not hold the Regular Certificates in connection
with a trade or business will be allowed to deduct as a short-term capital loss
any loss with respect to principal sustained during the taxable year on account
of a portion of any class or subclass of such Regular Certificates becoming
wholly worthless. Although the matter is not free from doubt, non-corporate
holders of Regular Certificates should be allowed a bad debt deduction at such
time as the principal balance of any class or subclass of such Regular
Certificates is reduced to reflect losses resulting from any liquidated
Mortgage Loans. The Service, however, could take the position that
non-corporate holders will be allowed a bad debt deduction to reflect such
losses only after all Mortgage Loans remaining in the Trust Fund have been
liquidated or such class of Regular Certificates has been otherwise retired.
The Service could also assert that losses on the Regular Certificates are
deductible based on some other method that may defer such deductions for all
holders, such as reducing future cash flow for purposes of computing original
issue discount. This may have the effect of creating "negative" original issue
discount which would be deductible only against future positive original issue
discount or otherwise upon termination of the Class. Holders of Regular
Certificates are urged to consult their own tax advisors regarding the
appropriate timing, amount and character of any loss sustained with respect to
such Regular Certificates. While losses attributable to interest previously
reported as income should be deductible as ordinary losses by both corporate
and non-corporate holders, the Internal Revenue Service may take the position
that losses attributable to accrued original issue discount may only be
deducted as short-term capital losses by non-corporate holders not engaged in a
trade or business. Special loss rules are applicable to banks and thrift
institutions, including rules regarding reserves for bad debts. Such taxpayers
are advised to consult their tax advisors regarding the treatment of losses on
Regular Certificates.
TAXATION OF RESIDUAL CERTIFICATES
Taxation of REMIC Income
Generally, the "daily portions" of REMIC taxable income or net loss will
be includible as ordinary income or loss in determining the federal taxable
income of holders of Residual Certificates ("Residual Certificateholders"), and
will not be taxed separately to the REMIC Pool. The daily portions of REMIC
taxable income or net loss of a Residual Certificateholder are determined by
allocating the REMIC Pool's taxable income or net loss for each calendar
quarter ratably to each day in such quarter and by allocating such daily
portion among the Residual Certificateholders in proportion to their respective
holdings of Residual Certificates in the REMIC Pool on such day. REMIC taxable
income is generally determined in the same manner as the taxable income of an
individual using the accrual method of accounting, except that (i) the
limitations on deductibility of investment interest expense and expenses for
the production of income do not apply, (ii) all bad loans will be deductible as
business bad debts and (iii) the limitation on the deductibility of interest
and expenses related to tax-exempt income will apply. The REMIC Pool's gross
income includes interest, original issue discount income and market discount
income, if any, on the Mortgage Loans, reduced by amortization of any premium
on the Mortgage Loans, plus income from amortization of issue premium, if any,
on the Regular Certificates, plus income on reinvestment of cash flows and
reserve assets, plus any cancellation of indebtedness income upon allocation of
realized losses to the Regular Certificates. The REMIC Pool's deductions
include interest and original issue discount expense on the Regular
Certificates, servicing fees on the Mortgage Loans, other administrative
expenses of the REMIC Pool and realized losses on the Mortgage Loans. The
requirement that Residual Certificateholders report their pro rata share of
taxable income or net loss of the REMIC Pool will continue until there are no
Certificates of any class of the related series outstanding.
The taxable income recognized by a Residual Certificateholder in any
taxable year will be affected by, among other factors, the relationship between
the timing of recognition of interest and original issue
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discount or market discount income or amortization of premium with respect to
the Mortgage Loans, on the one hand, and the timing of deductions for interest
(including original issue discount) on the Regular Certificates or income from
amortization of issue premium on the Regular Certificates, on the other hand.
In the event that an interest in the Mortgage Loans is acquired by the REMIC
Pool at a discount, and one or more of such Mortgage Loans is prepaid, the
Residual Certificateholder may recognize taxable income without being entitled
to receive a corresponding amount of cash because (i) the prepayment may be
used in whole or in part to make distributions in reduction of principal on the
Regular Certificates and (ii) the discount on the Mortgage Loans which is
includible in income may exceed the deduction allowed upon such distributions
on those Regular Certificates on account of any unaccrued original issue
discount relating to those Regular Certificates. When there is more than one
class of Regular Certificates that distribute principal sequentially, this
mismatching of income and deductions is particularly likely to occur in the
early years following issuance of the Regular Certificates when distributions
in reduction of principal are being made in respect of earlier classes of
Regular Certificates to the extent that such classes are not issued with
substantial discount. If taxable income attributable to such a mismatching is
realized, in general, losses would be allowed in later years as distributions
on the later classes of Regular Certificates are made. Taxable income may also
be greater in earlier years than in later years as a result of the fact that
interest expense deductions, expressed as a percentage of the outstanding
principal amount of such a series of Regular Certificates, may increase over
time as distributions in reduction of principal are made on the lower yielding
classes of Regular Certificates, whereas to the extent that the REMIC Pool
includes fixed rate Mortgage Loans, interest income with respect to any given
Mortgage Loan will remain constant over time as a percentage of the outstanding
principal amount of that loan. Consequently, Residual Certificateholders must
have sufficient other sources of cash to pay any federal, state or local income
taxes due as a result of such mismatching or unrelated deductions against which
to offset such income, subject to the discussion of "excess inclusions" below
under "Limitations on Offset or Exemption of REMIC Income." The timing of such
mismatching of income and deductions described in this paragraph, if present
with respect to a series of Certificates, may have a significant adverse effect
upon the Residual Certificateholder's after-tax rate of return. In addition, a
Residual Certificateholder's taxable income during certain periods may exceed
the income reflected by such Residual Certificateholder for such periods in
accordance with generally accepted accounting principles. Investors should
consult their own accountants concerning the accounting treatment of their
investment in Residual Certificates.
Basis and Losses
The amount of any net loss of the REMIC Pool that may be taken into
account by the Residual Certificateholder is limited to the adjusted basis of
the Residual Certificate as of the close of the quarter (or time of disposition
of the Residual Certificate if earlier), determined without taking into account
the net loss for the quarter. The initial adjusted basis of a purchaser of a
Residual Certificate is the amount paid for such Residual Certificate. Such
adjusted basis will be increased by the amount of taxable income of the REMIC
Pool reportable by the Residual Certificateholder and will be decreased (but
not below zero), first, by a cash distribution from the REMIC Pool and, second,
by the amount of loss of the REMIC Pool reportable by the Residual
Certificateholder. Any loss that is disallowed on account of this limitation
may be carried over indefinitely with respect to the Residual Certificateholder
as to whom such loss was disallowed and may be used by such Residual
Certificateholder only to offset any income generated by the same REMIC Pool.
A Residual Certificateholder will not be permitted to amortize directly
the cost of its Residual Certificate as an offset to its share of the taxable
income of the related REMIC Pool. However, that taxable income will not include
cash received by the REMIC Pool that represents a recovery of the REMIC Pool's
basis in its assets. Such recovery of basis by the REMIC Pool will have the
effect of amortization of the issue price of the Residual Certificates over
their life. However, in view of the possible acceleration of the income of
Residual Certificateholders described above under "Taxation of REMIC Income",
the period of time over which such issue price is effectively amortized may be
longer than the economic life of the Residual Certificates.
A Residual Certificate may have a negative value if the net present value
of anticipated tax liabilities exceeds the present value of anticipated cash
flows. The REMIC Regulations appear to treat the issue
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price of such a residual interest as zero rather than such negative amount for
purposes of determining the REMIC Pool's basis in its assets. The preamble to
the REMIC Regulations states that the Service may provide future guidance on
the proper tax treatment of payments made by a transferor of such a residual
interest to induce the transferee to acquire the interest, and Residual
Certificateholders should consult their own tax advisors in this regard.
Further, to the extent that the initial adjusted basis of a Residual
Certificateholder (other than an original holder) in the Residual Certificate
is greater that the corresponding portion of the REMIC Pool's basis in the
Mortgage Loans, the Residual Certificateholder will not recover a portion of
such basis until termination of the REMIC Pool unless future Treasury
regulations provide for periodic adjustments to the REMIC income otherwise
reportable by such holder. The REMIC Regulations currently in effect do not so
provide. See "Treatment of Certain Items of REMIC Income and Expense--Market
Discount" below regarding the basis of Mortgage Loans to the REMIC Pool and
"Sale or Exchange of a Residual Certificate" below regarding possible treatment
of a loss upon termination of the REMIC Pool as a capital loss.
Treatment of Certain Items of REMIC Income and Expense
Although the Depositor intends to compute REMIC income and expense in
accordance with the Code and applicable regulations, the authorities regarding
the determination of specific items of income and expense are subject to
differing interpretations. The Depositor makes no representation as to the
specific method that it will use for reporting income with respect to the
Mortgage Loans and expenses with respect to the Regular Certificates, and
different methods could result in different timing of reporting of taxable
income or net loss to Residual Certificateholders or differences in capital
gain versus ordinary income.
Original Issue Discount and Premium. Generally, the REMIC Pool's
deductions for original issue discount and income from amortization of issue
premium will be determined in the same manner as original issue discount income
on Regular Certificates as described above under "Taxation of Regular
Certificates--Original Issue Discount" and "--Variable Rate Regular
Certificates," without regard to the de minimis rule described therein, and
"--Acquisition Premium."
Deferred Interest. Any deferred interest that accrues with respect to any
adjustable rate Mortgage Loans held by the REMIC Pool will constitute income to
the REMIC Pool and will be treated in a manner similar to the deferred interest
that accrues with respect to Regular Certificates as described above under
"Taxation of Regular Certificates--Deferred Interest".
Market Discount. The REMIC Pool will have market discount income in
respect of Mortgage Loans if, in general, the basis of the REMIC Pool allocable
to such Mortgage Loans is exceeded by their unpaid principal balances. The
REMIC Pool's basis in such Mortgage Loans is generally the fair market value of
the Mortgage Loans immediately after the transfer thereof to the REMIC Pool.
The REMIC Regulations provide that such basis is equal in the aggregate to the
issue prices of all regular and residual interests in the REMIC Pool (or the
fair market value thereof at the Closing Date, in the case of a retained
Class). In respect of Mortgage Loans that have market discount to which Code
Section 1276 applies, the accrued portion of such market discount would be
recognized currently as an item of ordinary income in a manner similar to
original issue discount. Market discount income generally should accrue in the
manner described above under "Taxation of Regular Certificates--Market
Discount".
Premium. Generally, if the basis of the REMIC Pool in the Mortgage Loans
exceeds the unpaid principal balances thereof, the REMIC Pool will be
considered to have acquired such Mortgage Loans at a premium equal to the
amount of such excess. As stated above, the REMIC Pool's basis in Mortgage
Loans is the fair market value of the Mortgage Loans, based on the aggregate of
the issue prices (or the fair market value of retained Classes) of the regular
and residual interests in the REMIC Pool immediately after the transfer thereof
to the REMIC Pool. In a manner analogous to the discussion above under
"Taxation of Regular Certificates--Premium", a REMIC Pool that holds a Mortgage
Loan as a capital asset under Code Section 1221 may elect under Code Section
171 to amortize premium on whole mortgage loans or mortgage loans underlying
mortgage backed securities ("MBS") that were originated
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after September 27, 1985 or MBS that are REMIC regular interests under the
constant yield method. Amortizable bond premium will be treated as an offset to
interest income on the Mortgage Loans, rather than as a separate deduction
item. To the extent that the mortgagors with respect to the Mortgage Loans are
individuals, Code Section 171 will not be available for premium on Mortgage
Loans (including underlying mortgage loans) originated on or prior to September
27, 1985. Premium with respect to such Mortgage Loans may be deductible in
accordance with a reasonable method regularly employed by the holder thereof.
The allocation of such premium pro rata among principal payments should be
considered a reasonable method; however, the Service may argue that such
premium should be allocated in a different manner, such as allocating such
premium entirely to the final payment of principal.
Limitations on Offset or Exemption of REMIC Income
A portion or all of the REMIC taxable income includible in determining the
federal income tax liability of a Residual Certificateholder will be subject to
special treatment. That portion, referred to as the "excess inclusion", is
equal to the excess of REMIC taxable income for the calendar quarter allocable
to a Residual Certificate over the daily accruals for such quarterly period of
(i) 120% of the long-term applicable Federal rate that would have applied to
the Residual Certificate (if it were a debt instrument) on the Startup Day
under Code Section 1274(d), multiplied by (ii) the adjusted issue price of such
Residual Certificate at the beginning of such quarterly period. For this
purpose, the adjusted issue price of a Residual Certificate at the beginning of
a quarter is the issue price of the Residual Certificate, plus the amount of
such daily accruals of REMIC income described in this paragraph for all prior
quarters, decreased by any distributions made with respect to such Residual
Certificate prior to the beginning of such quarterly period. Accordingly, the
portion of the REMIC Pool's taxable income that will be treated as excess
inclusions will be a larger portion of such income as the adjusted issue price
of the Residual Certificates diminishes.
The portion of a Residual Certificateholder's REMIC taxable income
consisting of the excess inclusions generally may not be offset by other
deductions, including net operating loss carry forwards, on such Residual
Certificateholder's return. However, net operating loss carryovers are
determined without regard to excess inclusion income. Further, if the Residual
Certificateholder is an organization subject to the tax on unrelated business
income imposed by Code Section 511, the Residual Certificateholder's excess
inclusions will be treated as unrelated business taxable income of such
Residual Certificateholder for purposes of Code Section 511. In addition, REMIC
taxable income is subject to 30% withholding tax with respect to certain
persons who are not U.S. Persons (as defined below under "Tax-Related
Restrictions on Transfer of Residual Certificates--Foreign Investors"), and the
portion thereof attributable to excess inclusions is not eligible for any
reduction in the rate of withholding tax (by treaty or otherwise). See
"Taxation of Certain Foreign Investors--Residual Certificates" below. Finally,
if a real estate investment trust or a regulated investment company owns a
Residual Certificate, a portion (allocated under Treasury regulations yet to be
issued) of dividends paid by the real estate investment trust or a regulated
investment company could not be offset by net operating losses of its
shareholders, would constitute unrelated business taxable income for tax-exempt
shareholders, and would be ineligible for reduction of withholding to certain
persons who are not U.S. Persons. The SBJPA of 1996 has eliminated the special
rule permitting Section 593 institutions ("thrift institutions") to use net
operating losses and other allowable deductions to offset their excess
inclusion income from Residual Certificates that have "significant value"
within the meaning of the REMIC Regulations, effective for taxable years
beginning after December 31, 1995, except with respect to Residual Certificates
continuously held by thrift institutions since November 1, 1995.
In addition, the SBJPA of 1996 provides three rules for determining the
effect of excess inclusions on the alternative minimum taxable income of a
Residual Certificateholder. First, alternative minimum taxable income for a
Residual Certificateholder is determined without regard to the special rule,
discussed above, that taxable income cannot be less than excess inclusions.
Second, a Residual Certificateholder's alternative minimum taxable income for a
taxable year cannot be less than the excess inclusions for the year. Third, the
amount of any alternative minimum tax net operating loss deduction must be
computed without regard to any excess inclusions. These rules are effective for
taxable years beginning after December 31, 1996, unless a Residual
Certificateholder elects to have such rules apply only to taxable years
beginning after August 20, 1996.
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Tax-Related Restrictions on Transfer of Residual Certificates
Disqualified Organizations. If any legal or beneficial interest in a
Residual Certificate is transferred to a Disqualified Organization (as defined
below) other than in connection with the formation of a REMIC Pool, if the
Disqualified organization is required, pursuant to a binding contract, to sell
such Residual Certificate, which sale occurs within seven days after the
Startup Day, a tax would be imposed in an amount equal to the product of (i)
the present value of the total anticipated excess inclusions with respect to
such Residual Certificate for periods after the transfer and (ii) the highest
marginal federal income tax rate applicable to corporations. The REMIC
Regulations provide that the anticipated excess inclusions are based on actual
prepayment experience to the date of the transfer and projected payments based
on the Prepayment Assumption. The present value rate equals the applicable
Federal rate under Code Section 1274(d) as of the date of the transfer for a
term ending with the last calendar quarter in which excess inclusions are
expected to accrue. Such a tax generally would be imposed on the transferor of
the Residual Certificate, except that where such transfer is through an agent
(including a broker, nominee or other middleman) for a Disqualified
Organization, the tax would instead be imposed on such agent. However, a
transferor of a Residual Certificate would in no event be liable for such tax
with respect to a transfer if the transferee furnishes to the transferor an
affidavit that the transferee is not a Disqualified Organization and, as of the
time of the transfer, the transferor does not have actual knowledge that such
affidavit is false. The tax also may be waived by the Treasury Department if
the Disqualified Organization promptly disposes of the residual interest and
the transferor pays income tax at the highest corporate rate on the excess
inclusions for the period the Residual Certificate is actually held by the
Disqualified Organization.
In addition, if a "Pass-Through Entity" (as defined below) has excess
inclusion income with respect to a Residual Certificate during a taxable year
and a Disqualified Organization is the record holder of an equity interest in
such entity, then a tax is imposed on such entity equal to the product of (i)
the amount of excess inclusions on the Residual Certificate that are allocable
to the interest in the Pass-Through Entity during the period such interest is
held by such Disqualified Organization, and (ii) the highest marginal federal
corporate income tax rate. Such tax would be deductible from the ordinary gross
income of the Pass-Through Entity for the taxable year. The Pass-Through Entity
would not be liable for such tax if it has received an affidavit from such
record holder that it is not a Disqualified Organization or stating such
holder's taxpayer identification number and, during the period such person is
the record holder of the Residual Certificate, the Pass-Through Entity does not
have actual knowledge that such affidavit is false.
For these purposes, (i) "Disqualified Organization" means the United
States, any state or political subdivision thereof, any foreign government, any
international organization, any agency or instrumentality of any of the
foregoing (provided, that such term does not include an instrumentality if all
of its activities are subject to tax and, except in the case of the Federal
Home Loan Mortgage Corporation, a majority of its board of directors is not
selected by any such governmental entity), any cooperative organization
furnishing electric energy or providing telephone service to persons in rural
areas as described in Code Section 1381(a)(2)(C), and any organization (other
than a farmers' cooperative described in Code Section 521) that is exempt from
taxation under the Code unless such organization is subject to the tax on
unrelated business income imposed by Code Section 511, and (ii) "Pass-Through
Entity" means any regulated investment company, real estate investment trust,
common trust fund, partnership, trust or estate and certain corporations
operating on a cooperative basis. Except as may be provided in Treasury
regulations, any person holding an interest in a Pass-Through Entity as a
nominee for another will, with respect to such interest, be treated as a
Pass-Through Entity.
The Pooling Agreement with respect to a series of Certificates will
provide that no legal or beneficial interest in a Residual Certificate may be
transferred unless (i) the proposed transferee provides to the transferor and
the Trustee an affidavit providing its taxpayer identification number and
stating that such transferee is the beneficial owner of the Residual
Certificate, is not a Disqualified Organization and is not purchasing such
Residual Certificates on behalf of a Disqualified Organization (i.e., as a
broker, nominee or middleman thereof), and (ii) the transferor provides a
statement in writing to the Depositor and the Trustee that it has no actual
knowledge that such affidavit is false. Moreover, the Pooling Agreement will
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provide that any attempted or purported transfer in violation of these transfer
restrictions will be null and void and will vest no rights in any purported
transferee. Each Residual Certificate with respect to a series will bear a
legend referring to such restrictions on transfer, and each Residual
Certificateholder will be deemed to have agreed, as a condition of ownership
thereof, to any amendments to the related Pooling Agreement required under the
Code or applicable Treasury regulations to effectuate the foregoing
restrictions. Information necessary to compute an applicable excise tax must be
furnished to the Service and to the requesting party within 60 days of the
request, and the Depositor or the Trustee may charge a fee for computing and
providing such information.
Noneconomic Residual Interests. The REMIC Regulations would disregard
certain transfers of Residual Certificates, in which case the transferor would
continue to be treated as the owner of the Residual Certificates and thus would
continue to be subject to tax on its allocable portion of the net income of the
REMIC Pool. Under the REMIC Regulations, a transfer of a "noneconomic residual
interest" (as defined below) to a Residual Certificateholder (other than a
Residual Certificateholder who is not a U.S. Person, as defined below under
"Foreign Investors") is disregarded for all federal income tax purposes if a
significant purpose of the transferor is to impede the assessment or collection
of tax. A residual interest in a REMIC (including a residual interest with a
positive value at issuance) is a "noneconomic residual interest" unless, at the
time of the transfer, (i) the present value of the expected future
distributions on the residual interest at least equals the product of the
present value of the anticipated excess inclusions and the highest corporate
income tax rate in effect for the year in which the transfer occurs, and (ii)
the transferor reasonably expects that the transferee will receive
distributions from the REMIC at or after the time at which taxes accrue on the
anticipated excess inclusions in an amount sufficient to satisfy the accrued
taxes. The anticipated excess inclusions and the present value rate are
determined in the same manner as set forth above under "Disqualified
Organizations". The REMIC Regulations explain that a significant purpose to
impede the assessment or collection of tax exists if the transferor, at the
time of the transfer, either knew or should have known that the transferee
would be unwilling or unable to pay taxes due on its share of the taxable
income of the REMIC. A safe harbor is provided if (i) the transferor conducted,
at the time of the transfer, a reasonable investigation of the financial
condition of the transferee and found that the transferee historically had paid
its debts as they came due and found no significant evidence to indicate that
the transferee would not continue to pay its debts as they came due in the
future, and (ii) the transferee represents to the transferor that it
understands that, as the holder of the noneconomic residual interest, the
transferee may incur tax liabilities in excess of cash flows generated by the
interest and that the transferee intends to pay taxes associated with holding
the residual interest as they become due. The Pooling Agreement with respect to
each series of Certificates will require the transferee of a Residual
Certificate to certify to the matters in the preceding sentence as part of the
affidavit described above under the heading "Disqualified Organizations". The
transferor must have no actual knowledge or reason to know that such statements
are false.
Foreign Investors. The REMIC Regulations provide that the transfer of a
Residual Certificate that has "tax avoidance potential" to a "foreign person"
will be disregarded for all federal tax purposes. This rule appears intended to
apply to a transferee who is not a "U.S. Person" (as defined below), unless
such transferee's income is effectively connected with the conduct of a trade
or business within the United States or not otherwise subject to a withholding
tax. A Residual Certificate is deemed to have tax avoidance potential unless,
at the time of the transfer, (i) the future value of expected distributions
equals at least 30% of the anticipated excess inclusions after the transfer,
and (ii) the transferor reasonably expects that the transferee will receive
sufficient distributions from the REMIC Pool at or after the time at which the
excess inclusions accrue and prior to the end of the next succeeding taxable
year for the accumulated withholding tax liability to be paid. If the non-U.S.
Person transfers the Residual Certificate back to a U.S. Person, the transfer
will be disregarded and the foreign transferor will continue to be treated as
the owner unless arrangements are made so that the transfer does not have the
effect of allowing the transferor to avoid tax on accrued excess inclusions.
The Prospectus Supplement relating to a series of Certificates may provide
that a Residual Certificate may not be purchased by or transferred to any
person that is not a U.S. Person or may describe the circumstances and
restrictions pursuant to which such a transfer may be made. The term "U.S.
Person"
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means a citizen or resident of the United States, a corporation, partnership or
other entity created or organized in or under the laws of the United States or
any State, an estate that is subject to United States federal income tax
regardless of the source of its income or a trust if (A) for taxable years
beginning after December 31, 1996 (or for taxable years ending after August 20,
1996, if the trustee has made an applicable election), a court within the
United States is able to exercise primary supervision over the administration
of such trust, and one or more United States persons have the authority to
control all substantial decisions of such trust, or (B) for all other taxable
years, such trust is subject to United States federal income tax regardless of
the source of its income (or, to the extent provided in applicable Treasury
Regulations, certain trusts in existence on August 20, 1996 which are eligible
to elect to be treated as U.S. Persons).
Sale or Exchange of a Residual Certificate
Upon the sale or exchange of a Residual Certificate, the Residual
Certificateholder will recognize gain or loss equal to the excess, if any, of
the amount realized over the adjusted basis (as described above under "Taxation
of Residual Certificates--Basis and Losses") of such Residual Certificateholder
in such Residual Certificate at the time of the sale or exchange. In addition
to reporting the taxable income of the REMIC Pool, a Residual Certificateholder
will have taxable income to the extent that any cash distribution to it from
the REMIC Pool exceeds such adjusted basis on that Distribution Date. Such
income will be treated as gain from the sale or exchange of the Residual
Certificate. It is possible that the termination of the REMIC Pool may be
treated as a sale or exchange of a Residual Certificateholder's Residual
Certificate, in which case, if the Residual Certificateholder has an adjusted
basis in such Residual Certificateholder's Residual Certificate remaining when
its interest in the REMIC Pool terminates, and if such Residual
Certificateholder holds such Residual Certificate as a capital asset under Code
Section 1221, then such Residual Certificateholder will recognize a capital
loss at that time in the amount of such remaining adjusted basis.
Any gain on the sale of a Residual Certificate will be treated as ordinary
income (i) if a Residual Certificate is held as part of a "conversion
transaction" as defined in Code Section 1258(c), up to the amount of interest
that would have accrued on the Residual Certificateholder's net investment in
the conversion transaction at 120% of the appropriate applicable Federal rate
in effect at the time the taxpayer entered into the transaction minus any
amount previously treated as ordinary income with respect to any prior
disposition of property that was held as a part of such transaction or (ii) in
the case of a non-corporate taxpayer, to the extent such taxpayer has made an
election under Code Section 163(d)(4) to have net capital gains taxed as
investment income at ordinary income rates. In addition, gain or loss
recognized from the sale of a Residual Certificate by certain banks or thrift
institutions will be treated as ordinary income or loss pursuant to Code
Section 582(c).
The Conference Committee Report to the 1986 Act provides that, except as
provided in Treasury regulations yet to be issued, the wash sale rules of Code
Section 1091 will apply to dispositions of Residual Certificates where the
seller of the Residual Certificate, during the period beginning six months
before the sale or disposition of the Residual Certificate and ending six
months after such sale or disposition, acquires (or enters into any other
transaction that results in the application of Section 1091) any residual
interest in any REMIC or any interest in a "taxable mortgage pool" (such as a
non-REMIC owner trust) that is economically comparable to a Residual
Certificate.
Mark to Market Regulations
The Service has issued regulations (the "Mark to Market Regulations")
under Code Section 475 relating to the requirement that a securities dealer
mark to market securities held for sale to customers. This mark-to-market
requirement applies to all securities of a dealer, except to the extent that
the dealer has specifically identified a security as held for investment. The
Mark to Market Regulations provide that, for purposes of this mark-to-market
requirement, a Residual Certificate is not treated as a security and thus may
not be marked to market. The Mark to Market Regulations apply to all Residual
Certificates acquired on or after January 4, 1995.
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TAXES THAT MAY BE IMPOSED ON THE REMIC POOL
Prohibited Transactions
Income from certain transactions by the REMIC Pool, called prohibited
transactions, will not be part of the calculation of income or loss includible
in the federal income tax returns of Residual Certificateholders, but rather
will be taxed directly to the REMIC Pool at a 100% rate. Prohibited
transactions generally include (i) the disposition of a qualified mortgage
other than pursuant to a (a) substitution within two years of the Startup Day
for a defective (including a defaulted) obligation (or repurchase in lieu of
substitution of a defective (including a defaulted) obligation at any time) or
for any qualified mortgage within three months of the Startup Day, (b)
foreclosure, default or imminent default of a qualified mortgage, (c)
bankruptcy or insolvency of the REMIC Pool or (d) qualified (complete)
liquidation, (ii) the receipt of income from assets that are not the type of
mortgages or investments that the REMIC Pool is permitted to hold, (iii) the
receipt of compensation for services or (iv) the receipt of gain from
disposition of cash flow investments other than pursuant to a qualified
liquidation. Notwithstanding (i) and (iv), it is not a prohibited transaction
to sell REMIC Pool property to prevent a default on Regular Certificates as a
result of a default on qualified mortgages or to facilitate a clean-up call
(generally, an optional termination to save administrative costs when no more
than a small percentage of the Certificates is outstanding). The REMIC
Regulations indicate that the modification of a Mortgage Loan generally will
not be treated as a disposition if it is occasioned by a default or reasonably
foreseeable default, an assumption of the Mortgage Loan, the waiver of a
due-on-sale or due-on-encumbrance clause or the conversion of an interest rate
by a mortgagor pursuant to the terms of a convertible adjustable rate Mortgage
Loan.
Contributions to the REMIC Pool After the Startup Day
In general, the REMIC Pool will be subject to a tax at a 100% rate on the
value of any property contributed to the REMIC Pool after the Startup Day.
Exceptions are provided for cash contributions to the REMIC Pool (i) during the
three months following the Startup Day, (ii) made to a qualified reserve fund
by a Residual Certificateholder, (iii) in the nature of a guarantee, (iv) made
to facilitate a qualified liquidation or clean-up call and (v) as otherwise
permitted in Treasury regulations yet to be issued.
Net Income from Foreclosure Property
The REMIC Pool will be subject to federal income tax at the highest
corporate rate on "net income from foreclosure property", determined by
reference to the rules applicable to real estate investment trusts. Generally,
property acquired by deed in lieu of foreclosure would be treated as
"foreclosure property" for a period of two years, with possible extensions of
up to an additional four years. Net income from foreclosure property generally
means gain from the sale of a foreclosure property that is inventory property
and gross income from foreclosure property other than qualifying rents and
other qualifying income for a real estate investment trust.
It is not anticipated that the REMIC Pool will receive income or
contributions subject to tax under the preceding three paragraphs, except as
described in the applicable Prospectus Supplement with respect to net income
from foreclosure property on a commercial or multifamily residential property
that secured a Mortgage Loan. In addition, unless otherwise disclosed in the
applicable Prospectus Supplement, it is not anticipated that any material state
income or franchise tax will be imposed on a REMIC Pool.
LIQUIDATION OF THE REMIC POOL
If a REMIC Pool adopts a plan of complete liquidation, within the meaning
of Code Section 860F(a)(4)(A)(i), which may be accomplished by designating in
the REMIC Pool's final tax return a date on which such adoption is deemed to
occur, and sells all of its assets (other than cash) within a 90-day period
beginning on the date of the adoption of the plan of liquidation, the REMIC
Pool will not be subject to the prohibited transaction rules on the sale of its
assets, provided that the REMIC Pool credits or distributes in liquidation all
of the sale proceeds plus its cash (other than amounts retained to meet claims)
to holders of Regular Certificates and Residual Certificateholders within the
90-day period.
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ADMINISTRATIVE MATTERS
The REMIC Pool will be required to maintain its books on a calendar year
basis and to file federal income tax returns for federal income tax purposes in
a manner similar to a partnership. The form for such income tax return is Form
1066, U.S. Real Estate Mortgage Investment Conduit Income Tax Return. The
Trustee will be required to sign the REMIC Pool's returns. Treasury regulations
provide that, except where there is a single Residual Certificateholder for an
entire taxable year, the REMIC Pool will be subject to the procedural and
administrative rules of the Code applicable to partnerships, including the
determination by the Service of any adjustments to, among other things, items
of REMIC income, gain, loss, deduction or credit in a unified administrative
proceeding. The Residual Certificateholder owning the largest percentage
interest in the Residual Certificates will be obligated to act as "tax matters
person", as defined in applicable Treasury regulations, with respect to the
REMIC Pool. Each Residual Certificateholder will be deemed, by acceptance of
such Residual Certificates, to have agreed (i) to the appointment of the tax
matters person as provided in the preceding sentence and (ii) to the
irrevocable designation of the Master Servicer as agent for performing the
functions of the tax matters person.
LIMITATIONS ON DEDUCTION OF CERTAIN EXPENSES
An investor who is an individual, estate or trust will be subject to
limitation with respect to certain itemized deductions described in Code
Section 67, to the extent that such itemized deductions, in the aggregate, do
not exceed 2% of the investor's adjusted gross income. In addition, Code
Section 68 provides that itemized deductions otherwise allowable for a taxable
year of an individual taxpayer will be reduced by the lesser of (i) 3% of the
excess, if any, of adjusted gross income over $124,500 for the taxable year
beginning in 1998 ($62,250 in the case of a married individual filing a
separate return) (subject to adjustments for inflation in subsequent years) or
(ii) 80% of the amount of itemized deductions otherwise allowable for such
year. In the case of a REMIC Pool, such deductions may include deductions under
Code Section 212 for the servicing fee and all administrative and other
expenses relating to the REMIC Pool, or any similar expenses allocated to the
REMIC Pool with respect to a regular interest it holds in another REMIC. Such
investors who hold REMIC Certificates either directly or indirectly through
certain pass-through entities may have their pro rata share of such expenses
allocated to them as additional gross income, but may be subject to such
limitation on deductions. In addition, such expenses are not deductible at all
for purposes of computing the alternative minimum tax, and may cause such
investors to be subject to significant additional tax liability. Temporary
Treasury regulations provide that the additional gross income and corresponding
amount of expenses generally are to be allocated entirely to the holders of
Residual Certificates in the case of a REMIC Pool that would not qualify as a
fixed investment trust in the absence of a REMIC election. However, such
additional gross income and limitation on deductions will apply to the
allocable portion of such expenses to holders of Regular Certificates, as well
as holders of Residual Certificates, where such Regular Certificates are issued
in a manner that is similar to pass-through certificates in a fixed investment
trust. In general, such allocable portion will be determined based on the ratio
that a REMIC Certificateholder's income, determined on a daily basis, bears to
the income of all holders of Regular Certificates and Residual Certificates
with respect to a REMIC Pool. As a result, individuals, estates or trusts
holding REMIC Certificates (either directly or indirectly through a grantor
trust, partnership, S corporation, REMIC, or certain other pass-through
entities described in the foregoing temporary Treasury regulations) may have
taxable income in excess of the interest income at the pass-through rate on
Regular Certificates that are issued in a single Class or otherwise
consistently with fixed investment trust status or in excess of cash
distributions for the related period on Residual Certificates. Unless otherwise
indicated in the applicable Prospectus Supplement, all such expenses will be
allocable to the Residual Certificates.
TAXATION OF CERTAIN FOREIGN INVESTORS
Regular Certificates
Interest, including original issue discount, distributable to Regular
Certificateholders who are non-resident aliens, foreign corporations, or other
Non-U.S. Persons (as defined below), will be considered "portfolio interest"
and, therefore, generally will not be subject to 30% United States
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withholding tax, provided that such Non-U.S. Person (i) is not a "10-percent
shareholder" within the meaning of Code Section 871(h)(3)(B) or a controlled
foreign corporation described in Code Section 881(c)(3)(C) and (ii) provides
the Trustee, or the person who would otherwise be required to withhold tax from
such distributions under Code Section 1441 or 1442, with an appropriate
statement, signed under penalties of perjury, identifying the beneficial owner
and stating, among other things, that the beneficial owner of the Regular
Certificate is a Non-U.S. Person. If such statement, or any other required
statement, is not provided, 30% withholding will apply unless reduced or
eliminated pursuant to an applicable tax treaty or unless the interest on the
Regular Certificate is effectively connected with the conduct of a trade or
business within the United States by such Non-U.S. Person. In the latter case,
such Non-U.S. Person will be subject to United States federal income tax at
regular rates. Prepayment Premiums distributable to Regular Certificateholders
who are Non-U.S. Persons may be subject to 30% United States withholding tax.
Investors who are Non-U.S. Persons should consult their own tax advisors
regarding the specific tax consequences to them of owning a Regular
Certificate. The term "Non-U.S. Person" means any person who is not a U.S.
Person.
Residual Certificates
The Conference Committee Report to the 1986 Act indicates that amounts
paid to Residual Certificateholders who are Non-U.S. Persons are treated as
interest for purposes of the 30% (or lower treaty rate) United States
withholding tax. Treasury regulations provide that amounts distributed to
Residual Certificateholders may qualify as "portfolio interest", subject to the
conditions described in "Regular Certificates" above, but only to the extent
that (i) the Mortgage Loans (including mortgage loans underlying MBS) were
issued after July 18, 1984 and (ii) the Trust Fund or segregated pool of assets
therein (as to which a separate REMIC election will be made), to which the
Residual Certificate relates, consists of obligations issued in "registered
form" within the meaning of Code Section 163(f)(1). Generally, whole mortgage
loans will not be, but MBS and regular interests in another REMIC Pool will be,
considered obligations issued in registered form. Furthermore, a Residual
Certificateholder will not be entitled to any exemption from the 30%
withholding tax (or lower treaty rate) to the extent of that portion of REMIC
taxable income that constitutes an "excess inclusion". See "Taxation of
Residual Certificates
- --Limitations on Offset or Exemption of REMIC Income". If the amounts paid to
Residual Certificateholders who are Non-U.S. Persons are effectively connected
with the conduct of a trade or business within the United States by such
Non-U.S. Persons, 30% (or lower treaty rate) withholding will not apply.
Instead, the amounts paid to such Non-U.S. Persons will be subject to United
States federal income tax at regular rates. If 30% (or lower treaty rate)
withholding is applicable, such amounts generally will be taken into account
for purposes of withholding only when paid or otherwise distributed (or when
the Residual Certificate is disposed of) under rules similar to withholding
upon disposition of debt instruments that have original issue discount. See
"Tax-Related Restrictions on Transfer of Residual Certificates--Foreign
Investors" above concerning the disregard of certain transfers having "tax
avoidance potential". Investors who are Non-U.S. Persons should consult their
own tax advisors regarding the specific tax consequences to them of owning
Residual Certificates.
BACKUP WITHHOLDING
Distributions made on the Regular Certificates, and proceeds from the sale
of the Regular Certificates to or through certain brokers, may be subject to a
"backup" withholding tax under Code Section 3406 of 31% on "reportable
payments" (including interest distributions, original issue discount, and,
under certain circumstances, principal distributions) unless the Regular
Certificateholder complies with certain reporting and/or certification
procedures, including the provision of its taxpayer identification number to
the Trustee, its agent or the broker who effected the sale of the Regular
Certificate, or such Certificateholder is otherwise an exempt recipient under
applicable provisions of the Code. Any amounts to be withheld from distribution
on the Regular Certificates would be refunded by the Service or allowed as a
credit against the Regular Certificateholder's federal income tax liability.
REPORTING REQUIREMENTS
Reports of accrued interest, original issue discount and information
necessary to compute the accrual of any market discount on the Regular
Certificates will be made annually to the Service and to individuals,
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estates, non-exempt and non-charitable trusts, and partnerships who are either
holders of record of Regular Certificates or beneficial owners who own Regular
Certificates through a broker or middleman as nominee. All brokers, nominees
and all other non-exempt holders of record of Regular Certificates (including
corporations, non-calendar year taxpayers, securities or commodities dealers,
real estate investment trusts, investment companies, common trust funds, thrift
institutions and charitable trusts) may request such information for any
calendar quarter by telephone or in writing by contacting the person designated
in Service Publication 938 with respect to a particular Series of Regular
Certificates. Holders through nominees must request such information from the
nominee.
The Service's Form 1066 has an accompanying Schedule Q, Quarterly Notice
to Residual Interest Holders of REMIC Taxable Income or Net Loss Allocation.
Treasury regulations require that Schedule Q be furnished by the REMIC Pool to
each Residual Certificateholder by the end of the month following the close of
each calendar quarter (41 days after the end of a quarter under proposed
Treasury regulations) in which the REMIC Pool is in existence.
Treasury regulations require that, in addition to the foregoing
requirements, information must be furnished quarterly to Residual
Certificateholders, furnished annually, if applicable, to holders of Regular
Certificates, and filed annually with the Service concerning Code Section 67
expenses (see "Limitations on Deduction of Certain Expenses" above) allocable
to such holders. Furthermore, under such regulations, information must be
furnished quarterly to Residual Certificateholders, furnished annually to
holders of Regular Certificates, and filed annually with the Service concerning
the percentage of the REMIC Pool's assets meeting the qualified asset tests
described above under "Status of REMIC Certificates".
FEDERAL INCOME TAX CONSEQUENCES FOR CERTIFICATES AS TO WHICH NO REMIC ELECTION
IS MADE
STANDARD CERTIFICATES
General
In the event that no election is made to treat a Trust Fund (or a
segregated pool of assets therein) with respect to a series of Certificates
that are not designated as "Stripped Certificates", as described below, as a
REMIC (Certificates of such a series hereinafter referred to as "Standard
Certificates"), the Trust Fund will be classified as a grantor trust under
subpart E, Part 1 of subchapter J of the Code and not as an association taxable
as a corporation or a "taxable mortgage pool" within the meaning of Code
Section 7701(i). Where there is no fixed retained yield with respect to the
Mortgage Loans underlying the Standard Certificates, the holder of each such
Standard Certificate (a "Standard Certificateholder") in such series will be
treated as the owner of a pro rata undivided interest in the ordinary income
and corpus portions of the Trust Fund represented by its Standard Certificate
and will be considered the beneficial owner of a pro rata undivided interest in
each of the Mortgage Loans, subject to the discussion below under
"Recharacterization of Servicing Fees". Accordingly, the holder of a Standard
Certificate of a particular series will be required to report on its federal
income tax return its pro rata share of the entire income from the Mortgage
Loans represented by its Standard Certificate, including interest at the coupon
rate on such Mortgage Loans, original issue discount (if any), prepayment fees,
assumption fees, and late payment charges received by the Master Servicer, in
accordance with such Standard Certificateholder's method of accounting. A
Standard Certificateholder generally will be able to deduct its share of the
servicing fee and all administrative and other expenses of the Trust Fund in
accordance with its method of accounting, provided that such amounts are
reasonable compensation for services rendered to that Trust Fund. However,
investors who are individuals, estates or trusts who own Standard Certificates,
either directly or indirectly through certain pass-through entities, will be
subject to limitation with respect to certain itemized deductions described in
Code Section 67, including deductions under Code Section 212 for the servicing
fee and all such administrative and other expenses of the Trust Fund, to the
extent that such deductions, in the aggregate, do not exceed two percent of an
investor's adjusted gross income. In addition, Code Section 68 provides that
itemized deductions otherwise allowable for a taxable year of an individual
taxpayer will be reduced by the lesser of (i) 3% of the excess, if any, of
adjusted gross income
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over $124,500 for the taxable year beginning in 1998 ($62,250 in the case of a
married individual filing a separate return) (subject to adjustments for
inflation in subsequent years), or (ii) 80% of the amount of itemized
deductions otherwise allowable for such year. As a result, such investors
holding Standard Certificates, directly or indirectly through a pass-through
entity, may have aggregate taxable income in excess of the aggregate amount of
cash received on such Standard Certificates with respect to interest at the
pass-through rate on such Standard Certificates. In addition, such expenses are
not deductible at all for purposes of computing the alternative minimum tax,
and may cause such investors to be subject to significant additional tax
liability. Moreover, where there is fixed retained yield with respect to the
Mortgage Loans underlying a series of Standard Certificates or where the
servicing fee is in excess of reasonable servicing compensation, the
transaction will be subject to the application of the "stripped bond" and
"stripped coupon" rules of the Code, as described below under "Stripped
Certificates" and "Recharacterization of Servicing Fees", respectively.
Tax Status
Standard Certificates will have the following status for federal income
tax purposes:
1. A Standard Certificate owned by a "domestic building and loan
association" within the meaning of Code Section 7701(a)(19) will be considered
to represent "loans secured by an interest in real property which is
residential real property" within the meaning of Code Section
7701(a)(19)(C)(v), provided that the real property securing the Mortgage Loans
represented by that Standard Certificate is of the type described in such
section of the Code.
2. A Standard Certificate owned by a real estate investment trust will be
considered to represent "real estate assets" within the meaning of Code Section
856(c)(4)(A) to the extent that the assets of the related Trust Fund consist of
qualified assets, and interest income on such assets will be considered
"interest on obligations secured by mortgages on real property" to such extent
within the meaning of Code Section 856(c)(3)(B).
3. A Standard Certificate owned by a REMIC will be considered to represent
an "obligation . . . which is principally secured by an interest in real
property" within the meaning of Code Section 860G(a)(3)(A) to the extent that
the assets of the related Trust Fund consist of "qualified mortgages" within
the meaning of Code Section 860G(a)(3).
Premium and Discount
Standard Certificateholders are advised to consult with their tax advisors
as to the federal income tax treatment of premium and discount arising either
upon initial acquisition of Standard Certificates or thereafter.
Premium. The treatment of premium incurred upon the purchase of a Standard
Certificate will be determined generally as described above under.
Original Issue Discount. The original issue discount rules will be
applicable to a Standard Certificateholder's interest in those Mortgage Loans
as to which the conditions for the application of those sections are met. Rules
regarding periodic inclusion of original issue discount income are applicable
to mortgages of corporations originated after May 27, 1969, mortgages of
noncorporate mortgagors (other than individuals) originated after July 1, 1982,
and mortgages of individuals originated after March 2, 1984. Under the OID
Regulations, such original issue discount could arise by the charging of points
by the originator of the mortgages in an amount greater than a statutory de
minimis exception, including a payment of points currently deductible by the
borrower under applicable Code provisions or, under certain circumstances, by
the presence of "teaser rates" on the Mortgage Loans.
Original issue discount must generally be reported as ordinary gross
income as it accrues under a constant interest method that takes into account
the compounding of interest, in advance of the cash attributable to such
income. Unless indicated otherwise in the applicable Prospectus Supplement, no
prepayment assumption will be assumed for purposes of such accrual. However,
Code Section 1272 provides for a reduction in the amount of original issue
discount includible in the income of a holder of
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an obligation that acquires the obligation after its initial issuance at a
price greater than the sum of the original issue price and the previously
accrued original issue discount, less prior payments of principal. Accordingly,
if such Mortgage Loans acquired by a Standard Certificateholder are purchased
at a price equal to the then unpaid principal amount of such Mortgage Loans, no
original issue discount attributable to the difference between the issue price
and the original principal amount of such Mortgage Loans (i.e., points) will be
includible by such holder.
Market Discount. Standard Certificateholders also will be subject to the
market discount rules to the extent that the conditions for application of
those sections are met. Market discount on the Mortgage Loans will be
determined and will be reported as ordinary income generally in the manner
described above under "Material Federal Income Tax Consequences for REMIC
Certificates--Taxation of Regular Certificates--Market Discount", except that
the ratable accrual methods described therein will not apply and it is unclear
whether a Prepayment Assumption would apply. Rather, the holder will accrue
market discount pro rata over the life of the Mortgage Loans, unless the
constant yield method is elected. Unless indicated otherwise in the applicable
Prospectus Supplement, no prepayment assumption will be assumed for purposes of
such accrual.
Recharacterization of Servicing Fees. If the servicing fee paid to the
Master Servicer were deemed to exceed reasonable servicing compensation, the
amount of such excess would represent neither income nor a deduction to
Certificateholders. In this regard, there are no authoritative guidelines for
federal income tax purposes as to either the maximum amount of servicing
compensation that may be considered reasonable in the context of this or
similar transactions or whether, in the case of the Standard Certificate, the
reasonableness of servicing compensation should be determined on a weighted
average or loan-by-loan basis. If a loan-by-loan basis is appropriate, the
likelihood that such amount would exceed reasonable servicing compensation as
to some of the Mortgage Loans would be increased. Service guidance indicates
that a servicing fee in excess of reasonable compensation ("excess servicing")
will cause the Mortgage Loans to be treated under the "stripped bond" rules.
Such guidance provides safe harbors for servicing deemed to be reasonable and
requires taxpayers to demonstrate that the value of servicing fees in excess of
such amounts is not greater than the value of the services provided.
Accordingly, if the Service's approach is upheld, a servicer who receives
a servicing fee in excess of such amounts would be viewed as retaining an
ownership interest in a portion of the interest payments on the Mortgage Loans.
Under the rules of Code Section 1286, the separation of ownership of the right
to receive some or all of the interest payments on an obligation from the right
to receive some or all of the principal payments on the obligation would result
in treatment of such Mortgage Loans as "stripped coupons" and "stripped bonds".
Subject to the de minimis rule discussed below under "--Stripped Certificates",
each stripped bond or stripped coupon could be considered for this purpose as a
non-interest bearing obligation issued on the date of issue of the Standard
Certificates, and the original issue discount rules of the Code would apply to
the holder thereof. While Standard Certificateholders would still be treated as
owners of beneficial interests in a grantor trust for federal income tax
purposes, the corpus of such trust could be viewed as excluding the portion of
the Mortgage Loans the ownership of which is attributed to the Master Servicer,
or as including such portion as a second class of equitable interest.
Applicable Treasury regulations treat such an arrangement as a fixed investment
trust, since the multiple classes of trust interests should be treated as
merely facilitating direct investments in the trust assets and the existence of
multiple classes of ownership interests is incidental to that purpose. In
general, such a recharacterization should not have any significant effect upon
the timing or amount of income reported by a Standard Certificateholder, except
that the income reported by a cash method holder may be slightly accelerated.
See "Stripped Certificates" below for a further description of the federal
income tax treatment of stripped bonds and stripped coupons.
Sale or Exchange of Standard Certificates. Upon sale or exchange of a
Standard Certificate, a Standard Certificateholder will recognize gain or loss
equal to the difference between the amount realized on the sale and its
aggregate adjusted basis in the Mortgage Loans and the other assets represented
by the Standard Certificate. In general, the aggregate adjusted basis will
equal the Standard Certificateholder's cost for the Standard Certificate,
increased by the amount of any income previously reported with respect to the
Standard Certificate and decreased by the amount of any losses previously
reported with
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respect to the Standard Certificate and the amount of any distributions
received thereon. Except as provided above with respect to market discount on
any Mortgage Loans, and except for certain financial institutions subject to
the provisions of Code Section 582(c), any such gain or loss would be capital
gain or loss if the Standard Certificate was held as a capital asset. However,
gain on the sale of a Standard Certificate will be treated as ordinary income
(i) if a Standard Certificate is held as part of a "conversion transaction" as
defined in Code Section 1258(c), up to the amount of interest that would have
accrued on the Standard Certificateholder's net investment in the conversion
transaction at 120% of the appropriate applicable Federal rate in effect at the
time the taxpayer entered into the transaction minus any amount previously
treated as ordinary income with respect to any prior disposition of property
that was held as a part of such transaction or (ii) in the case of a
non-corporate taxpayer, to the extent such taxpayer has made an election under
Code Section 163(d)(4) to have net capital gains taxed as investment income at
ordinary income rates. Capital gains of certain non-corporate taxpayers are
subject to a lower maximum tax rate (28%) than ordinary income of such
taxpayers (39.6%) for property held for more than one year but not more than 18
months, and a still lower maximum rate (20%) for property held for more than 18
months. The maximum tax rate for corporations is the same with respect to both
ordinary income and capital gains.
STRIPPED CERTIFICATES
General
Pursuant to Code Section 1286, the separation of ownership of the right to
receive some or all of the principal payments on an obligation from ownership
of the right to receive some or all of the interest payments results in the
creation of "stripped bonds" with respect to principal payments and "stripped
coupons" with respect to interest payments. For purposes of this discussion,
Certificates that are subject to those rules will be referred to as "Stripped
Certificates". Stripped Certificates include "Stripped Interest Certificates"
and "Stripped Principal Certificates" (as defined in this Prospectus) as to
which no REMIC election is made.
The Certificates will be subject to those rules if (i) the Depositor or
any of its affiliates retains (for its own account or for purposes of resale),
in the form of fixed retained yield or otherwise, an ownership interest in a
portion of the payments on the Mortgage Loans, (ii) the Master Servicer is
treated as having an ownership interest in the Mortgage Loans to the extent it
is paid (or retains) servicing compensation in an amount greater than
reasonable consideration for servicing the Mortgage Loans (see "Standard
Certificates--Recharacterization of Servicing Fees" above) and (iii)
Certificates are issued in two or more classes or subclasses representing the
right to non-pro-rata percentages of the interest and principal payments on the
Mortgage Loans.
In general, a holder of a Stripped Certificate will be considered to own
"stripped bonds" with respect to its pro rata share of all or a portion of the
principal payments on each Mortgage Loan and/or "stripped coupons" with respect
to its pro rata share of all or a portion of the interest payments on each
Mortgage Loan, including the Stripped Certificate's allocable share of the
servicing fees paid to the Master Servicer, to the extent that such fees
represent reasonable compensation for services rendered. See discussion above
under "Standard Certificates--Recharacterization of Servicing Fees". Although
not free from doubt, for purposes of reporting to Stripped Certificateholders,
the servicing fees will be allocated to the Stripped Certificates in proportion
to the respective entitlements to distributions of each class (or subclass) of
Stripped Certificates for the related period or periods. The holder of a
Stripped Certificate generally will be entitled to a deduction each year in
respect of the servicing fees, as described above under "Standard
Certificates--General", subject to the limitation described therein.
Code Section 1286 treats a stripped bond or a stripped coupon as an
obligation issued at an original issue discount on the date that such stripped
interest is purchased. Although the treatment of Stripped Certificates for
federal income tax purposes is not clear in certain respects at this time,
particularly where such Stripped Certificates are issued with respect to a
Mortgage Pool containing variable-rate Mortgage Loans, the Depositor has been
advised by counsel that (i) the Trust Fund will be treated as a grantor trust
under subpart E, Part 1 of subchapter J of the Code and not as an association
taxable as a corporation or a "taxable mortgage pool" within the meaning of
Code Section 7701(i), and (ii) each Stripped
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Certificate should be treated as a single installment obligation for purposes
of calculating original issue discount and gain or loss on disposition. This
treatment is based on the interrelationship of Code Section 1286, Code Sections
1272 through 1275, and the OID Regulations. While under Code Section 1286
computations with respect to Stripped Certificates arguably should be made in
one of the ways described below under "Taxation of
Stripped--Certificates--Possible Alternative Characterizations," the OID
Regulations state, in general, that two or more debt instruments issued by a
single issuer to a single investor in a single transaction should be treated as
a single debt instrument for original issue discount purposes. The Pooling
Agreement requires that the Trustee make and report all computations described
below using this aggregate approach, unless substantial legal authority
requires otherwise.
Furthermore, Treasury regulations issued December 28, 1992 assume that a
Stripped Certificate will be treated as a single debt instrument issued on the
date it is purchased for purposes of calculating any original issue discount
and that the interest component of such a Stripped Certificate would be treated
as qualified stated interest under the OID Regulations. Further pursuant to
these final regulations the purchaser of such a Stripped Certificate will be
required to account for any discount as market discount rather than original
issue discount unless either (i) the initial discount with respect to the
Stripped Certificate was treated as zero under the de minimis rule of Code
Section 1273(a)(3), or (ii) no more than 100 basis points in excess of
reasonable servicing is stripped off the related Mortgage Loans. Any such
market discount would be reportable as described under "Material Federal Income
Tax Consequences for REMIC Certificates--Taxation of Regular
Certificates--Market Discount," without regard to the de minimis rule therein,
assuming that a prepayment assumption is employed in such computation.
Status of Stripped Certificates
No specific legal authority exists as to whether the character of the
Stripped Certificates, for federal income tax purposes, will be the same as
that of the Mortgage Loans. Although the issue is not free from doubt, counsel
has advised the Depositor that Stripped Certificates owned by applicable
holders should be considered to represent "real estate assets" within the
meaning of Code Section 856(c)(4)(A), "obligation[s] principally secured by an
interest in real property" within the meaning of Code Section 860G(a)(3)(A),
and "loans . . . secured by an interest in real property which is . . .
residential real property" within the meaning of Code Section
7701(a)(19)(C)(v), and interest (including original issue discount) income
attributable to Stripped Certificates should be considered to represent
"interest on obligations secured by mortgages on real property" within the
meaning of Code Section 856(c)(3)(B), provided that in each case the Mortgage
Loans and interest on such Mortgage Loans qualify for such treatment.
Taxation of Stripped Certificates
Original Issue Discount. Except as described above under "General", each
Stripped Certificate will be considered to have been issued at an original
issue discount for federal income tax purposes. Original issue discount with
respect to a Stripped Certificate must be included in ordinary income as it
accrues, in accordance with a constant interest method that takes into account
the compounding of interest, which may be prior to the receipt of the cash
attributable to such income. Based in part on the OID Regulations and the
amendments to the original issue discount sections of the Code made by the 1986
Act, the amount of original issue discount required to be included in the
income of a holder of a Stripped Certificate (referred to in this discussion as
a "Stripped Certificateholder") in any taxable year likely will be computed
generally as described above under "Federal Income Tax Consequences for REMIC
Certificates--Taxation of Regular Certificates--Original Issue Discount" and
"--Variable Rate Regular Certificates". However, with the apparent exception of
a Stripped Certificate qualifying as a market discount obligation, as described
above under "General", the issue price of a Stripped Certificate will be the
purchase price paid by each holder thereof, and the stated redemption price at
maturity will include the aggregate amount of the payments, other than
qualified stated interest to be made on the Stripped Certificate to such
Stripped Certificateholder, presumably under the Prepayment Assumption.
If the Mortgage Loans prepay at a rate either faster or slower than that
under the Prepayment Assumption, a Stripped Certificateholder's recognition of
original issue discount will be either accelerated
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or decelerated and the amount of such original issue discount will be either
increased or decreased depending on the relative interests in principal and
interest on each Mortgage Loan represented by such Stripped Certificateholder's
Stripped Certificate. While the matter is not free from doubt, the holder of a
Stripped Certificate should be entitled in the year that it becomes certain
(assuming no further prepayments) that the holder will not recover a portion of
its adjusted basis in such Stripped Certificate to recognize an ordinary loss
equal to such portion of unrecoverable basis.
As an alternative to the method described above, the fact that some or all
of the interest payments with respect to the Stripped Certificates will not be
made if the Mortgage Loans are prepaid could lead to the interpretation that
such interest payments are "contingent" within the meaning of the OID
Regulations. The OID Regulations, as they relate to the treatment of contingent
interest, are by their terms not applicable to prepayable securities such as
the Stripped Certificates. However, if final regulations dealing with
contingent interest with respect to the Stripped Certificates apply the same
principles as the OID Regulations, such regulations may lead to different
timing of income inclusion that would be the case under the OID Regulations.
Furthermore, application of such principles could lead to the characterization
of gain on the sale of contingent interest Stripped Certificates as ordinary
income. Investors should consult their tax advisors regarding the appropriate
tax treatment of Stripped Certificates.
Sale or Exchange of Stripped Certificates. Sale or exchange of a Stripped
Certificate prior to its maturity will result in gain or loss equal to the
difference, if any, between the amount received and the Stripped
Certificateholder's adjusted basis in such Stripped Certificate, as described
above under "Material Federal Income Tax Consequences for REMIC
Certificates--Taxation of Regular Certificates--Sale or Exchange of Regular
Certificates". To the extent that a subsequent purchaser's purchase price is
exceeded by the remaining payments on the Stripped Certificates, such
subsequent purchaser will be required for federal income tax purposes to accrue
and report such excess as if it were original issue discount in the manner
described above. It is not clear for this purpose whether the assumed
prepayment rate that is to be used in the case of a Stripped Certificateholder
other than an original Stripped Certificateholder should be the Prepayment
Assumption or a new rate based on the circumstances at the date of subsequent
purchase.
Purchase of More Than One Class of Stripped Certificates. Where an
investor purchases more than one class of Stripped Certificates, it is
currently unclear whether for federal income tax purposes such classes of
Stripped Certificates should be treated separately or aggregated for purposes
of the rules described above.
Possible Alternative Characterizations. The characterizations of the
Stripped Certificates discussed above are not the only possible interpretations
of the applicable Code provisions. For example, the Stripped Certificateholder
may be treated as the owner of (i) one installment obligation consisting of
such Stripped Certificate's pro rata share of the payments attributable to
principal on each Mortgage Loan and a second installment obligation consisting
of such Stripped Certificate's pro rata share of the payments attributable to
interest on each Mortgage Loan, (ii) as many stripped bonds or stripped coupons
as there are scheduled payments of principal and/or interest on each Mortgage
Loan or (iii) a separate installment obligation for each Mortgage Loan,
representing the Stripped Certificate's pro rata share of payments of principal
and/or interest to be made with respect thereto. Alternatively, the holder of
one or more classes of Stripped Certificates may be treated as the owner of a
pro rata fractional undivided interest in each Mortgage Loan to the extent that
such Stripped Certificate, or classes of Stripped Certificates in the
aggregate, represent the same pro rata portion of principal and interest on
each such Mortgage Loan, and a stripped bond or stripped coupon (as the case
may be), treated as an installment obligation or contingent payment obligation,
as to the remainder. Final regulations issued on December 28, 1992 regarding
original issue discount on stripped obligations make the foregoing
interpretations less likely to be applicable. The preamble to those regulations
states that they are premised on the assumption that an aggregation approach is
appropriate for determining whether original issue discount on a stripped bond
or stripped coupon is de minimis, and solicits comments on appropriate rules
for aggregating stripped bonds and stripped coupons under Code Section 1286.
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Because of these possible varying characterizations of Stripped
Certificates and the resultant differing treatment of income recognition,
Stripped Certificateholders are urged to consult their own tax advisors
regarding the proper treatment of Stripped Certificates for federal income tax
purposes.
FEDERAL INCOME TAX CONSEQUENCES FOR FASIT CERTIFICATES
If and to the extent set forth in the Prospectus Supplement relating to a
particular Series of Certificates, an election may be made to treat the related
Trust Fund or one or more segregated pools of assets therein as one or more
financial asset securitization investment trusts ("FASITs") within the meaning
of Code Section 860L(a). Qualification as a FASIT requires ongoing compliance
with certain conditions. With respect to each series of FASIT Certificates,
O'Melveny & Myers LLP, counsel to the Depositor, will advise the Depositor that
in the firm's opinion, assuming (i) the making of such an election, (ii)
compliance with the Pooling Agreement and (iii) compliance with any changes in
the law, including any amendments to the Code or applicable Treasury
Regulations thereunder, each FASIT Pool will qualify as a FASIT. In such case,
the Regular Certificates will be considered to be "regular interests" in the
FASIT and will be treated for federal income tax purposes as if they were newly
originated debt instruments, and the Residual Certificate will be considered
the "ownership interest" in the FASIT Pool. The Prospectus Supplement for each
series of Certificates will indicate whether one or more FASIT elections will
be made with respect to the related Trust Fund.
FASIT treatment has become available pursuant to recently enacted
legislation, and no Treasury Regulations have as yet been issued detailing the
circumstances under which a FASIT election may be made or the consequences of
such an election. If a FASIT election is made with respect to any Trust Fund or
as to any segregated pool of assets therein, the related Prospectus Supplement
will describe the Federal income tax consequences of such election.
REPORTING REQUIREMENTS AND BACKUP WITHHOLDING
The Trustee will furnish, within a reasonable time after the end of each
calendar year, to each Standard Certificateholder or Stripped Certificateholder
at any time during such year, such information (prepared on the basis described
above) as the Trustee deems to be necessary or desirable to enable such
Certificateholders to prepare their federal income tax returns. Such
information will include the amount of original issue discount accrued on
Certificates held by persons other than Certificateholders exempted from the
reporting requirements. The amounts required to be reported by the Trustee may
not be equal to the proper amount of original issue discount required to be
reported as taxable income by a Certificateholder, other than an original
Certificateholder that purchased at the issue price. In particular, in the case
of Stripped Certificates, unless provided otherwise in the applicable
Prospectus Supplement, such reporting will be based upon a representative
initial offering price of each class of Stripped Certificates. The Trustee will
also file such original issue discount information with the Service. If a
Certificateholder fails to supply an accurate taxpayer identification number or
if the Secretary of the Treasury determines that a Certificateholder has not
reported all interest and dividend income required to be shown on his federal
income tax return, 31% backup withholding may be required in respect of any
reportable payments, as described above under "Material Federal Income Tax
Consequences for REMIC Certificates--Backup Withholding".
TAXATION OF CERTAIN FOREIGN INVESTORS
To the extent that a Certificate evidences ownership in Mortgage Loans
that are issued on or before July 18, 1984, interest or original issue discount
paid by the person required to withhold tax under Code Section 1441 or 1442 to
nonresident aliens, foreign corporations, or other Non-U.S. Persons generally
will be subject to 30% United States withholding tax, or such lower rate as may
be provided for interest by an applicable tax treaty. Accrued original issue
discount recognized by the Standard Certificateholder or Stripped
Certificateholder on original issue discount recognized by the Standard
Certificateholder or Stripped Certificateholders on the sale or exchange of
such a Certificate also will be subject to federal income tax at the same rate.
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Treasury regulations provide that interest or original issue discount paid
by the Trustee or other withholding agent to a Non-U.S. Person evidencing
ownership interest in Mortgage Loans issued after July 18, 1984 will be
"portfolio interest" and will be treated in the manner, and such persons will
be subject to the same certification requirements, described above under
"Material Federal Income Tax Consequences for REMIC Certificates--Taxation of
Certain Foreign Investors--Regular Certificates".
STATE AND OTHER TAX CONSIDERATIONS
In addition to the federal income tax consequences described in "Material
Federal Income Tax Consequences", potential investors should consider the state
and local tax consequences of the acquisition, ownership, and disposition of
the Offered Certificates. State tax law may differ substantially from the
corresponding federal law, and the discussion above does not purport to
describe any aspect of the tax laws of any state or other jurisdiction.
Therefore, prospective investors should consult their own tax advisors with
respect to the various tax consequences of investments in the Offered
Certificates.
ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
imposes certain requirements on employee benefit plans subject to ERISA ("ERISA
Plans") and prohibits certain transactions between ERISA Plans and persons who
are "parties in interest" (as defined under ERISA) with respect to assets of
such Plans. Section 4975 of the Code prohibits a similar set of transactions
between certain plans ("Code Plans," and together with ERISA Plans, "Plans")
and persons who are "disqualified persons" (as defined in the Code) with
respect to Code Plans. Certain employee benefit plans, such as governmental
plans and church plans (if no election has been made under Section 410(d) of
the Code) are not subject to the requirements of ERISA or Section 4975 of the
Code, and assets of such plans may be invested in Certificates, subject to the
provisions of other applicable federal and state law. Any such governmental or
church plan which is qualified under Section 401(a) of the Code and exempt from
taxation under Section 501(a) of the Code is, however, subject to the
prohibited transaction rules set forth in Section 503 of the Code. Investments
by ERISA Plans are subject to ERISA's general fiduciary requirements, including
the requirement of investment prudence and diversification and the requirement
that investments be made in accordance with the documents governing the ERISA
Plan. Before investing in a Certificate, an ERISA Plan fiduciary should
consider, among other factors, whether to do so is appropriate in view of the
overall investment policy and liquidity needs of the ERISA Plan. Such fiduciary
should especially consider the sensitivity of the investments to the rate of
principal payments (including prepayments) on the Mortgage Loans, as discussed
in the Prospectus Supplement related to a Series.
PROHIBITED TRANSACTIONS
Section 406 of ERISA and Section 4975 of the Code prohibit parties in
interest with respect to ERISA Plans and disqualified persons with respect to
the Code Plans from engaging in certain transactions involving such Plans or
"plan assets" of such Plans, unless a statutory or administrative exemption
applies to the transaction. Section 4975 of the Code and Sections 502(i) and
502(l) of ERISA provide for the imposition of excise taxes and civil penalties
on certain persons that engage or participate in such prohibited transactions.
The Depositor, the Underwriter, the Master Servicer, the Special Servicer, if
any, or the Trustee or certain affiliates thereof may be considered or may
become parties in interest or disqualified persons with respect to a Plan. If
so, the acquisition or holding of Certificates by, on behalf of or with "plan
assets" of such Plan may be considered to give rise to a "prohibited
transaction" within the meaning of ERISA and/or Section 4975 of the Code,
unless an administrative exemption described below or some other exemption is
available.
Further, if the underlying assets included in a Trust Fund were deemed to
constitute "plan assets," certain transactions involved in the operation of the
Trust Fund may be deemed to constitute prohibited transactions under ERISA
and/or the Code. Neither ERISA nor Section 4975 of the Code defines the term
"plan assets."
Special caution should be exercised before assets of a Plan are used to
purchase a Certificate if, with respect to such assets, the Depositor, the
Underwriter, the Master Servicer, the Special Servicer, if any, or
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the Trustee or an affiliate thereof either (a) has discretionary authority or
control with respect to the investment or management of such assets, including
the purchasing or sale of securities or other property, or (b) has authority or
responsibility to give, or regularly gives, investment advice with respect to
such assets pursuant to an agreement or understanding that such advice will
serve as a primary basis for investment decisions with respect to such assets
and that such advice will be based on the particular needs of the Plan.
The U.S. Department of Labor (the "Department") has issued regulations
(the "Plan Asset Regulations") concerning whether a Plan's assets will be
considered to include an undivided interest in each of the underlying assets of
an entity (such as the Trust Fund) for purposes of the general fiduciary
responsibility provisions of ERISA and the prohibited transaction provisions of
ERISA and Section 4975 of the Code, if the Plan acquires an "equity interest"
(such as a Certificate) in an entity.
Certain exceptions are provided in the Plan Asset Regulations whereby an
investing Plan's assets would be considered merely to include its interest in
the Certificates instead of being deemed to include an undivided interest in
each of the underlying assets of the Trust Fund. However, it cannot be
predicted in advance, nor can there be a continuing assurance whether such
exceptions may be applicable, because of the factual nature of certain of the
rules set forth in the Regulations. For example, one of the exceptions in the
Plan Asset Regulations states that the underlying assets of an entity will not
be considered "plan assets" if less than 25% of the value of each class of
equity interests is held by "Benefit Plan Investors," which are defined as
ERISA Plans, Code Plans, individual retirement accounts and employee benefit
plans not subject to ERISA (for example, governmental plans). This exemption is
tested immediately after each acquisition of an equity interest in the entity
whether upon initial issuance or in the secondary market. Absent any
restricrtions on purchase or transfer, it cannot be assured that benefit plan
investors will own less than 25% of each class of Certificates.
Pursuant to the Plan Asset Regulations, if the assets of the Trust Fund
were deemed to be "plan assets" by reason of the investment of assets of a Plan
in any Certificates, the "plan assets" of such Plan would include an undivided
interest in the Mortgage Loans, the mortgages underlying the Mortgage Loans and
any other assets held in the Trust Fund. Therefore, because the Mortgage Loans
and other assets held in the Trust Fund may be deemed to be "plan assets" of
each Plan that purchases Certificates, in the absence of an exemption, the
purchase, sale or holding of Certificates of any Series or Class by or with the
assets of a Plan could result in a prohibited transaction and the imposition of
civil penalties or excise taxes. Depending on the relevant facts and
circumstances, certain prohibited transaction exemptions may apply to the
purchase, sale or holding of Certificates of any Series or Class by a Plan--for
example, Prohibited Transaction Class Exemption ("PTCE") 95-60, which exempts
certain transactions between insurance company general accounts and parties in
interest; PTCE 91-38, which exempts certain transactions between bank
collective investment funds and parties in interest; PTCE 90-1, which exempts
certain transactions between insurance company pooled separate accounts and
parties in interest; or PTCE 84- 14, which exempts certain transactions
effected on behalf of a Plan by a "qualified professional asset manager."
There can be no assurance that any of these exemptions will apply with
respect to any Plan's investment in any Certificates or, even if an exemption
were deemed to apply, that any exemption would apply to all prohibited
transactions that may occur in connection with such investment. Also, the
Department has issued individual administrative exemptions from application of
certain prohibited transaction restrictions of ERISA and the Code to most
underwriters of mortgage-backed securities (each, an "Underwriter's
Exemption"). Such an Underwriter's Exemption can only apply to mortgage-backed
securities which, among other conditions, are sold in an offering with respect
to which such an underwriter serves as the sole or a managing underwriter, or
as a selling or placement agent. If such an Underwriter's Exemption might be
applicable to a Series of Certificates, the related Prospectus Supplement will
refer to such possibility. Further, the related Prospectus Supplement may
provide that certain Classes or Series of Certificates may not be purchased by,
or transferred to, Plans or may only be purchased by, or transferred to, an
insurance company for its general account under circumstances that would not
result in a prohibited transaction.
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ANY FIDUCIARY OR OTHER PLAN INVESTOR WHO PROPOSES TO INVEST "PLAN ASSETS"
OF A PLAN IN CERTIFICATES OF ANY SERIES OR CLASS SHOULD CONSULT WITH ITS
COUNSEL WITH RESPECT TO THE POTENTIAL CONSEQUENCES UNDER ERISA AND SECTION 4975
OF THE CODE OF ANY SUCH ACQUISITION AND OWNERSHIP OF SUCH CERTIFICATES.
UNRELATED BUSINESS TAXABLE INCOME-RESIDUAL INTERESTS
The purchase of a Certificate evidencing an interest in the Residual
Interest in a Series that is treated as a REMIC by any employee benefit or
other plan that is exempt from taxation under Code Section 501(a), including
most varieties of Plans, may give rise to "unrelated business taxable income"
as described in Code Sections 511-515 and 860E. Further, prior to the purchase
of an interest in a Residual Interest, a prospective transferee may be required
to provide an affidavit to a transferor that it is not, nor is it purchasing an
interest in a Residual Interest on behalf of, a "Disqualified Organization,"
which term as defined above includes certain tax-exempt entities not subject to
Code Section 511, such as certain governmental plans, as discussed above under
"MATERIAL FEDERAL INCOME TAX CONSEQUENCES--Taxation of Holders of Residual
Certificates" and "--Restrictions on Ownership and Transfer of Residual
Certificates."
DUE TO THE COMPLEXITY OF THESE RULES AND THE PENALTIES IMPOSED UPON
PERSONS INVOLVED IN PROHIBITED TRANSACTIONS, IT IS PARTICULARLY IMPORTANT THAT
INDIVIDUALS RESPONSIBLE FOR INVESTMENT DECISIONS WITH RESPECT TO ERISA PLANS
AND CODE PLANS CONSULT WITH THEIR COUNSEL REGARDING THE CONSEQUENCES UNDER
ERISA AND/OR THE CODE OF THEIR ACQUISITION AND OWNERSHIP OF CERTIFICATES.
THE SALE OF CERTIFICATES TO A PLAN IS IN NO RESPECT A REPRESENTATION BY THE
DEPOSITOR, THE APPLICABLE UNDERWRITER OR ANY OTHER SERVICE PROVIDER WITH
RESPECT TO THE CERTIFICATES, SUCH AS THE TRUSTEE, THE MASTER SERVICER AND THE
SPECIAL SERVICER, IF ANY, THAT THIS INVESTMENT MEETS ALL RELEVANT LEGAL
REQUIREMENTS WITH RESPECT TO INVESTMENTS BY PLANS GENERALLY OR ANY PARTICULAR
PLAN OR THAT THIS INVESTMENT IS APPROPRIATE FOR PLANS GENERALLY OR ANY
PARTICULAR PLAN.
LEGAL INVESTMENT
The Offered Certificates will constitute "mortgage related securities" for
purposes of the Secondary Mortgage Market Enhancement Act of 1984, as amended
("SMMEA"), only if so specified in the related Prospectus Supplement. The
appropriate characterization of those Certificates not qualifying as "mortgage
related securities" ("Non-SMMEA Certificates") under various legal investment
restriction, and thus the ability of investors subject to these restrictions to
purchase such Certificates, may be subject to significant interpretive
uncertainties. Accordingly, investors whose investment authority is subject to
legal restrictions should consult their own legal advisors to determine whether
and to what extent the Non-SMMEA Certificates constitute legal investments for
them.
Generally, only classes of Offered Certificates that (i) are rated in one
of the two highest rating categories by one or more Rating Agencies, (ii) are
part of a series evidencing interests in a Trust Fund consisting of loans
originated by certain types of Originators as specified in SMMEA and (iii) are
part of a series evidencing interests in a Trust Fund consisting of mortgage
loans each of which is secured by a first lien on (a) a single parcel of real
estate on which is located a residential and/or mixed residential and
commercial structure or (b) one or more parcels of real estate upon which are
located one or more commercial structures will be "mortgage related securities"
for purposes of SMMEA. As "mortgage related securities," such classes will
constitute legal investments, for persons, trusts, corporations, partnerships,
associations, business trusts and business entities (including depository
institutions, insurance companies, trustees and pension funds) created pursuant
to or existing under the laws of the United States or of any state (including
the District of Columbia and Puerto Rico) whose authorized investments are
subject to state regulation, to the same extent that obligations issued by or
guaranteed as to principal and interest by the United States or any agency or
instrumentality thereof constitute legal investments for such entities under
applicable law. Under SMMEA, a number of states enacted legislation on or prior
to the October 3, 1991 cut-off for such enactments limiting to various extends
the ability of certain entities (in particular, insurance companies) to invest
in "mortgage related securities," secured by liens on residential, or mixed
residential and commercial properties, in most cases by requiring the affected
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investors to rely solely upon existing state law, and not SMMEA. Pursuant to
Section 347 of the Riegle Community Development and Regulatory Improvement Act
of 1994, states are authorized to enact legislation, on or before September 23,
2001, prohibiting or restricting the purchase, holding or investment by state
regulated entities in certificates satisfying the rating and qualified
Originator requirements for "mortgage related securities," but evidencing
interests in a Trust Fund consisting, in whole or in part, of first liens on
one or more parcels of real estate upon which are located one or more
commercial structures. Accordingly, the investors affected by such legislation
will be authorized to invest in Offered Certificates qualifying as "mortgage
related securities" only to the extent provided in such legislation.
SMMEA also amended the legal investment authority of federally-chartered
depository institutions as follows: federal savings and loan associations and
federal savings banks may invest in, sell or otherwise deal in "mortgage
related securities" without limitation as to the percentage of their assets
represented thereby, federal credit unions may invest in such securities, and
national banks may purchase such securities for their own account without
regard to the limitations generally applicable to investment securities set
forth in 12 U.S.C. Section 24 (Seventh), subject in each case to such
regulations as the applicable federal regulatory authority may prescribe. In
this connection, effective December 31, 1996, the Office of the Comptroller of
the Currency (the "OCC") has amended 12 C.F.R. Part 1 to authorize national
banks to purchase and sell for their own account, without limitation as to a
percentage of the bank's capital and surplus (but subject to compliance with
certain general standards in 12 C.F.R. Section 1.5 concerning "safety and
soundness" and retention of credit information), certain "Type IV securities,"
defined in 12 C.F.R. Section 1.2(1) to include certain "commercial
mortgage-related securities" and "residential mortgage-related securities." As
so defined, "commercial mortgage-related security" and "residential
mortgage-related security" mean, in relevant part, "mortgage related security"
within the meaning of SMMEA, provided that, in the case of a "commercial
mortgage-related security," it "represents ownership of a promissory note or
certificate of interest or participation that is directly secured by a first
lien on one or more parcels of real estate upon which one or more commercial
structures are located and that is fully secured by interests in a pool of
loans to numerous obligors." In the absence of any rule or administrative
interpretation by the OCC defining the term "numerous obligors," no
representation is made as to whether any class of Certificates will qualify as
"commercial mortgage-related securities," and thus as "Type IV securities," for
investment by national banks. federal credit unions should review NCUA Letter
to Credit Unions No. 96, as modified by Letter to Credit Unions No. 108, which
includes guidelines to assist federal credit unions in making investment
decisions for mortgage related securities. The NCUA has adopted rules, codified
as 12 C.F.R. Section Section 703.5(f)-(k), which prohibit federal credit
unions from investing in certain mortgage related securities (including
securities such as certain classes of the Offered Certificates), except under
limited circumstances. Effective January 1, 1998, the NCUA has amended its
rules governing investments by federal credit unions at 12 C.F.R. Part 703; the
revised rules will permit investments in "mortgage related securities" under
certain limited circumstances, but will prohibit investments in stripped
mortgage related securities, residual interests in mortgage related securities,
and commercial mortgage related securities, unless the credit union has
obtained written approval from the NCUA to participate in the "investment pilot
program" described in 12 C.F.R. Section 703.140.
All depository institutions considering an investment in the Offered
Certificates should review the "Supervisory Policy Statement on Securities
Activities" dated January 28, 1992, as revised April 15, 1994 (the "Policy
Statement") of the Federal Financial Institutions Examination Council (the
"FFIEC"). The Policy Statement, which has been adopted by the Board of
Governors of the Federal Reserve System, the OCC, the Federal Depository
Insurance Company and the Office of Thrift Supervision, and by the NCUA (with
certain modifications), prohibits depository institutions from investing in
certain "high-risk mortgage securities" (including securities such as certain
classes of the Offered Certificates), except under limited circumstances, and
sets forth certain investment practices deemed to be unsuitable for regulated
institutions. On September 29, 1997, the FFEIC released for public comment a
proposed "Supervisory Policy Statement on Investment Securities and End-User
Derivatives Activities" (the "1997 Statement"), which would replace the Policy
Statement. As proposed, the 1997 Statement would delete the specific "high-risk
mortgage securities" tests, and substitute general guidelines which depository
institutions should follow in managing risks (including market, credit,
liquidity, operational (transactional), and legal risks) applicable to all
securities (including mortgage pass-through securities and mortgage-derivative
products) used for investment purposes.
84
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Institutions whose investment activities are subject to regulation by
federal or state authorities should review rules, policies and guidelines
adopted from time to time by such authorities before purchasing any class of
the Offered Certificates, as certain classes may be deemed unsuitable
investments, or may otherwise be restricted, under such rules, policies or
guidelines (in certain instances irrespective of SMMEA).
The foregoing does not take into consideration the applicability of
statutes, rules, regulations, orders, guidelines or agreements generally
governing investments made by a particular investor, including, but not limited
to, "prudent investor" provisions, percentage-of-assets limits, provisions
which may restrict or prohibit investment in securities which are not "interest
bearing" or "income paying," and, with regard to any class of the Offered
Certificates issued in book-entry form, provisions which may restrict or
prohibit investments in securities which are issued in book-entry form.
Except as to the status of certain classes of Offered Certificates as
"mortgage related securities," no representations are made as to the proper
characterization of any class of Offered Certificates for legal investment
purposes, financial institution regulatory purposes, or other purposes, or as
to the ability of particular investors to purchase any class of Offered
Certificates under applicable legal investment restrictions. These
uncertainties (and any unfavorable future determinations concerning legal
investment or financial institution regulatory characteristics of the Offered
Certificates) may adversely affect the liquidity of any class of Offered
Certificates.
Accordingly, all investors whose investment activities are subject to
legal investment laws and regulations, regulatory capital requirements or
review by regulatory authorities should consult with their own legal advisors
in determining whether and to what extent the Offered Certificates of any class
constitute legal investments or are subject to investment, capital or other
restrictions.
PLAN OF DISTRIBUTION
The Depositor may sell the Certificates offered hereby in Series either
directly or through underwriters. The related Prospectus Supplement or
Prospectus Supplements for each Series will describe the terms of the offering
for that Series and will state the public offering or purchase price of each
Class of Certificates of such Series, or the method by which such price is to
be determined, and the net proceeds to the Depositor from such sale.
If the sale of any Certificates is made pursuant to an underwriting
agreement pursuant to which one or more underwriters agree to act in such
capacity, such Certificates will be acquired by such underwriters for their own
account and may be resold from time to time in one or more transactions,
including negotiated transactions, at a fixed public offering price or at
varying prices to be determined at the time of sale or at the time of
commitment therefor. Firm commitment underwriting and public reoffering by
underwriters may be done through underwriting syndicates or through one or more
firms acting alone.
The specific managing underwriter or underwriters, if any, with respect to
the offer and sale of a particular Series of Certificates will be set forth on
the cover of the Prospectus Supplement related to such Series and the members
of the underwriting syndicate, if any, will be named in such Prospectus
Supplement. The Prospectus Supplement will describe any discounts and
commissions to be allowed or paid by the Depositor to the underwriters, any
other items constituting underwriting compensation and any discounts and
commissions to be allowed or paid to the dealers. The obligations of the
underwriters will be subject to certain conditions precedent. The underwriters
with respect to a sale of any Class of Certificates will generally be obligated
to purchase all such Certificates if any are purchased. Pursuant to each such
underwriting agreement, the Depositor will indemnify the related underwriters
against certain civil liabilities, including liabilities under the 1933 Act.
If any Certificates are offered other than through underwriters pursuant
to such underwriting agreements, the related Prospectus Supplement or
Prospectus Supplements will contain information regarding the terms of such
offering and any agreements to be entered into in connection with such
offering.
85
<PAGE>
Purchasers of Certificates, including dealers, may, depending on the facts
and circumstances of such purchases, be deemed to be "underwriters" within the
meaning of the 1933 Act in connection with reoffers and sales by them of
Certificates. Certificateholders should consult with their legal advisors in
this regard prior to any such reoffer and sale.
LEGAL MATTERS
Certain legal matters relating to the Certificates offered hereby will be
passed upon for the Depositor by O'Melveny & Myers LLP, New York, New York, and
for the Underwriters as specified in the related Prospectus Supplement.
FINANCIAL INFORMATION
A new Trust Fund will be formed with respect to each Series of
Certificates and no Trust Fund will engage in any business activities or have
any assets or obligations prior to the issuance of the related Series of
Certificates. Accordingly, no financial statements with respect to any Trust
Fund will be included in this Prospectus or in the related Prospectus
Supplement.
RATING
It is a condition to the issuance of any Class of Offered Certificates
that they shall have been rated not lower than investment grade, that is. in
one of the four highest categories, by a Rating Agency.
Ratings on mortgage pass-through certificates address the likelihood of
receipt by certificateholders of all distributions on the underlying mortgage
loans. These ratings address the structural, legal and issuer-related aspects
associated with such certificates. the nature of the underlying mortgage loans
and the credit quality of the guarantor, if any. Ratings on mortgage
pass-through certificates do not represent any assessment of the likelihood of
principal prepayments by mortgagors or of the degree by which such prepayments
might differ from those originally anticipated. As a result, certificateholders
might suffer a lower than anticipated yield, and, in addition. holders of
stripped interest certificates in extreme cases might fail to recoup the
initial investments.
A security rating is not a recommendation to buy, sell or hold securities
and may be subject to revision or withdrawal at any time by the assigning
rating organization. Each security rating should be evaluated independently of
any other security, rating.
86
<PAGE>
INDEX OF SIGNIFICANT DEFINITIONS
DEFINITIONS PAGE
1933 Act................................................................... 2
1986 Act.................................................................. 57
1997 Statement............................................................ 84
ACMs...................................................................... 49
ADA....................................................................... 54
adequate protection....................................................... 45
Agreement.............................................................. 9, 19
Anti-Deficiency Legislation............................................... 49
Bankruptcy Code........................................................... 43
CERCLA................................................................ 18, 48
Certificateholders........................................................ 20
Certificates............................................................... 7
Classes.................................................................... 1
Closing Date.............................................................. 26
Code.................................................................. 11, 55
Code Plans................................................................ 81
Collection Account..................................................... 8, 21
Commission................................................................. 2
Compound Interest Certificates............................................ 58
Credit Enhancement..................................................... 9, 36
Credit Enhancement Limitations............................................ 13
Cut-off Date.......................................................... 10, 21
Department................................................................ 82
Depositor.................................................................. 1
Disqualified Organization............................................. 68, 83
Disqualified Organizations................................................ 69
Distribution Account................................................... 8, 21
Distribution Date..................................................... 10, 20
EPA....................................................................... 50
ERISA................................................................. 11, 81
ERISA Plans............................................................... 81
Escrow Account............................................................ 29
Escrow Payments........................................................... 29
Event of Default.......................................................... 34
excess servicing.......................................................... 76
Fannie Mae................................................................ 20
FASIT..................................................................... 55
FASITs.................................................................... 80
FFIEC..................................................................... 84
FHLMC..................................................................... 20
Forfeiture Laws........................................................... 54
Form 8-K.................................................................. 26
Garn-St Germain Act....................................................... 50
GNMA...................................................................... 20
Hazardous Materials....................................................... 49
Installment Contracts..................................................... 25
Lead Paint Act............................................................ 50
Lender Liability Act...................................................... 48
Mark to Market Regulations................................................ 70
Master Servicer........................................................... 29
Master Servicer Remittance Date........................................... 21
87
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MBS....................................................................... 66
Modifications, Waivers and Amendments..................................... 30
Mortgage.................................................................. 25
Mortgage Loan Groups...................................................... 26
Mortgage Loan Schedule.................................................... 26
Mortgage Loan Seller...................................................... 27
Mortgage Loans............................................................. 1
Mortgage Pool.............................................................. 1
Mortgaged Property..................................................... 7, 25
mortgagee................................................................. 40
mortgagor................................................................. 40
NCUN...................................................................... 52
Non-SMMEA Certificates.................................................... 83
Note...................................................................... 25
OCC....................................................................... 84
Offered Certificates....................................................... 1
OID Regulations........................................................... 58
Original Issue Discount................................................... 62
Pass-Through Rate.......................................................... 2
Permitted Investments..................................................... 22
Plan Asset Regulations.................................................... 82
Plans..................................................................... 81
Policy Statement.......................................................... 84
Prepayment Assumption..................................................... 59
Property Protection Expenses.............................................. 21
PTCE...................................................................... 82
Rating Agency......................................................... 11, 19
RATINGS................................................................... 11
reasonably equivalent value............................................... 43
Registration Statement..................................................... 2
Regular Certificateholder................................................. 58
Regular Certificates.............................................. 10, 55, 73
Regular Interests......................................................... 10
REITs..................................................................... 26
Relief Act................................................................ 51
REMIC...................................................................... 1
REMIC Regulations......................................................... 55
REO Account............................................................... 21
Reserve Account........................................................... 19
Reserve Fund.............................................................. 37
Residual Certificateholders............................................... 64
Residual Certificates..................................................... 10
Residual Interests........................................................ 10
Rights of Redemption...................................................... 43
SBJPA of 1996............................................................. 56
Senior Certificates....................................................... 36
Series..................................................................... 1
Service................................................................... 57
Servicing Fee............................................................. 31
SMMEA..................................................................... 83
S&P....................................................................... 22
Special Servicer........................................................... 7
Special Servicing Fee..................................................... 32
Specially Serviced Mortgage Loans......................................... 29
88
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Standard Certificateholder................................................ 74
Standard Certificates..................................................... 74
Startup Day............................................................... 56
Stripped Certificateholder................................................ 78
Stripped Certificates......................................... 74, 75, 76, 77
Subordinate Certificates.................................................. 36
super-premium............................................................. 59
thrift institutions....................................................... 67
Title V................................................................... 52
Title VIII................................................................ 52
Treasury.................................................................. 55
Trust Fund................................................................. 1
Trustee................................................................ 7, 24
UCC....................................................................... 40
Underwriter's Exemption................................................... 82
USTs...................................................................... 50
Voting Rights............................................................. 18
89
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NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS
SUPPLEMENT OR THE PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
DEPOSITOR OR THE UNDERWRITERS. THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO
NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL,
UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THE INFORMATION HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE DEPOSITOR SINCE SUCH DATE.
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
PAGE
------
<S> <C>
PROSPECTUS SUPPLEMENT
---------------------
Important Notice about Information Presented in
this Prospectus Supplement and the
Accompanying Prospectus ........................... S-3
Where You Can Find More Information ................. S-3
Summary ............................................. S-5
Risk Factors ........................................ S-18
Description of the Mortgage Pool .................... S-30
Prudential Securities Secured Financing
Corporation ....................................... S-59
Prudential Securities Credit Corp. .................. S-59
Mortgage Loan Sellers ............................... S-59
Description of the Certificates ..................... S-64
Yield and Maturity Considerations ................... S-74
Master Servicer and Special Sub-Servicer ............ S-81
Special Servicer .................................... S-81
The Pooling and Servicing Agreement ................. S-81
Material Federal Income Tax Consequences ............ S-99
ERISA Considerations ................................ S-100
Legal Investment .................................... S-103
Plan of Distribution ................................ S-104
Use of Proceeds ..................................... S-104
Legal Matters ....................................... S-104
Ratings ............................................. S-104
Index of Significant Definitions .................... S-106
Annex A--Mortgage Loan Characteristics .............. A-1
Annex B--Additional Step Loan and Interest-Only
Loan Characteristics .............................. B-1
Annex C--Affiliated Borrowers ....................... C-1
Annex D--Form of Statement to
Certificateholders ................................ D-1
Annex E--Structural and Collateral Term Sheet
and Top Ten Loan Descriptions ..................... E-1
PROSPECTUS
----------
Prospectus Supplement ............................... 2
Additional Information .............................. 2
Incorporation of Certain Information by
Reference ......................................... 2
Reports ............................................. 3
Summary of Prospectus ............................... 7
Risk Factors ........................................ 12
The Depositor ....................................... 19
Use of Proceeds ..................................... 19
Description of the Certificates ..................... 19
The Mortgage Pools .................................. 25
Servicing of the Mortgage Loans ..................... 29
Credit Enhancement .................................. 36
Certain Legal Aspects of the Mortgage Loans ......... 39
Material Federal Income Tax Consequences ............ 55
State and Other Tax Considerations .................. 81
ERISA Considerations ................................ 81
Legal Investment .................................... 83
Plan of Distribution ................................ 85
Legal Matters ....................................... 86
Financial Information ............................... 86
Rating .............................................. 86
Index of Significant Definitions .................... 87
</TABLE>
$826,728,000
COMMERCIAL MORTGAGE
PASS-THROUGH CERTIFICATES,
SERIES 1999-NRF1
PRUDENTIAL SECURITIES SECURED
FINANCING CORPORATION
-----------------------------------
PROSPECTUS SUPPLEMENT
-----------------------------------
PRUDENTIAL SECURITIES
CIBC WORLD MARKETS
MORGAN STANLEY DEAN WITTER
MARCH 18, 1999
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