PROSPECTUS SUPPLEMENT
- ---------------------
(TO PROSPECTUS DATED APRIL 29, 1997)
$1,155,321,000 (APPROXIMATE)
FIRST UNION-LEHMAN BROTHERS COMMERCIAL MORTGAGE TRUST
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1997-C1
FIRST UNION COMMERCIAL MORTGAGE SECURITIES, INC.
(DEPOSITOR)
----------
The Series 1997-C1 Commercial Mortgage Pass-Through Certificates (the
"Certificates") will consist of sixteen classes (each, a "Class") of
Certificates, including the eight Classes of Certificates offered hereby
(collectively, the "Offered Certificates"). The Certificates, in the aggregate,
will represent the entire undivided beneficial ownership interest in a trust
fund (the "Trust Fund") to be established by First Union Commercial Mortgage
Securities, Inc. (the "Depositor"), that is expected to consist primarily of a
segregated pool (the "Mortgage Pool") of 283 conventional, fixed rate mortgage
loans (the "Mortgage Loans") secured by first liens on commercial and
multifamily properties (each, a "Mortgaged Property"). As of May 1, 1997 (the
"Cut-off Date"), the Mortgage Loans had an aggregate principal balance (the
"Initial Pool Balance") of
(Continued on next page)
----------
PROSPECTIVE INVESTORS SHOULD CONSIDER THE INFORMATION SET FORTH UNDER "RISK
FACTORS" BEGINNING ON PAGE S-25 OF THIS PROSPECTUS SUPPLEMENT AND ON
PAGE 18 OF THE PROSPECTUS.
PROCEEDS OF THE ASSETS IN THE TRUST FUND WILL BE THE SOLE SOURCE OF PAYMENTS ON
THE OFFERED CERTIFICATES. THE OFFERED CERTIFICATES WILL NOT REPRESENT AN
INTEREST N OR OBLIGATION OF THE DEPOSITOR, EITHER UNDERWRITER, THE MASTER
SERVICER, THE TRUSTEE OR ANY OF THEIR AFFILIATES. NEITHER THE OFFERED
CERTIFICATES NOR THE MORTGAGE LOANS WILL BE INSURED OR GUARANTEED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY OR
INSTRUMENTALITY.
----------
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 SUPPLEMENT OR THE ACCOMPANYING
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------
THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR ENDORSED
THE MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
<TABLE>
<CAPTION>
===============================================================================================================================
INITIAL ASSUMED FINAL
CERTIFICATE % OF INITIAL PASS-THROUGH DISTRIBUTION EXPECTED
CLASS BALANCE(1) POOL BALANCE(1) RATE DATE(2) CUSIP NO. RATING(3)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A-1 .............. $200,000,000 15.3% 7.15% February 18, 2004 33736 LAA3 AAA/Aaa
Class A-2 .............. $318,000,000 24.4% 7.30% December 18, 2006 33736 LAB1 AAA/Aaa
Class A-3 .............. $395,812,000 30.3% 7.38% April 18, 2007 33736 LAC9 AAA/Aaa
Class B ................ $ 78,327,000 6.0% 7.43% April 18, 2007 33736 LAE5 AA/Aa2
Class C ................ $ 71,800,000 5.5% 7.44% April 18, 2007 33736 LAF2 A/A2
Class D ................ $ 71,800,000 5.5% 7.50% October 18, 2008 33736 LAG0 BBB/Baa2
Class E ................ $ 19,582,000 1.5% 7.75% August 18, 2009 33736 LAH8 BBB-/Baa3
Class IO ............... (4) N/A (4) April 18, 2027 33736 LAD7 AAA/Aaa
===============================================================================================================================
</TABLE>
(1) Subject to a permitted variance of plus or minus 5%.
(2) The Assumed Final Distribution Date has been determined on the basis of the
assumptions set forth in "Description of the Certificates3/4Assumed Final
Distribution Date; Rated Final Distribution Date" herein and a 0% CPR (as
defined herein). THE "RATED FINAL DISTRIBUTION DATE" IS APRIL 18, 2029, THE
FIRST DISTRIBUTION DATE THAT FOLLOWS THE SECOND ANNIVERSARY OF THE END OF
THE AMORTIZATION TERM FOR THE MORTGAGE LOAN THAT, AS OF THE CUT-OFF DATE,
HAS THE LONGEST REMAINING AMORTIZATION TERM. SEE "DESCRIPTION OF THE
CERTIFICATES3/4ASSUMED FINAL DISTRIBUTION DATE; RATED FINAL DISTRIBUTION
DATE" AND "RATINGS" HEREIN.
(3) By each of Fitch Investors Service, L.P. and Moody's Investors Service, Inc.
(4) The Class IO Certificates will not have a Certificate Balance nor will they
entitle the holders thereof to receive distributions of principal, but will
entitle such holders to receive payments of the aggregate interest accrued
on the notional amount of each of its Components, as described herein. The
aggregate of such notional amounts will initially equal approximately
$1,305,448,224. See "Description of the Certificates3/4Certificate Balances
and Notional Amount" anD "3/4Pass-Through Rates" herein.
----------
The Offered Certificates will be offered by Lehman Brothers Inc. and First
Union Capital Markets Corp. (together, the "Underwriters") from time to time in
negotiated transactions or otherwise at varying prices to be determined at the
time of sale. Proceeds to the Depositor from the sale of the Offered
Certificates, before deducting expenses payable by the Depositor, will be
approximately $1,251,955,092, which includes accrued interest. See "Method of
Distribution" herein.
The Offered Certificates are offered by the Underwriters when, as and if
issued and delivered to and accepted by the Underwriters, subject to prior sale
and subject to the Underwriters' right to reject orders in whole or in part. It
is expected that the Offered Certificates will be delivered in book-entry form
through the Same-Day Funds Settlement System of The Depository Trust Company on
or about May 29, 1997.
----------
LEHMAN BROTHERS FIRST UNION CAPITAL MARKETS CORP.
----------
The date of this Prospectus Supplement is May 9, 1997.
<PAGE>
(cover continued)
approximately $1,305,448,224, after application of all payments of principal due
on or before such date, whether or not received. First Union National Bank of
North Carolina (the "Master Servicer"), directly or through one or more
subservicers, and CRIIMI MAE Services Limited Partnership (the "Special
Servicer"), will service the Mortgage Loans. The Offered Certificates bear the
class designations and have the characteristics set forth in the table above.
Simultaneously with the issuance of the Offered Certificates, the Private
Certificates (as defined herein) will be issued. Only the Offered Certificates
are offered hereby.
The Depositor will acquire certain of the Mortgage Loans from First
Union National Bank of North Carolina and certain of the Mortgage Loans from an
affiliate of Lehman Brothers Inc. (each, a "Mortgage Loan Seller"). On or before
the date the Certificates are issued, the Depositor will transfer the Mortgage
Loans, without recourse, to State Street Bank and Trust Company, as trustee of
the Trust Fund (the "Trustee"), in exchange for the Certificates.
As and to the extent described herein, the Private Certificates will be
subordinate to the Offered Certificates; the Class B, Class C, Class D and Class
E Certificates will be subordinate to the Class A-1, Class A-2, Class A-3 and
Class IO Certificates; the Class C, Class D and Class E Certificates will be
subordinate to the Class B Certificates; the Class D and Class E Certificates
will be subordinate to the Class C Certificates; and the Class E Certificates
will be subordinate to the Class D Certificates. Distributions of interest on
and principal of the Certificates will be made, to the extent of available
funds, on the 18th day of each month or, if any such 18th day is not a business
day, then on the next succeeding business day, commencing June 18, 1997 (each, a
"Distribution Date"). As described herein, distributions allocable to interest
accrued on each Class of Offered Certificates (other than the Class IO
Certificates) will be made on each Distribution Date based on the pass-through
rate (the "Pass-Through Rate") applicable to such Class and the principal amount
(the "Certificate Balance") of such Class outstanding immediately prior to such
Distribution Date. As described herein, distributions allocable to interest
accrued on the Class IO Certificates will be made on each Distribution Date in
an amount equal to the aggregate amount of interest which has accrued on each of
its Components (as defined herein). The Class IO Certificates will have twelve
Components, each with a designation and a notional amount that corresponds with
the designation and Certificate Balance of a Class of Sequential Pay
Certificates (as defined herein). Interest will accrue on the notional amount of
each Component based on the Pass-Through Rate of such Component. The
Pass-Through Rate applicable to each Component will be equal to the Weighted
Average Net Mortgage Rate (as defined herein) minus the Pass-Through Rate
applicable to the corresponding Class of Sequential Pay Certificates. As
described herein, distributions allocable to principal of the Offered
Certificates will be made sequentially to the Class A-1, Class A-2, Class A-3,
Class B, Class C, Class D and Class E Certificates, in that order, until the
respective Classes of Certificates are retired. The Class IO Certificates will
not have a Certificate Balance, nor will they entitle the holders thereof to
distributions of principal. The holders of the Certificates may also receive
portions of any Prepayment Premiums and Yield Maintenance Charges (each as
defined herein) to the extent described herein. See "Description of the
Certificates--Distributions" herein.
The yield to maturity on each Class of Offered Certificates (other than
the Class IO Certificates) will depend on, among other things, the rate and
timing of principal payments (including by reason of prepayments, defaults and
liquidations) on the Mortgage Loans that are applied in reduction of the
Certificate Balance of such Class. THE YIELD TO MATURITY ON THE CLASS IO
CERTIFICATES WILL BE HIGHLY SENSITIVE TO THE RATE AND TIMING OF PRINCIPAL
PAYMENTS (INCLUDING BY REASON OF PREPAYMENTS, DEFAULTS AND LIQUIDATIONS) ON THE
MORTGAGE LOANS AND INVESTORS IN THE CLASS IO CERTIFICATES SHOULD FULLY CONSIDER
THE ASSOCIATED RISKS, INCLUDING THE RISK THAT A RAPID RATE OF PREPAYMENT OF THE
MORTGAGE LOANS COULD RESULT IN THE FAILURE OF SUCH INVESTORS TO FULLY RECOUP
THEIR INITIAL INVESTMENTS. The allocation to any Class of Offered Certificates
of any Prepayment Premium or Yield Maintenance Charge may be insufficient to
offset fully the adverse effects on the anticipated yield to maturity resulting
from the corresponding principal prepayment. Any delay in collection of a
Balloon Payment (as defined herein) due at the maturity of a Mortgage Loan will
likely extend the weighted average life of the Class or Classes of Offered
Certificates entitled to distributions in respect of principal as of the date
such Balloon Payment was due. See "Description of the Certificates--Certificate
Balances and Notional Amount" and "--Distributions," "Yield and Maturity
Considerations" and "Servicing of the Mortgage Loans--Modifications, Waivers
and Amendments" herein, and "Yield and Maturity Considerations" and "Risk
Factors--Prepayments; Average Life of Certificates; Yields" in the Prospectus.
As described herein, three separate "real estate mortgage investment
conduit" ("REMIC") elections will be made with respect to the Trust Fund for
federal income tax purposes (the REMICs formed thereby, "REMIC I," "REMIC II"
and "REMIC III"). The Offered Certificates will constitute "regular interests"
in the related REMIC. See "Certain Federal Income Tax Consequences" herein and
in the Prospectus.
There is currently no secondary market for the Offered Certificates.
Each of the Underwriters currently intends to make a secondary market in the
Offered Certificates, but has no obligation to do so. See "Risk Factors--The
Certificates--Limited Liquidity" herein.
THE PROSPECTUS THAT ACCOMPANIES THIS PROSPECTUS SUPPLEMENT CONTAINS
IMPORTANT INFORMATION REGARDING THIS OFFERING THAT IS NOT CONTAINED HEREIN, AND
PROSPECTIVE INVESTORS ARE URGED TO READ BOTH THE PROSPECTUS AND THIS PROSPECTUS
SUPPLEMENT IN FULL TO OBTAIN MATERIAL INFORMATION CONCERNING THE OFFERED
CERTIFICATES. SALES OF THE OFFERED CERTIFICATES MAY NOT BE CONSUMMATED UNLESS
THE PURCHASER HAS RECEIVED A COPY OF BOTH THE PROSPECTUS AND THIS PROSPECTUS
SUPPLEMENT.
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
PROSPECTUS. THIS DELIVERY REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF
DEALERS TO DELIVER A PROSPECTUS SUPPLEMENT AND PROSPECTUS WHEN ACTING AS
UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
S-2
<PAGE>
TABLE OF CONTENTS
PAGE
----
SUMMARY OF PROSPECTUS SUPPLEMENT ..................................... S-5
RISK FACTORS ......................................................... S-25
The Certificates ................................................... S-25
Limited Liquidity ................................................ S-25
Certain Yield and Maturity Considerations ........................ S-25
Potential Conflicts of Interest .................................. S-26
The Mortgage Loans ................................................. S-26
Risks of Lending on Income-Producing Properties .................. S-26
Nonrecourse Mortgage Loans ....................................... S-28
Environmental Law Considerations ................................. S-28
Balloon Payments ................................................. S-29
Risk of Subordinated Debt ........................................ S-29
DESCRIPTION OF THE MORTGAGE POOL ..................................... S-29
General ............................................................ S-29
Mortgage Loan History .............................................. S-30
Certain Terms and Conditions of the Mortgage Loans ................. S-31
Mortgage Rates; Calculations of Interest ......................... S-31
Due Dates ........................................................ S-31
Amortization ..................................................... S-31
Prepayment Provisions ............................................ S-31
Secondary Financing .............................................. S-32
Nonrecourse Obligations .......................................... S-32
"Due-on-Sale" and "Due-on-Encumbrance" Provisions ............. S-32
Cross-Default and Cross-Collateralization of Certain
Mortgage Loans ................................................. S-32
Low Income Housing Tax Credits ................................... S-33
Assessments of Property Condition .................................. S-33
Property Inspections ............................................. S-33
Appraisals ....................................................... S-33
Environmental Assessments ........................................ S-33
Engineering Assessments .......................................... S-33
Earthquake Analyses .............................................. S-34
Additional Mortgage Loan Information ............................... S-34
The Mortgage Pool ................................................ S-34
The Mortgage Loan Sellers .......................................... S-49
Assignment of the Mortgage Loans; Repurchases ...................... S-49
Representations and Warranties; Repurchases ........................ S-49
Changes in Mortgage Pool Characteristics ........................... S-51
SERVICING OF THE MORTGAGE LOANS ...................................... S-51
General ............................................................ S-51
The Master Servicer and Special Servicer ........................... S-52
The Special Servicer ............................................... S-52
Servicing and Other Compensation and Payment of Expenses ........... S-54
Modifications, Waivers and Amendments .............................. S-55
The Controlling Class Representative ............................... S-56
Limitation on Liability of Controlling Class Representative ...... S-57
REO Properties ..................................................... S-57
Inspections; Collection of Operating Information ................... S-58
S-3
<PAGE>
PAGE
----
DESCRIPTION OF THE CERTIFICATES ...................................... S-58
General ............................................................ S-58
Registration and Denominations ..................................... S-59
Certificate Balances and Notional Amount ........................... S-59
Pass-Through Rates ................................................. S-60
Distributions ...................................................... S-60
General .......................................................... S-60
The Available Distribution Amount ................................ S-61
Application of the Available Distribution Amount ................. S-61
Distributable Certificate Interest ............................... S-64
Principal Distribution Amount .................................... S-64
Treatment of REO Properties ...................................... S-65
Allocation of Prepayment Premiums and Yield Maintenance Charges .. S-65
Subordination; Allocation of Losses and Certain Expenses ........... S-66
P&I Advances ....................................................... S-68
Appraisal Reductions ............................................... S-69
Reports to Certificateholders; Available Information ............... S-69
Trustee Reports .................................................. S-69
Other Information ................................................ S-72
Book-Entry Certificates .......................................... S-72
Assumed Final Distribution Date; Rated Final Distribution Date ..... S-73
Voting Rights ...................................................... S-74
Termination ........................................................ S-74
The Trustee ........................................................ S-74
YIELD AND MATURITY CONSIDERATIONS .................................... S-75
Yield Considerations ............................................... S-75
General .......................................................... S-75
Rate and Timing of Principal Payment ............................. S-75
Losses and Shortfalls ............................................ S-76
Pass-Through Rates ............................................... S-76
Certain Relevant Factors ......................................... S-76
Delay in Payment of Distributions ................................ S-77
Unpaid Distributable Certificate Interest ........................ S-77
Yield Sensitivity of the Class IO Certificates ................... S-77
Price/Yield Tables ............................................... S-77
Weighted Average Life .............................................. S-79
USE OF PROCEEDS ...................................................... S-82
CERTAIN FEDERAL INCOME TAX CONSEQUENCES .............................. S-82
ERISA CONSIDERATIONS ................................................. S-83
LEGAL INVESTMENT ..................................................... S-85
METHOD OF DISTRIBUTION ............................................... S-86
LEGAL MATTERS ........................................................ S-86
RATINGS .............................................................. S-86
INDEX OF PRINCIPAL DEFINITIONS ....................................... S-88
ANNEX A-CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS ................ A-1
ANNEX B-TERM SHEET ................................................... B-1
ANNEX C-FORM OF DISTRIBUTION DATE STATEMENT .......................... C-1
ANNEX D-FORM OF DELINQUENT LOAN STATUS REPORT ........................ D-1
ANNEX E-FORM OF HISTORICAL LOAN MODIFICATION REPORT .................. E-1
ANNEX F-FORM OF HISTORICAL LOSS ESTIMATE REPORT ...................... F-1
ANNEX G-FORM OF REO STATUS REPORT .................................... G-1
ANNEX H-FORM OF WATCH LIST REPORT .................................... H-1
ANNEX I-OPERATING STATEMENT ANALYSIS ................................. I-1
ANNEX J-NOI ADJUSTMENT WORKSHEET ..................................... J-1
ANNEX K-COMPARATIVE FINANCIAL STATUS REPORT .......................... K-1
S-4
<PAGE>
SUMMARY OF PROSPECTUS SUPPLEMENT
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus Supplement and in
the accompanying Prospectus. Certain capitalized terms used in this Summary may
be defined elsewhere in this Prospectus Supplement or in the Prospectus. An
"Index of Principal Definitions" is included at the end of both this Prospectus
Supplement and the Prospectus. Terms that are used but not defined in this
Prospectus Supplement have the meanings specified in the Prospectus. All
percentages of the Mortgage Loans, or of any specified group of Mortgage Loans,
referred to herein without further description are approximate percentages by
aggregate Cut-off Date Balance. References to percentages of Mortgaged
Properties are references to the percentages of the Initial Pool Balance
represented by the aggregate Cut-off Date Balance of the related Mortgage Loans.
All numerical information provided herein with respect to the Mortgage Loans is
provided on an approximate basis.
<TABLE>
<CAPTION>
WEIGHTED CASH FLOW
FITCH/ INITIAL PERCENT OF PASS- AVERAGE OR
MOODY'S CERTIFICATE INITIAL POOL CREDIT THROUGH LIFE PRINCIPAL
CLASS RATING BALANCES(1) BALANCE(1) SUPPORT DESCRIPTION RATE (YEARS)(2) WINDOW(2)
----- ------ ---------- ------------ ------- ----------- ------ ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class A-1 ...... AAA/Aaa $200,000,000 15.3% 30.0% Fixed Coupon 7.15% 4.85 6/97-2/04
Class A-2 ...... AAA/Aaa $318,000,000 24.4% 30.0% Fixed Coupon 7.30% 7.75 2/04-12/06
Class A-3 ...... AAA/Aaa $395,812,000 30.3% 30.0% Fixed Coupon 7.38% 9.69 12/06-4/07
Class B ........ AA/Aa2 $ 78,327,000 6.0% 24.0% Fixed Coupon 7.43% 9.89 4/07-4/07
Class C ........ A/A2 $ 71,800,000 5.5% 18.5% Fixed Coupon 7.44% 9.89 4/07-4/07
Class D ........ BBB/Baa2 $ 71,800,000 5.5% 13.0% Fixed Coupon 7.50% 10.09 4/07-10/08
Class E ........ BBB-/Baa3 $ 19,582,000 1.5% 11.5% Fixed Coupon 7.75% 11.52 10/08-8/09
Class IO ....... AAA/Aaa (3) N/A N/A Variable IO Strip (4) N/A 6/97-4/27
Class F ........ (5) $ 71,800,000 5.5% 6.0% Fixed Coupon 7.00% 14.69 8/09-12/14
Class G ........ (5) $ 13,054,813 1.0% 5.0% Fixed Coupon 7.00% 18.54 12/14-12/16
Class H ........ (5) $ 26,108,964 2.0% 3.0% Fixed Coupon 7.00% 19.87 12/16-5/17
Class J ........ (5) $ 13,054,483 1.0% 2.0% Fixed Coupon 7.00% 21.37 5/17-3/20
Class K ........ (5) $ 26,108,964 2.0% 0.0% Fixed Coupon 7.00% 26.03 3/20-4/27
</TABLE>
- ------------
(1) Subject to a permitted variance of plus or minus 5%.
(2) Based on Scenario (1) set forth under "Yield and Maturity
Considerations--Weighted Average Life" herein.
(3) The Class IO Certificates will not have a Certificate Balance nor will they
entitle the holders thereof to receive distributions of principal. See
"--Description of the Certificates--Certificate Balances and Notional
Amount" herein.
(4) Holders of the Class IO Certificates will be entitled to receive
distributions of interest in an amount equal to the aggregate interest
accrued on the notional amount of each of its Components, as described
herein. See "--Description of the Certificates--Pass-Through Rates"
herein.
(5) Not offered hereby. Accordingly, any information herein regarding the terms
of such Class of Certificates is provided solely because of its potential
relevance to a prospective purchaser of an Offered Certificate.
S-5
<PAGE>
Title of Certificates....... First Union-Lehman Brothers Commercial Mortgage
Trust, Commercial Mortgage Pass-Through
Certificates, Series 1997-C1 (the "Certificates"),
to be issued in sixteen classes (each, a "Class")
to be designated as: (i) the Class A-1, Class A-2
and Class A-3 Certificates (collectively the
"Class A Certificates"); (ii) the Class B, Class
C, Class D, Class E, Class F, Class G, Class H,
Class J and Class K Certificates (collectively
with the Class A Certificates, the "Sequential Pay
Certificates"); (iii) the Class IO Certificates
(collectively with the Sequential Pay
Certificates, the "REMIC Regular Certificates");
and (iv) the Class R-I, Class R-II and Class R-III
Certificates (collectively, the "REMIC Residual
Certificates"). Only the Class A-1, Class A-2,
Class A-3, Class B, Class C, Class D, Class E and
Class IO Certificates (collectively, the "Offered
Certificates") are offered hereby. The Class F,
Class G, Class H, Class J, Class K and REMIC
Residual Certificates (collectively, the "Private
Certificates") have not been registered under the
Securities Act of 1933, as amended (the
"Securities Act"), and are not offered hereby.
Depositor....................First Union Commercial Mortgage Securities, Inc.,
a North Carolina corporation. The Depositor is a
wholly owned subsidiary of First Union National
Bank of North Carolina, which is also one of the
Mortgage Loan Sellers and the Master Servicer. The
Depositor also is an affiliate of First Union
Capital Markets Corp. ("First Union Capital"), one
of the Underwriters. Neither the Depositor nor any
of its affiliates has insured or guaranteed the
Offered Certificates. See "The Depositor" in the
Prospectus.
Master Servicer............. First Union National Bank of North Carolina
("FUNB"), a national banking association, which is
a subsidiary of First Union Corporation, a North
Carolina corporation registered as a bank holding
company under the Bank Holding Company Act of
1956, as amended. The Master Servicer is one of
the Mortgage Loan Sellers and an affiliate of the
Depositor and of First Union Capital, one of the
Underwriters. See "Servicing of the Mortgage
Loans--The Master Servicer and Special Servicer"
and "--Servicing and Other Compensation and
Payment of Expenses" herein.
Special Servicer............ CRIIMI MAE Services Limited Partnership, a
Maryland limited partnership. The Special Servicer
will be responsible for performing certain
servicing functions with respect to the Mortgage
Loans that, in general, are in default or as to
which default is imminent, for administering any
REO Property (as defined herein) and for
performing certain other servicing functions with
respect to the Mortgage Pool under the Pooling and
Servicing Agreement. The majority holder (or
holders) of the Class of Sequential Pay
Certificates having the latest alphabetical Class
designation will have the right, subject to
certain conditions described herein, to replace
the Special Servicer and to select a
representative (the "Controlling Class
Representative") from whom the Special Servicer
will seek advice and approval and take direction
under certain circumstances, as described herein.
It is anticipated that the Special
S-6
<PAGE>
Servicer or an affiliate of the Special
Servicer will purchase all or a significant
portion of the Private Certificates on or about
May 16 , 1997 (the "Closing Date"). See "Servicing
of the Mortgage Loans--The Master Servicer and
Special Servicer" and "--Servicing and Other
Compensation and Payment of Expenses" herein.
Trustee..................... State Street Bank and Trust Company, a trust
company chartered under the laws of the
Commonwealth of Massachusetts.
Mortgage Loan Sellers....... An affiliate of Lehman Brothers Inc., one of the
Underwriters (the "Lehman Seller"), and FUNB, a
national banking association. FUNB is the Master
Servicer and an affiliate of the Depositor and
First Union Capital, one of the Underwriters. See
"Description of the Mortgage Pool--The Mortgage
Loan Sellers" herein.
Cut-off Date................ May 1, 1997.
Settlement Date............. On or about May 29, 1997.
Registration of the
Offered Certificates....... The Offered Certificates of each Class will
initially be represented by one or more global
Certificates registered in the name of Cede & Co.,
as nominee of The Depository Trust Company
("DTC"). No person acquiring an interest in any
Offered Certificate (any such person, a
"Certificate Owner") will be entitled to receive
such Certificate in fully registered, certificated
form (a "Definitive Offered Certificate"), except
under the limited circumstances described under
"Description of the Certificates--Registration
and Denominations" herein and "Description of the
Certificates--Book-Entry Registration and
Definitive Certificates" in the Prospectus.
Instead, DTC will effect payments and transfers in
respect of the Offered Certificates by means of
its electronic recordkeeping services, acting
through certain participating organizations
("Participants"). This may result in certain
delays in receipt of payments by an investor and
may restrict an investor's ability to pledge its
Certificates. Unless and until Definitive Offered
Certificates of any Class are issued to the
related Certificate Owners, all references herein
to the rights of holders of such Class of Offered
Certificates are to the rights of those
Certificate Owners as such rights may be exercised
through DTC and its Participants, except as
otherwise specified herein.
Denominations............... The Offered Certificates of each Class will be
issued, maintained and transferred on the
book-entry records of DTC and its Participants in
denominations of $10,000 actual principal amount
(or $100,000 notional amount with respect to the
Class IO Certificates), and in integral multiples
of $1 in excess thereof.
The Mortgage Pool........... The Mortgage Pool will consist of 283 conventional,
fixed rate Mortgage Loans with an aggregate
Cut-off Date Balance of $1,305,448,224 (the
"Initial Pool Balance"), subject to a variance of
plus or minus 5.0%. The "Cut-off Date Balance" of
each Mortgage Loan will equal the unpaid principal
balance thereof as of the Cut-off Date, after
reduction for all payments of principal due on or
before such date, whether or not received. For
purposes of the numerical information provided
herein, each of the Mortgage Loans is deemed to be
secured by one Mortgaged
S-7
<PAGE>
Property, whether or not such Mortgaged Property
is comprised of more than one parcel.
Generally, all of the Mortgage Loans are
non-recourse obligations of the related borrowers.
No Mortgage Loan will be insured or guaranteed by
any governmental entity or private insurer.
Each Mortgage Loan is secured by a first mortgage
lien on the borrower's fee simple estate (or, with
respect to 10 Mortgage Loans, or 3.18%, on the
borrower's leasehold estate) in income producing
real property (each, a "Mortgaged Property").
Set forth below are the number of Mortgage Loans,
and the approximate percentage of the Initial Pool
Balance represented by such Mortgage Loans, that
are secured by Mortgaged Properties operated for
each indicated purpose:
PERCENTAGE OF
NUMBER OF INITIAL POOL
PROPERTY TYPE MORTGAGE LOANS BALANCE
------------- -------------- ------------
Multifamily ................ 123(1) 40.3%
Retail ..................... 94(2) 38.8%
Hospitality ................ 28(3) 9.9%
Office ..................... 14(4) 5.4%
Industrial/Warehouse ....... 11 2.4%
Self-Storage ............... 6 1.2%
Health Care ................ 4(5) 1.1%
Mobile Home Park ........... 3 1.0%
----------
(1) Including 11 Mortgage Loans, or 1.93%, secured by
properties which are eligible to receive low-income
housing tax credits pursuant to Section 42 of the Internal
Revenue Code of 1986 (the "Code" and such properties, the
"Section 42 Properties").
(2) Including 68 Mortgage Loans, or 32.02%, secured by
anchored retail properties and 26 Mortgage Loans, or
6.74%, secured by unanchored retail properties.
(3) All but one of such Mortgage Loans are secured by
properties which are affiliated with recognized
hotel/motel franchisors.
(4) Including one Mortgage Loan, or 1.05%, secured by 11
separate properties, eight of which are office properties,
two of which are unanchored retail properties and one of
which is an industrial property.
(5) Including one Mortgage Loan, or 0.19%, secured by an
assisted living facility; two Mortgage Loans, or 0.86%,
secured by congregate care facilities; and one Mortgage
Loan, or 0.08%, secured by a skilled nursing care
facility.
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<PAGE>
The Mortgaged Properties are located throughout 40 states. Set
forth below are the number of Mortgage Loans, and the
approximate percentage of the Initial Pool Balance represented
by such Mortgage Loans, that are secured by Mortgage
Properties located in the states with concentrations of
Mortgage Loans above 5.0%:
PERCENTAGE OF
NUMBER OF INITIAL POOL
STATE MORTGAGE LOANS BALANCE
----- -------------- -------------
Texas ...................... 53(1) 14.0%
Florida .................... 30 11.3%
California ................. 14 7.9%
Pennsylvania ............... 9 6.9%
Maryland ................... 10 6.5%
Arizona .................... 17 5.5%
Georgia .................... 20 5.3%
-------------
(1) Including one Mortgage Loan, or 1.05%, secured by 11
separate properties, nine of which are located in Texas
and one each in Virginia and North Carolina.
All of the Mortgage Loans bear interest at annualized rates
("Mortgage Rates") that will remain fixed for their respective
remaining loan terms, except as described herein. Except with
respect to one Mortgage Loan, scheduled payments of principal
and interest on the Mortgage Loans ("Monthly Payments") are
due monthly on the first day of each month. See "Description
of the Mortgage Pool--Certain Terms and Conditions of the
Mortgage Loans--Due Dates" and "--Mortgage Rates; Calculations
of Interest" herein.
Two hundred fifty-three (253) of the Mortgage Loans, or 88.96%,
provide for Monthly Payments based on amortization schedules
significantly longer than their respective remaining terms to
maturity. As a result, such Mortgage Loans ("Balloon Loans"),
will have substantial principal amounts due and payable (each
such amount, together with the corresponding payment of
interest, a "Balloon Payment") on their respective scheduled
maturity dates, unless prepaid prior thereto. Four of the
Mortgage Loans, or 1.93%, provide for the extension of
payments past their respective Expected Repayment Dates (as
defined herein) pursuant to the terms thereof. See
"Description of the Mortgage Pool--Certain Terms and
Conditions of the Mortgage Loans--Amortization" herein. The
remaining 26 Mortgage Loans, or 9.11%, are self-amortizing.
See "Risk Factors--The Mortgage Loans--Balloon Payments"
herein and "Risk Factors--Balloon Payments; Borrower Default"
in the Prospectus.
As of the Cut-off Date, all of the Mortgage Loans restrict or
prohibit voluntary principal prepayments. In general, the
Mortgage Loans: (i) prohibit voluntary prepayments of
principal for a period (a "Lockout Period") ending on a date
specified in the related Mortgage Note (as defined herein)
and, in general,
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<PAGE>
thereafter impose a Yield Maintenance Charge and/or Prepayment
Premium (each as defined herein) for most of their respective
remaining terms to maturity (241 Mortgage Loans, or 86.17%);
(ii) prohibit voluntary prepayments of principal for a Lockout
Period and thereafter permit voluntary principal prepayments
in whole without material restrictions (11 Mortgage Loans, or
3.39%); or (iii) permit voluntary principal prepayments
provided that the prepayment is accompanied by a Yield
Maintenance Charge or by a Prepayment Premium for most of
their respective remaining terms to maturity (31 Mortgage
Loans, or 10.44%). With respect to the 265 Mortgage Loans
which impose Yield Maintenance Charges, 231 of such Mortgage
Loans, or 89.92% of such Mortgage Loans, provide for the
calculation of the Yield Maintenance Charge using a discount
rate equal to the applicable Treasury Rate (as set forth in
the related Mortgage Note), two of such Mortgage Loans, or
1.41% of such Mortgage Loans, provide for the calculation of
the Yield Maintenance Charge using a discount rate equal to
the applicable Treasury Rate plus 1.00%, 31 of such Mortgage
Loans, or 8.09% of such Mortgage Loans, provide for the
calculation of the Yield Maintenance Charge using a discount
rate equal to the applicable Treasury Rate plus 0.50%, and one
of such Mortgage Loans, or 0.58% of such Mortgage Loans,
provides for the calculation of the Yield Maintenance Charge
using a discount rate equal to the applicable Treasury Rate
plus 0.35%. See "Description of the Mortgage Pool--Certain
Terms and Conditions of the Mortgage Loans--Prepayment
Provisions" and "--Additional Mortgage Loan Information"
herein. The ability of the Master Servicer or the Special
Servicer to waive or modify the terms of any Mortgage Loan
relating to the payment of a Prepayment Premium or Yield
Maintenance Charge is limited as described herein. See
"Servicing of the Mortgage Loans--Modifications, Waivers and
Amendments" herein. The Depositor makes no representation as
to the enforceability of the provision of any Mortgage Note
requiring the payment of a Prepayment Premium or Yield
Maintenance Charge, or of the collectability of any Prepayment
Premium or Yield Maintenance Charge.
Sixty (60) of the Mortgage Loans, or 23.97%, provide that the
holder of the Mortgage, following notice from the borrower
that the borrower intends to prepay the Mortgage Loan as
permitted by the related Mortgage Note, may require the
borrower, in lieu of prepayment, to pledge to such holder
"Defeasance Collateral" and thereupon obtain a release of the
Mortgaged Property from the lien of the related Mortgage. In
general, "Defeasance Collateral" is required to consist of
direct, non-callable United States Treasury obligations that
provide for payments prior, but as close as possible, to all
successive Due Dates and the scheduled maturity date, with
each such payment being equal to or greater than (with any
excess to be returned to the borrower) than the Monthly
Payment and, in the case of the scheduled maturity date, the
Balloon Payment, due on such date. The Pooling and Servicing
Agreement will require the Master
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<PAGE>
Servicer or the Special Servicer to require each such borrower
that proposes to prepay its Mortgage Loan to pledge instead
Defeasance Collateral, but in each case subject to certain
conditions, including confirmation from each Rating Agency
that acceptance of a pledge of the Defeasance Collateral in
lieu of a full prepayment will not result in a downgrade,
withdrawal or qualification of the rating then assigned by it
to any Class of Certificates. Seven of the Mortgage Loans, or
3.50%, permit the borrower at the borrower's option to pledge
Defeasance Collateral and obtain a release of the Mortgaged
Property from the lien of the related Mortgage.
Except with respect to two Mortgage Loans, or 1.05%, all of the
Mortgage Loans were originated since August 1996.
Set forth below is certain information regarding the Mortgage
Loans and the Mortgaged Properties as of the Cut-off Date (all
weighted averages set forth below are based on the Cut-off
Date Balances of the respective Mortgage Loans). Such
information is more fully described, and additional
information regarding the Mortgage Loans and the Mortgaged
Properties is set forth, in the tables under "Description of
The Mortgage Pool--Additional Mortgage Loan Information"
herein and in Annex A hereto:
Minimum Cut-off Date Balance............... $ 396,865
Maximum Cut-off Date Balance............... $33,388,969
Average Cut-off Date Balance............... $ 4,612,891
Minimum Mortgage Rate...................... 7.992%
Maximum Mortgage Rate...................... 10.500%
Weighted Average Mortgage Rate............. 8.717%
Minimum Remaining Term to Maturity
(months) ................................ 51
Maximum Remaining Term to Maturity
(months) ................................ 359
Weighted Average Remaining Term to
Maturity (months) ....................... 130
Minimum Remaining Amortization
Term (months) ........................... 174
Maximum Remaining Amortization
Term (months) ........................... 359
Weighted Average Remaining Amortization
Term (months) ........................... 329
Minimum Cut-off Date DSC Ratio ............ l.15x(1)
Maximum Cut-off Date DSC Ratio ............ 1.86x
Weighted Average Cut-off Date DSC
Ratio ................................... 1.34x
Minimum Cut-off Date LTV Ratio ............ 30.73%
Maximum Cut-off Date LTV Ratio ............ 83.95%(2)
Weighted Average Cut-off Date LTV
Ratio ................................... 69.87%
Minimum Maturity Date LTV Ratio ........... 16.39%(3)
Maximum Maturity Date LTV Ratio ........... 74.08%(3)
Weighted Average Maturity Date LTV
Ratio ................................... 61.28%(3)
----------
(1) The only Mortgage Loans with DSC Ratios below 1.20x are
Mortgage Loans secured by Section 42 Properties.
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<PAGE>
(2) The only Mortgage Loans with Cut-off Date LTV
Ratios in excess of 80% are Mortgage Loans
secured by Section 42 Properties.
(3) Includes Balloon Loans only.
One hundred fifty-five (155) of the Mortgage Loans,
or 60.07% (the "Lehman Loans"), will be acquired by
the Depositor from the Lehman Seller, which either
originated each such Mortgage Loan or, concurrently
with the origination thereof, acquired it from one
of the participants in its commercial and
multifamily mortgage loan conduit program. One
hundred twenty-eight (128) of the Mortgage Loans,
or 39.93% (the "FUNB Loans"), will be acquired by
the Depositor from FUNB, which originated each such
Mortgage Loan or acquired it concurrently with or
shortly after origination. See "Description of the
Mortgage Pool" herein.
On or prior to the Closing Date, the Depositor will
cause the Mortgage Loan Sellers to assign the
Mortgage Loans, without recourse (except as set
forth in the next sentence), to the Trustee for the
benefit of the holders of the Certificates (the
"Certificateholders"). In connection with such
assignment, each Mortgage Loan Seller will make
certain representations and warranties regarding
the characteristics of its Mortgage Loans and, as
more particularly described herein, will agree to
cure any material breach thereof or, in the absence
of such a cure, to repurchase the affected Mortgage
Loan. See "Description of the Mortgage Pool--
Representations and Warranties; Repurchases"
herein.
Description of the
Certificates..............The Certificates will be issued pursuant to a Pooling
and Servicing Agreement, to be dated as of May 1,
1997, among the Depositor, the Master Servicer, the
Special Servicer and the Trustee (the "Pooling and
Servicing Agreement"), and will represent in the
aggregate the entire beneficial ownership interest
in a trust fund (the "Trust Fund") consisting of
the Mortgage Pool and certain related assets.
A. Certificate Balances
and Notional Amount..... Upon initial issuance, and in each case subject to a
permitted variance of plus or minus 5%, the
respective Classes of Sequential Pay Certificates
will have the Certificate Balances set forth in the
table at the beginning of this Summary.
The "Certificate Balance" of any Class of Sequential
Pay 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 other assets in the Trust Fund. As more
particularly described herein, the Certificate
Balance of a Class of Sequential Pay Certificates
will be reduced on each Distribution Date by any
distributions of principal actually made on such
Class of Certificates on such Distribution Date,
and further by any losses on the Mortgage Loans
(herein referred to as "Realized Losses") and
certain Trust Fund expenses (herein referred to as
"Additional Trust Fund Expenses") actually
allocated to such Class of Certificates on such
Distribution Date.
S-12
<PAGE>
The Class IO Certificates will not have a Certificate
Balance, but will represent the right to receive
distributions of interest in an amount equal to the
aggregate interest accrued on the notional amount
of each of the Components, as described herein. The
Class IO Certificates will have twelve components
(each a "Component"), each corresponding to a
different Class of Sequential Pay Certificates.
Each Component will have the same letter and/or
numerical designation as the corresponding Class of
Sequential Pay Certificates. For any Distribution
Date, the notional amount of each Component will
equal the Certificate Balance of the corresponding
Class of Sequential Pay Certificates. On the
Settlement Date, the aggregate of the notional
amounts of each of the Components will equal
approximately $1,305,448,224, which amount will
equal the Initial Pool Balance. See "Description of
the Certificates--Certificate Balances and Notional
Amount" herein.
The REMIC Residual Certificates will not have
Certificate Balances, but will represent the right
to receive certain limited amounts not otherwise
payable on the REMIC Regular Certificates.
B. Pass-Through Rates..... The Pass-Through Rate applicable to each Class of
Sequential Pay Certificates for each Distribution
Date is fixed at the respective rate per annum set
forth with respect to such Class in the table at
the beginning of this Summary. The Pass-Through
Rate applicable to each Component for any
Distribution Date will be equal to the Weighted
Average Net Mortgage Rate for such Distribution
Date minus the Pass-Through Rate applicable to the
corresponding Class of Sequential Pay Certificates.
The REMIC Residual Certificates will not bear
interest.
The "Weighted Average Net Mortgage Rate" for each
Distribution Date is the weighted average of the
Net Mortgage Rates for the Mortgage Loans as of the
commencement of the related Collection Period (as
defined herein), weighted on the basis of their
respective Stated Principal Balances outstanding
immediately prior to such Distribution Date. The
"Net Mortgage Rate" for each Mortgage Loan will
generally equal (x) the Mortgage Rate in effect for
such Mortgage Loan as of the Cut-off Date, minus
(y) the applicable Master Servicing Fee Rate, the
Special Servicer Strip Rate, the Additional
Servicing Fee Rate and the Trustee Fee Rate (each
as defined herein); provided that if any Mortgage
Loan does not accrue interest on the basis of a
360-day year consisting of twelve 30-day months
(which is the basis on which interest accrues in
respect of the REMIC Regular Certificates), then,
solely for the purposes of calculating the
Pass-Through Rate for the Class IO Certificates,
such Net Mortgage Rate will, to the extent
appropriate, be adjusted from accrual period to
accrual period to compensate for such difference.
The "Stated Principal Balance" of each Mortgage
Loan outstanding at any time represents the
principal balance of such Mortgage Loan ultimately
due and payable thereon and will generally equal
the Cut-off Date Balance thereof, reduced on each
Distribution Date (to not less than zero) by (i)
any payments
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<PAGE>
or other collections (or advances in lieu thereof)
of principal of such Mortgage Loan that are due or
received, as the case may be, during the related
Collection Period (as defined herein) and
distributed on the Certificates on such date and
(ii) the principal portion of any Realized Loss
incurred in respect of such Mortgage Loan during
the related Collection Period for such Distribution
Date. See "Description of the Certificates--Pass-
Through Rates" herein.
C. Distributions.......... Distributions on the Certificates will be made by
the Trustee, to the extent of available funds, on
the 18th day of each month or, if any such 18th day
is not a business day, then on the next succeeding
business day, commencing June 18, 1997 (each, a
"Distribution Date"). The total of all payments or
other collections (or advances in lieu thereof) on
or in respect of the Mortgage Loans (other than
Prepayment Premiums and Yield Maintenance Charges,
which are separately distributable in respect of
the Certificates) that are available for
distribution to Certificateholders on any
Distribution Date (less certain fees and expenses
set forth in the Pooling and Servicing Agreement)
is herein referred to as the "Available
Distribution Amount" for such date. See
"Description of the Certificates--Distributions--
The Available Distribution Amount" herein.
On each Distribution Date, for so long as the
aggregate Certificate Balances of the Classes of
the Sequential Pay Certificates are greater than
zero, the Trustee will (except as otherwise
described under "Description of the Certificates--
Termination" herein) apply the Available
Distribution Amount for such date for the
following purposes and in the following order of
priority, in each case to the extent of remaining
available funds:
(1) to distributions of interest to the holders of
the Class A-1, Class A-2, Class A-3 and Class
IO Certificates (in each case, so long as any
such Class remains outstanding), pro rata, in
accordance with the respective amounts of
Distributable Certificate Interest (as defined
herein) on such Classes of Certificates on
such Distribution Date, in an amount equal to
all Distributable Certificate Interest in
respect of each such Class of Certificates for
such Distribution Date and, to the extent not
previously paid, for all prior Distribution
Dates;
(2) to distributions of principal to the holders
of the Class A-1 Certificates in an amount
(not to exceed the then outstanding
Certificate Balance of such Class of
Certificates) equal to the Principal
Distribution Amount (as defined herein) for
such Distribution Date;
(3) after the Class A-1 Certificates have been
retired, to distributions of principal to the
holders of the Class A-2 Certificates in an
amount (not to exceed the then outstanding
Certificate Balance of such Class of
Certificates) equal to the Principal
Distribution Amount for such Distribution
Date, less any portion thereof distributed in
respect of the Class A-1 Certificates;
S-14
<PAGE>
(4) after the Class A-1 and Class A-2 Certificates
have been retired, to distributions of
principal to the holders of the Class A-3
Certificates in an amount (not to exceed the
then outstanding Certificate Balance of such
Class of Certificates) equal to the Principal
Distribution Amount for such Distribution
Date, less any portion thereof distributed in
respect of the Class A-1 and/or Class A-2
Certificates;
(5) to distributions to the holders of the Class
A-1, Class A-2 and Class A-3 Certificates, pro
rata, in accordance with the amount of
Realized Losses and Additional Trust Fund
Expenses, if any, previously allocated to such
Classes of Certificates for which no
reimbursement has previously been received, to
reimburse such holders for such Realized
Losses and Additional Trust Fund Expenses, if
any;
(6) to distributions of interest to the holders of
the Class B Certificates in an amount equal to
all Distributable Certificate Interest in
respect of such Class of Certificates for such
Distribution Date and, to the extent not
previously paid, for all prior Distribution
Dates;
(7) after the Class A-1, Class A-2 and Class A-3
Certificates have been retired, to
distributions of principal to the holders of
the Class B Certificates in an amount (not to
exceed the then outstanding Certificate
Balance of such Class of Certificates) equal
to the Principal Distribution Amount for such
Distribution Date, less any portion thereof
distributed in respect of the Class A-1, Class
A-2 and/or Class A-3 Certificates;
(8) to distributions to the holders of the Class B
Certificates to reimburse such holders for all
Realized Losses and Additional Trust Fund
Expenses, if any, previously allocated to such
Class of Certificates and for which no
reimbursement has previously been received;
(9) to distributions of interest to the holders of
the Class C Certificates in an amount equal to
all Distributable Certificate Interest in
respect of such Class of Certificates for such
Distribution Date and, to the extent not
previously paid, for all prior Distribution
Dates;
(10) after the Class A-1, Class A-2, Class A-3 and
Class B Certificates have been retired, to
distributions of principal to the holders of
the Class C Certificates in an amount (not to
exceed the then outstanding Certificate
Balance of such Class of Certificates) equal
to the Principal Distribution Amount for such
Distribution Date, less any portion thereof
distributed in respect of the Class A-1, Class
A-2, Class A-3 and/or Class B Certificates;
(11) to distributions to the holders of the Class C
Certificates to reimburse such holders for all
Realized Losses and Additional Trust Fund
Expenses, if any, previously allocated to such
Class of Certificates and for which no
reimbursement has previously been received;
S-15
<PAGE>
(12) to distributions of interest to the holders of
the Class D Certificates in an amount equal to
all Distributable Certificate Interest in
respect of such Class of Certificates for such
Distribution Date and, to the extent not
previously paid, for all prior Distribution
Dates;
(13) after the Class A-1, Class A-2, Class A-3,
Class B and Class C Certificates have been
retired, to distributions of principal to the
holders of the Class D Certificates in an
amount (not to exceed the then outstanding
Certificate Balance of such Class of
Certificates) equal to the Principal
Distribution Amount for such Distribution
Date, less any portion thereof distributed in
respect of the Class A-1, Class A-2, Class
A-3, Class B and/or Class C Certificates;
(14) to distributions to the holders of the Class D
Certificates to reimburse such holders for all
Realized Losses and Additional Trust Fund
Expenses, if any, previously allocated to such
Class of Certificates and for which no
reimbursement has previously been received;
(15) to distributions of interest to the holders of
the Class E Certificates in an amount equal to
all Distributable Certificate Interest in
respect of such Class of Certificates for such
Distribution Date and, to the extent not
previously paid, for all prior Distribution
Dates;
(16) after the Class A-1, Class A-2, Class A-3,
Class B, Class C and Class D Certificates have
been retired, to distributions of principal to
the holders of the Class E Certificates in an
amount (not to exceed the then outstanding
Certificate Balance of such Class of
Certificates) equal to the Principal
Distribution Amount for such Distribution
Date, less any portion thereof distributed in
respect of the Class A-1, Class A-2, Class
A-3, Class B, Class C and/or Class D
Certificates;
(17) to distributions to the holders of the Class E
Certificates to reimburse such holders for all
Realized Losses and Additional Trust Fund
Expenses, if any, previously allocated to such
Class of Certificates and for which no
reimbursement has previously been received;
and
(18) to distributions to the holders of the
respective Classes of Private Certificates
(other than the REMIC Residual Certificates)
as described herein (provided that no
distributions of principal will be made in
respect of any Class of Private Certificates
until the aggregate Certificate Balance of the
Class A-1, Class A-2, Class A-3, Class B,
Class C, Class D and Class E Certificates has
been reduced to zero). See "Description of the
Certificates--Distributions--Application of
the Available Distribution Amount" herein;
provided that, on each Distribution Date after the
aggregate of the Certificate Balances of the
Subordinate Certificates (as defined herein) has
been reduced to zero, and in any event on the final
Distribution Date in connection with a termination
of the
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<PAGE>
Trust Fund (see "Description of the Certificates--
Termination" herein), the payments of principal to
be made as contemplated by clauses (2), (3) and (4)
above with respect to the Class A Certificates,
will be so made to the holders of the respective
Classes of such Certificates, up to an amount equal
to, and pro rata as among such Classes in
accordance with, the respective then outstanding
aggregate Certificate Balances of such Classes of
Certificates, and without regard to the Principal
Distribution Amount for such date.
The "Distributable Certificate Interest" in respect
of any Class of Sequential Pay Certificates for any
Distribution Date will generally equal one month's
interest at the applicable Pass-Through Rate
accrued on the Certificate Balance of such Class of
Certificates outstanding immediately prior to such
Distribution Date, reduced (to not less than zero)
by such Class' allocable share (in each case,
calculated as described herein) of any Net
Aggregate Prepayment Interest Shortfall (as
described herein) for such Distribution Date. The
"Distributable Certificate Interest" in respect of
the Class IO Certificates for any Distribution Date
will generally equal the aggregate interest that
accrued on each Component thereof for such
Distribution Date, reduced (to not less than zero)
by such Class' allocable share (calculated as
described herein) of any Net Aggregate Prepayment
Interest Shortfall for such Distribution Date. With
respect to each Distribution Date, interest will
accrue on each such Component in an amount equal to
one month's interest on the notional amount of such
Component immediately prior to such Distribution
Date at the applicable Pass-Through Rate. Interest
payable on the REMIC Regular Certificates will be
calculated on a 30/360 basis (as defined herein).
See "Servicing of the Mortgage Loans--Servicing and
Other Compensation and Payment of Expenses" and
"Description of the Certificates--Distributions--
Distributable Certificate Interest" herein.
The "Principal Distribution Amount" for any
Distribution Date will generally equal the
aggregate of the following: (a) the aggregate of
the principal portions of all Scheduled Payments
(other than Balloon Payments) and the principal
portion of any Assumed Scheduled Payments (as
defined herein) due or deemed due on or in respect
of the Mortgage Loans for their respective Due
Dates (as defined herein) occurring during the
related Collection Period; (b) the aggregate of all
principal prepayments received on the Mortgage
Loans during the related Collection Period; (c)
with respect to any Mortgage Loan as to which the
related stated maturity date occurred during or
prior to the related Collection Period, any payment
of principal made by or on behalf of the related
borrower during the related Collection Period
(including any Balloon Payment), net of any portion
of such payment that represents a recovery of the
principal portion of any Scheduled Payment (other
than a Balloon Payment) due or the principal
portion of any Assumed Scheduled Payment deemed
due, in respect of such Mortgage Loan on a Due Date
during or prior to the related Collection Period
and not previously recovered; (d) the aggregate of
all liquidation
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<PAGE>
proceeds, insurance proceeds, condemnation awards
and proceeds of Mortgage Loan repurchases that were
received on or in respect of the Mortgage Loans
during the related Collection Period and that were
identified and applied by the Master Servicer as
recoveries of principal, in each case net of any
portion of such amounts that represents a recovery
of the principal portion of any Scheduled Payment
(other than a Balloon Payment) due or of the
principal portion of any Assumed Scheduled Payment
deemed due, in respect of the related Mortgage Loan
on a Due Date during or prior to the related
Collection Period and not previously recovered; and
(e) for each Distribution Date after the initial
Distribution Date, the excess, if any, of the
Principal Distribution Amount for the immediately
preceding Distribution Date, over the aggregate
distributions of principal made on the Certificates
on such immediately preceding Distribution Date.
The "Scheduled Payment" due on any Mortgage Loan on
any related Due Date is the amount of the Monthly
Payment that is or would have been, as the case may
be, due thereon on such date, without regard to any
waiver, modification or amendment granted or agreed
to by the Special Servicer or otherwise resulting
from a bankruptcy or similar proceeding involving
the related borrower, and assuming that each prior
Scheduled Payment has been timely made. The
"Assumed Scheduled Payment" is an amount deemed due
in respect of a Balloon Loan that is delinquent in
respect of its Balloon Payment beyond the first
Determination Date (as defined herein) after its
stated maturity date. The Assumed Scheduled Payment
deemed due on any such Balloon Loan on its stated
maturity date and on each successive related Due
Date that it remains or is deemed to remain
outstanding will equal the Scheduled Payment that
would have been due thereon on such date if the
related Balloon Payment had not come due but rather
such Mortgage Loan had continued to amortize in
accordance with such loan's amortization schedule,
if any, in effect prior to its stated maturity
date. The "Determination Date" will be the 10th day
of each month (or, if not a business day, the next
preceding business day). See "Description of the
Certificates--Distributions--Principal Distribution
Amount" herein.
Reimbursements of previously allocated Realized
Losses and Additional Trust Fund Expenses will not
constitute distributions of principal for any
purpose and will not result in an additional
reduction in the Certificate Balance of the Class
of Certificates in respect of which any such
reimbursement is made.
The holders of the Certificates may also receive
portions of any Prepayment Premiums and Yield
Maintenance Charges to the extent described under
"Description of the Certificates--Distributions--
Allocation of Prepayment Premiums and Yield
Maintenance Charges" herein. Such distributions
will be in addition to the distributions of
interest, if any, made to such holders from the
Available Distribution Amount on each Distribution
Date.
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P&I Advances.............. Subject to a recoverability determination, as
described herein, and further subject to the
reduced advancing obligations in respect of certain
Required Appraisal Loans (as defined herein) and
certain Mortgage Loans as to which the Monthly
Payment has been reduced as part of a modification
or otherwise, the Master Servicer will be required
to make advances (each, a "P&I Advance") with
respect to each Distribution Date in an amount that
is generally equal to the aggregate of all
Scheduled Payments (other than Balloon Payments)
and any Assumed Scheduled Payments, net of related
Servicing Fees and any related Principal Recovery
Fees (each as defined herein), due or deemed due,
as the case may be, on or in respect of the
Mortgage Loans during the related Collection
Period, in each case to the extent that such amount
was not paid by or on behalf of the related
borrower or otherwise collected as of the close of
business on the last day of the related Collection
Period. If the Master Servicer fails to make a P&I
Advance required to be made, the Trustee shall then
be required to make such P&I Advance pursuant to
the terms of the Pooling and Servicing Agreement.
As more fully described herein, the Master Servicer
(or the Trustee, as applicable) will be entitled to
interest on any P&I Advance made by it, and each of
the Master Servicer and any Special Servicer will
be entitled to interest on certain reimbursable
servicing expenses incurred by either of them. Such
interest will accrue from the date any such P&I
Advance is made or such servicing expense is
incurred at a rate per annum equal to the "prime
rate" published in the "Money Rates" section of The
Wall Street Journal, as such "prime rate" may
change from time to time (the "Reimbursement
Rate"); and such interest will be compounded
annually and will be paid, contemporaneously with
the reimbursement of such P&I Advance or servicing
expense, out of general collections on the Mortgage
Pool then on deposit in the Certificate Account.
See "Description of the Certificates--P&I Advances"
herein and "Description of the Certificates--
Advances in Respect of Delinquencies" and
"Description of the Pooling Agreements--
Certificate Account" in the Prospectus.
Compensating Interest
Payments................ To the extent of its servicing compensation for the
related Collection Period, including Prepayment
Interest Excesses (as defined below) received
during such Collection Period, the Master Servicer
is required to make a non-reimbursable payment (a
"Compensating Interest Payment") with respect to
each Distribution Date to cover the aggregate of
any Prepayment Interest Shortfalls incurred during
such Collection Period. A "Prepayment Interest
Shortfall" is a shortfall in the collection of a
full month's interest (net of the related Master
Servicing Fee, the Additional Servicing Fee and the
Special Servicer Strip and without regard to any
Prepayment Premium or Yield Maintenance Charge
actually collected) on any Mortgage Loan by reason
of a full or partial principal prepayment made
prior to its Due Date in any Collection Period. A
"Prepayment Interest Excess" is a payment of
interest (net of the related Master
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<PAGE>
Servicing Fee, the Additional Servicing Fee and the
Special Servicer Strip) made in connection with any
full or partial prepayment of a Mortgage Loan after
its Due Date in any Collection Period, which
payment of interest is intended to cover the period
on and after such Due Date (exclusive of any
Prepayment Premium or Yield Maintenance Charge
actually collected). The "Net Aggregate Prepayment
Interest Shortfall" for any Distribution Date will
be the amount, if any, by which (a) the aggregate
of any Prepayment Interest Shortfalls incurred
during the related Collection Period exceeds (b)
any Compensating Interest Payment made by the
Master Servicer with respect to such Distribution
Date. See "Servicing of the Mortgage Loans--
Servicing and Other Compensation and Payment of
Expenses" and "Description of the Certificates--
Distributions-- Distributable Certificate Interest"
herein.
Subordination; Allocation of Losses and Certain
Expenses................. The rights of holders of
the Class B, Class C, Class D, Class E and the
Private Certificates (collectively, the
"Subordinate Certificates"), to receive
distributions of amounts collected or advanced on
the Mortgage Loans will, in each case, be
subordinated, to the extent described herein, to
the rights of holders of the Class A and Class IO
Certificates (collectively, the "Senior
Certificates") and each other such Class of
Subordinate Certificates, if any, with an earlier
alphabetical Class designation. This subordination
is intended to enhance the likelihood of timely
receipt by the holders of the Senior Certificates
of the full amount of Distributable Certificate
Interest payable in respect of such Classes of
Certificates on each Distribution Date, and the
ultimate receipt by the holders of each Class of
the Class A Certificates of principal equal to the
entire related Certificate Balance. Similarly, but
to decreasing degrees, this subordination is also
intended to enhance the likelihood of timely
receipt by the holders of the Class B, Class C,
Class D and Class E Certificates of the full amount
of Distributable Certificate Interest payable in
respect of such Classes of Certificates on each
Distribution Date, and the ultimate receipt by the
holders of such Certificates of, in the case of
each such Class, principal equal to the entire
related Certificate Balance. The protection
afforded to the holders of the Offered Certificates
by means of the subordination referred to above
will be accomplished by (i) the application of the
Available Distribution Amount on each Distribution
Date in the order described above in this Summary
under "--Description of the Certificates--
Distributions" and (ii) by the allocation of
Realized Losses and Additional Trust Fund Expenses
as described below. No other form of Credit Support
will be available for the benefit of the holders of
the Offered Certificates.
On each Distribution Date, following all
distributions on the Certificates to be made on
such date, the aggregate of all Realized Losses and
Additional Trust Fund Expenses that have been
incurred since the Cut-off Date through the end of
the related Collection Period and that have not
previously been so allocated will be allocated,
subject to the limitations described
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<PAGE>
herein, first to the Private Certificates in the
order described in the Pooling and Servicing
Agreement, and then to the Class E, Class D, Class
C and Class B Certificates, in that order, until
the Certificate Balance of each such Class has been
reduced to zero. Thereafter any additional Realized
Losses and Additional Trust Fund Expenses will be
allocated, subject to the limitations described
herein, to the Class A-1, Class A-2 and Class A-3
Certificates, pro rata, in proportion to their
outstanding Certificate Balances (in each such
case, in reduction of the related Certificate
Balance). See "Description of the Certificates--
Subordination; Allocation of Losses and Certain
Expenses" herein.
Any Realized Loss or Additional Trust Fund Expenses
allocated in reduction of the Certificate Balance
of any Class of Certificates will result in a
corresponding reduction in the notional amount of
the related Component.
Treatment of
REO Properties............Notwithstanding that a Mortgaged Property may be
acquired on behalf of the Certificateholders
through foreclosure, deed in lieu of foreclosure or
otherwise (upon acquisition, an "REO Property"),
the related Mortgage Loan will be treated, for
purposes of (i) determining distributions on the
Certificates, (ii) allocations of Realized Losses
and Additional Trust Fund Expenses to the
Certificates and (iii) the amount of fees payable
to the Trustee, the Master Servicer and the Special
Servicer under the Pooling and Servicing Agreement,
as having remained outstanding until such REO
Property is liquidated. In connection therewith,
operating revenues and other proceeds derived from
such REO Property (net of related operating costs,
including certain reimbursements payable to the
Master Servicer or any separate Special Servicer in
connection with the operation and disposition of
such REO Property) will be "applied" by the Master
Servicer as principal, interest and other amounts
that would have been "due" on such Mortgage Loan,
and the Master Servicer will be required to make
P&I Advances in respect of such Mortgage Loan, in
all cases as if such Mortgage Loan had remained
outstanding.
Optional Termination...... Each of the Master Servicer, the Special Servicer,
the Depositor, Lehman Brothers Inc. and the
Majority Subordinate Certificateholder (as defined
herein) will have an option to purchase all of the
Mortgage Loans and REO Properties, and thereby
effect termination of the Trust Fund and early
retirement of the then outstanding Certificates, on
any Distribution Date on which the aggregate Stated
Principal Balance of the Mortgage Pool is less than
1% of the Initial Pool Balance. See "Description of
the Certificates--Termination" herein and in the
Prospectus.
Certain Investment
Considerations........... The yield to maturity of a Class A-1, Class A-2,
Class A-3, Class B, Class C, Class D and Class E
Certificate purchased at a discount or premium will
be affected by the rate of prepayments and other
unscheduled collections of principal on or in
respect of the Mortgage Loans and the allocation
thereof to reduce the principal balance of such
Certificate. An investor should consider, in the
case of any such Certificate purchased at a
discount, the risk that a slower than anticipated
rate of
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prepayments could result in a lower than
anticipated yield and, in the case of any such
Certificate purchased at a premium, the risk that a
faster than anticipated rate of prepayments could
result in a lower than anticipated yield. IN
ADDITION, THE YIELD TO MATURITY OF THE CLASS IO
CERTIFICATES WILL BE HIGHLY SENSITIVE TO THE RATE
AND TIMING OF PRINCIPAL PAYMENTS (INCLUDING BY
REASON OF PREPAYMENTS, DEFAULTS AND LIQUIDATIONS)
ON THE MORTGAGE LOANS, AND INVESTORS IN THE CLASS
IO CERTIFICATES SHOULD FULLY CONSIDER THE
ASSOCIATED RISKS, INCLUDING THE RISK THAT A RAPID
RATE OF PREPAYMENTS AND/OR LIQUIDATIONS IN RESPECT
OF THE MORTGAGE LOANS COULD RESULT IN THE FAILURE
OF SUCH INVESTORS TO FULLY RECOUP THEIR INITIAL
INVESTMENTS. See "Yield and Maturity
Considerations" herein and in the Prospectus. The
allocation to any Class of any Prepayment Premium
or Yield Maintenance Charge may be insufficient to
offset fully the effects on the anticipated yield
to maturity resulting from the corresponding
principal prepayment. See "Description of
Certificates--Distributions--Allocation of
Prepayment Premiums and Yield Maintenance Charges"
herein.
In addition, insofar as an investor's initial
investment in any Offered Certificate is returned
in the form of payments of principal thereon, there
can be no assurance that such amounts can be
reinvested in comparable alternative investments
with comparable yields. Investors in the Offered
Certificates should consider that, as of the
Cut-off Date, certain of the Mortgage Loans may be
prepaid at any time and the remainder may be
prepaid at any time after the expiration of the
applicable Lock-Out Period (as defined herein),
subject, in most cases, to the payment of a
Prepayment Premium or Yield Maintenance Charge. See
"Description of the Mortgage Pool--Certain Terms
and Conditions of the Mortgage Loans--Prepayment
Provisions" herein. Accordingly, the rate of
prepayments on the Mortgage Loans is likely to be
inversely related to the level of prevailing market
interest rates (and, presumably, to the yields on
comparable alternative investments).
Certain Federal Income
Tax Consequences......... Three (3) separate "real estate mortgage investment
conduit" ("REMIC") elections will be made with
respect to the Trust Fund for federal income tax
purposes with the resulting REMICs being herein
referred to as "REMIC I," "REMIC II" and "REMIC
III." The assets of REMIC I will consist of the
Mortgage Loans, any REO Properties acquired on
behalf of the Certificateholders and the
Certificate Account (see "Description of the
Pooling Agreements--Certificate Account" in the
Prospectus). For federal income tax purposes, (a)
the separate noncertificated regular interests in
REMIC I will be the "regular interests" in REMIC I
and will constitute the assets of REMIC II, (b) the
Class R-I Certificates will be the sole class of
"residual interests" in REMIC I, (c) the separate
noncertificated regular interests in REMIC II will
be the "regular interests" in REMIC II and will
constitute the assets of REMIC III, (d) the Class
R-II Certificates will be sole class of "residual
interests" in REMIC
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<PAGE>
II, (e) the REMIC Regular Certificates (or, in the
case of the Class IO Certificates, each Component
thereof) will be the "regular interests" in REMIC
III and generally will be treated as debt
instruments of REMIC III, and (f) the Class R-III
Certificates will be the sole class of "residual
interests" in REMIC III.
The Class A-1, Class A-2, Class A-3, Class B, Class C
and Class D Certificates will not, and the Class E
and IO Certificates will, be treated as having been
issued with original issue discount for federal
income tax reporting purposes. The prepayment
assumption that will be used for purposes of
computing the accrual of original issue discount,
market discount and premium, if any, for federal
income tax purposes will be equal to a CPR of 0%.
However, no representation is made that the
Mortgage Loans will prepay at that rate or at any
other rate.
The Offered Certificates will be treated as "real
estate assets" within the meaning of Section
856(c)(5)(A) of the Code. In addition, interest
(including original issue discount) on the Offered
Certificates will be interest described in Section
856(c)(3)(B) of the Code. However, the Offered
Certificates will generally only be considered
assets described in Section 7701(a)(19)(C) of the
Code to the extent that the Mortgage Loans are
secured by residential property and, accordingly,
an investment in the Offered Certificates may not
be suitable for certain thrift institutions.
For further information regarding the federal income
tax consequences of investing in the Offered
Certificates, see "Certain Federal Income Tax
Consequences" herein and in the Prospectus.
ERISA Considerations...... A fiduciary of any employee benefit plan or other
retirement arrangement subject to the Employee
Retirement Income Security Act of 1974, as amended
("ERISA"), or Section 4975 of the Code (a "Plan")
should review carefully with its legal advisors
whether the purchase or holding of Offered
Certificates could give rise to a transaction that
is prohibited or is not otherwise permitted either
under ERISA or Section 4975 of the Code or whether
there exists any statutory or administrative
exemption applicable to an investment therein.
Lehman Brothers Inc. has received from the U.S.
Department of Labor (the "DOL") an individual
Prohibited Transaction Exemption that generally
exempts from the application of certain of the
prohibited transaction provisions of Sections
406(a) and (b) and 407(a) of ERISA and the excise
taxes imposed on such prohibited transactions by
Section 4975(a) and (b) of the Code, transactions
relating to the purchase, sale and holding of
pass-through certificates underwritten by Lehman
Brothers Inc. provided that certain conditions are
satisfied.
The Depositor expects that the Prohibited Transaction
Exemption will generally apply to the Senior
Certificates, but it will not apply to the other
Classes of Offered Certificates. ACCORDINGLY,
EXCEPT AS DESCRIBED HEREIN, THE CLASS B, CLASS C,
CLASS D AND CLASS E CERTIFICATES SHOULD NOT BE
ACQUIRED BY A PLAN OR ANY
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<PAGE>
INVESTOR HOLDING ASSETS OF A PLAN. PURCHASERS USING
INSURANCE COMPANY GENERAL ACCOUNT FUNDS TO EFFECT
SUCH PURCHASE SHOULD CONSIDER THE AVAILABILITY OF
PROHIBITED TRANSACTION CLASS EXEMPTION 95-60 (60
FED. REG. 35925, JULY 12, 1995) ISSUED BY THE DOL.
SEE "ERISA CONSIDERATIONS" HEREIN AND IN THE
PROSPECTUS.
Ratings................... It is a condition of their issuance that the Offered
Certificates receive the ratings from each of Fitch
Investors Service, L.P. ("Fitch") and Moody's
Investors Service, Inc. ("Moody's" and, together
with Fitch, the "Rating Agencies") set forth on the
cover page of this Prospectus Supplement. The
ratings on the Offered Certificates address the
likelihood of the timely receipt by holders thereof
of all distributions of interest to which they are
entitled and, except in the case of the Class IO
Certificates, distributions of principal by the
Rated Final Distribution Date set forth on the
cover page of this Prospectus Supplement. 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
represent any assessment of (i) the likelihood or
frequency of principal prepayments or default
interest on the Mortgage Loans, (ii) the degree to
which such prepayments might differ from those
originally anticipated or (iii) whether and to what
extent Prepayment Premiums and Yield Maintenance
Charges will be received. Also, a security rating
does not represent any assessment of the yield to
maturity that investors may experience or the
possibility that the holders of the Class IO
Certificates might not fully recover their
investment in the event of rapid prepayments of the
Mortgage Loans (including both voluntary and
involuntary prepayments). See "Ratings" herein and
"Risk Factors--Limited Nature of Ratings" in the
Prospectus.
Legal Investment.......... Any Class of Offered Certificates rated in the
category of "AAA" or "AA" (or the equivalent) by at
least one Rating Agency will constitute "mortgage
related securities" pursuant to the Secondary
Mortgage Market Enhancement Act of 1984, as amended
("SMMEA"). All other Offered Certificates
("Non-SMMEA Certificates") will not constitute
"mortgage related securities" for purposes of
SMMEA. As a result, the appropriate
characterization of the Non-SMMEA Certificates
under various legal investment restrictions, and
thus the ability of investors subject to these
restrictions to purchase the Non-SMMEA Certificates
of any Class, may be subject to significant
interpretative uncertainties. In addition,
institutions whose investment activities are
subject to review by federal or state regulatory
authorities may be or may become subject to
restrictions on the investment by such institutions
in certain forms of mortgage backed securities.
Investors should consult their own legal advisors
to determine whether and to what extent the Offered
Certificates constitute legal investments for them.
See "Legal Investment" herein and in the
Prospectus.
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<PAGE>
RISK FACTORS
Prospective purchasers of the Offered Certificates of any Class should
consider, among other things, the following risk factors (as well as the risk
factors set forth under "Risk Factors" in the Prospectus) in connection with an
investment therein.
THE CERTIFICATES
Limited Liquidity. There is currently no secondary market for the Offered
Certificates. While each of the Underwriters currently intends to make a
secondary market in the Offered Certificates, neither is under any obligation to
do so. Accordingly, there can be no assurance that a secondary market for the
Offered Certificates will develop. Moreover, if a secondary market does develop,
there can be no assurance that it will provide holders of the Offered
Certificates with liquidity of investment or that it will continue for the life
of the Offered Certificates. Any such secondary market may provide less
liquidity to investors than any comparable market for securities that evidence,
for example, interests solely in single-family mortgage loans. The Certificates
will not be listed on any securities exchange.
Certain Yield and Maturity Considerations. The yield on the Class IO
Certificates and any other Classes of Offered Certificates that are purchased at
a discount or premium will be affected by the rate and timing of principal
payments applied or otherwise resulting in reduction of the Certificate Balance
(or, in the case of the Class IO Certificates, the notional amount of any
Component) of such Class of Certificates, which in turn will be affected by (i)
the rate and timing of principal payments and collections on the Mortgage Loans,
particularly unscheduled payments or collections in the form of voluntary
prepayments of principal or unscheduled recoveries of principal due to defaults,
casualties or condemnations whether before or after the scheduled maturity date
of the related Mortgage Loans, and (ii) the order of priority of distributions
of principal in respect of the Certificates. The rate and timing of unscheduled
payments and collections of principal on the Mortgage Loans is impossible to
accurately predict and will be affected by a variety of factors, including,
without limitation, the level of prevailing interest rates, restrictions on
voluntary prepayments contained in the Mortgage Notes, the availability of
mortgage credit and other economic, demographic, geographic, tax and legal
factors. In general, however, if prevailing interest rates fall significantly
below the Mortgage Rates on the Mortgage Loans, borrowers under the Mortgage
Loans will have an increased incentive to prepay. As described herein, the
Principal Distribution Amount for each Distribution Date will be distributable
entirely in reduction of the Certificate Balance of the Class A-1, Class A-2 and
Class A-3 Certificates, in that order (unless the Certificate Balance of the
Class B Certificates has been reduced to zero), in each such case until the
related Certificate Balance thereof is reduced to zero, and will thereafter be
distributable in its entirety in respect of each remaining Class of Sequential
Pay Certificates, sequentially in alphabetical order of Class designation, until
the related Certificate Balance of each such Class is, in turn, reduced to zero.
See "Description of the Certificates--Distributions--Application of the
Available Distribution Amount" herein. Accordingly, the actual rate of principal
payments on the Mortgage Loans may have different effects on the yields of the
respective Classes of Offered Certificates. Any payment in reduction of the
Certificate Balance of a Class of Sequential Pay Certificates will also result
in a corresponding reduction in the notional amount of the related Component.
Thus, the yield on the Class IO Certificates will be extremely sensitive to the
rate and timing of principal payments on the Mortgage Loans, and the more
quickly the notional amount of any Component is reduced, the greater will be the
negative effect on their yields, to the extent such effect is not offset by
distributions of a portion of any applicable Prepayment Premiums or Yield
Maintenance Charges to the holders thereof, as described under "Description of
the Certificates--Distributions--Allocation of Prepayment Premiums and Yield
Maintenance Charges" herein. In addition, the Mortgage Loans may not require the
payment of Prepayment Premiums or Yield Maintenance Charges in the event of
involuntary prepayments resulting from casualty or condemnation. Accordingly,
prospective investors in the Class IO Certificates should consider the
associated risks, including the risk that a rapid rate of prepayments on the
Mortgage Loans could result in the failure of such investors to fully recoup
their initial investments.
The yield on any Offered Certificate also will be affected by the rate and
timing of losses attributable to defaults on the Mortgage Loans, the severity of
such losses and the extent to which such losses and related expenses are applied
in reduction of the actual or notional principal amount of such Certificate or
otherwise reduce the amount of funds available for distribution to the holder of
such Certificate. To the extent described herein, the Private Certificates are
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<PAGE>
subordinate in right and time of payment to the Offered Certificates and will
bear shortfalls in collections and losses incurred in respect of the Mortgage
Loans prior to the Offered Certificates; and the Class B, Class C, Class D and
Class E Certificates are subordinate in right and time of payment to the Senior
Certificates and will bear such shortfalls and losses prior to the Senior
Certificates, in reverse alphabetical order of Class designation. The Class A-1,
Class A-2 and Class A-3 Certificates will bear shortfalls in collections and
losses incurred in respect of the Mortgage Loans pro rata, in proportion to
their respective outstanding Certificate Balances. However, until the first
Distribution Date after the aggregate of the Certificate Balances of the
Subordinate Certificates has been reduced to zero, (i) the Class A-3
Certificates will receive principal payments only after the Certificate Balances
of the Class A-2 and Class A-1 Certificates have been reduced to zero and (ii)
the Class A-2 Certificates will receive principal payments only after the
Certificate Balance of the Class A-1 Certificates has been reduced to zero. As a
result, the shortfalls and losses allocated to the Class A-1, Class A-2 and
Class A-3 Certificates will have a greater affect on the Class A-3 Certificates
and, depending on the timing of such shortfalls or losses, to a lesser extent,
the Class A-2 Certificates. Any Realized Loss or Additional Trust Fund Expenses
allocated in reduction of the Certificate Balance of any Class of Sequential Pay
Certificates will result in a corresponding reduction in the notional amount of
the corresponding Component. See "Description of the Certificates--
Distributions" and "--Subordination; Allocation of Losses and Certain Expenses"
herein and "Yield and Maturity Considerations" herein and in the Prospectus.
The Pass-Through Rate applicable to each Component will be variable and
will be equal to the Weighted Average Net Mortgage Rate minus the Pass-Through
Rate on the Class of Sequential Pay Certificates related to such Component.
Accordingly, the Pass-Through Rate applicable to each Component and,
correspondingly, the yield on the Class IO Certificates will be sensitive to
changes in the relative composition of the Mortgage Pool as a result of
scheduled amortization, voluntary prepayments and liquidations. See "Description
of the Certificates--Distributions" and "Subordination; Allocation of Losses
and Certain Expenses" herein and "Yield and Maturity Considerations" herein and
in the Prospectus.
Potential Conflicts of Interest. Subject to certain conditions described
herein, the Pooling and Servicing Agreement will permit the holder (or holders)
of the majority of the Voting Rights allocated to the Class of Sequential Pay
Certificates that has the latest alphabetical Class designation and that has a
Certificate Balance that is greater than 25% of its original Certificate Balance
(or, if no Class of Sequential Pay Certificates has a Certificate Balance that
is greater than 25% of its original Certificate Balance, the Class of Sequential
Pay Certificates with the latest alphabetical Class designation) to replace the
Special Servicer or any successor thereafter appointed and to select the
Controlling Class Representative from whom the Special Servicer will seek advice
and approval and take direction under certain circumstances, as described
herein. The replacement Special Servicer may be a Certificateholder of such
Class or an affiliate of any such Certificateholder. As described herein, any
such Special Servicer will have considerable latitude in determining to
liquidate or modify defaulted Mortgage Loans. In addition, the Special Servicer
will perform certain servicing functions with respect to the Mortgage Loans,
pursuant to the Pooling and Servicing Agreement. See "Servicing of the Mortgage
Loans--Modifications, Waivers and Amendments" herein. It is contemplated that
the initial Special Servicer or an affiliate thereof may purchase some or all of
the Certificates of one or more Classes of Private Certificates, and the Special
Servicer or an affiliate thereof is not prohibited from purchasing the
Certificates of any other Class. Although the Special Servicer will be obligated
to observe the terms of the Pooling and Servicing Agreement and will be governed
by the servicing standard described herein, it may, especially if it is itself a
Certificateholder, have interests when dealing with defaulted Mortgage Loans
that are in conflict with those of holders of Offered Certificates. For
instance, a Special Servicer that is a Certificateholder could seek to mitigate
the potential for loss to its Class from a troubled Mortgage Loan by deferring
enforcement in the hope of maximizing future proceeds. However, such action
could result in less proceeds to the Trust Fund than would have been realized if
earlier action had been taken. In connection with the servicing of the Specially
Serviced Mortgage Loans, the Special Servicer may, at the direction of the
Controlling Class Representative, take actions with respect to such Specially
Serviced Mortgage Loans that could adversely affect the holders of some or all
of the Classes of Offered Certificates. It is possible that the Controlling
Class Representative may direct the Special Servicer to take actions which
conflict with the interests of the holders of certain Classes of Offered
Certificates.
THE MORTGAGE LOANS
Risks of Lending on Income-Producing Properties. The Mortgaged Properties
consist entirely of income-producing real estate. Lending on the security of
income-producing real estate is generally viewed as exposing a lender to a
greater risk of loss than lending on the security of single-family residences.
Income property
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<PAGE>
lending typically involves larger loans than single-family lending. In
addition, and unlike loans made on the security of single family residences,
repayment of loans made on the security of income-producing real property
depends upon the ability of the related real estate project (i) to generate
rental income sufficient to pay operating expenses and leasing commissions, to
make necessary repairs, tenant improvements and capital improvements and to pay
debt service and (ii) in the case of loans that do not fully amortize over their
terms, to retain sufficient value to permit the borrower to pay off the loan at
maturity by sale or refinancing. A number of factors, many beyond the control of
the property owner, can affect the ability of an income-producing real estate
project to generate sufficient net operating income to pay debt service and/or
to maintain its value. Among these factors are economic conditions generally and
in the area of the project, the age, quality and design of the project and the
degree to which it competes with other projects in the area, changes or
continued weakness in specific industry segments, increases in operating costs,
the willingness and ability of the owner to provide capable property management
and maintenance and, in the case of Mortgaged Properties that are retail,
industrial/warehouse or office properties, the degree to which the project's
revenue is dependent upon a single tenant or user, a small group of tenants,
tenants concentrated in a particular business or industry and the competition to
any such tenants. If leases are not renewed or replaced, if tenants default
and/or if rental rates fall and/or if operating expenses increase, the
borrower's ability to repay the loan may be impaired and the resale value of the
property, which is substantially dependent upon the property's ability to
generate income, may decline. In addition, there are other factors, including
changes in zoning or tax laws, the availability of credit for refinancing, and
changes in interest rate levels that may adversely affect the value of a project
(and thus the borrower's ability to sell or refinance) without necessarily
affecting the ability to generate current income.
In addition, particular types of income properties are exposed to
particular risks. For instance, office properties may require their owners to
expend significant amounts of cash to pay for general capital improvements,
tenant improvements and costs of re-leasing space. Also, office properties that
are not equipped to accommodate the needs of modern businesses may become
functionally obsolete and thus non-competitive. Multifamily projects are part of
a market that, in general, is characterized by low barriers to entry. Thus, a
particular apartment market with historically low vacancies could experience
substantial new construction, and a resultant oversupply of units, in a
relatively short period of time. Since multifamily apartment units are typically
leased on a short-term basis, the tenants who reside in a particular project
within such a market may easily move to alternative projects with more desirable
amenities or locations. The rent limitations imposed on Section 42 Properties
may adversely affect the ability of the applicable borrowers to increase rents
to maintain such Mortgaged Properties in proper condition during periods of
rapid inflation or declining market value of such Mortgaged Properties. In
addition, the income restrictions on tenants imposed by Section 42 of the Code
may reduce the number of eligible tenants in such Mortgaged Properties and
result in a reduction in occupancy rates applicable thereto. See "Description of
the Mortgage Pool--Certain Terms and Conditions of the Mortgage Loans--Low
Income Housing Tax Credits" herein. Shopping centers, in general, are affected
by the health of the retail industry, which is currently undergoing a
consolidation and is experiencing changes due to the growing market share of
"off-price" retailing, and a particular shopping center may be adversely
affected by the bankruptcy or decline in drawing power of an anchor tenant, a
shift in consumer demand due to demographic changes (for example, population
decreases or changes in average age or income) and/or changes in consumer
preference (for example, to discount retailers). See "Description of the
Mortgage Pool--Additional Mortgage Loan Information--Certain Lease Matters"
herein. Industrial properties may be adversely affected by reduced demand for
industrial space occasioned by a decline in a particular industry segment (for
example, a decline in defense spending), and a particular industrial property
that suited the needs of its original tenant may be difficult to relet to
another tenant or may become functionally obsolete relative to newer properties.
The successful operation of a hospitality property with a franchise affiliation
may depend in part upon the strength of the franchisor, the public perception of
the franchise service mark and the continued existence of the franchise license
agreement. The transferability of a franchise license agreement may be
restricted, and a lender or other person that acquires title to a hotel property
as a result of foreclosure may be unable to succeed to the borrower's rights
under the franchise license agreement. 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.
See "Risk Factors--Risks Associated with Certain Mortgage Loans and Mortgaged
Properties" in the Prospectus.
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. Providers of long-term nursing care, assisted living and
other medical services are subject to federal and state laws that relate to the
adequacy of medical care, distribution of pharmaceuticals, rate setting,
equipment, personnel, operating policies and additions to facilities and
services and, to
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the extent dependent on patients whose fees are reimbursed by private
insurers, to the reimbursement policies of such insurers. The failure of any of
such borrower to maintain or renew any required license or regulatory approval
could prevent it from continuing operations at a Mortgaged Property (in which
case no revenues would be received from such property or portion thereof
requiring licensing) or, if applicable, bar it from participation in government
reimbursement programs. Furthermore, in the event of foreclosure, there can be
no assurance that the Trustee or any other purchaser at a foreclosure sale would
be entitled to the rights under such licenses and such party may have to apply
in its own right for such a license. There can be no assurance that a new
license could be obtained or that the related Mortgage Property would be
adaptable to other uses. 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 subject to statutory and regulatory
changes, retroactive rate adjustments, administrative rulings, policy
interpretations, delays by fiscal intermediaries and government funding
restrictions. Moreover, governmental payors have employed cost-containment
measures that limit payments to health care providers, and there are currently
under consideration various proposals in the United States Congress that could
materially change or curtail those payments. Accordingly, there can be no
assurance that payments under government reimbursement programs will, in the
future, be sufficient to fully reimburse the cost of caring for program
beneficiaries. If not, net operating income of the Mortgaged Properties that
receive substantial revenues from those sources, and consequently the ability of
the related borrowers to meet their Mortgage Loan obligations, could be
adversely affected. Under applicable federal and state laws and regulations,
including those that govern Medicare and Medicaid programs, only the provider
who actually furnished the related medical goods and services may sue for or
enforce its rights to reimbursement. Accordingly, in the event of foreclosure,
none of the Trustee, the Master Servicer, the Special Servicer or a subsequent
lessee or operator of the property would generally be entitled to obtain from
federal or state governments any outstanding reimbursement payments relating to
services furnished at the respective properties prior to such foreclosure.
Various factors, including location, quality and franchise affiliation (or
lack thereof), affect the economic viability of a hotel. Adverse economic
conditions, either local, regional or national, may limit the amount that may be
charged for a room and may result in a reduction in occupancy levels. The
construction of competing hotels or motels can have similar effects. Because
hotel rooms generally are rented for short periods of time, hotel properties
tend to respond more quickly to adverse economic conditions and competition than
do other commercial properties. In addition, the transferability of franchise
license agreements may be restricted and, in the event of foreclosure, there can
be no assurance that the hotel would have the right to continue to use the
franchise license. Furthermore, the ability of a hotel to attract customers, and
some of such hotel's revenues, may depend in large part on its having a liquor
license. Such a license may not be transferable (for example, in connection with
a foreclosure).
Nonrecourse Mortgage Loans. The Mortgage Loans are not insured or
guaranteed by any governmental entity or private mortgage insurer. The Depositor
has not undertaken any evaluation of the significance of the recourse provisions
of Mortgage Loans that may permit recourse against the related borrower or
another person in the event of a default. Accordingly, investors should consider
all of the Mortgage Loans to be nonrecourse loans as to which recourse in the
case of default will be limited to the related Mortgaged Property.
Environmental Law Considerations. Contamination of real property may give
rise to a lien on that property to assure payment of the cost of clean-up or, in
certain circumstances, may result in liability to the lender for that cost. Such
contamination may also reduce the value of a property. A "Phase I" environmental
site assessment was performed at each of the Mortgaged Properties. See
"Description of the Mortgage Pool--Assessments of Property Condition--
Environmental and Engineering Assessments" herein.
The Pooling and Servicing Agreement requires that the Special Servicer
obtain an environmental site assessment of a Mortgaged Property prior to taking
possession of the property through foreclosure or otherwise or assuming control
of its operation. Such requirement effectively precludes enforcement of the
security for the related Mortgage Note until a satisfactory environmental site
assessment is obtained (or until any required remedial action is thereafter
taken), but will decrease the likelihood that the Trust Fund will become liable
for a material adverse environmental condition at the Mortgaged Property.
However, there can be no assurance that the requirements of the Pooling and
Servicing Agreement will effectively insulate the Trust Fund from potential
liability for a materially adverse environmental condition at any Mortgaged
Property. See "Description of the Pooling Agreements--Realization Upon
Defaulted Mortgage Loans", "Risk Factors--Environmental Risks" and "Certain
Legal Aspects of Mortgage Loans and Leases--Environmental Considerations" in
the Prospectus.
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Balloon Payments. Two hundred fifty-three (253) of the Mortgage Loans, or
88.96%, do not fully amortize over their terms to maturity. Loans with Balloon
Payments involve a greater risk to a lender than fully-amortizing loans because
the ability of a borrower to make a Balloon Payment typically will depend upon
its ability either to fully refinance the loan or to sell the related mortgaged
property at a price sufficient to permit the borrower to make the Balloon
Payment. Moreover, and whether or not losses are ultimately sustained, any delay
in the collection of a Balloon Payment that would otherwise be distributable in
respect of a Class of Offered Certificates will likely extend the weighted
average life of such Class. The ability of a borrower to effect a refinancing or
sale will be affected by a number of factors, including the value of the related
Mortgaged Property, the level of available mortgage rates at the time of sale or
refinancing, the borrower's equity in the Mortgaged Property, the financial
condition and operating history of the borrower and the Mortgaged Property, tax
laws, prevailing general economic conditions and the availability of credit for
loans secured by multifamily or commercial, as the case may be, real properties
generally. See "Risk Factors--Balloon Payments; Borrower Default" in the
Prospectus.
In order to maximize recoveries on defaulted Mortgage Loans, the Pooling
and Servicing Agreement permits the Special Servicer to extend and modify
Mortgage Loans that are in material default or as to which a payment default
(including the failure to make a Balloon Payment) is imminent; subject, however,
to the limitations described under "Servicing of the Mortgage Loans--
Modifications, Waivers and Amendments" herein. There can be no assurance,
however, that any such extension or modification will increase the present value
of recoveries in a given case. Any delay in collection of a Balloon Payment that
would otherwise be distributable in respect of a Class of Offered Certificates,
whether such delay is due to borrower default or to modification of the related
Mortgage Loan, will likely extend the weighted average life of such Class of
Offered Certificates. See "Yield and Maturity Considerations" herein and in the
Prospectus.
Risk of Subordinated Debt. The Mortgaged Properties securing eight Mortgage
Loans, or 2.71%, are encumbered by subordinated debt. The existence of
subordinated debt encumbering any Mortgaged Property may increase the difficulty
of refinancing the related Mortgage Loan at maturity and the possibility that
reduced cash flow could result in deferred maintenance. Also, in the event that
the holder of the subordinated debt has filed for bankruptcy or been placed in
involuntary receivership, foreclosing on the Mortgaged Property could be
delayed. See "Certain Legal Aspects of Mortgage Loans and Leases--Subordinate
Financing" and "--Due-on-Sale and Due-on-Encumbrance" in the Prospectus.
DESCRIPTION OF THE MORTGAGE POOL
GENERAL
The Mortgage Pool will consist of 283 conventional, fixed rate Mortgage
Loans with an Initial Pool Balance of $1,305,448,224, which will equal the
aggregate Cut-off Date Balance of such Mortgage Loans. The Cut-off Date Balances
of the Mortgage Loans range from $396,865 to $33,388,969, and the Mortgage Loans
have an average Cut-off Date Balance of $4,612,891. All percentages of the
Mortgage Loans, or of any specified group of Mortgage Loans, referred to herein
without further description are approximate percentages by aggregate Cut-off
Date Balance. References to percentages of Mortgaged Properties referred to
herein without further description are references to the percentages of the
Initial Pool Balance represented by the aggregate Cut-off Date Balance of the
related Mortgage Loans. For purposes of calculations herein, as shown on Annex A
hereto, each of the Mortgage Loans is deemed to be secured by one Mortgaged
Property, whether or not such Mortgaged Property is comprised of more than one
parcel. All numerical information provided herein with respect to the Mortgage
Loans is provided on an approximate basis.
Each Mortgage Loan is evidenced by a promissory note (a "Mortgage Note")
and secured by a mortgage, deed of trust or other similar security instrument (a
"Mortgage") that creates a first mortgage lien on a fee simple estate (or with
respect to 10 Mortgage Loans, or 3.18%, on the borrower's leasehold estate) in
an income-producing real property (each, a "Mortgaged Property").
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Set forth below are the number of Mortgage Loans, and the approximate
percentage of the Initial Pool Balance represented by such Mortgage Loans, that
are secured by Mortgaged Properties operated for each indicated purpose:
PERCENTAGE OF
NUMBER OF INITIAL POOL
PROPERTY TYPE MORTGAGE LOANS BALANCE
------------- -------------- -------------
Multifamily ................................ 123(1) 40.3%
Retail ..................................... 94(2) 38.8%
Hospitality ................................ 28(3) 9.9%
Office ..................................... 14(4) 5.4%
Industrial/Warehouse ....................... 11 2.4%
Self-Storage ............................... 6 1.2%
Health Care ................................ 4(5) 1.1%
Mobile Home Park ........................... 3 1.0%
- ----------
(1) Including 11 Mortgage Loans, or 1.93%, secured by properties which are
eligible to receive low-income housing tax credits pursuant to Section 42 of
the Internal Revenue Code of 1986 (the "Code" and such properties, the
"Section 42 Properties").
(2) Including 68 Mortgage Loans, or 32.02%, secured by anchored retail
properties and 26 Mortgage Loans, or 6.74%, secured by unanchored retail
properties.
(3) All but one of such Mortgage Loans are secured by properties which are
affiliated with recognized hotel/motel franchisors.
(4) Including one Mortgage Loan, or 1.05%, secured by 11 separate properties,
eight of which are office properties, two of which are unanchored retail
properties and one of which is an industrial property.
(5) Including one Mortgage Loan, or 0.19%, secured by an assisted living
facility; two Mortgage Loans, or 0.86%, secured by congregate care
facilities; and one Mortgage Loan, or 0.08%, secured by a skilled nursing
care facility.
The Mortgaged Properties are located throughout 40 states. Set forth below
are the number of Mortgage Loans, and the approximate percentage of the Initial
Pool Balance represented by such Mortgage Loans, that are secured by Mortgaged
Properties located in the states with concentrations of Mortgage Loans above
5.0%:
PERCENTAGE OF
NUMBER OF INITIAL POOL
STATE MORTGAGE LOANS BALANCE
----- -------------- -------------
Texas ..................................... 53(1) 14.0%
Florida ................................... 30 11.3%
California ................................ 14 7.9%
Pennsylvania .............................. 9 6.9%
Maryland .................................. 10 6.5%
Arizona ................................... 17 5.5%
Georgia ................................... 20 5.3%
(1) Including one Mortgage Loan, or 1.05%, secured by 11 separate properties,
nine of which are located in Texas and one each in Virginia and North
Carolina.
No Mortgage Loan or group of Mortgage Loans to one borrower or group of
related borrowers exceeds 4.44% of the Initial Pool Balance. See "--Additional
Mortgage Loan Information."
MORTGAGE LOAN HISTORY
One hundred fifty-five (155) of the Mortgage Loans, or 60.07% (the "Lehman
Loans"), will be acquired by the Depositor from the Lehman Seller, which either
originated each such Mortgage Loans or acquired it concurrently with origination
from one of the participants in its commercial and multifamily mortgage loan
conduit program. One
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hundred twenty-eight (128) of the Mortgage Loans, or 39.93% (the "FUNB Loans"),
were acquired by the Depositor from FUNB, which either originated each such
Mortgage Loan or acquired it concurrently with or shortly after origination.
All of the Mortgage Loans were originated since August 1996, except two of the
Mortgage Loans, or 1.05%.
None of the Mortgage Loans was 30 days or more delinquent as of the Cut-off
Date, and no Mortgage Loan has been more than 30 days delinquent during the 12
months preceding the Cut-off Date.
CERTAIN TERMS AND CONDITIONS OF THE MORTGAGE LOANS
Mortgage Rates; Calculations of Interest. All of the Mortgage Loans bear
interest at Mortgage Rates that will remain fixed for their remaining terms,
except after the Expected Repayment Date with respect to four of the Mortgage
Loans. See "--Amortization" below. Two hundred fifty-one (251) of the Mortgage
Loans, or 85.60%, accrue interest on the basis (a "30/360 basis") of a 360-day
year consisting of twelve 30-day months, and 32 of the Mortgage Loans, or
14.40%, accrue interest on the basis (an "actual/360 basis") of the actual
number of days elapsed over a 360 day year.
Due Dates. All but one of the Mortgage Loans have Due Dates (that is, the
dates upon which the related Monthly Payments first become due) that occur on
the first day of each month. For purposes of calculating the Cut-off Date
Balance, the May 1997 Due Date of the remaining Mortgage Loan is deemed to be on
the Cut-off Date.
Amortization. Two hundred fifty-three (253) of the Mortgage Loans, or
88.96%, provide for Monthly Payments based on amortization schedules
significantly longer than their respective terms to maturity. Four of the
Mortgage Loans, or 1.93%, provide that if the unamortized principal amount
thereof is not repaid on a date (the "Expected Repayment Date") set forth in the
related Mortgage Note, the Mortgage Loan will accrue additional interest at the
rate set forth therein and the borrower will be required to apply excess monthly
cash flow generated by the Mortgaged Property (as determined in the related
Mortgage) to the repayment of principal outstanding on the Mortgage Loan. With
respect to such Mortgage Loans, no Prepayment Premiums or Yield Maintenance
Charges will be due in connection with any principal prepayment after the
Expected Repayment Date. Twenty-six (26) of the Mortgage Loans, or 9.11%, are
self-amortizing. See "Risk Factors--Balloon Payments" herein.
Prepayment Provisions. As of the Cut-off Date, all of the Mortgage Loans
restrict or prohibit voluntary principal prepayment. In general, the Mortgage
Loans either (i) prohibit voluntary prepayments of principal for a period (a
"Lockout Period") ending on a date specified in the related Mortgage Note and
thereafter, in general, require that prepayments made for most of their
respective terms to maturity be accompanied by a Prepayment Premium and/or Yield
Maintenance Charge in excess of the amount prepaid (241 Mortgage Loans, or
86.17%); (ii) prohibit voluntary payments of principal for a Lockout Period and
thereafter permit voluntary principal prepayments in whole without material
restrictions (11 Mortgage Loans, or 3.39%) or (iii) permit voluntary principal
payments provided that the prepayment is accompanied by a Yield Maintenance
Charge or a Prepayment Premium for most of their respective terms to maturity
(31 Mortgage Loans, or 10.44%). With respect to 265 of the Mortgage Loans which
impose Yield Maintenance Charges, 231 of such Mortgage Loans, or 89.92% of such
Mortgage Loans, provide for the calculation of the Yield Maintenance Charge
using a discount rate equal to the applicable Treasury Rate (as set forth in the
related Mortgage Note), two of such Mortgage Loans, or 1.41% of such Mortgage
Loans, provide for the calculation of the Yield Maintenance Charge using a
discount rate equal to the applicable Treasury Rate plus 1.00%, 31 of such
Mortgage Loans, or 8.09% of such Mortgage Loans, provide for the calculation of
the Yield Maintenance Charge using a discount rate equal to the applicable
Treasury Rate plus 0.50%, and one of such Mortgage Loans, or 0.58% of such
Mortgage Loans, provides for the calculation of the Yield Maintenance Charge
using a discount rate equal to the applicable Treasury Rate plus 0.35%. See
"--Additional Mortgage Loan Information" herein. Prepayment Premiums and Yield
Maintenance Charges, if and to the extent collected, will be distributed to the
holders of the Offered Certificates as described herein under "Description of
the Certificates--Distributions--Allocation of Prepayment Premiums and Yield
Maintenance Charges." The Depositor makes no representation as to the
enforceability of the provisions of any Mortgage Note requiring the payment of a
Prepayment Premium or Yield Maintenance Charge, or of the collectability of any
Prepayment Premium or Yield Maintenance Charge.
Sixty (60) of the Mortgage Loans, or 23.97%, provide that the holder of the
Mortgage, following notice from the borrower that the borrower intends to prepay
the Mortgage Loan as permitted by the related Mortgage Note, may
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require the borrower, in lieu of prepayment, to pledge to such holder
"Defeasance Collateral" and thereupon obtain a release of the Mortgaged Property
from the lien of the related Mortgage. In general, "Defeasance Collateral" is
required to consist of direct, non-callable United States Treasury obligations
that provide for payments prior, but as close as possible, to all successive Due
Dates and the scheduled maturity date, with each such payment being equal to or
greater than (with any excess to be returned to the borrower) the Monthly
Payment and, in the case of the scheduled maturity date, the Balloon Payment,
due on such date. The Pooling and Servicing Agreement will require the Master
Servicer or the Special Servicer to require each such borrower that proposes to
prepay its Mortgage Loan to pledge instead Defeasance Collateral, but in each
case subject to certain conditions, including (i) that the defeasance would not
have an adverse effect on the REMIC status of any of REMIC I, REMIC II or REMIC
III (accordingly, no defeasance would be required prior to the second
anniversary of the Closing Date) and (ii) receipt of confirmation from each
Rating Agency that acceptance of a pledge of the Defeasance Collateral in lieu
of a full prepayment will not result in a downgrade, withdrawal or qualification
of the rating then assigned by it to any Class of Certificates. Seven of the
Mortgage Loans, or 3.50%, permit the borrower, following a specified date that
is not prior to the second anniversary of the Closing Date, to pledge Defeasance
Collateral and obtain a release of the Mortgaged Property from the lien of the
related Mortgage.
Neither the Master Servicer nor the Special Servicer will be permitted to
waive or modify the terms of any Mortgage Loan prohibiting voluntary prepayments
during a Lockout Period or requiring the payment of a Prepayment Premium or
Yield Maintenance Charge except under the circumstances described in "Servicing
of the Mortgage Loans--Modifications, Waivers and Amendments" herein.
Secondary Financing. The Mortgaged Properties securing eight Mortgage
Loans, or 2.71%, are encumbered by subordinated debt. With limited exception,
all of the Mortgage Loans either prohibit the related borrower from encumbering
the Mortgaged Property with additional secured debt or require the lender's
consent prior to so encumbering such property. See "--Due-on-Sale and
Due-on-Encumbrance Provisions" below. Other than as indicated above, the
Depositor has not confirmed if any other subordinate financing currently
encumbers any Mortgaged Property.
Nonrecourse Obligations. The Mortgage Loans are generally nonrecourse
obligations of the related borrowers and, upon any such borrower's default in
the payment of any amount due under the related Mortgage Loan, the holder
thereof may look only to the related Mortgaged Property for satisfaction of the
borrower's obligations. In addition, in those cases where recourse to a borrower
or guarantor is purportedly permitted, the Depositor has not undertaken an
evaluation of the financial condition of any such person, and prospective
investors should thus consider all of the Mortgage Loans to be nonrecourse.
"Due-on-Sale" and "Due-on-Encumbrance" Provisions. All of the Mortgages
contain "due-on-sale" and "due-on-encumbrance" clauses that, in general, permit
the holder of the Mortgage to accelerate the maturity of the related Mortgage
Loan if the borrower sells or otherwise transfers or encumbers the related
Mortgaged Property or prohibit the borrower from doing so without the consent of
the holder of the Mortgage. However, 11 Mortgage Loans, or 4.4%, all secured by
multifamily Mortgaged Properties, permit a transfer of the related Mortgaged
Property to a person that satisfies certain criteria (including criteria related
to bankruptcy remoteness and apartment management experience) specified in the
related Mortgage; one hundred fifty-two (152) Mortgage Loans, or 50.2%, permit a
one-time transfer of the Mortgaged Property, subject to payment of an assumption
fee and certain other conditions; and two Mortgage Loans, or 0.60%, permit two
separate transfers of the related Mortgaged Property, subject to payment of an
assumption fee and certain other conditions. As provided in the Pooling and
Servicing Agreement, the Master Servicer or the Special Servicer, on behalf of
the Trust Fund, will determine, in a manner consistent with the servicing
standard described herein under "Servicing of the Mortgage Loans--General,"
whether to exercise any right the holder of any Mortgage may have under any such
clause to accelerate payment of the related Mortgage Loan upon, or to withhold
its consent to, any transfer or further encumbrance of the related Mortgaged
Property.
Cross-Default and Cross-Collateralization of Certain Mortgage Loans.
Eighteen (18) of the Mortgage Loans, or 4.16%, are cross-collateralized and
cross-defaulted with one or more Mortgage Loans in the Mortgage Pool. Of such
Mortgage Loans, six Mortgage Loans, or 1.66% (control numbers 52, 105, 130, 175,
195, 208) are cross-collateralized and cross-defaulted with each other; four
Mortgage Loans, or 1.33% (control numbers 64, 90, 99, 220) are
cross-collateralized and cross-defaulted with each other; two Mortgage Loans, or
0.54% (control numbers 58, 266) are cross-collateralized and cross-defaulted
with each other; three Mortgage Loans, or 0.41% (control numbers 183, 234, 237)
are cross-collateralized and cross-defaulted with each other; and three Mortgage
Loans, or
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0.22% (control numbers 256, 264, 272) are cross-collateralized and
cross-defaulted with each other. No Mortgage Loans are cross-collateralized or
cross-defaulted with any loans which are not included in the Mortgage Pool. The
Master Servicer or the Special Servicer, as the case may be, will determine
whether to enforce the cross-default and cross-collateralization rights upon a
mortgage loan default with respect to any of these Mortgage Loans. The
Certificateholders will not have any right to participate in or control any such
determination. No other Mortgage Loans are subject to cross-collateralization or
cross-default provisions.
Low Income Housing Tax Credits. Eleven (11) of the Mortgaged Properties, or
1.93%, are eligible to receive low-income housing tax credits ("Tax Credits")
pursuant to Section 42 of the Code ("Section 42 Properties"). Section 42 of the
Code provides a Tax Credit for owners of residential rental property meeting the
definition of low-income housing who have received a tax credit allocation from
the state or local allocating agency.
At the time the project is "placed in service" (that is, when the first
unit is available for occupancy), the property owner must make an irrevocable
election of one of two set-aside rules, either (i) at least 20% of the units
must be rented to tenants with incomes of 50% or less of the median income (as
defined below), or (ii) at least 40% of the units must be rented to tenants with
incomes of 60% or less of the median income. The aggregate amount of Tax Credits
the owner is entitled to is based upon the percentage of total units made
available to qualified tenants. Median income is determined by the U.S.
Department of Housing and Urban Development ("HUD") for each metropolitan area
or county in the United States and is adjusted annually.
The Tax Credit provisions require that gross rent for each low-income unit
not exceed 30% of the annual HUD median income, adjusted for the household size
expected to occupy the particular unit. The gross rent charged for a unit must
take into account an allowance for utilities. If utilities are paid by the
tenant, then the maximum allowable Tax Credit rent is reduced according to
utility allowances, as provided in regulations of the Internal Revenue Service.
Under the Tax Credit provisions, a property owner must comply with the
tenant income restrictions and rental restrictions over a 15-year compliance
period, which provide for an annual adjustment of rent according to published
area median income statistics. In addition, agreements governing the property
may require an "extended use period" which has the effect of extending the
income and rental restrictions for an additional period (typically 15 years).
In the event a Tax Credit project does not maintain compliance with the Tax
Credit restrictions on tenant income or rental rates, the owners of the Tax
Credit project may lose the Tax Credits related to the period of the
noncompliance and face the partial recapture of previously taken Tax Credits.
The loss of Tax Credits, and the possibility of recapture of Tax Credits already
taken, may provide significant incentive for project owners to keep the Tax
Credit project in compliance and to fund property operating deficits.
ASSESSMENTS OF PROPERTY CONDITION
Property Inspections. All of the Mortgaged Properties were inspected in
connection with the origination or acquisition of the related Mortgage Loans to
assess their general condition. No inspection revealed any patent structural
deficiency or any deferred maintenance considered material and adverse to the
interests of the holders of the Offered Certificates and for which adequate
reserves have not been established.
Appraisals. All of the Mortgaged Properties were appraised by a state
certified appraiser or an appraiser belonging to the Appraisal Institute. The
purpose of each appraisal was to provide an opinion of the fair market value of
the related Mortgaged Property. There can be no assurance that another appraiser
would have arrived at the same opinion of value.
Environmental Assessments. A "Phase I" environmental site assessment was
performed with respect to all the Mortgaged Properties in connection with the
origination of the related Mortgage Loans. In certain cases, additional
environmental testing, as recommended by such "Phase I" assessment, was
performed. In each case where environmental assessments recommended further
action, the originator determined that the necessary remediation was being
undertaken in a satisfactory manner or that such remediation would be adequately
addressed post-closing. In some instances, the originator required that reserves
be established to cover the estimated cost of such remediation.
Engineering Assessments. In connection with the origination of 273 of the
Mortgage Loans, or 97.93%, a licensed engineer inspected the related Mortgaged
Property to assess the structure, exterior walls, roofing, interior structure
and mechanical and electrical systems. No engineering inspections were made with
respect to the remaining 10 Mortgage Loans, or 2.07%, which were determined by
the related Mortgage Loan Seller to be either "new
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construction" or a "substantially rehabilitated property" pursuant to its
underwriting guidelines. The resulting reports indicated certain deferred
maintenance items and/or recommended capital improvements with respect to
certain of such Mortgaged Properties. Generally, with respect to such Mortgaged
Properties, the related borrowers were required to deposit with the lender an
amount equal to at least 125% of the licensed engineer's estimated cost of the
recommended repairs, corrections or replacements to assure their completion.
Earthquake Analyses. An architectural and engineering consultant performed
an analysis on the 14 Mortgaged Properties located in the State of California in
order to evaluate the structural and seismic condition of the property and to
assess, based primarily on statistical information, the maximum probable loss
for the property in an earthquake scenario. The resulting reports, which were
prepared not earlier than July 1996, concluded that in the event of an
earthquake, only two of the Mortgaged Properties are likely to suffer a maximum
probable loss in excess of 25% of the amount of the estimated replacement cost
of the improvements. Each of those two Mortgaged Properties is covered by
earthquake insurance in an amount at least equal to the outstanding principal
balance of the related Mortgage Loan. One such Mortgage Loan is required to be
covered by such insurance through the maturity date thereof and the other
Mortgage Loan through the earlier of the maturity date thereof and the
completion of certain seismic retrofitting recommended in the report to reduce
the maximum probable loss to less than 25% of such estimated replacement cost.
ADDITIONAL MORTGAGE LOAN INFORMATION
The Mortgage Pool. For a detailed presentation of certain of the
characteristics of the Mortgage Loans and the Mortgaged Properties, on an
individual basis, see Annex A hereto. Certain additional information regarding
the Mortgage Loans is contained herein under "--Assignment of the Mortgage
Loans; Repurchases" and "--Representations and Warranties; Repurchases," and in
the Prospectus under "Description of the Trust Funds" and "Certain Legal Aspects
of Mortgage Loans."
Each of the following tables sets forth certain characteristics of the
Mortgage Pool presented, where applicable, as of the Cut-off Date. For purposes
of the tables and Annex A:
(i) References to "DSC Ratio" are references to debt service coverage
ratios. Debt service coverage ratios are used by income property lenders to
measure the ratio of (a) cash currently generated by a property that is
available for debt service (that is, cash that remains after average cost
of non-capital expenses of operation, tenant improvements, leasing
commissions and replacement reserves during the term of the Mortgage Loan)
to (b) required debt service payments. However, debt service coverage
ratios only measure the current, or recent, ability of a property to
service mortgage debt. The DSC Ratio for any Mortgage Loan is the ratio of
"Net Cash Flow" produced by the related Mortgaged Property to the
annualized amount of debt service that will be payable under that Mortgage
Loan commencing after the origination date. The Net Cash Flow for a
Mortgaged Property is the "net cash flow" of such Mortgaged Property as set
forth in, or determined by the applicable Mortgage Loan Seller on the basis
of, Mortgaged Property operating statements, generally unaudited, and
certified rent rolls (as applicable) supplied by the related borrower in
the case of multifamily, mixed use, retail, mobile home park, industrial,
self storage and office properties (each a "Rental Property"). In general,
the applicable Mortgage Loan Seller relied on full year operating
statements, rolling 12-month operating statements and/or applicable
year-to-date financial statements, if available, and on rent rolls for all
Rental Properties that were current as of a date not earlier than six
months prior to the respective date of origination in determining Net Cash
Flow for the Mortgaged Properties. References to "Cut-off Date DSC Ratio"
are references to the DSC Ratio as of the Cut-off Date.
In general, "net cash flow" is the revenue derived from the use and
operation of a Mortgaged Property less operating expenses (such as
utilities, administrative expenses, repairs and maintenance, tenant
improvement costs, leasing commissions, management fees and advertising),
fixed expenses (such as insurance, real estate taxes and, if applicable,
ground lease payments) and replacement reserves. Net cash flow does not
reflect interest expenses and non-cash items such as depreciation and
amortization, and generally does not reflect capital expenditures, but does
reflect reserves for replacements.
In determining the "revenue" component of Net Cash Flow for each Rental
Property, the applicable Mortgage Loan Seller generally relied on the most
recent rent roll (as applicable) supplied and, where the actual vacancy
shown thereon and the market vacancy was less than 5%, assumed a 5% vacancy
in determining
S-34
<PAGE>
revenue from rents, except that in the case of certain anchored shopping
centers and certain single tenant properties, space occupied by such
anchor or single tenants may have been disregarded in performing the
vacancy adjustment due to the length of the related leases or
creditworthiness of such tenants, in accordance with the respective
Mortgage Loan Seller's underwriting standards. In determining rental
revenue for multifamily, self storage and mobile home park properties, the
applicable Mortgage Loan Seller either reviewed rental revenue shown on the
certified rolling 12-month operating statements or annualized the rental
revenue and reimbursement of expenses shown on rent rolls or operating
statements with respect to the prior one to twelve month periods. For the
other Rental Properties, the applicable Mortgage Loan Seller generally
annualized rental revenue shown on the most recent certified rent roll (as
applicable), after applying the vacancy factor, without further regard to
the terms (including expiration dates) of the leases shown thereon. In the
case of hospitality properties, gross receipts were determined on the basis
of historical operating levels shown on the borrower-supplied operating
statements, but in no case in excess of rolling 12-month operating
statements. In the case of residential health care facilities, receipts
were based on historical occupancy levels, historical operating revenues
and the then current occupancy rates. Private occupancy rates were within
the then current market ranges and vacancy levels were a minimum of 5%. In
general, any non-recurring items and non-property related revenue were
eliminated from the calculation except in the case of residential health
care facilities.
In determining the "expense" component of Net Cash Flow for each
Mortgaged Property, the Mortgage Loan Seller generally relied on full-year
or year-to-date financial statements, rolling 12-month operating statements
and/or year-to-date financial statements supplied by the related borrower,
except that (a) if tax or insurance expense information more current than
that reflected in the financial statements was available, the newer
information was used, (b) property management fees were generally assumed
to be 4% to 5% of effective gross revenue (except with respect to
hospitality properties, where a minimum of 4% of gross receipts was
assumed, and single tenant properties, where fees as low as 2.0% of
effective gross receipts were assumed), (c) assumptions were made with
respect to reserves for leasing commissions, tenant improvement expenses
and capital expenditures and (d) expenses were assumed to include annual
replacement reserves equal to (1) in the case of retail, office and
industrial properties, not less than $0.08 and not more than $0.36 per
square foot net rentable commercial area, (2) in the case of multifamily
properties, not less than $150 or more than $398 per residential unit per
year, depending on the condition of the property, (3) in the case of
hospitality properties, generally between 3% and 6% of the gross revenues
received by the property owner on an ongoing basis, (4) in the case of
residential healthcare facilities, $200 to $300 per bed per year, (5) in
the case of the mobile home parks, not less than $30 or more than $40 per
pad per year and (6) in the case of self storage facilities, not less than
$7.00 or more than $28 per unit per year. In addition, in some instances,
the applicable Mortgage Loan Seller recharacterized as capital expenditures
those items reported by borrowers as operating expenses (thus increasing
"net cash flow") where such Mortgage Loan Seller determined appropriate.
THE BORROWERS' FINANCIAL INFORMATION USED TO DETERMINE NET CASH FLOW
WAS IN MOST CASES UNAUDITED, AND NEITHER THE MORTGAGE LOAN SELLERS NOR THE
DEPOSITOR VERIFIED THEIR ACCURACY.
(ii) References to "Cut-off Date LTV Ratio" are references to the
ratio, expressed as a percentage, of the Cut-off Date Balance of a Mortgage
Loan to the appraised value of the related Mortgaged Property as shown on
the most recent third-party appraisal thereof available to the related
Mortgage Loan Seller.
(iii) References to "Maturity Date LTV Ratio" are references to the
ratio, expressed as a percentage, of the expected balance of a Balloon Loan
on its schedled maturity date (prior to the payment of any Balloon
Payment) to the appraised value of the related Mortgaged Property as shown
on the most recent third-party appraisal thereof available to the related
Mortgage Loan Seller prior to the Cut-off Date.
(iv) References to "Loan per Sq Ft, Unit, Bed, Pad or Room" are, for
each Mortgage Loan secured by a lien on a multifamily property (including a
mobile home park), hospitality property or healthcare facility,
respectively, references to the Cut-off Date Balance of such Mortgage Loan
divided by the number of dwelling units, pads, guest rooms or beds,
respectively that the related Mortgaged Property comprises, and, for each
Mortgage Loan secured by a lien on a retail, industrial/warehouse, self
storage or office property, references to the Cut-off Date Balance of such
Mortgage Loan divided by the net rentable square foot area of the related
Mortgaged Property.
(v) References to "Year Built" are references to the year that a
Mortgaged Property was originally constructed or substantially
rehabilitated with respect to certain Section 42 properties. With respect
to any
S-35
<PAGE>
Mortgaged Property which was constructed in phases, the "Year Built" refers
to the year that the first phase was originally constructed.
(vi) References to "weighted averages" are references to averages
weighted on the basis of the Cut-off Date Balances of the related Mortgage
Loans.
(vii) References to "Capital Imp. Reserve" are references to reserves
escrowed for needed repairs, replacements and corrections of engineering
and environmental issues as identified in the engineering and environmental
reports. Such amounts typically represent 125% of the estimated cost of the
work outlined in such reports and not completed by origination of the
related Mortgage Loans. With respect to amounts considered minimal and a
part of ongoing maintenance, a reserve was not established.
(viii) References to "Underwriting Reserves" represent estimated
annual capital costs, as used by the applicable Mortgage Loan Seller in
determining Net Cash Flow.
(ix) References to "Administrative Cost Rate" represent the sum of the
Master Servicing Fee Rate, Special Servicer Strip Rate, Additional
Servicing Fee Rate and Trustee Fee Rate with respect to each Mortgage Loan.
(x) References to "Remaining Term to Maturity" represent, with respect
to each Mortgage Loan, the number of months remaining from the Cut-off Date
to the stated maturity date of such Mortgage Loan.
(xi) References to "Remaining Amortization Term" represent, with
respect to each Mortgage Loan, the number of months remaining from the
Cut-off Date to the month in which such Mortgage Loan would fully amortize
in accordance with such loan's amortization schedule without regard to any
Balloon Payment, if any, due on such Mortgage Loan.
(xii) References to "TI/LC" represent, with respect to each Mortgage
Loan, the amount of reserves set aside in respect of tenant improvements
and/or leasing commissions for such Mortgage Loan.
(xiii) References to "L" represent, with respect to each Mortgage
Loan, the period during which prepayments of principal are prohibited. The
number indicated in the parentheses indicates the duration in years of such
period. References to " %__( )" represent the percentage of Prepayment
Premium percentages and the duration such Prepayment Premium is assessed.
References to "O ( )" represent the period for which no such Prepayment
Premium or Yield Maintenance Charge is assessed. References to "YM 1% ( )"
represent the period for which the Prepayment Premium for such Mortgage
Loan is equal to the greater of the Yield Maintenance Charge for such
Mortgage Loan and 1% of such Mortgage Loan's outstanding principal balance.
References to "YM ( )" represent the period for which the Yield Maintenance
Charge is assessed.
(xiv) References to "Replacement Reserve" are references to the repair
and replacement reserve required to be established with respect to any
Mortgaged Property under the terms of the related Mortgage.
(xv) References to "Initial Deposit" and "Current Balance" with
respect to "Capital Imp. Reserve" and "Replacement Reserve" are references
to the deposit made as of the origination date of the related Mortgage Loan
and the balance of the reserve as of the "As of Date" set forth in the
related table, respectively.
(xvi) References to "Occupancy Percentage" are, with respect to any
Mortgaged Property, references to (a) in the case of multifamily properties
and assisted living/congregate care facilities, the percentage of units
rented, (b) in the case of hospitality properties, the average annual
occupancy rate (that is, for a specified year, the percentage obtained by
dividing the number of rooms actually rented for all nights in such year by
the number of rooms available to be rented for all nights in such year),
(c) in the case of office and retail properties, the percentage of the net
rentable square footage rented, and (d) in the case of self-storage
facilities, either the percentage of the net rentable square footage rented
or the percentage of units rented (depending on borrower reporting).
The sum in any column of any of the following tables may not equal the indicated
total due to rounding.
S-36
<PAGE>
<TABLE>
<CAPTION>
MORTGAGE LOANS BY STATE
(ALL MORTGAGE LOANS)
AGGREGATE % BY AGGREGATE AVERAGE HIGHEST WTD AVG. WTD AVG.
NUMBER CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
STATE OF LOANS BALANCE BALANCE BALANCE BALANCE LTV RATIO DSC RATIO
- ----- -------- ------------ -------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
AL ..................... 8 $ 37,604,951 2.9% $4,700,619 $19,925,320 71.6% 1.35x
AR ..................... 1 3,181,915 0.2 3,181,915 3,181,915 65.6 1.30
AZ ..................... 17 72,179,032 5.5 4,245,825 7,695,529 71.9 1.31
CA ..................... 14 103,447,597 7.9 7,389,114 33,388,968 68.8 1.33
CO ..................... 8 42,123,528 3.2 5,265,441 11,192,561 70.7 1.35
CT ..................... 3 10,698,853 0.8 3,566,284 5,793,034 72.8 1.34
DE ..................... 1 3,619,743 0.3 3,619,743 3,619,743 58.8 1.51
FL ..................... 30 147,914,906 11.3 4,930,497 13,408,170 70.6 1.39
GA ..................... 20 69,454,488 5.3 3,472,724 21,089,946 67.2 1.38
IL ..................... 7 49,717,920 3.8 7,102,560 14,475,611 64.4 1.36
IN ..................... 4 26,422,980 2.0 6,605,745 22,235,812 75.8 1.29
KS ..................... 1 2,971,556 0.2 2,971,556 2,971,556 73.4 1.30
KY ..................... 2 10,759,623 0.8 5,379,812 5,612,661 68.0 1.34
LA ..................... 2 9,786,908 0.7 4,893,454 6,507,178 59.9 1.39
MA ..................... 10 47,515,539 3.6 4,751,554 13,292,284 60.2 1.36
MD ..................... 10 84,929,069 6.5 8,492,907 28,715,037 69.1 1.32
ME ..................... 1 4,593,995 0.4 4,593,995 4,593,995 62.9 1.26
MI ..................... 3 10,740,541 0.8 3,580,180 6,382,341 71.2 1.30
MN ..................... 3 6,265,311 0.5 2,088,437 3,043,799 74.1 1.23
MO ..................... 4 17,456,981 1.3 4,364,245 8,239,782 71.2 1.33
MS ..................... 1 4,873,429 0.4 4,873,429 4,873,429 79.9 1.30
MT ..................... 1 7,695,326 0.6 7,695,326 7,695,326 71.3 1.34
NC ..................... 10 40,791,867 3.1 4,079,187 7,829,444 72.9 1.30
NE ..................... 1 6,632,828 0.5 6,632,828 6,632,828 73.7 1.29
NH ..................... 2 5,882,990 0.5 2,941,495 4,986,385 65.8 1.36
NJ ..................... 6 52,404,199 4.0 8,734,033 29,981,525 71.3 1.31
NM ..................... 1 5,617,106 0.4 5,617,106 5,617,106 60.1 1.41
NV ..................... 1 2,888,770 0.2 2,888,770 2,888,770 68.8 1.56
NY ..................... 13 22,029,051 1.7 1,694,542 3,993,660 65.4 1.39
OH ..................... 5 5,847,018 0.4 1,169,404 2,275,271 61.8 1.53
OK ..................... 3 9,440,008 0.7 3,146,669 6,096,696 68.9 1.36
PA ..................... 9 89,694,755 6.9 9,966,084 23,982,082 71.4 1.32
SC ..................... 4 22,359,409 1.7 5,589,852 6,754,418 72.5 1.26
TN ..................... 7 26,524,453 2.0 3,789,208 9,468,979 75.1 1.31
TX ..................... 53 182,158,568 14.0 3,436,954 13,717,943 72.0 1.34
UT ..................... 4 8,313,064 0.6 2,078,266 3,143,563 79.4 1.18
VA ..................... 9 40,187,157 3.1 4,465,240 9,438,855 66.3 1.41
WA ..................... 1 6,077,531 0.5 6,077,531 6,077,531 64.7 1.31
WI ..................... 2 3,325,251 0.3 1,662,626 1,710,351 73.8 1.18
WY ..................... 1 1,320,010 0.1 1,320,010 1,320,010 65.3 1.40
--- -------------- ----- ---------- ----------- ---- ----
Total/Wtd Avg/Min/Max: . 283 $1,305,448,224 100.0% $4,612,891 $33,388,968 69.9% 1.34x
=== ============== ===== ========== =========== ==== ====
<CAPTION>
RANGE OF WTD AVG. WTD AVG.
CUT-OFF DATE OCCUPANCY MORTGAGE
STATE DSC RATIOS RATE RATE
- ----- ------------ --------- --------
<S> <C> <C> <C>
AL ..................... 1.31-1.54x 92.3% 8.88%
AR ..................... 1.30 96.1 8.78
AZ ..................... 1.25-1.40 96.1 8.85
CA ..................... 1.20-1.64 89.2 8.71
CO ..................... 1.29-1.57 97.5 8.69
CT ..................... 1.28-1.45 98.3 8.82
DE ..................... 1.51 N/A 9.25
FL ..................... 1.23-1.71 95.6 8.69
GA ..................... 1.26-1.80 95.4 8.83
IL ..................... 1.22-1.52 96.3 8.78
IN ..................... 1.28-1.43 96.2 8.31
KS ..................... 1.30 95.3 8.74
KY ..................... 1.26-1.42 96.0 9.15
LA ..................... 1.25-1.66 100.0 9.07
MA ..................... 1.28-1.56 95.8 8.94
MD ..................... 1.25-1.83 94.2 8.51
ME ..................... 1.26 79.2 10.50
MI ..................... 1.25-1.39 100.0 9.05
MN ..................... 1.15-1.26 96.2 8.76
MO ..................... 1.31-1.41 97.2 8.57
MS ..................... 1.30 95.2 8.00
MT ..................... 1.34 93.0 8.49
NC ..................... 1.21-1.61 94.3 8.45
NE ..................... 1.29 96.9 8.24
NH ..................... 1.35-1.44 100.0 8.91
NJ ..................... 1.25-1.56 97.3 8.74
NM ..................... 1.41 65.4 9.56
NV ..................... 1.56 98.1 8.57
NY ..................... 1.26-1.64 96.4 8.81
OH ..................... 1.29-1.62 92.3 9.38
OK ..................... 1.28-1.55 95.0 9.19
PA ..................... 1.27-1.69 97.5 8.64
SC ..................... 1.20-1.43 89.4 8.39
TN ..................... 1.25-1.41 94.4 8.59
TX ..................... 1.20-1.86 94.5 8.65
UT ..................... 1.15-1.37 94.8 8.63
VA ..................... 1.20-1.73 91.6 8.84
WA ..................... 1.31 94.7 8.88
WI ..................... 1.16-1.20 99.1 9.46
WY ..................... 1.40 100.0 8.74
---------- ----- -----
Total/Wtd Avg/Min/Max: . 1.15-1.86x 94.7% 8.72%
========= ===== =====
</TABLE>
S-37
<PAGE>
<TABLE>
<CAPTION>
MORTGAGE LOANS BY PROPERTY TYPE
(ALL MORTGAGE LOANS)
AGGREGATE % BY AGG AVERAGE HIGHEST WTD AVG. WTD AVG.
NUMBER CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
PROPERTY TYPE OF LOANS BALANCE BALANCE BALANCE BALANCE LTV RATIO DSC RATIO
- ------------- -------- ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Residential Health Care ... 4 $ 14,817,863 1.1% $3,704,466 $ 7,695,326 71.0% 1.36x
Hospitality ............... 28 128,913,585 9.9 4,604,057 14,475,611 61.5 1.49
Industrial/Warehouse ...... 11 31,192,560 2.4 2,835,687 5,983,662 63.3 1.33
Multifamily ............... 123 526,106,414 40.3 4,277,288 29,981,525 74.7 1.30
Mobile Home Park .......... 3 13,171,111 1.0 4,390,370 5,393,201 67.8 1.28
Office .................... 14 70,049,532 5.4 5,003,538 13,717,943 63.3 1.42
Retail .................... 94 505,939,982 38.8 5,382,340 33,388,968 68.5 1.33
Self Storage .............. 6 15,257,179 1.2 2,542,863 5,617,106 63.4 1.38
--- -------------- ----- ---------- ----------- ---- ----
Total/Wtd Avg/Min/Max: .... 283 $1,305,448,224 100.0% $4,612,891 $33,388,968 69.9% 1.34x
=== ============== ===== ========== =========== ==== ====
<CAPTION>
RANGE OF WTD AVG. WTD AVG.
CUT-OFF DATE OCCUPANCY MORTGAGE
PROPERTY TYPE DSC RATIOS RATE RATE
- ------------- ------------ --------- --------
<S> <C> <C> <C> <C>
Residential Health Care ... 1.34-1.51x 95.0% 8.66%
Hospitality ............... 1.31-1.86 N/A 9.37
Industrial/Warehouse ...... 1.23-1.55 99.9 8.99
Multifamily ............... 1.15-1.64 94.8 8.44
Mobile Home Park .......... 1.26-1.29 90.3 9.09
Office .................... 1.29-1.63 87.4 9.02
Retail .................... 1.25-1.83 95.7 8.75
Self Storage .............. 1.26-1.54 80.8 9.34
---- ---- ---- ----
Total/Wtd Avg/Min/Max: .... 1.15-1.86x 94.7% 8.72%
==== ==== ==== ====
</TABLE>
<TABLE>
<CAPTION>
CUT-OFF DATE DSC RATIOS
(ALL MORTGAGE LOANS)
RANGE OF AGGREGATE % BY AGG AVERAGE HIGHEST WTD AVG. WTD AVG.
CUT-OFF DATE NUMBER CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
DSC RATIOS (X) OF LOANS BALANCE BALANCE BALANCE BALANCE LTV RATIO DSC RATIO
- ---------------- ---------- ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
1.15-1.19 ................ 5(1) $ 10,225,162 0.8% $2,045,032 $ 3,143,563 77.8% 1.17x
1.20-1.49 ................ 238 1,155,473,129 88.5 4,854,929 33,388,968 71.1 1.31
1.50-1.79 ................ 37 132,492,968 10.1 3,580,891 12,962,049 59.4 1.59
1.80-2.09 ................ 3 7,256,965 0.6 2,418,988 3,154,147 49.0 1.83
--- -------------- ----- ---------- ----------- ---- ----
Total/Wtd Avg/Min/Max: ... 283 $1,305,448,224 100.0% $4,612,891 $33,388,968 69.9% 1.34x
=== ============== ===== ========== =========== ==== ====
</TABLE>
RANGE OF RANGE OF WTD AVG. WTD AVG.
CUT-OFF DATE CUT-OFF DATE OCCUPANCY MORTGAGE
DSC RATIOS (X) DSC RATIOS RATE RATE
- -------------- ------------ ---------- ----------
1.15-1.19 ................ 1.15-1.18x 95.1% 8.78%
1.20-1.49 ................ 1.20-1.48 95.1 8.69
1.50-1.79 ................ 1.50-1.73 89.1 8.96
1.80-2.09 ................ 1.80-1.86 91.1 8.69
---------- ---- ----
Total/Wtd Avg/Min/Max: ... 1.15-1.86x 94.7% 8.72%
========== ==== ====
(1) The only Mortgage Loans with DSC Ratios below 1.20x are Mortgage Loans
secured by Section 42 Properties.
The weighted average Cut-off Date DSCR is 1.34x.
S-38
<PAGE>
<TABLE>
<CAPTION>
CUT-OFF DATE LTV RATIOS
(ALL MORTGAGE LOANS)
RANGE OF AGGREGATE % BY AGG AVERAGE HIGHEST WTD AVG.
CUT-OFF DATE NUMBER CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
LTV RATIOS (%) OF LOANS BALANCE BALANCE BALANCE BALANCE LTV RATIO
- -------------- -------- ------- ------- ------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
30.000-34.999 ............. 1 $ 5,224,057 0.4% $5,224,057 $ 5,224,057 30.7%
40.000-44.999 ............. 1 3,154,147 0.2 3,154,147 3,154,147 41.0
45.000-49.999 ............. 9 35,466,944 2.7 3,940,772 12,962,049 48.4
50.000-54.999 ............. 12 54,203,494 4.2 4,516,958 14,475,611 53.7
55.000-59.999 ............. 23 66,092,724 5.1 2,873,597 9,438,855 58.2
60.000-64.999 ............. 30 127,976,617 9.8 4,265,887 21,089,946 62.8
65.000-69.999 ............. 60 216,772,186 16.6 3,612,870 19,925,320 68.4
70.000-74.999 ............. 92 541,297,544 41.5 5,883,669 33,388,968 73.4
75.000-79.999 ............. 53 250,487,874 19.2 4,726,186 22,235,812 77.8
80.000+ ................... 2(1) 4,772,636 0.4 2,386,318 2,505,883 82.3
--- -------------- ----- ---------- ----------- ----
Total/Wtd Avg/Min/Max: .... 283 $1,305,448,224 100.0 % $4,612,891 $33,388,968 69.9%
=== ============== ===== ========== =========== ====
</TABLE>
RANGE OF WTD AVG. RANGE OF WTD AVG. WTD AVG.
CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE OCCUPANCY MORTGAGE
LTV RATIOS (%) DSC RATIO DSC RATIOS RATE RATE
- -------------- --------- ---------- ---- ----
30.000-34.999 ............. 1.64x 1.64x 96.6% 8.25%
40.000-44.999 ............. 1.83 1.83 90.7 8.25
45.000-49.999 ............. 1.55 1.27-1.80 76.8 9.20
50.000-54.999 ............. 1.41 1.25-1.64 97.4 8.97
55.000-59.999 ............. 1.46 1.15-1.86 92.4 9.07
60.000-64.999 ............. 1.39 1.26-1.69 90.9 9.11
65.000-69.999 ............. 1.36 1.16-1.71 96.0 8.93
70.000-74.999 ............. 1.31 1.20-1.61 95.9 8.62
75.000-79.999 ............. 1.28 1.18-1.61 94.2 8.35
80.000+ ................... 1.16 1.15-1.18 93.8 8.60
---- ---- ---- ---- ----
Total/Wtd Avg/Min/Max: .... 1.34x 1.15-1.86x 94.7% 8.72%
==== ==== ==== ==== ====
(1) The only Mortgage Loans with Cut-off Date LTV Ratios in excess of 80.0% are
Mortgage Loans secured by Section 42 Properties.
The weighted average Cut-off Date LTV Ratio is 69.9%.
<TABLE>
<CAPTION>
MATURITY DATE LTV RATIOS
(ALL BALLOON LOANS)
RANGE OF AGGREGATE % BY AGG AVERAGE HIGHEST WTD AVG. WTD AVG.
MATURITY DATE NUMBER CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
LTV RATIOS (%) OF LOANS BALANCE BALANCE BALANCE BALANCE LTV RATIO DSC RATIO
- -------------- -------- ------- ------- ------- ------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
15.000-19.999 ............. 1 $ 5,986,402 0.5% $5,986,402 $ 5,986,402 74.6% 1.27x
25.000-29.999 ............. 4 7,725,032 0.7 1,931,258 3,043,799 72.7 1.23
30.000-34.999 ............. 3 7,252,134 0.6 2,417,378 3,894,433 58.4 1.38
35.000-39.999 ............. 3 12,602,813 1.1 4,200,938 8,678,999 52.1 1.54
40.000-44.999 ............. 10 30,574,774 2.6 3,057,477 7,700,000 53.1 1.49
45.000-49.999 ............. 17 54,009,953 4.7 3,177,056 14,475,611 56.7 1.40
50.000-54.999 ............. 21 95,234,563 8.2 4,534,979 33,388,968 66.4 1.34
55.000-59.999 ............. 47 195,738,070 16.9 4,164,640 21,089,946 67.9 1.36
60.000-64.999 ............. 63 294,027,652 25.3 4,667,106 28,715,037 71.1 1.33
65.000-69.999 ............. 59 331,787,041 28.6 5,623,509 22,235,812 75.0 1.31
70.000-74.999 ............. 25 126,359,356 10.9 5,054,374 10,893,106 78.7 1.28
--- -------------- ----- ---------- ----------- ---- ----
Total/Wtd Avg/Min/Max: .... 253 $1,161,297,788 100.0% $4,590,110 $33,388,968 70.7% 1.33x
=== ============== ===== ========== =========== ==== ====
</TABLE>
RANGE OF RANGE OF WTD AVG. WTD AVG.
MATURITY DATE CUT-OFF DATE OCCUPANCY MORTGAGE
LTV RATIOS (%) DSC RATIOS RATE RATE
- -------------- ---------- ---- ----
15.000-19.999 ............. 1.27x 98.3% 8.60%
25.000-29.999 ............. 1.16-1.29 96.4 9.19
30.000-34.999 ............. 1.20-1.51 100.0 9.45
35.000-39.999 ............. 1.52-1.62 91.7 8.69
40.000-44.999 ............. 1.25-1.80 95.4 9.15
45.000-49.999 ............. 1.29-1.64 96.0 9.03
50.000-54.999 ............. 1.25-1.69 92.9 8.85
55.000-59.999 ............. 1.26-1.66 94.0 8.90
60.000-64.999 ............. 1.25-1.71 95.4 8.77
65.000-69.999 ............. 1.20-1.61 95.7 8.52
70.000-74.999 ............. 1.20-1.43 93.6 8.24
--------- ---- ----
Total/Wtd Avg/Min/Max: .... 1.16-1.80x 94.9% 8.70%
==== ==== ==== ====
The weighted average Maturity Date LTV Ratio is 61.3%.
S-39
<PAGE>
<TABLE>
<CAPTION>
MORTGAGE RATES
(ALL MORTGAGE LOANS)
AGGREGATE % BY AGG AVERAGE HIGHEST WTD AVG. WTD AVG.
RANGE OF NUMBER CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
MORTGAGE RATES (%) OF LOANS BALANCE BALANCE BALANCE BALANCE LTV RATIO DSC RATIO
- ------------------ -------- ------- ------- ------- ------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
7.500- 7.999 ........... 1 $ 16,443,811 1.3% $16,443,811 $16,443,811 71.5% 1.27x
8.000- 8.499 ........... 58 375,944,787 28.8 6,481,807 29,981,525 74.0 1.32
8.500- 8.999 ........... 130 600,247,570 46.0 4,617,289 33,388,968 70.1 1.32
9.000- 9.499 ........... 81 278,710,389 21.3 3,440,869 19,925,320 64.4 1.43
9.500- 9.999 ........... 10 26,753,152 2.0 2,675,315 5,617,106 63.6 1.37
10.000-10.499 ........... 2 2,754,520 0.2 1,377,260 1,747,579 65.0 1.47
10.500-10.999 ........... 1 4,593,995 0.4 4,593,995 4,593,995 62.9 1.26
--- -------------- ----- ----------- ----------- ---- ----
Total/Wtd Avg/Min/Max: .. 283 $1,305,448,224 100.0% $ 4,612,891 $33,388,968 69.9% 1.34x
=== ============== ===== =========== =========== ==== ====
</TABLE>
RANGE OF WTD AVG. WTD AVG.
RANGE OF CUT-OFF DATE OCCUPANCY MORTGAGE
MORTGAGE RATES (%) DSC RATIOS RATE RATE
- ------------------ ---------- ---- ----
7.500- 7.999 .......... 1.27x 97.8% 7.99%
8.000- 8.499 .......... 1.20-1.83 95.1 8.27
8.500- 8.999 .......... 1.15-1.80 95.2 8.72
9.000- 9.499 .......... 1.20-1.86 93.0 9.21
9.500- 9.999 .......... 1.16-1.54 80.4 9.65
10.000-10.499 .......... 1.45-1.51 84.4 10.05
10.500-10.999 .......... 1.26 79.2 10.50
-------- ---- -----
Total/Wtd Avg/Min/Max: . 1.15-1.86x 94.7% 8.72%
========= ==== ====
The weighted average Mortgage Rate is 8.72%.
<TABLE>
<CAPTION>
ORIGINAL TERMS TO MATURITY
(ALL MORTGAGE LOANS)
AGGREGATE % BY AGG AVERAGE HIGHEST WTD AVG. WTD AVG.
ORIGINAL TERM NUMBER CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
TO MATURITY (MONTHS) OF LOANS BALANCE BALANCE BALANCE BALANCE LTV RATIO DSC RATIO
- -------------------- -------- ------- ------- ------- ------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
59 ................... 1 $ 5,612,661 0.4% $5,612,661 $ 5,612,661 61.7% 1.42x
60 ................... 1 1,190,991 0.1 1,190,991 1,190,991 70.1 1.57
84 ................... 56 281,838,339 21.6 5,032,827 18,376,787 71.9 1.32
97 ................... 1 1,412,143 0.1 1,412,143 1,412,143 56.5 1.44
120 ................... 182 783,659,197 60.0 4,305,820 28,715,037 69.6 1.35
144 ................... 1 19,925,320 1.5 19,925,320 19,925,320 68.7 1.34
180 ................... 18 78,856,359 6.0 4,380,909 18,988,856 63.8 1.36
228 ................... 1 4,620,404 0.4 4,620,404 4,620,404 74.5 1.28
240 ................... 6 49,111,825 3.8 8,185,304 33,388,968 71.2 1.30
276 ................... 4 22,603,990 1.7 5,650,997 9,438,855 60.3 1.60
300 ................... 7 18,120,661 1.4 2,588,666 5,986,402 73.2 1.28
360 ................... 5 38,496,336 2.9 7,699,267 29,981,525 75.9 1.24
--- -------------- ----- ---------- ----------- ---- ----
Total/Wtd Avg/Min/Max:. 283 $1,305,448,224 100.0% $4,612,891 $33,388,968 69.9% 1.34x
=== ============== ===== ========== =========== ==== ====
</TABLE>
RANGE OF WTD AVG. WTD AVG.
ORIGINAL TERM CUT-OFF DATE OCCUPANCY MORTGAGE
TO MATURITY (MONTHS) DSC RATIOS RATE RATE
- -------------------- ---------- ---- ----
59 ................... 1.42x N/A 9.63%
60 ................... 1.57 100.0% 8.85
84 ................... 1.20-1.69 94.1 8.58
97 ................... 1.44 92.7 9.40
120 ................... 1.20-1.80 94.4 8.74
144 ................... 1.34 95.1 9.22
180 ................... 1.25-1.83 97.2 8.74
228 ................... 1.28 100.0 8.44
240 ................... 1.25-1.86 93.8 8.75
276 ................... 1.48-1.73 N/A 9.27
300 ................... 1.16-1.51 97.9 8.86
360 ................... 1.15-1.25 96.8 8.46
--------- ---- ----
Total/Wtd Avg/Min/Max:. 1.15-1.86x 94.7% 8.72%
========= ==== ====
The weighted average original term to maturity is 133 months.
S-40
<PAGE>
<TABLE>
<CAPTION>
Remaining Terms to Maturity
(All Mortgage Loans)
Range of Aggregate % by Agg Average Highest Wtd Avg. Wtd Avg.
Remaining Terms Number Cut-off Date Cut-off Date Cut-off Date Cut-off Date Cut-off Date Cut-off Date
to Maturity (Months) of Loans Balance Balance Balance Balance LTV Ratio DSC Ratio
- -------------------- -------- ------- ------- ------- ------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
49- 60 ............... 3 $ 11,397,647 0.9% $ 3,799,216 $ 5,612,661 63.1% 1.37x
73- 84 ............... 55 277,244,343 21.2 5,040,806 18,376,787 72.1 1.32
85- 96 ............... 1 1,412,143 0.1 1,412,143 1,412,143 56.5 1.44
109-120 ............... 182 783,659,197 60.0 4,305,820 28,715,037 69.6 1.35
133-144 ............... 1 19,925,320 1.5 19,925,320 19,925,320 68.7 1.34
169-180 ............... 18 78,856,359 6.0 4,380,909 18,988,856 63.8 1.36
217-228 ............... 1 4,620,404 0.4 4,620,404 4,620,404 74.5 1.28
229-240 ............... 6 49,111,825 3.8 8,185,304 33,388,968 71.2 1.30
265-276 ............... 4 22,603,990 1.7 5,650,997 9,438,855 60.3 1.60
289-300 ............... 7 18,120,661 1.4 2,588,666 5,986,402 73.2 1.28
349-360 ............... 5 38,496,336 2.9 7,699,267 29,981,525 75.9 1.24
--- -------------- ----- ---------- ----------- ---- ----
Total/Wtd Avg/Min/Max:. 283 $1,305,448,224 100.0% $4,612,891 $33,388,968 69.9% 1.34x
=== ============== ===== ========== =========== ==== ====
</TABLE>
Range of Range of Wtd Avg. Wtd Avg.
Remaining Terms Cut-off Date Occupancy Mortgage
to Maturity (Months) DSC Ratios Rate Rate
- -------------------- ---------- ---- ----
49- 60 ............... 1.26-1.57x 83.4% 9.90%
73- 84 ............... 1.20-1.69 94.4 8.55
85- 96 ............... 1.44 92.7 9.40
109-120 ............... 1.20-1.80 94.4 8.74
133-144 ............... 1.34 95.1 9.22
169-180 ............... 1.25-1.83 97.2 8.74
217-228 ............... 1.28 100.0 8.44
229-240 ............... 1.25-1.86 93.8 8.75
265-276 ............... 1.48-1.73 N/A 9.27
289-300 ............... 1.16-1.51 97.9 8.86
349-360 ............... 1.15-1.25 96.8 8.46
---- ---- ---- ----
Total/Wtd Avg/Min/Max:. 1.15-1.86x 94.7% 8.72%
========= ==== ====
The weighted average remaining term to maturity is 130 months.
<TABLE>
<CAPTION>
Cut-off Date Balances
(All Mortgage Loans)
Range of Aggregate % by Agg Average Highest Wtd Avg. Wtd Avg.
Cut-off Date Number Cut-off Date Cut-off Date Cut-off Date Cut-off Date Cut-off Date Cut-off Date
Balances ($) of Loans Balance Balance Balance Balance LTV Ratio DSC Ratio
------------ -------- ------- ------- ------- ------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
396,865.05- 999,999.99 ... 25 $ 19,056,336 1.5% $ 762,253 $ 994,457 65.3% 1.40x
1,000,000.00- 1,999,999.99 ... 49 70,532,443 5.4 1,439,438 1,996,414 68.1 1.36
2,000,000.00- 2,999,999.99 ... 43 105,223,859 8.1 2,447,066 2,988,507 68.3 1.38
3,000,000.00- 3,999,999.99 ... 54 188,005,541 14.4 3,481,584 3,997,829 68.6 1.37
4,000,000.00- 4,999,999.99 ... 25 113,651,494 8.7 4,546,060 4,993,268 70.1 1.33
5,000,000.00- 5,999,999.99 ... 27 148,464,318 11.4 5,498,678 5,994,807 69.2 1.36
6,000,000.00- 6,999,999.99 ... 17 109,793,678 8.4 6,458,452 6,984,528 72.4 1.29
7,000,000.00- 7,999,999.99 ... 13 98,484,442 7.5 7,575,726 7,909,075 71.0 1.36
8,000,000.00- 8,999,999.99 ... 3 25,437,786 1.9 8,479,262 8,678,999 66.7 1.39
9,000,000.00- 9,999,999.99 ... 7 65,394,391 5.0 9,342,056 9,568,283 70.2 1.31
10,000,000.00-14,999,999.99 ... 10 128,275,793 9.8 12,827,579 14,475,611 68.0 1.38
15,000,000.00-19,999,999.99 ... 4 73,734,774 5.6 18,433,694 19,925,320 72.5 1.28
20,000,000.00-24,999,999.99 ... 3 67,307,839 5.2 22,435,946 23,982,082 71.2 1.30
25,000,000.00-29,999,999.99 ... 2 58,696,562 4.5 29,348,281 29,981,525 73.4 1.27
30,000,000.00+ ................ 1 33,388,968 2.6 33,388,968 33,388,968 73.0 1.25
--- -------------- ----- ----------- ----------- ---- ----
Total: 283 $1,305,448,224 100.0% $ 4,612,891 $33,388,968 69.9% 1.34x
=== ============== ===== =========== =========== ==== ====
</TABLE>
Range of Range of Wtd Avg. Wtd Avg.
Cut-off Date Cut-off Date Occupancy Mortgage
Balances ($) DSC Ratios Rate Rate
------------ ---------- ---- ----
396,865.05- 999,999.99 ... 1.15-1.61x 95.5% 9.02%
1,000,000.00- 1,999,999.99 ... 1.16-1.80 96.7 8.95
2,000,000.00- 2,999,999.99 ... 1.15-1.86 95.7 8.81
3,000,000.00- 3,999,999.99 ... 1.18-1.83 94.5 8.82
4,000,000.00- 4,999,999.99 ... 1.20-1.56 94.1 8.76
5,000,000.00- 5,999,999.99 ... 1.21-1.69 94.6 8.86
6,000,000.00- 6,999,999.99 ... 1.20-1.36 95.2 8.64
7,000,000.00- 7,999,999.99 ... 1.20-1.73 94.7 8.62
8,000,000.00- 8,999,999.99 ... 1.31-1.52 95.4 8.50
9,000,000.00- 9,999,999.99 ... 1.20-1.48 93.7 8.52
10,000,000.00-14,999,999.99 ... 1.22-1.63 91.7 8.65
15,000,000.00-19,999,999.99 ... 1.25-1.34 95.6 8.58
20,000,000.00-24,999,999.99 ... 1.27-1.35 96.2 8.57
25,000,000.00-29,999,999.99 ... 1.25-1.28 94.8 8.58
30,000,000.00+ ................ 1.25 94.1 8.55
--------- ---- ----
Total: ........................ 1.15-1.86x 94.7% 8.72%
========= ==== ====
The average Cut-off Date Balance is $4,612,891.
S-41
<PAGE>
<TABLE>
<CAPTION>
Original Amortization Terms
(All Mortgage Loans)
Original Aggregate % by Agg Average Highest Wtd Avg. Wtd Avg.
Amortization Number Cut-off Date Cut-off Date Cut-off Date Cut-off Date Cut-off Date Cut-off Date
Terms (Months) of Loans Balance Balance Balance Balance LTV Ratio DSC Ratio
-------------- -------- ------- ------- ------- ------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
180 ..................... 10 $ 34,743,834 2.7% $3,474,383 $ 6,507,178 51.5% 1.40x
228 ..................... 1 4,620,404 0.4 4,620,404 4,620,404 74.5 1.28
240 ..................... 12 50,980,034 3.9 4,248,336 12,962,049 57.0 1.49
264 ..................... 2 9,352,376 0.7 4,676,188 4,981,687 58.4 1.45
276 ..................... 8 34,603,349 2.7 4,325,419 9,438,855 61.4 1.61
300 ..................... 96 271,956,049 20.8 2,832,876 14,475,611 65.0 1.38
312 ..................... 1 6,692,300 0.5 6,692,300 6,692,300 71.2 1.29
324 ..................... 6 18,539,431 1.4 3,089,905 6,984,528 71.9 1.32
330 ..................... 17 96,961,845 7.4 5,703,638 28,715,037 71.9 1.30
360 ..................... 130 776,998,602 59.5 5,976,912 33,388,968 73.4 1.31
--- -------------- ----- ---------- ----------- ---- ----
Total/Wtd Avg/Min/Max: .. 283 $1,305,448,224 100.0% $4,612,891 $33,388,968 69.9% 1.34x
=== ============== ===== ========== =========== ==== ====
</TABLE>
Original Range of Wtd Avg. Wtd Avg.
Amortization Cut-off Date Occupancy Mortgage
Terms (Months) DSC Ratios Rate Rate
-------------- ---------- ---- ----
180 ..................... 1.25-1.83x 98.7% 8.73%
228 ..................... 1.28 100.0 8.44
240 ..................... 1.25-1.86 79.3 9.13
264 ..................... 1.31-1.56 N/A 9.35
276 ..................... 1.41-1.73 N/A 9.30
300 ..................... 1.25-1.80 95.3 9.02
312 ..................... 1.29 100.0 8.80
324 ..................... 1.27-1.46 99.3 8.85
330 ..................... 1.25-1.64 96.5 8.76
360 ..................... 1.15-1.71 94.6 8.54
--------- ---- ----
Total/Wtd Avg/Min/Max: .. 1.15-1.86x 94.7% 8.72%
========= ==== ====
The weighted average original amortization term is 332 months.
<TABLE>
<CAPTION>
Occupancy Rates
(All Mortgage Loans)
Range of Aggregate % by Agg Average Highest Wtd Avg. Wtd Avg.
Occupancy Number Cut-off Date Cut-off Date Cut-off Date Cut-off Date Cut-off Date Cut-off Date
Rates (%) of Loans Balance Balance Balance Balance LTV Ratio DSC Ratio
--------- -------- ------- ------- ------- ------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Not Applicable ........... 28 $ 128,913,585 9.9% $ 4,604,057 $14,475,611 61.5% 1.49x
55.000-59.999 ............ 1 12,962,049 1.0 12,962,049 12,962,049 48.0 1.63
65.000-69.999 ............ 1 5,617,106 0.4 5,617,106 5,617,106 60.1 1.41
70.000-74.999 ............ 1 3,997,769 0.3 3,997,769 3,997,769 71.7 1.34
75.000-79.999 ............ 3 10,686,439 0.8 3,562,146 4,593,995 62.6 1.43
80.000-84.999 ............ 5 13,521,885 1.0 2,704,377 6,754,418 71.1 1.30
85.000-89.999 ............ 17 77,232,744 5.9 4,543,103 13,717,943 71.4 1.32
90.000-94.999 ............ 73 375,248,890 28.7 5,140,396 33,388,968 71.3 1.32
95.000-99.999 ............ 86 462,616,683 35.4 5,379,264 29,981,525 72.4 1.31
100 ...................... 68 214,651,075 16.4 3,156,633 11,400,510 68.3 1.33
--- -------------- ----- ----------- ----------- ---- ----
Total/Wtd Avg/Min/Max: ... 283 $1,305,448,224 100.0% $ 4,612,891 $33,388,968 69.9% 1.34x
=== ============== ===== =========== =========== ==== ====
</TABLE>
Range of Range of Wtd Avg. Wtd Avg.
Occupancy Cut-off Date Occupancy Mortgage
Rates (%) DSC Ratios Rate Rate
--------- ---------- ---- ----
Not Applicable ........... 1.31-1.86x N/A 9.37%
55.000-59.999 ............ 1.63 59.5% 9.23
65.000-69.999 ............ 1.41 65.4 9.56
70.000-74.999 ............ 1.34 73.3 8.90
75.000-79.999 ............ 1.26-1.62 77.8 9.56
80.000-84.999 ............ 1.21-1.51 84.5 8.39
85.000-89.999 ............ 1.15-1.43 87.7 8.62
90.000-94.999 ............ 1.15-1.83 92.8 8.57
95.000-99.999 ............ 1.16-1.71 97.1 8.60
100 ...................... 1.20-1.64 100.0 8.78
--------- ---- ----
Total/Wtd Avg/Min/Max: ... 1.15-1.86x 94.7% 8.72%
========= ==== ====
The weighted average occupancy rate is 94.7%, excluding Hospitality.
S-42
<PAGE>
<TABLE>
<CAPTION>
CAPITAL IMPROVEMENTS AND REPLACEMENT RESERVE ACCOUNTS
(ALL MORTGAGE LOANS)
INITIAL CURRENT ANNUAL CURRENT ANNUAL CURRENT AS OF
DEPOSIT BALANCE DEPOSIT TO BALANCE DEPOSIT BALANCE DATE OF
TO CAPITAL CAPITAL REPLACEMENT REPLACEMENT TO TI/LC OF TI/LC RESERVE
PROPERTY NAME PROPERTY TYPE IMP. RESERVE IMP. RESERVE RESERVE RESERVE RESERVE RESERVE ACCOUNTS
- ------------- ------------- ------------------------- ------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Aspen View Retirement Residence Health Care $ 8,750 $ 8,750 $ 25,000 -- -- -- 4/22/97
Country Gardens Health Care 16,250 16,250 7,200 -- -- -- 4/22/97
Gaulden Manor Nursing Center Health Care 14,438 5,872 13,500 $25,913 -- -- 4/24/97
Oakmont Retirement Residence Health Care -- -- 19,656 1,638 -- -- 4/22/97
Best Western Patio Motel Hospitality 27,938 27,938 67,866 11,335 -- -- 4/22/97
Comfort Inn Hospitality 17,500 17,500 106,452 17,505 -- -- 4/22/97
Comfort Inn Hospitality 17,500 17,500 94,304 -- -- -- 4/22/97
Comfort Inn--Elizabethtown Hospitality 13,750 -- 77,410 8,636 -- -- 4/22/97
Comfort Inn Belle Fontaine Hospitality 19,250 19,250 63,038 10,508 -- -- 3/27/97
Comfort Inn Cape Hatteras Hospitality 20,000 10,196 28,394 11,896 -- -- 3/28/97
Crestview Holiday Inn Hospitality 7,500 7,500 93,198 15,563 -- -- 4/22/97
Crowne Plaza Worcester Hospitality 7,000 7,065 257,366 107,675 -- -- 3/28/97
Days Inn--Atlanta Airport Hospitality 1,875 -- 88,458 14,838 -- -- 4/22/97
Hampton Inn--Newport News Hospitality -- -- 91,148 11,394 -- -- 4/22/97
Holiday Inn--Lakeland South Hospitality 164,598 164,598 148,943 20,332 -- -- 4/22/97
Holiday Inn Bay City Hospitality 601,380 601,380 57,204 9,512 -- -- 3/27/97
Holiday Inn Chesapeake Hospitality -- -- 159,957 66,882 -- -- 3/28/97
Holiday Inn Frisco Hospitality 1,250,000 1,257,640 129,087 43,172 -- -- 3/28/97
Holiday Inn Lufkin Hospitality 34,107 34,388 69,384 28,998 -- -- 3/28/97
Holiday Inn Monroeville Hospitality 8,300 8,381 174,336 72,917 -- -- 3/28/97
Holiday Inn North Hospitality 5,850 5,850 84,826 -- -- -- 4/22/97
Holiday Inn Virginia Beach Hospitality -- -- 113,004 47,332 -- -- 3/28/97
Lenox Suites Hospitality 25,000 25,000 339,372 28,280 -- -- 3/31/97
Marriot Courtyard--Knoxville Hospitality 5,598 5,598 74,756 -- -- -- 4/22/97
Marriot Courtyard--Tampa Hospitality 875 875 85,499 -- -- -- 4/22/97
Marriot Courtyard--Athens Hospitality 1,063 1,063 79,562 -- -- -- 4/22/97
Parsippany Hampton Inn Hospitality 130,375 130,375 95,564 -- -- -- 4/22/97
Quality Inn Petaluma Hospitality -- -- 83,140 7,419 -- -- 2/26/97
Ramada Inn--East Windsor Hospitality 17,979 16,416 136,063 22,053 -- -- 4/22/97
Ramada Inn Lawton Hospitality 14,813 14,813 46,392 3,866 -- -- 3/27/97
Residence Inn--Savannah Hospitality 125 125 63,229 -- -- -- 4/22/97
Sleep Inn Chattanooga Hospitality 4,688 4,688 29,604 7,401 -- -- 3/1/97
1, 5, 13 Branch Street Industrial -- -- 26,011 2,158 $62,020 $ 5,168 3/27/97
1000 West Crosby Industrial 166,250 166,250 43,800 -- 22,628 -- 3/31/97
7 --11 & 20 Ballard Way Industrial -- -- 10,687 891 19,544 1,629(a) 3/27/97
8 A--E Industrial Way Industrial -- -- 15,527 1,294 58,963 4,914 3/27/97
90 & 94 --104 Glenn Street Industrial -- -- 62,496 5,208 73,278 206,107 3/27/97
Cheesbrough Industrial Industrial 245,167 90,649 11,472 2,876 8,400 27,261 4/1/97
Cookson Company Industrial 11,313 11,313 8,146 1,360 -- -- 4/22/97
Malley Farms Business Center Industrial 12,000 12,000 7,159 1,305 -- -- 2/28/97
Mid America Business Park Industrial -- -- 12,553 -- 29,304 -- 3/31/97
Reynolds International Industrial -- -- 35,156 20,510 -- -- 3/31/97
Whispering Waters Industrial
Warehouse Industrial -- -- 16,130 -- 50,000 -- 3/25/97
Bay Bridge Mobile Home Park Mobile Home Park 10,750 8 14,790 15,792 -- -- 2/1/97
Boulder Ridge Mobile Home Park 12,606 12,606 9,636 -- -- -- 3/31/97
Forest Park Mobile Home Park Mobile Home Park 629,500 535,035 6,408 1,604 -- -- 4/22/97
1622 --1624 3rd Avenue Multifamily -- -- 9,120 760 -- 66,833(b) 3/31/97
163 West 78th Street Multifamily 8,125 300 2,000 1,167 -- -- 4/23/97
2530 --32 Bathgate Ave Multifamily 3,063 3,063 9,408 2,354 -- -- 4/22/97
2550 Briggs Ave Multifamily 11,750 11,750 7,448 1,863 -- -- 4/22/97
</TABLE>
(a) Includes $200,000 tenant specific lease reserve.
(b) Includes $66,833 tenant specific lease reserve.
S-43
<PAGE>
<TABLE>
<CAPTION>
INITIAL CURRENT ANNUAL CURRENT ANNUAL CURRENT AS OF
DEPOSIT BALANCE DEPOSIT TO BALANCE DEPOSIT BALANCE DATE OF
TO CAPITAL CAPITAL REPLACEMENT REPLACEMENT TO TI/LC OF TI/LC RESERVE
PROPERTY NAME PROPERTY TYPE IMP. RESERVE IMP. RESERVE RESERVE RESERVE RESERVE RESERVE ACCOUNTS
- ------------- ------------- ------------------------- ------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
2564 --70 Amsterdam Ave
(500 W. 188th St) Multifamily $ 5,000 $ 5,000 $ 13,716 $ 3,431 -- -- 4/22/97
2837 --2839 Decatur Ave Multifamily 5,313 5,313 11,590 2,899 -- -- 4/22/97
334 East 205th St Multifamily 14,250 14,250 8,456 2,115 -- -- 4/22/97
7 --9 East 32nd Street Multifamily -- -- 16,188 1,349 -- -- 4/22/97
Abington Apartments Multifamily 881 883 80,640 26,976 -- -- 3/27/97
Andover Court Apartments Multifamily -- -- 13,000 4,333 -- -- 2/28/97
Anthony Arms Multifamily 48,000 44,486 20,088 3,192 -- -- 4/23/97
Ashland Towne Square Apartments Multifamily 304,850 304,850 72,600 -- -- -- 3/31/97
Autumn Woods Apartments Multifamily 225,935 225,935 61,200 25,000 -- -- 3/31/97
Barkley Ridge Apartments Multifamily 19,000 19,000 65,400 40,000 -- -- 3/26/97
Barrington Park Apartments Multifamily 193,750 193,750 94,248 -- -- -- 3/31/97
Bentwood Apartments Multifamily -- -- 54,000 -- -- -- 3/27/97
Brentwood Manor Multifamily 7,750 7,750 41,028 6,845 -- -- 4/22/97
Broadmoor Apartments Multifamily 108,400 108,400 76,692 25,000 -- -- 3/31/97
Cambridge Commons II Multifamily 66,063 66,063 26,175 2,161 -- -- 4/24/97
Cameron Hill II Multifamily 130,438 130,438 32,928 13,741 -- -- 4/22/97
Caprock Apartments Multifamily 14,625 14,625 67,704 5,642 -- -- 3/26/97
Cedar Pointe Multifamily -- -- 46,500 19,404 -- -- 4/22/97
Cedar Ridge Apartments Multifamily -- -- 25,651 -- -- -- 3/26/97
Center Square Multifamily 226,188 49,347 24,000 8,611 -- -- 4/23/97
Claridge Apartments Multifamily 91,875 91,875 34,600 2,883 -- -- 3/31/97
Cliffbrook Condominiums Multifamily 14,734 14,734 15,492 -- -- -- 3/27/97
College Main Apartments Multifamily 18,420 18,420 47,913 -- -- -- 3/27/97
Creekstone Multifamily 39,250 39,250 64,464 21,516 -- -- 4/22/97
Del Coronado Apartments Multifamily 27,390 27,455 54,116 -- -- -- 4/1/97
Elmwood Village Multifamily 50,250 50,250 133,200 -- -- -- 4/22/97
Elmwood Villas Apartments Multifamily 14,213 14,213 34,788 8,697 -- -- 3/27/97
Emerald Pointe Multifamily 63,000 63,000 52,668 -- -- -- 4/22/97
English Aire Apartments Multifamily 110,750 110,750 55,875 4,656 -- -- 3/27/97
Falcon Crest Apartments Multifamily 81,875 81,875 40,800 -- -- -- 3/31/97
Florida Village Apartments Multifamily 14,250 14,250 31,584 2,632 -- -- 4/1/97
Forest Cove Apartments Multifamily 198,750 198,750 68,100 5,675 -- -- 3/31/97
Franklin Square Multifamily 5,000 5,000 40,131 -- -- -- 4/22/97
Fulton Place Apartments Multifamily -- -- 17,500 5,833 -- -- 2/28/97
Glen Oaks Apartments Multifamily 500,000 500,000 115,750 9,646 -- -- 3/31/97
Glenbrook Apartments Multifamily 19,313 19,313 21,000 1,750 -- -- 3/31/97
Glenwood Multifamily 5,625 3 17,808 2,971 -- -- 4/22/97
Hacienda Gardens Apartments Multifamily 104,538 104,538 75,600 6,300 -- -- 3/31/97
Hammocks Trails Multifamily 15,138 8,331 46,800 22,954 -- -- 2/1/97
Hampton Court Multifamily 380,500 380,500 29,694 -- -- -- 4/22/97
Harmony Gables Apartments Multifamily 15,188 15,188 14,100 -- -- -- 3/31/97
Heatherwood Apartments Multifamily 127,260 127,260 65,424 -- -- -- 3/31/97
Heathmoore Multifamily 11,250 11,250 19,564 1,962 -- -- 4/24/97
Hickory Ridge Multifamily 82,500 82,500 41,712 -- -- -- 4/22/97
Hilltop Ridge Apartments Multifamily 242,115 242,115 91,764 -- -- -- 3/31/97
Hunter Square Multifamily 3,125 3,125 13,201 3,306 -- -- 4/22/97
Hunter's Run Multifamily 196,800 194,889 54,000 13,500 -- -- 4/23/97
Hunters Glen Apartments Multifamily 84,000 84,000 77,004 77,000 -- -- 3/31/97
Hurst Hills Duplexes Multifamily 8,913 8,913 15,996 4,002 -- -- 4/22/97
Intern Apartments Multifamily 438 438 68,750 -- -- -- 3/31/97
La Mancha Apartments Multifamily 89,300 89,300 58,032 -- -- -- 3/31/97
Lake Mist Multifamily 3,750 3,750 36,288 15,143 -- -- 4/22/97
Landmark Apartments Multifamily 445,225 445,225 117,324 -- -- -- 3/31/97
</TABLE>
S-44
<PAGE>
<TABLE>
<CAPTION>
INITIAL CURRENT ANNUAL CURRENT ANNUAL CURRENT AS OF
DEPOSIT BALANCE DEPOSIT TO BALANCE DEPOSIT BALANCE DATE OF
TO CAPITAL CAPITAL REPLACEMENT REPLACEMENT TO TI/LC OF TI/LC RESERVE
PROPERTY NAME PROPERTY TYPE IMP. RESERVE IMP. RESERVE RESERVE RESERVE RESERVE RESERVE ACCOUNTS
- ------------- ------------- ------------ ------------ ------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Larchdale Woods Multifamily -- -- $ 105,200 $512,224 -- -- 4/22/97
Laurel Valley Apartments Multifamily $116,081 $116,081 53,004 138,731 -- -- 3/26/97
Lawndale Square Apartments Multifamily 121,680 121,680 55,404 -- -- -- 3/31/97
Lyons Court Multifamily 32,625 32,650 20,706 3,454 -- -- 4/22/97
Mableton Manor Multifamily 71,125 19,335 20,250 6,225 -- -- 4/23/97
Marina Del Rey Apartments Multifamily 58,075 38,952 45,200 3,767 -- -- 3/31/97
Mayfair Village Multifamily 9,000 9,000 22,908 5,730 -- -- 4/22/97
Mohawk Hills Multifamily 68,538 68,538 1 13,928 -- -- -- 4/22/97
Northwood Village Apartments Multifamily 14,713 14,713 15,600 1,300 -- -- 3/31/97
Oak Tree Village Multifamily 38,513 38,513 44,520 7,423 -- -- 4/22/97
Oakridge Multifamily 11,500 11,500 15,456 1,213 -- -- 4/22/97
Oakwood Apartments at
the Windsor Multifamily 68,352 68,523 68,052 17,061 -- -- 3/27/97
Outrigger Apartments Multifamily 126,000 126,000 36,000 -- -- -- 3/31/97
Overbrook Multifamily 103,750 103,750 22,248 5,573 -- -- 4/22/97
Oxford/Spanish Gardens Multifamily 106,400 106,400 61,776 -- -- -- 2/1/97
Palm Gardens Multifamily 13,603 -- 34,800 14,531 -- -- 4/22/97
Park Dale Lane Apartments Multifamily 26,688 26,688 19,200 1,600 -- -- 3/31/97
Park Place Apartments Multifamily 28,000 28,341 62,920 15,748 -- -- 4/22/97
Park Row / New Scotland
Gardens Apts Multifamily 17,750 17,750 26,000 5,933 -- -- 3/31/97
Parkside Phase II Multifamily 23,750 -- 7,164 9,490 -- -- 4/23/97
Parkview Court Apartments Multifamily 252,000 252,000 235,200 -- -- -- 3/27/97
Parkway Villas Multifamily 3,750 3,750 50,600 8,441 -- -- 4/22/97
Raphael Multifamily 625 -- 9,849 1,643 -- -- 4/22/97
Red Oak Place Apartments Multifamily 38,250 38,250 37,200 -- -- -- 3/31/97
Redwood Hollow Multifamily 26,403 26,403 19,080 3,717 -- -- 4/24/97
Renaissance Parc Apartments Multifamily 44,804 44,804 37,680 35,140 -- -- 3/26/97
River Oaks Multifamily 9,125 9,125 64,800 27,046 -- -- 4/22/97
Riverwalk Terrace Apartments Multifamily 292,088 157,311 78,084 75,203 -- -- 3/27/97
Semoran North Multifamily 51,375 51,375 69,600 17,412 -- -- 4/22/97
Shamrock Place Multifamily 11,563 11,563 20,090 6,711 -- -- 4/22/97
Springtree Apartments Multifamily 750 750 15,768 2,635 -- -- 4/24/97
St. Armand's Apartments Multifamily 31,344 26,288 18,720 9,360 -- -- 3/1/97
St. Catherine Apartments Multifamily 438 442 16,928 5,673 -- -- 4/1/97
Starlight Valley Apartments Multifamily 24,688 24,688 13,824 9,216 -- -- 3/1/97
Stepping Stone Multifamily 15,000 -- 24,000 8,152 -- -- 4/23/97
Sugartree Apartments Multifamily -- -- 20,100 3,368 -- -- 4/24/97
Sunset Foothills Multifamily 25,625 -- 45,024 95 -- -- 3/27/97
Sunset Pointe Apartments Multifamily 95,625 95,625 57,228 4,769 -- -- 3/31/97
The Crossroads Apartments Multifamily 1,000 -- 57,996 -- -- -- 3/27/97
The Falls on Antoine Multifamily 2,500 2,500 71,883 -- -- -- 3/31/97
The Royale Apartments Multifamily 127,500 127,500 48,400 -- -- -- 4/22/97
The Verandahs at Hunt Club Multifamily 41,199 41,199 47,250 11,813 -- -- 4/22/97
Valleyfield Multifamily 36,194 36,194 23,554 3,926 -- -- 4/24/97
Waterstone Apartments Multifamily 26,032 26,032 73,260 73,285 -- -- 3/26/97
Weatheredge Multifamily 111,000 111,000 63,958 -- -- -- 4/22/97
Westgate Park Multifamily 43,625 43,625 47,800 19,953 -- -- 4/22/97
Westland 49 Apartments Multifamily -- -- 86,600 86,600 -- -- 3/31/97
Westridge & Meadow Ridge
Apartments Multifamily 166,590 166,590 93,600 -- -- -- 3/31/97
Westwinds Village Multifamily 19,625 19,625 49,380 16,458 -- -- 3/27/97
Whispering Pines Multifamily 25,125 25,178 14,516 2,425 -- -- 4/1/97
Windsor Townhomes Multifamily 65,753 65,753 38,880 7,200 -- -- 4/23/97
Wingwood Apartments Multifamily 21,375 21,375 18,490 4,631 -- -- 4/24/97
</TABLE>
S-45
<PAGE>
<TABLE>
<CAPTION>
INITIAL CURRENT ANNUAL CURRENT ANNUAL CURRENT AS OF
DEPOSIT BALANCE DEPOSIT TO BALANCE DEPOSIT BALANCE DATE OF
TO CAPITAL CAPITAL REPLACEMENT REPLACEMENT TO TI/LC OF TI/LC RESERVE
PROPERTY NAME PROPERTY TYPE IMP. RESERVE IMP. RESERVE RESERVE RESERVE RESERVE RESERVE ACCOUNTS
- ------------- ------------- ------------ ------------ ------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Woods on the Fairway Apartments Multifamily $127,545 $127,545 $ 49,500 -- -- -- 3/31/97
Wycliffe Court Multifamily 38,762 28,750 20,995 $ 3,266 -- -- 4/24/97
Wynwood Multifamily 14,880 -- 34,080 17,400 -- -- 4/23/97
Canyon Place Multifamily--
Section 42 -- -- 16,350 6,823 -- -- 4/22/97
Colonia Del Ray Multifamily--
Section 42 -- -- 9,000 1,503 -- -- 4/22/97
Courtyard Homes Multifamily--
Section 42 -- -- 11,025 15,636 -- -- 4/22/97
Creekbend Multifamily--
Section 42 8,541 8,541 14,080 -- -- -- 4/22/97
Lincoln Square Multifamily--
Section 42 -- -- 6,650 1,664 -- -- 4/22/97
Palm Terrace Multifamily--
Section 42 -- -- 27,000 4,509 -- -- 4/22/97
Rose Lane Multifamily--
Section 42 -- -- 9,600 4,006 -- -- 4/22/97
Silver Lake Pointe Multifamily--
Section 42 -- -- 14,525 3,634 -- -- 4/22/97
Sussex Mill Multifamily--
Section 42 -- -- 10,500 875 -- -- 4/22/97
Valley View Multifamily--
Section 42 -- -- 12,000 5,007 -- -- 4/22/97
Villa De Oro Multifamily--
Section 42 137,500 -- 38,400 22,500 -- -- 4/23/97
3307 Northland Office Building Office 97,500 97,500 14,833 -- $ 68,172 -- 3/31/97
600 South Commonwealth Avenue Office 39,375 39,375 79,440 -- 150,000 -- 3/31/97
Airport Atrium Office Building Office -- -- 14,256 -- 82,896 $138,530(c) 3/31/97
Bucks County Office Center Office 80,156 80,156 37,731 -- 82,810 -- 3/31/97
Continental Professional Plaza Office 134,000 135,574 23,340 9,766 35,004 14,647 4/1/97
Harriston Square Office 5,813 510 6,240 3,135 26,092 8,028 3/1/97
Lincolnshire Portfolio Office 230,309 230,309 119,016 19,836 340,008 56,668 3/31/97
Magnolia Centre / Park Centre Office 26,161 26,161 14,184 -- 120,852 165,000(d) 3/26/97
Meridian Center One Office 22,333 22,333 8,174 681 -- -- 4/22/97
Mountain Park Professional
Center Office -- -- 6,012 -- 37,568 27,000(e) 4/1/97
One Highland Center Office 168,475 168,475 11,327 -- 41,320 -- 3/31/97
Port City Center Office 6,000 6,000 54,848 13,735 -- -- 4/22/97
Sierra Valencia Business Park Office 5,000 5,000 23,763 -- -- -- 4/22/97
Sixth Avenue Office 15,500 15,500 6,269 522 -- -- 4/22/97
ABCO Plaza Retail--Anchored 8,125 8,125 18,130 -- 24,634 -- 4/1/97
Americana Plaza Retail--Anchored 25,000 -- 17,028 26,419 20,004 3,333 3/31/97
Aurora Highlands Shopping Center Retail--Anchored 31,100 31,109 23,981 -- 30,048 16,667 4/1/97
Baywood Plaza Shopping Center Retail--Anchored 625 -- 5,377 448 -- -- 4/22/97
Bowdon Shopping Center Retail--Anchored 9,125 7,240 4,765 1,552 7,000 2,333 3/1/97
Carbondale Plaza Retail--Anchored 209,750 209,750 12,992 3,248 13,541 3,385 3/31/97
Cedartown North SC Retail--Anchored 17,500 17,500 5,386 1,349 -- -- 4/22/97
Continental Shopping Plaza Retail--Anchored 308,000 311,619 49,320 20,637 60,000 25,106 4/1/97
Crossroads Plaza Shopping Center Retail--Anchored -- -- 14,928 10,000 -- -- 3/31/97
Crossroads Towne Center Retail--Anchored -- -- 28,380 4,743 36,000 6,017 4/1/97
Daytona Beach Mall Retail--Anchored 27,688 27,688 16,099 4,027 -- -- 4/22/97
Eagle Creek Plaza Retail--Anchored 40,000 40,032 14,052 -- 17,100 -- 3/27/97
Food 4 Less Retail--Anchored -- -- 9,500 -- -- -- 4/1/97
Franklin Shopping Center Retail--Anchored 1,875 1,875 2,407 1,089 3,390 844 3/1/97
</TABLE>
- ----------
(c) Includes $138,530 tenant specific lease reserve.
(d) Includes $90,000 tenant specific lease reserve.
(e) Includes $27,000 tenant specific lease reserve.
S-46
<PAGE>
<TABLE>
<CAPTION>
INITIAL CURRENT ANNUAL CURRENT ANNUAL CURRENT AS OF
DEPOSIT BALANCE DEPOSIT TO BALANCE DEPOSIT BALANCE DATE OF
TO CAPITAL CAPITAL REPLACEMENT REPLACEMENT TO TI/LC OF TI/LC RESERVE
PROPERTY NAME PROPERTY TYPE IMP. RESERVE IMP. RESERVE RESERVE RESERVE RESERVE RESERVE ACCOUNTS
- ------------- ------------- ------------ ------------ ------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Freeport Lincoln Mall Retail--Anchored -- -- $16,263 -- -- -- 3/26/97
Galleria Shopping Center Retail--Anchored $ 72,063 $ 19,613 30,014 $ 7,516 -- -- 4/22/97
Gerlands Food Fair Retail--Anchored -- -- -- -- -- -- 4/22/97
Greenbriar Mall Retail--Anchored 1,768,700 1,773,930 111,024 18,532 $248,412 $542,942(f) 3/31/97
Grove Plaza Retail--Anchored 26,500 26,577 12,056 2,010 29,221 4,872 3/27/97
Hayden Plaza Retail--Anchored 21,250 21,268 23,596 -- 30,000 300,000 4/1/97
Hillcrest Shopping Center Retail--Anchored 20,000 29 39,420 9,879 120,000 281,997 3/27/97
Hogansville Shopping Center Retail--Anchored 3,719 2,623 5,297 1,766 5,765 1,922 3/1/97
Hoods Crossroads Shopping Center Retail--Anchored 21,375 15,313 13,276 3,322 -- -- 4/22/97
Kirby Richmond Shopping Center Retail--Anchored 79,718 79,718 8,171 -- 16,476 100,000(g) 3/27/97
Kroger--Friendswood Retail--Anchored -- -- -- -- -- -- 4/22/97
Liberty Triangle Retail--Anchored 2,625 2,625 9,426 -- 18,007 -- 4/1/97
Lincoln Crossing Retail--Anchored -- -- 15,180 -- -- -- 3/31/97
Maple Ridge SC--344 Retail--Anchored 875 875 -- -- -- -- 4/22/97
McDowell Marketplace Retail--Anchored -- -- 5,664 -- 10,944 -- 4/1/97
Mobile Festival Retail--Anchored -- -- 83,350 39,073 75,000 37,595 3/31/97
Montrose Shopping Center Retail--Anchored -- -- 21,372 5,343 30,756 7,689 3/31/97
New Paltz Shopping Center Retail--Anchored 85,000 85,721 8,282 4,846 -- -- 3/31/97
Oakwood Village Shopping Center Retail--Anchored 15,281 15,281 20,239 5,070 -- -- 4/22/97
Office Depot Retail--Anchored 313 313 6,648 -- 35,004 -- 3/27/97
Pepperwood Plaza Retail--Anchored 18,641 3,487 5,942 1,508 20,568 6,312 4/1/97
Plaza at Highlands Retail--Anchored -- -- 12,600 4,213 -- -- 4/1/97
Potomac Festival II Retail--Anchored 10,418 10,418 4,866 1,219 -- -- 4/22/97
Potrero Center Retail--Anchored -- -- 18,172 581,338(h) -- -- 4/22/97
Randolph Shopping Center Retail--Anchored -- -- 12,286 3,071 16,286 4,072 3/31/97
Ridge Road West Retail--Anchored 4,250 -- 2,592 466 -- -- 2/28/97
Rising Sun Avenue Shopping Center Retail--Anchored 35,000 35,000 4,806 401 6,000 500 3/31/97
River Center Shopping Center Retail--Anchored 10,169 10,013 16,732 24,536 -- -- 4/22/97
Rivertowne Commons Shopping
Center Retail--Anchored 37,500 37,500 60,955 15,257 -- -- 4/22/97
Riverview Plaza Shopping Center Retail--Anchored 12,500 12,500 20,436 1,703 -- -- 4/22/97
Safeway Food Store # 0837 Retail--Anchored 2,000 2,000 13,206 -- -- -- 4/22/97
SMC--Duluth--249 Retail--Anchored 4,875 4,875 -- -- -- -- 4/22/97
SMC--Houston--410 Retail--Anchored 32,375 32,375 -- -- -- -- 4/22/97
SMC--Tucker--252 Retail--Anchored 14,671 14,671 -- -- -- -- 4/22/97
SMC--Meterie--408 Retail--Anchored 13,094 13,094 -- -- -- -- 4/22/97
Snowden Square S.C.--349 Retail--Anchored 1,563 1,563 -- -- -- -- 4/22/97
South Wind Plaza Shopping Center Retail--Anchored -- -- 23,481 -- 300,000 -- 3/27/97
Southwind Plaza Shopping Center Retail--Anchored 23,945 23,945 11,890 2,976 -- -- 4/22/97
Springfield Plaza Shopping Center Retail--Anchored 86,250 86,250 63,688 669,057 -- -- 3/31/97
Square One Shopping Center Retail--Anchored 12,500 12,500 19,600 6,534 30,000 10,001 2/1/97
Staples Office Supply Retail--Anchored 3,125 3,125 2,359 -- -- -- 3/31/97
State Line Shopping Center Retail--Anchored 26,750 26,750 15,331 1,278 15,273 1,273 2/11/97
Sugar Creek Plaza Retail--Anchored 66,063 66,063 26,460 -- 41,640 -- 3/31/97
Sunset Plaza Retail--Anchored 1,200 11,226 34,824 125,000 20,500 -- 4/1/97
The Sinclair Retail--Anchored -- -- 1,848 -- -- 75,750 3/31/97
The Sports Authority Retail--Anchored 5,250 5,252 45,018 15,008 62,769 20,925 3/31/97
Town and Country Shopping Center Retail--Anchored 45,188 45,188 11,976 -- 23,280 -- 3/31/97
Towne Plaza Shopping Center Retail--Anchored 4,875 4,876 35,576 50,014 55,000 50,014 4/1/97
Union Hills Village Retail--Anchored -- -- 10,684 -- 30,400 196,000(i) 4/1/97
Valu Food Shopping Center Retail--Anchored -- -- 17,212 -- 24,000 194,886 3/31/97
Watseka Shopping Plaza Retail--Anchored 5,375 5,375 18,274 4,563 -- -- 3/31/97
Westfall Town Center Retail--Anchored 10,000 10,000 20,405 3,401 -- -- 3/31/97
Westfield Village Shopping Center Retail--Anchored 3,313 3,313 21,437 -- -- -- 4/1/97
Woodbridge Plaza Retail--Anchored 132,625 132,625 10,072 -- -- -- 4/22/97
</TABLE>
- ----------
(f) Includes $501,479 tenant specific lease reserve.
(g) Includes $100,000 tenant specific lease reserve.
(h) Includes $500,000 tenant specific lease reserve.
(i) Includes $196,000 tenant specific lease reserve.
S-47
<PAGE>
<TABLE>
<CAPTION>
INITIAL CURRENT ANNUAL CURRENT ANNUAL CURRENT AS OF
DEPOSIT BALANCE DEPOSIT TO BALANCE DEPOSIT BALANCE DATE OF
TO CAPITAL CAPITAL REPLACEMENT REPLACEMENT TO TI/LC OF TI/LC RESERVE
PROPERTY NAME PROPERTY TYPE IMP. RESERVE IMP. RESERVE RESERVE RESERVE RESERVE RESERVE ACCOUNTS
- ------------- ------------- ------------ ------------ ------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Anderson Square Business Park Retail--Unanchored $ 625 $ 625 $ 6,816 $ 5,530 $24,000 $19,470 3/31/97
Brookside Plaza Retail--Unanchored 7,500 7,500 12,320 3,083 -- -- 4/22/97
Campbell Crossing Retail--Unanchored 10,836 10,836 7,046 1,176 -- -- 4/22/97
Cascade Crossing Shopping Center Retail--Unanchored 1,375 -- 4,542 -- -- -- 4/22/97
Chisholm West Shopping Center Retail--Unanchored 23,688 23,688 33,889 -- 74,015 -- 3/27/97
Cleveland Street Square Retail--Unanchored 5,844 5,844 13,543 3,389 -- -- 4/22/97
Crossroads Shopping Center
Beaumont Retail--Unanchored -- -- 12,096 3,024 29,816 45,819 3/27/97
Deerbrook Corner Shopping Center Retail--Unanchored 10,375 10,375 16,404 41,367 18,000 1,500 3/31/97
Delray West Plaza Retail--Unanchored 15,225 15,225 17,940 2,990 -- 150,000 2/28/97
Gala Plaza Retail--Unanchored 152,125 152,125 13,018 3,260 -- -- 4/22/97
Gateway Center Retail--Unanchored 30,313 30,313 36,880 6,150 -- -- 4/22/97
Gateway Courtyard Retail--Unanchored -- -- 4,140 345 20,040 1,670 3/31/97
Golfsmith Golf Center Retail--Unanchored -- -- -- -- 12,000 2,000 3/31/97
Indian Trace Retail--Unanchored 3,688 3,688 13,329 -- -- -- 4/22/97
Little River Plaza Retail--Unanchored 210,062 210,062 20,916 1,743 21,396 1,783 3/31/97
Madison Plaza Shopping Center Retail--Unanchored 345,347 -- 6,561 1,643 -- -- 4/22/97
Marketplace Mall Retail--Unanchored 35,419 35,419 53,377 -- -- -- 4/22/97
Midway Retail Center Retail--Unanchored 5,875 5,875 2,569 -- 14,658 -- 3/31/97
Page Plaza Retail--Unanchored 49,375 49,375 10,447 -- -- -- 4/22/97
Redondo Place Shopping Center Retail--Unanchored 1,000 1,000 9,414 -- -- -- 3/27/97
Riverside Mall Retail--Unanchored 28,938 28,938 23,818 -- -- -- 4/22/97
Streetcar Stables Retail--Unanchored -- -- 3,324 831 -- -- 2/28/97
Tustin Autoplex Retail--Unanchored 10,625 10,625 3,063 -- 13,092 -- 3/31/97
Village Square West Retail--Unanchored 2,875 2,875 3,567 297 -- -- 4/22/97
Welleby Square Shopping Center Retail--Unanchored 12,470 12,470 8,381 -- 25,379 -- 3/27/97
West End Plaza Retail--Unanchored 1,375 -- 6,285 2,623 -- 2,511 4/22/97
A1 Self Storage (Loan Level) Self Storage 14,875 1,570 24,140 6,823 -- -- 3/27/97
Anchor Business Park Self Storage 11,250 11,250 17,592 -- 12,000 10,000 3/31/97
Atlanta Highway Mini--Storage Self Storage -- -- 4,992 1,250 -- -- 4/22/97
Boulder Bins Self Storage Self Storage 200,638 47,746 17,289 7,214 -- -- 3/31/97
Dothan Mini--Storage West Self Storage 10,500 10,500 2,807 703 -- -- 4/22/97
Storhouse Mini--Storage Self Storage 52,625 52,625 2,223 1,917 -- -- 4/22/97
</TABLE>
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THE MORTGAGE LOAN SELLERS
On or about May 16, 1997 (the "Closing Date"), the Depositor will acquire
the Mortgage Loans from the Mortgage Loan Sellers pursuant to separate
agreements (the "Mortgage Loan Purchase Agreements"). The Mortgage Loan Sellers
acquired or originated the Mortgage Loans as described above under "--Mortgage
Loan History."
ASSIGNMENT OF THE MORTGAGE LOANS; REPURCHASES
On or prior to the Closing Date, the Depositor will transfer the Mortgage
Loans, without recourse, to the Trustee for the benefit of the
Certificateholders. In connection with such transfer, the Depositor will require
each Mortgage Loan Seller to deliver to the Trustee or to a document custodian
appointed by the Trustee (a "Custodian"), among other things, the following
documents with respect to each Mortgage Loan (collectively, as to each Mortgage
Loan, the "Mortgage File"): (i) the original Mortgage Note, endorsed, without
recourse, to the order of the Trustee; (ii) the original or a copy of the
Mortgage, together with an original or copy of any intervening assignments of
the Mortgage, in each case with evidence of recording indicated thereon; (iii)
the original or a copy of any related assignment of leases and of any
intervening assignments thereof (if such item is a document separate from the
Mortgage), with evidence of recording indicated thereon; (iv) an original
assignment of the Mortgage in favor of the Trustee and in recordable form; (v)
an original assignment of any related assignment of leases (if such item is a
document separate from the Mortgage) in favor of the Trustee and in recordable
form; (vi) originals or copies of all written modification agreements in those
instances in which the terms or provisions of the Mortgage or Mortgage Note have
been modified; (vii) the original or a copy of the policy or certificate of
lender's title insurance issued on the date of the origination of such Mortgage
Loan, or, if such policy has not been issued, an irrevocable, binding commitment
to issue such title insurance policy; and (viii) any file copies of any UCC
financing statements in the possession of the applicable Mortgage Loan Seller.
The Trustee or a Custodian on its behalf will be required to review each
Mortgage File within a specified period following its receipt thereof. If any of
the above-described documents is found during the course of such review to be
missing from any Mortgage File or defective, and in either case such omission or
defect materially and adversely affects the interests of the Certificateholders,
the applicable Mortgage Loan Seller, if it cannot deliver the document or cure
the defect (other than omissions solely due to a document not having been
returned by the related recording office) within a period of 90 days following
its receipt of notice thereof, will be obligated pursuant to the applicable
Mortgage Loan Purchase Agreement (the relevant rights under which will be
assigned by the Depositor to the Trustee) to repurchase the affected Mortgage
Loan within such 90-day period at a price (the "Purchase Price") generally equal
to the sum of (i) the unpaid principal balance of such Mortgage Loan, (ii)
unpaid accrued interest on such Mortgage Loan (calculated at the Mortgage Rate)
to but not including the Due Date in the Collection Period in which the purchase
is to occur, and (iii) certain servicing expenses that are reimbursable to the
Master Servicer or the Special Servicer plus any interest thereon and on any P&I
Advances; provided that such Mortgage Loan Seller will have an additional 90-day
period to deliver the document or cure the defect, as the case may be, if it is
diligently proceeding to effect such delivery or cure and has delivered to the
Trustee an officer's certificate that describes the reasons that such delivery
or cure was not effected within the first 90-day cure period and the actions it
proposes to take to effect such delivery or cure, and which states that it
anticipates such delivery or cure will be effected within the additional 90-day
period. The foregoing repurchase obligation will constitute the sole remedy
available to the Certificateholders and the Trustee for any uncured failure to
deliver, or any uncured defect in, a constituent Mortgage Loan document. The
applicable Mortgage Loan Seller will be solely responsible for such repurchase
obligation, and such obligation will not be the responsibility of the Depositor
or any of its other affiliates.
The Pooling and Servicing Agreement will require the Trustee promptly to
cause each of the assignments described in clauses (iv) and (v) of the second
preceding paragraph to be submitted for recording in the real property records
of the jurisdiction in which the related Mortgaged Property is located. See
"Description of the Pooling Agreements--Assignment of Mortgage Loans;
Repurchases" in the Prospectus.
REPRESENTATIONS AND WARRANTIES; REPURCHASES
In each Mortgage Loan Purchase Agreement, the applicable Mortgage Loan
Seller will represent and warrant with respect to each related Mortgage Loan, as
of the Closing Date, or as of such other date specifically provided in the
representation and warranty, among other things, generally that: (i) the
information set forth in the schedule of
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Mortgage Loans attached to the applicable Mortgage Loan Purchase Agreement
(which contains certain of the information set forth in Annex A) is true and
correct in all material respects as of the Cut-off Date; (ii) if such Mortgage
Loan was originated by the applicable Mortgage Loan Seller or an affiliate
thereof, then, as of the date of its origination, such Mortgage Loan complied in
all material respects with, or was exempt from, all requirements of federal,
state or local law relating to the origination of such Mortgage Loan and, if
such Mortgage Loan was not originated by the applicable Mortgage Loan Seller or
an affiliate thereof, then, to the best of such Seller's knowledge after having
performed the type of due diligence customarily performed by prudent
institutional commercial and multifamily mortgage lenders, as of the date of its
origination, such Mortgage Loan complied in all material respects with, or was
exempt from, all requirements of federal, state or local law relating to the
origination of such Mortgage Loan; (iii) the applicable Mortgage Loan Seller
owns the Mortgage Loan, has good and marketable title thereto, has full right
and authority to sell, assign and transfer the Mortgage Loan and is transferring
the Mortgage Loan free and clear of any and all liens, pledges, charges or
security interests; (iv) the proceeds of such Mortgage Loan have been fully
disbursed and there is no requirement for future advances thereunder; (v) to the
actual knowledge of the applicable Mortgage Loan Seller, each of the related
Mortgage Note, related Mortgage, Assignment of Leases, if any, and other
agreements executed in connection therewith is the legal, valid and binding
obligation of the maker thereof (subject to any non-recourse provisions therein
and any state anti-deficiency legislation), enforceable in accordance with its
terms, except as such enforcement may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of creditors'
rights generally, and by general principles of equity (regardless of whether
such enforcement is considered in a proceeding in equity or at law), and a legal
opinion to such effect was obtained by the originator of such Mortgage Loan at
the time of origination; and, as of the date of its origination, there was no
valid offset, defense, counterclaim or right to rescission with respect to any
of the related Mortgage Note, Mortgage or other agreements executed in
connection with such Mortgage Loan, and, as of the Cut-off Date, to the actual
knowledge of the applicable Mortgage Loan Seller, there is no valid offset,
defense, counterclaim or right to rescission with respect to such Mortgage Note,
Mortgage(s) or other agreements; (vi) the assignment of the related Mortgage in
favor of the Trustee constitutes the legal, valid and binding assignment of such
Mortgage to the Trustee; (vii) the related Mortgage (or, in the case of a
cross-collateralized Mortgage Loan, a related Mortgage) is a valid and
enforceable first lien on the related Mortgaged Property (or, in the case of a
cross-collateralized Mortgage Loan, the related primary Mortgaged Property),
which Mortgaged Property is free and clear of all encumbrances and liens having
priority over or on a parity with the first lien of such Mortgage, except for
(a) liens for real estate taxes and special assessments not yet due and payable,
(b) covenants, conditions and restrictions, rights of way, easements and other
matters of public record as of the date of recording of such Mortgage, such
exceptions appearing of record being customarily acceptable to mortgage lending
institutions generally or specifically reflected in the appraisal of such
Mortgaged Property made in connection with the origination of such Mortgage
Loan, (c) other matters to which like properties are commonly subject which do
not, individually or in the aggregate, materially interfere with the benefits of
the security intended to be provided by such Mortgage or materially affect the
value or marketability of such Mortgaged Property and (d) if such Mortgage
secures a cross-collateralized Mortgage Loan, any lien securing a related
cross-collateralized Mortgage Loan; (viii) to the actual knowledge of the
applicable Mortgage Loan Seller, all taxes and governmental assessments that
prior to the Cut-off Date became due or owing in respect of, and affect, the
related Mortgaged Property (or, in the case of a cross-collateralized Mortgage
Loan, the related primary Mortgaged Property) have been paid, or an escrow of
funds in an amount sufficient to cover such payments has been established; (ix)
as of the date of its origination, there was no proceeding pending for the total
or partial condemnation of the related Mortgaged Property (or, in the case of a
cross-collateralized Mortgage Loan, the related primary Mortgaged Property) that
materially affects the value thereof, and such Mortgaged Property was free of
material damage; and, as of the Cut-off Date, there is no proceeding pending for
the total or partial condemnation of the related Mortgaged Property (or, in the
case of a cross-collateralized Mortgage Loan, the related primary Mortgaged
Property) that materially affects the value thereof, and such Mortgaged Property
is free of material damage; (x) as of the date of its origination, all insurance
required under the Mortgage for such Mortgage Loan was in full force and effect
with respect to the related Mortgaged Property (or, in the case of a
cross-collateralized Mortgage Loan, the related primary Mortgaged Property);
(xi) as of the Cut-off Date, no Mortgage Loan is, or in the prior 12 months, has
been, 30 days or more past due in respect of any Scheduled Payment; and (xii)
one or more environmental site assessments were performed with respect to the
related Mortgaged Property (or, in the case of a cross-collateralized Mortgage
Loan, the related primary Mortgaged Property) during the 18-month period
preceding the Cut-off Date, and the Seller, having made no independent inquiry
other than to review the report(s) prepared in connection with the assessment(s)
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referenced herein, has no knowledge of any material and adverse environmental
condition or circumstance affecting such Mortgaged Property that was not
disclosed in such report(s).
In the case of a breach of any of the foregoing representations and
warranties that materially and adversely affects the interests of the
Certificateholders, the applicable Mortgage Loan Seller, if it cannot cure such
breach within a period of 90 days following its receipt of notice thereof, will
be obligated pursuant to the applicable Mortgage Loan Purchase Agreement (the
relevant rights under which will be assigned by the Depositor to the Trustee) to
repurchase the affected Mortgage Loan within such 90-day period at the
applicable Purchase Price; provided that such Mortgage Loan Seller will have an
additional 90-day period to cure such breach if it is diligently proceeding with
such cure and has delivered to the Trustee an officer's certificate that
describes the reasons that a cure was not effected within the first 90-day cure
period and the actions it proposes to take to effect such cure and which states
that it anticipates such cure will be effected within the additional 90-day
period.
The foregoing repurchase obligation will constitute the sole remedy
available to the Certificateholders and the Trustee for any uncured breach of
the applicable Mortgage Loan Seller's representations and warranties regarding
the applicable Mortgage Loans. The applicable Mortgage Loan Seller will be the
sole warranting party in respect of the Mortgage Loans sold by such Mortgage
Loan Seller to the Depositor, and neither the Depositor nor any of its other
affiliates will be obligated to repurchase any such affected Mortgage Loan in
connection with a breach of the applicable Mortgage Loan Seller's
representations and warranties if the applicable Mortgage Loan Seller defaults
on its obligation to do so. See "Description of the Pooling
Agreements--Representations and Warranties; Repurchases" in the Prospectus.
CHANGES IN MORTGAGE POOL CHARACTERISTICS
The description in this Prospectus Supplement of the Mortgage Pool and the
Mortgaged Properties is based upon the Mortgage Pool as expected to be
constituted at the time the Offered Certificates are issued. Prior to the
issuance of the Offered Certificates, a Mortgage Loan may be removed from the
Mortgage Pool if the Depositor deems such removal necessary or appropriate or if
it is prepaid. The Depositor believes that the information set forth herein will
be representative of the characteristics of the Mortgage Pool as it will be
constituted at the time the Offered Certificates are issued, although the range
of Mortgage Rates, maturities and certain other characteristics of the Mortgage
Loans in the Mortgage Pool may vary.
A Current Report on Form 8-K (the "Form 8-K") will be available to
purchasers of the Offered Certificates on or shortly after the Closing Date and
will be filed, together with the Pooling and Servicing Agreement, with the
Securities and Exchange Commission within fifteen days after the initial
issuance of the Offered Certificates. If Mortgage Loans are removed from or
added to the Mortgage Pool as described in the preceding paragraph, such removal
or addition will be noted in the Form 8-K.
SERVICING OF THE MORTGAGE LOANS
GENERAL
The Master Servicer and the Special Servicer, either directly or through
sub-servicers, will be required to service and administer the Mortgage Loans on
behalf of the Trustee and for the benefit of the Certificateholders, in
accordance with applicable law, the terms of the Pooling and Servicing
Agreement, the terms of the respective Mortgage Loans and, to the extent
consistent with the foregoing, in the same manner in which, and with the same
care, skill, prudence and diligence with which, the Master Servicer or the
Special Servicer, as the case may be, generally services and administers similar
mortgage loans (a) for other third-parties portfolios, giving due consideration
to customary and usual standards of practice of prudent institutional commercial
mortgage lenders servicing their own loans and to the maximization of the
recovery on such Mortgage Loans on a net present value basis, or (b) held in its
own portfolio, whichever servicing procedure is of a higher standard, but
without regard to (i) any relationship that the Master Servicer or the Special
Servicer, as the case may be, or any affiliate thereof may have with the related
borrower; (ii) the ownership of any Certificate by the Master Servicer or the
Special Servicer, as the case may be, or by any affiliate thereof; (iii) the
right of the Master Servicer or the Special Servicer, as the case may be, to
receive compensation or other fees for its services rendered pursuant to the
Pooling and Servicing Agreement; (iv) the obligations of the Master Servicer or
the Special Servicer, as the case may be, to make Advances (as defined herein);
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(v) the ownership, servicing or management for others of any other mortgage
loans or mortgaged property; and (vi) any obligation of the Master Servicer, as
a Mortgage Loan Seller or as an affiliate thereof, to pay any indemnity with
respect to or repurchase any Mortgage Loan.
Set forth below, following the subsection captioned "--The Master Servicer
and Special Servicer," is a description of certain pertinent provisions of the
Pooling and Servicing Agreement relating to the servicing of the Mortgage Loans.
Reference is also made to the Prospectus, in particular to the section captioned
"Description of the Pooling Agreements," for important information in addition
to that set forth herein regarding the terms and conditions of the Pooling and
Servicing Agreement as they relate to the rights and obligations of the Master
Servicer and Special Servicer thereunder. The Special Servicer generally will
have all of the rights to indemnity and reimbursement, and limitations on
liability, that the Master Servicer is described as having in the Prospectus and
the Special Servicer rather than the Master Servicer will perform the servicing
duties described in the Prospectus with respect to Specially Serviced Mortgage
Loans and REO Properties (each as described herein). In addition to the
circumstances for resignation of the Master Servicer set forth in the
Prospectus, the Master Servicer and the Special Servicer shall have the right to
resign at any other time provided that (i) each of the Rating Agencies confirms
in writing that the successor's appointment will not result in a withdrawal,
qualification or downgrade of any rating or ratings assigned to any Class of
Certificates, (ii) the resigning party pays all costs and expenses in connection
with such transfer, and (iii) the successor accepts appointment prior to the
effectiveness of such resignation. See "Certain Matters Regarding the Master
Servicer and the Depositor" in the Prospectus.
THE MASTER SERVICER AND SPECIAL SERVICER
FUNB, in its capacity as master servicer under the Pooling and Servicing
Agreement (in such capacity, the "Master Servicer") will be responsible for
servicing the Mortgage Loans (other than Specially Serviced Mortgage Loans and
REO Properties). Although the Master Servicer is authorized to employ agents,
including sub-servicers, to directly service the Mortgage Loans for which it is
responsible, the Master Servicer will remain liable for its servicing
obligations under the Pooling and Servicing Agreement. The Master Servicer is a
wholly owned subsidiary of First Union Corporation. The Master Servicer's
principal servicing offices are located at One First Union Center, TW9, 301
South College Street, Charlotte, North Carolina 28288-1075.
As of March 31, 1997, the Master Servicer and its affiliates serviced
approximately 1,105 commercial and multifamily loans, totaling approximately
$4.0 billion in aggregate outstanding principal amounts, including loans
securitized in mortgage-backed securitization transactions.
The initial Special Servicer will be CRIIMI MAE Services Limited
Partnership, a Maryland limited partnership, the general partner of which is
CRIIMI MAE Management, Inc. The Special Servicer will be responsible for
performing certain servicing functions with respect to Mortgage Loans that, in
general, are in default or as to which default is imminent, for administering
any REO Property and for performing certain other functions with respect to all
Mortgage Loans, such as conducting property inspections, collecting financial
statements, rent-rolls and other financial data on the Mortgaged Properties, and
preparing related reports, as set forth in the Pooling and Servicing Agreement.
As of March 31, 1997, the Special Servicer was responsible for the servicing of
approximately 1,630 commercial and multifamily loans with an aggregate principal
balance of approximately $6.4 billion, the collateral for which is located in 48
states. It is anticipated that the Special Servicer or an affiliate of the
Special Servicer will purchase all or a significant portion of certain Classes
of the Private Certificates on or about the Closing Date. The Special Servicer's
principal offices are located at 11200 Rockville Pike, Rockville, Maryland
20852.
The information set forth herein concerning the Master Servicer and the
Special Servicer has been provided by the Master Servicer and Special Servicer,
respectively, and none of the Depositor or either Underwriter makes any
representation or warranty as to the accuracy or completeness of such
information.
THE SPECIAL SERVICER
The Pooling and Servicing Agreement permits the holder (or holders) of the
majority of the Voting Rights allocated to the Controlling Class of Sequential
Pay Certificates to replace the Special Servicer and to select a representative
(the "Controlling Class Representative") from whom the Special Servicer will
seek advice and approval and take direction under certain circumstances. See
"Servicing of the Mortgage Loans--The Controlling Class Representative." The
"Controlling Class of Sequential Pay Certificates" is the Class of Sequential
Pay
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Certificates that has the latest alphabetical Class designation and that has a
Certificate Balance that is greater than 25% of its original Certificate
Balance; provided that if no Class of Sequential Pay Certificates has a
Certificate Balance that is greater than 25% of its original Certificate
Balance, the Class of Sequential Pay Certificates with the latest alphabetical
Class designation will be the "Controlling Class of Sequential Pay
Certificates." The Class A-1, Class A-2 and Class A-3 Certificates will be
treated as one Class for determining the Controlling Class of Sequential Pay
Certificates. Any such replacement of a Special Servicer will be subject to,
among other things, (i) the delivery of notice of the proposed replacement to
the Rating Agencies and receipt of notice from the Rating Agencies that the
replacement will not result in a qualification, downgrade or withdrawal of any
of the then current ratings assigned to the Certificates, and (ii) the written
agreement of the successor Special Servicer to be bound by the terms and
conditions of the Pooling and Servicing Agreement. Subject to the foregoing, any
Certificateholder or affiliate thereof may be appointed as Special Servicer. See
"Description of Certificates--Voting Rights" herein.
The Special Servicer will be responsible for servicing and administering
any Mortgage Loan as to which (a) any Monthly Payment shall be delinquent 45 or
more days (or, in the case of a Balloon Payment, if the Master Servicer
determines that the related borrower has obtained a binding commitment to
refinance, such longer period of delinquency (not to exceed 120 days) within
which such refinancing is expected to occur); (b) the Master Servicer shall have
determined that a default in making a Monthly Payment is likely to occur within
30 days and is likely to remain unremedied for at least 60 days (or, in the case
of a Balloon Payment, if the Master Servicer determines that the related
borrower has obtained commitment to refinance, such longer period of delinquency
(not to exceed 120 days) within which such refinancing is expected to occur);
(c) there shall have occurred a default (other than as described in clause (a)
above) that materially impairs the value of the Mortgaged Property as security
for the Mortgage Loan or otherwise materially adversely affects the interests of
Certificateholders and that continues unremedied for the applicable grace period
under the terms of the Mortgage Loan (or, if no grace period is specified, for
30 days); (d) a decree or order under any bankruptcy, insolvency or similar law
shall have been entered against the related borrower and such decree or order
shall have remained in force, undischarged or unstayed for a period of 60 days;
(e) the related borrower shall consent to the appointment of a conservator or
receiver or liquidator in any insolvency or similar proceedings of or relating
to such related borrower or of or relating to all or substantially all of its
property; (f) the related borrower shall admit in writing its inability to pay
its debts generally as they become due, file a petition to take advantage of any
applicable insolvency or reorganization statute, make an assignment for the
benefit of its creditors, or voluntarily suspend payment of its obligations; or
(g) the Master Servicer shall have received notice of the commencement of
foreclosure or similar proceedings with respect to the related Mortgaged
Property.
In the event of any of the foregoing with respect to any Mortgage Loan, the
Master Servicer is required to transfer certain of its servicing
responsibilities with respect thereto to the Special Servicer. Notwithstanding
such transfer, the Master Servicer will continue to receive payments on such
Mortgage Loan (including amounts collected by the Special Servicer), to make
certain calculations with respect to such Mortgage Loan, and to make remittances
(including, if necessary, P&I Advances) and prepare certain reports to the
Trustee with respect to such Mortgage Loan. If title to the related Mortgaged
Property is acquired by the Trust Fund (upon acquisition, an "REO Property"),
whether through foreclosure, deed in lieu of foreclosure or otherwise, the
Special Servicer will continue to be responsible for the operation and
management thereof. Mortgage Loans serviced by the Special Servicer are referred
to herein as "Specially Serviced Mortgage Loans" and, together with any REO
Properties, constitute "Specially Serviced Trust Fund Assets." The Master
Servicer will have no responsibility for the Special Servicer's performance of
its duties under the Pooling and Servicing Agreement.
A Mortgage Loan will cease to be a Specially Serviced Mortgage Loan (and
will become a "Corrected Mortgage Loan" as to which the Master Servicer will
re-assume servicing responsibilities):
(w) with respect to the circumstances described in clause (a) of the
second preceding paragraph, when the related borrower has made three
consecutive full and timely Monthly Payments under the terms of such
Mortgage Loan (as such terms may be changed or modified in connection with
a bankruptcy or similar proceeding involving the related borrower or by
reason of a modification, waiver or amendment granted or agreed to by the
Special Servicer);
(x) with respect to any of the circumstances described in clauses (b),
(d), (e) and (f) of the second preceding paragraph, when such circumstances
cease to exist in the good faith, reasonable judgment of the Special
Servicer, but, with respect to any bankruptcy or insolvency proceedings
described in clauses (d), (e) and (f), no later than the entry of an order
or decree dismissing such proceeding;
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(y) with respect to the circumstances described in clause (c) of the
second preceding paragraph, when such default is cured; and
(z) with respect to the circumstances described in clause (g) of the
second preceding paragraph, when such proceedings are terminated;
so long as at that time no other circumstance identified in such clauses (a)
through (g) then exists.
SERVICING AND OTHER COMPENSATION AND PAYMENT OF EXPENSES
The principal compensation to be paid to the Master Servicer in respect of
its servicing activities will be the Master Servicing Fee. The "Master Servicing
Fee" will be payable monthly on a loan-by-loan basis from amounts received in
respect of interest on each Mortgage Loan, will accrue at the related Master
Servicing Fee Rate and will be computed on the basis of the same principal
amount and for the same period respecting which any related interest payment due
on the Mortgage Loan is computed. The "Master Servicing Fee Rate" will be a per
annum rate equal to: 0.090% in the case of 214 Mortgage Loans (or 76.41%),
0.165% in the case of 27 Mortgage Loans (or 11.48%), 0.140% in the case of 18
Mortgage Loans (or 6.91%), 0.170% in the case of six Mortgage Loans (or 2.38%),
0.135% in the case of two Mortgage Loans (or 1.14%), 0.080% in the case of eight
Mortgage Loans (or 0.78%), 0.150% in the case of one Mortgage Loan (or 0.27%),
0.240% in the case of two Mortgage Loans (or 0.18%), 0.350% in the case of one
Mortgage Loan (or 0.14%), 0.665% in the case of one Mortgage Loan (or 0.11%),
0.340% in the case of one Mortgage Loan (or 0.10%), 0.415% in the case of one
Mortgage Loan (or 0.08%), 0.510% in the case of one Mortgage Loan (or 0.03%).
The weighted average Master Servicing Fee Rate as of the Cut-off Date will be
0.1064%.
If a borrower voluntarily prepays a Mortgage Loan on a date that is prior
to its Due Date in such Collection Period, the amount of interest (net of
related Master Servicing Fees, Additional Servicing Fees (as defined herein) and
the Special Servicer Strip (as defined below)) that accrues on the Mortgage Loan
during such Collection Period will be less (such shortfall, a "Prepayment
Interest Shortfall") than the amount of interest (net of related Master
Servicing Fees, Additional Servicing Fees and the Special Servicer Strip and
without regard to any Prepayment Premium or Yield Maintenance Charge actually
collected) that would have accrued on the Mortgage Loan through its Due Date. If
such a principal prepayment occurs during any Collection Period after the Due
Date for such Mortgage Loan in such Collection Period, the amount of interest
(net of related Master Servicing Fees, Additional Servicing Fees, the Special
Servicer Strip and the Trustee Fee) that accrues and is collected on the
Mortgage Loans during such Collection Period will exceed (such excess, a
"Prepayment Interest Excess") the amount of interest (net of related Master
Servicing Fees, Additional Servicing Fees, the Special Servicer Strip and the
Trustee Fee and without regard to any Prepayment Premium or Yield Maintenance
Charge actually collected) that would have been collected on the Mortgage Loan
during such Collection Period if the borrower had not prepaid. Any Prepayment
Interest Excesses collected will be paid to the Master Servicer as additional
servicing compensation. However, with respect to each Distribution Date, the
Master Servicer will be required to deposit into the Certificate Account (such
deposit, a "Compensating Interest Payment"), without any right of reimbursement
therefor, an amount equal to the lesser of (i) its servicing compensation for
the related Collection Period, including any Prepayment Interest Excesses
received during such Collection Period, and (ii) the aggregate of any Prepayment
Interest Shortfalls experienced during the related Collection Period.
Compensating Interest Payments will not cover shortfalls in Mortgage Loan
interest accruals that result from any liquidation of a defaulted Mortgage Loan,
or of any REO Property acquired in respect thereof, that occurs during a
Collection Period prior to the related Due Date therein.
The principal compensation to be paid to the Special Servicer in respect of
its special servicing activities will be the Special Servicing Fee (together
with the Master Servicing Fee, the Additional Servicing Fee and the Special
Servicer Strip, the "Servicing Fees") and, under the circumstances described
herein, Principal Recovery Fees. The "Special Servicing Fee" will accrue at a
rate (the "Special Servicing Fee Rate") equal to 0.25% per annum and will be
computed on the basis of the same principal amount and for the same period
respecting which any related interest payment on the related Specially Serviced
Mortgage Loan is computed. However, earned Special Servicing Fees will be
payable out of general collections on the Mortgage Loans then on deposit in the
Certificate Account. The Special Servicing Fee with respect to any Specially
Serviced Mortgage Loan will cease to accrue if such loan is liquidated or
becomes a Corrected Mortgage Loan. The Special Servicer will be entitled to a
"Principal Recovery Fee" with respect to each Specially Serviced Trust Fund
Asset and Corrected Mortgage Loan, which Principal Recovery Fee generally will
be in an amount equal to 0.25% of all amounts received in respect thereof and
allocable as a recovery of principal. However, no Principal Recovery Fee will be
payable in connection with, or out of Liquidation Proceeds (as defined in the
Prospectus) resulting from, the purchase of any Specially Serviced Trust Fund
Asset or Corrected
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Mortgage Loan (i) by a Mortgage Loan Seller (as described herein under
"Description Of The Mortgage Pool--Assignment of the Mortgage Loans;
Repurchases" and "--Representations and Warranties; Repurchases," (ii) by the
Master Servicer, the Special Servicer, the Depositor, Lehman Brothers Inc. or
the Majority Subordinate Certificateholder as described herein under
"Description Of The Certificates--Termination" or (iii) in certain other
limited circumstances.
The Special Servicer, in addition to its duties with respect to the
Specially Serviced Mortgage Loans, will be responsible for (i) conducting (or
retaining a third party to conduct) inspections of each Mortgaged Property and
(ii) collecting and making certain calculations based on annual and quarterly
operating statements and rent rolls with respect to each Mortgaged Property. The
Special Servicer will be entitled to a monthly fee (the "Additional Servicing
Fee") for performing the duties set forth in clauses (i) and (ii) above payable
monthly on a loan-by-loan basis from amounts received in respect of interest on
each Mortgage Loan, which monthly fee will accrue at a per annum rate of 0.01%
(the "Additional Servicing Fee Rate") and will be computed on the basis of the
same principal amount and for the same period respecting which any related
interest payment due on the related Mortgage Loan is computed. The Special
Servicer will be entitled to any loan service charges, statement charges or
other charges earned by it.
As additional servicing compensation, the Master Servicer or the Special
Servicer will be entitled to retain all assumption and modification fees, late
charges and Prepayment Interest Excesses collected from borrowers on Mortgage
Loans. In addition, the Master Servicer and the Special Servicer each is
authorized to invest or direct the investment of funds held in those accounts
maintained by it that relate to the Mortgage Loans or REO Properties, as the
case may be, in certain short-term United States government securities and other
permitted investment grade obligations, and the Master Servicer and the Special
Servicer each will be entitled to retain any interest or other income earned on
such funds held in those accounts maintained by it, but shall be required to
cover any losses on investments of funds held in those accounts maintained by
it, from its own funds without any right to reimbursement.
Each of the Master Servicer and Special Servicer will, in general, be
required to pay all ordinary expenses incurred by it in connection with its
servicing activities under the Pooling and Servicing Agreement, including the
fees of any sub-servicers retained by it, and will not be entitled to
reimbursement therefor except as expressly provided in the Pooling and Servicing
Agreement. However, each of the Master Servicer and Special Servicer will be
permitted to pay certain of such expenses (including certain expenses incurred
as a result of a Mortgage Loan default) directly out of the Certificate Account
and at times without regard to the relationship between the expense and the
funds from which it is being paid. See "Description of the
Certificates--Distributions" herein and "Description of the Pooling
Agreements--Certificate Account" and "--Servicing Compensation and Payment of
Expenses" in the Prospectus.
As and to the extent described herein under "Description of the
Certificates--P&I Advances," the Master Servicer and the Special Servicer will
be each entitled to receive interest, at the Reimbursement Rate, on any
reimbursable servicing expenses incurred by it. Such interest will compound
annually and will be paid, contemporaneously with the reimbursement of the
related servicing expense, from general collections on the Mortgage Loans then
on deposit in the Certificate Account.
The initial Special Servicer will be entitled to an interest strip (the
"Special Servicer Strip") payable monthly on a loan-by-loan basis from amounts
received in respect of interest on each Mortgage Loan, which interest strip will
accrue at a per annum rate of 0.03% (the "Special Servicer Strip Rate") and will
be computed on the basis of the same principal amount and for the same period
respecting which any related interest payment due on the related Mortgage Loan
is computed. The initial Special Servicer will be entitled to receive the
Special Servicer Strip, even if the initial Special Servicer is no longer acting
as the Special Servicer.
MODIFICATIONS, WAIVERS AND AMENDMENTS
The Pooling and Servicing Agreement will permit the Special Servicer to
modify, waive or amend any term of any Mortgage Loan if (a) it determines, in
accordance with the servicing standard described under "--General" above, that
it is appropriate to do so and (b) except as described in the following
paragraph, such modification, waiver or amendment, will not (i) affect the
amount or timing of any scheduled payments of principal, interest or other
amount (including Prepayment Premiums and Yield Maintenance Charges) payable
under the Mortgage Loan, (ii) affect the obligation of the related borrower to
pay a Prepayment Premium or Yield Maintenance Charge or permit a principal
prepayment during the applicable Lockout Period, (iii) except as expressly
provided by the related Mortgage or in connection with a material adverse
environmental condition at the related Mortgaged Property, result in a release
of the lien of the related Mortgage on any material portion of such Mortgaged
Property without a
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corresponding principal prepayment or (iv) in the judgment of the Special
Servicer, materially impair the security for the Mortgage Loan or reduce the
likelihood of timely payment of amounts due thereon.
Notwithstanding clause (b) of the preceding paragraph, the Special Servicer
may (i) reduce the amounts owing under any Specially Serviced Mortgage Loan by
forgiving principal, accrued interest and/or any Prepayment Premium or Yield
Maintenance Charge, (ii) reduce the amount of the Monthly Payment on any
Specially Serviced Mortgage Loan, including by way of a reduction in the related
Mortgage Rate, (iii) forbear in the enforcement of any right granted under any
Mortgage Note or Mortgage relating to a Specially Serviced Mortgage Loan, (iv)
extend the maturity date of any Mortgage Loan, and/or (v) accept a principal
prepayment during any Lockout Period; provided that (x) the related borrower is
in default with respect to the Specially Serviced Mortgage Loan or, in the
judgment of the Special Servicer, such default is reasonably foreseeable, (y) in
the sole, good faith judgment of the Special Servicer, such modification, waiver
or amendment would increase the recovery to Certificateholders on a net present
value basis documented to the Trustee and (z) such modification, waiver or
amendment does not result in a tax being imposed on the Trust Fund or cause any
REMIC created pursuant to the Pooling and Servicing Agreement to fail to qualify
as a REMIC at any time the Certificates are outstanding. In no event, however,
will the Special Servicer be permitted to (i) extend the maturity date of a
Mortgage Loan beyond a date that is two years prior to the Rated Final
Distribution Date, (ii) extend the maturity date of any Mortgage Loan which has
a Mortgage Rate below the then prevailing interest rate for comparable loans, as
determined by the Special Servicer, unless such Mortgage Loan is a Balloon Loan
that has failed to make the Balloon Payment at its scheduled maturity and such
Balloon Loan is not a Specially Serviced Mortgage Loan (other than by reason of
failure to make the Balloon Payment) and has not been delinquent in the
preceding 12 months (other than with respect to the Balloon Payment), in which
case the Special Servicer may make up to three one-year extensions at the
existing Mortgage Rate for such Mortgage Loan (such limitation of extensions
made at a below market rate shall not limit the ability of the Special Servicer
to extend the maturity date of any Mortgage Loan at an interest rate at or in
excess of the prevailing rate for comparable loans at the time of such
modification), (iii) if the Mortgage Loan is secured by a ground lease, extend
the maturity date of such Mortgage Loan beyond a date which is 10 years prior to
the expiration of the term of such ground lease, (iv) reduce the Mortgage Rate
to a rate below the then prevailing interest rate for comparable loans, as
determined by the Special Servicer or (v) defer interest due on any Mortgage
Loan in excess of 10% of the Stated Principal Balance of such Mortgage Loan or
defer the collection of interest on any Mortgage Loan without accruing interest
on such deferred interest at a rate at least equal to the Mortgage Rate of such
Mortgage Loan.
The Special Servicer will be required to notify the Trustee and the Master
Servicer of any modification, waiver or amendment of any term of any Mortgage
Loan, and to deliver to the Trustee or the related Custodian, for deposit in the
related Mortgage File, an original counterpart of the agreement related to such
modification, waiver or amendment, promptly (and in any event within 10 business
days) following the execution thereof. Copies of each agreement whereby any such
modification, waiver or amendment of any term of any Mortgage Loan is effected
are required to be available for review during normal business hours at the
offices of the Special Servicer. See "Description of the Certificates--Reports
to Certificateholders; Available Information" herein.
THE CONTROLLING CLASS REPRESENTATIVE
The Controlling Class Representative will be entitled to advise the Special
Servicer with respect to the following actions of the Special Servicer, and the
Special Servicer will not be permitted to take any of the following actions as
to which the Controlling Class Representative has objected in writing within ten
business days of being notified thereof (provided that if such written objection
has not been received by the Special Servicer within such ten business day
period, then the Controlling Class Representative's approval will be deemed to
have been given):
(i) any foreclosure upon or comparable conversion (which may include
acquisitions of an REO Property) of the ownership of properties securing
such of the Specially Serviced Mortgage Loans as come into and continue in
default;
(ii) any modification of a monetary term of a Mortgage Loan other than
a modification consisting of the extension of the maturity date of a
Mortgage Loan for one year or less;
(iii) any proposed sale of a defaulted Mortgage Loan or REO Property
(other than in connection with the termination of the Trust Fund as
described under "Description of the Certificates--Termination" herein);
(iv) any determination to bring an REO Property into compliance with
applicable environmental laws;
(v) any acceptance of substitute or additional collateral for a
Mortgage Loan;
(vi) any waiver of a "due-on-sale" or "due-on-encumbrance" clause; and
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(vii) any acceptance of an assumption agreement releasing a borrower
from liability under a Mortgage Loan.
In addition, the Controlling Class Representative may direct the Special
Servicer to take or to refrain from taking, such other actions as the
Controlling Class Representative may deem advisable or as to which provision is
otherwise made in the Pooling and Servicing Agreement; provided that no such
direction and no objection contemplated by the prior paragraph may require or
cause the Special Servicer to violate any provision of the Pooling and Servicing
Agreement, including the Special Servicer's obligation to act in accordance with
the servicing standards described under "--General" above, or expose the Master
Servicer, the Special Servicer, the Trust Fund or the Trustee to liability, or
materially expand the scope of the Special Servicer's responsibilities under the
Pooling and Servicing Agreement or cause the Special Servicer to act or fail to
act in a manner which, in the reasonable judgment of the Special Servicer, is
not in the best interests of the Certificateholders.
Limitation on Liability of Controlling Class Representative
The Controlling Class Representative will have no liability to the
Certificateholders for any action taken, or for refraining from the taking of
any action, in good faith pursuant to the Pooling and Servicing Agreement, or
for errors in judgment; provided, however, that the Controlling Class
Representative will not be protected against any liability which would otherwise
be imposed by reason of willful misfeasance, bad faith or negligence in the
performance of duties or by reason of reckless disregard of obligations or
duties. By its acceptance of a Certificate, each Certificateholder confirms its
understanding that the Controlling Class Representative may take actions that
favor the interests of one or more Classes of the Certificates over other
Classes of the Certificates, and that the Controlling Class Representative may
have special relationships and interests that conflict with those of holders of
some Classes of the Certificates; and, absent willful misfeasance, bad faith or
negligence on the part of the Controlling Class Representative, each
Certificateholder agrees to take no action against the Controlling Class
Representative or any of its officers, directors, employees, principals or
agents as a result of such a special relationship or conflict.
REO PROPERTIES
If title to any Mortgaged Property is acquired by the Trustee on behalf of
the Certificateholders, the Special Servicer, on behalf of such holders, will be
required to sell the Mortgaged Property within two years of acquisition, unless
(i) the Internal Revenue Service grants an extension of time to sell such
property (an "REO Extension") or (ii) it obtains an opinion of counsel generally
to the effect that the holding of the property for more than two years after its
acquisition will not result in the imposition of a tax on the Trust Fund or
cause any REMIC created pursuant to the Pooling and Servicing Agreement to fail
to qualify as a REMIC under the Code. Subject to the foregoing, the Special
Servicer will generally be required to solicit bids for any Mortgaged Property
so acquired in such a manner as will be reasonably likely to realize a fair
price for such property. The Special Servicer may retain an independent
contractor to operate and manage any REO Property; however, the retention of an
independent contractor will not relieve the Special Servicer of its obligations
with respect to such REO Property.
In general, the Special Servicer or an independent contractor employed by
the Special Servicer at the expense of the Trust Fund will be obligated to
operate and manage any Mortgaged Property acquired as REO Property in a manner
that would, to the extent commercially feasible, maximize the Trust Fund's net
after-tax proceeds from such property. After the Special Servicer reviews the
operation of such property and consults with the Trustee to determine the Trust
Fund's federal income tax reporting position with respect to the income it is
anticipated that the Trust Fund would derive from such property, the Special
Servicer could determine (particularly in the case of an REO Property that is a
hospitality or residential health care facility) that it would not be
commercially feasible to manage and operate such property in a manner that would
avoid the imposition of a tax on "net income from foreclosure property," within
the meaning of Section 857(b)(4)(B) of the Code or a tax on "prohibited
transactions" under Section 860F of the Code (either such tax referred to herein
as an "REO Tax"). To the extent that income the Trust Fund receives from an REO
Property is subject to a tax on (i) "net income from foreclosure property" such
income would be subject to federal tax at the highest marginal corporate tax
rate (currently 35%) or (ii) "prohibited transactions," such income would be
subject to federal tax at a 100% rate. The determination as to whether income
from an REO Property would be subject to an REO Tax will depend on the specific
facts and circumstances relating to the management and operation of each REO
Property. Generally, income from an REO Property that is directly operated by
the Special Servicer would be apportioned and classified as "service" or
"non-service" income. The "service" portion of such income could be subject to
federal tax either at the highest marginal corporate tax rate or at the 100%
rate on "prohibited transactions," and the "non-service" portion of such income
could be subject to federal tax at the highest
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marginal corporate tax rate or, although it appears unlikely, at the 100% rate
applicable to "prohibited transactions." Any REO Tax imposed on the Trust Fund's
income from an REO Property would reduce the amount available for distribution
to Certificateholders. Certificateholders are advised to consult their tax
advisors regarding the possible imposition of REO Taxes in connection with the
operation of commercial REO Properties by REMICs. See "Certain Federal Income
Tax Consequences" herein and "Certain Federal Income Tax Consequences--REMICs"
in the Prospectus.
INSPECTIONS; COLLECTION OF OPERATING INFORMATION
The Special Servicer will be required to perform or cause to be performed a
physical inspection of a Mortgaged Property as soon as practicable after the
related Mortgage Loan becomes a Specially Serviced Mortgage Loan. In addition,
the Special Servicer will be required to inspect or cause to be inspected each
Mortgaged Property at least once per calendar year if, in a given calendar year,
it has not already done so. The Special Servicer will be required to prepare a
written report of each such inspection performed by it that describes the
condition of the Mortgaged Property and that specifies the existence with
respect thereto of any sale, transfer or abandonment or any material change in
its condition or value.
The Special Servicer is also required to use reasonable efforts to collect
from the related borrower and review the quarterly and annual operating
statements of each Mortgaged Property and to cause annual operating statements
to be prepared for each REO Property. Each of the Mortgages requires the related
borrower to deliver an annual property operating statement. However, there can
be no assurance that any operating statements required to be delivered will in
fact be delivered, nor is the Special Servicer likely to have any practical
means of compelling such delivery in the case of an otherwise performing
Mortgage Loan.
Copies of the inspection reports and operating statements referred to above
are required to be available for review by Certificateholders during normal
business hours at the offices of the Special Servicer. See "Description of the
Certificates--Reports to Certificateholders; Available Information" herein.
DESCRIPTION OF THE CERTIFICATES
GENERAL
The First Union-Lehman Brothers Commercial Mortgage Trust, Commercial
Mortgage Pass-Through Certificates, Series 1997-C1 (the "Certificates") will be
issued pursuant to a Pooling and Servicing Agreement, to be dated as of May 1,
1997, among the Depositor, the Master Servicer, the Special Servicer and the
Trustee (the "Pooling and Servicing Agreement"). The Certificates will represent
in the aggregate the entire beneficial ownership interest in a trust fund (the
"Trust Fund") consisting primarily of: (i) the Mortgage Loans and all payments
and other collections in respect of the Mortgage Loans received or applicable to
periods after the Cut-off Date (exclusive of payments of principal and interest
due, and principal prepayments received, on or before the Cut-off Date); (ii)
any REO Property acquired on behalf of the Trust Fund; (iii) such funds or
assets as from time to time are deposited in the Certificate Account (see
"Description of the Pooling Agreements--Certificate Account" in the
Prospectus); and (iv) certain rights of the Depositor under the Mortgage Loan
Purchase Agreements relating to Mortgage Loan document delivery requirements and
the representations and warranties of the Mortgage Loan Sellers regarding the
Mortgage Loans.
The Certificates will consist of sixteen classes (each, a "Class") to be
designated as: (i) the Class A-1 Certificates, the Class A-2 Certificates and
the Class A-3 Certificates (collectively, the "Class A Certificates"); (ii) the
Class B Certificates, the Class C Certificates, the Class D Certificates, the
Class E Certificates, the Class F Certificates, the Class G Certificates, the
Class H Certificates, the Class J Certificates and the Class K Certificates
(collectively with the Class A Certificates, the "Sequential Pay Certificates");
(iii) the Class IO Certificates (collectively with the Sequential Pay
Certificates, the "REMIC Regular Certificates"); and (iv) the Class R-I
Certificates, the Class R-II Certificates and the Class R-III Certificates
(collectively, the "REMIC Residual Certificates").
Only the Class A-1, Class A-2, Class A-3, Class IO, Class B, Class C, Class
D and Class E Certificates (collectively, the "Offered Certificates") are
offered hereby. The Class F, Class G, Class H, Class J, Class K and the REMIC
Residual Certificates (collectively, the "Private Certificates") have not been
registered under the Securities Act, and are not offered hereby. Accordingly,
information herein regarding the terms of the Private Certificates is provided
solely because of its potential relevance to a prospective purchaser of an
Offered Certificate.
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REGISTRATION AND DENOMINATIONS
The Offered Certificates will be issued in book-entry format through the
facilities of The Depository Trust Company ("DTC"). Each Class of Offered
Certificates will be issued in denominations of not less than $10,000 actual
principal amount (or $100,000 notional amount with respect to the Class IO
Certificates), and in integral multiples of $1 in excess thereof.
Each Class of Offered Certificates will initially be represented by one or
more global Certificates registered in the name of the nominee of DTC. The
Depositor has been informed by DTC that DTC's nominee will be Cede & Co. No
beneficial owner of an Offered Certificate (each, a "Certificate Owner") will be
entitled to receive a fully registered, certificated form of such Certificate (a
"Definitive Offered Certificate"), except under the limited circumstances
described in the Prospectus under "Description of the Certificates--Book-Entry
Registration and Definitive Certificates." Unless and until Definitive Offered
Certificates are issued in respect of a Class of Offered Certificates,
beneficial ownership interests in such Class will be recorded and transferred on
the book-entry records of DTC and its participating organizations (the
"Participants"), and all references to actions by holders of a Class of Offered
Certificates will refer to actions taken by DTC upon instructions received from
the related Certificate Owners through the Participants in accordance with DTC
procedures, and all references herein to payments, notices, reports and
statements to the holders of a Class of Offered Certificates will refer to
payments, notices, reports and statements to DTC or Cede & Co., as the
registered holder thereof, for distribution to the related Certificate Owners
through the Participants in accordance with DTC procedures. The form of such
payments and transfers may result in certain delays in receipt of payments by an
investor and may restrict an investor's ability to pledge its securities. None
of the Depositor, the Master Servicer, the Special Servicer or the Trustee or
any of their respective affiliates will have any liability for any actions taken
by DTC or its nominee, including, without limitation, actions for any aspect of
the records relating to or payments made on account of beneficial ownership
interests in Offered Certificates held by Cede & Co., as nominee for DTC, or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests. See "Description of the Certificates--Book-Entry
Registration and Definitive Certificates" and "Risk Factors--Book-Entry
Registration" in the Prospectus.
CERTIFICATE BALANCES AND NOTIONAL AMOUNT
Upon initial issuance, and in each case subject to a permitted variance of
plus or minus 5%, the respective Classes of Sequential Pay Certificates will
have the Certificate Balances representing the approximate percentage of the
Initial Pool Balance as set forth in the following table:
INITIAL PERCENT OF
CERTIFICATE INITIAL POOL
CLASS OF CERTIFICATES BALANCE BALANCE
- --------------------- --------- --------
Class A-1 Certificates .................... $200,000,000 15.3%
Class A-2 Certificates .................... $318,000,000 24.4%
Class A-3 Certificates .................... $395,812,000 30.3%
Class B Certificates ...................... $ 78,327,000 6.0%
Class C Certificates ...................... $ 71,800,000 5.5%
Class D Certificates ...................... $ 71,800,000 5.5%
Class E Certificates ...................... $ 19,582,000 1.5%
Private Certificates ...................... $150,127,224 11.5%
(other than the REMIC Residual Certificates)
The "Certificate Balance" of any Class of Sequential Pay 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
Certificate Balance of each Class of Sequential Pay Certificates will be reduced
on each Distribution Date by any distributions of principal actually made on
such Class of Certificates on such Distribution Date, and further by any
Realized Losses and Additional Trust Fund Expenses actually allocated to such
Class of Certificates on such Distribution Date.
The Class IO Certificates will not have a Certificate Balance, but will
represent the right to receive distributions of interest in an amount equal to
the aggregate interest accrued on the notional amount of each of the Components,
as described herein. The Class IO Certificates will have twelve components (each
a "Component"), each corresponding to a different Class of Sequential Pay
Certificates. Each Component will have the same letter and/or numerical
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designation as a Class of Sequential Pay Certificates. For any Distribution
Date, the notional amount of each Component will equal the Certificate Balance
of the corresponding Class of Sequential Pay Certificates. On the Closing Date,
the aggregate of the notional amounts of each of the Components will equal
approximately $1,305,448,224, which amount will equal the Initial Pool Balance.
The REMIC Residual Certificates will not have Certificate Balances, but
will represent the right to receive on each Distribution Date any portion of the
Available Distribution Amount (as defined below) for such date that remains
after the required distributions have been made on all the REMIC Regular
Certificates.
PASS-THROUGH RATES
The Pass-Through Rate applicable to each Class of Sequential Pay
Certificates for each Distribution Date is fixed at the respective rate per
annum set forth with respect to such Class in the table at the beginning of the
Summary. The Pass-Through Rate applicable to each Component for any Distribution
Date will be equal to the Weighted Average Net Mortgage Rate for such
Distribution Date minus the Pass-Through Rate applicable to the corresponding
Class of Sequential Pay Certificates. The REMIC Residual Certificates will not
bear interest.
The "Weighted Average Net Mortgage Rate" for each Distribution Date is the
weighted average of the Net Mortgage Rates for the Mortgage Loans as of the
commencement of the related Collection Period, weighted on the basis of their
respective Stated Principal Balances outstanding immediately prior to such
Distribution Date. The "Net Mortgage Rate" for each Mortgage Loan will generally
equal (x) the Mortgage Rate in effect for such Mortgage Loan as of the Cut-off
Date, minus (y) the applicable Master Servicing Fee Rate, the Additional
Servicing Fee Rate, the Special Servicer Strip Rate and the Trustee Fee Rate;
provided that if any Mortgage Loan does not accrue interest on the basis of a
360-day year consisting of twelve 30-day months (which is the basis on which
interest accrues in respect of the REMIC Regular Certificates), then, solely for
purposes of calculating the Pass-Through Rate for the Class IO Certificates,
such Net Mortgage Rate will, to the extent appropriate, be adjusted from accrual
period to accrual period to compensate for such difference. The "Stated
Principal Balance" of each Mortgage Loan outstanding at any time will generally
be an amount equal to the Cut-off Date Balance thereof, reduced on each
Distribution Date (to not less than zero) by (i) any payments or other
collections (or advances in lieu thereof) of principal of such Mortgage Loan
that are due or received, as the case may be, during the related Collection
Period and are distributed on the Certificates on such Distribution Date and
(ii) the principal portion of any Realized Loss incurred in respect of such
Mortgage Loan during the related Collection Period. Notwithstanding the
foregoing, if any Mortgage Loan is paid in full, liquidated or otherwise removed
from the Trust Fund, commencing as of the first Distribution Date following the
Collection Period during which such event occurred, the Stated Principal Balance
of such Mortgage Loan will be zero.
The "Collection Period" for each Distribution Date will be the period that
begins immediately following the Determination Date in the month preceding the
month in which such Distribution Date occurs (or, in the case of the initial
Distribution Date, immediately following the Cut-off Date) and ends on and
includes the Determination Date in the same month as such Distribution Date. The
"Determination Date" will be the 10th day of each month (or, if not a business
day, the next preceding business day).
DISTRIBUTIONS
General. Distributions on the Certificates will be made by the Trustee, to
the extent of available funds, on the 18th day of each month or, if any such
18th day is not a business day, then on the next succeeding business day with
the same force and effect and no additional interest shall accrue, commencing
June 18, 1997 (each, a "Distribution Date"). Except as described below, all such
distributions will be made to the persons in whose names the Certificates are
registered (the "Certificateholders") at the close of business on the last
business day of the month preceding the month in which the related Distribution
Date occurs and shall be made by wire transfer of immediately available funds,
if such Certificateholder shall have provided wiring instructions no less than
five business days prior to such record date or otherwise by check mailed to the
address of such Certificateholder as it appears in the Certificate register. The
final distribution on any Certificate (determined without regard to any possible
future reimbursement of any Realized Loss or Additional Trust Fund Expense
previously allocated to such Certificate) will be made only upon presentation
and surrender of such Certificate at the location that will be specified in a
notice of the pendency of such final distribution. All distributions made with
respect to a Class of Certificates will be allocated pro rata among the
outstanding Certificates of such Class based on their respective percentage
interests in such Class.
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The Available Distribution Amount. The aggregate amount available for
distributions of interest and principal to Certificateholders on each
Distribution Date (the "Available Distribution Amount") will, in general, equal
the sum of the following amounts:
(a) the total amount of all cash received on or in respect of the
Mortgage Loans and any REO Properties by the Master Servicer as of the
close of business on the related Determination Date, exclusive of any
portion thereof that represents one or more of the following:
(i) any Monthly Payments collected but due on a Due Date after
the related Collection Period,
(ii) any Prepayment Premiums and Yield Maintenance Charges, and
(iii) all amounts in the Certificate Account that are payable or
reimbursable to any person other than the Certificateholders,
including any Servicing Fees and Trustee Fees;
(b) all P&I Advances made by the Master Servicer with respect to such
Distribution Date;
(c) any Compensating Interest Payment made by the Master Servicer to
cover the aggregate of any Prepayment Interest Shortfalls experienced
during the related Collection Period. See "Servicing of the Mortgage
Loans--Servicing and Other Compensation and Payment of Expenses" herein,
"--P&I Advances" below and "Description of the Pooling
Agreements--Certificate Account" in the Prospectus.
Any Prepayment Premiums and Yield Maintenance Charges actually collected
will be distributed separately from the Available Distribution Amount. See
"--Distributions--Allocation of Prepayment Premiums and Yield Maintenance
Charges" herein.
Application of the Available Distribution Amount. On each Distribution
Date, for so long as the aggregate Certificate Balance of the Classes of the
Sequential Pay Certificates are greater than zero, the Trustee will (except as
otherwise described under "--Termination" below) apply amounts on deposit in
the Certificate Account, to the extent of the Available Distribution Amount, in
the following order of priority:
(1) to distributions of interest to the holders of the Class A-1,
Class A-2 and Class A-3 and Class IO Certificates (in each case, so long as
any such Class remains outstanding), pro rata, in accordance with the
respective amounts of Distributable Certificate Interest (as defined
herein) in respect of such Classes of Certificates on such Distribution
Date, in an amount equal to all Distributable Certificate Interest in
respect of each such Class of Certificates for such Distribution Date and,
to the extent not previously paid, for all prior Distribution Dates;
(2) to distributions of principal to the holders of the Class A-1
Certificates in an amount (not to exceed the then outstanding Certificate
Balance of such Class of Certificates) equal to the Principal Distribution
Amount (as defined herein) for such Distribution Date;
(3) after the Class A-1 Certificates have been retired, to
distributions of principal to the holders of the Class A-2 Certificates in
an amount (not to exceed the then outstanding Certificate Balance of such
Class of Certificates) equal to the Principal Distribution Amount for such
Distribution Date, less any portion thereof distributed in respect of the
Class A-1 Certificates;
(4) after the Class A-1 and Class A-2 Certificates have been retired,
to distributions of principal to the holders of the Class A-3 Certificates
in an amount (not to exceed the then outstanding Certificate Balance of
such Class of Certificates) equal to the Principal Distribution Amount for
such Distribution Date, less any portion thereof distributed in respect of
the Class A-1 and/or Class A-2 Certificates;
(5) to distributions to the holders of the Class A-1, Class A-2 and
Class A-3 Certificates, pro rata, in accordance with the amount of Realized
Losses and Additional Trust Fund Expenses, if any, previously allocated to
such Classes of Certificates for which no reimbursement has previously been
received, to reimburse such holders for all Realized Losses and Additional
Trust Fund Expenses, if any;
(6) to distributions of interest to the holders of the Class B
Certificates in an amount equal to all Distributable Certificate Interest
in respect of such Class of Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
(7) after the Class A-1, Class A-2 and Class A-3 Certificates have been
retired, to distributions of principal to the holders of the Class B
Certificates in an amount (not to exceed the then outstanding Certificate
Balance of the Class B Certificates) equal to the Principal Distribution
Amount for such Distribution Date, less any portion
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thereof distributed in respect of the Class A-1, Class A-2 and/or Class A-3
Certificates on such Distribution Date;
(8) to distributions to the holders of the Class B Certificates to
reimburse such holders for all Realized Losses and Additional Trust Fund
Expenses, if any, previously allocated to such Class of Certificates and
for which no reimbursement has previously been received;
(9) to distributions of interest to the holders of the Class C
Certificates in an amount equal to all Distributable Certificate Interest
in respect of such Class of Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
(10) after the Class A-1, Class A-2, Class A-3 and Class B
Certificates have been retired, to distributions of principal to the
holders of the Class C Certificates in an amount (not to exceed the then
outstanding Certificate Balance of the Class C Certificates) equal to the
Principal Distribution Amount for such Distribution Date, less any portion
thereof distributed in respect of the Class A-1, Class A-2, Class A-3
and/or Class B Certificates on such Distribution Date;
(11) to distributions to the holders of the Class C Certificates to
reimburse such holders for all Realized Losses and Additional Trust Fund
Expenses, if any, previously allocated to such Class of Certificates and
for which no reimbursement has previously been received;
(12) to distributions of interest to the holders of the Class D
Certificates in an amount equal to all Distributable Certificate Interest
in respect of such Class of Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
(13) after the Class A-1, Class A-2, Class A-3, Class B and Class C
Certificates have been retired, to distributions of principal to the
holders of the Class D Certificates in an amount (not to exceed the then
outstanding Certificate Balance of the Class D Certificates) equal to the
Principal Distribution Amount for such Distribution Date, less any portion
thereof distributed in respect of the Class A-1, Class A-2, Class A-3,
Class B and/or Class C Certificates on such Distribution Date;
(14) to distributions to the holders of the Class D Certificates to
reimburse such holders for all Realized Losses and Additional Trust Fund
Expenses, if any, previously allocated to such Class of Certificates and
for which no reimbursement has previously been received;
(15) to distributions of interest to the holders of the Class E
Certificates in an amount equal to all Distributable Certificate Interest
in respect of such Class of Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
(16) after the Class A-1, Class A-2, Class A-3, Class B, Class C and
Class D Certificates have been retired, to distributions of principal to
the holders of the Class E Certificates in an amount (not to exceed the
then outstanding Certificate Balance of such Class of Certificates) equal
to the Principal Distribution Amount for such Distribution Date, less any
portion thereof distributed in respect of the Class A-1, Class A-2, Class
A-3, Class B, Class C and/or Class D Certificates;
(17) to distributions to the holders of the Class E Certificates to
reimburse such holders for all Realized Losses and Additional Trust Fund
Expenses, if any, previously allocated to such Class of Certificates and
for which no reimbursement has previously been received;
(18) to distributions of interest to the holders of the Class F
Certificates in an amount equal to all Distributable Certificate Interest
in respect of such Class of Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
(19) after the Class A-1, Class A-2, Class A-3, Class B, Class C,
Class D and Class E Certificates have been retired, to distributions of
principal to the holders of the Class F Certificates in an amount (not to
exceed the then outstanding Certificate Balance of such Class of
Certificates) equal to the Principal Distribution Amount for such
Distribution Date, less any portion thereof distributed in respect of the
Class A-1, Class A-2, Class A-3, Class B, Class C, Class D and/or Class E
Certificates;
(20) to distributions to the holders of the Class F Certificates to
reimburse such holders for all Realized Losses and Additional Trust Fund
Expenses, if any, previously allocated to such Class of Certificates and
for which no reimbursement has previously been received;
(21) to distributions of interest to the holders of the Class G
Certificates in an amount equal to all Distributable Certificate Interest
in respect of such Class of Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
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(22) after the Class A-1, Class A-2, Class A-3, Class B, Class C, Class
D, Class E and Class F Certificates have been retired, to distributions of
principal to the holders of the Class G Certificates in an amount (not to
exceed the then outstanding Certificate Balance of such Class of
Certificates) equal to the Principal Distribution Amount for such
Distribution Date, less any portion thereof distributed in respect of the
Class A-1, Class A-2, Class A-3, Class B, Class C, Class D, Class E and/or
Class F Certificates;
(23) to distributions to the holders of the Class G Certificates to
reimburse such holders for all Realized Losses and Additional Trust Fund
Expenses, if any, previously allocated to such Class of Certificates and
for which no reimbursement has previously been received;
(24) to distributions of interest to the holders of the Class H
Certificates in an amount equal to all Distributable Certificate Interest
in respect of such Class of Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
(25) after the Class A-1, Class A-2, Class A-3, Class B, Class C,
Class D, Class E, Class F and Class G Certificates have been retired, to
distributions of principal to the holders of the Class H Certificates in an
amount (not to exceed the then outstanding Certificate Balance of such
Class of Certificates) equal to the Principal Distribution Amount for such
Distribution Date, less any portion thereof distributed in respect of the
Class A-1, Class A-2, Class A-3, Class B, Class C, Class D, Class E, Class
F and/or Class G Certificates;
(26) to distributions to the holders of the Class H Certificates to
reimburse such holders for all Realized Losses and Additional Trust Fund
Expenses, if any, previously allocated to such Class of Certificates and
for which no reimbursement has previously been received;
(27) to distributions of interest to the holders of the Class J
Certificates in an amount equal to all Distributable Certificate Interest
in respect of such Class of Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
(28) after the Class A-1, Class A-2, Class A-3, Class B, Class C,
Class D, Class E, Class F, Class G and Class H Certificates have been
retired, to distributions of principal to the holders of the Class J
Certificates in an amount (not to exceed the then outstanding Certificate
Balance of such Class of Certificates) equal to the Principal Distribution
Amount for such Distribution Date, less any portion thereof distributed in
respect of the Class A-1, Class A-2, Class A-3, Class B, Class C, Class D,
Class E, Class F, Class G and/or Class H Certificates;
(29) to distributions to the holders of the Class J Certificates to
reimburse such holders for all Realized Losses and Additional Trust Fund
Expenses, if any, previously allocated to such Class of Certificates and
for which no reimbursement has previously been received;
(30) to distributions of interest to the holders of the Class K
Certificates in an amount equal to all Distributable Certificate Interest
in respect of such Class of Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
(31) after the Class A-1, Class A-2, Class A-3, Class B, Class C,
Class D, Class E, Class F, Class G, Class H and Class J Certificates have
been retired, to distributions of principal to the holders of the Class K
Certificates in an amount (not to exceed the then outstanding Certificate
Balance of such Class of Certificates) equal to the Principal Distribution
Amount for such Distribution Date, less any portion thereof distributed in
respect of the Class A-1, Class A-2, Class A-3, Class B, Class C, Class D,
Class E, Class F, Class G, Class H and/or Class J Certificates;
(32) to distributions to the holders of the Class K Certificates to
reimburse such holders for all Realized Losses and Additional Trust Fund
Expenses, if any, previously allocated to each such Class of Certificates
and for which no reimbursement has previously been received; and
(33) to distributions to the holders of the REMIC Residual
Certificates in an amount equal to the balance, if any, of the Available
Distribution Amount remaining after the distributions to be made on such
Distribution Date as described in clauses (1) through (32) above;
provided that, on each Distribution Date after the aggregate of the Certificate
Balances of the Subordinate Certificates has been reduced to zero, and in any
event on the final Distribution Date in connection with a termination of the
Trust Fund (see "Description of the Certificates--Termination" herein), the
payments of principal to be made as contemplated by clauses (2), (3) and (4)
above with respect to the Class A Certificates, will be so made to the holders
of the respective Classes of such Certificates, up to an amount equal to, and
pro rata as among such Classes in accordance with, the respective then
outstanding aggregate Certificate Balances of such Classes of Certificates, and
without regard to the Principal Distribution Amount for such date.
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Distributable Certificate Interest. The "Distributable Certificate
Interest" in respect of each Class of REMIC Regular Certificates for each
Distribution Date will equal the Accrued Certificate Interest in respect of such
Class of Certificates for such Distribution Date, net of such Class's allocable
share (calculated as described below) of the aggregate of any Prepayment
Interest Shortfalls resulting from voluntary principal prepayments made on the
Mortgage Loans during the related Collection Period that are not covered by the
Master Servicer's Compensating Interest Payment for such Distribution Date (the
aggregate of such Prepayment Interest Shortfalls that are not so covered, as to
such Distribution Date, the "Net Aggregate Prepayment Interest Shortfall").
The "Accrued Certificate Interest" in respect of each Class of Sequential
Pay Certificates for each Distribution Date will equal one month's interest at
the Pass-Through Rate applicable to such Class of Certificates for such
Distribution Date accrued on the related Certificate Balance outstanding
immediately prior to such Distribution Date. The "Accrued Certificate Interest"
in respect of the Class IO Certificates for any Distribution Date will equal the
aggregate interest that accrued on each Component for such Distribution Date.
With respect to each Distribution Date, interest will accrue on each Component
in an amount equal to one month's interest on the notional amount of such
Component immediately prior to such Distribution Date at the applicable
Pass-Through Rate for such Component. Accrued Certificate Interest will be
calculated on a basis of a 360-day year consisting of twelve 30-day months.
The portion of the Net Aggregate Prepayment Interest Shortfall for any
Distribution Date that is allocable to each Class of REMIC Regular Certificates
will equal the product of (a) such Net Aggregate Prepayment Interest Shortfall,
multiplied by (b) a fraction, the numerator of which is equal to the Accrued
Certificate Interest in respect of such Class of Certificates for such
Distribution Date, and the denominator of which is equal to the aggregate
Accrued Certificate Interest in respect of all Classes of REMIC Regular
Certificates for such Distribution Date.
Principal Distribution Amount. The "Principal Distribution Amount" for each
Distribution Date will generally equal the aggregate of the following:
(a) the aggregate of the principal portions of all Scheduled Payments
(other than Balloon Payments) due, and the principal portions of any
Assumed Scheduled Payments deemed due, on or in respect of the Mortgage
Loans for their respective Due Dates occurring during the related
Collection Period;
(b) the aggregate of all principal prepayments received on the
Mortgage Loans during the related Collection Period;
(c) with respect to any Mortgage Loan as to which the related stated
maturity date occurred during or prior to the related Collection Period,
any payment of principal made by or on behalf of the related borrower
during the related Collection Period (including any Balloon Payment), net
of any portion of such payment that represents a recovery of the principal
portion of any Scheduled Payment (other than a Balloon Payment) due or the
principal portion of any Assumed Scheduled Payment deemed due, in respect
of such Mortgage Loan on a Due Date during or prior to the related
Collection Period and not previously recovered;
(d) the aggregate of all Liquidation Proceeds, Insurance Proceeds
(each as defined in the Prospectus), condemnation awards and proceeds of
Mortgage Loan repurchases that were received on or in respect of Mortgage
Loans during the related Collection Period and that were identified and
applied by the Master Servicer as recoveries of principal, in each case net
of any portion of such amounts that represents a recovery of the principal
portion of any Scheduled Payment (other than a Balloon Payment) due, or of
the principal portion of any Assumed Scheduled Payment deemed due, in
respect of the related Mortgage Loan on a Due Date during or prior to the
related Collection Period and not previously recovered; and
(e) if such Distribution Date is subsequent to the initial
Distribution Date, the excess, if any, of the Principal Distribution Amount
for the immediately preceding Distribution Date, over the aggregate
distributions of principal made on the Certificates on such immediately
preceding Distribution Date.
The "Scheduled Payment" due on any Mortgage Loan on any related Due Date is
the amount of the Monthly Payment that is or would have been, as the case may
be, due thereon on such date, without regard to any waiver, modification or
amendment of such Mortgage Loan granted or agreed to by the Special Servicer or
otherwise resulting from a bankruptcy or similar proceeding involving the
related borrower, and assuming that each prior Scheduled Payment has been made
in a timely manner. The "Assumed Scheduled Payment" is an amount deemed due in
respect of any Balloon Loan that is delinquent in respect of its Balloon Payment
beyond the first Determination Date that follows its stated maturity date. The
Assumed Scheduled Payment deemed due on any such Balloon Loan on
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its stated maturity date and on each successive related Due Date that it
remains or is deemed to remain outstanding will equal the Scheduled Payment that
would have been due thereon on such date if the related Balloon Payment had not
come due but rather such Mortgage Loan had continued to amortize in accordance
with such loan's amortization schedule, if any, in effect prior to its stated
maturity date.
Distributions of the Principal Distribution Amount will constitute the only
distributions of principal on the Certificates. Reimbursements of previously
allocated Realized Losses and Additional Trust Fund Expenses will not constitute
distributions of principal for any purpose and will not result in an additional
reduction in the Certificate Balance of the Class of Certificates in respect of
which any such reimbursement is made.
Treatment of REO Properties. Notwithstanding that any Mortgaged Property
may be acquired as part of the Trust Fund through foreclosure, deed in lieu of
foreclosure or otherwise, the related Mortgage Loan will be treated, for
purposes of (i) determining distributions on the Certificates, (ii) allocations
of Realized Losses and Additional Trust Fund Expenses to the Certificates, and
(iii) the amount of Trustee Fees and Servicing Fees payable under the Pooling
and Servicing Agreement, as having remained outstanding until such REO Property
is liquidated. In connection therewith, operating revenues and other proceeds
derived from such REO Property (net of related operating costs) will be
"applied" by the Master Servicer as principal, interest and other amounts that
would have been "due" on such Mortgage Loan, and the Master Servicer will be
required to make P&I Advances in respect of such Mortgage Loan, in all cases as
if such Mortgage Loan had remained outstanding. References to "Mortgage Loan" or
"Mortgage Loans" in the definitions of "Principal Distribution Amount" and
"Weighted Average Net Mortgage Rate" are intended to include any Mortgage Loan
as to which the related Mortgaged Property has become an REO Property (an "REO
Mortgage Loan").
Allocation of Prepayment Premiums and Yield Maintenance Charges. In the
event a borrower is required to pay any Yield Maintenance Charge or any
Prepayment Premium, the amount of such payments actually collected will be
distributed in respect of the Offered Certificates as set forth below. "Yield
Maintenance Charges" are fees paid or payable, as the context requires, as a
result of a prepayment of principal on a Mortgage Loan, which fees have been
calculated (based on Scheduled Payments on such Mortgage Loan) to compensate the
holder of the Mortgage for reinvestment losses based on the value of a discount
rate at or near the time of prepayment. Any other fees paid or payable, as the
context requires, as a result of a prepayment of principal on a Mortgage Loan,
which are calculated based upon a specified percentage (which may decline over
time) of the amount prepaid are considered "Prepayment Premiums."
On each Distribution Date, any Prepayment Premium or Yield Maintenance
Charge collected on a Mortgage Loan during the related Collection Period will be
distributed as follows: first, to the holders of the Class IO Certificates and
the holders of the respective Classes of Sequential Pay Certificates then
entitled to distributions of principal in an amount equal to, and pro rata in
accordance with, the corresponding PV Yield Loss Amount (as defined below) for
each such Class of Certificates; and second, to the holders of the Class IO
Certificates any remaining amount so collected.
The "PV Yield Loss Amount" with respect any Distribution Date and any
prepayment of principal of a Mortgage Loan that is distributable (together with
a Prepayment Premium or Yield Maintenance Charge) to Certificateholders on such
Distribution Date, means: (a) with respect to any Class of Sequential Pay
Certificates as to which such prepayment is payable, in whole or in part, in
reduction of the Certificate Balance thereof on such Distribution Date, an
amount equal to the present value of a series of monthly payments, each equal to
the related Fixed Interest Payment Adjustment deemed payable on each subsequent
Distribution Date to and including the applicable Final Adjustment Distribution
Date, and each discounted at the applicable Reinvestment Yield (compounding
monthly) for the number of months remaining from the then current Distribution
Date to the applicable subsequent Distribution Date; and (b) with respect to the
Class IO Certificates, an amount equal to the present value of a series of
monthly payments, which may vary over time, each equal to the applicable related
Variable Interest Payment Adjustment deemed payable on each subsequent
Distribution Date to and including the applicable Final Adjustment Distribution
Date, and each discounted at the applicable Reinvestment Yield (compounding
monthly) for the number of months remaining from the then current Distribution
Date to the applicable subsequent Distribution Date.
For purposes of computing the PV Yield Loss Amount for any Class of REMIC
Regular Certificates, the following definitions shall apply:
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The "Final Adjustment Distribution Date" for such Class of Certificates in
respect of any prepayment means, the earlier of (i) the Assumed Final
Distribution Date for such Class and (ii) the Distribution Date immediately
following the stated maturity date for the Mortgage Loan being prepaid.
With respect to any Class of Sequential Pay Certificates and any prepayment
of principal that is applied, in whole or in part, in reduction of the
Certificate Balance of such Class on any Distribution Date, the "Fixed Interest
Payment Adjustment" shall equal one-twelfth of the product of (a) the amount, if
any, by which the Pass-Through Rate for such Class exceeds the applicable
Reinvestment Yield, multiplied by (b) the full amount of such prepayment of
principal, multiplied by (c) a fraction, the numerator of which is the portion
of the Principal Distribution Amount for such Distribution Date that is payable
in respect of such Class, and the denominator of which is the entire Principal
Distribution Amount for such Distribution Date.
With respect to the Class IO Certificates and any particular prepayment of
principal distributable on any Distribution Date, the "Variable Interest Payment
Adjustment" deemed payable on any particular subsequent Distribution Date
through and including the related Final Adjustment Distribution Date shall vary
with the occurrence of each Assumed Final Distribution Date that occurs prior to
such Final Adjustment Distribution Date, and shall equal one-twelfth of the
product of (a) the applicable Adjustment Rate, multiplied by (b) the amount of
such prepayment of principal. The "Adjustment Rate" applicable to any subsequent
Distribution Date shall be a percentage equal to the Weighted Average Net
Mortgage Rate for the current Distribution Date less the Pass-Through Rate for
the Class A-1 Certificates if such subsequent Distribution Date occurs on or
before the Assumed Final Distribution Date for the Class A-1 Certificates, the
Pass-Through Rate for the Class A-2 Certificates if such subsequent Distribution
Date occurs after the Assumed Final Distribution Date for the Class A-1
Certificates and on or before the Assumed Final Distribution Date for the Class
A-2 Certificates and, if such subsequent Distribution Date occurs thereafter,
the Pass-Through Rate for the most senior Class of Sequential Pay Certificates
for which the Assumed Final Distribution Date coincides with or follows such
subsequent Distribution Date.
The "Reinvestment Yield" applicable to any Class of REMIC Regular
Certificates will be equal to the yield on the U.S. Treasury issue (primary
issue) with a maturity date closest to the applicable Final Adjustment
Distribution Date.
For an example of the foregoing allocation of Prepayment Premiums and Yield
Maintenance Charges, see Annex B hereto. The Depositor makes no representation
as to the enforceability of the provision of any Mortgage Note requiring the
payment of a Prepayment Premium or Yield Maintenance Charge, or of the
collectability of any Prepayment Premium or Yield Maintenance Charge. See
"Description of the Mortgage Pool--Certain Terms and Conditions of the Mortgage
Loans-Prepayment Provisions" herein.
SUBORDINATION; ALLOCATION OF LOSSES AND CERTAIN EXPENSES
The rights of holders of the Class B, Class C, Class D and Class E
Certificates and each Class of the Private Certificates (collectively, the
"Subordinate Certificates") to receive distributions of amounts collected or
advanced on the Mortgage Loans will be subordinated, to the extent described
herein, to the rights of holders of the Class A and Class IO Certificates
(collectively, the "Senior Certificates") and each other such Class of
Subordinate Certificates, if any, with an earlier alphabetical Class
designation. This subordination is intended to enhance the likelihood of timely
receipt by the holders of the Senior Certificates of the full amount of
Distributable Certificate Interest payable in respect of such Classes of
Certificates on each Distribution Date, and the ultimate receipt by the holders
of each Class of the Class A Certificates, of principal in an amount equal to
the entire related Certificate Balance. Similarly, but to decreasing degrees,
this subordination is also intended to enhance the likelihood of timely receipt
by the holders of the Class B, the Class C, the Class D Certificates and the
Class E Certificates of the full amount of Distributable Certificate Interest
payable in respect of such Classes of Certificates on each Distribution Date,
and the ultimate receipt by the holders of such Certificates of, in the case of
each such Class thereof, principal equal to the entire related Certificate
Balance. The protection afforded to the holders of the Class E Certificates by
means of the subordination of the Private Certificates, to the holders of the
Class D Certificates by means of the subordination of the Class E and the
Private Certificates, to the holders of the Class C Certificates by means of the
subordination of the Class D, the Class E and the Private Certificates, to the
holders of the Class B Certificates by means of the subordination of the Class
C, the Class D, the Class E and the Private Certificates, and to the holders of
the Senior Certificates by means of
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the subordination of the Subordinate Certificates, will be accomplished by (i)
the application of the Available Distribution Amount on each Distribution Date
in accordance with the order of priority described under "--Distributions
- --Application of the Available Distribution Amount" above and (ii) by the
allocation of Realized Losses and Additional Trust Fund Expenses as described
below. Until the first Distribution Date after the aggregate of the Certificate
Balances of the Subordinate Certificates has been reduced to zero, the Class A-3
Certificates will receive principal payments only after the Certificate Balances
of the Class A-2 and Class A-1 Certificates have been reduced to zero and the
Class A-2 Certificates will receive principal payments only after the
Certificate Balance of the Class A-1 Certificates has been reduced to zero.
However, the Class A-1, Class A-2, Class A-3 and Class IO Certificates will bear
shortfalls in collections and losses incurred in respect of the Mortgage Loans
concurrently. No other form of credit support will be available for the benefit
of the holders of the Offered Certificates.
On each Distribution Date, following all distributions on the Certificates
to be made on such date, the aggregate of all Realized Losses and Additional
Trust Fund Expenses that have been incurred since the Cut-off Date through the
end of the related Collection Period and that have not previously been allocated
as described below will be allocated among the respective Classes of Sequential
Pay Certificates (in each case in reduction of their respective Certificate
Balances) as follows, but in the aggregate only to the extent that the aggregate
Certificate Balance of all Classes of Sequential Pay Certificates remaining
outstanding after giving effect to the distributions on such Distribution Date
exceeds the aggregate Stated Principal Balance of the Mortgage Pool that will be
outstanding immediately following such Distribution Date: first, to the Class K
Certificates, until the remaining Certificate Balance of such Class of
Certificates is reduced to zero; second, to the Class J Certificates, until the
remaining Certificate Balance of such Class of Certificates is reduced to zero;
third, to the Class H Certificates, until the remaining Certificate Balance of
such Class of Certificates is reduced to zero; fourth, to the Class G
Certificates, until the remaining Certificate Balance of such Class of
Certificates is reduced to zero; fifth, to the Class F Certificates, until the
remaining Certificate Balance of such Class of Certificates is reduced to zero;
sixth, to the Class E Certificates, until the remaining Certificate Balance of
such Class of Certificates is reduced to zero; seventh, to the Class D
Certificates, until the remaining Certificate Balance of such Class of
Certificates is reduced to zero; eighth, to the Class C Certificates, until the
remaining Certificate Balance of such Class of Certificates is reduced to zero;
ninth, to the Class B Certificates, until the remaining Certificate Balance of
such Class of Certificates is reduced to zero; and, last, to the Class A-1
Certificates, the Class A-2 Certificates and the Class A-3 Certificates, pro
rata, in proportion to their respective outstanding Certificate Balances, until
the remaining Certificate Balances of such Classes of Certificates are reduced
to zero.
Any Realized Loss or Additional Trust Fund Expenses allocated in reduction
of the Certificate Balance of any Class of Sequential Pay Certificates will
result in a corresponding reduction in the notional amount for the Component of
the Class IO Certificates that is related to such Class of Sequential Pay
Certificates.
"Realized Losses" are losses arising from the inability to collect all
amounts due and owing under any defaulted Mortgage Loan, including by reason of
the fraud or bankruptcy of the borrower or a casualty of any nature at the
related Mortgaged Property, to the extent not covered by insurance. The Realized
Loss in respect of a liquidated Mortgage Loan (or related REO Property) is an
amount generally equal to the excess, if any, of (a) the outstanding principal
balance of such Mortgage Loan as of the date of liquidation, together with (i)
all accrued and unpaid interest thereon at the related Mortgage Rate in effect
from time to time to but not including the Due Date in the Collection Period in
which the liquidation occurred and (ii) certain related unreimbursed servicing
expenses, over (b) the aggregate amount of Liquidation Proceeds, if any,
recovered in connection with such liquidation. If any portion of the debt due
under a Mortgage Loan is forgiven, whether in connection with a modification,
waiver or amendment granted or agreed to by the Special Servicer or in
connection with the bankruptcy or similar proceeding involving the related
borrower, the amount so forgiven also will be treated as a Realized Loss.
"Additional Trust Fund Expenses" include, among other things, (i) any
Special Servicing Fees or Principal Recovery Fees paid to the Special Servicer,
(ii) any interest paid to the Master Servicer and/or the Special Servicer in
respect of unreimbursed Advances, and (iii) any of certain unanticipated,
non-Mortgage Loan specific expenses of the Trust Fund, including certain
reimbursements to the Trustee of the type described under "Description of the
Pooling Agreements--Certain Matters Regarding the Trustee" in the Prospectus,
certain reimbursements to the Master Servicer, the Special Servicer and the
Depositor of the type described under "Description of the Pooling
Agreements--Certain Matters Regarding the Master Servicer and the Depositor" in
the Prospectus (the Special
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Servicer having the same rights to indemnity and reimbursement as described
thereunder with respect to the Master Servicer), and certain federal, state and
local taxes, and certain tax related expenses, payable from the assets of the
Trust Fund and described under "Certain Federal Income Tax
Consequences--Prohibited Transactions Tax and Other Taxes" in the Prospectus
and "Servicing of the Mortgage Loans--REO Properties" herein. Additional Trust
Fund Expenses will reduce amounts payable to Certificateholders and, subject to
the distribution priorities described above, may result in a loss on one or more
Classes of Offered Certificates.
P&I ADVANCES
On or about each Distribution Date, the Master Servicer will be obligated,
subject to the recoverability determination described in the next paragraph, to
make advances (each, a "P&I Advance") out of its own funds or, subject to the
replacement thereof as provided in the Pooling and Servicing Agreement, from
funds held in the Certificate Account that are not required to be distributed to
Certificateholders on such Distribution Date, in an amount that is generally
equal to the aggregate of all Scheduled Payments (other than Balloon Payments)
and any Assumed Scheduled Payments, net of related Servicing Fees and, if any,
Principal Recovery Fees, due or deemed due, as the case may be, in respect of
the Mortgage Loans during the related Collection Period, in each case to the
extent such amount was not paid by or on behalf of the related borrower or
otherwise collected as of the close of business on the related Determination
Date. The Master Servicer's obligations to make P&I Advances in respect of any
Mortgage Loan will continue until liquidation of such Mortgage Loan or
disposition of any REO Property acquired in respect thereof. However, if the
Monthly Payment on any Mortgage Loan has been reduced in connection with a
bankruptcy or similar proceeding or a modification, waiver or amendment granted
or agreed to by a Special Servicer, the Master Servicer will be required to
advance only the amount of the reduced Monthly Payment (net of related Servicing
Fees and, if any, Principal Recovery Fees) in respect of subsequent
delinquencies. In addition, if it is determined that an Appraisal Reduction
Amount (as defined below) exists with respect to any Required Appraisal Loan (as
defined below), then, with respect to the Distribution Date immediately
following the date of such determination and with respect to each subsequent
Distribution Date for so long as such Appraisal Reduction Amount exists, the
Master Servicer will be required in the event of subsequent delinquencies to
advance in respect of such Mortgage Loan only an amount equal to the product of
(i) the amount of the P&I Advance that would otherwise be required without
regard to this sentence, multiplied by (ii) a fraction, the numerator of which
is equal to the Stated Principal Balance of such Mortgage Loan, net of such
Appraisal Reduction Amount, and the denominator of which is equal to the Stated
Principal Balance of such Mortgage Loan. If the Master Servicer fails to make a
P&I Advance required to be made, then the Trustee shall then be required to make
such P&I Advance pursuant to the terms of the Pooling and Servicing Agreement.
See "--Appraisal Reductions" below.
The Master Servicer (or the Trustee, as applicable) will be entitled to
recover any P&I Advance made out of its own funds from any amounts collected in
respect of the Mortgage Loan (net of related Servicing Fees with respect to
collections of interest and net of related Principal Recovery Fees with respect
to collections of principal) as to which such P&I Advance was made whether such
amounts are collected in the form of late payments, Insurance Proceeds or
Liquidation Proceeds, or any other recovery of the related Mortgage Loan or REO
Property ("Related Proceeds"). Neither the Master Servicer nor the Trustee will
be obligated to make any P&I Advance that it determines in accordance with the
servicing standards described herein, would, if made, not be recoverable from
Related Proceeds (a "Nonrecoverable P&I Advance"), and the Master Servicer (or
the Trustee, as applicable) will be entitled to recover, from general funds on
deposit in the Certificate Account, any P&I Advance made that it later
determines to be a Nonrecoverable P&I Advance. See "Description of the
Certificates--Advances in Respect of Delinquencies" and "Description of the
Pooling Agreements--Certificate Account" in the Prospectus.
In connection with the recovery by the Master Servicer or the Trustee of
any P&I Advance made by it or the recovery by either the Master Servicer or the
Special Servicer of any reimbursable servicing expense incurred by it (each such
P&I Advance or expense, an "Advance"), the Master Servicer, the Special Servicer
or the Trustee, as applicable, will be entitled to be paid, out of any amounts
then on deposit in the Certificate Account, interest compounded annually at a
per annum rate (the "Reimbursement Rate") equal to the "prime rate" published in
the "Money Rates" section of The Wall Street Journal, as such "prime rate" may
change from time to time, accrued on the amount of such Advance from the date
made to but not including the date of reimbursement. To the extent not offset or
covered by amounts otherwise payable on the Private Certificates, interest
accrued on outstanding Advances will result in a reduction in amounts payable on
the Offered Certificates, subject to the distribution priorities described
herein.
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APPRAISAL REDUCTIONS
Upon the earliest of the date (each such date, a "Required Appraisal Date")
that (1) any Mortgage Loan is sixty (60) days delinquent in respect of any
Monthly Payments, (2) any REO Property is acquired on behalf of the Trust Fund
(the related Mortgage Loan, as (an "REO Mortgage Loan"), (3) any Mortgage Loan
has been modified by the Special Servicer to reduce the amount of any Monthly
Payment, other than a Balloon Payment, (4) on which a receiver is appointed and
continues in such capacity in respect of the Mortgaged Property securing any
Mortgage Loan, (5) a borrower with respect to any Mortgage Loan is subject to
any bankruptcy proceeding or (6) a Balloon Payment with respect to any Mortgage
Loan has not been paid on its scheduled maturity date (each such Mortgage Loan,
including an REO Mortgage Loan, a "Required Appraisal Loan"), the Special
Servicer will be required to obtain (within 60 days of the applicable Required
Appraisal Date) an appraisal of the related Mortgaged Property prepared in
accordance with 12 CFR ss.225.62 and conducteD in accordance with the standards
of the Appraisal Institute by a Qualified Appraiser, unless such an appraisal
had previously been obtained within the prior three months. A "Qualified
Appraiser" is an independent appraiser, selected by the Special Servicer that is
a member in good standing of the Appraisal Institute, and, that, if the state in
which the subject Mortgaged Property is located certifies or licenses
appraisers, certified or licensed in such state, and in each such case, who has
a minimum of five years experience in the subject property type and market. The
cost of such appraisal will be borne by the Special Servicer, subject to the
Special Servicer's right to be reimbursed therefor out of Related Proceeds or,
if not reimbursable therefrom, out of general funds on deposit in the
Certificate Account. As a result of any such appraisal, it may be determined
that an "Appraisal Reduction Amount" exists with respect to the related Required
Appraisal Loan, such determination to be made upon the later of 30 days after
the Required Appraisal Date if no new appraisal is required or upon receipt of a
new appraisal. The Appraisal Reduction Amount for any Required Appraisal Loan
will equal the excess, if any, of (a) the sum of, as of the Determination Date
immediately succeeding the date on which the appraisal is obtained, (i) the
Stated Principal Balance of such Required Appraisal Loan, (ii) to the extent not
previously advanced by or on behalf of the Master Servicer or the Trustee, all
unpaid interest on the Required Appraisal Loan through the most recent Due Date
prior to such Determination Date at a per annum rate equal to the related Net
Mortgage Rate, (iii) all accrued but unpaid Servicing Fees and any Additional
Trust Fund Expenses in respect of such Required Appraisal Loan, (iv) all related
unreimbursed Advances made by or on behalf of the Master Servicer, the Special
Servicer or the Trustee with respect to such Required Appraisal Loan and (v) all
currently due and unpaid real estate taxes and reserves owed for improvements
(net of any amount escrowed therefor) and assessments, insurance premiums, and,
if applicable, ground rents in respect of the related Mortgaged Property, over
(b) an amount equal to 90% of the appraised value (net of any prior liens) of
the related Mortgaged Property as determined by such appraisal.
Notwithstanding the foregoing, if any Required Appraisal Loan as to which
an Appraisal Reduction Amount has been established in accordance with the
preceding paragraph becomes a Corrected Mortgage Loan, then the Appraisal
Reduction Amount shall be deemed to be zero, subject to such Mortgage Loan again
becoming subject to the appraisal requirement described above; provided that, in
the case of any Required Appraisal Loan that has been modified as described in
the immediately preceding paragraph, the Appraisal Reduction Amount will be
deemed to exist for so long as the terms of the modification are in effect.
REPORTS TO CERTIFICATEHOLDERS; AVAILABLE INFORMATION
Trustee Reports. Based on information provided in monthly reports prepared
by the Master Servicer and the Special Servicer and delivered to the Trustee,
the Trustee, will prepare and forward either electronically or by first class
mail on each Distribution Date to each Certificateholder, each initial
Certificate Owner and (upon written request made to the Trustee) each subsequent
Certificate Owner, the Depositor, the Master Servicer, the Special Servicer, the
Underwriters and each Rating Agency:
1. A statement (a "Distribution Date Statement"), substantially in the
form of Annex C hereto, setting forth, among other things, for each
Distribution Date: (i) the amount of the distribution to the holders of
each Class of REMIC Regular Certificates in reduction of the Certificate
Balance thereof; (ii) the amount of the distribution to the holders of each
Class of REMIC Regular Certificates allocable to Distributable Certificate
Interest; (iii) the amount of the distribution to the holders of each Class
of REMIC Regular Certificates allocable to Prepayment Premiums and Yield
Maintenance Charges; (iv) the amount of the distribution to the holders of
each Class of REMIC Regular Certificates in reimbursement of previously
allocated Realized Losses and Additional Trust Fund Expenses; (v) the
Available Distribution Amount for such Distribution Date; (vi) (A) the
aggregate amount of P&I Advances made in respect of such Distribution Date
and (B) the aggregate amount of
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servicing advances and Nonrecoverable P&I Advances as of the close of business
on the related Determination Date; (vii) the aggregate unpaid principal balance
of the Mortgage Pool outstanding as of the close of business on the related
Determination Date; (viii) the aggregate Stated Principal Balance of the
Mortgage Pool outstanding immediately before and immediately after such
Distribution Date; (ix) the number, aggregate unpaid principal balance, weighted
average remaining term to maturity and weighted average Mortgage Rate of the
Mortgage Loans as of the close of business on the related Determination Date;
(x) the number, aggregate unpaid principal balance (as of the close of business
on the related Determination Date) and aggregate Stated Principal Balance
(immediately after such Distribution Date) of Mortgage Loans (A) delinquent one
month, (B) delinquent two months, (C) delinquent three or more months, and (D)
as to which foreclosure proceedings have been commenced; (xi) as to each
Mortgage Loan referred to in the preceding clause (x) above, (A) the loan number
thereof, (B) the Stated Principal Balance thereof immediately following such
Distribution Date, (C) whether the delinquency is in respect of its Balloon
Payment, (D) whether a notice of acceleration has been sent to the borrower and,
if so, the date of such notice, (E) if a Phase I Environmental Assessment of the
related Mortgaged Property has been performed as contemplated by the Pooling and
Servicing Agreement and (F) a brief description of the status of any foreclosure
proceedings or any workout or loan modification negotiations with the related
borrower; (xii) with respect to any Mortgage Loan as to which a liquidation
event occurred during the related Collection Period (other than a payment in
full), (A) the loan number thereof, (B) the nature of the liquidation event and,
in the case of a determination by the Special Servicer with respect to any
defaulted Mortgage Loan or REO Property that there has been a recovery of all
Insurance Proceeds, Liquidation Proceeds and other payments or recoveries that
the Special Servicer has determined in accordance with accepted servicing
standards, will be ultimately recoverable (a "Final Recovery Determination"), a
brief description of the basis for such Final Recovery Determination, (C) the
aggregate of all liquidation proceeds and other amounts received in connection
with such liquidation event (separately identifying the portion thereof
allocable to distributions on the Certificates), and (D) the amount of any
Realized Loss in connection with such liquidation event; (xiii) with respect to
any REO Property included in the Trust Fund as to which a Final Recovery
Determination was made during the related Collection Period, (A) the loan number
of the related Mortgage Loan, (B) a brief description of the basis for the Final
Recovery Determination, (C) the aggregate of all liquidation proceeds and other
amounts received in connection with such Final Recovery Determination
(separately identifying the portion thereof allocable to distributions on the
Certificates), and (D) the amount of any Realized Loss in respect of the related
REO Property in connection with such Final Recovery Determination; (xiv) the
Accrued Certificate Interest and Distributable Certificate Interest in respect
of each Class of REMIC Regular Certificates for such Distribution Date; (xv) any
unpaid Distributable Certificate Interest in respect of each Class of REMIC
Regular Certificates after giving effect to the distributions made on such
Distribution Date; (xvi) the Pass-Through Rate for each Class of REMIC Regular
Certificates; (xvii) the Principal Distribution Amount for such Distribution
Date, separately identifying the respective components thereof (and, in the case
of any principal prepayment or other unscheduled collection of principal
received during the related Collection Period, the loan number for the related
Mortgage Loan and the amount of such prepayment or other collection of
principal); (xviii) the aggregate of all Realized Losses incurred during the
related Collection Period and, aggregated by type, all Additional Trust Fund
Expenses incurred during the related Collection Period; (xix) the aggregate of
all Appraisal Reduction Amounts, Realized Losses and Additional Trust Fund
Expenses that remain unallocated immediately following such Distribution Date;
(xx) the Certificate Balance of each Class of REMIC Regular Certificates (other
than the Class IO Certificates) and the notional amount of each Component
immediately before and immediately after such Distribution Date, separately
identifying any reduction therein due to the allocation of Realized Losses and
Additional Trust Fund Expenses on such Distribution Date; (xxi) the certificate
factor for each Class of REMIC Regular Certificates immediately following such
Distribution Date; (xxii) the aggregate amount of interest on P&I Advances paid
to the Master Servicer during the related Collection Period; (xxiii) the
aggregate amount of interest on servicing advances paid to the Master Servicer
and the Special Servicer during the related Collection Period; and (xxiv) (A)
the aggregate amount of servicing compensation (separately identifying the
amount of each category of compensation) paid to the Master Servicer, the
Special Servicer and, if payable directly out of the Trust Fund without a
reduction in the servicing compensation otherwise payable to the Master Servicer
or the Special Servicer, to each sub-servicer, during the related Collection
Period, and (B) such other information as the Trustee is required by the Code or
other applicable law to furnish to enable Certificateholders to prepare their
tax returns.
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2. A report updating the information regarding the Mortgage Loans,
which report shall contain substantially all of the categories of
information regarding the Mortgage Loans set forth in this Prospectus
Supplement in Annex A. Each such report shall be based upon information
received as of the related Determination Date and be based upon the most
recent information provided by the borrowers.
The Master Servicer or the Special Servicer as set forth below is required
to deliver to the Trustee prior to each Distribution Date, and the Trustee is
required to deliver to each Certificateholder, the Depositor, the Underwriters
and each Rating Agency on each Distribution Date, the following five reports
providing the required information as of the Determination Date immediately
preceding the preparation of each such report:
(a) A "Delinquent Loan Status Report" containing substantially the
content set forth in Annex D attached hereto, prepared by each of the
Master Servicer and Special Servicer setting forth, among other things,
those Mortgage Loans that were delinquent 30-59 days, delinquent 60-89
days, delinquent 90 days or more, current but specially serviced, or in
foreclosure but not REO Property.
(b) An "Historical Loan Modification Report" containing substantially
the content set forth in Annex E attached hereto, prepared by the Special
Servicer setting forth among other things, those Mortgage Loans that have
been modified pursuant to the Pooling and Servicing Agreement (i) during
the related Collection Period and (ii) since the Cut-off Date, showing the
original and the revised terms thereof.
(c) An "Historical Loss Estimate Report" containing substantially the
content set forth in Annex F attached hereto, prepared by the Special
Servicer setting forth, among other things, (i) the aggregate amount of
Liquidation Proceeds and expenses relating to each Final Recovery
Determination, both during the related Collection Period and historically,
and (ii) the amount of Realized Losses occurring during the related
Collection Period, set forth on a loan-by-loan basis.
(d) An "REO Status Report" containing substantially the content set
forth in Annex G attached hereto, prepared by the Special Servicer setting
forth, among other things, with respect to each REO Property that was
included in the Trust Fund (i) the acquisition date of such REO Property,
(ii) the amount of income collected with respect to such REO Property net
of related expenses, taxes and other amounts, if any, received on such REO
Property during the related Collection Period and (iii) the value of the
REO Property based on the most recent appraisal or other valuation thereof
available to the Special Servicer as of such Determination Date (including
any prepared internally by the Special Servicer).
(e) A "Watch List Report" containing substantially the content set
forth in Annex H attached hereto, prepared by the Special Servicer setting
forth, among other things, any Mortgage Loan that is in jeopardy of
becoming a Specially Serviced Mortgage Loan.
The information that pertains to Specially Serviced Trust Fund Assets
reflected in reports shall be based solely upon the reports delivered by the
Special Servicer to the Trustee prior to related Distribution Date. Absent
manifest error, none of the Master Servicer, the Special Servicer or the Trustee
shall be responsible for the accuracy or completeness of any information
supplied to it by a Borrower or third party that is included in any reports,
statements, materials or information prepared or provided by the Master
Servicer, the Special Servicer or the Trustee, as applicable.
The Special Servicer or the Master Servicer is also required to deliver to
the Trustee the following materials:
(a) Within 45 days following the end of each calendar quarter
commencing with the calendar quarter ending in September 1997, with respect
to each Mortgaged Property and REO Property, an "Operating Statement
Analysis" containing substantially the content set forth in Annex I as of
the end of such calendar quarter together with copies of the operating
statements and rent rolls (but only to the extent the related borrower is
required by the Mortgage to deliver, or otherwise agrees to provide, such
information). The Special Servicer is required consistent with the
servicing standards described herein to endeavor to obtain such quarterly
operating statements and rent rolls.
(b) Within 45 days after receipt by the Special Servicer of annual
operating statement if any, with respect to any Mortgaged Property or REO
Property, an "NOI Adjustment Worksheet" containing substantially the
content set forth in Annex J for such Mortgaged Property (with the annual
operating statements attached thereto as an exhibit), presenting the
computations made in accordance with the methodology described in the
Pooling and Servicing Agreement to "normalize" the full year net operating
income and debt service coverage numbers used by the Special Servicer in
the other reports referenced above.
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(c) Prior to each Distribution Date, a "Comparative Financial Status
Report" containing substantially the content set forth in Annex K setting
forth, among other things, the occupancy, revenue, net operating income and
DSCR for each Mortgage Loan or related Mortgaged Property as of the
Determination Date immediately preceding the preparation of such report for
each of the following three periods (to the extent such information is in
the Special Servicer's possession): (i) the most current available
year-to-date, (ii) each of the previous two full fiscal years stated
separately; and (iii) the "base year" (representing the original analysis
of information used as of the Cut-off Date).
The Trustee is to deliver a copy of each Comparative Financial Status Report
that it receives from the Special Servicer to the Depositor, the Underwriters,
the Master Servicer and each Rating Agency promptly after its receipt thereof.
Any Certificateholder may obtain a copy of each Comparative Financial Status
Report upon written request to the Trustee. Upon specific written request, the
Trustee is to deliver a copy of each NOI Adjustment Worksheet that it receives
from the Special Servicer to the Depositor, the Master Servicer, the
Underwriters and each Rating Agency. The Trustee is to deliver on April 30 of
each year to each Rating Agency and the Underwriters, and at any time upon
written request, to the Depositor and the Master Servicer, a copy of each annual
Operating Statement Analysis that it receives from the Special Servicer. Any
Certificateholder may obtain a copy of any NOI Adjustment Worksheet or Operating
Statement Analysis in the possession of the Trustee upon written request and at
the expense of such Certificateholder.
In addition, within a reasonable period of time after the end of each
calendar year, the Trustee is required to send to each person who at any time
during the calendar year was a Certificateholder of record, a report summarizing
on an annual basis (if appropriate) the items provided to Certificateholders in
the monthly Distribution Date Statements and such other information as may be
required to enable such Certificateholders to prepare their federal income tax
returns. Such information is required to include the amount of original issue
discount accrued on each Class of Certificates held by persons other than
Certificateholders exempted from the reporting requirements and information
regarding the expenses of the Trust Fund.
Other Information. The Pooling and Servicing Agreement requires that the
Master Servicer or the Special Servicer make available at its offices primarily
responsible for administration of the Trust Fund, during normal business hours,
for review by any Certificate Owner owning an interest in an Offered Certificate
or any person identified to the Master Servicer as a prospective transferee of
such an interest, originals or copies of, among other things, the following
items: (a) the Pooling and Servicing Agreement and any amendments thereto, (b)
all Distribution Date Statements delivered to holders of the relevant Class of
Offered Certificates since the Closing Date, (c) all officer's certificates
delivered to the Master Servicer since the Closing Date as described under
"Description of the Pooling Agreements-Evidence as to Compliance" in the
Prospectus, (d) all accountants' reports delivered to the Master Servicer since
the Closing Date as described under "Description of the Pooling
Agreements3/4Evidence as to Compliance" in the Prospectus, (e) the most recent
property inspection report prepared by or on behalf of the Special Servicer in
respect of each Mortgaged Property and delivered to the Master Servicer, (f) the
most recent Mortgaged Property annual operating statements and rent roll, if
any, collected by or on behalf of the Special Servicer and delivered to the
Master Servicer, (g) any and all modifications, waivers and amendments of the
terms of a Mortgage Loan entered into by the Special Servicer, and (h) any and
all officers' certificates and other evidence delivered to the Master Servicer
to support the Master Servicer's or a Special Servicer's determination that any
Advance was or, if made, would not be recoverable from Related Proceeds. Copies
of any and all of the foregoing items will be available from the Master Servicer
upon request; however, the Master Servicer will be permitted to require payment
of a sum sufficient to cover the reasonable costs and expenses of providing such
information to the Certificate Owners, including, without limitation, copy
charges and reasonable fees for employee time and for space.
Book-Entry Certificates. Until such time as Definitive Certificates are
issued in respect of the Book Entry Certificates, the foregoing information and
access will be available to the holders of the Book-Entry Certificates only to
the extent it is forwarded by or otherwise available through DTC and DTC
Participants. Any beneficial owner of a Book-Entry Certificate who does not
receive information through DTC or its Participants may request that Trustee
reports be mailed directly to it by written request to the Trustee (accompanied
by evidence of such beneficial ownership) at the Corporate Trust Office of the
Trustee. The manner in which notices and other communications are conveyed by
DTC to DTC Participants, and by DTC Participants to the holders of the
Book-Entry Certificates, will be governed by arrangements among them, subject to
any statutory or regulators requirements as may be in effect from time to time.
The Master Servicer, the Special Servicer, the Trustee and the Depositor are
required to recognize as
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Certificateholders only those persons in whose names the Certificates are
registered on the books and records of the Certificate Registrar.
The Trustee will be required to make available monthly to
Certificateholders, Bloomberg Financial Service, the Rating Agencies, the
Underwriters, the Master Servicer, the Special Servicer and the Depositor an
electronic file containing Mortgage Loan information, based on reports provided
to it by the Master Servicer and the Special Servicer, in the "CSSA 100.1"
periodic update file layout with the Delinquent Loan Status Report, Historical
Loan Modification Report, Historical Loss Estimate Report, REO Status Report and
Watch List Report attached (provided that these reports are delivered to the
Trustee in an electronic format acceptable to the Trustee) via the Trustee's
bulletin board. An account to access the bulletin board may be established by
calling (617) 664-5450. Once an account has been established the bulletin board
is accessible by calling (617) 664-5380. In order to access information from the
bulletin board the user must have available their assigned log-on ID and
password. In addition, the Distribution Date Statement to Certificateholders may
be obtained from the Trustee via the Trustee's "Street Fax" system by calling
(617) 664-5600. Factor information may be obtained automatically through the
Trustee's "Street Connection" automated factor system by calling (617) 664-5500.
A customer service representative of the Trustee can be reached by calling (617)
664-5750 or 1-800-531-0368.
A Certificate Owner may obtain certain information contained in each
Distribution Date Statement by sending a written request, together with any fee
that State Street Bank and Trust Company may require, to State Street Bank and
Trust Company, Corporate Trust Department, Two International Place--5th Floor,
Boston, Massachusetts 02110, Attention: First Union--Lehman Brothers, Series
1997-C1. Factor information may bE obtained by potential purchasers of the
Offered Certificates, by calling (617) 664-5500. The Trustee may disclaim
responsibility for any information therein for which it is not the original
source.
Upon written request of any Certificateholder of record made for purposes
of communicating with other Certificateholders with respect to their rights
under the Pooling and Servicing Agreement, the Certificate Registrar will
furnish such Certificateholder with a list of the other Certificateholders then
of record.
ASSUMED FINAL DISTRIBUTION DATE; RATED FINAL DISTRIBUTION DATE
The "Assumed Final Distribution Date" with respect to any Class of REMIC
Regular Certificates is the Distribution Date on which the Certificate Balance
(or, in the case of the Class IO Certificates, the aggregate of the notional
amounts of the respective Components) of such Class of Certificates would be
reduced to zero based on the assumption that no Mortgage Loan is voluntarily
prepaid prior to its stated maturity date and otherwise based on the "Mortgage
Loan Assumptions" set forth under "Yield and Maturity Considerations3/4Weighted
Average Life" herein, which Distribution Date shall in each case be as follows:
CLASS DESIGNATION ASSUMED FINAL DISTRIBUTION DATE
----------------- -------------------------------
Class A-1 ..................................... February 18, 2004
Class A-2 ..................................... December 18, 2006
Class A-3 ..................................... April 18, 2007
Class IO ...................................... April 18, 2027
Class B ....................................... April 18, 2007
Class C ....................................... April 18, 2007
Class D ....................................... October 18, 2008
Class E ....................................... August 18, 2009
Class F ....................................... December 18, 2014
Class G ....................................... December 18, 2016
Class H ....................................... May 18, 2017
Class J ....................................... March 18, 2020
Class K ....................................... April 18, 2027
The Assumed 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 be delinquent. Accordingly, in the event of defaults on the Mortgage Loans,
the actual final Distribution Date for one or more Classes of the Offered
Certificates may be later, and could be substantially later, than the related
Assumed Final Distribution Date(s).
In addition, the Assumed Final Distribution Dates set forth above were
calculated on the basis of a 0% CPR (as defined herein) and no losses on the
Mortgage Loans. Because the rate of principal payments (including prepayments)
on the Mortgage Loans can be expected to exceed the scheduled rate of principal
payments, and could exceed such scheduled rate by a substantial amount, and
because losses may occur in respect of the Mortgage Loans, the actual final
Distribution Date for one or more Classes of the Offered Certificates may be
earlier, and could be
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substantially earlier, than the related Assumed Final Distribution Date(s). The
rate of principal payments (including prepayments) on the Mortgage Loans will
depend on the characteristics of the Mortgage Loans, as well as on the
prevailing level of interest rates and other economic factors, and no assurance
can be given as to actual principal payment experience. See "Yield and Maturity
Considerations" and "Description of the Mortgage Pool" herein and "Yield and
Prepayment Considerations" in the Prospectus.
The "Rated Final Distribution Date" with respect to each Class of Offered
Certificates (other than the Class IO Certificates) is the first Distribution
Date that follows the second anniversary of the end of the amortization term for
the Mortgage Loan that, as of the Cut-off Date, has the longest remaining
amortization term. The rating assigned by a Rating Agency to any Class of
Offered Certificates entitled to receive distributions in respect of principal
reflects an assessment of the likelihood that Certificateholders of such Class
will receive, on or before the Rated Final Distribution Date, all principal
distributions to which they are entitled. See "Ratings" herein.
VOTING RIGHTS
At all times during the term of the Pooling and Servicing Agreement, 100%
of the voting rights for the Certificates (the "Voting Rights") will be
allocated among the respective Classes of Sequential Pay Certificates in
proportion to the Certificate Balances (as adjusted by treating any Appraisal
Reduction Amount as Realized Losses solely for the purposes of adjusting Voting
Rights) of those Classes. Voting Rights allocated to a Class of Certificates
will be allocated among the related Certificateholders in proportion to the
percentage interests in such Class evidenced by their respective Certificates.
The Class A-1, Class A-2 and Class A-3 Certificates will be treated as one Class
for determining the Controlling Class of Sequential Pay Certificates. In
addition, if either the Master Servicer or the Special Servicer is the holder of
any Sequential Pay Certificate, neither of the Master Servicer or Special
Servicer, in its capacity as a Certificateholder, shall have Voting Rights with
respect to matters concerning compensation affecting the Master Servicer or the
Special Servicer. See "Description of the Certificates--Voting Rights" in thE
Prospectus.
TERMINATION
The obligations created by the Pooling and Servicing Agreement will
terminate following the earlier of (i) the final payment (or advance in respect
thereof) or other liquidation of the last Mortgage Loan or REO Property subject
thereto, and (ii) the purchase of all of the Mortgage Loans and all of the REO
Properties remaining in the Trust Fund, if any, by the Master Servicer, the
Special Servicer, the Depositor, Lehman Brothers Inc. or any single
Certificateholder that is entitled to greater than 50% of the Voting Rights
allocated to the Class of Sequential Pay Certificates with the latest
alphabetical class designation then outstanding (or if no Certificateholder is
entitled to greater than 50% of the Voting Rights of such Class, the
Certificateholder with the largest percentage of Voting Rights allocated to such
Class) (the "Majority Subordinate Certificateholder") and distribution thereof
to the Certificateholders. Written notice of termination of the Pooling and
Servicing Agreement will be given to each Certificateholder, and the final
distribution will be made only upon surrender and cancellation of the
Certificates at the office of the Trustee or other registrar for the
Certificates or at such other location as may be specified in such notice of
termination.
Any such purchase by the Master Servicer, the Special Servicer, the
Depositor, Lehman Brothers Inc. or the Majority Subordinate Certificateholder of
all the Mortgage Loans and all of the REO Properties, if any, remaining in the
Trust Fund is required to be made at a price equal to (i) the aggregate Purchase
Price of all the Mortgage Loans (other than REO Mortgage Loans) then included in
the Trust Fund, plus (ii) the fair market value of all REO Properties then
included in the Trust Fund, as determined by an appraiser mutually agreed upon
by the Master Servicer and the Trustee, minus (iii) if the purchaser is the
Master Servicer, the aggregate of amounts payable or reimbursable to the Master
Servicer under the Pooling and Servicing Agreement. Such purchase will effect
early retirement of the then outstanding Offered Certificates, but the right of
the Master Servicer, the Special Servicer, Lehman Brothers Inc., the Majority
Subordinate Certificateholder or the Depositor to effect such termination is
subject to the requirement that the then aggregate Stated Principal Balance of
the Mortgage Pool be less than 1% of the Initial Pool Balance.
The purchase price paid in connection with the purchase of all Mortgage
Loans and REO Properties remaining in the Trust Fund, exclusive of any portion
thereof payable or reimbursable (as if such purchase price constituted
liquidation proceeds) to any person other than the Certificateholders, will
constitute part of the Available Distribution Amount for the final Distribution
Date. The Available Distribution Amount for the final Distribution Date will be
distributed by the Trustee generally as described herein under
"--Distributions--Application of the Available Distribution Amount", except
that the distributions of principal on any Class of Sequential Pay Certificates
described thereunder will be made, subject to available funds and the
distribution priorities described thereunder, in an amount equal to the entire
Certificate Balance of such Class remaining outstanding.
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<PAGE>
THE TRUSTEE
State Street Bank and Trust Company, a trust company chartered under the
laws of the Commonwealth of Massachusetts, will act as Trustee on behalf of the
Certificateholders. The Corporate Trust Department of the Trustee is located at
Two International Place-5th Floor, Boston, Massachusetts 02110. See "Description
of the Pooling Agreements--The Trustee," "--Duties of the Trustee,"
"3/4Certain Matters Regarding the TrusTee" and "--Resignation and Removal of the
Trustee" in the Prospectus. As compensation for its services, thE Trustee will
be entitled to receive monthly, from general funds on deposit in the Certificate
Account, the Trustee Fee. The "Trustee Fee" for each Mortgage Loan and REO Loan
for any Distribution Date will equal one month's interest for the most recently
ended calendar month (calculated (a) if such Mortgage Loan or REO Loan is an
Actual-360 Loan, on the basis of the actual number of days elapsed during such
calendar month in a year assumed to consist of 360-days and (b) otherwise, on
the basis of a 360-day year consisting of twelve 30-day months), accrued at the
Trustee Fee Rate on the Stated Principal Balance of such Mortgage Loan or REO
Loan, as the case may be, outstanding immediately following the prior
Distribution Date (or, in the case of the initial Distribution Date, as of the
Closing Date). The "Trustee Fee Rate" will be a per annum rate equal to 0.005%.
The Trustee will also have certain duties with respect to REMIC
administration (in such capacity the "REMIC Administrator"). See "Certain
Federal Income Tax Consequences--REMICs--Reporting and OtHer Administrative
Matters" in the Prospectus.
YIELD AND MATURITY CONSIDERATIONS
YIELD CONSIDERATIONS
General. The yield on any Offered Certificate will depend on (a) the price
at which such Certificate is purchased by an investor and (b) the rate, timing
and amount of distributions on such Certificate. The rate, timing and amount of
distributions on any Offered Certificate will in turn depend on, among other
things, (i) the Pass-Through Rate for such Certificate (deemed, in the case of a
Class IO Certificate, to equal the weighted average of the Pass-Through Rates
for the respective Components of the Class IO Certificates from time to time),
(ii) the rate and timing of principal payments (including principal prepayments)
and other principal collections on the Mortgage Loans and the extent to which
such amounts are to be applied in reduction of the Certificate Balance or
notional amount of the related Class or Component, as the case may be, (iii) the
rate, timing and severity of Realized Losses and Additional Trust Fund Expenses
and the extent to which such losses and expenses are allocable in reduction of
the Certificate Balance or notional amount of the related Class or Component, as
the case may be, and (iv) the timing and severity of any Net Aggregate
Prepayment Interest Shortfalls and the extent to which such shortfalls are
allocable in reduction of the Distributable Certificate Interest payable on the
related Class.
Rate and Timing of Principal Payment. The yield to holders of the Class IO
Certificates will be extremely sensitive to, and the yield to holders of any
other Offered 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 any Class of Sequential Pay Certificates and,
correspondingly, the notional amount of any Component. As described herein, the
Principal Distribution Amount for each Distribution Date will generally be
distributable first in respect of the Class A-1 Certificates until the
Certificate Balance thereof is reduced to zero, and thereafter will generally be
distributable entirely in respect of the Class A-2 Certificates, the Class A-3
Certificates, the Class B Certificates, the Class C Certificates, the Class D
and the Class E Certificates, in that order, in each case until the Certificate
Balance of such Class of Certificates is reduced to zero. Any reduction of the
Certificate Balance of any Class of Sequential Pay Certificates will result in a
corresponding reduction in the notional amount in the related Component.
Consequently, the rate and timing of principal payments that are distributed or
otherwise result in reduction of the Certificate Balance or the notional amount
of a Component, as the case may be, of any Class of Offered Certificates will be
directly related to the rate and timing of principal payments on or in respect
of the Mortgage Loans, which will in turn be affected by the amortization
schedules thereof, the dates on which Balloon Payments are due and the rate and
timing of principal prepayments and other unscheduled collections thereon
(including for this purpose, collections made in connection with liquidations of
Mortgage Loans due to defaults, casualties or condemnations affecting the
Mortgaged Properties, or purchases of Mortgage Loans out of the Trust Fund).
Prepayments and, assuming the respective stated maturity dates therefor have not
occurred, liquidations and purchases of the Mortgage Loans, will result in
distributions on the Offered Certificates (other than the Class IO Certificates)
of amounts that would otherwise be distributed over the remaining terms 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
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<PAGE>
Offered Certificates that are Sequential Pay Certificates) while work-outs are
negotiated or foreclosures are completed. See "Servicing of the Mortgage
Loans3/4Modifications, Waivers and Amendments" herein and "Description of the
Pooling Agreements--Realization Upon Defaulted Mortgage Loans" and "CertaiN
Legal Aspects of Mortgage Loans--Foreclosure" in the Prospectus.
The extent to which the yield to maturity of any Class of Offered
Certificates may vary from the anticipated yield will depend upon the degree to
which such Certificates are purchased at a discount or premium and when, and to
what degree, payments of principal on the Mortgage Loans in turn are distributed
or otherwise result in reduction of the Certificate Balance or notional amount
of a Component, as the case may be, of such Certificates. An investor should
consider, in the case of any Offered Certificate purchased at a discount, the
risk that a slower than anticipated rate of principal payments on the Mortgage
Loans could result in an actual yield to such investor that is lower than the
anticipated yield and, in the case of a Class IO Certificate or any other
Offered Certificate purchased at a premium, 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 or otherwise results
in reduction of the principal balance (or notional amount of a Component, as
applicable) of an Offered Certificate purchased at a discount or premium, the
greater will be the effect on an investor's yield to maturity. As a result, the
effect on an investor's yield of principal payments on the Mortgage Loans
occurring at a rate higher (or lower) than the rate anticipated by the investor
during any particular period would not be fully offset by a subsequent like
reduction (or increase) in the rate of such principal payments. Investors in the
Class IO Certificates should fully consider the risk that a rapid rate of
principal payments on the Mortgage Loans could result in the failure of such
investors to recoup their initial investments. Because the rate of principal
payments on the Mortgage Loans will depend on future events and a variety of
factors (as described more fully below), no assurance can be given as to such
rate or the rate of principal prepayments in particular. The Depositor is not
aware of any relevant publicly available or authoritative statistics with
respect to the historical prepayment experience of a large group of mortgage
loans comparable to the Mortgage Loans.
Losses and Shortfalls. The yield to holders of the Offered Certificates
will also depend on the extent to which such holders are required to bear the
effects of any losses or shortfalls on the Mortgage Loans. Losses and other
shortfalls on the Mortgage Loans will, with the exception of any Net Aggregate
Prepayment Interest Shortfalls, generally be borne by the holders of the
respective Classes of Sequential Pay Certificates, to the extent of amounts
otherwise distributable in respect of their Certificates, in reverse
alphabetical order of their Class designations. Realized Losses and Additional
Trust Fund Expenses will be allocated, as and to the extent described herein, to
the respective Classes of Sequential Pay Certificates (in reduction of the
Certificate Balance of each such Class), in reverse alphabetical order of their
Class designations. Any Realized Loss or Additional Trust Fund Expenses
allocated in reduction of the Certificate Balance of any Class of Sequential Pay
Certificates will result in a corresponding reduction in the notional amount of
the related Component. As more fully described herein under "Description of the
Certificates--Distributions--Distributable Certificate Interest," Net
Aggregate Prepayment Interest ShortfaLls will generally be borne by the
respective Classes of REMIC Regular Certificates on a pro rata basis.
Pass-Through Rates. The Pass-Through Rate applicable to each Component of
the Class IO Certificates will be variable and will be equal to the Weighted
Average Net Mortgage Rate from time to time minus the Pass-Through Rate on the
Class of Sequential Pay Certificates relating to such Component. Accordingly,
the Pass-Through Rate on the Components and, correspondingly, the yield on the
Class IO Certificates, will be sensitive to changes in the relative composition
of the Mortgage Pool as a result of scheduled amortization, voluntary
prepayments and liquidations and to changes in the relative sizes of the
Certificate Balances of the respective Classes of Sequential Pay Certificates.
Certain Relevant Factors. The rate and timing of principal payments and
defaults and the severity of losses on the Mortgage Loans may be affected by a
number of factors, including, without limitation, prevailing interest rates, the
terms of the Mortgage Loans (for example, Lockout Periods, provisions requiring
the payment of Prepayment Premiums and Yield Maintenance Charges and
amortization terms that require Balloon Payments), the demographics and relative
economic vitality of the areas in which the Mortgaged Properties are located and
the general supply and demand for rental units, hotel/motel guest rooms, health
care facility beds or comparable commercial space, as applicable, in such areas,
the quality of management of the Mortgaged Properties, the servicing of the
Mortgage Loans, possible changes in tax laws and other opportunities for
investment. See "Risk Factors--The Mortgage Loans" and "Description of the
MortgagE Pool" herein and "Yield and Maturity Considerations--Principal
Prepayments" in the Prospectus.
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<PAGE>
The rate of prepayment on the Mortgage Pool is likely to be affected by
prevailing market interest rates for mortgage loans of a comparable type, term
and risk level. When the prevailing market interest rate is below a mortgage
interest rate, the related borrower has an incentive to refinance its mortgage
loan. As of the Cut-off Date, all of the Mortgage Loans may be prepaid at any
time after the expiration of the applicable Lockout Period and/or any period
when the holder of a Mortgage may require a borrower to pledge Defeasance
Collateral in lieu of prepaying the related Mortgage Loan (a "Required
Defeasance Period"), subject, in most cases, to the payment of a Prepayment
Premium or a Yield Maintenance Charge. A requirement that a prepayment be
accompanied by a Prepayment Premium or Yield Maintenance Charge may not provide
a sufficient economic disincentive to deter a borrower from refinancing at a
more favorable interest rate.
Depending on prevailing market interest rates, the outlook for market
interest rates and economic conditions generally, some borrowers may sell or
refinance Mortgaged Properties in order to realize their equity therein, to meet
cash flow needs or to make other investments. In addition, some borrowers may be
motivated by federal and state tax laws (which are subject to change) to sell
Mortgaged Properties prior to the exhaustion of tax depreciation benefits.
The Depositor makes no representation as to the particular factors that
will affect the rate and timing of prepayments and defaults on the Mortgage
Loans, as to the relative importance of such factors, as to the percentage of
the principal balance of the Mortgage Loans that will be prepaid or as to
whether a default will have occurred as of any date or as to the overall rate of
prepayment or default on the Mortgage Loans.
Delay in Payment of Distributions. Because monthly distributions will not
be made to Certificateholders until a date that is scheduled to be at least 18
days following the Due Dates for the Mortgage Loans during the related
Collection Period, the effective yield to the holders of the Offered
Certificates will be lower than the yield that would otherwise be produced by
the applicable Pass-Through Rates and purchase prices (assuming such prices did
not account for such delay).
Unpaid Distributable Certificate Interest. As described under "Description
of the Certificates--Distributions--Application of the Available Distribution
Amount" herein, if the portion of The Available Distribution Amount
distributable in respect of interest on any Class of Offered Certificates on any
Distribution Date is less than the Distributable Certificate Interest then
payable for such Class, the shortfall will be distributable to holders of such
Class of Certificates on subsequent Distribution Dates, to the extent of
available funds. Any such shortfall will not bear interest, however, and will
therefore negatively affect the yield to maturity of such Class of Certificates
for so long as it is outstanding.
Yield Sensitivity of the Class IO Certificates. The yield to maturity on
the Class IO Certificates will be extremely sensitive to the rate and timing of
principal payments (including by reason of prepayments, defaults and
liquidations) on the Mortgage Loans. Accordingly, investors in the Class IO
Certificates should fully consider the associated risks, including the risk that
a rapid rate of prepayment of the Mortgage Loans could result in the failure of
such investors to fully recoup their initial investments. The allocation of a
portion of collected Prepayment Premiums and Yield Maintenance Charges to the
Class IO Certificates is intended to reduce those risks; however, such
allocation may be insufficient to offset fully the adverse effects on the yields
on such Class of Certificates that the related prepayments may otherwise have.
PRICE/YIELD TABLES
The tables beginning on page B-11 of Annex B hereto (the "Yield Tables")
show the pre-tax corporate bond equivalent ("CBE") yield to maturity, modified
duration (except in the case of the Class IO Certificates), weighted average
life, first Distribution Date on which principal is to be paid ("First Principal
Payment Date") and final Distribution Date on which principal is to be paid
("Last Principal Payment Date") with respect to each Class of Offered
Certificates, prepared using the Table Assumptions (as described below) and,
where applicable, the specified assumed purchase prices (which prices do not
include accrued interest). Assumed purchase prices are expressed in 32nds (i.e.
100.04 means 100 4/32%) as a percentage of the initial Certificate Balance (or,
in the case of the Class IO Certificates, of the aggregate of the initial
notional amounts of the respective Components) of each Class of Offered
Certificates. For purposes of the Yield Tables relating to the Class IO
Certificates, the information therein relating to weighted average life, First
Principal Payment Date and Last Principal Payment Date is being calculated in
respect of the aggregate notional amount of the respective Components of the
Class IO Certificates.
The yields set forth in the Yield Tables were calculated by determining the
monthly discount rates which, when applied to the assumed stream of cash flows
to be paid on each Class of Offered Certificates, would cause the discounted
present value of such assumed stream of cash flows to equal the assumed purchase
prices, plus accrued interest from and including the Cut-off Date to but
excluding May 29, 1997, and by converting such monthly rates to
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<PAGE>
semi-annual corporate bond equivalent rates. Such calculation does not take into
account variations that may occur in the interest rates at which investors may
be able to reinvest funds received by them as distributions on the Offered
Certificates and consequently does not purport to reflect the return on any
investment in such Classes of Offered Certificates when such reinvestment rates
are considered. For purposes of the Yield Tables (except in the case of the
Class IO Certificates), "modified duration" has been calculated using the
modified Macaulay Duration as specified in the "PSA Standard Formulas." The
Macaulay Duration is calculated as the present value weighted average time to
receive future payments of principal and interest, and the PSA Standard Formula
modified duration is calculated by dividing the Macaulay Duration by the
appropriate semi-annual compounding factor. The duration of a security may be
calculated according to various methodologies; accordingly, no representation is
made by the Depositor or any other person that the "modified duration" approach
used herein is appropriate. Duration, like yield, will be affected by the
prepayment rate of the Mortgage Loans and extensions in respect of Balloon
Payments that actually occur during the life of the Class A, Class B, Class C,
Class D and Class E Certificates and by the actual performance of the Mortgage
Loans, all of which may differ, and may differ significantly, from the
assumptions used in preparing the Yield Tables.
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 annual rate
of prepayment each month, expressed as a per annum percentage of the then
scheduled principal balance of one or more mortgage loans. As used in the Yield
Tables, the columns headed "0% CPR" assumes that none of the Mortgage Loans is
prepaid in whole or in part before maturity. The columns headed "2% CPR", "4%
CPR", "6% CPR" and "8% CPR," respectively, assume that prepayments are made each
month at those levels of CPR on each Mortgage Loan that is eligible for
prepayment under the applicable prepayment scenario (each, a "Scenario")
The Yield Tables were derived from calculations based on the following
assumptions (the "Table Assumptions"): (i) (A) in the case of the Yield Tables
identified as relating to Scenario 1, no Mortgage Loan prepays during any
applicable Lockout Period or Required Defeasance Period and (B) in the case of
the Yield Tables identified as relating to Scenario 2, no Mortgage Loan prepays
during any applicable Lockout Period or Required Defeasance Period or during any
period when a Prepayment Premium or a Yield Maintenance Charge could be required
in connection with a voluntary prepayment of principal; otherwise, in the case
of each of the Yield Tables, each Mortgage Loan is assumed to prepay at the
indicated level of CPR, with each prepayment being applied on the first day of
the applicable month in which it is assumed to be received, (ii) the initial
Certificate Balances of the respective Classes of Sequential Pay Certificates
and the Pass-Through Rates for the respective Classes of the REMIC Regular
Certificates are as described in Annex B hereof, (iii) there are no
delinquencies or defaults with respect to, and no modifications, waivers or
amendments of the terms of, the Mortgage Loans, (iv) there are no Realized
Losses, Additional Trust Fund Expenses or Appraisal Reduction Amounts with
respect to the Mortgage Loans or the Trust Fund, (v) scheduled interest and
principal payments on the Mortgage Loans are timely received, (vi) all Mortgage
Loans have Due Dates on the first day of each month and accrue interest on the
respective basis described herein (i.e., a 30/360 basis or an actual/360 basis),
(vii) all prepayments are accompanied by a full month's interest and there are
no Prepayment Interest Shortfalls, (viii) there are no breaches of either
Seller's representations and warranties regarding its Mortgage Loans, (ix) the
Master Servicing Fee, Additional Servicing Fee, Special Servicer Strip and
Trustee Fee accrue in respect of each Mortgage Loan at a combined rate of 0.085%
per annum, plus the per annum rate at which the applicable primary servicing fee
is calculated, (x) no Prepayment Premiums or Yield Maintenance Charges are
collected, (xi) no party entitled thereto exercises its right of optional
termination of the Trust Fund described herein, (xii) the Mortgage Loans which
have Expected Repayment Dates are repaid in full on their respective Expected
Repayment Dates, (xiii) distributions on the Certificates are made on the
eighteenth day (each assumed to be a business day) of each month, commencing in
June 1997, and (xiv) the Settlement Date for the sale of the Offered
Certificates is May 29, 1997.
The characteristics of the Mortgage Loans differ in certain respects
from those assumed in preparing the Yield Tables, and the Yield Tables are
presented for illustrative purposes only. In particular, none of the Mortgage
Loans permit voluntary partial prepayments. Thus neither the Mortgage Pool nor
any Mortgage Loan will prepay at any constant rate, and it is unlikely that the
Mortgage Loans will prepay in a manner consistent with either Scenario 1 or
Scenario 2 for the Yield Tables. In addition, there can be no assurance that the
Mortgage Loans will prepay at any particular rate, that the Mortgage Loans will
not prepay (involuntarily or otherwise) during Lockout Periods and/or Required
Defeasance Periods, that the actual pre-tax yields on, or any other payment
characteristics of, any Class of
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<PAGE>
Offered Certificates will correspond to any of the information shown in the
Yield Tables, or that the aggregate purchase prices of the Offered Certificates
will be as assumed. Accordingly, investors must make their own decisions as to
the appropriate assumptions (including prepayment assumptions) to be used in
deciding whether to purchase the Offered Certificates.
WEIGHTED AVERAGE LIFE
The weighted average life of any Class A-1, Class A-2, Class A-3, Class B,
Class C, Class D or Class E Certificate refers to the average amount of time
that will elapse from the assumed Settlement Date until each dollar allocable to
principal of such Certificate is distributed to the investor. The weighted
average life of any such Offered Certificate will be influenced by, among other
things, the rate at which principal on the Mortgage Loans is paid or otherwise
collected or advanced and applied to pay principal of such Offered Certificate.
As described herein, the Principal Distribution Amount for each Distribution
Date will generally be distributable first in respect of the Class A-1
Certificates until the Certificate Balance thereof is reduced to zero, and will
thereafter generally be distributable entirely in respect of the Class A-2
Certificates, the Class A-3 Certificates, the Class B Certificates, the Class C
Certificates, the Class D Certificates and the Class E Certificates, in that
order, in each case until the Certificate Balance of such Class of Certificates
is reduced to zero.
The following tables indicate the percentage of the initial Certificate
Balance of each Class of Offered Certificates (other than the Class IO
Certificates) that would be outstanding after each of the dates shown under each
of the designated Scenarios and the corresponding weighted average life of each
such Class of Offered Certificates. The tables have been prepared on the basis
of, among others, the Table Assumptions (other than assumption (i) thereof) and
the additional assumptions described below. To the extent that the Mortgage
Loans or the Certificates have characteristics that differ from those assumed in
preparing the tables, the Class A-1, Class A-2, Class A-3, Class B, Class C,
Class D and/or Class E Certificates may mature earlier or later than indicated
by the tables. In particular, partial prepayments on the Mortgage Loans in fact
are not permitted. Accordingly, the Mortgage Loans will not prepay at any
constant rate, and it is highly unlikely that the Mortgage Loans will prepay in
a manner consistent with the assumptions underlying any of the Scenarios
described below. In addition, variations in the actual prepayment experience and
the balance of the Mortgage Loans that prepay may increase or decrease the
percentages of initial Certificate Balances (and shorten or extend the weighted
average lives) shown in the following tables. Investors are urged to conduct
their own analyses of the rates at which the Mortgage Loans may be expected to
prepay.
The tables set forth below were prepared on the basis of the Table
Assumptions (other than assumption (i) thereof), except that it was assumed that
there are no prepayments on the Mortgage Loans other than in accordance with the
designated Scenario. The Scenarios for the following tables are as follows:
Scenario (1): No Mortgage Loan prepays; that is, the CPR
Scenarios (2), (3) and (4): for the Mortgage Pool is 0%. No Mortgage
Loan prepays during its Lockout Period
(which for purposes of the following tables
is assumed to include any Required
Defeasance Period). Thereafter, each
Mortgage Loan prepays each month at the rate
of 2% CPR in the case of Scenario (2), 4%
CPR in the case of Scenario (3) and 6% CPR
in the case of Scenario (4).
Scenarios (5), (6) and (7): No Mortgage Loan prepays during a month in
which a Lockout Period (which for purposes
of the following tables is assumed to
include any Required Defeasance Period) is
in effect or in which prepayments on such
Mortgage Loan are required to be accompanied
by a Yield Maintenance Charge ("YM") or
Prepayment Premium ("PP"). All other
Mortgage Loans prepay each month at the rate
of 4% CPR in the case of Scenario (5), 6%
CPR in the case of Scenario (6) and 8% in
the case of Scenario (7).
Based on the above-referenced assumptions, the following tables indicate the
resulting weighted average lives of each Class of Offered Certificates (other
than the Class IO Certificates) and set forth the percentages of the initial
Certificate Balance of such Class of Offered Certificates that would be
outstanding after each of the dates shown under each of the designated
Scenarios. For purposes of the following tables, the weighted average life of an
Offered Certificate (other than the Class IO Certificates) is determined by (i)
multiplying the amount of each principal distribution thereon by the number of
years from the assumed Settlement Date of such Certificate to the related
Distribution Date, (ii) summing the results and (iii) dividing the sum by the
aggregate amount of the reductions in the principal balance of such Certificate.
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<PAGE>
<TABLE>
<CAPTION>
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE OF THE
CLASS A-1 CERTIFICATES UNDER EACH DESIGNATED SCENARIO
0% CPR DURING LOCKOUT,
0% CPR DURING YM OR PP-OTHERWISE
LOCKOUT-OTHERWISE AT INDICATED CPR AT INDICATED CPR
---------------------------------- -------------------------------
(0% CPR) (2% CPR) (4% CPR) (6% CPR) (4% CPR) (6% CPR) (8% CPR)
DISTRIBUTION DATE 1 2 3 4 5 6 7
- ----------------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Closing Date ..................... 100% 100% 100% 100% 100% 100% 100%
May 1998 ......................... 94 92 91 90 94 94 94
May 1999 ......................... 86 84 82 79 86 86 86
May 2000 ......................... 79 74 70 65 79 79 79
May 2001 ......................... 70 62 53 45 70 70 70
May 2002 ......................... 56 40 26 11 56 56 56
May 2003 ......................... 46 23 1 0 46 46 46
May 2004 and thereafter .......... 0 0 0 0 0 0 0
Weighted Average Life (in years) . 4.8 4.3 3.7 3.4 4.8 4.8 4.8
<CAPTION>
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE OF THE
CLASS A-2 CERTIFICATES UNDER EACH DESIGNATED SCENARIO
0% CPR DURING LOCKOUT,
0% CPR DURING YM OR PP-OTHERWISE
LOCKOUT-OTHERWISE AT INDICATED CPR AT INDICATED CPR
---------------------------------- -------------------------------
(0% CPR) (2% CPR) (4% CPR) (6% CPR) (4% CPR) (6% CPR) (8% CPR)
DISTRIBUTION DATE 1 2 3 4 5 6 7
- ----------------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Closing Date ..................... 100% 100% 100% 100% 100% 100% 100%
May 1998 ......................... 100 100 100 100 100 100 100
May 1999 ......................... 100 100 100 100 100 100 100
May 2000 ......................... 100 100 100 100 100 100 100
May 2001 ......................... 100 100 100 100 100 100 100
May 2002 ......................... 100 100 100 100 100 100 100
May 2003 ......................... 100 100 100 88 100 100 100
May 2004 ......................... 42 26 12 0 42 42 41
May 2005 ......................... 36 16 0 0 35 35 35
May 2006 ......................... 29 6 0 0 28 28 27
May 2007 and thereafter .......... 0 0 0 0 0 0 0
Weighted Average Life (in years) . 7.7 7.2 6.8 6.6 7.7 7.7 7.7
<CAPTION>
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE OF THE
CLASS A-3 CERTIFICATES UNDER EACH DESIGNATED SCENARIO
0% CPR DURING LOCKOUT,
0% CPR DURING YM OR PP-OTHERWISE
LOCKOUT-OTHERWISE AT INDICATED CPR AT INDICATED CPR
---------------------------------- -------------------------------
(0% CPR) (2% CPR) (4% CPR) (6% CPR) (4% CPR) (6% CPR) (8% CPR)
DISTRIBUTION DATE 1 2 3 4 5 6 7
- ----------------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Closing Date ..................... 100% 100% 100% 100% 100% 100% 100%
May 1998 ......................... 100 100 100 100 100 100 100
May 1999 ......................... 100 100 100 100 100 100 100
May 2000 ......................... 100 100 100 100 100 100 100
May 2001 ......................... 100 100 100 100 100 100 100
May 2002 ......................... 100 100 100 100 100 100 100
May 2003 ......................... 100 100 100 100 100 100 100
May 2004 ......................... 100 100 100 98 100 100 100
May 2005 ......................... 100 100 99 85 100 100 100
May 2006 ......................... 100 100 88 73 100 100 100
May 2007 and thereafter .......... 0 0 0 0 0 0 0
Weighted Average Life (in years) . 9.7 9.6 9.5 9.1 9.7 9.7 9.7
S-80
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE OF THE
CLASS B CERTIFICATES UNDER EACH DESIGNATED SCENARIO
0% CPR DURING LOCK-OUT,
0% CPR DURING YM OR PP-OTHERWISE
LOCK-OUT-OTHERWISE AT INDICATED CPR AT INDICATED CPR
---------------------------------- -------------------------------
(0% CPR) (2% CPR) (4% CPR) (6% CPR) (4% CPR) (6% CPR) (8% CPR)
DISTRIBUTION DATE 1 2 3 4 5 6 7
- ----------------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Closing Date ..................... 100% 100% 100% 100% 100% 100% 100%
May 1998 ......................... 100 100 100 100 100 100 100
May 1999 ......................... 100 100 100 100 100 100 100
May 2000 ......................... 100 100 100 100 100 100 100
May 2001 ......................... 100 100 100 100 100 100 100
May 2002 ......................... 100 100 100 100 100 100 100
May 2003 ......................... 100 100 100 100 100 100 100
May 2004 ......................... 100 100 100 100 100 100 100
May 2005 ......................... 100 100 100 100 100 100 100
May 2006 ......................... 100 100 100 100 100 100 100
May 2007 and thereafter .......... 0 0 0 0 0 0 0
Weighted Average Life (in years) . 9.9 9.9 9.8 9.8 9.9 9.9 9.9
<CAPTION>
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE OF THE
CLASS C CERTIFICATES UNDER EACH DESIGNATED SCENARIO
0% CPR DURING LOCK-OUT,
0% CPR DURING YM OR PP-OTHERWISE
LOCK-OUT-OTHERWISE AT INDICATED CPR AT INDICATED CPR
---------------------------------- -------------------------------
(0% CPR) (2% CPR) (4% CPR) (6% CPR) (4% CPR) (6% CPR) (8% CPR)
DISTRIBUTION DATE 1 2 3 4 5 6 7
- ----------------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Closing Date ..................... 100% 100% 100% 100% 100% 100% 100%
May 1998 ......................... 100 100 100 100 100 100 100
May 1999 ......................... 100 100 100 100 100 100 100
May 2000 ......................... 100 100 100 100 100 100 100
May 2001 ......................... 100 100 100 100 100 100 100
May 2002 ......................... 100 100 100 100 100 100 100
May 2003 ......................... 100 100 100 100 100 100 100
May 2004 ......................... 100 100 100 100 100 100 100
May 2005 ......................... 100 100 100 100 100 100 100
May 2006 ......................... 100 100 100 100 100 100 100
May 2007 and thereafter .......... 0 0 0 0 0 0 0
Weighted Average Life (in years) . 9.9 9.9 9.9 9.9 9.9 9.9 9.9
<CAPTION>
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE OF THE
CLASS D CERTIFICATES UNDER EACH DESIGNATED SCENARIO
0% CPR DURING LOCK-OUT,
0% CPR DURING YM OR PP-OTHERWISE
LOCK-OUT-OTHERWISE AT INDICATED CPR AT INDICATED CPR
---------------------------------- -------------------------------
(0% CPR) (2% CPR) (4% CPR) (6% CPR) (4% CPR) (6% CPR) (8% CPR)
DISTRIBUTION DATE 1 2 3 4 5 6 7
- ----------------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Closing Date ..................... 100% 100% 100% 100% 100% 100% 100%
May 1998 ......................... 100 100 100 100 100 100 100
May 1999 ......................... 100 100 100 100 100 100 100
May 2000 ......................... 100 100 100 100 100 100 100
May 2001 ......................... 100 100 100 100 100 100 100
May 2002 ......................... 100 100 100 100 100 100 100
May 2003 ......................... 100 100 100 100 100 100 100
May 2004 ......................... 100 100 100 100 100 100 100
May 2005 ......................... 100 100 100 100 100 100 100
May 2006 ......................... 100 100 100 100 100 100 100
May 2007 ......................... 20 3 0 0 20 20 20
May 2008 ......................... 10 0 0 0 10 10 10
May 2009 and thereafter .......... 0 0 0 0 0 0 0
Weighted Average Life (in years) . 10.1 9.9 9.9 9.9 10.1 10.1 10.1
S-81
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE OF THE
CLASS E CERTIFICATES UNDER EACH DESIGNATED SCENARIO
0% CPR DURING LOCKOUT,
0% CPR DURING YM OR PP-OTHERWISE
LOCKOUT-OTHERWISE AT INDICATED CPR AT INDICATED CPR
---------------------------------- -------------------------------
(0% CPR) (2% CPR) (4% CPR) (6% CPR) (4% CPR) (6% CPR) (8% CPR)
DISTRIBUTION DATE 1 2 3 4 5 6 7
- ----------------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Closing Date ..................... 100% 100% 100% 100% 100% 100% 100%
May 1998 ......................... 100 100 100 100 100 100 100
May 1999 ......................... 100 100 100 100 100 100 100
May 2000 ......................... 100 100 100 100 100 100 100
May 2001 ......................... 100 100 100 100 100 100 100
May 2002 ......................... 100 100 100 100 100 100 100
May 2003 ......................... 100 100 100 100 100 100 100
May 2004 ......................... 100 100 100 100 100 100 100
May 2005 ......................... 100 100 100 100 100 100 100
May 2006 ......................... 100 100 100 100 100 100 100
May 2007 ......................... 100 100 52 1 100 100 100
May 2008 ......................... 100 61 0 0 100 100 100
May 2009 ......................... 7 0 0 0 7 7 7
May 2010 and thereafter .......... 0 0 0 0 0 0 0
Weighted Average Life (in years) . 11.5 11.1 10.2 9.9 11.5 11.5 11.5
</TABLE>
USE OF PROCEEDS
Substantially all of the proceeds from the sale of the Offered Certificates
will be used by the Depositor to purchase the Mortgage Loans and to pay certain
expenses in connection with the issuance of the Certificates.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Upon the issuance of the Offered Certificates, Willkie Farr & Gallagher,
counsel to the Depositor, will deliver its opinion generally to the effect that,
assuming compliance with all provisions of the Pooling and Servicing Agreement,
for federal income tax purposes, portions of the Trust Fund designated in the
Pooling and Servicing Agreement as "REMIC I," "REMIC II" and "REMIC III,"
respectively, will each qualify as a REMIC under the Code. For federal income
tax purposes, (a) the separate noncertificated regular interests in REMIC I will
be the "regular interests" in REMIC I and will constitute the assets of REMIC
II, (b) the Class R-I Certificates will be the sole class of "residual
interests" in REMIC I, (c) the separate noncertificated regular interests in
REMIC II will be the "regular interests" in REMIC II and will constitute the
assets of REMIC III, (d) the Class R-II Certificates will be the sole class of
"residual interest" in REMIC II, (e) the REMIC Regular Certificates (or, in the
case of the Class IO Certificates, each Component thereof) will be the "regular
interests" in REMIC III and generally will be treated as debt instruments of
REMIC III, and (f) the Class R-III Certificates will be the sole class of
"residual interests" in REMIC III. For federal income tax purposes the Class IO
Certificates will consist of twelve components, each corresponding to one of the
Classes of Sequential Pay Certificates constituting "regular interests." See
"Certain Federal Income Tax Consequences--REMICs" in the Prospectus.
The Class A-1, Class A-2, Class A-3, Class B, Class C and Class D
Certificates will not, and the Class E and IO Certificates will, be treated as
having been issued with original issue discount for federal income tax reporting
purposes. The prepayment assumption that will be used in determining the rate of
accrual of original issue discount, market discount and premium, if any, for
federal income tax purposes will be based on the assumption that subsequent to
the date of any determination the Mortgage Loans will prepay at a rate equal to
a CPR of 0%. No representation is made that the Mortgage Loans will prepay at
that rate or at any other rate. See "Certain Federal Income Tax
Consequences--REMICs--Taxation of Owners of REMIC Regular
Certificates--Original Issue Discount" in the Prospectus.
If the method for computing original issue discount described in the
Prospectus results in a negative amount for any period with respect to a
Certificateholder (in particular, the holder of a Class IO Certificate), the
amount of
S-82
<PAGE>
original issue discount allocable to such period would be zero and such
Certificateholder will be permitted to offset such negative amount only against
future original issue discount (if any) attributable to such Certificates.
Although the matter is not free from doubt, a holder of a Class IO Certificate
may be permitted to deduct a loss to the extent that his or her respective
remaining basis in such Certificate exceeds the maximum amount of future
payments to which such Certificateholder is entitled, assuming no further
prepayments of the Mortgage Loans. Any such loss might be treated as a capital
loss.
The Internal Revenue Service (the "IRS") has issued regulations (the "OID
Regulations") under Sections 1271 to 1275 of the Code generally addressing the
treatment of debt instruments issued with original issue discount. The OID
Regulations in some circumstances permit the holder of a debt instrument to
recognize original issue discount under a method that differs from that used by
the issuer. Accordingly, it is possible that the holder of an Offered
Certificate may be able to select a method for recognizing original issue
discount that differs from that used by the Trustee in preparing reports to the
Certificateholders and the IRS. Prospective purchasers of Offered Certificates
are advised to consult their tax advisors concerning the tax treatment of such
Certificates.
The Offered Certificates will be treated as "real estate assets" within the
meaning of Section 856(c)(5)(A) of the Code. In addition, interest (including
original issue discount) on the Offered Certificates will be interest described
in Section 856(c)(3)(B) of the Code. However, the Offered Certificates will
generally only be considered assets described in Section 7701(a)(19)(C) of the
Code to the extent that the Mortgage Loans are secured by residential property
and, accordingly, investment in the Offered Certificates may not be suitable for
certain thrift institutions.
Prepayment Premiums and Yield Maintenance Charges actually collected will
be distributed to the holders of the Offered Certificates as described herein.
It is not entirely clear under the Code when the amount of a Prepayment Premium
or Yield Maintenance Charge should be taxed to the holder of an Offered
Certificate, but it is not expected, for federal income tax reporting purposes,
that Prepayment Premiums and Yield Maintenance Charges will be treated as giving
rise to any income to the holders of the Offered Certificates prior to the
Master Servicer's actual receipt of a Prepayment Premium or Yield Maintenance
Charge. It appears that Prepayment Premiums and Yield Maintenance Charges, if
any, will be treated as ordinary income rather than capital gain. However, that
is not entirely clear and Certificateholders should consult their own tax
advisors concerning the treatment of Prepayment Premiums and Yield Maintenance
Charges.
For further information regarding the federal income tax consequences of
investing in the Offered Certificates, see "Certain Federal Income Tax
Consequences--REMICs" in the Prospectus.
ERISA CONSIDERATIONS
A fiduciary of any employee benefit plan or other retirement plan or
arrangement, including individual retirement accounts and annuities, Keogh plans
and collective investment funds, separate accounts and general accounts in which
such plans, accounts or arrangements are invested, that is subject to the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or
Section 4975 of the Code (each, a "Plan") should carefully review with its legal
advisors whether the purchase or holding of Offered Certificates could give rise
to a transaction that is prohibited or is not otherwise permitted either under
ERISA or Section 4975 of the Code or whether there exists any statutory or
administrative exemption applicable thereto.
Lehman Brothers Inc. ("Lehman Brothers") has received from the DOL an
individual prohibited transaction exemption (the "Exemption"), which generally
exempts from the application of the prohibited transaction provisions of
Sections 406(a) and (b) and 407(a) of ERISA, and the excise taxes imposed on
such prohibited transactions pursuant to Sections 4975(a) and (b) of the Code,
the purchase, sale and holding of mortgage pass-through certificates
underwritten by an Underwriter, as hereinafter defined, provided that certain
conditions set forth in the Exemption are satisfied. For purposes of this
discussion, the term "Underwriter" shall include (a) Lehman Brothers, (b) any
person directly or indirectly, through one or more intermediaries, controlling,
controlled by or under common control with Lehman Brothers, and (c) any member
of the underwriting syndicate or selling group of which Lehman Brothers or a
person described in (b) is a manager or co-manager with respect to the Offered
Certificates.
The Exemption sets forth six general conditions that must be satisfied for
a transaction involving the purchase, sale and holding of Class A-1, Class A-2,
Class A-3 and Class IO Certificates to be eligible for exemptive relief
S-83
<PAGE>
thereunder. First, the acquisition of the Certificates by a Plan must be on
terms that are at least as favorable to the Plan as they would be in an
arm's-length transaction with an unrelated party. Second, the rights and
interests evidenced by such Certificates must not be subordinated to the rights
and interests evidenced by the other certificates of the same trust. Third, such
Certificates at the time of acquisition by the Plan must be rated in one of the
three highest generic rating categories by Standard & Poor's Ratings Services, a
division of The McGraw-Hill Companies, Inc. ("Standard & Poor's), Duff & Phelps
Credit Rating Co. ("DCR"), Moody's, or Fitch. Fourth, the Trustee cannot be an
affiliate of any other member of the "Restricted Group," which consists of
either Underwriter, the Depositor, the Master Servicer, a Special Servicer, the
Trustee, any sub-servicer, and any borrower with respect to Mortgage Loans
constituting more than 5% of the aggregate unamortized principal balance of the
Mortgage Loans as of the date of initial issuance of such Certificates. Fifth,
the sum of all payments made to and retained by either Underwriter must
represent not more than reasonable compensation for underwriting such
Certificates; the sum of all payments made to and retained by the Depositor
pursuant to the assignment of the Mortgage Loans to the Trust Fund must
represent not more than the fair market value of such obligations; and the sum
of all payments made to and retained by the Master Servicer, a Special Servicer
or any sub-servicer must represent 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.
Sixth, the investing Plan must be an accredited investor as defined in Rule
501(a)(1) of Regulation D of the Securities and Exchange Commission under the
Securities Act.
Because none of the Class A-1, Class A-2, Class A-3 and Class IO
Certificates are subordinated with respect to the allocation of Realized Losses
and Additional Trust Fund Expenses to any other Class of Certificates, the
second general condition set forth above is satisfied with respect to such
Certificates. It is a condition of the issuance of the Class A-1, Class A-2,
Class A-3 and Class IO Certificates that they be rated not lower than "Aaa" and
"AAA" by Moody's and Fitch, respectively; thus, the third general condition set
forth above is satisfied with respect to such Certificates as of the Closing
Date. In addition, the fourth general condition set forth above is also
satisfied as of the Closing Date. A fiduciary of a Plan contemplating purchasing
any such Certificate in the secondary market must make its own determination
that, at the time of such purchase, such Certificate continue to satisfy the
third and fourth general conditions set forth above. A fiduciary of a Plan
contemplating the purchase of any such Certificate must make its own
determination that the first, fifth and sixth general conditions set forth above
will be satisfied with respect to such Certificate as of the date of such
purchase.
The Exemption also requires that the Trust Fund meet the following
requirements: (i) the Trust Fund must consist solely of assets of the type that
have been included in other investment pools; (ii) certificates in such other
investment pools must have been rated in one of the three highest categories of
Standard & Poor's, Moody's, DCR or Fitch for at least one year prior to the
Plan's acquisition of such Certificates; and (iii) certificates in such other
investment pools must have been purchased by investors other than Plans for at
least one year prior to any Plan's acquisition of such Certificates. The
Depositor has confirmed to its satisfaction that such requirements have been
satisfied as of the date hereof.
If the general conditions of the Exemption are satisfied, the Exemption may
provide an exemption from the restrictions imposed by Sections 406(a) and 407(a)
of ERISA (as well as the excise taxes imposed by Sections 4975(a) and (b) of the
Code by reason of Sections 4975(c)(1)(A) through (D) of the Code) in connection
with (i) the direct or indirect sale, exchange or transfer of such Certificates
in the initial issuance of Certificates between the Depositor or an Underwriter
and a Plan when the Depositor, an Underwriter, Trustee, Master Servicer, Special
Servicer, sub-servicer or borrower is a "Party in Interest," as defined in the
Prospectus, with respect to the investing Plan, (ii) the direct or indirect
acquisition or disposition in the secondary market of Senior Certificates by a
Plan and (iii) the holding of Senior Certificates by a Plan. However, no
exemption is provided from the restrictions of Sections 406(a)(1)(E), 406(a)(2)
and 407 of ERISA for the acquisition or holding of such Certificate on behalf of
an "Excluded Plan" by any person who has discretionary authority or renders
investment advice with respect to the assets of such Excluded Plan. For purposes
hereof, an Excluded Plan is a Plan sponsored by any member of the Restricted
Group.
If certain specific conditions of the Exemption are also satisfied, the
Exemption may provide an exemption from the restrictions imposed by Sections
406(b)(1) and (b)(2) of ERISA and the taxes imposed by Section 4975(c)(1)(E) of
the Code in connection with (1) the direct or indirect sale, exchange or
transfer of Senior Certificates in the initial issuance of Certificates between
the Depositor or an Underwriter and a Plan when the person who has discretionary
authority or renders investment advice with respect to the investment of such
Plan's assets in such Certificates is (a) a borrower with respect to 5% or less
of the fair market value of the Mortgage Loans or (b) an affiliate of such a
person,
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<PAGE>
(2) the direct or indirect acquisition or disposition in the secondary market of
Senior Certificates by such Plan and (3) the holding of such Certificates by
such Plan.
Further, if certain specific conditions of the Exemption are satisfied, the
Exemption may provide an exemption from the restrictions imposed by Sections
406(a), 406(b) and 407(a) of ERISA, and the taxes imposed by Sections 4975(a)
and (b) of the Code by reason of Section 4975(c) of the Code for transactions in
connection with the servicing, management and operation of the Mortgage Pool.
The Depositor expects that the specific conditions of the Exemption required for
this purpose will be satisfied with respect to the Senior Certificates.
The Exemption also may provide an exemption from the restrictions imposed
by Sections 406(a) and 407(a) of ERISA, and the taxes imposed by Sections
4975(a) and (b) of the Code by reason of Sections 4975(c)(1)(A) through (D) of
the Code if such restrictions are deemed to otherwise apply merely because a
person is deemed to be a Party in Interest with respect to an investing Plan by
virtue of providing services to the Plan (or by virtue of having certain
specified relationships to such a person) solely as a result of the Plan's
ownership of Senior Certificates. A purchaser of any such Certificate should be
aware, however, that even if the conditions specified in one or more exemptions
are satisfied, the scope of relief provided by an exemption may not cover all
acts that may be considered prohibited transactions.
Before purchasing any Senior Certificate, a fiduciary of a Plan should
itself confirm that the specific and general conditions of the Exemption and the
other requirements set forth in the Exemption would be satisfied. In addition to
making its own determination as to the availability of the exemptive relief
provided in the Exemption, the Plan fiduciary should consider the availability
of any other prohibited transaction exemptions. See "ERISA CONSIDERATIONS" in
the Prospectus.
THE CHARACTERISTICS OF THE CLASS B, CLASS C, CLASS D AND CLASS E
CERTIFICATES DO NOT MEET THE REQUIREMENTS OF THE EXEMPTION. ACCORDINGLY,
CERTIFICATES OF THOSE CLASSES MAY NOT BE ACQUIRED BY A PLAN, OTHER THAN AN
INSURANCE COMPANY GENERAL ACCOUNT, WHICH MAY BE ABLE TO RELY ON SECTION III OF
PTE 95-60 (DISCUSSED BELOW).
Section III of Prohibited Transaction Class Exemption 95-60 ("PTE 95-60")
exempts from the application of the prohibited transaction provisions of
Sections 406(a), 406(b) and 407(a) of ERISA and Section 4975 of the Code
transactions in connection with the servicing, management and operation of a
trust (such as the Trust Fund) in which an insurance company general account has
an interest as a result of its acquisition of certificates issued by the trust,
provided that certain conditions are satisfied. If these conditions are met,
insurance company general accounts would be allowed to purchase classes of
Certificates (such as the Class B, Class C, Class D and Class E Certificates)
which do not meet the requirements of the Exemption solely because they (i) are
subordinated to other classes of Certificates in the Trust Fund and/or (ii) have
not received a rating at the time of the acquisition in one of the three highest
rating categories from Standard & Poor's, Moody's, DCR or Fitch. All other
conditions of the Exemption would have to be satisfied in order for PTE 95-60 to
be available. Before purchasing Class B, Class C, Class D or Class E
Certificates, an insurance company general account seeking to rely on Section
III of PTE 95-60 should itself confirm that all applicable conditions and other
requirements have been satisfied.
Insurance company general accounts purchasing any Class of Certificates may
also be able to rely on relief from certain fiduciary provisions of ERISA
provided under Section 401(c) of ERISA. Insurance companies seeking to rely on
such relief should independently determine whether, and the extent to which,
such relief is available.
LEGAL INVESTMENT
Any Class of Offered Certificates rated in the category of "AAA" or "AA"
(or the equivalent) by at least one Rating Agency will constitute "mortgage
related securities" for purposes of the Secondary Mortgage Market Enhancement
Act of 1984, as amended ("SMMEA"). All other Offered Certificates (the
"Non-SMMEA Certificates") will not constitute "mortgage related securities" for
purposes of SMMEA. As a result, the appropriate characterization of the
Non-SMMEA Certificates under various legal investment restrictions, and thus the
ability of investors subject to these restrictions to purchase the Non-SMMEA
Certificates of any Class, may be subject to significant interpretative
uncertainties. In addition, institutions whose investment activities are subject
to review by federal or state regulatory authorities may be or may become
subject to restrictions on the investment by such institutions in certain forms
of mortgage related securities. Investors should consult their own legal
advisors to determine whether and to what extent the Offered Certificates
constitute legal investments for them. See "Legal Investment" in the Prospectus.
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<PAGE>
The Depositor makes no representation as to the ability of particular
investors to purchase the Offered Certificates under applicable legal investment
or other restrictions. All institutions whose investment activities are subject
to legal investment laws and regulations, regulatory capital requirements or
review by regulatory authorities should consult with their own legal advisors in
determining whether and to what extent the Offered Certificates constitute legal
investments for them or are subject to investment, capital or other
restrictions. See "Legal Investment" in the Prospectus.
METHOD OF DISTRIBUTION
Subject to the terms and conditions set forth in the underwriting agreement
(the "Underwriting Agreement") among the Depositor and the Underwriters, the
Depositor has agreed to sell to each Underwriter, and each Underwriter has
agreed to purchase one-half of the respective Certificate Balances of each class
of Offered Certificates.
In the Underwriting Agreement, the Underwriters have severally agreed to
purchase all of the Offered Certificates if any are purchased. In the event of a
default by either Underwriter, the Underwriting Agreement provides that, the
purchase commitment of the non-defaulting Underwriter may be increased. Proceeds
to the Depositor from the sale of the Offered Certificates, before deducting
expenses payable by the Depositor, will be approximately $1,251,955,092, which
includes accrued interest.
Distribution of the Offered Certificates will be made by each Underwriter
from time to time in negotiated transactions or otherwise at varying prices to
be determined at the time of sale. Each Underwriter may effect such transactions
by selling the Offered Certificates to or through dealers, and such dealers may
receive compensation in the form of underwriting discounts, concessions or
commissions from such Underwriter. In connection with the purchase and sale of
the Offered Certificates, the Underwriters may be deemed to have received
compensation from the Depositor in the form of underwriting discounts. Each
Underwriter and any dealers that participate with either Underwriter in the
distribution of the Offered Certificates may be deemed to be underwriters and
any profit on the resale of the Offered Certificates positioned by them may be
deemed to be underwriting discounts and commissions under the Securities Act.
Purchasers of the Offered Certificates, including dealers, may, depending
on the facts and circumstances of such purchases, be deemed to be "underwriters"
within the meaning of the Securities Act in connection with reoffers and sales
by them of Offered Certificates. Certificateholders should consult with their
legal advisors in this regard prior to any such reoffer or sale.
The Depositor also has been advised by the Underwriters that each of them,
through one or more of its affiliates, currently intends to make a market in the
Offered Certificates; however, neither Underwriter has any 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 Offered Certificates will develop. See
"Risk Factors--Limited Liquidity" herein and in the Prospectus.
The Depositor has agreed to indemnify each Underwriter and each person, if
any, who controls any Underwriter within the meaning of Section 15 of the
Securities Act against, or make contributions to each Underwriter and each such
controlling person with respect to, certain liabilities, including liabilities
under the Securities Act.
LEGAL MATTERS
Certain legal matters will be passed upon for the Depositor by Willkie Farr
& Gallagher, New York, New York, and certain legal matters will be passed upon
for the Underwriters by Sidley & Austin, New York, New York.
RATINGS
It is a condition of their issuance that each of the Class A-1, Class A-2,
Class A-3 and the Class IO Certificates be rated not lower than "AAA" by Fitch
and "Aaa" by Moody's, that the Class B Certificates be rated not lower than "AA"
by Fitch and "Aa2" by Moody's, that the Class C Certificates be rated not lower
than "A" by Fitch and "A2" by Moody's, that the Class D Certificates be rated
not lower than "BBB" by Fitch and "Baa2" by Moody's and that the Class E
Certificates be rated not lower than "BBB-" by Fitch and "Baa3" by Moody's.
S-86
<PAGE>
The ratings on the Offered Certificates address the likelihood of timely
receipt by holders thereof of all distributions of interest to which they are
entitled and, except in the case of the Class IO Certificates, distributions of
principal by the Rated Final Distribution Date set forth on the cover page of
this Prospectus Supplement. The ratings take into consideration the credit
quality of the Mortgage Pool, structural and legal aspects associated with the
Offered Certificates, and the extent to which the payment stream from the
Mortgage Pool is adequate to make payments required under the Offered
Certificates. A security rating does not represent any assessment of (i) the
likelihood or frequency of principal prepayments or default interest on the
Mortgage Loans, (ii) the degree to which such prepayments might differ from
those originally anticipated or (iii) whether and to what extent Prepayment
Premiums and Yield Maintenance Charges will be received. Also, a security rating
does not represent any assessment of the yield to maturity that investors may
experience or the possibility that the holders of the Class IO Certificates
might not fully recover their investment in the event of rapid prepayments of
the Mortgage Loans (including both voluntary and involuntary prepayments). As
described herein, the amounts payable with respect to the Class IO Certificates
consist only of interest. If the entire Mortgage Pool were to prepay in the
initial month, with the result that the holders of the Class IO Certificates
receive only a single month's interest and thus suffer a nearly complete loss of
their investment, all amounts "due" to such Certificateholders will nevertheless
have been paid, and such result is consistent with the ratings received on the
Class IO Certificates. The rating does not address the timing or magnitude of
reductions of the notional amounts of the Components of the Class IO
Certificates, but only the obligation to pay interest timely on the Notional
Amount as reduced from time to time. Accordingly, the ratings of the Class IO
Certificates should be evaluated independently from similar ratings on other
types of securities.
There can be no assurance that any rating agency not requested to rate the
Offered Certificates will not nonetheless issue a rating to any or all Classes
thereof and, if so, what such rating or ratings would be. A rating assigned to
any Class of Offered Certificates by a rating agency that has not been requested
by the Depositor to do so may be lower than the rating assigned thereto by any
of the Rating Agencies.
The ratings on the Offered Certificates should be evaluated independently
from similar ratings on other types of securities. A security rating is not a
recommendation to buy, sell or hold securities and may be subject to revision or
withdrawal at any time by the assigning rating agency. See "Risk
Factors--Limited Nature of Ratings" in the Prospectus.
S-87
<PAGE>
INDEX OF PRINCIPAL DEFINITIONS
PAGE
----
30/360 Basis ...................................................... S-31
Accrued Certificate Interest ...................................... S-64
Additional Servicing Fee .......................................... S-55
Additional Servicing Fee Rate ..................................... S-55
Additional Trust Fund Expenses .................................... S-12
Advance ........................................................... S-68
Appraisal Reduction Amount ........................................ S-69
Assumed Scheduled Payment ......................................... S-18
Available Distribution Amount ..................................... S-14
Balloon Loans ..................................................... S-9
Balloon Payment ................................................... S-9
CBE ............................................................... S-77
Certificate Balance ............................................... S-2
Certificate Owner ................................................. S-7
Certificateholders ................................................ S-12
Certificates ...................................................... S-1
Class ............................................................. S-1
Class A Certificates .............................................. S-6
Class Prepayment Percentage ....................................... S-54
Closing Date ...................................................... S-49
Code .............................................................. S-8
Collection Period ................................................. S-60
Compensating Interest Payment ..................................... S-19
Component ......................................................... S-13
Constant Prepayment Rate or CPR ................................... S-78
Controlling Class of Sequential Pay Certificates .................. S-52
Controlling Class Representative .................................. S-52
Corrected Mortgage Loan ........................................... S-53
Custodian ......................................................... S-49
Cut-off Date ...................................................... S-1
Cut-off Date Balance .............................................. S-7
Cut-off Date DSC Ratio ............................................ S-34
Cut-off Date LTV .................................................. S-35
Cut-off Date LTV Ratios ........................................... S-35
DSCR .............................................................. S-34
Debt Service Coverage Ratio ....................................... S-34
Definitive Offered Certificate .................................... S-7
Depositor ......................................................... S-1
Determination Date ................................................ S-18
Distributable Certificate Interest ................................ S-17
Distribution Date ................................................. S-2
Distribution Date Statement ....................................... S-69
DOL ............................................................... S-23
DTC ............................................................... S-7
Due Dates ......................................................... S-31
ERISA ............................................................. S-23
Excluded Plan ..................................................... S-84
Exemption ......................................................... S-83
Final Recovery Determination ...................................... S-70
First Principal Payment Date ...................................... S-77
First Union Capital ............................................... S-6
Fitch ............................................................. S-24
Form 8-K .......................................................... S-51
S-88
<PAGE>
PAGE
----
FUNB ............................................................. S-6
FUNB Loans ....................................................... S-12
HUD .............................................................. S-33
Initial Pool Balance ............................................. S-1
Initial Reserves at Closing ...................................... S-32
IRS .............................................................. S-83
Last Principal Payment Date ...................................... S-77
Lehman Loans ..................................................... S-12
Lehman Sellers ................................................... S-7
Loan per Sq ft, Unit, Bed, Key or Room ........................... S-35
Lockout Period ................................................... S-9
Majority Subordinate Certificateholders .......................... S-21
Master Servicer .................................................. S-2
Master Servicing Fee ............................................. S-54
Master Servicing Fee Rate ........................................ S-54
Maturity LTV Ratios .............................................. S-35
Monthly Payments ................................................. S-9
Moody's .......................................................... S-24
Mortgage ......................................................... S-29
Mortgage File .................................................... S-49
Mortgage Loan Purchase Agreements ................................ S-49
Mortgage Loan Seller ............................................. S-2
Mortgage Loans ................................................... S-1
Mortgage Note .................................................... S-27
Mortgage Pool .................................................... S-1
Mortgage Rates ................................................... S-9
Mortgaged Property ............................................... S-1
Net Aggregate Prepayment Interest Shortfall ...................... S-20
Net Cash Flow .................................................... S-34
Net Mortgage Rate ................................................ S-13
Nonrecoverable P&I Advance ....................................... S-68
Offered Certificates ............................................. S-1
OID Regulations .................................................. S-83
P&I Advance ...................................................... S-19
Participants ..................................................... S-7
Party in Interest ................................................ S-84
Pass-Through Rate ................................................ S-2
Plan ............................................................. S-23
Pooling and Servicing Agreement .................................. S-12
Prepayment Interest Excess ....................................... S-20
Prepayment Interest Shortfall .................................... S-19
Prepayment Premiums .............................................. S-65
Principal Distribution Amount .................................... S-17
Principal Recovery Fee ........................................... S-54
Private Certificates ............................................. S-6
PTE 95-60 ........................................................ S-85
Purchase Price ................................................... S-49
Rated Final Distribution Date .................................... S-74
Rating Agencies .................................................. S-24
Realized Losses .................................................. S-12
Reimbursement Rate ............................................... S-19
Related Proceeds ................................................. S-68
Remaining Term to Maturity ....................................... S-36
REMIC ............................................................ S-2
C-89
<PAGE>
PAGE
----
REMIC I ........................................................ S-2
REMIC II ....................................................... S-2
REMIC III ...................................................... S-2
REMIC Administrator ............................................ S-75
REMIC Regular Certificates ..................................... S-6
REMIC Residual Certificates .................................... S-6
Rental Property ................................................ S-34
REO Extension .................................................. S-57
REO Mortgage Loan .............................................. S-69
REO Property ................................................... S-21
REO Tax ........................................................ S-57
Required Appraisal Date ........................................ S-69
Required Appraisal Loan ........................................ S-69
Restricted Group ............................................... S-84
Scenario ....................................................... S-78
Scheduled Payment .............................................. S-18
Section 42 Property ............................................ S-8
Securities Act ................................................. S-6
Senior Certificates ............................................ S-20
Sequential Pay Certificates .................................... S-6
Servicing Fees ................................................. S-54
Settlement Date ................................................ S-49
SMMEA .......................................................... S-24
Special Servicer ............................................... S-2
Special Servicing Fee .......................................... S-54
Special Servicing Fee Rate ..................................... S-54
Special Servicer Strip ......................................... S-55
Special Servicer Strip Rate .................................... S-55
Specially Serviced Mortgage Loans .............................. S-53
Specially Serviced Trust Fund Assets ........................... S-53
Standard & Poor's .............................................. S-84
Stated Principal Balance ....................................... S-13
Subordinate Certificates ....................................... S-20
Tax Credits .................................................... S-33
Table Assumptions .............................................. S-78
TI/LC .......................................................... S-36
Trust Fund ..................................................... S-1
Trustee ........................................................ S-2
Trustee Fee .................................................... S-75
Trustee Fee Rate ............................................... S-75
Underwriters ................................................... S-1
Underwriting Agreement ......................................... S-86
Underwriting Reserves .......................................... S-36
Voting Rights .................................................. S-74
Weighted Average Net Mortgage Rate ............................. S-13
Year Built ..................................................... S-35
Yield Maintenance Charges ...................................... S-65
Yield Tables ................................................... S-77
S-90
<PAGE>
ANNEX A
<TABLE>
<CAPTION>
Control Zip
No. Property Name Address City State Code
==================================================================================================================================
<S> <C> <C> <C> <C>
1 Potrero Center 2300 16th Street San Francisco CA 94103
2 Elmwood Village 24 Boulevard Elmwood Park NJ 07407
3 Rivertowne Commons Shopping Center 6000-6250 Oxon Hill Road Oxon Hill MD 20745
4 Riverview Plaza Shopping Center 1100-1400 South Delaware Ave Philadelphia PA 19147
5 Mohawk Hills 945 Mohawk Hills Drive Indianapolis IN 46032
- -----------------------------------------------------------------------------------------------------------------------------------
6 Greenbriar Mall I-285 & Lakewood Freeway Atlanta GA 30315
7 Mobile Festival 3725 Airport Boulevard Mobile AL 36608
8 Parkview Court Apartments 1607 Patricia Drive Yeadon PA 19050
9 Glen Oaks Apartments 7509 Mandan Road Greenbelt MD 20770
10 Oakwood Apartments at the Windsor 1700 Benjamin Franklin Pkwy Philadelphia PA 19103
- -----------------------------------------------------------------------------------------------------------------------------------
11 Lenox Suites 616 North Rush Street Chicago IL 60611
12 Larchdale Woods 13178 Larchdale Road Laurel MD 20708
13 Lincolnshire Portfolio
13a MacArthur Commons 3501 N. MacArthur Irving TX 75062
- -----------------------------------------------------------------------------------------------------------------------------------
13b La Sierra Office Building 5445 La Sierra Dallas TX 75231
13c White Lake Plaza 1100 Oakland Boulevard Fort Worth TX 76103
13d Parkway West 509 Viking Drive Virginia Beach VA 23452
13e Comerica Bank Building 6510 Abrams Road Dallas TX 75231
13f Midport Tech Center 2550 Midway Road Carrollton TX 75006
- -----------------------------------------------------------------------------------------------------------------------------------
13g Triangle Business Park 4200,4208,4128 South Boulevard Charlotte NC 28209
13h Buckner Retail Center 2029-2049 Buckner Dallas TX 75217
13i Walnut Ridge 1920 Westridge Irving TX 75038
13j Lone Star Plaza 2535 Lone Star Drive Dallas TX 75212
13k Tantor Office Warehouse 11317-11319 Tantor Road Dallas TX 75229
- -----------------------------------------------------------------------------------------------------------------------------------
14 The Sports Authority 48-220 University Dr. Pembroke Pines FL 33024
15 Springfield Plaza Shopping Center 1277-1345 Liberty Street Springfield MA 01104
16 600 South Commonwealth Avenue 600 South Commonwealth Avenue Los Angeles CA 90005
17 Westland 49 Apartments 1333-1339 West 49th Place Hialeah FL 33012
- -----------------------------------------------------------------------------------------------------------------------------------
19 Westfall Town Center 721 Routes 6 & 209 Westfall Township PA 18336
20 Westfield Village Shopping Center 9349-9389 Sheridan Boulevard Westminster CO 80030
21 Forest Cove Apartments 1706 Forest Cove Drive Mount Prospect IL 60056
22 Hacienda Gardens Apartments 1850 Batson Avenue Rowland Heights CA 91748
- -----------------------------------------------------------------------------------------------------------------------------------
23 Square One Shopping Center NEQ US Hwy & NW J Wms W Jensen Beach FL 34957
24 Creekstone 266 Stewarts Ferry Pike Nashville TN 37214
25 Holiday Inn Chesapeake 725 Woodlake Drive Chesapeake VA 23320
26 Semoran North 1743 Semoran North Circle Winter Park FL 32792
27 Westridge & Meadow Ridge Apartments 2401 Westridge & 2400 S. Loop West Houston TX 77054
- -----------------------------------------------------------------------------------------------------------------------------------
28 Hammocks Trails 15301 SW 106th Lane Miami FL 33196
29 Hillcrest Shopping Center 1701 Larkin Ave. Crest Hill IL 60453
30 River Oaks 3701 West Pioneer Drive Irving TX 75061
31 Del Coronado Apartments 4949 West Pine Boulevard St. Louis MO 63108
32 Park Place Apartments 2701 SW 13th Street Gainsville FL 28604
- -----------------------------------------------------------------------------------------------------------------------------------
33 Hilltop Ridge Apartments 4260 Brownsboro Road Winston Salem NC 27106
34 The Verandahs at Hunt Club 3000 Foxhill Circle Apopka FL 32703
35 Crowne Plaza Worcester 10 Lincoln Square Worchester MA 01608
36 Crossroads Towne Center 12751-12875 West Bell Road Surprise AZ 85374
37 Aspen View Retirement Residence 3705 Avenue C Billings MT 59102
- -----------------------------------------------------------------------------------------------------------------------------------
38 Valu Food Shopping Center 450-484 Governor Ritchie Highway Severna Park MD 21146
39 Laurel Valley Apartments 1671 Terrel Mill Road Marietta GA 20067
40 Sunset Pointe Apartments 7800 Woodman Avenue Van Nuys CA 91402
41 Holiday Inn Virginia Beach 2607 Atlantic Ave Virginia Beach VA 23451
42 Airport Atrium Office Building 2780 Skypark Drive Torrance CA 90505
- -----------------------------------------------------------------------------------------------------------------------------------
43 Plaza at Highlands 1970-2050 County Line Road Highlands Ranch CO 80126
44 Hayden Plaza 1126 N. Scottsdale Rd Tempe AZ 85281
45 River Center Shopping Center 5555-5655 East River Rd. Tucson AZ 85712
46 Indian Trace 1304-1396 Southwest 160th St. Sunrise FL 33326
47 Hunters Glen Apartments 350 Bryant Road Spartanburg SC 29303
- -----------------------------------------------------------------------------------------------------------------------------------
48 Union Hills Village 18631 North 19th Avenue Phoenix AZ 85027
49 Brookside Plaza 443-573 Waukegan Road Northbrook IL 60062
50 Lincoln Crossing 27th & Superior Lincoln NE 68502
51 Abington Apartments 4616 Scott Crossing Drive Memphis TN 38128
52 SMC-Meterie-408 6851 Vetrans Blvd. Metairie LA 70003
- -----------------------------------------------------------------------------------------------------------------------------------
53 The Falls on Antoine 6101 Antoine Houston TX 77091
54 Claridge Apartments 10027 Spice Lane Houston TX 77072
55 Crossroads Plaza Shopping Center 1416 Main Street Adrian MI 49221
56 Barrington Park Apartments 1201 Cedar Lane Road Greenville SC 29611
57 Sugar Creek Plaza 2810 Shaerer Road Tallahassee FL 32312
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
% of Aggregate Cumulative
Control Original Cut-off Date Cut-off Date % of Initial Mortgage
No. Property Name Balance Balance Balance Pool Balance Rate
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
1 Potrero Center $ 33,409,000 $ 33,388,968 2.56% 2.56% 8.5500%
2 Elmwood Village 30,000,000 29,981,525 2.30% 4.85% 8.4200
3 Rivertowne Commons Shopping Center 28,800,000 28,715,037 2.20% 7.05% 8.7500
4 Riverview Plaza Shopping Center 24,000,000 23,982,082 1.84% 8.89% 8.6250
5 Mohawk Hills 22,250,000 22,235,812 1.70% 10.59% 8.2500
- ------------------------------------------------------------------------------------------------------------------------------------
6 Greenbriar Mall 21,126,000 21,089,946 1.62% 12.21% 8.8400
7 Mobile Festival 20,000,000 19,925,320 1.53% 13.74% 9.2240
8 Parkview Court Apartments 19,000,000 18,988,856 1.45% 15.19% 8.6570
9 Glen Oaks Apartments 18,400,000 18,376,787 1.41% 16.60% 8.3200
10 Oakwood Apartments at the Windsor 16,500,000 16,443,811 1.26% 17.86% 7.9920
- ------------------------------------------------------------------------------------------------------------------------------------
11 Lenox Suites 14,500,000 14,475,611 1.11% 18.97% 9.3750
12 Larchdale Woods 14,000,000 13,981,900 1.07% 20.04% 8.2000
13 Lincolnshire Portfolio 13,750,000 13,717,943 1.05% 21.09% 8.7400
---------------------------------
13a MacArthur Commons 2,650,000 2,643,822
- ------------------------------------------------------------------------------------------------------------------------------------
13b La Sierra Office Building 2,245,000 2,239,766
13c White Lake Plaza 1,820,000 1,815,757
13d Parkway West 1,680,000 1,676,083
13e Comerica Bank Building 1,500,000 1,496,503
13f Midport Tech Center 1,320,000 1,316,922
- ------------------------------------------------------------------------------------------------------------------------------------
13g Triangle Business Park 700,000 698,368
13h Buckner Retail Center 630,000 628,531
13i Walnut Ridge 475,000 473,893
13j Lone Star Plaza 420,000 419,021
13k Tantor Office Warehouse 310,000 309,277
- ------------------------------------------------------------------------------------------------------------------------------------
14 The Sports Authority 13,450,000 13,408,170 1.03% 22.12% 8.4400
15 Springfield Plaza Shopping Center 13,300,000 13,292,284 1.02% 23.13% 8.7100
16 600 South Commonwealth Avenue 13,000,000 12,962,049 0.99% 24.13% 9.2300
17 Westland 49 Apartments 13,000,000 12,951,657 0.99% 25.12% 8.4750
- ------------------------------------------------------------------------------------------------------------------------------------
19 Westfall Town Center 11,420,000 11,400,510 0.87% 25.99% 8.8400
20 Westfield Village Shopping Center 11,200,000 11,192,561 0.86% 26.85% 8.0500
21 Forest Cove Apartments 10,900,000 10,893,106 0.83% 27.68% 8.2900
22 Hacienda Gardens Apartments 9,574,000 9,568,283 0.73% 28.42% 8.5700
- ------------------------------------------------------------------------------------------------------------------------------------
23 Square One Shopping Center 9,500,000 9,470,018 0.73% 29.14% 8.3680
24 Creekstone 9,500,000 9,468,979 0.73% 29.87% 8.2000
25 Holiday Inn Chesapeake 9,500,000 9,438,855 0.72% 30.59% 9.2500
26 Semoran North 9,300,000 9,276,516 0.71% 31.30% 8.3500
27 Westridge & Meadow Ridge Apartments 9,100,000 9,094,373 0.70% 32.00% 8.4000
- ------------------------------------------------------------------------------------------------------------------------------------
28 Hammocks Trails 9,094,013 9,077,368 0.70% 32.69% 8.5000
29 Hillcrest Shopping Center 8,750,000 8,678,999 0.66% 33.36% 8.4740
30 River Oaks 8,550,000 8,519,005 0.65% 34.01% 8.6000
31 Del Coronado Apartments 8,250,000 8,239,782 0.63% 34.64% 8.4100
32 Park Place Apartments 7,928,000 7,909,075 0.61% 35.25% 8.6250
- ------------------------------------------------------------------------------------------------------------------------------------
33 Hilltop Ridge Apartments 7,840,000 7,829,444 0.60% 35.85% 8.0000
34 The Verandahs at Hunt Club 7,800,000 7,780,303 0.60% 36.44% 8.3500
35 Crowne Plaza Worcester 7,700,000 7,700,000 0.59% 37.03% 9.4000
36 Crossroads Towne Center 7,714,000 7,695,529 0.59% 37.62% 8.6100
37 Aspen View Retirement Residence 7,700,000 7,695,326 0.59% 38.21% 8.4900
- ------------------------------------------------------------------------------------------------------------------------------------
38 Valu Food Shopping Center 7,700,000 7,695,300 0.59% 38.80% 8.4630
39 Laurel Valley Apartments 7,600,000 7,579,728 0.58% 39.38% 8.0800
40 Sunset Pointe Apartments 7,536,000 7,531,500 0.58% 39.96% 8.5700
41 Holiday Inn Virginia Beach 7,500,000 7,451,727 0.57% 40.53% 9.2500
42 Airport Atrium Office Building 7,350,000 7,341,459 0.56% 41.09% 8.7200
- ------------------------------------------------------------------------------------------------------------------------------------
43 Plaza at Highlands 7,200,000 7,179,070 0.55% 41.64% 8.7700
44 Hayden Plaza 7,100,000 7,095,982 0.54% 42.19% 8.8300
45 River Center Shopping Center 7,000,000 6,984,528 0.54% 42.72% 9.0000
46 Indian Trace 6,850,000 6,843,890 0.52% 43.25% 9.0000
47 Hunters Glen Apartments 6,763,525 6,754,418 0.52% 43.76% 8.0000
- ------------------------------------------------------------------------------------------------------------------------------------
48 Union Hills Village 6,750,000 6,746,243 0.52% 44.28% 8.9100
49 Brookside Plaza 6,715,000 6,692,300 0.51% 44.79% 8.8000
50 Lincoln Crossing 6,650,000 6,632,828 0.51% 45.30% 8.2400
51 Abington Apartments 6,650,000 6,625,496 0.51% 45.81% 8.5200
52 SMC-Meterie-408 6,560,000 6,507,178 0.50% 46.31% 8.9100
- ------------------------------------------------------------------------------------------------------------------------------------
53 The Falls on Antoine 6,450,000 6,445,828 0.49% 46.80% 8.1800
54 Claridge Apartments 6,400,000 6,387,748 0.49% 47.29% 8.2800
55 Crossroads Plaza Shopping Center 6,400,000 6,382,341 0.49% 47.78% 8.8600
56 Barrington Park Apartments 6,333,680 6,325,152 0.48% 48.26% 8.0000
57 Sugar Creek Plaza 6,110,000 6,105,408 0.47% 48.73% 8.8500
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Original Remaining Original Remaining
Term to Term to Amortization Amortization
Control Maturity Maturity Term Term
No. Property Name (Mos.) (Mos.) (Mos.) (Mos.)
==========================================================================================================================
<S> <C> <C> <C> <C>
1 Potrero Center 240 239 360 359
2 Elmwood Village 360 359 360 359
3 Rivertowne Commons Shopping Center 120 116 330 326
4 Riverview Plaza Shopping Center 120 119 330 329
5 Mohawk Hills 120 119 360 359
- --------------------------------------------------------------------------------------------------------------------------
6 Greenbriar Mall 120 117 360 357
7 Mobile Festival 144 137 360 353
8 Parkview Court Apartments 180 179 360 359
9 Glen Oaks Apartments 84 82 360 358
10 Oakwood Apartments at the Windsor 120 115 360 355
- --------------------------------------------------------------------------------------------------------------------------
11 Lenox Suites 84 82 300 298
12 Larchdale Woods 120 118 360 358
13 Lincolnshire Portfolio 120 116 360 356
13a MacArthur Commons
- --------------------------------------------------------------------------------------------------------------------------
13b La Sierra Office Building
13c White Lake Plaza
13d Parkway West
13e Comerica Bank Building
13f Midport Tech Center
- --------------------------------------------------------------------------------------------------------------------------
13g Triangle Business Park
13h Buckner Retail Center
13i Walnut Ridge
13j Lone Star Plaza
13k Tantor Office Warehouse
- --------------------------------------------------------------------------------------------------------------------------
14 The Sports Authority 120 115 360 355
15 Springfield Plaza Shopping Center 120 119 360 359
16 600 South Commonwealth Avenue 120 118 240 238
17 Westland 49 Apartments 120 114 360 354
- --------------------------------------------------------------------------------------------------------------------------
19 Westfall Town Center 120 117 360 357
20 Westfield Village Shopping Center 120 119 360 359
21 Forest Cove Apartments 84 83 360 359
22 Hacienda Gardens Apartments 120 119 360 359
- --------------------------------------------------------------------------------------------------------------------------
23 Square One Shopping Center 84 79 360 355
24 Creekstone 120 115 360 355
25 Holiday Inn Chesapeake 276 270 276 270
26 Semoran North 120 116 360 356
27 Westridge & Meadow Ridge Apartments 84 83 360 359
- --------------------------------------------------------------------------------------------------------------------------
28 Hammocks Trails 120 117 360 357
29 Hillcrest Shopping Center 120 115 240 235
30 River Oaks 120 114 360 354
31 Del Coronado Apartments 120 118 360 358
32 Park Place Apartments 120 116 360 356
- --------------------------------------------------------------------------------------------------------------------------
33 Hilltop Ridge Apartments 84 82 360 358
34 The Verandahs at Hunt Club 120 116 360 356
35 Crowne Plaza Worcester 84 84 300 300
36 Crossroads Towne Center 84 80 360 356
37 Aspen View Retirement Residence 120 119 360 359
- --------------------------------------------------------------------------------------------------------------------------
38 Valu Food Shopping Center 120 119 360 359
39 Laurel Valley Apartments 120 116 360 356
40 Sunset Pointe Apartments 120 119 360 359
41 Holiday Inn Virginia Beach 276 270 276 270
42 Airport Atrium Office Building 120 118 360 358
- --------------------------------------------------------------------------------------------------------------------------
43 Plaza at Highlands 120 115 360 355
44 Hayden Plaza 84 83 360 359
45 River Center Shopping Center 120 117 324 321
46 Indian Trace 120 119 300 299
47 Hunters Glen Apartments 84 82 360 358
- --------------------------------------------------------------------------------------------------------------------------
48 Union Hills Village 84 83 360 359
49 Brookside Plaza 120 116 312 308
50 Lincoln Crossing 120 116 360 356
51 Abington Apartments 120 114 360 354
52 SMC-Meterie-408 180 177 180 177
- --------------------------------------------------------------------------------------------------------------------------
53 The Falls on Antoine 84 83 360 359
54 Claridge Apartments 84 81 360 357
55 Crossroads Plaza Shopping Center 120 117 300 297
56 Barrington Park Apartments 84 82 360 358
57 Sugar Creek Plaza 84 83 324 323
- --------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Control Origination Maturity Balloon
No. Property Name Date Date Balance Property Type
==========================================================================================================================
<S> <C> <C> <C> <C>
1 Potrero Center 3/28/97 4/1/17 $22,892,706 Retail - Anchored
2 Elmwood Village 3/31/97 4/1/27 - Multifamily
3 Rivertowne Commons Shopping Center 12/13/96 1/1/07 25,376,202 Retail - Anchored
4 Riverview Plaza Shopping Center 3/25/97 4/1/07 21,094,063 Retail - Anchored
5 Mohawk Hills 3/25/97 4/1/07 19,649,897 Multifamily
- --------------------------------------------------------------------------------------------------------------------------
6 Greenbriar Mall 1/2/97 2/1/07 18,866,727 Retail - Anchored
7 Mobile Festival 9/27/96 10/1/08 17,302,205 Retail - Anchored
8 Parkview Court Apartments 3/26/97 4/1/12 14,951,636 Multifamily
9 Glen Oaks Apartments 2/18/97 3/1/04 17,108,084 Multifamily
10 Oakwood Apartments at the Windsor 11/22/96 12/1/06 14,496,622 Multifamily
- --------------------------------------------------------------------------------------------------------------------------
11 Lenox Suites 2/7/97 3/1/04 13,088,622 Hospitality
12 Larchdale Woods 2/28/97 3/1/07 12,351,762 Multifamily
13 Lincolnshire Portfolio 12/27/96 1/1/07 12,257,104
------------
13a MacArthur Commons 2,362,278 Office
- --------------------------------------------------------------------------------------------------------------------------
13b La Sierra Office Building 2,001,250 Office
13c White Lake Plaza 1,622,395 Retail - Unanchored
13d Parkway West 1,497,595 Office
13e Comerica Bank Building 1,337,138 Office
13f Midport Tech Center 1,176,682 Office
- --------------------------------------------------------------------------------------------------------------------------
13g Triangle Business Park 623,998 Office
13h Buckner Retail Center 561,598 Retail - Unanchored
13i Walnut Ridge 423,427 Office
13j Lone Star Plaza 374,399 Office
13k Tantor Office Warehouse 276,342 Industrial
- --------------------------------------------------------------------------------------------------------------------------
14 The Sports Authority 11/27/96 12/1/06 11,922,232 Retail - Anchored
15 Springfield Plaza Shopping Center 3/13/97 4/1/07 11,849,400 Retail - Anchored
16 600 South Commonwealth Avenue 2/5/97 3/1/07 - Office
17 Westland 49 Apartments 10/29/96 11/1/06 11,531,073 Multifamily
- --------------------------------------------------------------------------------------------------------------------------
19 Westfall Town Center 1/30/97 2/1/07 10,198,713 Retail - Anchored
20 Westfield Village Shopping Center 3/20/97 4/1/07 9,851,741 Retail - Anchored
21 Forest Cove Apartments 3/3/97 4/1/04 10,130,825 Multifamily
22 Hacienda Gardens Apartments 3/19/97 4/1/07 8,507,517 Multifamily
- --------------------------------------------------------------------------------------------------------------------------
23 Square One Shopping Center 11/26/96 12/1/03 8,838,326 Retail - Anchored
24 Creekstone 11/26/96 12/1/06 8,381,552 Multifamily
25 Holiday Inn Chesapeake 10/10/96 11/1/19 - Hospitality
26 Semoran North 12/12/96 1/1/07 8,229,306 Multifamily
27 Westridge & Meadow Ridge Apartments 3/31/97 4/1/04 8,469,582 Multifamily
- --------------------------------------------------------------------------------------------------------------------------
28 Hammocks Trails 1/31/97 2/1/07 8,070,287 Multifamily
29 Hillcrest Shopping Center 11/27/96 12/1/06 6,152,060 Retail - Anchored
30 River Oaks 10/18/96 11/1/06 7,601,874 Multifamily
31 Del Coronado Apartments 2/6/97 3/1/07 7,308,674 Multifamily
32 Park Place Apartments 12/30/96 1/1/07 7,052,153 Multifamily
- --------------------------------------------------------------------------------------------------------------------------
33 Hilltop Ridge Apartments 2/24/97 3/1/04 7,259,363 Multifamily
34 The Verandahs at Hunt Club 12/19/96 1/1/07 6,901,998 Multifamily
35 Crowne Plaza Worcester 4/11/97 5/1/04 6,952,950 Hospitality
36 Crossroads Towne Center 12/12/96 1/1/04 7,198,176 Retail - Anchored
37 Aspen View Retirement Residence 3/21/97 4/1/07 6,831,899 Congregate Care
- --------------------------------------------------------------------------------------------------------------------------
38 Valu Food Shopping Center 3/3/97 4/1/07 6,828,377 Retail - Anchored
39 Laurel Valley Apartments 12/2/96 1/1/07 6,689,165 Multifamily
40 Sunset Pointe Apartments 3/19/97 4/1/07 6,696,538 Multifamily
41 Holiday Inn Virginia Beach 10/10/96 11/1/19 - Hospitality
42 Airport Atrium Office Building 2/6/97 3/1/07 6,549,563 Office
- --------------------------------------------------------------------------------------------------------------------------
43 Plaza at Highlands 11/1/96 12/1/06 6,421,804 Retail - Anchored
44 Hayden Plaza 3/12/97 4/1/04 6,642,616 Retail - Anchored
45 River Center Shopping Center 1/8/97 2/1/07 6,021,898 Retail - Anchored
46 Indian Trace 3/28/97 4/1/07 5,817,168 Retail - Unanchored
47 Hunters Glen Apartments 2/24/97 3/1/04 6,262,613 Multifamily
- --------------------------------------------------------------------------------------------------------------------------
48 Union Hills Village 3/26/97 4/1/04 6,321,046 Retail - Anchored
49 Brookside Plaza 12/31/96 1/1/07 5,654,413 Retail - Unanchored
50 Lincoln Crossing 12/27/96 1/1/07 5,871,733 Retail - Anchored
51 Abington Apartments 10/31/96 11/1/06 5,903,644 Multifamily
52 SMC-Meterie-408 1/16/97 2/1/12 - Retail - Anchored
- --------------------------------------------------------------------------------------------------------------------------
53 The Falls on Antoine 3/13/97 4/1/04 5,986,401 Multifamily
54 Claridge Apartments 1/30/97 2/1/04 5,947,619 Multifamily
55 Crossroads Plaza Shopping Center 1/10/97 2/1/07 5,292,223 Retail - Anchored
56 Barrington Park Apartments 2/24/97 3/1/04 5,864,603 Multifamily
57 Sugar Creek Plaza 3/12/97 4/1/04 5,586,802 Retail - Anchored
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Control
No. Property Name Prepayment Provisions
=============================================================================================================
<S> <C>
1 Potrero Center L(10),YM1%(9.67),O(.33)
2 Elmwood Village L(4),YM1%(11),1%(14.75),O(.25)
3 Rivertowne Commons Shopping Center L(4),YM1%(2),3%(1),2%(1),1%(1.5),O(.5)
4 Riverview Plaza Shopping Center L(4),YM1%(5.75),O(.25)
5 Mohawk Hills L(0),YM1%(9.5),O(.5)
- -------------------------------------------------------------------------------------------------------------
6 Greenbriar Mall L(5),YM1%(2),3%(1),2%(1),O(1)
7 Mobile Festival L(3),YM1%(7),1%(1.5),O(.5)
8 Parkview Court Apartments L(8),YM1%(6.5),O(.5) or Defeasance at Borrower's option
9 Glen Oaks Apartments L(3),YM1%(3.5),O(.5) or Defeasance at lender's option
10 Oakwood Apartments at the Windsor L(4),YM1%(6)
- -------------------------------------------------------------------------------------------------------------
11 Lenox Suites L(0),YM1%(6.5),O(.5) or Defeasance at lender's option
12 Larchdale Woods L(4),YM1%(5.5),O(.5)
13 Lincolnshire Portfolio L(3),YM1%(6.5),O(.5)
13a MacArthur Commons
- -------------------------------------------------------------------------------------------------------------
13b La Sierra Office Building
13c White Lake Plaza
13d Parkway West
13e Comerica Bank Building
13f Midport Tech Center
- -------------------------------------------------------------------------------------------------------------
13g Triangle Business Park
13h Buckner Retail Center
13i Walnut Ridge
13j Lone Star Plaza
13k Tantor Office Warehouse
- -------------------------------------------------------------------------------------------------------------
14 The Sports Authority L(3),YM1%(6.5),O(.5) or Defeasance at lender's option
15 Springfield Plaza Shopping Center L(4),YM1%(5.5),O(.5) or Defeasance at lender's option
16 600 South Commonwealth Avenue L(4),YM1%(5.5),O(.5)
17 Westland 49 Apartments L(3),YM1%(6.5),O(.5)
- -------------------------------------------------------------------------------------------------------------
19 Westfall Town Center L(3),YM1%(6.5),O(.5) or Defeasance at lender's option
20 Westfield Village Shopping Center L(4),YM1%(5.5),O(.5) or Defeasance at lender's option
21 Forest Cove Apartments L(4),YM1%(2.5),O(.5) or Defeasance at lender's option
22 Hacienda Gardens Apartments L(4),YM1%(3),3%(1),2%(1),1%(.5),O(.5)
- -------------------------------------------------------------------------------------------------------------
23 Square One Shopping Center L(3),YM1%(3.5),O(.5)
24 Creekstone L(2),YM1%(4),2%(1),1%(1),O(2)
25 Holiday Inn Chesapeake L(0),YM1%(15),O(8) or Defeasance at lender's option
26 Semoran North L(5),O(5)
27 Westridge & Meadow Ridge Apartments L(6.5),O(.5)
- -------------------------------------------------------------------------------------------------------------
28 Hammocks Trails L(5),YM1%(4.5),O(.5)
29 Hillcrest Shopping Center L(4),YM1%(5.5),O(.5)
30 River Oaks L(2),YM1%(4),2%(1),1%(1),O(2)
31 Del Coronado Apartments L(4),YM1%(5.5),O(.5)
32 Park Place Apartments L(0),YM1%(9.75),O(.25)
- -------------------------------------------------------------------------------------------------------------
33 Hilltop Ridge Apartments L(2),YM1%(4.5),O(.5) or Defeasance at lender's option
34 The Verandahs at Hunt Club L(5),YM1%(4.5),O(.5)
35 Crowne Plaza Worcester L(0),YM1%(6.5),O(.5) or Defeasance at Borrower's option
36 Crossroads Towne Center L(3),YM1%(3.5),O(.5)
37 Aspen View Retirement Residence L(4),YM1%(5.75),O(.25)
- -------------------------------------------------------------------------------------------------------------
38 Valu Food Shopping Center L(5),5%(1),4%(1),3%(1),2%(1),1%(.5),O(.5) or Defeasance at lender's option
39 Laurel Valley Apartments L(3),YM1%(6.5),O(.5)
40 Sunset Pointe Apartments L(4),YM1%(3),3%(1),2%(1),1%(.5),O(.5)
41 Holiday Inn Virginia Beach L(0),YM1%(15),O(8) or Defeasance at lender's option
42 Airport Atrium Office Building L(3),YM1%(7)
- -------------------------------------------------------------------------------------------------------------
43 Plaza at Highlands L(3),YM1%(6.5),O(.5)
44 Hayden Plaza L(4),YM1%(2.5),O(.5)
45 River Center Shopping Center L(5),YM1%(4.5),O(.5)
46 Indian Trace L(4),YM1%(5.5),O(.5)
47 Hunters Glen Apartments L(2),YM1%(4.5),O(.5) or Defeasance at lender's option
- -------------------------------------------------------------------------------------------------------------
48 Union Hills Village L(2.5),YM1%(2.5),2%(1),O(1)
49 Brookside Plaza L(3),YM1%(6.5),O(.5)
50 Lincoln Crossing L(3),YM1%(6.5),O(.5) or Defeasance at lender's option
51 Abington Apartments L(3),YM1%(6.5),O(.5)
52 SMC-Meterie-408 L(1),YM1%(8.5),5%(1),4%(1),3%(1),2%(1),1%(1),O(.5)
- -------------------------------------------------------------------------------------------------------------
53 The Falls on Antoine L(3),YM1%(3.5),O(.5) or Defeasance at lender's option
54 Claridge Apartments L(3),YM1%(3.5),O(.5) or Defeasance at lender's option
55 Crossroads Plaza Shopping Center L(3),YM1%(6.5),O(.5) or Defeasance at lender's option
56 Barrington Park Apartments L(2),YM1%(4.5),O(.5) or Defeasance at lender's option
57 Sugar Creek Plaza L(2),YM1%(4.5),O(.5) or Defeasance at lender's option
- -------------------------------------------------------------------------------------------------------------
<CAPTION>
Control Annual Net Appraised
No. Property Name Debt Service Cash Flow DSCR Value
========================================================================================================================
<S> <C> <C> <C> <C>
1 Potrero Center $3,096,853 $3,870,656 1.25x $45,750,000
2 Elmwood Village 2,747,704 3,447,694 1.25 40,000,000
3 Rivertowne Commons Shopping Center 2,772,104 3,562,064 1.28 40,000,000
4 Riverview Plaza Shopping Center 2,285,022 2,899,937 1.27 33,000,000
5 Mohawk Hills 2,005,882 2,561,370 1.28 28,400,000
- ------------------------------------------------------------------------------------------------------------------------
6 Greenbriar Mall 2,010,698 2,716,258 1.35 34,000,000
7 Mobile Festival 1,969,901 2,634,222 1.34 29,000,000
8 Parkview Court Apartments 1,778,554 2,261,624 1.27 25,250,000
9 Glen Oaks Apartments 1,669,675 2,085,515 1.25 24,600,000
10 Oakwood Apartments at the Windsor 1,451,750 1,836,674 1.27 23,000,000
- ------------------------------------------------------------------------------------------------------------------------
11 Lenox Suites 1,505,141 2,124,485 1.41 26,500,000
12 Larchdale Woods 1,256,227 1,598,009 1.27 18,000,000
13 Lincolnshire Portfolio 1,296,877 1,844,076 1.42 21,390,000
---------------------------------------------------------
13a MacArthur Commons 249,944 332,007 1.33 4,100,000
- ------------------------------------------------------------------------------------------------------------------------
13b La Sierra Office Building 211,745 261,323 1.23 3,200,000
13c White Lake Plaza 171,659 289,314 1.69 2,580,000
13d Parkway West 158,455 217,988 1.38 2,700,000
13e Comerica Bank Building 141,477 178,945 1.26 2,500,000
13f Midport Tech Center 124,500 191,613 1.54 1,900,000
- ------------------------------------------------------------------------------------------------------------------------
13g Triangle Business Park 66,023 96,126 1.46 1,050,000
13h Buckner Retail Center 59,421 100,545 1.69 900,000
13i Walnut Ridge 44,801 69,604 1.55 1,200,000
13j Lone Star Plaza 39,614 59,166 1.49 820,000
13k Tantor Office Warehouse 29,239 47,445 1.62 440,000
- ------------------------------------------------------------------------------------------------------------------------
14 The Sports Authority 1,234,170 1,695,887 1.37 19,300,000
15 Springfield Plaza Shopping Center 1,251,017 1,599,179 1.28 18,800,000
16 600 South Commonwealth Avenue 1,426,731 2,330,002 1.63 27,000,000
17 Westland 49 Apartments 1,196,742 1,923,492 1.61 17,300,000
- ------------------------------------------------------------------------------------------------------------------------
19 Westfall Town Center 1,086,915 1,390,355 1.28 15,800,000
20 Westfield Village Shopping Center 990,868 1,284,788 1.30 15,130,000
21 Forest Cove Apartments 986,337 1,206,498 1.22 13,900,000
22 Hacienda Gardens Apartments 889,095 1,066,928 1.20 13,000,000
- ------------------------------------------------------------------------------------------------------------------------
23 Square One Shopping Center 865,919 1,136,635 1.31 13,900,000
24 Creekstone 852,440 1,066,769 1.25 12,500,000
25 Holiday Inn Chesapeake 998,705 1,476,002 1.48 15,800,000
26 Semoran North 846,272 1,135,160 1.34 12,500,000
27 Westridge & Meadow Ridge Apartments 831,927 1,105,030 1.33 12,500,000
- ------------------------------------------------------------------------------------------------------------------------
28 Hammocks Trails 839,101 1,056,583 1.26 13,500,000
29 Hillcrest Shopping Center 909,487 1,385,705 1.52 17,000,000
30 River Oaks 796,188 1,060,630 1.33 11,400,000
31 Del Coronado Apartments 754,919 986,630 1.31 11,000,000
32 Park Place Apartments 739,958 1,017,428 1.37 10,500,000
- ------------------------------------------------------------------------------------------------------------------------
33 Hilltop Ridge Apartments 690,326 888,894 1.29 9,800,000
34 The Verandahs at Hunt Club 709,776 962,874 1.36 9,850,000
35 Crowne Plaza Worcester 800,882 1,248,179 1.56 15,500,000
36 Crossroads Towne Center 718,997 977,601 1.36 10,400,000
37 Aspen View Retirement Residence 709,821 948,967 1.34 10,800,000
- ------------------------------------------------------------------------------------------------------------------------
38 Valu Food Shopping Center 708,055 940,904 1.33 10,300,000
39 Laurel Valley Apartments 674,286 898,175 1.33 10,250,000
40 Sunset Pointe Apartments 699,835 839,781 1.20 9,990,000
41 Holiday Inn Virginia Beach 788,451 1,362,620 1.73 12,500,000
42 Airport Atrium Office Building 691,981 893,565 1.29 10,500,000
- ------------------------------------------------------------------------------------------------------------------------
43 Plaza at Highlands 680,944 883,152 1.30 9,900,000
44 Hayden Plaza 675,143 864,783 1.28 10,525,000
45 River Center Shopping Center 691,425 874,890 1.27 10,000,000
46 Indian Trace 689,819 930,481 1.35 11,000,000
47 Hunters Glen Apartments 595,540 718,943 1.21 9,000,000
- ------------------------------------------------------------------------------------------------------------------------
48 Union Hills Village 646,506 839,702 1.30 9,000,000
49 Brookside Plaza 658,275 846,726 1.29 9,400,000
50 Lincoln Crossing 598,950 770,645 1.29 9,000,000
51 Abington Apartments 614,724 802,784 1.31 8,350,000
52 SMC-Meterie-408 794,222 993,099 1.25 11,850,000
- ------------------------------------------------------------------------------------------------------------------------
53 The Falls on Antoine 577,676 726,983 1.26 8,200,000
54 Claridge Apartments 578,593 722,448 1.25 8,050,000
55 Crossroads Plaza Shopping Center 637,156 823,896 1.29 8,800,000
56 Barrington Park Apartments 557,692 668,594 1.20 8,000,000
57 Sugar Creek Plaza 595,836 790,369 1.33 8,150,000
- ------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Cut-off Scheduled
Control Appraisal Date Maturity
No. Property Name Year LTV Date LTV
==========================================================================================================
<S> <C> <C> <C>
1 Potrero Center 1997 73.0 50.0
2 Elmwood Village 1997 75.0 -
3 Rivertowne Commons Shopping Center 1996 71.8 63.4
4 Riverview Plaza Shopping Center 1997 72.7 63.9
5 Mohawk Hills 1996 78.3 69.2
- ----------------------------------------------------------------------------------------------------------
6 Greenbriar Mall 1996 62.0 55.5
7 Mobile Festival 1996 68.7 59.7
8 Parkview Court Apartments 1997 75.2 59.2
9 Glen Oaks Apartments 1997 74.7 69.5
10 Oakwood Apartments at the Windsor 1996 71.5 63.0
- ----------------------------------------------------------------------------------------------------------
11 Lenox Suites 1997 54.6 49.4
12 Larchdale Woods 1996 77.7 68.6
13 Lincolnshire Portfolio 64.1 57.3
--------------------------
13a MacArthur Commons 1996 64.5 57.6
- ----------------------------------------------------------------------------------------------------------
13b La Sierra Office Building 1996 70.0 62.5
13c White Lake Plaza 1996 70.4 62.9
13d Parkway West 1996 62.1 55.5
13e Comerica Bank Building 1996 59.9 53.5
13f Midport Tech Center 1996 69.3 61.9
- ----------------------------------------------------------------------------------------------------------
13g Triangle Business Park 1996 66.5 59.4
13h Buckner Retail Center 1996 69.8 62.4
13i Walnut Ridge 1996 39.5 35.3
13j Lone Star Plaza 1996 51.1 45.7
13k Tantor Office Warehouse 1996 70.3 62.8
- ----------------------------------------------------------------------------------------------------------
14 The Sports Authority 1996 69.5 61.8
15 Springfield Plaza Shopping Center 1997 70.7 63.0
16 600 South Commonwealth Avenue 1996 48.0 -
17 Westland 49 Apartments 1997 74.9 66.7
- ----------------------------------------------------------------------------------------------------------
19 Westfall Town Center 1997 72.2 64.5
20 Westfield Village Shopping Center 1997 74.0 65.1
21 Forest Cove Apartments 1997 78.4 72.9
22 Hacienda Gardens Apartments 1996 73.6 65.4
- ----------------------------------------------------------------------------------------------------------
23 Square One Shopping Center 1996 68.1 63.6
24 Creekstone 1996 75.8 67.1
25 Holiday Inn Chesapeake 1996 59.7 -
26 Semoran North 1996 74.2 65.8
27 Westridge & Meadow Ridge Apartments 1997 72.8 67.8
- ----------------------------------------------------------------------------------------------------------
28 Hammocks Trails 1997 67.2 59.8
29 Hillcrest Shopping Center 1996 51.1 36.2
30 River Oaks 1996 74.7 66.7
31 Del Coronado Apartments 1996 74.9 66.4
32 Park Place Apartments 1996 75.3 67.2
- ----------------------------------------------------------------------------------------------------------
33 Hilltop Ridge Apartments 1997 79.9 74.1
34 The Verandahs at Hunt Club 1996 79.9 70.1
35 Crowne Plaza Worcester 1996 49.7 44.9
36 Crossroads Towne Center 1996 74.0 69.2
37 Aspen View Retirement Residence 1997 71.3 63.3
- ----------------------------------------------------------------------------------------------------------
38 Valu Food Shopping Center 1997 74.7 66.3
39 Laurel Valley Apartments 1996 74.0 65.3
40 Sunset Pointe Apartments 1997 75.4 67.0
41 Holiday Inn Virginia Beach 1996 59.6 -
42 Airport Atrium Office Building 1996 69.9 62.4
- ----------------------------------------------------------------------------------------------------------
43 Plaza at Highlands 1996 72.5 64.9
44 Hayden Plaza 1996 67.4 63.1
45 River Center Shopping Center 1996 69.9 60.2
46 Indian Trace 1997 62.2 52.9
47 Hunters Glen Apartments 1997 75.1 69.6
- ----------------------------------------------------------------------------------------------------------
48 Union Hills Village 1997 75.0 70.2
49 Brookside Plaza 1996 71.2 60.2
50 Lincoln Crossing 1996 73.7 65.2
51 Abington Apartments 1996 79.4 70.7
52 SMC-Meterie-408 1996 54.9 -
- ----------------------------------------------------------------------------------------------------------
53 The Falls on Antoine 1996 78.6 73.0
54 Claridge Apartments 1997 79.4 73.9
55 Crossroads Plaza Shopping Center 1996 72.5 60.1
56 Barrington Park Apartments 1997 79.1 73.3
57 Sugar Creek Plaza 1996 74.9 68.5
- ----------------------------------------------------------------------------------------------------------
<CAPTION>
Loan per
Sq Ft, Unit, Sq Ft, Unit,
Control Year Bed, Pad Bed, Pad
No. Property Name Built or Room or Room
======================================================================================================================
<S> <C> <C> <C>
1 Potrero Center 1968 227,146 Sq Foot 147.08
2 Elmwood Village 1952 666 Unit 45,045.05
3 Rivertowne Commons Shopping Center 1987 380,968 Sq Foot 75.60
4 Riverview Plaza Shopping Center 1989 204,362 Sq Foot 117.44
5 Mohawk Hills 1970 564 Unit 39,450.35
- ----------------------------------------------------------------------------------------------------------------------
6 Greenbriar Mall 1965 677,095 Sq Foot 31.20
7 Mobile Festival 1986 525,505 Sq Foot 38.06
8 Parkview Court Apartments 1963-68 960 Unit 19,791.67
9 Glen Oaks Apartments 1979 463 Unit 39,740.82
10 Oakwood Apartments at the Windsor 1964 318 Unit 51,886.79
- ----------------------------------------------------------------------------------------------------------------------
11 Lenox Suites 1920's 324 Room 44,753.09
12 Larchdale Woods 1967 526 Unit 26,615.97
13 Lincolnshire Portfolio 541,058 Sq Foot 25.41
------- ---------
13a MacArthur Commons 1967 113,397 Sq Foot 23.37
- ----------------------------------------------------------------------------------------------------------------------
13b La Sierra Office Building 1983 57,514 Sq Foot 39.03
13c White Lake Plaza 1967 42,400 Sq Foot 42.92
13d Parkway West 1984 41,563 Sq Foot 40.42
13e Comerica Bank Building 1980 72,445 Sq Foot 20.71
13f Midport Tech Center 1985 54,328 Sq Foot 24.30
- ----------------------------------------------------------------------------------------------------------------------
13g Triangle Business Park 1984 56,436 Sq Foot 12.40
13h Buckner Retail Center 1964 12,404 Sq Foot 50.79
13i Walnut Ridge 1985 26,570 Sq Foot 17.88
13j Lone Star Plaza 1985 34,001 Sq Foot 12.35
13k Tantor Office Warehouse 1985 30,000 Sq Foot 10.33
- ----------------------------------------------------------------------------------------------------------------------
14 The Sports Authority 1974 300,121 Sq Foot 44.82
15 Springfield Plaza Shopping Center 1958 424,589 Sq Foot 31.32
16 600 South Commonwealth Avenue 1971 316,768 Sq Foot 41.04
17 Westland 49 Apartments 1971 433 Unit 30,023.09
- ----------------------------------------------------------------------------------------------------------------------
19 Westfall Town Center 1994 204,054 Sq Foot 55.97
20 Westfield Village Shopping Center 1994 142,916 Sq Foot 78.37
21 Forest Cove Apartments 1975 301 Unit 36,212.62
22 Hacienda Gardens Apartments 1974 240 Unit 39,891.67
- ----------------------------------------------------------------------------------------------------------------------
23 Square One Shopping Center 1989 196,193 Sq Foot 48.42
24 Creekstone 1986 316 Unit 30,063.29
25 Holiday Inn Chesapeake 1986 230 Room 41,304.35
26 Semoran North 1993 348 Unit 26,724.14
27 Westridge & Meadow Ridge Apartments 1979 624 Unit 14,583.33
- ----------------------------------------------------------------------------------------------------------------------
28 Hammocks Trails 1987 312 Unit 29,147.48
29 Hillcrest Shopping Center 1965 281,577 Sq Foot 31.07
30 River Oaks 1984 324 Unit 26,388.89
31 Del Coronado Apartments 1984 198 Unit 41,666.67
32 Park Place Apartments 1984 260 Unit 30,492.31
- ----------------------------------------------------------------------------------------------------------------------
33 Hilltop Ridge Apartments 1978 370 Unit 21,189.19
34 The Verandahs at Hunt Club 1985 210 Unit 37,142.86
35 Crowne Plaza Worcester 1981 243 Room 31,687.24
36 Crossroads Towne Center 1987 152,532 Sq Foot 50.57
37 Aspen View Retirement Residence 1996 125 Bed 61,600.00
- ----------------------------------------------------------------------------------------------------------------------
38 Valu Food Shopping Center 1987 114,748 Sq Foot 67.10
39 Laurel Valley Apartments 1972 265 Unit 28,679.25
40 Sunset Pointe Apartments 1973 292 Unit 25,808.22
41 Holiday Inn Virginia Beach 1995 143 Room 52,447.55
42 Airport Atrium Office Building 1990 95,034 Sq Foot 77.34
- ----------------------------------------------------------------------------------------------------------------------
43 Plaza at Highlands 1988 68,980 Sq Foot 104.38
44 Hayden Plaza 1966,75 157,304 Sq Foot 45.14
45 River Center Shopping Center 1986 111,548 Sq Foot 62.75
46 Indian Trace 1987 91,924 Sq Foot 74.52
47 Hunters Glen Apartments 1976 385 Unit 17,567.60
- ----------------------------------------------------------------------------------------------------------------------
48 Union Hills Village 1988 106,836 Sq Foot 63.18
49 Brookside Plaza 1989 94,768 Sq Foot 70.86
50 Lincoln Crossing 1994 98,199 Sq Foot 67.72
51 Abington Apartments 1973 384 Unit 17,317.71
52 SMC-Meterie-408 1971 116,729 Sq Foot 56.20
- ----------------------------------------------------------------------------------------------------------------------
53 The Falls on Antoine 1984 348 Unit 18,534.48
54 Claridge Apartments 1984 173 Unit 36,994.22
55 Crossroads Plaza Shopping Center 1990 149,279 Sq Foot 42.87
56 Barrington Park Apartments 1974 353 Unit 17,942.44
57 Sugar Creek Plaza 1988 176,455 Sq Foot 34.63
- ----------------------------------------------------------------------------------------------------------------------
<CAPTION>
Control Occupancy Underwriting
No. Property Name Percentage Reserves
========================================================================================
<S> <C> <C>
1 Potrero Center 94.1% 0.08 Sq Foot
2 Elmwood Village 97.5 200.00 Unit
3 Rivertowne Commons Shopping Center 92.1 0.16 Sq Foot
4 Riverview Plaza Shopping Center 99.4 0.10 Sq Foot
5 Mohawk Hills 97.0 202.00 Unit
- ----------------------------------------------------------------------------------------
6 Greenbriar Mall 91.8 0.16 Sq Foot
7 Mobile Festival 95.1 0.15 Sq Foot
8 Parkview Court Apartments 95.0 250.00 Unit
9 Glen Oaks Apartments 94.6 250.00 Unit
10 Oakwood Apartments at the Windsor 97.8 248.00 Unit
- ----------------------------------------------------------------------------------------
11 Lenox Suites NAP 5% of gross revenue
12 Larchdale Woods 97.0 200.00 Unit
13 Lincolnshire Portfolio 87.1 0.16 Sq Foot
-------
13a MacArthur Commons 87.9 0.15 Sq Foot
- ----------------------------------------------------------------------------------------
13b La Sierra Office Building 85.3 0.15 Sq Foot
13c White Lake Plaza 82.8 0.20 Sq Foot
13d Parkway West 89.0 0.15 Sq Foot
13e Comerica Bank Building 80.2 0.15 Sq Foot
13f Midport Tech Center 96.2 0.15 Sq Foot
- ----------------------------------------------------------------------------------------
13g Triangle Business Park 60.7 0.15 Sq Foot
13h Buckner Retail Center 100.0 0.20 Sq Foot
13i Walnut Ridge 100.0 0.15 Sq Foot
13j Lone Star Plaza 100.0 0.15 Sq Foot
13k Tantor Office Warehouse 100.0 0.15 Sq Foot
- ----------------------------------------------------------------------------------------
14 The Sports Authority 98.0 0.15 Sq Foot
15 Springfield Plaza Shopping Center 93.1 0.15 Sq Foot
16 600 South Commonwealth Avenue 59.5 0.25 Sq Foot
17 Westland 49 Apartments 94.7 200.00 Unit
- ----------------------------------------------------------------------------------------
19 Westfall Town Center 100.0 0.10 Sq Foot
20 Westfield Village Shopping Center 100.0 0.15 Sq Foot
21 Forest Cove Apartments 98.3 226.25 Unit
22 Hacienda Gardens Apartments 90.4 315.31 Unit
- ----------------------------------------------------------------------------------------
23 Square One Shopping Center 93.9 0.15 Sq Foot
24 Creekstone 94.9 204.00 Unit
25 Holiday Inn Chesapeake NAP 4% of gross revenue
26 Semoran North 94.8 200.00 Unit
27 Westridge & Meadow Ridge Apartments 96.0 250.00 Unit
- ----------------------------------------------------------------------------------------
28 Hammocks Trails 92.0 235.00 Unit
29 Hillcrest Shopping Center 90.8 0.14 Sq Foot
30 River Oaks 98.5 200.00 Unit
31 Del Coronado Apartments 97.0 273.31 Unit
32 Park Place Apartments 97.7 242.00 Unit
- ----------------------------------------------------------------------------------------
33 Hilltop Ridge Apartments 91.9 247.84 Unit
34 The Verandahs at Hunt Club 96.2 225.00 Unit
35 Crowne Plaza Worcester NAP 4% of gross revenue
36 Crossroads Towne Center 95.3 0.19 Sq Foot
37 Aspen View Retirement Residence 93.0 200.00 Bed
- ----------------------------------------------------------------------------------------
38 Valu Food Shopping Center 92.0 0.15 Sq Foot
39 Laurel Valley Apartments 97.0 200.00 Unit
40 Sunset Pointe Apartments 88.0 200.00 Unit
41 Holiday Inn Virginia Beach NAP 4% of gross revenue
42 Airport Atrium Office Building 96.0 0.15 Sq Foot
- ----------------------------------------------------------------------------------------
43 Plaza at Highlands 100.0 0.15 Sq Foot
44 Hayden Plaza 95.0 0.15 Sq Foot
45 River Center Shopping Center 98.7 0.15 Sq Foot
46 Indian Trace 100.0 0.15 Sq Foot
47 Hunters Glen Apartments 84.7 200.00 Unit
- ----------------------------------------------------------------------------------------
48 Union Hills Village 95.0 0.10 Sq Foot
49 Brookside Plaza 100.0 0.13 Sq Foot
50 Lincoln Crossing 97.0 0.15 Sq Foot
51 Abington Apartments 92.5 211.00 Unit
52 SMC-Meterie-408 100.0 0.10 Sq Foot
- ----------------------------------------------------------------------------------------
53 The Falls on Antoine 93.4 207.00 Unit
54 Claridge Apartments 93.0 200.00 Unit
55 Crossroads Plaza Shopping Center 100.0 0.10 Sq Foot
56 Barrington Park Apartments 88.1 267.00 Unit
57 Sugar Creek Plaza 99.3 0.10 Sq Foot
- ----------------------------------------------------------------------------------------
<CAPTION>
Largest Retail Tenant
-----------------------------------------------------------------
Tenant Lease
Control Administrative Area Leased Exp Date Control
No. Property Name Cost Rate Tenant Name (Sq. Ft.) (Sq. Ft.) No.
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
1 Potrero Center 0.1350 Safeway 60,294 06/21 1
2 Elmwood Village 0.1350 2
3 Rivertowne Commons Shopping Center 0.1350 Kmart 84,640 01/13 3
4 Riverview Plaza Shopping Center 0.1350 United Artist Theatre 42,055 05/12 4
5 Mohawk Hills 0.1350 5
- ------------------------------------------------------------------------------------------------------------------------------------
6 Greenbriar Mall 0.2100 Rich's 180,000 06/99 6
7 Mobile Festival 0.1350 WalMart 104,339 11/06 7
8 Parkview Court Apartments 0.2100 8
9 Glen Oaks Apartments 0.1350 9
10 Oakwood Apartments at the Windsor 0.1850 10
- ------------------------------------------------------------------------------------------------------------------------------------
11 Lenox Suites 0.1350 11
12 Larchdale Woods 0.1350 12
13 Lincolnshire Portfolio 0.1350 13
13a MacArthur Commons 13a
- ------------------------------------------------------------------------------------------------------------------------------------
13b La Sierra Office Building 13b
13c White Lake Plaza Dallas Health Club 21,600 11/03 13c
13d Parkway West 13d
13e Comerica Bank Building 13e
13f Midport Tech Center 13f
- ------------------------------------------------------------------------------------------------------------------------------------
13g Triangle Business Park 13g
13h Buckner Retail Center Blockbuster Video 5,760 01/03 13h
13i Walnut Ridge 13i
13j Lone Star Plaza 13j
13k Tantor Office Warehouse 13k
- ------------------------------------------------------------------------------------------------------------------------------------
14 The Sports Authority 0.1350 Uptons (Byrons) 91,500 12/02 14
15 Springfield Plaza Shopping Center 0.1350 K-mart 88,425 11/01 15
16 600 South Commonwealth Avenue 0.1350 16
17 Westland 49 Apartments 0.1350 17
- ------------------------------------------------------------------------------------------------------------------------------------
19 Westfall Town Center 0.1350 K-mart 115,366 09/18 19
20 Westfield Village Shopping Center 0.2100 Best Buy Co., Inc. 51,409 01/11 20
21 Forest Cove Apartments 0.1350 21
22 Hacienda Gardens Apartments 0.1350 22
- ------------------------------------------------------------------------------------------------------------------------------------
23 Square One Shopping Center 0.1350 Home Depot 101,915 01/05 23
24 Creekstone 0.1350 24
25 Holiday Inn Chesapeake 0.1350 25
26 Semoran North 0.1350 26
27 Westridge & Meadow Ridge Apartments 0.1350 27
- ------------------------------------------------------------------------------------------------------------------------------------
28 Hammocks Trails 0.1350 28
29 Hillcrest Shopping Center 0.1850 Venture Dept. Store 90,303 01/00 29
30 River Oaks 0.1350 30
31 Del Coronado Apartments 0.2100 31
32 Park Place Apartments 0.1800 32
- ------------------------------------------------------------------------------------------------------------------------------------
33 Hilltop Ridge Apartments 0.1350 33
34 The Verandahs at Hunt Club 0.1350 34
35 Crowne Plaza Worcester 0.1350 35
36 Crossroads Towne Center 0.2100 ABCO Foods 43,155 01/07 36
37 Aspen View Retirement Residence 0.1350 37
- ------------------------------------------------------------------------------------------------------------------------------------
38 Valu Food Shopping Center 0.1350 Valu-Foods 43,000 06/07 38
39 Laurel Valley Apartments 0.2150 39
40 Sunset Pointe Apartments 0.1350 40
41 Holiday Inn Virginia Beach 0.1350 41
42 Airport Atrium Office Building 0.1350 42
- ------------------------------------------------------------------------------------------------------------------------------------
43 Plaza at Highlands 0.2100 Target (Not part of Mortgaged Property) 101,730 NAV 43
44 Hayden Plaza 0.2100 Drug Emporium 29,900 10/00 44
45 River Center Shopping Center 0.1800 ABCO 34,933 10/06 45
46 Indian Trace 0.1350 Wometco 26,328 09/08 46
47 Hunters Glen Apartments 0.1350 47
- ------------------------------------------------------------------------------------------------------------------------------------
48 Union Hills Village 0.2100 Safeway 47,036 10/07 48
49 Brookside Plaza 0.1350 Sears Hardware 22,620 10/04 49
50 Lincoln Crossing 0.1350 Petsmart 25,177 01/09 50
51 Abington Apartments 0.1850 51
52 SMC-Meterie-408 0.1350 Service Merchandise 82,630 02/12 52
- ------------------------------------------------------------------------------------------------------------------------------------
53 The Falls on Antoine 0.1350 53
54 Claridge Apartments 0.1350 54
55 Crossroads Plaza Shopping Center 0.1350 K-mart 86,479 04/16 55
56 Barrington Park Apartments 0.1350 56
57 Sugar Creek Plaza 0.1350 Waccama 75,000 11/98 57
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Control Zip
No. Property Name Address City State Code
===================================================================================================================================
<S> <C> <C> <C> <C>
58 Continental Shopping Plaza NWC Int. 19/ Continental Road Green Valley AZ 85614
59 Chisholm West Shopping Center 1231 Garth Brooks Blvd. Yukon OK 73085
60 Caprock Apartments 6022 Caprock Court El Paso TX 75154
61 Cleveland Street Square 16505 Redmond Way Redmond WA 98052
62 3307 Northland Office Building 3307 Northland Drive Austin TX 78731
- -----------------------------------------------------------------------------------------------------------------------------------
63 Palm Terrace 55 East Ray Road Chandler AZ 85225
64 1, 5, 13 Branch Street 1,5,13 Branch Street Methuen MA 01844
65 Galleria Shopping Center 9600 N. Kings Highway Myrtle Beach SC 29572
66 La Mancha Apartments 102 La Mancha Drive Asheville NC 28805
67 State Line Shopping Center 130 Elm Street Enfield CT 06082
- -----------------------------------------------------------------------------------------------------------------------------------
68 Parsippany Hampton Inn 3535 Route 46 and Cherry Hill Road Parsippany NJ 07054
69 Page Plaza 5100 South Cleveland Avenue Fort Myers FL 33907
70 Bucks County Office Center 1200 New Rodgers Road Bristol Township PA 19056
71 A1 Self Storage (Loan Level)
- -----------------------------------------------------------------------------------------------------------------------------------
71a A1 Self Storage: Baylor 2636 Baylor Drive Albuquerque NM 87106
71b A1 Self Storage: Clark 1311 Clark Road Santa Fe NM 87505
71c A1 Self Storage: Pacheco 661 & 789 W. San Mateo Road Santa Fe NM 87505
71d A1 Self Storage: Pinon 2000 Pinon St. Santa Fe NM 87505
71e A1 Self Storage: San Mateo 5115 San Mateo Blvd. N.E. Albuquerque NM 87109
- -----------------------------------------------------------------------------------------------------------------------------------
71f A1 Self Storage: Westside 116 Industrial Park Place Rio Rancho NM 87124
72 Comfort Inn - Elizabethtown 1043 Executive Drive Elizabethtown KY 42701
73 McDowell Marketplace 340 & 530 East McDowell Road Phoenix AZ 85004
74 Lawndale Square Apartments 3104 Lawndale Drive Greensboro NC 27408
- -----------------------------------------------------------------------------------------------------------------------------------
75 Woodbridge Plaza 1550 St. Georges Avenue (RT 35) Woodbridge NJ 07001
76 Marketplace Mall 2101 Peters Creek Parkway Winston-Salem NC 27127
77 Boulder Ridge 11990 South Boulder Road Lafayette CO 80026
78 Marriot Courtyard - Tampa 13575 Cypress Glenn Lane Tampa FL 33637
79 Magnolia Centre / Park Centre 1203 Governors Sq. & 124 Mariott Drive Tallahassee FL 32301
- -----------------------------------------------------------------------------------------------------------------------------------
80 ABCO Plaza 710-826 East Union Hills Drive Phoenix AZ 85024
81 Montrose Shopping Center Randolph Rd. & Nebel St. Rockville MD 20852
82 Southwind Plaza Shopping Center 1177 North Bragg Blvd. Spring Lake NC 23462
83 The Crossroads Apartments 2102 West Loop 289 Lubbock TX 79407
84 Holiday Inn Frisco 1129 N. Summit Boulevard Frisco CO 80443
- -----------------------------------------------------------------------------------------------------------------------------------
85 Barkley Ridge Apartments Blurgrass Ave & Alexandria Pike Newport KY 41071
86 Holiday Inn Monroeville 2750 Mosside Boulevard Monroeville PA 15146
87 Hampton Inn - Newport News 12251 Jefferson Avenue @ I64 Newport News VA 23606
88 Bentwood Apartments 3201 West Loop 289 Lubbock TX 79407
89 Landmark Apartments 235 37th Street East Tuscaloosa AL 35405
- -----------------------------------------------------------------------------------------------------------------------------------
90 8 A-E Industrial Way 8 A-E Industrial Way Salem NH 03079
91 Ramada Inn - East Windsor 399 Monmouth Street East Windsor NJ 08520
92 Daytona Beach Mall 90 Nova Road @ Int'l Spdwy Blvd Daytona Beach FL 32114
93 Broadmoor Apartments 4524 Highway 39 North Meridian MS 39301
94 Aurora Highlands Shopping Center 1790 South Buckley Road Aurora CO 80014
- -----------------------------------------------------------------------------------------------------------------------------------
95 Kirby Richmond Shopping Center 3401 Kirby Drive Houston TX 77098
96 Woods on the Fairway Apartments 8311 FM 1960 East Atascocita TX 77346
97 Ashland Towne Square Apartments 204 Kings Arms Street Ashland VA 23005
98 Marina Del Rey Apartments 1713 Dove Loop Road Grapevine TX 76051
99 90 & 94-104 Glenn Street 90, 94-104 Glenn St. Lawrence MA 01840
- -----------------------------------------------------------------------------------------------------------------------------------
100 Food 4 Less 500 Hacienda/Melrose Drive Vista CA 92083
101 Bay Bridge Mobile Home Park Bay Bridge Road Brunswick ME 04011
102 Cascade Crossing Shopping Center 3695 Cascade Road Atlanta GA 30331
103 Days Inn - Atlanta Airport 4601 Best Road College Park GA 30337
104 Marriot Courtyard - Knoxville 216 Langley Place Knoxville TN 37922
- -----------------------------------------------------------------------------------------------------------------------------------
105 SMC-Houston-410 10225 Katy Freeway Houston TX 77024
106 Anchor Business Park 7520-30 Alondra Blvd & 16100 Garfield Avenue Los Angeles CA 90723
107 Towne Plaza Shopping Center 2102-2154 William Street Cape Girardeau MO 63703
108 English Aire Apartments 1919 & 2121 Burton Drive Austin TX 78741
109 Madison Plaza Shopping Center 520-580 Second Street El Cajon CA 92021
- -----------------------------------------------------------------------------------------------------------------------------------
110 Palm Gardens 5500-5550 Washington Street Hollywood FL 33021
111 Deerbrook Corner Shopping Center 20050 U.S. Highway 59 Humble TX 77325
112 Hunter's Run 4748 St. Francis Avenue Dallas TX 75227
113 Watseka Shopping Plaza 1200 East Walnut Watseka IL 60970
114 Mountain Park Professional Center 4350 East Ray Road Phoenix AZ 85044
- -----------------------------------------------------------------------------------------------------------------------------------
115 South Wind Plaza Shopping Center 5335 N. Military Trail W. Palm Beach FL 33407
116 Intern Apartments 233 Indiana Avenue Lubbock TX 79415
117 1622-1624 3rd Avenue 1622-1624 3rd Avenue New York NY 10128
118 Oxford/Spanish Gardens 4054 Beth Manor Drive Montgomery AL 36109
119 Holiday Inn - Lakeland South 3405 South Florida Avenue Lakeland FL 33803
- -----------------------------------------------------------------------------------------------------------------------------------
120 Waterstone Apartments 7502 Corporate Drive Houston TX 77036
121 Oakwood Village Shopping Center 200 Oakwood Ave @ Meridian St Huntsville AL 35811
122 Red Oak Place Apartments 17710 Red Oak Drive Houston TX 77090
123 Sunset Foothills 350 North Silverbell Road Tucson AZ 85745
124 Franklin Square 1575 Tremont Street Boston MA 02120
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
% of Aggregate Cumulative
Control Original Cut-off Date Cut-off Date % of Initial Mortgage
No. Property Name Balance Balance Balance Pool Balance Rate
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
58 Continental Shopping Plaza 6,118,000 6,097,166 0.47% 49.20% 8.9050%
59 Chisholm West Shopping Center 6,100,000 6,096,696 0.47% 49.66% 9.0400
60 Caprock Apartments 6,100,000 6,088,926 0.47% 50.13% 8.5400
61 Cleveland Street Square 6,100,000 6,077,531 0.47% 50.60% 8.8750
62 3307 Northland Office Building 6,000,000 5,994,807 0.46% 51.06% 9.1800
- ------------------------------------------------------------------------------------------------------------------------------------
63 Palm Terrace 6,000,000 5,986,402 0.46% 51.51% 8.6000
64 1, 5, 13 Branch Street 6,000,000 5,983,662 0.46% 51.97% 8.9400
65 Galleria Shopping Center 5,950,000 5,927,628 0.45% 52.43% 8.7500
66 La Mancha Apartments 5,840,000 5,832,137 0.45% 52.87% 8.0000
67 State Line Shopping Center 5,800,000 5,793,034 0.44% 53.32% 8.5600
- ------------------------------------------------------------------------------------------------------------------------------------
68 Parsippany Hampton Inn 5,775,000 5,770,162 0.44% 53.76% 9.3750
69 Page Plaza 5,700,000 5,696,032 0.44% 54.20% 9.0000
70 Bucks County Office Center 5,700,000 5,694,907 0.44% 54.63% 8.9900
71 A1 Self Storage (Loan Level) 5,650,000 5,617,106 0.43% 55.06% 9.5600
- ------------------------------------------------------------------------------------------------------------------------------------
71a A1 Self Storage: Baylor
71b A1 Self Storage: Clark
71c A1 Self Storage: Pacheco
71d A1 Self Storage: Pinon
71e A1 Self Storage: San Mateo
- ------------------------------------------------------------------------------------------------------------------------------------
71f A1 Self Storage: Westside
72 Comfort Inn - Elizabethtown 5,650,000 5,612,661 0.43% 55.49% 9.6250
73 McDowell Marketplace 5,600,000 5,596,791 0.43% 55.92% 8.7700
74 Lawndale Square Apartments 5,600,000 5,592,460 0.43% 56.35% 8.0000
- ------------------------------------------------------------------------------------------------------------------------------------
75 Woodbridge Plaza 5,475,000 5,472,028 0.42% 56.77% 9.0300
76 Marketplace Mall 5,400,000 5,395,082 0.41% 57.18% 8.8750
77 Boulder Ridge 5,400,000 5,393,201 0.41% 57.59% 8.3300
78 Marriot Courtyard - Tampa 5,355,000 5,350,514 0.41% 58.00% 9.3750
79 Magnolia Centre / Park Centre 5,300,000 5,294,115 0.41% 58.41% 8.9400
- ------------------------------------------------------------------------------------------------------------------------------------
80 ABCO Plaza 5,280,000 5,277,103 0.40% 58.81% 8.9780
81 Montrose Shopping Center 5,300,000 5,224,057 0.40% 59.21% 8.2490
82 Southwind Plaza Shopping Center 5,219,000 5,203,955 0.40% 59.61% 8.8750
83 The Crossroads Apartments 5,200,000 5,183,293 0.40% 60.01% 8.2800
84 Holiday Inn Frisco 5,150,000 5,150,000 0.39% 60.40% 9.4000
- ------------------------------------------------------------------------------------------------------------------------------------
85 Barkley Ridge Apartments 5,150,000 5,146,963 0.39% 60.80% 8.6300
86 Holiday Inn Monroeville 5,100,000 5,100,000 0.39% 61.19% 9.4000
87 Hampton Inn - Newport News 5,100,000 5,092,603 0.39% 61.58% 9.2500
88 Bentwood Apartments 5,100,000 5,083,614 0.39% 61.97% 8.2800
89 Landmark Apartments 5,000,000 4,993,268 0.38% 62.35% 8.0000
- ------------------------------------------------------------------------------------------------------------------------------------
90 8 A-E Industrial Way 5,000,000 4,986,385 0.38% 62.73% 8.9400
91 Ramada Inn - East Windsor 5,000,000 4,981,687 0.38% 63.12% 9.0000
92 Daytona Beach Mall 4,950,000 4,935,397 0.38% 63.49% 8.7500
93 Broadmoor Apartments 4,880,000 4,873,429 0.37% 63.87% 8.0000
94 Aurora Highlands Shopping Center 4,852,000 4,849,333 0.37% 64.24% 8.9700
- ------------------------------------------------------------------------------------------------------------------------------------
95 Kirby Richmond Shopping Center 4,850,000 4,847,278 0.37% 64.61% 8.8700
96 Woods on the Fairway Apartments 4,805,952 4,799,481 0.37% 64.98% 8.0000
97 Ashland Towne Square Apartments 4,800,000 4,793,537 0.37% 65.34% 8.0000
98 Marina Del Rey Apartments 4,750,000 4,737,304 0.36% 65.71% 8.0700
99 90 & 94-104 Glenn Street 4,700,000 4,687,202 0.36% 66.07% 8.9400
- ------------------------------------------------------------------------------------------------------------------------------------
100 Food 4 Less 4,637,000 4,620,404 0.35% 66.42% 8.4420
101 Bay Bridge Mobile Home Park 4,650,000 4,593,995 0.35% 66.77% 10.5000
102 Cascade Crossing Shopping Center 4,500,000 4,497,291 0.34% 67.12% 8.5300
103 Days Inn - Atlanta Airport 4,400,000 4,370,689 0.33% 67.45% 9.7500
104 Marriot Courtyard - Knoxville 4,369,000 4,365,340 0.33% 67.79% 9.3750
- ------------------------------------------------------------------------------------------------------------------------------------
105 SMC-Houston-410 4,400,000 4,351,651 0.33% 68.12% 8.6900
106 Anchor Business Park 4,350,000 4,346,055 0.33% 68.45% 8.9000
107 Towne Plaza Shopping Center 4,250,000 4,246,218 0.33% 68.78% 9.0140
108 English Aire Apartments 4,200,000 4,188,043 0.32% 69.10% 8.6700
109 Madison Plaza Shopping Center 4,200,000 4,184,846 0.32% 69.42% 9.0000
- ------------------------------------------------------------------------------------------------------------------------------------
110 Palm Gardens 4,150,000 4,135,032 0.32% 69.74% 8.6250
111 Deerbrook Corner Shopping Center 4,100,000 4,093,273 0.31% 70.05% 9.0300
112 Hunter's Run 4,100,000 4,090,000 0.31% 70.36% 8.5200
113 Watseka Shopping Plaza 4,100,000 4,084,355 0.31% 70.68% 8.6600
114 Mountain Park Professional Center 4,000,000 3,997,829 0.31% 70.98% 9.0300
- ------------------------------------------------------------------------------------------------------------------------------------
115 South Wind Plaza Shopping Center 4,000,000 3,997,769 0.31% 71.29% 8.9000
116 Intern Apartments 4,000,000 3,995,632 0.31% 71.59% 9.0200
117 1622-1624 3rd Avenue 4,000,000 3,993,660 0.31% 71.90% 8.5500
118 Oxford/Spanish Gardens 4,000,000 3,983,701 0.31% 72.20% 8.8000
119 Holiday Inn - Lakeland South 3,900,000 3,894,433 0.30% 72.50% 9.3750
- ------------------------------------------------------------------------------------------------------------------------------------
120 Waterstone Apartments 3,850,000 3,838,172 0.29% 72.80% 8.5000
121 Oakwood Village Shopping Center 3,830,000 3,818,438 0.29% 73.09% 8.6250
122 Red Oak Place Apartments 3,800,000 3,795,389 0.29% 73.38% 8.5100
123 Sunset Foothills 3,800,000 3,785,188 0.29% 73.67% 8.5300
124 Franklin Square 3,775,000 3,772,727 0.29% 73.96% 8.5300
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Original Remaining Original Remaining
Term to Term to Amortization Amortization
Control Maturity Maturity Term Term
No. Property Name (Mos.) (Mos.) (Mos.) (Mos.)
==========================================================================================================================
<S> <C> <C> <C> <C>
58 Continental Shopping Plaza 84 78 360 354
59 Chisholm West Shopping Center 120 119 360 359
60 Caprock Apartments 120 117 360 357
61 Cleveland Street Square 84 80 300 296
62 3307 Northland Office Building 84 83 300 299
- --------------------------------------------------------------------------------------------------------------------------
63 Palm Terrace 300 297 330 327
64 1, 5, 13 Branch Street 120 117 300 297
65 Galleria Shopping Center 120 116 300 296
66 La Mancha Apartments 84 82 360 358
67 State Line Shopping Center 120 118 360 358
- --------------------------------------------------------------------------------------------------------------------------
68 Parsippany Hampton Inn 120 119 300 299
69 Page Plaza 120 119 330 329
70 Bucks County Office Center 120 119 300 299
71 A1 Self Storage (Loan Level) 120 113 300 293
- --------------------------------------------------------------------------------------------------------------------------
71a A1 Self Storage: Baylor
71b A1 Self Storage: Clark
71c A1 Self Storage: Pacheco
71d A1 Self Storage: Pinon
71e A1 Self Storage: San Mateo
- --------------------------------------------------------------------------------------------------------------------------
71f A1 Self Storage: Westside
72 Comfort Inn - Elizabethtown 59 51 300 292
73 McDowell Marketplace 180 179 360 359
74 Lawndale Square Apartments 84 82 360 358
- --------------------------------------------------------------------------------------------------------------------------
75 Woodbridge Plaza 120 119 360 359
76 Marketplace Mall 120 119 300 299
77 Boulder Ridge 120 118 360 358
78 Marriot Courtyard - Tampa 120 119 300 299
79 Magnolia Centre / Park Centre 120 118 360 358
- --------------------------------------------------------------------------------------------------------------------------
80 ABCO Plaza 180 179 360 359
81 Montrose Shopping Center 180 175 180 175
82 Southwind Plaza Shopping Center 120 116 330 326
83 The Crossroads Apartments 84 79 360 355
84 Holiday Inn Frisco 84 84 300 300
- --------------------------------------------------------------------------------------------------------------------------
85 Barkley Ridge Apartments 120 119 360 359
86 Holiday Inn Monroeville 84 84 276 276
87 Hampton Inn - Newport News 240 239 240 239
88 Bentwood Apartments 84 79 360 355
89 Landmark Apartments 84 82 360 358
- --------------------------------------------------------------------------------------------------------------------------
90 8 A-E Industrial Way 120 117 300 297
91 Ramada Inn - East Windsor 120 117 264 261
92 Daytona Beach Mall 84 80 330 326
93 Broadmoor Apartments 84 82 360 358
94 Aurora Highlands Shopping Center 120 119 360 359
- --------------------------------------------------------------------------------------------------------------------------
95 Kirby Richmond Shopping Center 84 83 360 359
96 Woods on the Fairway Apartments 84 82 360 358
97 Ashland Towne Square Apartments 84 82 360 358
98 Marina Del Rey Apartments 84 80 360 356
99 90 & 94-104 Glenn Street 120 117 300 297
- --------------------------------------------------------------------------------------------------------------------------
100 Food 4 Less 228 226 228 226
101 Bay Bridge Mobile Home Park 84 57 360 333
102 Cascade Crossing Shopping Center 120 119 360 359
103 Days Inn - Atlanta Airport 120 114 264 258
104 Marriot Courtyard - Knoxville 120 119 300 299
- --------------------------------------------------------------------------------------------------------------------------
105 SMC-Houston-410 180 176 180 176
106 Anchor Business Park 120 119 300 299
107 Towne Plaza Shopping Center 120 119 300 299
108 English Aire Apartments 120 117 300 297
109 Madison Plaza Shopping Center 120 116 300 296
- --------------------------------------------------------------------------------------------------------------------------
110 Palm Gardens 120 114 360 354
111 Deerbrook Corner Shopping Center 120 117 360 357
112 Hunter's Run 120 116 360 356
113 Watseka Shopping Plaza 120 116 300 296
114 Mountain Park Professional Center 120 119 360 359
- --------------------------------------------------------------------------------------------------------------------------
115 South Wind Plaza Shopping Center 120 119 360 359
116 Intern Apartments 120 118 360 358
117 1622-1624 3rd Avenue 240 239 240 239
118 Oxford/Spanish Gardens 120 113 360 353
119 Holiday Inn - Lakeland South 120 119 240 239
- --------------------------------------------------------------------------------------------------------------------------
120 Waterstone Apartments 120 115 360 355
121 Oakwood Village Shopping Center 120 116 330 326
122 Red Oak Place Apartments 84 82 360 358
123 Sunset Foothills 84 80 300 296
124 Franklin Square 120 119 360 359
- --------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Control Origination Maturity Balloon
No. Property Name Date Date Balance Property Type
==========================================================================================================================
<S> <C> <C> <C> <C>
58 Continental Shopping Plaza 10/11/96 11/1/03 5,728,878 Retail - Anchored
59 Chisholm West Shopping Center 3/17/97 4/1/07 5,467,192 Retail - Unanchored
60 Caprock Apartments 1/27/97 2/1/07 5,417,428 Multifamily
61 Cleveland Street Square 12/23/96 1/1/04 5,466,516 Retail - Unanchored
62 3307 Northland Office Building 3/31/97 4/1/04 5,400,977 Office
- --------------------------------------------------------------------------------------------------------------------------
63 Palm Terrace 1/16/97 2/1/22 1,316,204 Multifamily - Section 42
64 1, 5, 13 Branch Street 1/10/97 2/1/07 4,970,576 Industrial
65 Galleria Shopping Center 12/23/96 1/1/07 4,907,587 Retail - Anchored
66 La Mancha Apartments 2/24/97 3/1/04 5,407,485 Multifamily
67 State Line Shopping Center 2/11/97 3/1/07 5,152,944 Retail - Anchored
- --------------------------------------------------------------------------------------------------------------------------
68 Parsippany Hampton Inn 3/28/97 4/1/07 4,952,186 Hospitality
69 Page Plaza 3/28/97 4/1/07 5,055,268 Retail - Unanchored
70 Bucks County Office Center 3/11/97 4/1/07 4,727,433 Office
71 A1 Self Storage (Loan Level) 9/27/96 10/1/06 4,745,279
- --------------------------------------------------------------------------------------------------------------------------
71a A1 Self Storage: Baylor Self Storage
71b A1 Self Storage: Clark Self Storage
71c A1 Self Storage: Pacheco Self Storage
71d A1 Self Storage: Pinon Self Storage
71e A1 Self Storage: San Mateo Self Storage
- --------------------------------------------------------------------------------------------------------------------------
71f A1 Self Storage: Westside Self Storage
72 Comfort Inn - Elizabethtown 8/6/96 8/1/01 - Hospitality
73 McDowell Marketplace 3/6/97 4/1/12 4,422,559 Retail - Anchored
74 Lawndale Square Apartments 2/24/97 3/1/04 5,185,259 Multifamily
- --------------------------------------------------------------------------------------------------------------------------
75 Woodbridge Plaza 3/31/97 4/1/07 4,906,161 Retail - Anchored
76 Marketplace Mall 3/25/97 4/1/07 4,570,661 Retail - Unanchored
77 Boulder Ridge 2/25/97 3/1/07 4,776,447 Mobile Home Park
78 Marriot Courtyard - Tampa 3/28/97 4/1/07 4,592,027 Hospitality
79 Magnolia Centre / Park Centre 2/14/97 3/1/07 4,741,745 Office
- --------------------------------------------------------------------------------------------------------------------------
80 ABCO Plaza 3/13/97 4/1/12 4,196,813 Retail - Anchored
81 Montrose Shopping Center 11/11/96 12/1/11 - Retail - Anchored
82 Southwind Plaza Shopping Center 12/20/96 1/1/07 4,612,339 Retail - Anchored
83 The Crossroads Apartments 11/6/96 12/1/03 4,832,440 Multifamily
84 Holiday Inn Frisco 4/11/97 5/1/04 4,650,349 Hospitality
- --------------------------------------------------------------------------------------------------------------------------
85 Barkley Ridge Apartments 3/7/97 4/1/07 4,581,482 Multifamily
86 Holiday Inn Monroeville 4/11/97 5/1/04 4,489,916 Hospitality
87 Hampton Inn - Newport News 3/26/97 4/1/17 - Hospitality
88 Bentwood Apartments 11/6/96 12/1/03 4,739,508 Multifamily
89 Landmark Apartments 2/24/97 3/1/04 4,629,695 Multifamily
- --------------------------------------------------------------------------------------------------------------------------
90 8 A-E Industrial Way 1/10/97 2/1/07 4,142,147 Industrial
91 Ramada Inn - East Windsor 1/16/97 2/1/07 3,842,294 Hospitality
92 Daytona Beach Mall 12/19/96 1/1/04 4,595,546 Retail - Anchored
93 Broadmoor Apartments 2/24/97 3/1/04 4,518,584 Multifamily
94 Aurora Highlands Shopping Center 3/21/97 4/1/07 4,343,261 Retail - Anchored
- --------------------------------------------------------------------------------------------------------------------------
95 Kirby Richmond Shopping Center 3/24/97 4/1/04 4,539,681 Retail - Anchored
96 Woods on the Fairway Apartments 2/24/97 3/1/04 4,450,019 Multifamily
97 Ashland Towne Square Apartments 2/24/97 3/1/04 4,444,507 Multifamily
98 Marina Del Rey Apartments 12/13/96 1/1/04 4,402,277 Multifamily
99 90 & 94-104 Glenn Street 1/10/97 2/1/07 3,893,618 Industrial
- --------------------------------------------------------------------------------------------------------------------------
100 Food 4 Less 2/18/97 3/1/16 - Retail - Anchored
101 Bay Bridge Mobile Home Park 1/13/95 2/1/02 4,425,976 Mobile Home Park
102 Cascade Crossing Shopping Center 3/27/97 4/1/07 4,078,945 Retail - Unanchored
103 Days Inn - Atlanta Airport 10/28/96 11/1/06 - Hospitality
104 Marriot Courtyard - Knoxville 3/28/97 4/1/07 3,746,511 Hospitality
- --------------------------------------------------------------------------------------------------------------------------
105 SMC-Houston-410 12/20/96 1/1/12 - Retail - Anchored
106 Anchor Business Park 3/17/97 4/1/07 3,600,368 Self Storage
107 Towne Plaza Shopping Center 3/21/97 4/1/07 3,526,761 Retail - Anchored
108 English Aire Apartments 1/17/97 2/1/07 3,457,701 Multifamily
109 Madison Plaza Shopping Center 12/24/96 1/1/07 3,484,163 Retail - Unanchored
- --------------------------------------------------------------------------------------------------------------------------
110 Palm Gardens 10/31/96 11/1/06 3,691,528 Multifamily
111 Deerbrook Corner Shopping Center 1/23/97 2/1/07 3,674,021 Retail - Unanchored
112 Hunter's Run 12/16/96 1/1/07 3,639,842 Multifamily
113 Watseka Shopping Plaza 12/18/96 1/1/07 3,374,578 Retail - Anchored
114 Mountain Park Professional Center 3/21/97 4/1/07 3,584,411 Office
- --------------------------------------------------------------------------------------------------------------------------
115 South Wind Plaza Shopping Center 3/7/97 4/1/07 3,576,106 Retail - Anchored
116 Intern Apartments 2/4/97 3/1/07 3,583,776 Multifamily
117 1622-1624 3rd Avenue 3/14/97 4/1/17 - Multifamily
118 Oxford/Spanish Gardens 10/1/96 10/1/06 3,569,628 Multifamily
119 Holiday Inn - Lakeland South 3/6/97 4/1/07 2,892,285 Hospitality
- --------------------------------------------------------------------------------------------------------------------------
120 Waterstone Apartments 11/12/96 12/1/06 3,416,600 Multifamily
121 Oakwood Village Shopping Center 12/6/96 1/1/07 3,364,480 Retail - Anchored
122 Red Oak Place Apartments 2/7/97 3/1/04 3,541,576 Multifamily
123 Sunset Foothills 12/23/96 1/1/04 3,387,549 Multifamily
124 Franklin Square 3/17/97 4/1/07 3,351,953 Multifamily
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Control
No. Property Name Prepayment Provisions
=============================================================================================================
<S> <C>
58 Continental Shopping Plaza L(3),YM1%(3.5),O(.5)
59 Chisholm West Shopping Center L(4),YM1%(5.5),O(.5)
60 Caprock Apartments L(3),YM1%(6.5),O(.5)
61 Cleveland Street Square L(3),YM1%(3.75),O(.25)
62 3307 Northland Office Building L(0),YM1%(5),1%(1.5),O(.5) or Defeasance at lender's option
- -------------------------------------------------------------------------------------------------------------
63 Palm Terrace L(15),O(10)
64 1, 5, 13 Branch Street L(5),YM1%(4.5),O(.5) or Defeasance at lender's option
65 Galleria Shopping Center L(4),YM1%(5.75),O(.25)
66 La Mancha Apartments L(2),YM1%(4.5),O(.5) or Defeasance at lender's option
67 State Line Shopping Center L(3),YM1%(6.5),O(.5)
- -------------------------------------------------------------------------------------------------------------
68 Parsippany Hampton Inn L(4),YM1%(5.75),O(.25)
69 Page Plaza L(4),YM1%(5.75),O(.25)
70 Bucks County Office Center L(4),YM1%(6)
71 A1 Self Storage (Loan Level) L(0),YM1%(4),1%(6)
- -------------------------------------------------------------------------------------------------------------
71a A1 Self Storage: Baylor
71b A1 Self Storage: Clark
71c A1 Self Storage: Pacheco
71d A1 Self Storage: Pinon
71e A1 Self Storage: San Mateo
- -------------------------------------------------------------------------------------------------------------
71f A1 Self Storage: Westside
72 Comfort Inn - Elizabethtown L(4.417), O(.5)
73 McDowell Marketplace L(7),YM1%(7.5),O(.5)
74 Lawndale Square Apartments L(2),YM1%(4.5),O(.5) or Defeasance at lender's option
- -------------------------------------------------------------------------------------------------------------
75 Woodbridge Plaza L(4),YM1%(5.75),O(.25)
76 Marketplace Mall L(4),YM1%(5.75),O(.25)
77 Boulder Ridge L(4),YM1%(5.5),O(.5)
78 Marriot Courtyard - Tampa L(4),YM1%(5.75),O(.25)
79 Magnolia Centre / Park Centre L(4),YM1%(5.5),O(.5)
- -------------------------------------------------------------------------------------------------------------
80 ABCO Plaza L(7),YM1%(3),{5%(1),4%(1),3%(1),2%(1),1%(0.5) or 1% TYM}
81 Montrose Shopping Center L(3),YM1%(12) or Defeasance at lender's option
82 Southwind Plaza Shopping Center L(4),YM1%(5.75),O(.25)
83 The Crossroads Apartments L(2),4%(2),3%(1),2%(1),1%(1)
84 Holiday Inn Frisco L(0),YM1%(6.5),O(.5) or Defeasance at Borrower's option
- -------------------------------------------------------------------------------------------------------------
85 Barkley Ridge Apartments L(3),YM1%(6.5),O(.5)
86 Holiday Inn Monroeville L(0),YM1%(6.5),O(.5) or Defeasance at Borrower's option
87 Hampton Inn - Newport News L(8),YM1%(7),O(5)
88 Bentwood Apartments L(2),4%(2),3%(1),2%(1),1%(1)
89 Landmark Apartments L(2),YM1%(4.5),O(.5) or Defeasance at lender's option
- -------------------------------------------------------------------------------------------------------------
90 8 A-E Industrial Way L(5),YM1%(4.5),O(.5) or Defeasance at lender's option
91 Ramada Inn - East Windsor L(5),YM1%(4.75),O(.25)
92 Daytona Beach Mall L(3),YM1%(3.75),O(.25)
93 Broadmoor Apartments L(2),YM1%(4.5),O(.5) or Defeasance at lender's option
94 Aurora Highlands Shopping Center L(4),YM1%(5.5),O(.5)
- -------------------------------------------------------------------------------------------------------------
95 Kirby Richmond Shopping Center L(2),YM1%(4.5),O(.5)
96 Woods on the Fairway Apartments L(2),YM1%(4.5),O(.5) or Defeasance at lender's option
97 Ashland Towne Square Apartments L(2),YM1%(4.5),O(.5) or Defeasance at lender's option
98 Marina Del Rey Apartments L(3),YM1%(3.5),O(.5) or Defeasance at lender's option
99 90 & 94-104 Glenn Street L(5),YM1%(4.5),O(.5) or Defeasance at lender's option
- -------------------------------------------------------------------------------------------------------------
100 Food 4 Less L(4),YM1%(14.5),O(.5) or Defeasance at lender's option
101 Bay Bridge Mobile Home Park L(0),YM1%(6.5),O(.5)
102 Cascade Crossing Shopping Center L(4),YM1%(5.75),O(.25)
103 Days Inn - Atlanta Airport L(9.5), O(.5)
104 Marriot Courtyard - Knoxville L(4),YM1%(5.75),O(.25)
- -------------------------------------------------------------------------------------------------------------
105 SMC-Houston-410 L(1),YM1%(8.5),5%(1),4%(1),3%(1),2%(1),1%(1),O(.5)
106 Anchor Business Park L(4),YM1%(5.5),O(.5)
107 Towne Plaza Shopping Center L(5),YM1%(4.5),O(.5)
108 English Aire Apartments L(5),YM1%(4.5),O(.5)
109 Madison Plaza Shopping Center L(4),YM1%(5.75),O(.25)
- -------------------------------------------------------------------------------------------------------------
110 Palm Gardens L(5),YM1%(4.5),O(.5)
111 Deerbrook Corner Shopping Center L(4),YM1%(5.5),O(.5) or Defeasance at lender's option
112 Hunter's Run L(0),YM1%(9.5),O(.5)
113 Watseka Shopping Plaza L(3),YM1%(6.5),O(.5) or Defeasance at Borrower's option
114 Mountain Park Professional Center L(5),YM1%(1),5%(1),4%(1),2%(1),1%(.5),O(.5)
- -------------------------------------------------------------------------------------------------------------
115 South Wind Plaza Shopping Center L(4),YM1%(5.5),O(.5)
116 Intern Apartments L(3),YM1%(6.5),O(.5) or Defeasance at lender's option
117 1622-1624 3rd Avenue L(5),YM1%(14.5),O(.5)
118 Oxford/Spanish Gardens L(3),YM1%(6.5),O(.5)
119 Holiday Inn - Lakeland South L(4),YM1%(5.75),O(.25)
- -------------------------------------------------------------------------------------------------------------
120 Waterstone Apartments L(3),YM1%(6.5),O(.5) or Defeasance at lender's option
121 Oakwood Village Shopping Center L(4),YM1%(5.75),O(.25)
122 Red Oak Place Apartments L(3),YM1%(3.5),O(.5) or Defeasance at lender's option
123 Sunset Foothills L(0),YM1%(6.5),O(.5)
124 Franklin Square L(5),YM1%(4.75),O(.25)
- -------------------------------------------------------------------------------------------------------------
<CAPTION>
Control Annual Net Appraised
No. Property Name Debt Service Cash Flow DSCR Value
========================================================================================================================
<S> <C> <C> <C> <C>
58 Continental Shopping Plaza 585,710 796,208 1.36 8,500,000
59 Chisholm West Shopping Center 591,092 758,349 1.28 8,150,000
60 Caprock Apartments 564,921 753,129 1.33 8,225,000
61 Cleveland Street Square 608,038 798,309 1.31 9,400,000
62 3307 Northland Office Building 613,121 814,830 1.33 8,600,000
- ------------------------------------------------------------------------------------------------------------------------
63 Palm Terrace 570,005 722,028 1.27 8,030,000
64 1, 5, 13 Branch Street 601,266 818,790 1.36 9,600,000
65 Galleria Shopping Center 587,011 757,644 1.29 8,500,000
66 La Mancha Apartments 514,222 622,493 1.21 7,300,000
67 State Line Shopping Center 538,126 728,814 1.35 7,900,000
- ------------------------------------------------------------------------------------------------------------------------
68 Parsippany Hampton Inn 599,461 868,288 1.45 8,250,000
69 Page Plaza 560,621 784,599 1.40 7,650,000
70 Bucks County Office Center 573,542 805,431 1.40 8,800,000
71 A1 Self Storage (Loan Level) 595,197 838,320 1.41 9,350,000
- ------------------------------------------------------------------------------------------------------------------------
-------------- ---------------
71a A1 Self Storage: Baylor 94,348 950,000
71b A1 Self Storage: Clark 132,274 1,400,000
71c A1 Self Storage: Pacheco 326,609 3,250,000
71d A1 Self Storage: Pinon 134,102 1,500,000
71e A1 Self Storage: San Mateo 88,758 900,000
- ------------------------------------------------------------------------------------------------------------------------
71f A1 Self Storage: Westside 62,229 1,350,000
72 Comfort Inn - Elizabethtown 598,268 847,938 1.42 9,100,000
73 McDowell Marketplace 529,623 694,568 1.31 7,500,000
74 Lawndale Square Apartments 493,090 656,705 1.33 7,000,000
- ------------------------------------------------------------------------------------------------------------------------
75 Woodbridge Plaza 530,056 668,207 1.26 7,500,000
76 Marketplace Mall 538,263 720,167 1.34 10,000,000
77 Boulder Ridge 490,470 633,177 1.29 7,200,000
78 Marriot Courtyard - Tampa 555,864 816,978 1.47 7,650,000
79 Magnolia Centre / Park Centre 508,997 706,196 1.39 7,070,000
- ------------------------------------------------------------------------------------------------------------------------
80 ABCO Plaza 508,806 674,429 1.33 7,100,000
81 Montrose Shopping Center 616,972 1,009,803 1.64 17,000,000
82 Southwind Plaza Shopping Center 507,820 633,113 1.25 7,000,000
83 The Crossroads Apartments 470,107 615,717 1.31 6,700,000
84 Holiday Inn Frisco 535,655 739,830 1.38 8,000,000
- ------------------------------------------------------------------------------------------------------------------------
85 Barkley Ridge Apartments 480,894 607,025 1.26 6,870,000
86 Holiday Inn Monroeville 542,350 918,292 1.69 8,500,000
87 Hampton Inn - Newport News 560,511 748,879 1.34 7,250,000
88 Bentwood Apartments 461,067 608,901 1.32 6,500,000
89 Landmark Apartments 440,259 629,861 1.43 6,250,000
- ------------------------------------------------------------------------------------------------------------------------
90 8 A-E Industrial Way 501,055 674,963 1.35 7,500,000
91 Ramada Inn - East Windsor 522,705 816,006 1.56 9,360,000
92 Daytona Beach Mall 476,455 616,817 1.29 6,600,000
93 Broadmoor Apartments 429,693 560,619 1.30 6,100,000
94 Aurora Highlands Shopping Center 467,227 639,596 1.37 7,200,000
- ------------------------------------------------------------------------------------------------------------------------
95 Kirby Richmond Shopping Center 462,857 595,266 1.29 6,500,000
96 Woods on the Fairway Apartments 423,173 507,325 1.20 6,050,000
97 Ashland Towne Square Apartments 422,648 534,472 1.26 6,000,000
98 Marina Del Rey Apartments 421,031 570,445 1.35 5,985,000
99 90 & 94-104 Glenn Street 470,992 608,841 1.29 8,700,000
- ------------------------------------------------------------------------------------------------------------------------
100 Food 4 Less 490,685 629,214 1.28 6,200,000
101 Bay Bridge Mobile Home Park 510,425 641,698 1.26 7,300,000
102 Cascade Crossing Shopping Center 416,362 637,754 1.53 6,300,000
103 Days Inn - Atlanta Airport 486,443 639,647 1.31 6,800,000
104 Marriot Courtyard - Knoxville 453,514 635,682 1.40 6,300,000
- ------------------------------------------------------------------------------------------------------------------------
105 SMC-Houston-410 525,840 665,525 1.27 7,550,000
106 Anchor Business Park 434,491 546,664 1.26 5,800,000
107 Towne Plaza Shopping Center 428,479 564,704 1.32 6,700,000
108 English Aire Apartments 411,625 514,064 1.25 5,600,000
109 Madison Plaza Shopping Center 422,955 550,489 1.30 6,800,000
- ------------------------------------------------------------------------------------------------------------------------
110 Palm Gardens 387,339 486,018 1.25 5,700,000
111 Deerbrook Corner Shopping Center 396,937 564,672 1.42 6,200,000
112 Hunter's Run 379,003 522,411 1.38 5,200,000
113 Watseka Shopping Plaza 401,491 537,543 1.34 5,900,000
114 Mountain Park Professional Center 387,255 502,934 1.30 5,420,000
- ------------------------------------------------------------------------------------------------------------------------
115 South Wind Plaza Shopping Center 382,770 514,504 1.34 5,575,000
116 Intern Apartments 386,910 495,986 1.28 5,350,000
117 1622-1624 3rd Avenue 418,075 530,758 1.27 5,600,000
118 Oxford/Spanish Gardens 379,332 503,654 1.33 5,500,000
119 Holiday Inn - Lakeland South 432,424 651,411 1.51 8,500,000
- ------------------------------------------------------------------------------------------------------------------------
120 Waterstone Apartments 355,238 489,517 1.38 5,200,000
121 Oakwood Village Shopping Center 364,651 476,061 1.31 4,850,000
122 Red Oak Place Apartments 350,948 473,036 1.35 4,815,000
123 Sunset Foothills 368,106 462,899 1.26 5,250,000
124 Franklin Square 349,281 456,911 1.31 6,800,000
- ------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Cut-off Scheduled
Control Appraisal Date Maturity
No. Property Name Year LTV Date LTV
==========================================================================================================
<S> <C> <C> <C>
58 Continental Shopping Plaza 1996 71.7 67.4
59 Chisholm West Shopping Center 1997 74.8 67.1
60 Caprock Apartments 1996 74.0 65.9
61 Cleveland Street Square 1996 64.7 58.2
62 3307 Northland Office Building 1997 69.7 62.8
- ----------------------------------------------------------------------------------------------------------
63 Palm Terrace 1996 74.6 16.4
64 1, 5, 13 Branch Street 1996 62.3 51.8
65 Galleria Shopping Center 1996 69.7 57.7
66 La Mancha Apartments 1997 79.9 74.1
67 State Line Shopping Center 1997 73.3 65.2
- ----------------------------------------------------------------------------------------------------------
68 Parsippany Hampton Inn 1997 69.9 60.0
69 Page Plaza 1997 74.5 66.1
70 Bucks County Office Center 1996 64.7 53.7
71 A1 Self Storage (Loan Level) 60.1 50.8
- ----------------------------------------------------------------------------------------------------------
71a A1 Self Storage: Baylor 1996
71b A1 Self Storage: Clark 1996
71c A1 Self Storage: Pacheco 1996
71d A1 Self Storage: Pinon 1996
71e A1 Self Storage: San Mateo 1996
- ----------------------------------------------------------------------------------------------------------
71f A1 Self Storage: Westside 1996
72 Comfort Inn - Elizabethtown 1995 62.1 -
73 McDowell Marketplace 1997 74.6 59.0
74 Lawndale Square Apartments 1997 79.9 74.1
- ----------------------------------------------------------------------------------------------------------
75 Woodbridge Plaza 1996 73.0 65.4
76 Marketplace Mall 1997 54.0 45.7
77 Boulder Ridge 1997 74.9 66.3
78 Marriot Courtyard - Tampa 1997 69.9 60.0
79 Magnolia Centre / Park Centre 1997 74.9 67.1
- ----------------------------------------------------------------------------------------------------------
80 ABCO Plaza 1996 74.3 59.1
81 Montrose Shopping Center 1996 30.7 -
82 Southwind Plaza Shopping Center 1996 74.3 65.9
83 The Crossroads Apartments 1996 77.4 72.1
84 Holiday Inn Frisco 1996 64.4 58.1
- ----------------------------------------------------------------------------------------------------------
85 Barkley Ridge Apartments 1997 74.9 66.7
86 Holiday Inn Monroeville 1996 60.0 52.8
87 Hampton Inn - Newport News 1997 70.2 -
88 Bentwood Apartments 1996 78.2 72.9
89 Landmark Apartments 1997 79.9 74.1
- ----------------------------------------------------------------------------------------------------------
90 8 A-E Industrial Way 1996 66.5 55.2
91 Ramada Inn - East Windsor 1996 53.2 41.1
92 Daytona Beach Mall 1996 74.8 69.6
93 Broadmoor Apartments 1997 79.9 74.1
94 Aurora Highlands Shopping Center 1997 67.4 60.3
- ----------------------------------------------------------------------------------------------------------
95 Kirby Richmond Shopping Center 1997 74.6 69.8
96 Woods on the Fairway Apartments 1997 79.3 73.6
97 Ashland Towne Square Apartments 1997 79.9 74.1
98 Marina Del Rey Apartments 1996 79.2 73.6
99 90 & 94-104 Glenn Street 1996 53.9 44.8
- ----------------------------------------------------------------------------------------------------------
100 Food 4 Less 1997 74.5 -
101 Bay Bridge Mobile Home Park 1994 62.9 60.6
102 Cascade Crossing Shopping Center 1997 71.4 64.7
103 Days Inn - Atlanta Airport 1996 64.3 -
104 Marriot Courtyard - Knoxville 1997 69.3 59.5
- ----------------------------------------------------------------------------------------------------------
105 SMC-Houston-410 1996 57.6 -
106 Anchor Business Park 1997 74.9 62.1
107 Towne Plaza Shopping Center 1996 63.4 52.6
108 English Aire Apartments 1996 74.8 61.7
109 Madison Plaza Shopping Center 1996 61.5 51.2
- ----------------------------------------------------------------------------------------------------------
110 Palm Gardens 1996 72.5 64.8
111 Deerbrook Corner Shopping Center 1996 66.0 59.3
112 Hunter's Run 1996 78.7 70.0
113 Watseka Shopping Plaza 1996 69.2 57.2
114 Mountain Park Professional Center 1997 73.8 66.1
- ----------------------------------------------------------------------------------------------------------
115 South Wind Plaza Shopping Center 1997 71.7 64.1
116 Intern Apartments 1996 74.7 67.0
117 1622-1624 3rd Avenue 1997 71.3 -
118 Oxford/Spanish Gardens 1996 72.4 64.9
119 Holiday Inn - Lakeland South 1997 45.8 34.0
- ----------------------------------------------------------------------------------------------------------
120 Waterstone Apartments 1996 73.8 65.7
121 Oakwood Village Shopping Center 1996 78.7 69.4
122 Red Oak Place Apartments 1997 78.8 73.6
123 Sunset Foothills 1996 72.1 64.5
124 Franklin Square 1996 55.5 49.3
- ----------------------------------------------------------------------------------------------------------
<CAPTION>
Loan per
Sq Ft, Unit, Sq Ft, Unit,
Control Year Bed, Pad Bed, Pad
No. Property Name Built or Room or Room
======================================================================================================================
<S> <C> <C> <C>
58 Continental Shopping Plaza 1980 153,599 Sq Foot 39.83
59 Chisholm West Shopping Center 1979,96 211,806 Sq Foot 28.80
60 Caprock Apartments 1978 296 Unit 20,608.11
61 Cleveland Street Square 1984 71,279 Sq Foot 85.58
62 3307 Northland Office Building 1983 98,888 Sq Foot 60.67
- ----------------------------------------------------------------------------------------------------------------------
63 Palm Terrace 1996 180 Unit 33,333.33
64 1, 5, 13 Branch Street 1985 91,696 Sq Foot 65.43
65 Galleria Shopping Center 1983 173,049 Sq Foot 34.38
66 La Mancha Apartments 1974 248 Unit 23,548.39
67 State Line Shopping Center 1971 153,315 Sq Foot 37.83
- ----------------------------------------------------------------------------------------------------------------------
68 Parsippany Hampton Inn 1986 100 Room 57,750.00
69 Page Plaza 1990 95,077 Sq Foot 59.95
70 Bucks County Office Center 1940-60 188,653 Sq Foot 30.21
71 A1 Self Storage (Loan Level) 2,029 Unit 2,784.62
- ----------------------------------------------------------------------------------------------------------------------
----------------
71a A1 Self Storage: Baylor 1969 362 Unit
71b A1 Self Storage: Clark 1983 273 Unit
71c A1 Self Storage: Pacheco 1972,81 467 Unit
71d A1 Self Storage: Pinon 1983 271 Unit
71e A1 Self Storage: San Mateo 1970's 220 Unit
- ----------------------------------------------------------------------------------------------------------------------
71f A1 Self Storage: Westside 1985 436 Unit
72 Comfort Inn - Elizabethtown 1990 133 Room 42,481.20
73 McDowell Marketplace 1996 56,649 Sq Foot 98.85
74 Lawndale Square Apartments 1967,70 277 Unit 20,216.61
- ----------------------------------------------------------------------------------------------------------------------
75 Woodbridge Plaza 1980 77,478 Sq Foot 70.67
76 Marketplace Mall 1984 166,245 Sq Foot 32.48
77 Boulder Ridge 1972 241 Pad 22,406.64
78 Marriot Courtyard - Tampa 1995 81 Room 66,111.11
79 Magnolia Centre / Park Centre 1987 80,607 Sq Foot 65.75
- ----------------------------------------------------------------------------------------------------------------------
80 ABCO Plaza 1989 120,864 Sq Foot 43.69
81 Montrose Shopping Center 1970 145,149 Sq Foot 36.51
82 Southwind Plaza Shopping Center 1990 118,902 Sq Foot 43.89
83 The Crossroads Apartments 1983 232 Unit 22,413.79
84 Holiday Inn Frisco 1968 216 Room 23,842.59
- ----------------------------------------------------------------------------------------------------------------------
85 Barkley Ridge Apartments 1962,67 327 Unit 15,749.24
86 Holiday Inn Monroeville 1967 189 Room 26,984.13
87 Hampton Inn - Newport News 1995 120 Room 42,500.00
88 Bentwood Apartments 1983 216 Unit 23,611.11
89 Landmark Apartments 1969-72 361 Unit 13,850.42
- ----------------------------------------------------------------------------------------------------------------------
90 8 A-E Industrial Way 1986 150,800 Sq Foot 33.16
91 Ramada Inn - East Windsor 1973 200 Room 25,000.00
92 Daytona Beach Mall 1973 107,327 Sq Foot 46.12
93 Broadmoor Apartments 1971 249 Unit 19,598.39
94 Aurora Highlands Shopping Center 1980-85 133,216 Sq Foot 36.42
- ----------------------------------------------------------------------------------------------------------------------
95 Kirby Richmond Shopping Center 1971 47,091 Sq Foot 102.99
96 Woods on the Fairway Apartments 1983 165 Unit 29,126.98
97 Ashland Towne Square Apartments 1974 218 Unit 22,018.35
98 Marina Del Rey Apartments 1974 227 Unit 20,925.11
99 90 & 94-104 Glenn Street 1974 244,000 Sq Foot 19.26
- ----------------------------------------------------------------------------------------------------------------------
100 Food 4 Less 1996 80,542 Sq Foot 57.57
101 Bay Bridge Mobile Home Park 1961 493 Pad 9,432.05
102 Cascade Crossing Shopping Center 1996 45,416 Sq Foot 99.08
103 Days Inn - Atlanta Airport 1983 162 Room 27,160.49
104 Marriot Courtyard - Knoxville 1995 78 Room 56,012.82
- ----------------------------------------------------------------------------------------------------------------------
105 SMC-Houston-410 1973 81,283 Sq Foot 54.13
106 Anchor Business Park 1978,86 644 Unit 6,754.66
107 Towne Plaza Shopping Center 1963 186,139 Sq Foot 22.83
108 English Aire Apartments 1973 233 Unit 18,025.75
109 Madison Plaza Shopping Center 1965 65,606 Sq Foot 64.02
- ----------------------------------------------------------------------------------------------------------------------
110 Palm Gardens 1968 174 Unit 23,850.57
111 Deerbrook Corner Shopping Center 1984 83,308 Sq Foot 49.21
112 Hunter's Run 1987 240 Unit 17,083.33
113 Watseka Shopping Plaza 1990 121,827 Sq Foot 33.65
114 Mountain Park Professional Center 1995 40,077 Sq Foot 99.81
- ----------------------------------------------------------------------------------------------------------------------
115 South Wind Plaza Shopping Center 1987,88 123,927 Sq Foot 32.28
116 Intern Apartments 1964 276 Unit 14,492.75
117 1622-1624 3rd Avenue 1910 32 Unit 125,000.00
118 Oxford/Spanish Gardens 1971,73 234 Unit 17,094.02
119 Holiday Inn - Lakeland South 1969 172 Room 22,674.42
- ----------------------------------------------------------------------------------------------------------------------
120 Waterstone Apartments 1979 294 Unit 13,095.24
121 Oakwood Village Shopping Center 1983 80,955 Sq Foot 47.31
122 Red Oak Place Apartments 1981 186 Unit 20,430.11
123 Sunset Foothills 1962 201 Unit 18,905.47
124 Franklin Square 1964 147 Unit 25,680.27
- ----------------------------------------------------------------------------------------------------------------------
<CAPTION>
Control Occupancy Underwriting
No. Property Name Percentage Reserves
========================================================================================
<S> <C> <C>
58 Continental Shopping Plaza 97.4 0.28 Sq Foot
59 Chisholm West Shopping Center 93.7 0.18 Sq Foot
60 Caprock Apartments 90.9 228.70 Unit
61 Cleveland Street Square 94.7 0.19 Sq Foot
62 3307 Northland Office Building 98.2 0.15 Sq Foot
- ----------------------------------------------------------------------------------------
63 Palm Terrace 98.3 150.00 Unit
64 1, 5, 13 Branch Street 99.6 0.28 Sq Foot
65 Galleria Shopping Center 96.8 0.17 Sq Foot
66 La Mancha Apartments 88.7 234.42 Unit
67 State Line Shopping Center 100.0 0.15 Sq Foot
- ----------------------------------------------------------------------------------------
68 Parsippany Hampton Inn NAP 955.64 Room
69 Page Plaza 97.9 0.11 Sq Foot
70 Bucks County Office Center 90.0 0.20 Sq Foot
71 A1 Self Storage (Loan Level) 65.4 21.43 Unit
- ----------------------------------------------------------------------------------------
-------
71a A1 Self Storage: Baylor NAV 17.04 Unit
71b A1 Self Storage: Clark NAV 22.81 Unit
71c A1 Self Storage: Pacheco NAV 22.69 Unit
71d A1 Self Storage: Pinon NAV 22.95 Unit
71e A1 Self Storage: San Mateo NAV 32.43 Unit
- ----------------------------------------------------------------------------------------
71f A1 Self Storage: Westside NAV 16.39 Unit
72 Comfort Inn - Elizabethtown NAP 582.03 Room
73 McDowell Marketplace 96.8 0.10 Sq Foot
74 Lawndale Square Apartments 91.0 200.00 Unit
- ----------------------------------------------------------------------------------------
75 Woodbridge Plaza 98.0 0.13 Sq Foot
76 Marketplace Mall 100.0 0.32 Sq Foot
77 Boulder Ridge 99.2 40.00 Pad
78 Marriot Courtyard - Tampa NAP 1,055.5Room
79 Magnolia Centre / Park Centre 95.5 0.18 Sq Foot
- ----------------------------------------------------------------------------------------
80 ABCO Plaza 91.4 0.15 Sq Foot
81 Montrose Shopping Center 96.6 0.15 Sq Foot
82 Southwind Plaza Shopping Center 100.0 0.10 Sq Foot
83 The Crossroads Apartments 92.2 311.00 Unit
84 Holiday Inn Frisco NAP 3% of gross revenue
- ----------------------------------------------------------------------------------------
85 Barkley Ridge Apartments 96.0 235.00 Unit
86 Holiday Inn Monroeville NAP 4% of gross revenue
87 Hampton Inn - Newport News NAP 759.57 Room
88 Bentwood Apartments 95.4 282.91 Unit
89 Landmark Apartments 88.4 325.06 Unit
- ----------------------------------------------------------------------------------------
90 8 A-E Industrial Way 100.0 0.10 Sq Foot
91 Ramada Inn - East Windsor NAP 680.32 Room
92 Daytona Beach Mall 100.0 0.15 Sq Foot
93 Broadmoor Apartments 95.2 308.44 Unit
94 Aurora Highlands Shopping Center 85.7 0.18 Sq Foot
- ----------------------------------------------------------------------------------------
95 Kirby Richmond Shopping Center 100.0 0.17 Sq Foot
96 Woods on the Fairway Apartments 97.0 300.00 Unit
97 Ashland Towne Square Apartments 91.3 332.67 Unit
98 Marina Del Rey Apartments 94.7 200.00 Unit
99 90 & 94-104 Glenn Street 100.0 0.26 Sq Foot
- ----------------------------------------------------------------------------------------
100 Food 4 Less 100.0 0.12 Sq Foot
101 Bay Bridge Mobile Home Park 79.2 30.00 Pad
102 Cascade Crossing Shopping Center 100.0 0.10 Sq Foot
103 Days Inn - Atlanta Airport NAP 546.04 Room
104 Marriot Courtyard - Knoxville NAP 958.41 Room
- ----------------------------------------------------------------------------------------
105 SMC-Houston-410 100.0 0.10 Sq Foot
106 Anchor Business Park 87.0 27.32 Unit
107 Towne Plaza Shopping Center 96.0 0.20 Sq Foot
108 English Aire Apartments 90.6 239.81 Unit
109 Madison Plaza Shopping Center 86.9 0.10 Sq Foot
- ----------------------------------------------------------------------------------------
110 Palm Gardens 99.4 200.00 Unit
111 Deerbrook Corner Shopping Center 89.0 0.20 Sq Foot
112 Hunter's Run 89.6 225.00 Unit
113 Watseka Shopping Plaza 100.0 0.15 Sq Foot
114 Mountain Park Professional Center 100.0 0.15 Sq Foot
- ----------------------------------------------------------------------------------------
115 South Wind Plaza Shopping Center 73.3 0.19 Sq Foot
116 Intern Apartments 91.3 238.65 Unit
117 1622-1624 3rd Avenue 87.5 285.00 Unit
118 Oxford/Spanish Gardens 89.0 260.74 Unit
119 Holiday Inn - Lakeland South NAP 865.95 Room
- ----------------------------------------------------------------------------------------
120 Waterstone Apartments 90.1 249.15 Unit
121 Oakwood Village Shopping Center 93.3 0.25 Sq Foot
122 Red Oak Place Apartments 94.1 200.00 Unit
123 Sunset Foothills 95.0 224.00 Unit
124 Franklin Square 97.3 273.00 Unit
- ----------------------------------------------------------------------------------------
<CAPTION>
Largest Retail Tenant
-----------------------------------------------------------------
Tenant Lease
Control Administrative Area Leased Exp Date Control
No. Property Name Cost Rate Tenant Name (Sq. Ft.) (Sq. Ft.) No.
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
58 Continental Shopping Plaza 0.2100 Safeway 48,660 01/00 58
59 Chisholm West Shopping Center 0.1850 Country General 33,600 10/99 59
60 Caprock Apartments 0.2150 60
61 Cleveland Street Square 0.1350 Hughie's Breaktime 7,430 09/00 61
62 3307 Northland Office Building 0.1350 62
- ------------------------------------------------------------------------------------------------------------------------------------
63 Palm Terrace 0.1350 63
64 1, 5, 13 Branch Street 0.1350 64
65 Galleria Shopping Center 0.1350 Krogers 43,312 08/08 65
66 La Mancha Apartments 0.1350 66
67 State Line Shopping Center 0.1350 Ames / TJX 71,680 11/98 67
- ------------------------------------------------------------------------------------------------------------------------------------
68 Parsippany Hampton Inn 0.1350 68
69 Page Plaza 0.1350 Office Max 25,000 08/02 69
70 Bucks County Office Center 0.1350 70
71 A1 Self Storage (Loan Level) 0.1850 71
- ------------------------------------------------------------------------------------------------------------------------------------
71a A1 Self Storage: Baylor 71a
71b A1 Self Storage: Clark 71b
71c A1 Self Storage: Pacheco 71c
71d A1 Self Storage: Pinon 71d
71e A1 Self Storage: San Mateo 71e
- ------------------------------------------------------------------------------------------------------------------------------------
71f A1 Self Storage: Westside 71f
72 Comfort Inn - Elizabethtown 0.1350 72
73 McDowell Marketplace 0.2100 ABCO Foods 42,693 08/16 73
74 Lawndale Square Apartments 0.1350 74
- ------------------------------------------------------------------------------------------------------------------------------------
75 Woodbridge Plaza 0.1350 Pathmark Stores, Inc. 50,000 01/15 75
76 Marketplace Mall 0.1350 Hamrick's 48,355 01/05 76
77 Boulder Ridge 0.1350 77
78 Marriot Courtyard - Tampa 0.1350 78
79 Magnolia Centre / Park Centre 0.2150 79
- ------------------------------------------------------------------------------------------------------------------------------------
80 ABCO Plaza 0.2100 ABCO Foods 35,534 07/08 80
81 Montrose Shopping Center 0.1350 Sears Home Life 27,867 09/05 81
82 Southwind Plaza Shopping Center 0.1350 Byrd's Foods 29,000 05/10 82
83 The Crossroads Apartments 0.1850 83
84 Holiday Inn Frisco 0.1350 84
- ------------------------------------------------------------------------------------------------------------------------------------
85 Barkley Ridge Apartments 0.2150 85
86 Holiday Inn Monroeville 0.1350 86
87 Hampton Inn - Newport News 0.1350 87
88 Bentwood Apartments 0.1850 88
89 Landmark Apartments 0.1350 89
- ------------------------------------------------------------------------------------------------------------------------------------
90 8 A-E Industrial Way 0.1350 90
91 Ramada Inn - East Windsor 0.1350 91
92 Daytona Beach Mall 0.1350 Circuit City 32,567 01/06 92
93 Broadmoor Apartments 0.1350 93
94 Aurora Highlands Shopping Center 0.2100 Safeway 44,340 04/06 94
- ------------------------------------------------------------------------------------------------------------------------------------
95 Kirby Richmond Shopping Center 0.1850 Office Depot 24,212 05/00 95
96 Woods on the Fairway Apartments 0.1350 96
97 Ashland Towne Square Apartments 0.1350 97
98 Marina Del Rey Apartments 0.1350 98
99 90 & 94-104 Glenn Street 0.1350 99
- ------------------------------------------------------------------------------------------------------------------------------------
100 Food 4 Less 0.2100 Food 4 Less (Single Tenant) 80,542 02/16 100
101 Bay Bridge Mobile Home Park 0.1350 101
102 Cascade Crossing Shopping Center 0.1350 Scottish Rite/Piedmont 14,616 12/06 102
103 Days Inn - Atlanta Airport 0.1350 103
104 Marriot Courtyard - Knoxville 0.1350 104
- ------------------------------------------------------------------------------------------------------------------------------------
105 SMC-Houston-410 0.1350 Service Merchandise Company, Inc. 81,283 01/12 105
106 Anchor Business Park 0.1350 106
107 Towne Plaza Shopping Center 0.2100 Sears 70,575 04/99 107
108 English Aire Apartments 0.1850 108
109 Madison Plaza Shopping Center 0.1350 Pet Supply 21,000 04/05 109
- ------------------------------------------------------------------------------------------------------------------------------------
110 Palm Gardens 0.1350 110
111 Deerbrook Corner Shopping Center 0.1350 Finger's furniture 52,360 02/05 111
112 Hunter's Run 0.2100 112
113 Watseka Shopping Plaza 0.1350 WalMart 74,136 11/10 113
114 Mountain Park Professional Center 0.2100 114
- ------------------------------------------------------------------------------------------------------------------------------------
115 South Wind Plaza Shopping Center 0.1850 Winn Dixie 45,880 12/07 115
116 Intern Apartments 0.1350 116
117 1622-1624 3rd Avenue 0.1350 117
118 Oxford/Spanish Gardens 0.1350 118
119 Holiday Inn - Lakeland South 0.1350 119
- ------------------------------------------------------------------------------------------------------------------------------------
120 Waterstone Apartments 0.2150 120
121 Oakwood Village Shopping Center 0.1350 Winn Dixie 47,307 03/10 121
122 Red Oak Place Apartments 0.1350 122
123 Sunset Foothills 0.1350 123
124 Franklin Square 0.1350 124
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Control Zip
No. Property Name Address City State Code
===================================================================================================================================
<S> <C> <C> <C> <C>
125 Residence Inn - Savannah 5710 White Bluff Road Savannah GA 31405
126 Lake Mist 1200 Lake Mist Drive Charlotte NC 28217
127 Cedar Pointe 3154 Berry Lane Roanoke VA 24018
128 Americana Plaza 2049-2159 Americana Plaza Orlando FL 32839
129 Westgate Park 1700 West Prince Road Tuscon AZ 85705
- -----------------------------------------------------------------------------------------------------------------------------------
130 SMC-Duluth-249 2075 Market Street Duluth GA 30136
131 Hoods Crossroads Shopping Center 3501 Matthews-Mint Hill Road Mint Hill NC 28201
132 Holiday Inn North 4000 Concord Pike Wilmington DE 19803
133 Comfort Inn 100 Morris Street Revere MA 02151
134 Oakmont Retirement Residence 2801 Cohasset Road Chico CA 95973
- -----------------------------------------------------------------------------------------------------------------------------------
135 Emerald Pointe 206-242 and 239 Nautilus Drive New London CT 06320
136 Hampton Court 378 Golden Gate Avenue San Francisco CA 94102
137 Marriot Courtyard -Athens 166 Finley Street Athens GA 30601
138 Comfort Inn 3660 Street Road Bensalem PA 19020
139 Gateway Courtyard 9901 Capital of Texas Highway Austin TX 78759
- -----------------------------------------------------------------------------------------------------------------------------------
140 St. Catherine Apartments 3350 St. Catherine Road Florissant MO 63033
141 Quality Inn Petaluma 5100 Montero Way Petaluma CA 94954
142 Crestview Holiday Inn State Road 85 & IH-10 Crestview FL 32536
143 Office Depot 1631 Challenge Drive Concord CA 94520
144 Heatherwood Apartments 13200 Christy Lane #15 Newport News VA 23608
- -----------------------------------------------------------------------------------------------------------------------------------
145 Meridian Center One 2 Industrial Way Eatontown NJ 07724
146 Port City Center 701 East Bay Street Charleston SC 29403
147 Riverside Mall 23-75 Riverside Avenue Medford MA 02155
148 Delray West Plaza 14800-14860 Military Trail Delray Beach FL 33484
149 Redondo Place Shopping Center 903 Bitters Road San Antonio TX 78216
- -----------------------------------------------------------------------------------------------------------------------------------
150 College Main Apartments 4302 College Main Road Bryan TX 77805
151 Grove Plaza 1151-1161 Walnut & 2404-2558 Grov Ontario CA 91764
152 Park Row / New Scotland Gardens Apts. Mercer & Warren St. Albany NY 12208
153 Best Western Patio Motel 2820 Tulane Avenue New Orleans LA 70119
154 Falcon Crest Apartments 3829 Gannon Lane Dallas TX 75237
- -----------------------------------------------------------------------------------------------------------------------------------
155 Forest Park Mobile Home Park 7800-7850 Tayloe Drive Manassas VA 22111
156 Riverwalk Terrace Apartments 5900 Kinkead Avenue Fort Smith AR 72901
157 Boulder Bins Self Storage 4900 North Broadway Boulder CO 80304
158 Randolph Shopping Center 12205 Nebel Street Rockville MD 20852
159 Canyon Place 1503 North 2100 West St. George UT 84770
- -----------------------------------------------------------------------------------------------------------------------------------
160 Florida Village Apartments 1206 & 1208 Florida Road Durango CO 81301
161 One Highland Center 314 Highland Mall Boulevard Austin TX 78752
162 Anderson Square Business Park 7950 Anderson Square Road Austin TX 78758
163 Renaissance Parc Apartments 7135 Oaklawn Drive San Antonio TX 78229
164 Reynolds International 5000 North 29th Street McAllen TX 78505
- -----------------------------------------------------------------------------------------------------------------------------------
165 Outrigger Apartments 1001 Shoreview Drive Orlando FL 32807
166 Whispering Waters Industrial Warehouse 2301 Northwest 33rd Court Pompano Beach FL 33069
167 Silver Lake Pointe 2701 County Road I Mounds View MN 55432
168 Carbondale Plaza Brooklyn Street Carbondale PA 18407
169 Sunset Plaza SEC of Broadway & Crawford St. Salina KS 67401
- -----------------------------------------------------------------------------------------------------------------------------------
170 Town and Country Shopping Center NW Fruitville & Beneva Roads Sarasota FL 34232
171 7-9 East 32nd Street 7-9 East 32nd Street New York City NY 10016
172 Elmwood Villas Apartments 401 North 28th Street Las Vegas NV 89101
173 Oak Tree Village 1006 Main Street Pleasantville NJ 08232
174 Cedar Ridge Apartments 4905 Chicago Ave & Albany & 48th Street Lubbock TX 79414
- -----------------------------------------------------------------------------------------------------------------------------------
175 Snowden Square S.C. - 349 9041 Snowden River Pkwy. Columbia MD 21046
176 Brentwood Manor 5738 Old Dixie Highway Forest Park GA 30050
177 Autumn Woods Apartments 101 Foreman Road Mobile AL 36608
178 Windsor Townhomes 4170 Altoona Drive Dallas TX 75233
179 Safeway Food Store # 0837 Silver Hill Road District Heights MD 20747
- -----------------------------------------------------------------------------------------------------------------------------------
180 Whispering Pines 10400 Jay Street Coon Rapids MN 55433
181 Eagle Creek Plaza 308-400 Rollins Road Round Lake Beach IL 60073
182 Welleby Square Shopping Center 10064 West Oakland Park Sunrise FL 33351
183 Baywood Plaza Shopping Center 3210 - 3326 FM 528 @ West Bay Area Boulevard Friendswood TX 77546
184 Country Gardens 680 Holcomb Bridge Road Norcross GA 30071
- -----------------------------------------------------------------------------------------------------------------------------------
185 Cliffbrook Condominiums 7965 Cliffbrook Drive Dallas TX 75240
186 Valley View 5725 South Wasatch Drive S Ogden UT 84403
187 New Paltz Shopping Center 263 Main Street New Paltz NY 12561
188 Hurst Hills Duplexes 504-722 Billie Ruth Lane & 609-623, 629-635 Hurst TX 76053
Melbourne Road
189 Crossroads Shopping Center Beaumont 4438 Dowlen Road Beaumont TX 77706
- -----------------------------------------------------------------------------------------------------------------------------------
190 Comfort Inn Belle Fontaine 260 Northview Drive Belle Fontaine OH 43311
191 Freeport Lincoln Mall 1211-87 Galena Avenue Freeport IL 61032
192 Rose Lane 105 South Fairfield Road Layton UT 84041
193 Holiday Inn Lufkin 4036 South First Street Lufkin TX 75901
194 Hickory Ridge 2001 Laverne Street Houston TX 77080
- -----------------------------------------------------------------------------------------------------------------------------------
195 Maple Ridge SC - 344 4220 Maple Road Buffalo NY 14226
196 The Sinclair 673 Collins Avenue Miami Beach FL 33139
197 Pepperwood Plaza 705-855 West Baseline Road Tempe AZ 85282
198 Comfort Inn Cape Hatteras Rt 12 & Old Lighthouse Rd Baxton NC 27920
199 Staples Office Supply 335 Haggerty Road Commerce Township MI 48390
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
% of Aggregate Cumulative
Control Original Cut-off Date Cut-off Date % of Initial Mortgage
No. Property Name Balance Balance Balance Pool Balance Rate
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
125 Residence Inn - Savannah 3,745,000 3,741,863 0.29% 74.25% 9.3750%
126 Lake Mist 3,750,000 3,736,817 0.29% 74.53% 8.7500
127 Cedar Pointe 3,725,000 3,711,469 0.28% 74.82% 8.5900
128 Americana Plaza 3,700,000 3,691,374 0.28% 75.10% 8.7400
129 Westgate Park 3,700,000 3,686,992 0.28% 75.38% 8.7500
- ------------------------------------------------------------------------------------------------------------------------------------
130 SMC-Duluth-249 3,712,500 3,661,547 0.28% 75.66% 8.7400
131 Hoods Crossroads Shopping Center 3,642,000 3,628,080 0.28% 75.94% 8.6500
132 Holiday Inn North 3,625,000 3,619,743 0.28% 76.22% 9.2500
133 Comfort Inn 3,600,000 3,596,984 0.28% 76.49% 9.3750
134 Oakmont Retirement Residence 3,600,000 3,592,848 0.28% 76.77% 8.3700
- ------------------------------------------------------------------------------------------------------------------------------------
135 Emerald Pointe 3,550,000 3,548,111 0.27% 77.04% 9.1250
136 Hampton Court 3,550,000 3,545,900 0.27% 77.31% 8.7500
137 Marriot Courtyard -Athens 3,500,000 3,497,068 0.27% 77.58% 9.3750
138 Comfort Inn 3,500,000 3,496,943 0.27% 77.85% 9.1250
139 Gateway Courtyard 3,500,000 3,493,852 0.27% 78.12% 8.7000
- ------------------------------------------------------------------------------------------------------------------------------------
140 St. Catherine Apartments 3,500,000 3,488,789 0.27% 78.38% 8.2950
141 Quality Inn Petaluma 3,500,000 3,477,890 0.27% 78.65% 9.3750
142 Crestview Holiday Inn 3,460,000 3,451,673 0.26% 78.91% 9.6800
143 Office Depot 3,450,000 3,446,608 0.26% 79.18% 8.4120
144 Heatherwood Apartments 3,393,047 3,388,478 0.26% 79.44% 8.0000
- ------------------------------------------------------------------------------------------------------------------------------------
145 Meridian Center One 3,359,000 3,354,414 0.26% 79.69% 9.1250
146 Port City Center 3,372,000 3,352,211 0.26% 79.95% 9.2500
147 Riverside Mall 3,350,000 3,343,748 0.26% 80.21% 8.7500
148 Delray West Plaza 3,350,000 3,334,275 0.26% 80.46% 8.7800
149 Redondo Place Shopping Center 3,337,500 3,331,240 0.26% 80.72% 8.7200
- ------------------------------------------------------------------------------------------------------------------------------------
150 College Main Apartments 3,300,000 3,296,305 0.25% 80.97% 8.9000
151 Grove Plaza 3,450,000 3,292,706 0.25% 81.22% 8.6450
152 Park Row / New Scotland Gardens Apts. 3,300,000 3,291,827 0.25% 81.47% 8.4450
153 Best Western Patio Motel 3,290,000 3,279,729 0.25% 81.73% 9.3750
154 Falcon Crest Apartments 3,250,000 3,245,642 0.25% 81.97% 8.0200
- ------------------------------------------------------------------------------------------------------------------------------------
155 Forest Park Mobile Home Park 3,200,000 3,183,914 0.24% 82.22% 8.3600
156 Riverwalk Terrace Apartments 3,200,000 3,181,915 0.24% 82.46% 8.7820
157 Boulder Bins Self Storage 3,200,000 3,181,058 0.24% 82.71% 9.4600
158 Randolph Shopping Center 3,200,000 3,154,147 0.24% 82.95% 8.2490
159 Canyon Place 3,155,000 3,143,563 0.24% 83.19% 8.6000
- ------------------------------------------------------------------------------------------------------------------------------------
160 Florida Village Apartments 3,120,000 3,114,620 0.24% 83.43% 8.7900
161 One Highland Center 3,100,000 3,097,388 0.24% 83.66% 9.3400
162 Anderson Square Business Park 3,100,000 3,094,224 0.24% 83.90% 8.7600
163 Renaissance Parc Apartments 3,100,000 3,094,197 0.24% 84.14% 8.3900
164 Reynolds International 3,125,000 3,092,331 0.24% 84.37% 9.2500
- ------------------------------------------------------------------------------------------------------------------------------------
165 Outrigger Apartments 3,080,000 3,078,048 0.24% 84.61% 8.2800
166 Whispering Waters Industrial Warehouse 3,050,000 3,048,275 0.23% 84.84% 8.8320
167 Silver Lake Pointe 3,050,000 3,043,799 0.23% 85.08% 9.4000
168 Carbondale Plaza 3,000,000 2,988,507 0.23% 85.31% 8.6360
169 Sunset Plaza 2,975,000 2,971,556 0.23% 85.53% 8.7380
- ------------------------------------------------------------------------------------------------------------------------------------
170 Town and Country Shopping Center 2,900,000 2,898,409 0.22% 85.76% 8.9800
171 7-9 East 32nd Street 2,900,000 2,895,654 0.22% 85.98% 8.6250
172 Elmwood Villas Apartments 2,900,000 2,888,770 0.22% 86.20% 8.5700
173 Oak Tree Village 2,850,000 2,844,383 0.22% 86.42% 9.3500
174 Cedar Ridge Apartments 2,840,000 2,838,294 0.22% 86.63% 8.5400
- ------------------------------------------------------------------------------------------------------------------------------------
175 Snowden Square S.C. - 349 2,885,000 2,838,132 0.22% 86.85% 8.9375
176 Brentwood Manor 2,800,000 2,794,327 0.21% 87.07% 8.2500
177 Autumn Woods Apartments 2,775,000 2,771,264 0.21% 87.28% 8.0000
178 Windsor Townhomes 2,700,000 2,693,468 0.21% 87.48% 8.5600
179 Safeway Food Store # 0837 2,633,000 2,629,242 0.20% 87.69% 9.3750
- ------------------------------------------------------------------------------------------------------------------------------------
180 Whispering Pines 2,630,000 2,622,899 0.20% 87.89% 8.0200
181 Eagle Creek Plaza 2,625,000 2,620,841 0.20% 88.09% 8.5800
182 Welleby Square Shopping Center 2,600,000 2,598,592 0.20% 88.29% 9.0400
183 Baywood Plaza Shopping Center 2,590,000 2,588,270 0.20% 88.48% 9.2200
184 Country Gardens 2,525,000 2,522,748 0.19% 88.68% 9.0000
- ------------------------------------------------------------------------------------------------------------------------------------
185 Cliffbrook Condominiums 2,525,000 2,521,866 0.19% 88.87% 8.4000
186 Valley View 2,515,000 2,505,883 0.19% 89.06% 8.6000
187 New Paltz Shopping Center 2,500,000 2,481,864 0.19% 89.25% 9.0600
188 Hurst Hills Duplexes 2,457,000 2,450,821 0.19% 89.44% 8.3700
189 Crossroads Shopping Center Beaumont 2,375,000 2,360,275 0.18% 89.62% 9.1800
- ------------------------------------------------------------------------------------------------------------------------------------
190 Comfort Inn Belle Fontaine 2,285,000 2,275,271 0.17% 89.80% 9.2500
191 Freeport Lincoln Mall 2,274,000 2,272,708 0.17% 89.97% 8.8100
192 Rose Lane 2,275,000 2,266,753 0.17% 90.14% 8.6000
193 Holiday Inn Lufkin 2,280,000 2,259,773 0.17% 90.32% 9.2500
194 Hickory Ridge 2,257,000 2,255,735 0.17% 90.49% 8.8750
- ------------------------------------------------------------------------------------------------------------------------------------
195 Maple Ridge SC - 344 2,285,000 2,247,879 0.17% 90.66% 8.9375
196 The Sinclair 2,250,000 2,247,275 0.17% 90.83% 8.5200
197 Pepperwood Plaza 2,250,000 2,244,889 0.17% 91.01% 8.8660
198 Comfort Inn Cape Hatteras 2,250,000 2,235,518 0.17% 91.18% 9.2500
199 Staples Office Supply 2,224,525 2,223,290 0.17% 91.35% 8.9200
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Original Remaining Original Remaining
Term to Term to Amortization Amortization
Control Maturity Maturity Term Term
No. Property Name (Mos.) (Mos.) (Mos.) (Mos.)
==========================================================================================================================
<S> <C> <C> <C> <C>
125 Residence Inn - Savannah 120 119 300 299
126 Lake Mist 120 114 360 354
127 Cedar Pointe 120 114 360 354
128 Americana Plaza 120 116 360 356
129 Westgate Park 120 114 360 354
- --------------------------------------------------------------------------------------------------------------------------
130 SMC-Duluth-249 180 175 180 175
131 Hoods Crossroads Shopping Center 120 116 300 296
132 Holiday Inn North 120 119 240 239
133 Comfort Inn 120 119 300 299
134 Oakmont Retirement Residence 120 118 300 298
- --------------------------------------------------------------------------------------------------------------------------
135 Emerald Pointe 84 83 360 359
136 Hampton Court 120 118 360 358
137 Marriot Courtyard -Athens 120 119 300 299
138 Comfort Inn 120 119 300 299
139 Gateway Courtyard 84 81 360 357
- --------------------------------------------------------------------------------------------------------------------------
140 St. Catherine Apartments 180 175 360 355
141 Quality Inn Petaluma 276 270 276 270
142 Crestview Holiday Inn 120 117 300 297
143 Office Depot 180 179 300 299
144 Heatherwood Apartments 84 82 360 358
- --------------------------------------------------------------------------------------------------------------------------
145 Meridian Center One 120 118 330 328
146 Port City Center 120 116 240 236
147 Riverside Mall 120 118 300 298
148 Delray West Plaza 84 79 300 295
149 Redondo Place Shopping Center 120 118 300 298
- --------------------------------------------------------------------------------------------------------------------------
150 College Main Apartments 180 178 360 358
151 Grove Plaza 84 80 360 356
152 Park Row / New Scotland Gardens Apts. 120 116 360 356
153 Best Western Patio Motel 120 117 276 273
154 Falcon Crest Apartments 84 82 360 358
- --------------------------------------------------------------------------------------------------------------------------
155 Forest Park Mobile Home Park 120 115 300 295
156 Riverwalk Terrace Apartments 120 114 300 294
157 Boulder Bins Self Storage 120 113 300 293
158 Randolph Shopping Center 180 175 180 175
159 Canyon Place 360 354 360 354
- --------------------------------------------------------------------------------------------------------------------------
160 Florida Village Apartments 120 117 360 357
161 One Highland Center 120 119 300 299
162 Anderson Square Business Park 120 118 300 298
163 Renaissance Parc Apartments 120 117 360 357
164 Reynolds International 180 176 180 176
- --------------------------------------------------------------------------------------------------------------------------
165 Outrigger Apartments 120 119 360 359
166 Whispering Waters Industrial Warehouse 84 83 360 359
167 Silver Lake Pointe 300 296 360 356
168 Carbondale Plaza 120 116 300 296
169 Sunset Plaza 120 118 360 358
- --------------------------------------------------------------------------------------------------------------------------
170 Town and Country Shopping Center 120 119 360 359
171 7-9 East 32nd Street 120 118 330 328
172 Elmwood Villas Apartments 84 80 300 296
173 Oak Tree Village 120 117 330 327
174 Cedar Ridge Apartments 84 83 360 359
- --------------------------------------------------------------------------------------------------------------------------
175 Snowden Square S.C. - 349 180 174 180 174
176 Brentwood Manor 300 298 300 298
177 Autumn Woods Apartments 84 82 360 358
178 Windsor Townhomes 120 116 360 356
179 Safeway Food Store # 0837 240 239 240 239
- --------------------------------------------------------------------------------------------------------------------------
180 Whispering Pines 84 80 360 356
181 Eagle Creek Plaza 84 82 324 322
182 Welleby Square Shopping Center 120 119 360 359
183 Baywood Plaza Shopping Center 120 119 330 329
184 Country Gardens 120 119 300 299
- --------------------------------------------------------------------------------------------------------------------------
185 Cliffbrook Condominiums 120 118 360 358
186 Valley View 360 354 360 354
187 New Paltz Shopping Center 120 112 300 292
188 Hurst Hills Duplexes 120 116 360 356
189 Crossroads Shopping Center Beaumont 120 113 300 293
- --------------------------------------------------------------------------------------------------------------------------
190 Comfort Inn Belle Fontaine 180 176 276 272
191 Freeport Lincoln Mall 120 119 360 359
192 Rose Lane 360 354 360 354
193 Holiday Inn Lufkin 240 234 240 234
194 Hickory Ridge 120 119 360 359
- --------------------------------------------------------------------------------------------------------------------------
195 Maple Ridge SC - 344 180 174 180 174
196 The Sinclair 84 82 360 358
197 Pepperwood Plaza 120 116 360 356
198 Comfort Inn Cape Hatteras 276 270 276 270
199 Staples Office Supply 120 119 360 359
- --------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Control Origination Maturity Balloon
No. Property Name Date Date Balance Property Type
==========================================================================================================================
<S> <C> <C> <C> <C>
125 Residence Inn - Savannah 3/28/97 4/1/07 3,211,419 Hospitality
126 Lake Mist 10/15/96 11/1/06 3,343,462 Multifamily
127 Cedar Pointe 10/18/96 11/1/06 3,311,306 Multifamily
128 Americana Plaza 12/26/96 1/1/07 3,298,275 Retail - Anchored
129 Westgate Park 10/10/96 11/1/06 3,298,883 Multifamily
- --------------------------------------------------------------------------------------------------------------------------
130 SMC-Duluth-249 11/7/96 12/1/11 - Retail - Anchored
131 Hoods Crossroads Shopping Center 12/31/96 1/1/07 2,996,908 Retail - Anchored
132 Holiday Inn North 3/27/97 4/1/07 2,677,657 Hospitality
133 Comfort Inn 3/19/97 4/1/07 3,087,077 Hospitality
134 Oakmont Retirement Residence 2/26/97 3/1/07 2,942,595 Congregate Care
- --------------------------------------------------------------------------------------------------------------------------
135 Emerald Pointe 3/21/97 4/1/04 3,332,545 Multifamily
136 Hampton Court 2/26/97 3/1/07 3,165,143 Multifamily
137 Marriot Courtyard -Athens 3/28/97 4/1/07 3,001,324 Hospitality
138 Comfort Inn 3/21/97 4/1/07 2,982,021 Hospitality
139 Gateway Courtyard 1/31/97 2/1/04 3,269,498 Retail - Unanchored
- --------------------------------------------------------------------------------------------------------------------------
140 St. Catherine Apartments 11/9/96 12/1/11 2,722,045 Multifamily
141 Quality Inn Petaluma 10/10/96 11/1/19 - Hospitality
142 Crestview Holiday Inn 1/16/97 2/1/07 2,913,387 Hospitality
143 Office Depot 3/14/97 4/1/12 2,244,442 Retail - Anchored
144 Heatherwood Apartments 2/24/97 3/1/04 3,141,755 Multifamily
- --------------------------------------------------------------------------------------------------------------------------
145 Meridian Center One 2/10/97 3/1/07 2,919,419 Office
146 Port City Center 12/19/96 1/1/07 2,424,316 Office
147 Riverside Mall 2/25/97 3/1/07 2,763,095 Retail - Unanchored
148 Delray West Plaza 11/7/96 12/1/03 2,997,831 Retail - Unanchored
149 Redondo Place Shopping Center 2/24/97 3/1/07 2,750,857 Retail - Unanchored
- --------------------------------------------------------------------------------------------------------------------------
150 College Main Apartments 2/28/97 3/1/12 2,616,723 Multifamily
151 Grove Plaza 12/31/96 1/1/04 3,080,470 Retail - Anchored
152 Park Row / New Scotland Gardens Apts. 12/27/96 1/1/07 2,925,438 Multifamily
153 Best Western Patio Motel 1/6/97 2/1/07 2,627,104 Hospitality
154 Falcon Crest Apartments 2/4/97 3/1/04 3,010,100 Multifamily
- --------------------------------------------------------------------------------------------------------------------------
155 Forest Park Mobile Home Park 11/26/96 12/1/06 2,615,006 Mobile Home Park
156 Riverwalk Terrace Apartments 10/24/96 11/1/06 2,641,340 Multifamily
157 Boulder Bins Self Storage 10/1/96 10/1/06 2,681,813 Self Storage
158 Randolph Shopping Center 11/11/96 12/1/11 - Retail - Anchored
159 Canyon Place 10/15/96 11/1/26 - Multifamily - Section 42
- --------------------------------------------------------------------------------------------------------------------------
160 Florida Village Apartments 1/28/97 2/1/07 2,783,801 Multifamily
161 One Highland Center 3/20/97 4/1/07 2,591,227 Office
162 Anderson Square Business Park 2/14/97 3/1/07 2,557,490 Retail - Unanchored
163 Renaissance Parc Apartments 1/3/97 2/1/07 2,745,231 Multifamily
164 Reynolds International 12/11/96 1/1/12 - Industrial
- --------------------------------------------------------------------------------------------------------------------------
165 Outrigger Apartments 3/6/97 4/1/07 2,721,681 Multifamily
166 Whispering Waters Industrial Warehouse 3/25/97 4/1/04 2,853,585 Industrial
167 Silver Lake Pointe 12/6/96 1/1/22 1,229,168 Multifamily - Section 42
168 Carbondale Plaza 12/30/96 1/1/07 2,467,808 Retail - Anchored
169 Sunset Plaza 2/19/97 3/1/07 2,651,893 Retail - Anchored
- --------------------------------------------------------------------------------------------------------------------------
170 Town and Country Shopping Center 3/31/97 4/1/07 2,596,394 Retail - Anchored
171 7-9 East 32nd Street 2/20/97 3/1/07 2,494,857 Multifamily
172 Elmwood Villas Apartments 12/31/96 1/1/04 2,586,835 Multifamily
173 Oak Tree Village 1/30/97 2/1/07 2,487,950 Multifamily
174 Cedar Ridge Apartments 3/24/97 4/1/04 2,647,835 Multifamily
- --------------------------------------------------------------------------------------------------------------------------
175 Snowden Square S.C. - 349 10/4/96 11/1/11 - Retail - Anchored
176 Brentwood Manor 2/20/97 3/1/22 - Multifamily
177 Autumn Woods Apartments 2/24/97 3/1/04 2,569,481 Multifamily
178 Windsor Townhomes 12/27/96 1/1/07 2,398,784 Multifamily
179 Safeway Food Store # 0837 3/20/97 4/1/17 - Retail - Anchored
- --------------------------------------------------------------------------------------------------------------------------
180 Whispering Pines 12/2/96 1/1/04 2,435,865 Multifamily
181 Eagle Creek Plaza 2/13/97 3/1/04 2,391,304 Retail - Anchored
182 Welleby Square Shopping Center 3/21/97 4/1/07 2,330,278 Retail - Unanchored
183 Baywood Plaza Shopping Center 3/20/97 4/1/07 2,308,912 Retail - Anchored
184 Country Gardens 3/25/97 4/1/07 2,144,284 Assisted Living
- --------------------------------------------------------------------------------------------------------------------------
185 Cliffbrook Condominiums 2/13/97 3/1/07 2,236,466 Multifamily
186 Valley View 10/29/96 11/1/26 - Multifamily - Section 42
187 New Paltz Shopping Center 8/9/96 9/1/06 2,076,726 Retail - Anchored
188 Hurst Hills Duplexes 12/6/96 1/1/07 2,174,973 Multifamily
189 Crossroads Shopping Center Beaumont 9/19/96 10/1/06 1,978,206 Retail - Unanchored
- --------------------------------------------------------------------------------------------------------------------------
190 Comfort Inn Belle Fontaine 12/10/96 1/1/12 1,363,876 Hospitality
191 Freeport Lincoln Mall 3/26/97 4/1/07 2,029,703 Retail - Anchored
192 Rose Lane 10/29/96 11/1/26 - Multifamily - Section 42
193 Holiday Inn Lufkin 10/19/96 11/1/16 - Hospitality
194 Hickory Ridge 4/1/97 4/1/07 2,016,909 Multifamily
- --------------------------------------------------------------------------------------------------------------------------
195 Maple Ridge SC - 344 10/4/96 11/1/11 - Retail - Anchored
196 The Sinclair 2/6/97 3/1/04 2,097,242 Retail - Anchored
197 Pepperwood Plaza 12/19/96 1/1/07 2,010,326 Retail - Anchored
198 Comfort Inn Cape Hatteras 10/10/96 11/1/19 - Hospitality
199 Staples Office Supply 3/14/97 4/1/07 - Retail - Anchored
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Control
No. Property Name Prepayment Provisions
=============================================================================================================
<S> <C>
125 Residence Inn - Savannah L(4),YM1%(5.75),O(.25)
126 Lake Mist L(4),YM1%(5.5),O(.5)
127 Cedar Pointe L(4),YM1%(5.5),O(.5)
128 Americana Plaza L(3),YM1%(6.5),O(.5) or Defeasance at lender's option
129 Westgate Park L(3),YM1%(4),O(3)
- -------------------------------------------------------------------------------------------------------------
130 SMC-Duluth-249 L(1),YM1%(8.5),5%(1),4%(1),3%(1),2%(1),1%(1),O(.5)
131 Hoods Crossroads Shopping Center L(4),YM1%(5.75),O(.25)
132 Holiday Inn North L(4),YM1%(5.75),O(.25)
133 Comfort Inn L(4),YM1%(5.75),O(.25)
134 Oakmont Retirement Residence L(4),YM1%(5.75),O(.25)
- -------------------------------------------------------------------------------------------------------------
135 Emerald Pointe L(3),3%(1),2%(1),1%(1),O(1)
136 Hampton Court L(5),YM1%(4.75),O(.25)
137 Marriot Courtyard -Athens L(4),YM1%(5.75),O(.25)
138 Comfort Inn L(4),YM1%(5.75),O(.25)
139 Gateway Courtyard L(2),5%(1),4%(1),3%(1),2%(1),1%(.5),O(.5)
- -------------------------------------------------------------------------------------------------------------
140 St. Catherine Apartments L(5),YM1%(9.5),O(.5)
141 Quality Inn Petaluma L(0),YM1%(15),O(8)
142 Crestview Holiday Inn L(4),YM1%(2),3%(1),2%(1),1%(1.75),O(.25)
143 Office Depot L(10),YM1%(4.5),O(.5)
144 Heatherwood Apartments L(2),YM1%(4.5),O(.5) or Defeasance at lender's option
- -------------------------------------------------------------------------------------------------------------
145 Meridian Center One L(4),5%(1),4%(1),3%(1),2%(2),1%(.75),O(.25)
146 Port City Center L(4),YM1%(5),O(1)
147 Riverside Mall L(4),YM1%(5),O(1)
148 Delray West Plaza L(3),YM1%(3.5),O(.5)
149 Redondo Place Shopping Center L(3),YM1%(6.5),O(.5)
- -------------------------------------------------------------------------------------------------------------
150 College Main Apartments L(7),YM1%(7.5),O(.5)
151 Grove Plaza L(3),YM1%(3.5),O(.5)
152 Park Row / New Scotland Gardens Apts. L(3),YM1%(6.5),O(.5)
153 Best Western Patio Motel L(1),YM1%(8.75),O(.25)
154 Falcon Crest Apartments L(3),YM1%(3.5),O(.5) or Defeasance at lender's option
- -------------------------------------------------------------------------------------------------------------
155 Forest Park Mobile Home Park L(5),YM1%(2),O(3)
156 Riverwalk Terrace Apartments L(5),YM1%(4.5),O(.5)
157 Boulder Bins Self Storage L(3),YM1%(6.5),O(.5) or Defeasance at lender's option
158 Randolph Shopping Center L(3),YM1%(12) or Defeasance at lender's option
159 Canyon Place L(5),YM1%(10),O(15)
- -------------------------------------------------------------------------------------------------------------
160 Florida Village Apartments L(3),YM1%(6.5),O(.5)
161 One Highland Center L(4),YM1%(5.5),O(.5) or Defeasance at lender's option
162 Anderson Square Business Park L(5),YM1%(4.5),O(.5) or Defeasance at lender's option
163 Renaissance Parc Apartments L(3),YM1%(6.5),O(.5)
164 Reynolds International L(3),YM1%(11.5),O(.5)
- -------------------------------------------------------------------------------------------------------------
165 Outrigger Apartments L(4),YM1%(5.5),O(.5) or Defeasance at lender's option
166 Whispering Waters Industrial Warehouse L(5),YM1%(1.5),O(.5) or Defeasance at Borrower's option
167 Silver Lake Pointe L(14),O(11)
168 Carbondale Plaza L(3),YM1%(6.5),O(.5)
169 Sunset Plaza L(4),YM1%(5),O(1)
- -------------------------------------------------------------------------------------------------------------
170 Town and Country Shopping Center L(4),YM1%(5.5),O(.5)
171 7-9 East 32nd Street L(4),YM1%(5.75),O(.25)
172 Elmwood Villas Apartments L(3),YM1%(3.5),O(.5) or Defeasance at lender's option
173 Oak Tree Village L(4),YM(5.75),O(.25)
174 Cedar Ridge Apartments L(4),YM1%(2.5),O(.5) or Defeasance at lender's option
- -------------------------------------------------------------------------------------------------------------
175 Snowden Square S.C. - 349 L(1),YM1%(8.5),5%(1),4%(1),3%(1),2%(1),1%(1),O(.5)
176 Brentwood Manor L(0),YM1%(15),O(10)
177 Autumn Woods Apartments L(2),YM1%(4.5),O(.5) or Defeasance at lender's option
178 Windsor Townhomes L(0),YM1%(9.5),O(.5)
179 Safeway Food Store # 0837 L(4),YM1%(15.75),O(.25)
- -------------------------------------------------------------------------------------------------------------
180 Whispering Pines L(3),YM1%(3.5),O(.5)
181 Eagle Creek Plaza L(4),YM1%(2.5),O(.5)
182 Welleby Square Shopping Center L(4),YM1%(5.5),O(.5)
183 Baywood Plaza Shopping Center L(4),YM1%(5.75),O(.25)
184 Country Gardens L(4),YM1%(5.75),O(.25)
- -------------------------------------------------------------------------------------------------------------
185 Cliffbrook Condominiums L(4),YM1%(5.5),O(.5)
186 Valley View L(5),YM1%(10),O(15)
187 New Paltz Shopping Center L(0),3%(1),2%(1),1%(7.5),O(.5)
188 Hurst Hills Duplexes L(3),YM1%(6.75),O(.25)
189 Crossroads Shopping Center Beaumont L(4),YM1%(6)
- -------------------------------------------------------------------------------------------------------------
190 Comfort Inn Belle Fontaine L(0),YM1%(14.5),O(.5)
191 Freeport Lincoln Mall L(3),YM1%(6.5),O(.5) or Defeasance at lender's option
192 Rose Lane L(5),YM1%(10),O(15)
193 Holiday Inn Lufkin L(0),YM1%(15),O(5)
194 Hickory Ridge L(3),YM1%(6.75),O(.25)
- -------------------------------------------------------------------------------------------------------------
195 Maple Ridge SC - 344 L(1),YM1%(8.5),5%(1),4%(1),3%(1),2%(1),1%(1),O(.5)
196 The Sinclair L(4),YM1%(2.5),O(.5) or Defeasance at lender's option
197 Pepperwood Plaza L(3),YM1%(6.5),O(.5)
198 Comfort Inn Cape Hatteras L(0),YM1%(15),O(8) or Defeasance at lender's option
199 Staples Office Supply L(4),YM1%(5.5),O(.5) or Defeasance at lender's option
- -------------------------------------------------------------------------------------------------------------
<CAPTION>
Control Annual Net Appraised
No. Property Name Debt Service Cash Flow DSCR Value
========================================================================================================================
<S> <C> <C> <C> <C>
125 Residence Inn - Savannah 388,741 552,706 1.42 5,350,000
126 Lake Mist 354,015 453,587 1.28 4,750,000
127 Cedar Pointe 346,560 445,371 1.29 5,100,000
128 Americana Plaza 348,978 490,709 1.41 5,200,000
129 Westgate Park 349,295 472,173 1.35 5,210,000
- ------------------------------------------------------------------------------------------------------------------------
130 SMC-Duluth-249 444,991 577,164 1.30 5,650,000
131 Hoods Crossroads Shopping Center 356,345 455,709 1.28 5,200,000
132 Holiday Inn North 398,402 602,339 1.51 6,160,000
133 Comfort Inn 373,690 530,301 1.42 6,300,000
134 Oakmont Retirement Residence 344,082 466,829 1.36 5,500,000
- ------------------------------------------------------------------------------------------------------------------------
135 Emerald Pointe 346,608 442,654 1.28 4,850,000
136 Hampton Court 335,134 448,704 1.34 4,850,000
137 Marriot Courtyard -Athens 363,310 512,985 1.41 5,000,000
138 Comfort Inn 356,065 544,223 1.53 5,000,000
139 Gateway Courtyard 328,915 495,844 1.51 5,900,000
- ------------------------------------------------------------------------------------------------------------------------
140 St. Catherine Apartments 316,862 445,349 1.41 4,800,000
141 Quality Inn Petaluma 371,490 609,310 1.64 5,600,000
142 Crestview Holiday Inn 367,968 515,311 1.40 5,000,000
143 Office Depot 330,913 474,070 1.43 4,700,000
144 Heatherwood Apartments 298,764 358,176 1.20 4,300,000
- ------------------------------------------------------------------------------------------------------------------------
145 Meridian Center One 333,922 434,793 1.30 5,050,000
146 Port City Center 370,596 530,056 1.43 5,620,000
147 Riverside Mall 330,502 426,762 1.29 5,900,000
148 Delray West Plaza 331,322 458,316 1.38 6,000,000
149 Redondo Place Shopping Center 328,453 435,074 1.32 4,850,000
- ------------------------------------------------------------------------------------------------------------------------
150 College Main Apartments 315,785 405,966 1.29 4,500,000
151 Grove Plaza 308,552 462,621 1.50 4,900,000
152 Park Row / New Scotland Gardens Apts. 302,948 382,806 1.26 4,400,000
153 Best Western Patio Motel 349,200 581,157 1.66 4,700,000
154 Falcon Crest Apartments 286,712 353,423 1.23 4,400,000
- ------------------------------------------------------------------------------------------------------------------------
155 Forest Park Mobile Home Park 305,593 391,737 1.28 5,065,000
156 Riverwalk Terrace Apartments 316,538 412,786 1.30 4,850,000
157 Boulder Bins Self Storage 334,432 476,647 1.43 5,700,000
158 Randolph Shopping Center 372,512 682,838 1.83 7,700,000
159 Canyon Place 293,798 346,852 1.18 4,000,000
- ------------------------------------------------------------------------------------------------------------------------
160 Florida Village Apartments 295,611 436,217 1.48 4,000,000
161 One Highland Center 320,887 438,469 1.37 4,250,000
162 Anderson Square Business Park 306,090 467,137 1.53 4,400,000
163 Renaissance Parc Apartments 283,141 362,913 1.28 4,000,000
164 Reynolds International 385,947 519,949 1.35 4,600,000
- ------------------------------------------------------------------------------------------------------------------------
165 Outrigger Apartments 278,448 375,023 1.35 4,125,000
166 Whispering Waters Industrial Warehouse 290,079 357,542 1.23 4,250,000
167 Silver Lake Pointe 305,086 371,828 1.22 4,100,000
168 Carbondale Plaza 293,189 405,842 1.38 4,500,000
169 Sunset Plaza 280,546 364,546 1.30 4,050,000
- ------------------------------------------------------------------------------------------------------------------------
170 Town and Country Shopping Center 279,508 479,028 1.71 4,310,000
171 7-9 East 32nd Street 276,107 453,266 1.64 5,300,000
172 Elmwood Villas Apartments 281,862 440,808 1.56 4,200,000
173 Oak Tree Village 288,770 388,165 1.34 4,100,000
174 Cedar Ridge Apartments 263,012 331,630 1.26 3,780,000
- ------------------------------------------------------------------------------------------------------------------------
175 Snowden Square S.C. - 349 349,853 447,311 1.28 5,300,000
176 Brentwood Manor 264,919 399,241 1.51 4,050,000
177 Autumn Woods Apartments 244,344 329,081 1.35 3,700,000
178 Windsor Townhomes 250,507 316,984 1.27 3,800,000
179 Safeway Food Store # 0837 291,942 364,902 1.25 4,000,000
- ------------------------------------------------------------------------------------------------------------------------
180 Whispering Pines 232,016 291,648 1.26 3,400,000
181 Eagle Creek Plaza 250,090 335,929 1.34 3,800,000
182 Welleby Square Shopping Center 251,941 409,116 1.62 3,900,000
183 Baywood Plaza Shopping Center 259,561 327,765 1.26 3,760,000
184 Country Gardens 254,277 351,670 1.38 3,200,000
- ------------------------------------------------------------------------------------------------------------------------
185 Cliffbrook Condominiums 230,837 303,053 1.31 3,300,000
186 Valley View 234,200 269,136 1.15 3,100,000
187 New Paltz Shopping Center 252,993 356,548 1.41 4,200,000
188 Hurst Hills Duplexes 223,996 284,909 1.27 3,150,000
189 Crossroads Shopping Center Beaumont 242,694 325,179 1.34 3,550,000
- ------------------------------------------------------------------------------------------------------------------------
190 Comfort Inn Belle Fontaine 240,215 389,897 1.62 3,800,000
191 Freeport Lincoln Mall 215,845 269,010 1.25 3,000,000
192 Rose Lane 211,851 249,148 1.18 2,700,000
193 Holiday Inn Lufkin 250,581 465,966 1.86 3,800,000
194 Hickory Ridge 215,493 276,429 1.28 3,150,000
- ------------------------------------------------------------------------------------------------------------------------
195 Maple Ridge SC - 344 277,093 352,998 1.27 4,650,000
196 The Sinclair 207,989 303,350 1.46 3,450,000
197 Pepperwood Plaza 214,650 300,493 1.40 3,000,000
198 Comfort Inn Cape Hatteras 236,535 381,825 1.61 3,600,000
199 Staples Office Supply 213,254 266,567 1.25 2,950,000
- ------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Cut-off Scheduled
Control Appraisal Date Maturity
No. Property Name Year LTV Date LTV
==========================================================================================================
<S> <C> <C> <C>
125 Residence Inn - Savannah 1997 69.9 60.0
126 Lake Mist 1996 78.7 70.4
127 Cedar Pointe 1996 72.8 64.9
128 Americana Plaza 1996 71.0 63.4
129 Westgate Park 1996 70.8 63.3
- ----------------------------------------------------------------------------------------------------------
130 SMC-Duluth-249 1996 64.8 -
131 Hoods Crossroads Shopping Center 1996 69.8 57.6
132 Holiday Inn North 1997 58.8 43.5
133 Comfort Inn 1997 57.1 49.0
134 Oakmont Retirement Residence 1997 65.3 53.5
- ----------------------------------------------------------------------------------------------------------
135 Emerald Pointe 1996 73.2 68.7
136 Hampton Court 1996 73.1 65.3
137 Marriot Courtyard -Athens 1997 69.9 60.0
138 Comfort Inn 1996 69.9 59.6
139 Gateway Courtyard 1997 59.2 55.4
- ----------------------------------------------------------------------------------------------------------
140 St. Catherine Apartments 1996 72.7 56.7
141 Quality Inn Petaluma 1996 62.1 -
142 Crestview Holiday Inn 1996 69.0 58.3
143 Office Depot 1997 73.3 47.8
144 Heatherwood Apartments 1997 78.8 73.1
- ----------------------------------------------------------------------------------------------------------
145 Meridian Center One 1996 66.4 57.8
146 Port City Center 1996 59.7 43.1
147 Riverside Mall 1996 56.7 46.8
148 Delray West Plaza 1996 55.6 50.0
149 Redondo Place Shopping Center 1996 68.7 56.7
- ----------------------------------------------------------------------------------------------------------
150 College Main Apartments 1997 73.3 58.1
151 Grove Plaza 1996 67.2 62.9
152 Park Row / New Scotland Gardens Apts. 1996 74.8 66.5
153 Best Western Patio Motel 1996 69.8 55.9
154 Falcon Crest Apartments 1997 73.8 68.4
- ----------------------------------------------------------------------------------------------------------
155 Forest Park Mobile Home Park 1996 62.9 51.6
156 Riverwalk Terrace Apartments 1996 65.6 54.5
157 Boulder Bins Self Storage 1996 55.8 47.0
158 Randolph Shopping Center 1996 41.0 -
159 Canyon Place 1996 78.6 -
- ----------------------------------------------------------------------------------------------------------
160 Florida Village Apartments 1996 77.9 69.6
161 One Highland Center 1996 72.9 61.0
162 Anderson Square Business Park 1996 70.3 58.1
163 Renaissance Parc Apartments 1996 77.4 68.6
164 Reynolds International 1996 67.2 -
- ----------------------------------------------------------------------------------------------------------
165 Outrigger Apartments 1997 74.6 66.0
166 Whispering Waters Industrial Warehouse 1997 71.7 67.1
167 Silver Lake Pointe 1996 74.2 30.0
168 Carbondale Plaza 1996 66.4 54.8
169 Sunset Plaza 1996 73.4 65.5
- ----------------------------------------------------------------------------------------------------------
170 Town and Country Shopping Center 1997 67.3 60.2
171 7-9 East 32nd Street 1996 54.6 47.1
172 Elmwood Villas Apartments 1996 68.8 61.6
173 Oak Tree Village 1996 69.4 60.7
174 Cedar Ridge Apartments 1997 75.1 70.0
- ----------------------------------------------------------------------------------------------------------
175 Snowden Square S.C. - 349 1996 53.6 -
176 Brentwood Manor 1997 69.0 -
177 Autumn Woods Apartments 1997 74.9 69.4
178 Windsor Townhomes 1996 70.9 63.1
179 Safeway Food Store # 0837 1996 65.7 -
- ----------------------------------------------------------------------------------------------------------
180 Whispering Pines 1996 77.1 71.6
181 Eagle Creek Plaza 1996 69.0 62.9
182 Welleby Square Shopping Center 1997 66.6 59.8
183 Baywood Plaza Shopping Center 1996 68.8 61.4
184 Country Gardens 1997 78.8 67.0
- ----------------------------------------------------------------------------------------------------------
185 Cliffbrook Condominiums 1996 76.4 67.8
186 Valley View 1996 80.8 -
187 New Paltz Shopping Center 1996 59.1 49.4
188 Hurst Hills Duplexes 1996 77.8 69.0
189 Crossroads Shopping Center Beaumont 1996 66.5 55.7
- ----------------------------------------------------------------------------------------------------------
190 Comfort Inn Belle Fontaine 1996 59.9 35.9
191 Freeport Lincoln Mall 1997 75.8 67.7
192 Rose Lane 1996 84.0 -
193 Holiday Inn Lufkin 1996 59.5 -
194 Hickory Ridge 1997 71.6 64.0
- ----------------------------------------------------------------------------------------------------------
195 Maple Ridge SC - 344 1996 48.3 -
196 The Sinclair 1997 65.1 60.8
197 Pepperwood Plaza 1996 74.8 67.0
198 Comfort Inn Cape Hatteras 1996 62.1 -
199 Staples Office Supply 1997 75.4 -
- ----------------------------------------------------------------------------------------------------------
<CAPTION>
Loan per
Sq Ft, Unit, Sq Ft, Unit,
Control Year Bed, Pad Bed, Pad
No. Property Name Built or Room or Room
======================================================================================================================
<S> <C> <C> <C>
125 Residence Inn - Savannah 1996 66 Room 56,742.42
126 Lake Mist 1984 144 Unit 26,041.67
127 Cedar Pointe 1974 150 Unit 24,833.33
128 Americana Plaza 1986 106,456 Sq Foot 34.76
129 Westgate Park 1985 239 Unit 15,481.17
- ----------------------------------------------------------------------------------------------------------------------
130 SMC-Duluth-249 1984 56,255 Sq Foot 65.99
131 Hoods Crossroads Shopping Center 1978 74,426 Sq Foot 48.93
132 Holiday Inn North 1961 138 Room 26,268.12
133 Comfort Inn 1988 118 Room 30,508.47
134 Oakmont Retirement Residence 1983 91 Bed 39,560.44
- ----------------------------------------------------------------------------------------------------------------------
135 Emerald Pointe 1970 252 Unit 14,087.30
136 Hampton Court 1911 101 Unit 35,148.51
137 Marriot Courtyard -Athens 1990 105 Room 33,333.33
138 Comfort Inn 1987 141 Room 24,822.70
139 Gateway Courtyard 1995 41,377 Sq Foot 84.59
- ----------------------------------------------------------------------------------------------------------------------
140 St. Catherine Apartments 1989 92 Unit 38,043.48
141 Quality Inn Petaluma 1985 110 Room 31,818.18
142 Crestview Holiday Inn 1974 120 Room 28,833.33
143 Office Depot 1967,89 44,284 Sq Foot 77.91
144 Heatherwood Apartments 1974 232 Unit 14,625.20
- ----------------------------------------------------------------------------------------------------------------------
145 Meridian Center One 1985 58,385 Sq Foot 57.53
146 Port City Center 1881 188,555 Sq Foot 17.88
147 Riverside Mall 1948 105,827 Sq Foot 31.66
148 Delray West Plaza 1981 77,992 Sq Foot 42.95
149 Redondo Place Shopping Center 1984 62,760 Sq Foot 53.18
- ----------------------------------------------------------------------------------------------------------------------
150 College Main Apartments 1969,73 178 Unit 18,539.33
151 Grove Plaza 1985 39,925 Sq Foot 86.41
152 Park Row / New Scotland Gardens Apts 1940's 130 Unit 25,384.62
153 Best Western Patio Motel 1963 75 Room 43,866.67
154 Falcon Crest Apartments 1986 204 Unit 15,931.37
- ----------------------------------------------------------------------------------------------------------------------
155 Forest Park Mobile Home Park 1965 178 Pad 17,977.53
156 Riverwalk Terrace Apartments 1972 305 Unit 10,491.80
157 Boulder Bins Self Storage 1972 1,082 Unit 2,957.49
158 Randolph Shopping Center 1972 82,583 Sq Foot 38.75
159 Canyon Place 1995 109 Unit 28,944.95
- ----------------------------------------------------------------------------------------------------------------------
160 Florida Village Apartments 1973 96 Unit 32,500.00
161 One Highland Center 1972 63,841 Sq Foot 48.56
162 Anderson Square Business Park 1981,83 68,157 Sq Foot 45.48
163 Renaissance Parc Apartments 1963 157 Unit 19,745.22
164 Reynolds International 1950's 234,375 Sq Foot 13.33
- ----------------------------------------------------------------------------------------------------------------------
165 Outrigger Apartments 1975 160 Unit 19,250.00
166 Whispering Waters Industrial Warehouse 1987 107,536 Sq Foot 28.36
167 Silver Lake Pointe 1995 83 Unit 36,746.99
168 Carbondale Plaza 1971 129,915 Sq Foot 23.09
169 Sunset Plaza 1975 97,129 Sq Foot 30.63
- ----------------------------------------------------------------------------------------------------------------------
170 Town and Country Shopping Center 1978 102,651 Sq Foot 28.25
171 7-9 East 32nd Street 1985 76 Unit 38,157.89
172 Elmwood Villas Apartments 1985 156 Unit 18,589.74
173 Oak Tree Village 1955 168 Unit 16,964.29
174 Cedar Ridge Apartments 1980-84 113 Unit 25,132.74
- ----------------------------------------------------------------------------------------------------------------------
175 Snowden Square S.C. - 349 1993 50,000 Sq Foot 57.70
176 Brentwood Manor 1972 156 Unit 17,948.72
177 Autumn Woods Apartments 1976 225 Unit 12,333.33
178 Windsor Townhomes 1984 144 Unit 18,750.00
179 Safeway Food Store # 0837 1987 47,165 Sq Foot 55.83
- ----------------------------------------------------------------------------------------------------------------------
180 Whispering Pines 1990 76 Unit 34,605.26
181 Eagle Creek Plaza 1981 61,803 Sq Foot 42.47
182 Welleby Square Shopping Center 1990 61,175 Sq Foot 42.50
183 Baywood Plaza Shopping Center 1983 53,768 Sq Foot 48.17
184 Country Gardens 1993/1994 38 Bed 66,447.37
- ----------------------------------------------------------------------------------------------------------------------
185 Cliffbrook Condominiums 1972 121 Unit 20,867.77
186 Valley View 1995 80 Unit 31,437.50
187 New Paltz Shopping Center 1974 48,715 Sq Foot 51.32
188 Hurst Hills Duplexes 1970 62 Unit 39,629.03
189 Crossroads Shopping Center Beaumont 1984 44,630 Sq Foot 53.22
- ----------------------------------------------------------------------------------------------------------------------
190 Comfort Inn Belle Fontaine 1989 76 Room 30,065.79
191 Freeport Lincoln Mall 1965 162,626 Sq Foot 13.98
192 Rose Lane 1995 64 Unit 35,546.88
193 Holiday Inn Lufkin 1982 104 Room 21,923.08
194 Hickory Ridge 1978 176 Unit 12,823.86
- ----------------------------------------------------------------------------------------------------------------------
195 Maple Ridge SC - 344 1986 51,600 Sq Foot 44.28
196 The Sinclair 1996 11,953 Sq Foot 188.24
197 Pepperwood Plaza 1986 37,607 Sq Foot 59.83
198 Comfort Inn Cape Hatteras 1991 60 Room 37,500.00
199 Staples Office Supply 1996 23,575 Sq Foot 94.36
- ----------------------------------------------------------------------------------------------------------------------
<CAPTION>
Control Occupancy Underwriting
No. Property Name Percentage Reserves
========================================================================================
<S> <C> <C>
125 Residence Inn - Savannah NAP 958.01 Room
126 Lake Mist 95.8 252.00 Unit
127 Cedar Pointe 93.3 310.00 Unit
128 Americana Plaza 99.1 0.16 Sq Foot
129 Westgate Park 90.4 200.00 Unit
- ----------------------------------------------------------------------------------------
130 SMC-Duluth-249 100.0 0.10 Sq Foot
131 Hoods Crossroads Shopping Center 94.4 0.18 Sq Foot
132 Holiday Inn North NAP 614.68 Room
133 Comfort Inn NAP 902.13 Room
134 Oakmont Retirement Residence 100.0 216.00 Bed
- ----------------------------------------------------------------------------------------
135 Emerald Pointe 94.8 209.00 Unit
136 Hampton Court 100.0 294.00 Unit
137 Marriot Courtyard -Athens NAP 757.74 Room
138 Comfort Inn NAP 668.82 Room
139 Gateway Courtyard 75.2 0.22 Sq Foot
- ----------------------------------------------------------------------------------------
140 St. Catherine Apartments 97.8 184.33 Unit
141 Quality Inn Petaluma NAP 5% of gross revenue
142 Crestview Holiday Inn NAP 776.65 Room
143 Office Depot 100.0 0.15 Sq Foot
144 Heatherwood Apartments 92.7 282.00 Unit
- ----------------------------------------------------------------------------------------
145 Meridian Center One 100.0 0.14 Sq Foot
146 Port City Center 88.0 0.30 Sq Foot
147 Riverside Mall 90.0 0.23 Sq Foot
148 Delray West Plaza 98.4 0.23 Sq Foot
149 Redondo Place Shopping Center 95.9 0.15 Sq Foot
- ----------------------------------------------------------------------------------------
150 College Main Apartments 99.4 268.50 Unit
151 Grove Plaza 96.7 0.30 Sq Foot
152 Park Row / New Scotland Gardens Apts. 100.0 250.00 Unit
153 Best Western Patio Motel NAP 904.88 Room
154 Falcon Crest Apartments 95.6 200.00 Unit
- ----------------------------------------------------------------------------------------
155 Forest Park Mobile Home Park 91.6 36.00 Pad
156 Riverwalk Terrace Apartments 96.1 256.00 Unit
157 Boulder Bins Self Storage 93.8 15.98 Unit
158 Randolph Shopping Center 90.7 0.15 Sq Foot
159 Canyon Place 96.3 150.00 Unit
- ----------------------------------------------------------------------------------------
160 Florida Village Apartments 100.0 329.00 Unit
161 One Highland Center 100.0 0.18 Sq Foot
162 Anderson Square Business Park 100.0 0.10 Sq Foot
163 Renaissance Parc Apartments 91.1 250.00 Unit
164 Reynolds International 100.0 0.15 Sq Foot
- ----------------------------------------------------------------------------------------
165 Outrigger Apartments 95.0 225.00 Unit
166 Whispering Waters Industrial Warehouse 100.0 0.15 Sq Foot
167 Silver Lake Pointe 97.6 175.00 Unit
168 Carbondale Plaza 100.0 0.15 Sq Foot
169 Sunset Plaza 95.3 0.36 Sq Foot
- ----------------------------------------------------------------------------------------
170 Town and Country Shopping Center 95.0 0.15 Sq Foot
171 7-9 East 32nd Street 100.0 213.00 Unit
172 Elmwood Villas Apartments 98.1 223.00 Unit
173 Oak Tree Village 91.7 265.00 Unit
174 Cedar Ridge Apartments 97.4 227.00 Unit
- ----------------------------------------------------------------------------------------
175 Snowden Square S.C. - 349 100.0 0.10 Sq Foot
176 Brentwood Manor 100.0 263.00 Unit
177 Autumn Woods Apartments 84.0 272.00 Unit
178 Windsor Townhomes 94.4 270.00 Unit
179 Safeway Food Store # 0837 100.0 0.28 Sq Foot
- ----------------------------------------------------------------------------------------
180 Whispering Pines 96.1 237.00 Unit
181 Eagle Creek Plaza 100.0 0.23 Sq Foot
182 Welleby Square Shopping Center 79.1 0.14 Sq Foot
183 Baywood Plaza Shopping Center 98.2 0.10 Sq Foot
184 Country Gardens 98.0 200.00 Bed
- ----------------------------------------------------------------------------------------
185 Cliffbrook Condominiums 100.0 128.03 Unit
186 Valley View 92.5 150.00 Unit
187 New Paltz Shopping Center 95.5 0.20 Sq Foot
188 Hurst Hills Duplexes 98.4 258.00 Unit
189 Crossroads Shopping Center Beaumont 92.3 0.27 Sq Foot
- ----------------------------------------------------------------------------------------
190 Comfort Inn Belle Fontaine NAP 5% of gross revenue
191 Freeport Lincoln Mall 86.3 0.10 Sq Foot
192 Rose Lane 95.3 150.00 Unit
193 Holiday Inn Lufkin NAP 3% of gross revenue
194 Hickory Ridge 98.3 237.00 Unit
- ----------------------------------------------------------------------------------------
195 Maple Ridge SC - 344 100.0 0.10 Sq Foot
196 The Sinclair 100.0 0.15 Sq Foot
197 Pepperwood Plaza 97.9 0.18 Sq Foot
198 Comfort Inn Cape Hatteras NAP 4% of gross revenue
199 Staples Office Supply 100.0 0.10 Sq Foot
- ----------------------------------------------------------------------------------------
<CAPTION>
Largest Retail Tenant
-----------------------------------------------------------------
Tenant Lease
Control Administrative Area Leased Exp Date Control
No. Property Name Cost Rate Tenant Name (Sq. Ft.) (Sq. Ft.) No.
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
125 Residence Inn - Savannah 0.1350 125
126 Lake Mist 0.1350 126
127 Cedar Pointe 0.1350 127
128 Americana Plaza 0.1350 Winn Dixie 52,939 12/06 128
129 Westgate Park 0.1350 129
- ------------------------------------------------------------------------------------------------------------------------------------
130 SMC-Duluth-249 0.1350 Service Merchandise 56,255 12/11 130
131 Hoods Crossroads Shopping Center 0.1350 Food Lion 30,280 09/07 131
132 Holiday Inn North 0.1350 132
133 Comfort Inn 0.1350 133
134 Oakmont Retirement Residence 0.1350 134
- ------------------------------------------------------------------------------------------------------------------------------------
135 Emerald Pointe 0.1350 135
136 Hampton Court 0.1350 136
137 Marriot Courtyard -Athens 0.1350 137
138 Comfort Inn 0.1350 138
139 Gateway Courtyard 0.1350 REI (Not part of Mortgaged Property) 40,000 NAV 139
- ------------------------------------------------------------------------------------------------------------------------------------
140 St. Catherine Apartments 0.2100 140
141 Quality Inn Petaluma 0.1950 141
142 Crestview Holiday Inn 0.1350 142
143 Office Depot 0.1850 Office Depot (Retail) 24,000 09/06 143
144 Heatherwood Apartments 0.1350 144
- ------------------------------------------------------------------------------------------------------------------------------------
145 Meridian Center One 0.1350 145
146 Port City Center 0.1350 146
147 Riverside Mall 0.1350 CVS 10,025 05/01 147
148 Delray West Plaza 0.1350 Priced Perfect Furniture 26,546 09/06 148
149 Redondo Place Shopping Center 0.1850 Western Auto Supply 11,855 07/04 149
- ------------------------------------------------------------------------------------------------------------------------------------
150 College Main Apartments 0.1850 150
151 Grove Plaza 0.1850 Lucky's (Not part of Mortgaged Property) 45,650 NAV 151
152 Park Row / New Scotland Gardens Apts. 0.1350 152
153 Best Western Patio Motel 0.1350 153
154 Falcon Crest Apartments 0.1350 154
- ------------------------------------------------------------------------------------------------------------------------------------
155 Forest Park Mobile Home Park 0.1350 155
156 Riverwalk Terrace Apartments 0.1350 156
157 Boulder Bins Self Storage 0.1350 157
158 Randolph Shopping Center 0.1350 National Tire Warehouse 24,443 11/02 158
159 Canyon Place 0.1350 159
- ------------------------------------------------------------------------------------------------------------------------------------
160 Florida Village Apartments 0.2100 160
161 One Highland Center 0.1350 161
162 Anderson Square Business Park 0.1350 Transamerican Auto Parts 11,520 11/01 162
163 Renaissance Parc Apartments 0.2150 163
164 Reynolds International 0.1350 164
- ------------------------------------------------------------------------------------------------------------------------------------
165 Outrigger Apartments 0.1350 165
166 Whispering Waters Industrial Warehouse 0.1350 166
167 Silver Lake Pointe 0.1350 167
168 Carbondale Plaza 0.1350 Insalaco Market 52,720 11/15 168
169 Sunset Plaza 0.2100 Dillon's Market 32,118 09/98 169
- ------------------------------------------------------------------------------------------------------------------------------------
170 Town and Country Shopping Center 0.1350 Kash N' Karry 46,634 12/02 170
171 7-9 East 32nd Street 0.1350 171
172 Elmwood Villas Apartments 0.1350 172
173 Oak Tree Village 0.1350 173
174 Cedar Ridge Apartments 0.1350 174
- ------------------------------------------------------------------------------------------------------------------------------------
175 Snowden Square S.C. - 349 0.1350 Service Merchandise Company, Inc. 50,000 11/11 175
176 Brentwood Manor 0.1350 176
177 Autumn Woods Apartments 0.1350 177
178 Windsor Townhomes 0.2100 178
179 Safeway Food Store # 0837 0.1350 Safeway 47,165 02/07 179
- ------------------------------------------------------------------------------------------------------------------------------------
180 Whispering Pines 0.2100 180
181 Eagle Creek Plaza 0.1850 Eagle Foods 28,963 04/05 181
182 Welleby Square Shopping Center 0.1850 Sunrise Fitness 18,600 07/04 182
183 Baywood Plaza Shopping Center 0.1350 Eckerd 10,355 11/03 183
184 Country Gardens 0.1350 184
- ------------------------------------------------------------------------------------------------------------------------------------
185 Cliffbrook Condominiums 0.1850 185
186 Valley View 0.1350 186
187 New Paltz Shopping Center 0.1350 Shop Rite 32,940 05/08 187
188 Hurst Hills Duplexes 0.1350 188
189 Crossroads Shopping Center Beaumont 0.1850 Smith Barney 6,200 01/97 189
- ------------------------------------------------------------------------------------------------------------------------------------
190 Comfort Inn Belle Fontaine 0.1350 190
191 Freeport Lincoln Mall 0.1350 Menard's 77,620 09/03 191
192 Rose Lane 0.1350 192
193 Holiday Inn Lufkin 0.1350 193
194 Hickory Ridge 0.1350 194
- ------------------------------------------------------------------------------------------------------------------------------------
195 Maple Ridge SC - 344 0.1350 Service Merchandise Company, Inc. 51,600 11/11 195
196 The Sinclair 0.1350 The Gap 8,740 10/06 196
197 Pepperwood Plaza 0.2100 ABCO Foods (Not part of Mortgaged Property) 40,850 NAV 197
198 Comfort Inn Cape Hatteras 0.1350 198
199 Staples Office Supply 0.1350 Staples (Single Tenant) 23,575 09/11 199
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Control Zip
No. Property Name Address City State Code
===================================================================================================================================
<S> <C> <C> <C> <C>
200 Parkway Villas 4800 Brookdale Drive Wichita Falls TX 76310
201 Cameron Hill II 409 Cameron Circle Chattanooga TN 37403
202 Tustin Autoplex 2005-2025 N. Tustin Avenue Santa Ana CA 92701
203 Glenbrook Apartments 2089 S. Glenbrook Garland TX 75041
204 1000 West Crosby 1000 West Crosby Road Carrollton TX 75006
- -----------------------------------------------------------------------------------------------------------------------------------
205 Holiday Inn Bay City 501 Saginaw Street Bay City MI 48708
206 Potomac Festival II 14650 Potomac Mills Road @ Opitz Blvd Woodbridge VA 22192
207 Weatheredge 7520 Cook Road Houston TX 77072
208 SMC-Tucker-252 1990 W. Exchange Place Tucker GA 30084
209 Gateway Center 1421-1575 Goshen Road Ft. Wayne IN 46808
- -----------------------------------------------------------------------------------------------------------------------------------
210 Streetcar Stables 1700 Wynkoop St. Denver CO 80202
211 Colonia Del Ray 120 North McQueen Road Chandler AZ 85225
212 Village Square West 11602-11640 North Dale Mabry Highway Tampa FL 33618
213 Cedartown North SC US Highway 27 Cedartown GA 30125
214 Gala Plaza Shorter Avenue and Redmond Circle Rome GA 36301
- -----------------------------------------------------------------------------------------------------------------------------------
215 Anthony Arms 328 Greenwood St. Worcester MA 01607
216 Ramada Inn Lawton 601 Northwest Second Street Lawton OK 73507
217 Cookson Company 2417 S. 50th Avenue Phoenix AZ 85043
218 Sussex Mill W240 N6345 Maple Avenue Sussex Village WI 53089
219 Sixth Avenue 145 6th Avenue New York NY 10013
- -----------------------------------------------------------------------------------------------------------------------------------
220 7-11 & 20 Ballard Way 7-11 & 20 Ballard Way Lawrence MA 01840
221 Valleyfield 5421Covington Way Decatur GA 30035
222 Little River Plaza 587 East Main Street Westfield MA 01085
223 Shamrock Place 2308-2322 Lawrenceville Highway Decatur GA 30033
224 Courtyard Homes 11505 West Greenfield Avenue West Allis WI 53214
- -----------------------------------------------------------------------------------------------------------------------------------
225 Golfsmith Golf Center 4141 LBJ Freeway Dallas TX 75244
226 Rising Sun Avenue Shopping Center 5921 Rising Sun Ave. Philadelphia PA 19120
227 Lyons Court 16303 Lyons School Road Houston TX 77379
228 Mid America Business Park 6205 South Sooner Road Oklahoma City OK 73135
229 Wingwood Apartments 5749 St. Charles Prado Orlando FL 32822
- -----------------------------------------------------------------------------------------------------------------------------------
230 Park Dale Lane Apartments 801 Dale Lane White Settlement TX 76108
231 Liberty Triangle 208-228 N. 291 Highway Liberty MO 64068
231a Tranche "A"
231b Tranche "B"
- -----------------------------------------------------------------------------------------------------------------------------------
232 The Royale Apartments 9701 Stella Link Houston TX 77025
233 Villa De Oro 130 Camino de Oro San Antonio TX 78224
234 Gerlands Food Fair 10902 Scarsdale Boulevard Houston TX 77089
235 Sierra Valencia Business Park 3280 Hemisphere Loop Tuscon AZ 85706
- -----------------------------------------------------------------------------------------------------------------------------------
236 Westwinds Village 4900 East University Boulevard Odessa TX 79761
237 Kroger - Friendswood 3210 - 3326 FM 528 @ West Bay Area Boulevard Friendswood TX 77546
238 Northwood Village Apartments 1301 Northwood Drive Crosicana TX 75110
239 Redwood Hollow 101 Redwood Hollow Dr. Smyrna TN 37167
240 West End Plaza 550 Farmington Avenue Hartford CT 06105
- -----------------------------------------------------------------------------------------------------------------------------------
241 Sleep Inn Chattanooga 2351 Shallowford Village Drive Chattanooga TN 37421
242 Cheesbrough Industrial 220 & 314 Evelyn Street Cheyenne WY 82001
243 Overbrook 5713-5723 Edmonsdon Avenue Catonsville MD 21228
244 Springtree Apartments 4772 Elmhurst Rd. West Palm Beach FL 33417
245 Harmony Gables Apartments 877 Charles Allen Drive Atlanta GA 30308
- -----------------------------------------------------------------------------------------------------------------------------------
246 Mableton Manor 1000 South Manor Drive Mableton GA 30059
247 Harriston Square 5522 Old National Hwy Atlanta GA 30349
248 Heathmoore 2412 South Green River Rd. Evansville IN 47715
249 Midway Retail Center 18918 Midway Road Dallas TX 75287
250 Stepping Stone 7737 Skolout Drive San Antonio TX 78227
- -----------------------------------------------------------------------------------------------------------------------------------
251 Center Square 623 E. 16th Street Plano TX 75074
252 Wycliffe Court 1225 E. Northfield Blvd. Murfreesboro TN 37130
253 Ridge Road West 3400 Ridge Road West Greece NY 14626
254 163 West 78th Street 163 West 78th St. New York NY 10024
255 2564-70 Amsterdam Ave (500 W. 188th St) 2564-70 Amsterdam Ave (500 W. 188th St) New York NY 10040
- -----------------------------------------------------------------------------------------------------------------------------------
256 Bowdon Shopping Center 130 North Carroll Street Bowdon GA 30108
257 Sugartree Apartments 1801 Sugartree Circle New Smyrna Beach FL 32168
258 Hunter Square 1003-1021 Hunter Street Baltimore MD 21202
259 Gaulden Manor Nursing Center 225 Hansberger Street Baltimore OH 43105
260 Wynwood 1267 Nelson St Richmond VA 23231
- -----------------------------------------------------------------------------------------------------------------------------------
261 Creekbend 1050 Rentshire Drive Columbus OH 43228
262 Raphael 5520 and 5505 Helen Street Austin TX 78751
263 Campbell Crossing 4515 N. 16th Street/Campbell Avenue Phoenix AZ 85016
264 Franklin Shopping Center East Court Square Franklin GA 30217
265 Cambridge Commons II 4962 Oakhurst Dr. Indianapolis IN 46254
- -----------------------------------------------------------------------------------------------------------------------------------
266 Continental Professional Plaza 1131-1151 South La Canada Drive Green Valley AZ 85614
267 Malley Farms Business Center 30 Centre Road Somersworth NH 03078
268 St. Armand's Apartments 3648 Yarbrough Avenue Winston-Salem NC 27106
269 Glenwood 4719 Harmon Street Austin TX 78751
270 Dothan Mini-Storage West 2731 Ross Clark Circle, N.W. Dothan AL 36301
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
% of Aggregate Cumulative
Control Original Cut-off Date Cut-off Date % of Initial Mortgage
No. Property Name Balance Balance Balance Pool Balance Rate
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
200 Parkway Villas 2,200,000 2,195,150 0.17% 91.52% 8.7500%
201 Cameron Hill II 2,175,000 2,167,083 0.17% 91.68% 8.5800
202 Tustin Autoplex 2,150,000 2,148,081 0.16% 91.85% 8.9950
203 Glenbrook Apartments 2,150,000 2,146,024 0.16% 92.01% 8.4500
204 1000 West Crosby 2,150,000 2,144,184 0.16% 92.17% 8.9800
- ------------------------------------------------------------------------------------------------------------------------------------
205 Holiday Inn Bay City 2,140,000 2,134,910 0.16% 92.34% 9.7500
206 Potomac Festival II 2,140,000 2,132,117 0.16% 92.50% 8.8750
207 Weatheredge 2,100,000 2,098,176 0.16% 92.66% 9.1600
208 SMC-Tucker-252 2,100,000 2,071,178 0.16% 92.82% 8.7400
209 Gateway Center 2,070,000 2,068,115 0.16% 92.98% 8.8750
- ------------------------------------------------------------------------------------------------------------------------------------
210 Streetcar Stables 2,075,000 2,063,685 0.16% 93.14% 9.0000
211 Colonia Del Ray 2,000,000 1,996,414 0.15% 93.29% 8.6000
212 Village Square West 1,960,000 1,956,904 0.15% 93.44% 8.8750
213 Cedartown North SC 1,875,000 1,867,950 0.14% 93.58% 8.7500
214 Gala Plaza 1,850,000 1,843,044 0.14% 93.72% 8.7500
- ------------------------------------------------------------------------------------------------------------------------------------
215 Anthony Arms 1,800,000 1,795,017 0.14% 93.86% 8.8400
216 Ramada Inn Lawton 1,750,000 1,747,579 0.13% 94.00% 10.0000
217 Cookson Company 1,750,000 1,742,801 0.13% 94.13% 9.7500
218 Sussex Mill 1,712,000 1,710,351 0.13% 94.26% 9.6200
219 Sixth Avenue 1,700,000 1,697,019 0.13% 94.39% 9.1250
- ------------------------------------------------------------------------------------------------------------------------------------
220 7-11 & 20 Ballard Way 1,700,000 1,695,371 0.13% 94.52% 8.9400
221 Valleyfield 1,689,000 1,684,286 0.13% 94.65% 8.7900
222 Little River Plaza 1,650,000 1,648,543 0.13% 94.78% 9.0600
223 Shamrock Place 1,650,000 1,642,683 0.13% 94.90% 9.1250
224 Courtyard Homes 1,620,000 1,614,900 0.12% 95.03% 9.2850
- ------------------------------------------------------------------------------------------------------------------------------------
225 Golfsmith Golf Center 1,615,000 1,611,202 0.12% 95.15% 8.7000
226 Rising Sun Avenue Shopping Center 1,600,000 1,599,139 0.12% 95.27% 9.0720
227 Lyons Court 1,600,000 1,599,079 0.12% 95.39% 8.7500
228 Mid America Business Park 1,600,000 1,595,733 0.12% 95.52% 8.9000
229 Wingwood Apartments 1,557,000 1,551,000 0.12% 95.63% 8.6000
- ------------------------------------------------------------------------------------------------------------------------------------
230 Park Dale Lane Apartments 1,525,000 1,522,180 0.12% 95.75% 8.4500
231 Liberty Triangle 1,492,000 1,482,192 0.11% 95.86% 8.8200
----------------------------------- ----------
231a Tranche "A" 153,500 145,215 8.8200
231b Tranche "B" 1,338,500 1,336,976 8.8200
- ------------------------------------------------------------------------------------------------------------------------------------
232 The Royale Apartments 1,475,000 1,473,719 0.11% 95.98% 9.1600
233 Villa De Oro 1,418,000 1,412,143 0.11% 96.09% 9.4000
234 Gerlands Food Fair 1,410,000 1,409,264 0.11% 96.19% 9.2200
235 Sierra Valencia Business Park 1,404,000 1,402,799 0.11% 96.30% 9.2500
- ------------------------------------------------------------------------------------------------------------------------------------
236 Westwinds Village 1,400,000 1,396,450 0.11% 96.41% 8.3300
237 Kroger - Friendswood 1,395,000 1,393,801 0.11% 96.51% 9.2200
238 Northwood Village Apartments 1,390,000 1,387,430 0.11% 96.62% 8.4500
239 Redwood Hollow 1,377,000 1,369,902 0.10% 96.73% 8.2050
240 West End Plaza 1,365,000 1,357,708 0.10% 96.83% 9.1250
- ------------------------------------------------------------------------------------------------------------------------------------
241 Sleep Inn Chattanooga 1,350,000 1,344,359 0.10% 96.93% 9.3750
242 Cheesbrough Industrial 1,325,000 1,320,010 0.10% 97.03% 8.7400
243 Overbrook 1,300,000 1,295,891 0.10% 97.13% 8.3750
244 Springtree Apartments 1,288,000 1,283,037 0.10% 97.23% 8.6000
245 Harmony Gables Apartments 1,267,000 1,265,780 0.10% 97.33% 8.5370
- ------------------------------------------------------------------------------------------------------------------------------------
246 Mableton Manor 1,260,000 1,252,150 0.10% 97.42% 9.1500
247 Harriston Square 1,250,000 1,243,559 0.10% 97.52% 9.3430
248 Heathmoore 1,205,000 1,198,788 0.09% 97.61% 8.2050
249 Midway Retail Center 1,200,000 1,197,830 0.09% 97.70% 8.9400
250 Stepping Stone 1,200,000 1,196,050 0.09% 97.80% 9.0700
- ------------------------------------------------------------------------------------------------------------------------------------
251 Center Square 1,200,000 1,190,991 0.09% 97.89% 8.8500
252 Wycliffe Court 1,190,000 1,183,294 0.09% 97.98% 8.8000
253 Ridge Road West 1,150,000 1,145,856 0.09% 98.06% 9.0100
254 163 West 78th Street 1,072,500 1,067,669 0.08% 98.15% 8.9800
255 2564-70 Amsterdam Ave (500 W. 188th St) 1,053,000 1,049,278 0.08% 98.23% 9.1250
- ------------------------------------------------------------------------------------------------------------------------------------
256 Bowdon Shopping Center 1,050,000 1,046,726 0.08% 98.31% 8.7100
257 Sugartree Apartments 1,023,000 1,019,058 0.08% 98.39% 8.6000
258 Hunter Square 1,021,000 1,018,575 0.08% 98.46% 8.6500
259 Gaulden Manor Nursing Center 1,015,000 1,006,941 0.08% 98.54% 10.1250
260 Wynwood 1,000,000 994,457 0.08% 98.62% 8.9000
- ------------------------------------------------------------------------------------------------------------------------------------
261 Creekbend 975,000 974,467 0.07% 98.69% 9.0000
262 Raphael 962,000 960,655 0.07% 98.76% 9.0000
263 Campbell Crossing 945,000 943,343 0.07% 98.84% 9.1250
264 Franklin Shopping Center 937,500 934,577 0.07% 98.91% 8.7100
265 Cambridge Commons II 922,000 920,265 0.07% 98.98% 8.7000
- ------------------------------------------------------------------------------------------------------------------------------------
266 Continental Professional Plaza 902,000 899,034 0.07% 99.05% 9.0750
267 Malley Farms Business Center 900,000 896,605 0.07% 99.12% 8.7300
268 St. Armand's Apartments 900,000 894,205 0.07% 99.19% 8.9500
269 Glenwood 860,000 858,798 0.07% 99.25% 9.0000
270 Dothan Mini-Storage West 860,000 857,144 0.07% 99.32% 9.5000
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Original Remaining Original Remaining
Term to Term to Amortization Amortization
Control Maturity Maturity Term Term
No. Property Name (Mos.) (Mos.) (Mos.) (Mos.)
==========================================================================================================================
<S> <C> <C> <C> <C>
200 Parkway Villas 120 117 330 327
201 Cameron Hill II 120 114 360 354
202 Tustin Autoplex 120 119 300 299
203 Glenbrook Apartments 84 81 360 357
204 1000 West Crosby 84 81 300 297
- --------------------------------------------------------------------------------------------------------------------------
205 Holiday Inn Bay City 84 81 300 297
206 Potomac Festival II 120 116 300 296
207 Weatheredge 120 119 300 299
208 SMC-Tucker-252 180 175 180 175
209 Gateway Center 120 119 300 299
- --------------------------------------------------------------------------------------------------------------------------
210 Streetcar Stables 84 78 300 294
211 Colonia Del Ray 300 297 360 357
212 Village Square West 120 118 300 298
213 Cedartown North SC 120 116 300 296
214 Gala Plaza 120 116 300 296
- --------------------------------------------------------------------------------------------------------------------------
215 Anthony Arms 120 117 300 297
216 Ramada Inn Lawton 240 239 240 239
217 Cookson Company 180 177 240 237
218 Sussex Mill 300 298 360 358
219 Sixth Avenue 120 118 300 298
- --------------------------------------------------------------------------------------------------------------------------
220 7-11 & 20 Ballard Way 120 117 300 297
221 Valleyfield 120 117 300 297
222 Little River Plaza 120 119 300 299
223 Shamrock Place 84 79 300 295
224 Courtyard Homes 300 294 360 354
- --------------------------------------------------------------------------------------------------------------------------
225 Golfsmith Golf Center 120 116 360 356
226 Rising Sun Avenue Shopping Center 120 119 360 359
227 Lyons Court 120 119 360 359
228 Mid America Business Park 180 179 180 179
229 Wingwood Apartments 120 116 300 296
- --------------------------------------------------------------------------------------------------------------------------
230 Park Dale Lane Apartments 84 81 360 357
231 Liberty Triangle 120 118 360 358
-------------------------------------------------------
231a Tranche "A" 33 31 33 31
231b Tranche "B" 120 118 360 358
- --------------------------------------------------------------------------------------------------------------------------
232 The Royale Apartments 120 119 300 299
233 Villa De Oro 97 89 360 352
234 Gerlands Food Fair 120 119 360 359
235 Sierra Valencia Business Park 120 119 300 299
- --------------------------------------------------------------------------------------------------------------------------
236 Westwinds Village 120 116 360 356
237 Kroger - Friendswood 120 119 300 299
238 Northwood Village Apartments 84 81 360 357
239 Redwood Hollow 120 115 300 295
240 West End Plaza 120 114 300 294
- --------------------------------------------------------------------------------------------------------------------------
241 Sleep Inn Chattanooga 120 116 276 272
242 Cheesbrough Industrial 120 116 300 296
243 Overbrook 120 116 330 326
244 Springtree Apartments 120 116 300 296
245 Harmony Gables Apartments 120 119 300 299
- --------------------------------------------------------------------------------------------------------------------------
246 Mableton Manor 120 113 300 293
247 Harriston Square 120 114 300 294
248 Heathmoore 120 115 300 295
249 Midway Retail Center 120 118 300 298
250 Stepping Stone 120 114 360 354
- --------------------------------------------------------------------------------------------------------------------------
251 Center Square 60 52 300 292
252 Wycliffe Court 120 114 300 294
253 Ridge Road West 120 116 300 296
254 163 West 78th Street 120 112 360 352
255 2564-70 Amsterdam Ave (500 W. 188th St) 120 116 300 296
- --------------------------------------------------------------------------------------------------------------------------
256 Bowdon Shopping Center 120 116 324 320
257 Sugartree Apartments 120 116 300 296
258 Hunter Square 120 116 360 356
259 Gaulden Manor Nursing Center 120 114 240 234
260 Wynwood 120 114 300 294
- --------------------------------------------------------------------------------------------------------------------------
261 Creekbend 300 299 360 359
262 Raphael 120 118 330 328
263 Campbell Crossing 120 118 300 298
264 Franklin Shopping Center 120 116 324 320
265 Cambridge Commons II 120 118 300 298
- --------------------------------------------------------------------------------------------------------------------------
266 Continental Professional Plaza 84 78 360 354
267 Malley Farms Business Center 84 80 300 296
268 St. Armand's Apartments 120 113 300 293
269 Glenwood 120 118 330 328
270 Dothan Mini-Storage West 120 116 300 296
- --------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Control Origination Maturity Balloon
No. Property Name Date Date Balance Property Type
==========================================================================================================================
<S> <C> <C> <C> <C>
200 Parkway Villas 1/27/97 2/1/07 1,897,604 Multifamily
201 Cameron Hill II 10/29/96 11/1/06 1,933,083 Multifamily
202 Tustin Autoplex 3/24/97 4/1/07 1,783,357 Retail - Unanchored
203 Glenbrook Apartments 1/28/97 2/1/04 2,002,301 Multifamily
204 1000 West Crosby 1/28/97 2/1/04 1,929,724 Industrial
- --------------------------------------------------------------------------------------------------------------------------
205 Holiday Inn Bay City 1/10/97 2/1/04 1,941,691 Hospitality
206 Potomac Festival II 12/6/96 1/1/07 1,810,249 Retail - Anchored
207 Weatheredge 4/1/97 4/1/07 1,790,844 Multifamily
208 SMC-Tucker-252 11/7/96 12/1/11 - Retail - Anchored
209 Gateway Center 3/6/97 4/1/07 1,712,295 Retail - Unanchored
- --------------------------------------------------------------------------------------------------------------------------
210 Streetcar Stables 10/22/96 11/1/03 1,862,955 Retail - Unanchored
211 Colonia Del Ray 1/16/97 2/1/22 764,740 Multifamily - Section 42
212 Village Square West 2/21/97 3/1/07 1,660,631 Retail - Unanchored
213 Cedartown North SC 12/6/96 1/1/07 1,580,823 Retail - Anchored
214 Gala Plaza 12/31/96 1/1/07 1,525,888 Retail - Unanchored
- --------------------------------------------------------------------------------------------------------------------------
215 Anthony Arms 1/31/97 2/1/07 1,487,751 Multifamily
216 Ramada Inn Lawton 3/26/97 4/1/17 - Hospitality
217 Cookson Company 1/24/97 2/1/12 795,914 Industrial
218 Sussex Mill 2/27/97 3/1/22 699,591 Multifamily - Section 42
219 Sixth Avenue 2/20/97 3/1/07 1,414,240 Office
- --------------------------------------------------------------------------------------------------------------------------
220 7-11 & 20 Ballard Way 1/10/97 2/1/07 1,408,330 Industrial
221 Valleyfield 1/15/97 2/1/07 1,394,392 Multifamily
222 Little River Plaza 3/19/97 4/1/07 1,370,639 Retail - Unanchored
223 Shamrock Place 11/12/96 12/1/03 1,484,090 Multifamily
224 Courtyard Homes 10/31/96 11/1/21 648,086 Multifamily - Section 42
- --------------------------------------------------------------------------------------------------------------------------
225 Golfsmith Golf Center 12/23/96 1/1/07 1,438,637 Retail - Unanchored
226 Rising Sun Avenue Shopping Center 3/11/97 4/1/07 1,434,826 Retail - Anchored
227 Lyons Court 3/3/97 4/1/07 1,457,343 Multifamily
228 Mid America Business Park 3/4/97 4/1/12 - Industrial
229 Wingwood Apartments 12/18/96 1/1/07 1,279,703 Multifamily
- --------------------------------------------------------------------------------------------------------------------------
230 Park Dale Lane Apartments 1/27/97 2/1/04 1,420,237 Multifamily
231 Liberty Triangle 2/28/97 3/1/07 1,194,922 Retail - Anchored
--------------------------
231a Tranche "A" 12/1/99 -
231b Tranche "B" 3/1/07 1,194,922
- --------------------------------------------------------------------------------------------------------------------------
232 The Royale Apartments 4/1/97 4/1/07 1,257,854 Multifamily
233 Villa De Oro 8/6/96 10/15/04 1,316,604 Multifamily - Section 42
234 Gerlands Food Fair 3/20/97 4/1/07 1,297,190 Retail - Anchored
235 Sierra Valencia Business Park 3/27/97 4/1/07 1,200,101 Office
- --------------------------------------------------------------------------------------------------------------------------
236 Westwinds Village 12/18/96 1/1/07 1,238,338 Multifamily
237 Kroger - Friendswood 3/20/97 4/1/07 1,191,485 Retail - Anchored
238 Northwood Village Apartments 1/28/97 2/1/04 1,294,511 Multifamily
239 Redwood Hollow 11/25/96 12/1/06 1,121,012 Multifamily
240 West End Plaza 10/25/96 11/1/06 1,135,551 Retail - Unanchored
- --------------------------------------------------------------------------------------------------------------------------
241 Sleep Inn Chattanooga 12/2/96 1/1/07 1,077,991 Hospitality
242 Cheesbrough Industrial 12/26/96 1/1/07 1,092,611 Industrial
243 Overbrook 12/4/96 1/1/07 1,112,420 Multifamily
244 Springtree Apartments 12/18/96 1/1/07 1,058,612 Multifamily
245 Harmony Gables Apartments 3/11/97 4/1/07 1,039,796 Multifamily
- --------------------------------------------------------------------------------------------------------------------------
246 Mableton Manor 9/30/96 10/1/06 1,048,788 Multifamily
247 Harriston Square 10/24/96 11/1/06 1,044,918 Office
248 Heathmoore 11/25/96 12/1/06 980,988 Multifamily
249 Midway Retail Center 2/18/97 3/1/07 994,115 Retail - Unanchored
250 Stepping Stone 10/10/96 11/1/06 1,076,081 Multifamily
- --------------------------------------------------------------------------------------------------------------------------
251 Center Square 8/22/96 9/1/01 1,119,249 Multifamily
252 Wycliffe Court 10/16/96 11/1/06 982,659 Multifamily
253 Ridge Road West 12/23/96 1/1/07 954,250 Retail - Anchored
254 163 West 78th Street 8/23/96 9/1/06 960,218 Multifamily
255 2564-70 Amsterdam Ave (500 W. 188th St) 12/19/96 1/1/07 875,997 Multifamily
- --------------------------------------------------------------------------------------------------------------------------
256 Bowdon Shopping Center 12/10/96 1/1/07 897,804 Retail - Anchored
257 Sugartree Apartments 12/18/96 1/1/07 840,807 Multifamily
258 Hunter Square 12/31/96 1/1/07 908,629 Multifamily
259 Gaulden Manor Nursing Center 10/24/96 11/1/06 747,243 Skilled Nursing
260 Wynwood 10/29/96 11/1/06 827,671 Multifamily
- --------------------------------------------------------------------------------------------------------------------------
261 Creekbend 3/28/97 4/1/22 382,897 Multifamily - Section 42
262 Raphael 2/19/97 3/1/07 834,021 Multifamily
263 Campbell Crossing 2/18/97 3/1/07 786,151 Retail - Unanchored
264 Franklin Shopping Center 12/10/96 1/1/07 801,611 Retail - Anchored
265 Cambridge Commons II 2/3/97 3/1/07 759,582 Multifamily
- --------------------------------------------------------------------------------------------------------------------------
266 Continental Professional Plaza 10/11/96 11/1/03 846,273 Office
267 Malley Farms Business Center 12/24/96 1/1/04 804,779 Industrial
268 St. Armand's Apartments 9/27/96 10/1/06 745,757 Multifamily
269 Glenwood 2/19/97 3/1/07 745,591 Multifamily
270 Dothan Mini-Storage West 12/30/96 1/1/07 721,360 Self Storage
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Control
No. Property Name Prepayment Provisions
=============================================================================================================
<S> <C>
200 Parkway Villas L(4),YM1%(5.75),O(.25)
201 Cameron Hill II L(5),YM1%(4.5),O(.5)
202 Tustin Autoplex L(5),YM1%(4.5),O(.5)
203 Glenbrook Apartments L(3),YM1%(3.5),O(.5) or Defeasance at lender's option
204 1000 West Crosby L(4),YM1%(2.5),O(.5) or Defeasance at lender's option
- -------------------------------------------------------------------------------------------------------------
205 Holiday Inn Bay City L(0),YM1%(6.5),O(.5)
206 Potomac Festival II L(4),YM1%(5.75),O(.25)
207 Weatheredge L(5),YM1%(4.75),O(.25)
208 SMC-Tucker-252 L(1),YM1%(8.5),5%(1),4%(1),3%(1),2%(1),1%(1),O(.5)
209 Gateway Center L(5),YM1%(4.75),O(.25)
- -------------------------------------------------------------------------------------------------------------
210 Streetcar Stables L(1),YM1%(5.75),O(.25)
211 Colonia Del Ray L(15),O(10)
212 Village Square West L(4),YM1%(5.75),O(.25)
213 Cedartown North SC L(4),YM1%(5.75),O(.25)
214 Gala Plaza L(4),YM1%(2),3%(1),2%(1),1%(1.75),O(.25)
- -------------------------------------------------------------------------------------------------------------
215 Anthony Arms L(0),YM1%(9.5),O(.5)
216 Ramada Inn Lawton L(0),YM1%(15),O(5)
217 Cookson Company L(5),YM1%(9.75),O(.25)
218 Sussex Mill L(15),O(10)
219 Sixth Avenue L(4),YM1%(5.75),O(.25)
- -------------------------------------------------------------------------------------------------------------
220 7-11 & 20 Ballard Way L(5),YM1%(4.5),O(.5) or Defeasance at lender's option
221 Valleyfield L(4),YM1%(5.5),O(.5)
222 Little River Plaza L(3),YM1%(6.5),O(.5) or Defeasance at borrower's option
223 Shamrock Place L(1),YM1%(5.75),O(.25)
224 Courtyard Homes L(15),O(10)
- -------------------------------------------------------------------------------------------------------------
225 Golfsmith Golf Center L(3),YM1%(6.5),O(.5) or Defeasance at lender's option
226 Rising Sun Avenue Shopping Center L(3),YM1%(6.5),O(.5) or Defeasance at lender's option
227 Lyons Court L(3),YM1%(6.75),O(.25)
228 Mid America Business Park L(4),YM1%(10.5),O(.5) or Defeasance at lender's option
229 Wingwood Apartments L(5),YM1%(4.5),O(.5)
- -------------------------------------------------------------------------------------------------------------
230 Park Dale Lane Apartments L(3),YM1%(3.5),O(.5) or Defeasance at lender's option
231 Liberty Triangle L(4),YM1%(5),O(1)
--------------------------------------------------------------
231a Tranche "A" L(2.75)
231b Tranche "B" L(4),YM1%(5),O(1)
- -------------------------------------------------------------------------------------------------------------
232 The Royale Apartments L(5),YM1%(4.75),O(.25)
233 Villa De Oro L(0),YM1%(7.583),O(.5)
234 Gerlands Food Fair L(4),YM1%(5.75),O(.25)
235 Sierra Valencia Business Park L(4),YM1%(5.75),O(.25)
- -------------------------------------------------------------------------------------------------------------
236 Westwinds Village L(4),YM1%(5.5),O(.5)
237 Kroger - Friendswood L(4),YM1%(5.75),O(.25)
238 Northwood Village Apartments L(3),YM1%(3.5),O(.5) or Defeasance at lender's option
239 Redwood Hollow L(5),YM1%(4.5),O(.5)
240 West End Plaza L(4),YM1%(5.5),O(.5)
- -------------------------------------------------------------------------------------------------------------
241 Sleep Inn Chattanooga L(0),YM1%(9.5),O(.5)
242 Cheesbrough Industrial L(3),YM1%(6.5),O(.5)
243 Overbrook L(4),YM1%(5.75),O(.25)
244 Springtree Apartments L(5),YM1%(4.5),O(.5)
245 Harmony Gables Apartments L(5),YM1%(4.5),O(.5) or Defeasance at lender's option
- -------------------------------------------------------------------------------------------------------------
246 Mableton Manor L(0),YM1%(9.5),O(.5)
247 Harriston Square L(3),YM1%(7)
248 Heathmoore L(5),YM1%(4.5),O(.5)
249 Midway Retail Center L(3),YM1%(6.5),O(.5) or Defeasance at lender's option
250 Stepping Stone L(0),YM1%(9.5),O(.5)
- -------------------------------------------------------------------------------------------------------------
251 Center Square L(0),YM1%(4.5),O(.5)
252 Wycliffe Court L(5),YM1%(4.5),O(.5)
253 Ridge Road West L(1),YM1%(8.75),O(.25)
254 163 West 78th Street L(0),YM1%(9.5),O(.5)
255 2564-70 Amsterdam Ave (500 W. 188th St) L(5),YM1%(4.5),O(.5)
- -------------------------------------------------------------------------------------------------------------
256 Bowdon Shopping Center L(3),YM1%(6.5),O(.5)
257 Sugartree Apartments L(5),YM1%(4.5),O(.5)
258 Hunter Square L(5),YM1%(4.5),O(.5)
259 Gaulden Manor Nursing Center L(3),YM1%(6.5),O(.5)
260 Wynwood L(0),YM1%(9.5),O(.5)
- -------------------------------------------------------------------------------------------------------------
261 Creekbend L(15),O(10)
262 Raphael L(5),YM1%(4.75),O(.25)
263 Campbell Crossing L(4),YM1%(5.75),O(.25)
264 Franklin Shopping Center L(3),YM1%(6.5),O(.5)
265 Cambridge Commons II L(5),YM1%(4.5),O(.5)
- -------------------------------------------------------------------------------------------------------------
266 Continental Professional Plaza L(3),YM1%(3.5),O(.5)
267 Malley Farms Business Center L(1),YM1%(5.75),O(.25)
268 St. Armand's Apartments L(3),YM1%(6.5),O(.5)
269 Glenwood L(5),YM1%(4.75),O(.25)
270 Dothan Mini-Storage West L(4),YM1%(2),3%(1),2%(1),1%(1.75),O(.25)
- -------------------------------------------------------------------------------------------------------------
<CAPTION>
Control Annual Net Appraised
No. Property Name Debt Service Cash Flow DSCR Value
========================================================================================================================
<S> <C> <C> <C> <C>
200 Parkway Villas 211,758 273,153 1.29 3,400,000
201 Cameron Hill II 202,168 285,975 1.41 2,900,000
202 Tustin Autoplex 216,424 274,250 1.27 2,850,000
203 Glenbrook Apartments 197,466 240,183 1.22 2,710,000
204 1000 West Crosby 216,159 279,519 1.29 3,400,000
- ------------------------------------------------------------------------------------------------------------------------
205 Holiday Inn Bay City 228,844 317,474 1.39 3,400,000
206 Potomac Festival II 213,312 284,652 1.33 3,700,000
207 Weatheredge 214,245 325,513 1.52 2,800,000
208 SMC-Tucker-252 251,712 324,110 1.29 4,200,000
209 Gateway Center 206,334 278,684 1.35 3,700,000
- ------------------------------------------------------------------------------------------------------------------------
210 Streetcar Stables 208,960 327,985 1.57 2,900,000
211 Colonia Del Ray 186,243 234,722 1.26 2,600,000
212 Village Square West 195,370 255,919 1.31 2,800,000
213 Cedartown North SC 184,982 233,882 1.26 2,500,000
214 Gala Plaza 182,516 328,420 1.80 3,700,000
- ------------------------------------------------------------------------------------------------------------------------
215 Anthony Arms 178,906 232,172 1.30 2,650,000
216 Ramada Inn Lawton 202,655 294,074 1.45 2,800,000
217 Cookson Company 199,188 249,667 1.25 2,550,000
218 Sussex Mill 174,547 201,918 1.16 2,450,000
219 Sixth Avenue 172,946 262,520 1.52 3,400,000
- ------------------------------------------------------------------------------------------------------------------------
220 7-11 & 20 Ballard Way 170,359 219,994 1.29 2,600,000
221 Valleyfield 167,183 221,551 1.33 2,300,000
222 Little River Plaza 166,975 255,753 1.53 3,500,000
223 Shamrock Place 167,859 228,510 1.36 2,200,000
224 Courtyard Homes 160,421 191,918 1.20 2,070,000
- ------------------------------------------------------------------------------------------------------------------------
225 Golfsmith Golf Center 151,776 190,525 1.26 2,400,000
226 Rising Sun Avenue Shopping Center 155,483 198,006 1.27 2,135,000
227 Lyons Court 151,047 191,564 1.27 2,100,000
228 Mid America Business Park 193,599 299,812 1.55 3,000,000
229 Wingwood Apartments 151,710 210,325 1.39 2,300,000
- ------------------------------------------------------------------------------------------------------------------------
230 Park Dale Lane Apartments 140,063 173,984 1.24 1,940,000
231 Liberty Triangle 190,228 251,208 1.32 2,150,000
-----------------
231a Tranche "A" 63,065
231b Tranche "B" 127,164
- ------------------------------------------------------------------------------------------------------------------------
232 The Royale Apartments 150,482 199,320 1.32 2,450,000
233 Villa De Oro 141,840 204,210 1.44 2,500,000
234 Gerlands Food Fair 138,829 173,555 1.25 2,100,000
235 Sierra Valencia Business Park 144,283 187,618 1.30 2,900,000
- ------------------------------------------------------------------------------------------------------------------------
236 Westwinds Village 127,159 167,998 1.32 2,200,000
237 Kroger - Friendswood 143,012 178,352 1.25 1,810,000
238 Northwood Village Apartments 127,664 165,391 1.30 1,845,000
239 Redwood Hollow 129,787 163,971 1.26 1,765,000
240 West End Plaza 138,865 202,034 1.45 1,950,000
- ------------------------------------------------------------------------------------------------------------------------
241 Sleep Inn Chattanooga 143,289 201,725 1.41 2,000,000
242 Cheesbrough Industrial 130,613 182,418 1.40 2,022,000
243 Overbrook 121,073 162,687 1.34 1,890,000
244 Springtree Apartments 125,499 171,265 1.36 1,835,000
245 Harmony Gables Apartments 122,806 172,092 1.40 1,700,000
- ------------------------------------------------------------------------------------------------------------------------
246 Mableton Manor 128,443 164,684 1.28 1,650,000
247 Harriston Square 129,421 175,233 1.35 1,775,000
248 Heathmoore 113,575 161,141 1.42 1,600,000
249 Midway Retail Center 120,253 196,646 1.64 1,940,000
250 Stepping Stone 116,592 179,847 1.54 1,950,000
- ------------------------------------------------------------------------------------------------------------------------
251 Center Square 119,369 187,335 1.57 1,700,000
252 Wycliffe Court 117,888 149,553 1.27 1,590,000
253 Ridge Road West 115,908 168,850 1.46 1,550,000
254 163 West 78th Street 103,370 139,458 1.35 1,430,000
255 2564-70 Amsterdam Ave (500 W. 188th St) 107,125 155,273 1.45 1,350,000
- ------------------------------------------------------------------------------------------------------------------------
256 Bowdon Shopping Center 101,169 138,683 1.37 1,400,000
257 Sugartree Apartments 99,678 134,355 1.35 1,460,000
258 Hunter Square 95,513 119,825 1.25 1,500,000
259 Gaulden Manor Nursing Center 118,550 178,474 1.51 1,450,000
260 Wynwood 99,883 139,870 1.40 1,750,000
- ------------------------------------------------------------------------------------------------------------------------
261 Creekbend 94,141 121,664 1.29 1,500,000
262 Raphael 94,617 130,748 1.38 1,300,000
263 Campbell Crossing 96,137 123,555 1.29 1,350,000
264 Franklin Shopping Center 90,330 131,439 1.46 1,250,000
265 Cambridge Commons II 90,586 129,806 1.43 1,500,000
- ------------------------------------------------------------------------------------------------------------------------
266 Continental Professional Plaza 87,677 115,329 1.32 1,500,000
267 Malley Farms Business Center 88,645 127,353 1.44 1,450,000
268 St. Armand's Apartments 90,264 112,775 1.25 1,700,000
269 Glenwood 84,585 121,176 1.43 1,300,000
270 Dothan Mini-Storage West 90,165 139,146 1.54 1,600,000
- ------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Cut-off Scheduled
Control Appraisal Date Maturity
No. Property Name Year LTV Date LTV
==========================================================================================================
<S> <C> <C> <C>
200 Parkway Villas 1996 64.6 55.8
201 Cameron Hill II 1996 74.7 66.7
202 Tustin Autoplex 1997 75.4 62.6
203 Glenbrook Apartments 1997 79.2 73.9
204 1000 West Crosby 1996 63.1 56.8
- ----------------------------------------------------------------------------------------------------------
205 Holiday Inn Bay City 1996 62.8 57.1
206 Potomac Festival II 1996 57.6 48.9
207 Weatheredge 1997 74.9 64.0
208 SMC-Tucker-252 1996 49.3 -
209 Gateway Center 1996 55.9 46.3
- ----------------------------------------------------------------------------------------------------------
210 Streetcar Stables 1996 71.2 64.2
211 Colonia Del Ray 1996 76.8 29.4
212 Village Square West 1996 69.9 59.3
213 Cedartown North SC 1996 74.7 63.2
214 Gala Plaza 1996 49.8 41.2
- ----------------------------------------------------------------------------------------------------------
215 Anthony Arms 1996 67.7 56.1
216 Ramada Inn Lawton 1996 62.4 -
217 Cookson Company 1996 68.4 31.2
218 Sussex Mill 1996 69.8 28.6
219 Sixth Avenue 1996 49.9 41.6
- ----------------------------------------------------------------------------------------------------------
220 7-11 & 20 Ballard Way 1996 65.2 54.2
221 Valleyfield 1996 73.2 60.6
222 Little River Plaza 1996 47.1 39.2
223 Shamrock Place 1996 74.7 67.5
224 Courtyard Homes 1996 78.0 31.3
- ----------------------------------------------------------------------------------------------------------
225 Golfsmith Golf Center 1996 67.1 59.9
226 Rising Sun Avenue Shopping Center 1997 74.9 67.2
227 Lyons Court 1997 76.2 69.4
228 Mid America Business Park 1997 53.2 -
229 Wingwood Apartments 1996 67.4 55.6
- ----------------------------------------------------------------------------------------------------------
230 Park Dale Lane Apartments 1997 78.5 73.2
231 Liberty Triangle 1997 68.9 55.6
231a Tranche "A"
231b Tranche "B"
- ----------------------------------------------------------------------------------------------------------
232 The Royale Apartments 1997 60.2 51.3
233 Villa De Oro 1996 56.5 52.7
234 Gerlands Food Fair 1996 67.1 61.8
235 Sierra Valencia Business Park 1997 48.4 41.4
- ----------------------------------------------------------------------------------------------------------
236 Westwinds Village 1996 63.5 56.3
237 Kroger - Friendswood 1996 77.0 65.8
238 Northwood Village Apartments 1997 75.2 70.2
239 Redwood Hollow 1996 77.6 63.5
240 West End Plaza 1996 69.6 58.2
- ----------------------------------------------------------------------------------------------------------
241 Sleep Inn Chattanooga 1996 67.2 53.9
242 Cheesbrough Industrial 1996 65.3 54.0
243 Overbrook 1996 68.6 58.9
244 Springtree Apartments 1996 69.9 57.7
245 Harmony Gables Apartments 1997 74.5 61.2
- ----------------------------------------------------------------------------------------------------------
246 Mableton Manor 1996 75.9 63.6
247 Harriston Square 1996 70.1 58.9
248 Heathmoore 1996 74.9 61.3
249 Midway Retail Center 1996 61.7 51.2
250 Stepping Stone 1996 61.3 55.2
- ----------------------------------------------------------------------------------------------------------
251 Center Square 1996 70.1 65.8
252 Wycliffe Court 1996 74.4 61.8
253 Ridge Road West 1996 73.9 61.6
254 163 West 78th Street 1996 74.7 67.1
255 2564-70 Amsterdam Ave (500 W. 188th St) 1996 77.7 64.9
- ----------------------------------------------------------------------------------------------------------
256 Bowdon Shopping Center 1996 74.8 64.1
257 Sugartree Apartments 1996 69.8 57.6
258 Hunter Square 1996 67.9 60.6
259 Gaulden Manor Nursing Center 1996 69.4 51.5
260 Wynwood 1996 56.8 47.3
- ----------------------------------------------------------------------------------------------------------
261 Creekbend 1996 65.0 25.5
262 Raphael 1996 73.9 64.2
263 Campbell Crossing 1996 69.9 58.2
264 Franklin Shopping Center 1996 74.8 64.1
265 Cambridge Commons II 1996 61.4 50.6
- ----------------------------------------------------------------------------------------------------------
266 Continental Professional Plaza 1996 59.9 56.4
267 Malley Farms Business Center 1996 61.8 55.5
268 St. Armand's Apartments 1996 52.6 43.9
269 Glenwood 1996 66.1 57.4
270 Dothan Mini-Storage West 1996 53.6 45.1
- ----------------------------------------------------------------------------------------------------------
<CAPTION>
Loan per
Sq Ft, Unit, Sq Ft, Unit,
Control Year Bed, Pad Bed, Pad
No. Property Name Built or Room or Room
======================================================================================================================
<S> <C> <C> <C>
200 Parkway Villas 1982 200 Unit 11,000.00
201 Cameron Hill II 1978 108 Unit 20,138.89
202 Tustin Autoplex 1990 20,417 Sq Foot 105.30
203 Glenbrook Apartments 1984 84 Unit 25,595.24
204 1000 West Crosby 1956 219,000Sq Foot 9.82
- ----------------------------------------------------------------------------------------------------------------------
205 Holiday Inn Bay City 1967 100 Room 21,400.00
206 Potomac Festival II 1989 48,662 Sq Foot 43.98
207 Weatheredge 1973 226 Unit 9,292.04
208 SMC-Tucker-252 1980 47,712 Sq Foot 44.01
209 Gateway Center 1961 178,124Sq Foot 11.62
- ----------------------------------------------------------------------------------------------------------------------
210 Streetcar Stables 1892 22,148 Sq Foot 93.69
211 Colonia Del Ray 1996 60 Unit 33,333.33
212 Village Square West 1981 29,725 Sq Foot 65.94
213 Cedartown North SC 1988 53,861 Sq Foot 34.81
214 Gala Plaza 1965 130,178Sq Foot 14.21
- ----------------------------------------------------------------------------------------------------------------------
215 Anthony Arms 1972 72 Unit 25,000.00
216 Ramada Inn Lawton 1963 98 Room 17,857.14
217 Cookson Company 1988 81,458 Sq Foot 21.48
218 Sussex Mill 1995 60 Unit 28,533.33
219 Sixth Avenue 1900 62,690 Sq Foot 27.12
- ----------------------------------------------------------------------------------------------------------------------
220 7-11 & 20 Ballard Way 1980's 42,091 Sq Foot 40.39
221 Valleyfield 1984 66 Unit 25,590.91
222 Little River Plaza 1979 58,964 Sq Foot 27.98
223 Shamrock Place 1971 70 Unit 23,571.43
224 Courtyard Homes 1995 63 Unit 25,714.29
- ----------------------------------------------------------------------------------------------------------------------
225 Golfsmith Golf Center 1995 17,949 Sq Foot 89.98
226 Rising Sun Avenue Shopping Center 1955 24,028 Sq Foot 66.59
227 Lyons Court 1981 87 Unit 18,390.80
228 Mid America Business Park 1983 83,685 Sq Foot 19.12
229 Wingwood Apartments 1980 86 Unit 18,104.65
- ----------------------------------------------------------------------------------------------------------------------
230 Park Dale Lane Apartments 1984 96 Unit 15,885.42
231 Liberty Triangle 1978 63,210 Sq Foot 23.60
231a Tranche "A"
231b Tranche "B"
- ----------------------------------------------------------------------------------------------------------------------
232 The Royale Apartments 1963 176 Unit 8,380.68
233 Villa De Oro 1986 150 Unit 9,453.33
234 Gerlands Food Fair 1983 40,853 Sq Foot 34.51
235 Sierra Valencia Business Park 1987 81,943 Sq Foot 17.13
- ----------------------------------------------------------------------------------------------------------------------
236 Westwinds Village 1979 211 Unit 6,635.07
237 Kroger - Friendswood 1983 40,869 Sq Foot 34.13
238 Northwood Village Apartments 1980 78 Unit 17,820.51
239 Redwood Hollow 1985 72 Unit 19,125.00
240 West End Plaza 1949 17,958 Sq Foot 76.01
- ----------------------------------------------------------------------------------------------------------------------
241 Sleep Inn Chattanooga 1994 57 Room 23,684.21
242 Cheesbrough Industrial 1975 114,751Sq Foot 11.55
243 Overbrook 1963 72 Unit 18,055.56
244 Springtree Apartments 1981 72 Unit 17,888.89
245 Harmony Gables Apartments 1923,59 47 Unit 26,957.45
- ----------------------------------------------------------------------------------------------------------------------
246 Mableton Manor 1965 81 Unit 15,555.56
247 Harriston Square 1985,87 31,353 Sq Foot 39.87
248 Heathmoore 1984 73 Unit 16,506.85
249 Midway Retail Center 1995 17,129 Sq Foot 70.06
250 Stepping Stone 1986 80 Unit 15,000.00
- ----------------------------------------------------------------------------------------------------------------------
251 Center Square 1971 96 Unit 12,500.00
252 Wycliffe Court 1985 65 Unit 18,307.69
253 Ridge Road West 1988 17,180 Sq Foot 66.94
254 163 West 78th Street 1900 10 Unit 107,250.00
255 2564-70 Amsterdam Ave (500 W. 188th St) 1930 54 Unit 19,500.00
- ----------------------------------------------------------------------------------------------------------------------
256 Bowdon Shopping Center 1988 39,712 Sq Foot 26.44
257 Sugartree Apartments 1985 60 Unit 17,050.00
258 Hunter Square 1900 43 Unit 23,744.19
259 Gaulden Manor Nursing Center 1959 45 Bed 22,555.56
260 Wynwood 1975 120 Unit 8,333.33
- ----------------------------------------------------------------------------------------------------------------------
261 Creekbend 1990 64 Unit 15,234.38
262 Raphael 1964 49 Unit 19,632.65
263 Campbell Crossing 1986 23,909 Sq Foot 39.52
264 Franklin Shopping Center 1974 27,213 Sq Foot 34.45
265 Cambridge Commons II 1987 75 Unit 12,293.33
- ----------------------------------------------------------------------------------------------------------------------
266 Continental Professional Plaza 1979 29,285 Sq Foot 30.80
267 Malley Farms Business Center 1985 47,724 Sq Foot 18.86
268 St. Armand's Apartments 1973 68 Unit 13,235.29
269 Glenwood 1962 48 Unit 17,916.67
270 Dothan Mini-Storage West 1990 401 Unit 2,144.64
- ----------------------------------------------------------------------------------------------------------------------
<CAPTION>
Control Occupancy Underwriting
No. Property Name Percentage Reserves
========================================================================================
<S> <C> <C>
200 Parkway Villas 99.0 253.00 Unit
201 Cameron Hill II 93.5 304.89 Unit
202 Tustin Autoplex 87.4 0.15 Sq Foot
203 Glenbrook Apartments 92.9 250.00 Unit
204 1000 West Crosby 100.0 0.25 Sq Foot
- ----------------------------------------------------------------------------------------
205 Holiday Inn Bay City NAP 4% of gross revenue
206 Potomac Festival II 84.8 0.10 Sq Foot
207 Weatheredge 94.7 283.00 Unit
208 SMC-Tucker-252 100.0 0.10 Sq Foot
209 Gateway Center 94.0 0.21 Sq Foot
- ----------------------------------------------------------------------------------------
210 Streetcar Stables 100.0 0.15 Sq Foot
211 Colonia Del Ray 93.3 150.00 Unit
212 Village Square West 100.0 0.10 Sq Foot
213 Cedartown North SC 92.5 0.10 Sq Foot
214 Gala Plaza 91.8 0.10 Sq Foot
- ----------------------------------------------------------------------------------------
215 Anthony Arms 94.4 279.00 Unit
216 Ramada Inn Lawton NAP 5% of gross revenue
217 Cookson Company 100.0 0.10 Sq Foot
218 Sussex Mill 98.3 175.00 Unit
219 Sixth Avenue 95.0 0.10 Sq Foot
- ----------------------------------------------------------------------------------------
220 7-11 & 20 Ballard Way 100.0 0.25 Sq Foot
221 Valleyfield 92.4 356.88 Unit
222 Little River Plaza 96.6 0.35 Sq Foot
223 Shamrock Place 95.7 287.00 Unit
224 Courtyard Homes 100.0 175.00 Unit
- ----------------------------------------------------------------------------------------
225 Golfsmith Golf Center 100.0 0.12 Sq Foot
226 Rising Sun Avenue Shopping Center 100.0 0.34 Sq Foot
227 Lyons Court 96.6 238.00 Unit
228 Mid America Business Park 100.0 0.15 Sq Foot
229 Wingwood Apartments 97.7 215.00 Unit
- ----------------------------------------------------------------------------------------
230 Park Dale Lane Apartments 93.8 250.00 Unit
231 Liberty Triangle 100.0 0.15 Sq Foot
231a Tranche "A"
231b Tranche "B"
- ----------------------------------------------------------------------------------------
232 The Royale Apartments 92.7 275.00 Unit
233 Villa De Oro 92.7 256.00 Unit
234 Gerlands Food Fair 100.0 0.17 Sq Foot
235 Sierra Valencia Business Park 100.0 0.29 Sq Foot
- ----------------------------------------------------------------------------------------
236 Westwinds Village 92.5 235.71 Unit
237 Kroger - Friendswood 100.0 0.10 Sq Foot
238 Northwood Village Apartments 100.0 243.59 Unit
239 Redwood Hollow 98.6 265.00 Unit
240 West End Plaza 100.0 0.35 Sq Foot
- ----------------------------------------------------------------------------------------
241 Sleep Inn Chattanooga NAP 4% of gross revenue
242 Cheesbrough Industrial 100.0 0.10 Sq Foot
243 Overbrook 93.1 309.00 Unit
244 Springtree Apartments 94.4 219.00 Unit
245 Harmony Gables Apartments 97.9 300.00 Unit
- ----------------------------------------------------------------------------------------
246 Mableton Manor 95.1 250.00 Unit
247 Harriston Square 96.7 0.20 Sq Foot
248 Heathmoore 94.6 268.00 Unit
249 Midway Retail Center 94.1 0.15 Sq Foot
250 Stepping Stone 97.5 300.00 Unit
- ----------------------------------------------------------------------------------------
251 Center Square 100.0 250.00 Unit
252 Wycliffe Court 98.5 323.00 Unit
253 Ridge Road West 100.0 0.15 Sq Foot
254 163 West 78th Street 100.0 200.00 Unit
255 2564-70 Amsterdam Ave (500 W. 188th St) 100.0 254.00 Unit
- ----------------------------------------------------------------------------------------
256 Bowdon Shopping Center 100.0 0.12 Sq Foot
257 Sugartree Apartments 90.0 335.00 Unit
258 Hunter Square 90.7 307.00 Unit
259 Gaulden Manor Nursing Center 84.4 300.00 Bed
260 Wynwood 97.5 284.00 Unit
- ----------------------------------------------------------------------------------------
261 Creekbend 95.3 220.00 Unit
262 Raphael 98.0 201.00 Unit
263 Campbell Crossing 100.0 0.29 Sq Foot
264 Franklin Shopping Center 100.0 0.12 Sq Foot
265 Cambridge Commons II 85.3 349.00 Unit
- ----------------------------------------------------------------------------------------
266 Continental Professional Plaza 94.1 0.20 Sq Foot
267 Malley Farms Business Center 100.0 0.15 Sq Foot
268 St. Armand's Apartments 100.0 275.00 Unit
269 Glenwood 95.8 371.00 Unit
270 Dothan Mini-Storage West 91.3 7.00 Unit
- ----------------------------------------------------------------------------------------
<CAPTION>
Largest Retail Tenant
-----------------------------------------------------------------
Tenant Lease
Control Administrative Area Leased Exp Date Control
No. Property Name Cost Rate Tenant Name (Sq. Ft.) (Sq. Ft.) No.
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
200 Parkway Villas 0.1350 200
201 Cameron Hill II 0.1350 201
202 Tustin Autoplex 0.1850 Firestone 3,465 07/06 202
203 Glenbrook Apartments 0.1350 203
204 1000 West Crosby 0.1350 204
- ------------------------------------------------------------------------------------------------------------------------------------
205 Holiday Inn Bay City 0.1350 205
206 Potomac Festival II 0.1350 Country Habitat 7,110 12/01 206
207 Weatheredge 0.1350 207
208 SMC-Tucker-252 0.1350 Service Merchandise Company, Inc. 47,712 12/11 208
209 Gateway Center 0.1350 Pro Bowl West 64,025 12/11 209
- ------------------------------------------------------------------------------------------------------------------------------------
210 Streetcar Stables 0.1350 Morton's (Restaurant) 7,258 08/10 210
211 Colonia Del Ray 0.1350 211
212 Village Square West 0.1350 Outback Steakhouse 5,938 12/98 212
213 Cedartown North SC 0.1350 Winn Dixie 30,625 01/09 213
214 Gala Plaza 0.1350 Helig-Myers Furniture 23,900 03/06 214
- ------------------------------------------------------------------------------------------------------------------------------------
215 Anthony Arms 0.3950 215
216 Ramada Inn Lawton 0.1350 216
217 Cookson Company 0.1350 217
218 Sussex Mill 0.1350 218
219 Sixth Avenue 0.1350 219
- ------------------------------------------------------------------------------------------------------------------------------------
220 7-11 & 20 Ballard Way 0.1350 220
221 Valleyfield 0.1250 221
222 Little River Plaza 0.1350 Douglas Maxi Drugs 17,172 03/03 222
223 Shamrock Place 0.1350 223
224 Courtyard Homes 0.1350 224
- ------------------------------------------------------------------------------------------------------------------------------------
225 Golfsmith Golf Center 0.1350 Golfsmith Golf (Single Tenant) 17,949 07/06 225
226 Rising Sun Avenue Shopping Center 0.1350 Thrift Drugs 9,700 11/11 226
227 Lyons Court 0.1350 227
228 Mid America Business Park 0.1350 228
229 Wingwood Apartments 0.1250 229
- ------------------------------------------------------------------------------------------------------------------------------------
230 Park Dale Lane Apartments 0.1350 230
231 Liberty Triangle 0.2100 Safeway 33,465 12/99 231
231a Tranche "A" 231a
231b Tranche "B" 231b
- ------------------------------------------------------------------------------------------------------------------------------------
232 The Royale Apartments 0.1350 232
233 Villa De Oro 0.7100 233
234 Gerlands Food Fair 0.1350 Gerlands 40,853 12/05 234
235 Sierra Valencia Business Park 0.1350 235
- ------------------------------------------------------------------------------------------------------------------------------------
236 Westwinds Village 0.1350 236
237 Kroger - Friendswood 0.1350 Krogers 40,869 12/02 237
238 Northwood Village Apartments 0.1350 238
239 Redwood Hollow 0.1250 239
240 West End Plaza 0.1350 Cornucopia Natural Foods 9,950 03/05 240
- ------------------------------------------------------------------------------------------------------------------------------------
241 Sleep Inn Chattanooga 0.1350 241
242 Cheesbrough Industrial 0.2100 242
243 Overbrook 0.1350 243
244 Springtree Apartments 0.1250 244
245 Harmony Gables Apartments 0.1350 245
- ------------------------------------------------------------------------------------------------------------------------------------
246 Mableton Manor 0.3850 246
247 Harriston Square 0.1350 247
248 Heathmoore 0.1250 248
249 Midway Retail Center 0.1350 Fox & Hound 10,549 12/00 249
250 Stepping Stone 0.2850 250
- ------------------------------------------------------------------------------------------------------------------------------------
251 Center Square 0.2850 251
252 Wycliffe Court 0.1250 252
253 Ridge Road West 0.1350 Wilson Farms (Topps) 3,320 04/01 253
254 163 West 78th Street 0.2100 254
255 2564-70 Amsterdam Ave (500 W. 188th St) 0.1350 255
- ------------------------------------------------------------------------------------------------------------------------------------
256 Bowdon Shopping Center 0.1350 Piggly Wiggly 19,792 07/02 256
257 Sugartree Apartments 0.1250 257
258 Hunter Square 0.1350 258
259 Gaulden Manor Nursing Center 0.2100 259
260 Wynwood 0.4600 260
- ------------------------------------------------------------------------------------------------------------------------------------
261 Creekbend 0.1350 261
262 Raphael 0.1350 262
263 Campbell Crossing 0.1350 Gourmet of China 3,000 05/97 263
264 Franklin Shopping Center 0.1350 Piggly Wiggly 16,013 06/11 264
265 Cambridge Commons II 0.1250 265
- ------------------------------------------------------------------------------------------------------------------------------------
266 Continental Professional Plaza 0.2100 266
267 Malley Farms Business Center 0.1350 267
268 St. Armand's Apartments 0.1350 268
269 Glenwood 0.1350 269
270 Dothan Mini-Storage West 0.1350 270
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Control Zip
No. Property Name Address City State Code
===================================================================================================================================
<S> <C> <C> <C> <C>
271 Atlanta Highway Mini-Storage 3536 Atlanta Highway Montgomery AL 36109
272 Hogansville Shopping Center 208 Hogansville Road Hogansville GA 30230
273 Mayfair Village 1787 Mayfair Village Road Jacksonville FL 32207
274 Andover Court Apartments 5-A Andover Court Athens OH 45701
275 Fulton Place Apartments 1170 North Shoop Avenue Wauseon OH 43567
- -----------------------------------------------------------------------------------------------------------------------------------
276 Oakridge 2535 Jammes Road Jacksonville FL 32210
277 2837-2839 Decatur Ave 2837-2839 Decatur Ave Bronx NY 10458
278 Lincoln Square 300 & 310 Fifth Street Chisolm MN 55719
279 2550 Briggs Ave 2550 Briggs Ave Bronx NY 10458
280 334 East 205th St 334 East 205th St Bronx NY 10467
- -----------------------------------------------------------------------------------------------------------------------------------
281 Starlight Valley Apartments 3216 Starlight Drive Winston-Salem NC 27107
282 2530-32 Bathgate Ave 2530-32 Bathgate Ave Bronx NY 10458
283 Storhouse Mini-Storage 707 Sheila Blvd. Prattville AL 36066
284 Parkside Phase II 1776 Kearns Blvd. Park City UT 84060
<CAPTION>
% of Aggregate Cumulative
Control Original Cut-off Date Cut-off Date % of Initial Mortgage
No. Property Name Balance Balance Balance Pool Balance Rate
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
271 Atlanta Highway Mini-Storage 860,000 857,144 0.07% 99.38% 9.5000%
272 Hogansville Shopping Center 850,000 847,350 0.06% 99.45% 8.7100
273 Mayfair Village 844,000 841,464 0.06% 99.51% 8.6500
274 Andover Court Apartments 800,000 795,169 0.06% 99.57% 9.3400
275 Fulton Place Apartments 800,000 795,169 0.06% 99.63% 9.3400
- ------------------------------------------------------------------------------------------------------------------------------------
276 Oakridge 791,000 789,824 0.06% 99.69% 8.6700
277 2837-2839 Decatur Ave 622,000 619,802 0.05% 99.74% 9.1250
278 Lincoln Square 600,000 598,613 0.05% 99.79% 8.7800
279 2550 Briggs Ave 569,000 566,989 0.04% 99.83% 9.1250
280 334 East 205th St 546,000 544,070 0.04% 99.87% 9.1250
- ------------------------------------------------------------------------------------------------------------------------------------
281 Starlight Valley Apartments 447,000 444,169 0.03% 99.91% 9.0500
282 2530-32 Bathgate Ave 429,000 427,484 0.03% 99.94% 9.1250
283 Storhouse Mini-Storage 400,000 398,672 0.03% 99.97% 9.5000
284 Parkside Phase II 400,000 396,865 0.03% 100.00% 9.3300
1,308,775,242 1,305,448,224 100.00%
<CAPTION>
Original Remaining Original Remaining
Term to Term to Amortization Amortization
Control Maturity Maturity Term Term
No. Property Name (Mos.) (Mos.) (Mos.) (Mos.)
==========================================================================================================================
<S> <C> <C> <C> <C>
271 Atlanta Highway Mini-Storage 120 116 300 296
272 Hogansville Shopping Center 120 116 324 320
273 Mayfair Village 120 116 330 326
274 Andover Court Apartments 120 113 300 293
275 Fulton Place Apartments 120 113 300 293
- --------------------------------------------------------------------------------------------------------------------------
276 Oakridge 120 118 330 328
277 2837-2839 Decatur Ave 120 116 300 296
278 Lincoln Square 360 356 360 356
279 2550 Briggs Ave 120 116 300 296
280 334 East 205th St 120 116 300 296
- --------------------------------------------------------------------------------------------------------------------------
281 Starlight Valley Apartments 120 113 300 293
282 2530-32 Bathgate Ave 120 116 300 296
283 Storhouse Mini-Storage 120 116 300 296
284 Parkside Phase II 120 111 300 291
<CAPTION>
Control Origination Maturity Balloon
No. Property Name Date Date Balance Property Type
==========================================================================================================================
<S> <C> <C> <C> <C>
271 Atlanta Highway Mini-Storage 12/30/96 1/1/07 721,360 Self Storage
272 Hogansville Shopping Center 12/10/96 1/1/07 726,794 Retail - Anchored
273 Mayfair Village 12/12/96 1/1/07 726,471 Multifamily
274 Andover Court Apartments 9/16/96 10/1/06 668,703 Multifamily
275 Fulton Place Apartments 9/16/96 10/1/06 668,703 Multifamily
- --------------------------------------------------------------------------------------------------------------------------
276 Oakridge 2/19/97 3/1/07 681,138 Multifamily
277 2837-2839 Decatur Ave 12/19/96 1/1/07 517,446 Multifamily
278 Lincoln Square 12/23/96 1/1/27 - Multifamily - Section 42
279 2550 Briggs Ave 12/19/96 1/1/07 473,355 Multifamily
280 334 East 205th St 12/19/96 1/1/07 454,221 Multifamily
- --------------------------------------------------------------------------------------------------------------------------
281 Starlight Valley Apartments 9/27/96 10/1/06 371,235 Multifamily
282 2530-32 Bathgate Ave 12/19/96 1/1/07 356,888 Multifamily
283 Storhouse Mini-Storage 12/30/96 1/1/07 335,517 Self Storage
284 Parkside Phase II 8/12/96 8/1/06 334,278 Multifamily
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Control
No. Property Name Prepayment Provisions
=============================================================================================================
<S> <C>
271 Atlanta Highway Mini-Storage L(4),YM1%(2),3%(1),2%(1),1%(1.75),O(.25)
272 Hogansville Shopping Center L(3),YM1%(6.5),O(.5)
273 Mayfair Village L(3),YM1%(6.5),O(.5)
274 Andover Court Apartments L(1),YM1%(8.75),O(.25)
275 Fulton Place Apartments L(1),YM1%(8.75),O(.25)
- -------------------------------------------------------------------------------------------------------------
276 Oakridge L(3),YM1%(6.5),O(.5)
277 2837-2839 Decatur Ave L(5),YM1%(4.5),O(.5)
278 Lincoln Square L(14),O(16)
279 2550 Briggs Ave L(5),YM1%(4.5),O(.5)
280 334 East 205th St L(5),YM1%(4.5),O(.5)
- -------------------------------------------------------------------------------------------------------------
281 Starlight Valley Apartments L(3),YM1%(6.5),O(.5)
282 2530-32 Bathgate Ave L(5),YM1%(4.5),O(.5)
283 Storhouse Mini-Storage L(4),YM1%(2),3%(1),2%(1),1%(1.75),O(.25)
284 Parkside Phase II L(0),YM1%(9.5),O(.5)
<CAPTION>
Control Annual Net Appraised
No. Property Name Debt Service Cash Flow DSCR Value
========================================================================================================================
<S> <C> <C> <C> <C>
271 Atlanta Highway Mini-Storage 90,165 133,274 1.48 1,350,000
272 Hogansville Shopping Center 81,899 115,739 1.41 1,220,000
273 Mayfair Village 80,533 112,491 1.40 1,125,000
274 Andover Court Apartments 82,810 129,734 1.57 1,400,000
275 Fulton Place Apartments 82,810 128,260 1.55 1,350,000
- ------------------------------------------------------------------------------------------------------------------------
276 Oakridge 75,608 95,016 1.26 1,025,000
277 2837-2839 Decatur Ave 63,278 88,028 1.39 850,000
278 Lincoln Square 56,797 65,542 1.15 1,000,000
279 2550 Briggs Ave 57,886 93,225 1.61 730,000
280 334 East 205th St 55,546 76,156 1.37 700,000
- ------------------------------------------------------------------------------------------------------------------------
281 Starlight Valley Apartments 45,198 62,496 1.38 770,000
282 2530-32 Bathgate Ave 43,643 63,175 1.45 550,000
283 Storhouse Mini-Storage 41,937 59,926 1.43 600,000
284 Parkside Phase II 41,372 56,541 1.37 775,000
<CAPTION>
Cut-off Scheduled
Control Appraisal Date Maturity
No. Property Name Year LTV Date LTV
==========================================================================================================
<S> <C> <C> <C>
271 Atlanta Highway Mini-Storage 1996 63.5 53.4
272 Hogansville Shopping Center 1996 69.5 59.6
273 Mayfair Village 1996 74.8 64.6
274 Andover Court Apartments 1996 56.8 47.8
275 Fulton Place Apartments 1996 58.9 49.5
- ----------------------------------------------------------------------------------------------------------
276 Oakridge 1996 77.1 66.5
277 2837-2839 Decatur Ave 1996 72.9 60.9
278 Lincoln Square 1996 59.9 -
279 2550 Briggs Ave 1996 77.7 64.8
280 334 East 205th St 1996 77.7 64.9
- ----------------------------------------------------------------------------------------------------------
281 Starlight Valley Apartments 1996 57.7 48.2
282 2530-32 Bathgate Ave 1996 77.7 64.9
283 Storhouse Mini-Storage 1996 66.5 55.9
284 Parkside Phase II 1996 51.2 43.1
<CAPTION>
Loan per
Sq Ft, Unit, Sq Ft, Unit,
Control Year Bed, Pad Bed, Pad
No. Property Name Built or Room or Room
======================================================================================================================
<S> <C> <C> <C>
271 Atlanta Highway Mini-Storage 1990 384 Unit 2,239.58
272 Hogansville Shopping Center 1985 32,800 Sq Foot 25.91
273 Mayfair Village 1953 83 Unit 10,168.67
274 Andover Court Apartments 1980 52 Unit 15,384.62
275 Fulton Place Apartments 1977 70 Unit 11,428.57
- ----------------------------------------------------------------------------------------------------------------------
276 Oakridge 1978 56 Unit 14,125.00
277 2837-2839 Decatur Ave 1930 38 Unit 16,368.42
278 Lincoln Square 1907 38 Unit 15,789.47
279 2550 Briggs Ave 1920 28 Unit 20,321.43
280 334 East 205th St 1930 28 Unit 19,500.00
- ----------------------------------------------------------------------------------------------------------------------
281 Starlight Valley Apartments 1978-84 48 Unit 9,312.50
282 2530-32 Bathgate Ave 1930 24 Unit 17,875.00
283 Storhouse Mini-Storage 1987 247 Unit 1,619.43
284 Parkside Phase II 1983 18 Unit 22,222.22
<CAPTION>
Control Occupancy Underwriting
No. Property Name Percentage Reserves
========================================================================================
<S> <C> <C>
271 Atlanta Highway Mini-Storage 84.9 13.00 Unit
272 Hogansville Shopping Center 100.0 0.16 Sq Foot
273 Mayfair Village 100.0 276.00 Unit
274 Andover Court Apartments 92.3 250.00 Unit
275 Fulton Place Apartments 98.6 250.00 Unit
- ----------------------------------------------------------------------------------------
276 Oakridge 94.6 276.00 Unit
277 2837-2839 Decatur Ave 94.7 305.00 Unit
278 Lincoln Square 89.5 175.00 Unit
279 2550 Briggs Ave 97.4 266.00 Unit
280 334 East 205th St 96.4 302.00 Unit
- ----------------------------------------------------------------------------------------
281 Starlight Valley Apartments 93.8 288.00 Unit
282 2530-32 Bathgate Ave 91.7 392.00 Unit
283 Storhouse Mini-Storage 97.6 9.00 Unit
284 Parkside Phase II 94.4 398.00 Unit
<CAPTION>
Largest Retail Tenant
-----------------------------------------------------------------
Tenant Lease
Control Administrative Area Leased Exp Date Control
No. Property Name Cost Rate Tenant Name (Sq. Ft.) (Sq. Ft.) No.
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
271 Atlanta Highway Mini-Storage 0.1350 271
272 Hogansville Shopping Center 0.1350 Piggly Wiggly 16,200 07/03 272
273 Mayfair Village 0.1350 273
274 Andover Court Apartments 0.1350 274
275 Fulton Place Apartments 0.1350 275
- ------------------------------------------------------------------------------------------------------------------------------------
276 Oakridge 0.1350 276
277 2837-2839 Decatur Ave 0.1350 277
278 Lincoln Square 0.1350 278
279 2550 Briggs Ave 0.1350 279
280 334 East 205th St 0.1350 280
- ------------------------------------------------------------------------------------------------------------------------------------
281 Starlight Valley Apartments 0.1350 281
282 2530-32 Bathgate Ave 0.1350 282
283 Storhouse Mini-Storage 0.1350 283
284 Parkside Phase II 0.5550 284
</TABLE>
1. Ctrl. Nos. 52, 105, 130, 175, 195 and 208 are cross-collateralized and cross-
defaulted.
2. Ctrl. Nos. 58 and 266 are cross-collateralized and cross-defaulted.
3. Ctrl. Nos. 64, 90, 99 and 220 are cross-collateralized and cross-defaulted.
4. Ctrl. Nos. 183, 234 and 237 are cross-collateralized and cross-defaulted.
5. Ctrl. Nos. 256, 264 and 272 are cross-collateralized and cross-defaulted.
6. Ctrl. No. 231: Loan consists of 2 tranches. The loan, as a whole is assumed
to have certain loan terms, such as original term to maturity, original
amortization term, remaining term, and prepayment terms identical to
Tranche "B".
7. Ctrl. No. 13: This loan is deemed to be secured by an office property located
in Texas for the tables contained herein.
8. Ctrl. No. 71: This loan is deemed to be secured by a self-storage facility
located in New Mexico for the tables contained herein.
9. Ctrl. No. 80: Prepayment provision - Years 0-7: locked out; Years 8-10:
Greater of 1% or Treasury Yield Maintenance;
Year 11: Lessor of 5% or (Greater of 1% of Treasury Yield Maintenance)
Year 12: Lessor of 4% or (Greater of 1% of Treasury Yield Maintenance)
Year 13: Lessor of 3% or (Greater of 1% of Treasury Yield Maintenance)
Year 14: Lessor of 3% or (Greater of 1% of Treasury Yield Maintenance)
Year 14 1/2: Lessor of 1% or (Greater of 1% of Treasury Yield Maintenance)
Year 15: Open
10. Ctrl. No. 151: $150,000 in lease escrow was used to pay down the principal
on 3/21/97 in accordance with the Lease Renewal Escrow Agreement.
11. Ctrl. Nos. 16, 72, 103, 199: Hyper-amortizing loans. The Maturity Dates
used herein are the "Expected Repayment Dates". Scheduled Maturity Date
Balances and LTVs are assumed to be zero.
12. Ctrl. Nos. 185, 210 and 247 are condominium properties.
ANNEX B
FIRST UNION - LEHMAN BROTHERS COMMERCIAL MORTGAGE TRUST
MORTGAGE PASS-THROUGH CERTIFICATES SERIES 1997-C1
$1,155,321,000
OFFERED CERTIFICATES
[GRAPHIC OMITTED]
% OF MORTGAGE POOL BY CUT-OFF DATE BALANCE
LEHMAN BROTHERS FIRST UNION CAPITAL MARKETS CORP.
THE SECURITIES DESCRIBED HEREIN ARE OFFERED ONLY PURSUANT TO A DEFINITIVE
PROSPECTUS AND PROSPECTUS SUPPLEMENT AND PROSPECTIVE INVESTORS WHO CONSIDER
PURCHASING ANY SUCH SECURITIES ARE ADVISED TO CAREFULLY READ, AND SHOULD RELY
SOLELY ON THE DETAILED INFORMATION APPEARING IN THE PROSPECTUS AND PROSPECTUS
SUPPLEMENT. THIS ANNEX B DOES NOT INCLUDE ALL RELEVANT INFORMATION RELATING TO
THE SECURITIES AND UNDERLYING ASSETS DESCRIBED HEREIN, PARTICULARLY WITH RESPECT
TO THE RISKS AND SPECIAL CONSIDERATIONS INVOLVED WITH AN INVESTMENT IN SUCH
SECURITIES AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE DETAILED
INFORMATION SET FORTH IN THE PROSPECTUS AND PROSPECTUS SUPPLEMENT. CERTAIN
CAPITALIZED TERMS USED HEREIN MAY BE DEFINED IN THE PROSPECTUS OR PROSPECTUS
SUPPLEMENT.
B-1
<PAGE>
FIRST UNION-LEHMAN BROTHERS COMMERCIAL MORTGAGE TRUST
MORTGAGE PASS-THROUGH CERTIFICATES SERIES 1997-C1
(FU-LB 1997-C1)
[GRAPHIC OMITTED]
<TABLE>
<CAPTION>
=================================================================================================================================
ORIGINAL RATING AVG PRINCIPAL LEGAL
CLASS FACE (F/M) DESCRIPTION COUPON LIFE(1) WINDOW(1) STATUS
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
A-1 $ 200,000,000 AAA/Aaa Fixed 7.150 4.85 6/97 - 2/04 Public
- ---------------------------------------------------------------------------------------------------------------------------------
A-2 $ 318,000,000 AAA/Aaa Fixed 7.300 7.75 2/04 - 12/06 Public
- ---------------------------------------------------------------------------------------------------------------------------------
A-3 $ 395,812,000 AAA/Aaa Fixed 7.380 9.69 12/06 - 4/07 Public
- ---------------------------------------------------------------------------------------------------------------------------------
IO $ 1,305,448,224(2) AAA/Aaa WAC IO 1.307 9.56(3) N/A Public
- ---------------------------------------------------------------------------------------------------------------------------------
B $ 78,327,000 AA/Aa2 Fixed 7.430 9.89 4/07 - 4/07 Public
- ---------------------------------------------------------------------------------------------------------------------------------
C $ 71,800,000 A/A2 Fixed 7.440 9.89 4/07 - 4/07 Public
- ---------------------------------------------------------------------------------------------------------------------------------
D $ 71,800,000 BBB/Baa2 Fixed 7.500 10.09 4/07 - 10/08 Public
- ---------------------------------------------------------------------------------------------------------------------------------
E $ 19,582,000 BBB-/Baa3 Fixed 7.750 11.52 10/08 - 8/09 Public
- ---------------------------------------------------------------------------------------------------------------------------------
F $ 71,800,000 Not Offered Fixed 7.000 14.69 8/09 - 12/14 Private, 144A
- ---------------------------------------------------------------------------------------------------------------------------------
G $ 13,054,813 Not Offered Fixed 7.000 18.54 12/14 - 12/16 Private, 144A
- ---------------------------------------------------------------------------------------------------------------------------------
H $ 26,108,964 Not Offered Fixed 7.000 19.87 12/16 - 5/17 Private, 144A
- ---------------------------------------------------------------------------------------------------------------------------------
J $ 13,054,483 Not Offered Fixed 7.000 21.37 5/17 - 3/20 Private, 144A
- ---------------------------------------------------------------------------------------------------------------------------------
K $ 26,108,964 Not Offered Fixed 7.000 26.03 3/20 - 4/27 Private, 144A
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL $ 1,305,448,224
=================================================================================================================================
</TABLE>
(1) Assuming 0% CPR, no losses.
(2) Represents notional amount.
(3) Represents average life of related principal or notional amounts, as
applicable.
RATING AGENCIES: Fitch Investors Service, L.P. and Moody's Investors
Service, Inc.
TRUSTEE: State Street Bank and Trust Company
MASTER SERVICER: First Union National Bank of North Carolina
SPECIAL SERVICER: CRIIMI MAE Services Limited Partnership
SETTLEMENT DATE: On or about May 29, 1997.
B-2
<PAGE>
FU-LB 97-C1 STRUCTURAL SUMMARY (CONTINUED):
ERISA: Classes A-1, A-2, A-3 and IO are expected to be eligible for
Lehman Brothers Inc.'s individual prohibited transaction
exemption with respect to ERISA.
SMMEA: Classes A-1, A-2, A-3, B and IO are "mortgage related
securities" for purposes of SMMEA.
PAYMENT: Pays on 18th of each month, or if such date is not a business
day, then the following business day.
THE CLASS IO: The Class IO is comprised of twelve components, one relating
to each class of Sequential Pay Certificates.
OPTIONAL CALL: 1% Clean-up Call.
COLLATERAL: The Certificates are backed by mortgage loans secured by first
liens on 283 commercial and multifamily properties, such
mortgage loans having been originated by an affiliate of
Lehman Brothers, or its approved conduit originators, or First
Union National Bank of North Carolina, or its approved conduit
originators.
OFFERING HIGHLIGHTS:
o NEWLY ORIGINATED COLLATERAL. The collateral consists of 283 Mortgage Loans
with a principal balance of approximately $1.305 billion. 60.1% of the
Mortgage Loans, by balance, were contributed by an affiliate of Lehman
Brothers and 39.9% of the Mortgage Loans by balance, were contributed by
First Union National Bank of North Carolina.
o CALL PROTECTION.
100% of the loans have call protection: 68.6% of Mortgage Loans have
lockout initially then yield maintenance and/or declining penalties and/or
open periods.
<TABLE>
<CAPTION>
==================================================================================================================================
TYPE OF CALL PROTECTION # OF LOANS % OF BALANCE
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Lockout (weighted average 52 months), then yield maintenance ("YM")* 160 50.3%
- ----------------------------------------------------------------------------------------------------------------------------------
Lockout (weighted average 41 months), then YM*, then declining penalties 21 13.4%
- ----------------------------------------------------------------------------------------------------------------------------------
Lockout (weighted average 30 months), then declining penalties 5 1.6%
- ----------------------------------------------------------------------------------------------------------------------------------
Lockout (weighted average 118 months), then open 11 3.4%
- ----------------------------------------------------------------------------------------------------------------------------------
Defeasance or Lockout then Defeasance (Lender Option) 60 24.0%
- ----------------------------------------------------------------------------------------------------------------------------------
YM * only 24 6.8%
- ----------------------------------------------------------------------------------------------------------------------------------
YM *, then declining penalties 1 0.4%
- ----------------------------------------------------------------------------------------------------------------------------------
Declining penalties only 1 0.2%
==================================================================================================================================
</TABLE>
* 90% of Mortgage Loans with yield maintenance
are calculated at Treasuries flat.
o NO LOAN DELINQUENT 30 DAYS OR MORE AS OF THE CUT-OFF DATE.
o $4.6MM AVERAGE LOAN BALANCE AS OF THE CUT-OFF DATE.
o 1.34X WEIGHTED AVERAGE DEBT SERVICE COVERAGE AS OF THE CUT-OFF DATE.
o 69.9% WEIGHTED AVERAGE LOAN TO VALUE AS OF THE CUT-OFF DATE.
o DIVERSIFIED PROPERTY TYPES. 40.3% Multifamily concentration. Less than 10%
concentrations in Office (5.4%) and Hotel (9.9%).
o DIVERSIFIED GEOGRAPHIC LOCATIONS: 40 states; top three states are Texas
(14.0%), Florida (11.3%), and California (7.9%); all other states are under
7% concentration each.
o DETAILED MONTHLY INVESTOR REPORTING. Updated collateral summary information
will be a part of the monthly remittance report in addition to detailed P&I
payment and delinquency information. Quarterly NOI and Occupancy data, to
the extent delivered by the borrowers, will be available to
Certificateholders through the Trustee. The following is a list of all the
reports that will be available to Certificateholders:
NAME OF REPORT DESCRIPTION (INFORMATION PROVIDED)
- --------------------------------------------------------------------------------
1 Remittance Report principal and interest
distributions, principal balances
- --------------------------------------------------------------------------------
2 Mortgage Loan Status Report portfolio stratifications
- --------------------------------------------------------------------------------
3 Comparative Financial Status Report revenue, NOI, DSCR to the extent
available
- --------------------------------------------------------------------------------
4 Delinquent Loan Status Report listing of delinquent mortgage loans
- --------------------------------------------------------------------------------
5 Historical Loan Modification Report information on modified mortgage
loans
- --------------------------------------------------------------------------------
6 Historical Loss Estimate Report liquidation proceeds, expenses, and
realized losses
- --------------------------------------------------------------------------------
7 REO Status Report NOI and value of REO
- --------------------------------------------------------------------------------
8 Watch List listing of loans in jeopardy of
becoming Specially Serviced
o CASH FLOWS WILL BE MODELED ON BLOOMBERG.
B-3
<PAGE>
FU-LB 97-C1 STRUCTURAL SUMMARY (CONTINUED):
PRIORITY AND TIMING OF CASH FLOWS *
[GRAPHIC OMITTED]
- --------------------------------------------------------------------------------
* Assuming 0% CPR, no losses.
MORTGAGE LOANS: The collateral consists of an approximately $1.305
billion pool of 283 fixed rate mortgage loans secured by
first liens on commercial and multifamily properties in
40 different states. As of the Cut-off Date, the
Mortgage Loans have a WAC of 8.717% and a WAM of 130
months. See the Prospectus Supplement or Collateral
Summary tables at the end of this memo for more Mortgage
Loan details.
DISTRIBUTIONS: Principal and interest payments will generally be made
to Certificateholders in the following order:
1) Interest to the Senior Classes: Class A-1, Class
A-2, Class A-3 and Class IO, pro rata,
2) Principal to Class A-1 until such Class is
retired,*
3) Principal to Class A-2 until such Class is
retired,*
4) Principal to Class A-3 until such Class is
retired,*
5) Interest to Class B, then Principal to Class B
until such Class is retired,
6) Interest to Class C, then Principal to Class C
until such Class is retired,
7) Interest to Class D, then Principal to Class D
until such Class is retired,
8) Interest to Class E, then Principal to Class E
until such Class is retired,
9) Interest and Principal to the Private Classes,
sequentially.
* Pro rata if Classes B through K were retired as a
result of losses.
CREDIT ENHANCEMENT: Credit enhancement for each class of Certificates will
be provided by the classes of Certificates which are
subordinate in priority with respect to payments of
interest and principal.
REALIZED LOSSES: Realized Losses from any Mortgage Loan will be allocated
in reverse sequential order (i.e. K, J, H, G, F, E, D,
C, B and then pro-rata to Classes A-1, A-2, and A-3).
APPRAISAL REDUCTIONS: With respect to certain Mortgage Loans as to which an
appraisal is required (including any Mortgage Loan that
becomes 60 days delinquent), an Appraisal Reduction
Amount may be created, in the amount, if any, by which
the Stated Principal Balance of such Mortgage Loan,
together with unadvanced interest, unreimbursed advances
of certain other items, exceeds 90% of the appraised
value of the related Mortgaged Property. The Appraisal
Reduction Amount will reduce proportionately the amount
of any P&I Advance for such loan, which reduction may
result in a shortfall of interest to the most
subordinate class of Sequential Pay Certificates
outstanding. The Appraisal Reduction Amount will be
reduced to zero as of the date the related Mortgage Loan
has been brought current for three months, paid in full,
repurchased or otherwise liquidated, and any shortfalls
borne by the subordinate classes may be made whole.
B-4
<PAGE>
FU-LB 97-C1 STRUCTURAL SUMMARY (CONTINUED):
PREPAYMENT PREMIUMS (% represents % of Cut-off Date Balances):
<TABLE>
<CAPTION>
===============================================================================================================================
PREPAYMENT 5/97 5/98 5/99 5/00 5/01 5/02 5/03 5/04 5/05 5/06 5/07
PREMIUM
===============================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
LOCK-OUT 89.6% 87.1% 79.4% 54.7% 20.5% 8.0% 8.0% 6.2% 4.4% 4.0% 1.2%
- -------------------------------------------------------------------------------------------------------------------------------
DEFEASANCE 3.0 3.0 7.9 17.0 21.7 24.0 24.0 12.2 12.2 12.0 2.6
- -------------------------------------------------------------------------------------------------------------------------------
YM 7.2 9.7 11.4 26.8 55.0 63.7 58.7 49.9 51.7 46.6 10.8
- -------------------------------------------------------------------------------------------------------------------------------
5% 0.3 0.3 0.3 0.4 1.3
- -------------------------------------------------------------------------------------------------------------------------------
4% 0.8 1.1 0.3 0.3 0.4
- -------------------------------------------------------------------------------------------------------------------------------
3% 0.2 0.3 1.1 3.0 2.9
- -------------------------------------------------------------------------------------------------------------------------------
2% 0.2 0.3 1.6 1.4 3.0 3.5
- -------------------------------------------------------------------------------------------------------------------------------
1% 0.2 0.2 0.6 0.9 1.7 2.0 3.4 5.1 1.5
- -------------------------------------------------------------------------------------------------------------------------------
OPEN 0.5 0.7 2.0 1.3 2.6 9.7
===============================================================================================================================
MATURED 0.9 0.9 22.1 22.2 22.2 82.2
===============================================================================================================================
TOTAL 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
%
===============================================================================================================================
</TABLE>
*Note that Prepayment Premiums generally end prior to the last six months
before the Mortgage Loan's maturity date.
ALLOCATION OF PREPAYMENT PREMIUMS:
All Prepayment Premiums are distributed to Certificateholders on the
Distribution Date following the one-month collection period in which the
prepayment occurred. All Prepayment Premiums will be allocated up to an
amount equal to, and pro rata on the basis of, the "PV Yield Loss Amount"
for the Class IO Certificates and for each Class of Sequential Pay
Certificates receiving principal. Any excess amounts will be distributed to
Class IO.
TREASURY YIELD MAINTENANCE PREPAYMENT EXAMPLE:
(SEE "DESCRIPTION OF CERTIFICATES" IN THE PROSPECTUS SUPPLEMENT)
Yield Maintenance represents a Prepayment Premium which will generally be
equal to the present value of the reduction in interest payments as a
result of the prepayment through the maturity of the Mortgage Loan,
discounted at the yield of a Treasury security of similar maturity in most
cases, (converted from semi-annual to monthly pay).
GENERAL YIELD MAINTENANCE EXAMPLE:
Assuming the structure presented on page 1 of this memo and the following
assumptions (which in certain cases differ from the presented structure):
Weighted Average Net Mortgage Rate = 8.60%
<TABLE>
<CAPTION>
========================================================================================================
ASSUMED ASSUMED
PRINCIPAL FINAL IO VARIABLE INTEREST
DISTRIBUTION DISTRIBUTION ASSUMED COMPONENT PAYMENT ADJUSTMENT
COMPONENT FROM DATE COUPON RATE FOR $10MM
========================================================================================================
<S> <C> <C> <C> <C> <C>
A-1 6/18/97 2/18/04 7.30% 1.30% $ 10,833.33
- --------------------------------------------------------------------------------------------------------
A-2 3/18/04 12/18/06 7.60% 1.00% $ 8,333.33
- --------------------------------------------------------------------------------------------------------
A-3 * 1/18/07 4/18/07 7.70% 0.90% $ 7,500.00
- --------------------------------------------------------------------------------------------------------
D 5/18/07 10/18/08 7.80% 0.80% $ 6,666.67
- --------------------------------------------------------------------------------------------------------
E 11/18/08 5/18/09 7.80% 0.80% $ 6,666.67
- --------------------------------------------------------------------------------------------------------
F 6/18/09 10/18/14 7.00% 1.60% $ 13,333.33
- --------------------------------------------------------------------------------------------------------
G 11/18/14 11/18/16 7.00% 1.60% $ 13,333.33
- --------------------------------------------------------------------------------------------------------
H 12/18/16 4/18/17 7.00% 1.60% $ 13,333.33
- --------------------------------------------------------------------------------------------------------
J 5/18/17 2/18/20 7.00% 1.60% $ 13,333.33
- --------------------------------------------------------------------------------------------------------
K 3/18/20 4/18/27 7.00% 1.60% $ 13,333.33
========================================================================================================
</TABLE>
* Component Classes B and C have the same Assumed Final Distribution Date as
Class A-3.
B-5
<PAGE>
FU-LB 97-C1 STRUCTURAL SUMMARY (CONTINUED):
TREASURY YIELD MAINTENANCE PREPAYMENT EXAMPLE (CONTINUED):
Mortgage Loan Characteristics of loan being prepaid*:
Balance $10,000,000
Coupon 9.0%
Maturity 10 yrs (June 1, 2007)
Amortization Term 30 yrs
Prepayment Date 6/1/97
Prepayment Premium Type Yield Maintenance
*The Yield Maintenance formula for certain Mortgage Loans may result in a lower
Yield Maintenance prepayment premium than set forth in this example.
<TABLE>
<CAPTION>
========================================================================================================
MORTGAGE CLASS A-1 CLASS IO
LOAN CERTIFICATES CERTIFICATES
========================================================================================================
<S> <C> <C> <C>
AMOUNT OF PRINCIPAL PREPAYMENT $10,000,000 $10,000,000 $10,000,000
- --------------------------------------------------------------------------------------------------------
MATURITY DATE OF THE MORTGAGE LOAN 6/1/07
END OF RELEVANT INTEREST PAYMENT PERIOD(1) 2/18/04 6/18/07
NUMBER OF PAYMENTS(2) 120 80 120
- --------------------------------------------------------------------------------------------------------
TREASURY NOTE USED FOR REINVESTMENT YIELD(3) O6.25%2/07 5.875%2/04 6.25%2/07
TREASURY YIELD (CBE) 6.95% 6.90% 6.95%
REINVESTMENT YIELD (MTG)(4) 6.85% 6.80% 6.85%
- --------------------------------------------------------------------------------------------------------
MORTGAGE RATE 9.00%
PAYMENT DIFFERENTIAL ($ PER MONTH)(5) $17,916.67
- --------------------------------------------------------------------------------------------------------
CERTIFICATE PASS-THROUGH RATE 7.30%
FIXED INTEREST PAYMENT ADJUSTMENT ($ PER MONTH) $4,166.67
- --------------------------------------------------------------------------------------------------------
VARIABLE INTEREST PAYMENT ADJUSTMENT ($ PER MONTH)
6/18/97 TO 2/18/04 $10,833.33(7)
3/18/04 TO 12/18/06 $ 8,333.33(8)
1/18/07 TO 4/18/07 $ 7,500.00(9)
5/18/07 TO 6/18/07 $ 6,666.67(10)
- --------------------------------------------------------------------------------------------------------
TOTAL PREPAYMENT PREMIUM $1,553,421
- --------------------------------------------------------------------------------------------------------
PV YIELD LOSS AMOUN $267,412 $879,313
- --------------------------------------------------------------------------------------------------------
REMAINDER OF PREPAYMENT PREMIUM $406,696(11)
(ALLOCATED TO CLASS IO)
========================================================================================================
</TABLE>
(1) For the Class A-1 Certificates, the earlier of the Assumed Final
Distribution Date for such Class and the first Distribution Date following
the maturity date of the Mortgage Loan; For the Class IO Certificates, the
first Distribution Date following the maturity date of the Mortgage Loan.
(2) The number of payments to discount for PV Yield Loss calculation.
(3) The treasury note with a maturity date closest to the maturity date of the
loan or the end of relevant interest payment period.
(4) The Reinvestment Yield used is the mortgage equivalent of the CBE treasury
yield.
(5) (Mortgage Rate - Reinvestment Yield) x (amount of Principal Prepayment) /
12 used for 120 payments.
(6) (Pass-Through Rate for Class A-1 Certificates - Reinvestment Yield) x
(amount of Principal Prepayment) / 12 used for 80 payments.
(7) (130 bps) x (amount of Principal prepayment) / 12 used for 80 payments;
relates to Component A-1 of the aggregate Notional Amount of Class IO
Certificates.
(8) (100 bps) x (amount of Principal prepayment) / 12 used for 34 payments;
relates to Component A-2 of the aggregate Notional Amount of Class IO
Certificates.
(9) (90 bps) x (amount of Principal prepayment) / 12 used for 4 payments;
relates to Component A-3 of the aggregate Notional Amount of Class IO
Certificates.
(10) (80 bps) x (amount of Principal prepayment) / 12 used for 2 payments;
relates to Component D of the aggregate Notional Amount of Class IO
Certificates. No Variable Interest Payment Adjustments relate to Component
B or C because, based on the Mortgage Loan Assumptions and a 0% CPR, the
Class B and C Certificates would be retired on the same date as the Class
A-3 Certificates.
(11) Excess of Prepayment Premium over aggregate PV Yield Loss Amount for Class
A-1 and Class IO Certificates will be allocated to Class IO
B-6
<PAGE>
FU-LB 97-C1 STRUCTURAL SUMMARY (CONTINUED):
ADVANCING: The Master Servicer will be obligated to make advances of
scheduled principal and interest payments (excluding balloon
payments) and certain servicing expenses ("Advances"), to
the extent that such Advances are deemed to be recoverable.
If the Master Servicer fails to make a required Advance, the
Trustee will be obligated to make such advances.
CONTROLLING CLASS REPRESENTATIVE:
A Controlling Class Representative will be appointed by a
majority of Certificateholders of the Controlling Class,
which will generally be the most subordinate class with a
Certificate Balance outstanding that is at least 25% of the
initial Certificate Balance of such Class. The Controlling
Class Representative will, subject to certain limitations,
direct the Special Servicer on how to resolve delinquent or
defaulted loans.
SPECIAL SERVICER FLEXIBILITY:
See "Servicing of the Mortgage Loans - The Special Servicer"
in the Prospectus Supplement.
SPECIAL SERVICER: CRIIMI MAE Services Limited Partnership ("CRIIMI"), a
Maryland limited partnership, the general partner of which
is CRIIMI MAE Management, Inc.
As of March 31, 1997, CRIIMI had a total commercial and
multifamily mortgage loan servicing portfolio (including
loans serviced for its own accounts and for others) of
approximately $6.4 billion.
MASTER SERVICER: First Union National Bank of North Carolina ("FUNB"). As of
March 31, 1997, FUNB had a total commercial and multifamily
mortgage loan servicing portfolio (including loans serviced
for its own accounts and for others) of approximately $4
billion.
MINIMUM DENOMINATIONS:
MINIMUM INCREMENTS
CLASSES DENOMINATION THEREAFTER DELIVERY
- --------------------------------------------------------------------------------
A-1, A-2, A-3, B, C, D, AND E $10,000 $1 DTC
- --------------------------------------------------------------------------------
IO $100,000 $1 DTC
B-7
<PAGE>
FU-LB 97-C1 COLLATERAL OVERVIEW (AS OF THE CUT-OFF DATE - MAY 1, 1997):
GENERAL CHARACTERISTICS
=======================================================
CHARACTERISTICS
-------------------------------------------------------
AMOUNT $1,305,448,224
-------------------------------------------------------
# OF LOANS 283
-------------------------------------------------------
GROSS WAC 8.717 %
-------------------------------------------------------
ORIGINAL WAM 133 months
-------------------------------------------------------
REMAINING WAM 130 months
-------------------------------------------------------
AVG. LOAN BALANCE $4,612,891
-------------------------------------------------------
WA DSCR 1.34x
-------------------------------------------------------
WA CUT-OFF DATE LTV RATIO 69.9%
-------------------------------------------------------
BALLOON LOANS 89.0%
=======================================================
PROPERTY TYPES
===============================================
PROPERTY % OF INITIAL POOL
TYPES BALANCE
-----------------------------------------------
Multifamily 40.3%
-----------------------------------------------
Retail 38.8%
-----------------------------------------------
Hotel 9.9%
-----------------------------------------------
Office 5.4%
-----------------------------------------------
Industrial/Warehouse 2.4%
-----------------------------------------------
Self Storage 1.2%
-----------------------------------------------
Health Care 1.1%
-----------------------------------------------
Mobile Home Park 1.0%
===============================================
DEAL SUMMARY BY PROPERTY TYPE:
<TABLE>
<CAPTION>
====================================================================================================================================
# AGGREGATE % AVERAGE REM WA WA
PROPERTY OF CUT-OFF OF CUT-OFF GROSS WAM LTV WA OCC % %
TYPE LOANS BALANCE DEAL BALANCE WAC (MTHS) RATIO DSCR RATE(1) CA(2) BALLOON(2)
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
MULTIFAMILY 123 $526,106,414 40.3% $4,277,288 8.44% 134 75 % 1.30X 95% 1.6% 36.8%
====================================================================================================================================
Multifamily 112 500,853,127 38.4 4,471,903 8.42 125 75 1.31 95 1.6 35.5
- ------------------------------------------------------------------------------------------------------------------------------------
Section 42 11 25,253,287 1.9 2,295,753 8.87 304 75 1.23 96 0.0 1.3
====================================================================================================================================
RETAIL 94 505,939,982 38.8 5,382,340 8.75 127 68 1.33 96 3.9 35.7
====================================================================================================================================
Anchored 68 417,968,382 32.0 6,146,594 8.72 131 69 1.32 96 3.4 29.0
- ------------------------------------------------------------------------------------------------------------------------------------
Unanchored 26 87,971,600 6.7 3,383,523 8.89 111 65 1.39 95 0.5 6.7
====================================================================================================================================
HOTEL 28 128,913,585 9.9 4,604,057 9.37 142 61 1.49 NA 0.3 6.7
====================================================================================================================================
Full Service 9 44,724,707 3.4 4,969,412 9.37 171 60 1.56 NA 0.0 1.8
- ------------------------------------------------------------------------------------------------------------------------------------
Limited Service 19 84,188,877 6.4 4,430,994 9.37 127 62 1.46 NA 0.3 4.9
====================================================================================================================================
OFFICE 14 70,049,532 5.4 5,003,538 9.02 114 63 1.42 87 1.6 4.4
====================================================================================================================================
INDUSTRIAL 11 31,192,560 2.4 2,835,687 8.99 122 63 1.33 100 0.0 2.0
====================================================================================================================================
SELF STORAGE 6 15,257,179 1.2 2,542,863 9.34 115 63 1.38 81 0.3 1.2
====================================================================================================================================
HEALTH CARE 4 14,817,863 1.1 3,704,466 8.66 118 71 1.36 95 0.3 1.1
====================================================================================================================================
Assisted Living 1 2,522,748 0.2 2,522,748 9.00 119 79 1.38 98 0.0 0.2
- ------------------------------------------------------------------------------------------------------------------------------------
Congregate Care 2 11,288,174 0.9 5,644,087 8.45 119 69 1.34 95 0.3 0.9
- ------------------------------------------------------------------------------------------------------------------------------------
Skilled Nursing 1 1,006,941 0.1 1,006,941 10.13 114 69 1.51 84 0.0 0.1
====================================================================================================================================
MOBILE HOME PARK 3 13,171,111 1.0 4,390,370 9.09 96 68 1.28 90 0.0 1.0
====================================================================================================================================
====================================================================================================================================
TOTAL/WTD. AVG. 283 $1,305,448,224 100% $4,612,891 8.72% 130 70% 1.34X 95% 7.9% 89.0%
====================================================================================================================================
</TABLE>
(1) Excluding Hotels.
(2) Represents % of total pool.
B-8
<PAGE>
FU-LB 97-C1 COLLATERAL OVERVIEW (AS OF THE CUT-OFF DATE - MAY 1, 1997):
DEAL SUMMARY BY PROPERTY TYPE (CONTINUED):
<TABLE>
<CAPTION>
================================================================================================================================
# AGGREGATE % AVG MINIMUM MAXIMUM MIN
PROPERTY OF CUT-OFF OF CUT-OFF CUT-OFF CUT-OFF GROSS MIN MAX WAM
TYPE LOANS BALANCE DEAL BALANCE BALANCE BALANCE WAC WAC WAC (MTHS)
================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
MULTIFAMILY 123 $526,106,414 40.3% $4,277,288 $396,865 $29,981,525 8.44% 7.99% 9.62% 52
================================================================================================================================
Multifamily 112 500,853,127 38.4 4,471,903 396,865 29,981,525 8.42 7.99 9.35 52
- --------------------------------------------------------------------------------------------------------------------------------
Section 42 11 25,253,287 1.9 2,295,753 598,613 5,986,402 8.87 8.60 9.62 89
================================================================================================================================
RETAIL 94 505,939,982 38.8 5,382,340 847,350 33,388,968 8.75 8.05 9.38 78
================================================================================================================================
Anchored 68 417,968,382 32.0 6,146,594 847,350 33,388,968 8.72 8.05 9.38 78
- --------------------------------------------------------------------------------------------------------------------------------
Unanchored 26 87,971,600 6.7 3,383,523 943,343 6,843,890 8.89 8.53 9.18 78
================================================================================================================================
HOTEL 28 128,913,585 9.9 4,604,057 1,344,359 14,475,611 9.37 9.00 10.00 51
================================================================================================================================
Full Service 9 44,724,707 3.4 4,969,412 1,747,579 9,438,855 9.37 9.25 10.00 81
- --------------------------------------------------------------------------------------------------------------------------------
Limited Service 19 84,188,877 6.4 4,430,994 1,344,359 14,475,611 9.37 9.00 9.75 51
================================================================================================================================
OFFICE 14 70,049,532 5.4 5,003,538 899,034 13,717,943 9.02 8.72 9.34 78
================================================================================================================================
INDUSTRIAL 11 31,192,560 2.4 2,835,687 896,605 5,983,662 8.99 8.73 9.75 80
================================================================================================================================
SELF STORAGE 6 15,257,179 1.2 2,542,863 398,672 5,617,106 9.34 8.90 9.56 113
================================================================================================================================
HEALTH CARE 4 14,817,863 1.1 3,704,466 1,006,941 7,695,326 8.66 8.37 10.13 114
================================================================================================================================
Assisted Living 1 2,522,748 0.2 2,522,748 2,522,748 2,522,748 9.00 9.00 9.00 119
- --------------------------------------------------------------------------------------------------------------------------------
Congregate Care 2 11,288,174 0.9 5,644,087 3,592,848 7,695,326 8.45 8.37 8.49 118
- --------------------------------------------------------------------------------------------------------------------------------
Skilled Nursing 1 1,006,941 0.1 1,006,941 1,006,941 1,006,941 10.13 10.13 10.13 114
================================================================================================================================
MOBILE HOME PARK 3 13,171,111 1.0 4,390,370 3,183,914 5,393,201 9.09 8.33 10.50 57
================================================================================================================================
================================================================================================================================
TOTAL 283 $1,305,448,224 100% $4,612,891 $396,865 $33,388,968 8.72% 7.99% 10.50% 51
================================================================================================================================
<CAPTION>
========================================================================================
# MAX WA MIN MAX
PROPERTY OF WAM WA MIN MAX LTV LTV LTV
TYPE LOANS (MTHS) DSCR DSCR DSCR RATIO RATIO RATIO
=======================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
MULTIFAMILY 123 359 1.30X 1.15X 1.64X 75 % 51 % 84 %
=======================================================================================
Multifamily 112 359 1.31 1.20 1.64 75 51 80
- ---------------------------------------------------------------------------------------
Section 42 11 356 1.23 1.15 1.44 75 56 84
=======================================================================================
RETAIL 94 239 1.33 1.25 1.83 68 31 79
=======================================================================================
Anchored 68 239 1.32 1.25 1.83 69 31 79
- ---------------------------------------------------------------------------------------
Unanchored 26 119 1.39 1.26 1.80 65 47 75
=======================================================================================
HOTEL 28 270 1.49 1.31 1.86 61 46 70
=======================================================================================
Full Service 9 270 1.56 1.38 1.86 60 50 70
- ---------------------------------------------------------------------------------------
Limited Service 19 270 1.46 1.31 1.66 62 46 70
=======================================================================================
OFFICE 14 119 1.42 1.29 1.63 63 48 75
=======================================================================================
INDUSTRIAL 11 179 1.33 1.23 1.55 63 53 72
=======================================================================================
SELF STORAGE 6 119 1.38 1.26 1.54 63 54 75
=======================================================================================
HEALTH CARE 4 119 1.36 1.34 1.51 71 65 79
=======================================================================================
Assisted Living 1 119 1.38 1.38 1.38 79 79 79
- ---------------------------------------------------------------------------------------
Congregate Care 2 119 1.34 1.34 1.36 69 65 71
- ---------------------------------------------------------------------------------------
Skilled Nursing 1 114 1.51 1.51 1.51 69 69 69
=======================================================================================
MOBILE HOME PARK 3 118 1.28 1.26 1.29 68 63 75
=======================================================================================
=======================================================================================
TOTAL 283 359 1.34X 1.15X 1.86X 70% 31% 84%
=======================================================================================
</TABLE>
B-9
<PAGE>
FU-LB 97-C1 COLLATERAL OVERVIEW (AS OF THE CUT-OFF DATE - MAY 1, 1997):
LOAN SIZE DISTRIBUTION
================================================================================
% OF INITIAL
BALANCE RANGE ($) # OF LOANS POOL BALANCE
- --------------------------------------------------------------------------------
1 - 2,000,000 74 6.86%
- --------------------------------------------------------------------------------
2,000,001 - 4,000,000 97 22.46
- --------------------------------------------------------------------------------
4,000,001 - 6,000,000 52 20.08
- --------------------------------------------------------------------------------
6,000,001 - 8,000,000 30 15.95
- --------------------------------------------------------------------------------
8,000,001 - 10,000,000 10 6.96
- --------------------------------------------------------------------------------
10,000,001 - 12,000,000 3 2.57
- --------------------------------------------------------------------------------
12,000,001 - 14,000,000 6 6.15
- --------------------------------------------------------------------------------
14,000,001 - 16,000,000 1 1.11
- --------------------------------------------------------------------------------
16,000,001 - 18,000,000 1 1.26
- --------------------------------------------------------------------------------
18,000,001 - 20,000,000 3 4.39
- --------------------------------------------------------------------------------
20,000,001+ 6 12.21
================================================================================
GROSS RATE DISTRIBUTION
=========================================
GROSS RATE % OF INITIAL
(%) POOL BALANCE
-----------------------------------------
7.751 - 8.000% 5.70%
-----------------------------------------
8.001 - 8.250% 7.80
-----------------------------------------
8.251 - 8.500% 17.54
-----------------------------------------
8.501 - 8.750% 27.88
-----------------------------------------
8.751 - 9.000% 19.88
-----------------------------------------
9.001 - 9.250% 11.55
-----------------------------------------
9.251 - 9.500% 7.19
-----------------------------------------
9.501 - 9.750% 1.89
-----------------------------------------
9.751 - 10.000% 0.13
-----------------------------------------
10.001 - 10.250% 0.08
-----------------------------------------
10.251 - 10.500% 0.35
=========================================
REMAINING TERMS TO MATURITY
=============================================
MONTHS % OF INITIAL
POOL BALANCE
---------------------------------------------
51 - 72 0.87%
---------------------------------------------
73 - 88 21.24
---------------------------------------------
89 - 107 0.11
---------------------------------------------
108 - 120 60.03
---------------------------------------------
121 - 240 11.68
---------------------------------------------
241 - 274 1.73
---------------------------------------------
275+ 4.34
=============================================
REMAINING AMORTIZATION TERM
======================================
MONTHS % OF INITIAL
POOL BALANCE
--------------------------------------
162 - 239 6.92
--------------------------------------
240 - 274 2.98
--------------------------------------
275 - 296 7.88
--------------------------------------
297 - 348 23.06
--------------------------------------
349 - 356 19.96
--------------------------------------
357 - 360 39.21
======================================
DEBT SERVICE COVERAGE RATIOS
===================================================
% OF INITIAL
DSCR RANGE (X) POOL BALANCE
---------------------------------------------------
1.149 - 1.200 2.60%
---------------------------------------------------
1.201 - 1.300 45.16
---------------------------------------------------
1.301 - 1.400 30.95
---------------------------------------------------
1.401 - 1.500 10.84
---------------------------------------------------
1.501 - 1.600 4.91
---------------------------------------------------
1.601 - 1.700 4.20
---------------------------------------------------
1.701 - 1.800 0.93
---------------------------------------------------
1.801 - 1.900 0.41
===================================================
LOAN TO VALUE % (LTV)
======================================
LTV RANGES % OF INITIAL
POOL BALANCE
--------------------------------------
30.001 - 35.000 0.40%
--------------------------------------
40.001 - 45.000 0.24
--------------------------------------
45.001 - 50.000 2.72
--------------------------------------
50.001 - 55.000 4.15
--------------------------------------
55.001 - 60.000 5.45
--------------------------------------
60.001 - 65.000 9.41
--------------------------------------
65.001 - 70.000 16.61
--------------------------------------
70.001 - 75.000 41.46
--------------------------------------
75.001 - 80.000 19.19
--------------------------------------
80.001 - 85.000 0.37
======================================
STATE DISTRIBUTION
===============================================
STATE % OF INITIAL
POOL BALANCE
-----------------------------------------------
TX 13.95%
-----------------------------------------------
FL 11.33
-----------------------------------------------
CA 7.92
-----------------------------------------------
PA 6.87
-----------------------------------------------
MD 6.51
-----------------------------------------------
AZ 5.53
===============================================
STATE DISTRIBUTION
===============================================
STATE % OF INITIAL
POOL BALANCE
-----------------------------------------------
GA 5.32%
-----------------------------------------------
NJ 4.01
-----------------------------------------------
IL 3.81
-----------------------------------------------
MA 3.64
-----------------------------------------------
Other 31.10
===============================================
B-10
<PAGE>
Weighted Average Life, First Principal Payment Date, Last Principal Payment
Date, Pre-Tax Yield to Maturity and Modified
Duration of Class A1 Certificates
Scenario 1
<TABLE>
<CAPTION>
Price (32nds) 0% CPR 2% CPR 4% CPR 6% CPR 8% CPR
- ------------ ------------------ ------------------ ------------------ ------------------ ------------------
CBE Modified CBE Modified CBE Modified CBE Modified CBE Modified
Yield Duration Yield Duration Yield Duration Yield Duration Yield Duration
(%) (yrs.) (%) (yrs.) (%) (yrs.) (%) (yrs.) (%) (yrs.)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
100.00 7.170% 3.86 7.160% 3.46 7.149% 3.11 7.140% 2.86 7.132% 2.69
100.04 7.138% 3.86 7.124% 3.46 7.109% 3.11 7.096% 2.86 7.086% 2.69
100.08 7.106% 3.87 7.088% 3.46 7.069% 3.11 7.053% 2.87 7.040% 2.69
100.12 7.074% 3.87 7.052% 3.47 7.029% 3.11 7.010% 2.87 6.993% 2.69
100.16 7.042% 3.87 7.017% 3.47 6.989% 3.11 6.967% 2.87 6.947% 2.69
100.20 7.010% 3.87 6.981% 3.47 6.950% 3.12 6.924% 2.87 6.902% 2.69
100.24 6.978% 3.87 6.946% 3.47 6.910% 3.12 6.881% 2.87 6.856% 2.70
100.28 6.946% 3.88 6.910% 3.47 6.871% 3.12 6.838% 2.87 6.810% 2.70
101.00 6.914% 3.88 6.875% 3.47 6.831% 3.12 6.795% 2.88 6.764% 2.70
101.04 6.883% 3.88 6.839% 3.48 6.792% 3.12 6.752% 2.88 6.719% 2.70
101.08 6.851% 3.88 6.804% 3.48 6.752% 3.12 6.709% 2.88 6.673% 2.70
101.12 6.820% 3.89 6.769% 3.48 6.713% 3.13 6.667% 2.88 6.628% 2.70
101.16 6.788% 3.89 6.733% 3.48 6.674% 3.13 6.624% 2.88 6.583% 2.70
Weighted Average
Life (yrs.) 4.85 4.26 3.74 3.40 3.16
First Principal
Payment Date 18-Jun-97 18-Jun-97 18-Jun-97 18-Jun-97 18-Jun-97
Last Principal
Payment Date 18-Feb-2004 18-Dec-2003 18-Jun-2003 18-Oct-2002 18-May-2002
</TABLE>
B-11
<PAGE>
Weighted Average Life, First Principal Payment Date, Last Principal Payment
Date, Pre-Tax Yield to Maturity and Modified
Duration of Class A2 Certificates
Scenario 1
<TABLE>
<CAPTION>
Price (32nds) 0% CPR 2% CPR 4% CPR 6% CPR 8% CPR
- ------------ ------------------ ------------------ ------------------ ------------------ ------------------
CBE Modified CBE Modified CBE Modified CBE Modified CBE Modified
Yield Duration Yield Duration Yield Duration Yield Duration Yield Duration
(%) (yrs.) (%) (yrs.) (%) (yrs.) (%) (yrs.) (%) (yrs.)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
100.08 7.308% 5.70 7.302% 5.40 7.298% 5.19 7.295% 5.05 7.292% 4.92
100.12 7.286% 5.70 7.279% 5.40 7.274% 5.19 7.270% 5.06 7.266% 4.92
100.16 7.264% 5.70 7.256% 5.41 7.250% 5.19 7.246% 5.06 7.241% 4.92
100.20 7.243% 5.70 7.234% 5.41 7.226% 5.20 7.221% 5.06 7.216% 4.93
100.24 7.221% 5.71 7.211% 5.41 7.203% 5.20 7.197% 5.06 7.191% 4.93
100.28 7.200% 5.71 7.188% 5.41 7.179% 5.20 7.172% 5.06 7.166% 4.93
101.00 7.178% 5.71 7.165% 5.41 7.155% 5.20 7.148% 5.06 7.141% 4.93
101.04 7.156% 5.71 7.142% 5.42 7.132% 5.20 7.124% 5.06 7.116% 4.93
101.08 7.135% 5.72 7.120% 5.42 7.108% 5.20 7.100% 5.07 7.091% 4.93
101.12 7.114% 5.72 7.097% 5.42 7.084% 5.21 7.075% 5.07 7.066% 4.94
101.16 7.092% 5.72 7.075% 5.42 7.061% 5.21 7.051% 5.07 7.042% 4.94
101.20 7.071% 5.72 7.052% 5.42 7.037% 5.21 7.027% 5.07 7.017% 4.94
101.24 7.049% 5.72 7.029% 5.42 7.014% 5.21 7.003% 5.07 6.992% 4.94
Weighted Average
Life (yrs.) 7.75 7.20 6.82 6.59 6.37
First Principal
Payment Date 18-Feb-2004 18-Dec-2003 18-Jun-2003 18-Oct-2002 18-May-2002
Last Principal
Payment Date 18-Dec-2006 18-Oct-2006 18-Apr-2005 18-May-2004 18-Apr-2004
</TABLE>
B-12
<PAGE>
Weighted Average Life, First Principal Payment Date, Last Principal Payment
Date, Pre-Tax Yield to Maturity and Modified
Duration of Class A3 Certificates
Scenario 1
<TABLE>
<CAPTION>
Price (32nds) 0% CPR 2% CPR 4% CPR 6% CPR 8% CPR
- ------------ ------------------ ------------------ ------------------ ------------------ ------------------
CBE Modified CBE Modified CBE Modified CBE Modified CBE Modified
Yield Duration Yield Duration Yield Duration Yield Duration Yield Duration
(%) (yrs.) (%) (yrs.) (%) (yrs.) (%) (yrs.) (%) (yrs.)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
100.08 7.405% 6.70 7.405% 6.67 7.404% 6.59 7.401% 6.42 7.399% 6.24
100.12 7.387% 6.70 7.386% 6.68 7.385% 6.59 7.382% 6.42 7.379% 6.24
100.16 7.368% 6.70 7.368% 6.68 7.366% 6.59 7.363% 6.42 7.359% 6.24
100.20 7.350% 6.71 7.349% 6.68 7.348% 6.59 7.344% 6.42 7.339% 6.24
100.24 7.332% 6.71 7.331% 6.68 7.329% 6.60 7.324% 6.43 7.320% 6.25
100.28 7.313% 6.71 7.313% 6.69 7.310% 6.60 7.305% 6.43 7.300% 6.25
101.00 7.295% 6.71 7.294% 6.69 7.291% 6.60 7.286% 6.43 7.280% 6.25
101.04 7.277% 6.72 7.276% 6.69 7.273% 6.60 7.267% 6.43 7.260% 6.25
101.08 7.258% 6.72 7.257% 6.69 7.254% 6.61 7.248% 6.44 7.241% 6.25
101.12 7.240% 6.72 7.239% 6.70 7.236% 6.61 7.229% 6.44 7.221% 6.26
101.16 7.222% 6.72 7.221% 6.70 7.217% 6.61 7.210% 6.44 7.202% 6.26
101.20 7.204% 6.72 7.202% 6.70 7.199% 6.61 7.191% 6.44 7.182% 6.26
101.24 7.185% 6.73 7.184% 6.70 7.180% 6.62 7.172% 6.45 7.163% 6.26
Weighted Average
Life (yrs.) 9.69 9.64 9.47 9.14 8.79
First Principal
Payment Date 18-Dec-2006 18-Oct-2006 18-Apr-2005 18-May-2004 18-Apr-2004
Last Principal
Payment Date 18-Apr-2007 18-Mar-2007 18-Mar-2007 18-Feb-2007 18-Feb-2007
</TABLE>
B-13
<PAGE>
Weighted Average Life, First Principal Payment Date, Last Principal Payment
Date, Pre-Tax Yield to Maturity and Modified
Duration of Class B Certificates
Scenario 1
<TABLE>
<CAPTION>
Price (32nds) 0% CPR 2% CPR 4% CPR 6% CPR 8% CPR
- ------------ ------------------ ------------------ ------------------ ------------------ ------------------
CBE Modified CBE Modified CBE Modified CBE Modified CBE Modified
Yield Duration Yield Duration Yield Duration Yield Duration Yield Duration
(%) (yrs.) (%) (yrs.) (%) (yrs.) (%) (yrs.) (%) (yrs.)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
100.08 7.458% 6.77 7.457% 6.76 7.457% 6.75 7.457% 6.73 7.457% 6.71
100.12 7.439% 6.78 7.439% 6.77 7.439% 6.75 7.439% 6.73 7.438% 6.71
100.16 7.421% 6.78 7.421% 6.77 7.421% 6.75 7.420% 6.73 7.420% 6.72
100.20 7.403% 6.78 7.403% 6.77 7.402% 6.76 7.402% 6.73 7.401% 6.72
100.24 7.385% 6.78 7.384% 6.77 7.384% 6.76 7.383% 6.74 7.383% 6.72
100.28 7.366% 6.79 7.366% 6.78 7.366% 6.76 7.365% 6.74 7.365% 6.72
101.00 7.348% 6.79 7.348% 6.78 7.348% 6.76 7.347% 6.74 7.346% 6.73
101.04 7.330% 6.79 7.330% 6.78 7.329% 6.77 7.329% 6.74 7.328% 6.73
101.08 7.312% 6.79 7.312% 6.78 7.311% 6.77 7.310% 6.75 7.310% 6.73
101.12 7.294% 6.80 7.294% 6.79 7.293% 6.77 7.292% 6.75 7.292% 6.73
101.16 7.276% 6.80 7.276% 6.79 7.275% 6.77 7.274% 6.75 7.274% 6.74
101.20 7.258% 6.80 7.258% 6.79 7.257% 6.78 7.256% 6.75 7.255% 6.74
101.24 7.240% 6.80 7.240% 6.79 7.239% 6.78 7.238% 6.76 7.237% 6.74
Weighted Average
Life (yrs.) 9.89 9.86 9.83 9.79 9.76
First Principal
Payment Date 18-Apr-2007 18-Mar-2007 18-Mar-2007 18-Feb-2007 18-Feb-2007
Last Principal
Payment Date 18-Apr-2007 18-Apr-2007 18-Apr-2007 18-Apr-2007 18-Mar-2007
</TABLE>
B-14
<PAGE>
Weighted Average Life, First Principal Payment Date, Last Principal Payment
Date, Pre-Tax Yield to Maturity and Modified
Duration of Class C Certificates
Scenario 1
<TABLE>
<CAPTION>
Price (32nds) 0% CPR 2% CPR 4% CPR 6% CPR 8% CPR
- ------------ ------------------ ------------------ ------------------ ------------------ ------------------
CBE Modified CBE Modified CBE Modified CBE Modified CBE Modified
Yield Duration Yield Duration Yield Duration Yield Duration Yield Duration
(%) (yrs.) (%) (yrs.) (%) (yrs.) (%) (yrs.) (%) (yrs.)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
99.24 7.541% 6.76 7.541% 6.76 7.541% 6.76 7.541% 6.76 7.541% 6.75
99.28 7.523% 6.76 7.523% 6.76 7.523% 6.76 7.523% 6.76 7.523% 6.75
100.00 7.504% 6.76 7.504% 6.76 7.504% 6.76 7.504% 6.76 7.504% 6.75
100.04 7.486% 6.77 7.486% 6.77 7.486% 6.77 7.486% 6.77 7.486% 6.75
100.08 7.468% 6.77 7.468% 6.77 7.468% 6.77 7.468% 6.77 7.468% 6.76
100.12 7.449% 6.77 7.449% 6.77 7.449% 6.77 7.449% 6.77 7.449% 6.76
100.16 7.431% 6.77 7.431% 6.77 7.431% 6.77 7.431% 6.77 7.431% 6.76
100.20 7.413% 6.78 7.413% 6.78 7.413% 6.78 7.413% 6.78 7.413% 6.76
100.24 7.395% 6.78 7.395% 6.78 7.395% 6.78 7.395% 6.78 7.394% 6.77
100.28 7.377% 6.78 7.377% 6.78 7.377% 6.78 7.377% 6.78 7.376% 6.77
101.00 7.358% 6.78 7.358% 6.78 7.358% 6.78 7.358% 6.78 7.358% 6.77
101.04 7.340% 6.79 7.340% 6.79 7.340% 6.79 7.340% 6.79 7.340% 6.77
101.08 7.322% 6.79 7.322% 6.79 7.322% 6.79 7.322% 6.79 7.322% 6.78
Weighted Average
Life (yrs.) 9.89 9.89 9.89 9.89 9.86
First Principal
Payment Date 18-Apr-2007 18-Apr-2007 18-Apr-2007 18-Apr-2007 18-Apr-2007
Last Principal
Payment Date 18-Apr-2007 18-Apr-2007 18-Apr-2007 18-Apr-2007 18-Mar-2007
</TABLE>
B-15
<PAGE>
Weighted Average Life, First Principal Payment Date, Last Principal Payment
Date, Pre-Tax Yield to Maturity and Modified
Duration of Class D Certificates
Scenario 1
<TABLE>
<CAPTION>
Price (32nds) 0% CPR 2% CPR 4% CPR 6% CPR 8% CPR
- ------------ ------------------ ------------------ ------------------ ------------------ ------------------
CBE Modified CBE Modified CBE Modified CBE Modified CBE Modified
Yield Duration Yield Duration Yield Duration Yield Duration Yield Duration
(%) (yrs.) (%) (yrs.) (%) (yrs.) (%) (yrs.) (%) (yrs.)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
99.08 7.676% 6.82 7.677% 6.73 7.677% 6.73 7.677% 6.73 7.677% 6.73
99.12 7.658% 6.82 7.658% 6.73 7.658% 6.73 7.658% 6.73 7.658% 6.73
99.16 7.639% 6.82 7.640% 6.74 7.640% 6.73 7.640% 6.73 7.640% 6.73
99.20 7.621% 6.83 7.621% 6.74 7.621% 6.74 7.621% 6.74 7.621% 6.74
99.24 7.603% 6.83 7.603% 6.74 7.603% 6.74 7.603% 6.74 7.603% 6.74
99.28 7.585% 6.83 7.584% 6.75 7.584% 6.74 7.584% 6.74 7.584% 6.74
100.00 7.566% 6.84 7.566% 6.75 7.566% 6.74 7.566% 6.74 7.566% 6.74
100.04 7.548% 6.84 7.547% 6.75 7.547% 6.75 7.547% 6.75 7.547% 6.75
100.08 7.530% 6.84 7.529% 6.75 7.529% 6.75 7.529% 6.75 7.529% 6.75
100.12 7.512% 6.84 7.511% 6.76 7.511% 6.75 7.511% 6.75 7.511% 6.75
100.16 7.494% 6.85 7.492% 6.76 7.492% 6.76 7.492% 6.76 7.492% 6.76
100.20 7.476% 6.85 7.474% 6.76 7.474% 6.76 7.474% 6.76 7.474% 6.76
100.24 7.458% 6.85 7.456% 6.76 7.456% 6.76 7.456% 6.76 7.456% 6.76
Weighted Average
Life (yrs.) 10.09 9.89 9.89 9.89 9.89
First Principal
Payment Date 18-Apr-2007 18-Apr-2007 18-Apr-2007 18-Apr-2007 18-Apr-2007
Last Principal
Payment Date 18-Oct-2008 18-Aug-2007 18-Apr-2007 18-Apr-2007 18-Apr-2007
</TABLE>
B-16
<PAGE>
Weighted Average Life, First Principal Payment Date, Last Principal Payment
Date, Pre-Tax Yield to Maturity and Modified
Duration of Class E Certificates
Scenario 1
<TABLE>
<CAPTION>
Price (32nds) 0% CPR 2% CPR 4% CPR 6% CPR 8% CPR
- ------------ ------------------ ------------------ ------------------ ------------------ ------------------
CBE Modified CBE Modified CBE Modified CBE Modified CBE Modified
Yield Duration Yield Duration Yield Duration Yield Duration Yield Duration
(%) (yrs.) (%) (yrs.) (%) (yrs.) (%) (yrs.) (%) (yrs.)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
98.24 7.997% 7.32 8.000% 7.13 8.007% 6.77 8.009% 6.64 8.009% 6.64
98.28 7.980% 7.32 7.983% 7.14 7.988% 6.78 7.990% 6.64 7.990% 6.64
99.00 7.963% 7.33 7.965% 7.14 7.970% 6.78 7.972% 6.65 7.972% 6.64
99.04 7.946% 7.33 7.947% 7.14 7.951% 6.78 7.953% 6.65 7.953% 6.65
99.08 7.928% 7.33 7.930% 7.15 7.933% 6.78 7.934% 6.65 7.934% 6.65
99.12 7.911% 7.34 7.912% 7.15 7.914% 6.79 7.915% 6.65 7.915% 6.65
99.16 7.894% 7.34 7.895% 7.15 7.896% 6.79 7.896% 6.66 7.896% 6.65
99.20 7.877% 7.34 7.877% 7.16 7.877% 6.79 7.877% 6.66 7.877% 6.66
99.24 7.860% 7.35 7.860% 7.16 7.859% 6.80 7.859% 6.66 7.859% 6.66
99.28 7.843% 7.35 7.843% 7.16 7.841% 6.80 7.840% 6.67 7.840% 6.66
100.00 7.827% 7.35 7.825% 7.16 7.823% 6.80 7.821% 6.67 7.821% 6.67
100.04 7.810% 7.36 7.808% 7.17 7.804% 6.80 7.803% 6.67 7.803% 6.67
100.08 7.793% 7.36 7.791% 7.17 7.786% 6.81 7.784% 6.67 7.784% 6.67
Weighted Average
Life (yrs.) 11.52 11.05 10.20 9.89 9.89
First Principal
Payment Date 18-Oct-2008 18-Aug-2007 18-Apr-2007 18-Apr-2007 18-Apr-2007
Last Principal
Payment Date 18-Aug-2009 18-Oct-2008 18-May-2008 18-Jun-2007 18-Apr-2007
</TABLE>
B-17
<PAGE>
Weighted Average Life, First Principal Payment Date, Last Principal Payment
Date, and Pre-Tax Yield to Maturity of Class IO Certificates
Scenario 1
<TABLE>
<CAPTION>
Price (32nds) 0% CPR 2% CPR 4% CPR 6% CPR 8% CPR
- ------------ ------------------ ------------------ ------------------ ------------------ ------------------
CBE CBE CBE CBE CBE
Yield Yield Yield Yield Yield
(%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C>
7.12 10.622% 9.931% 9.267% 8.629% 8.012%
7.14 10.417% 9.725% 9.060% 8.421% 7.803%
7.16 10.215% 9.522% 8.856% 8.216% 7.597%
7.18 10.016% 9.322% 8.654% 8.013% 7.394%
7.20 9.820% 9.124% 8.456% 7.814% 7.194%
7.22 9.626% 8.930% 8.261% 7.618% 6.997%
7.24 9.435% 8.738% 8.068% 7.424% 6.802%
7.26 9.247% 8.548% 7.878% 7.233% 6.611%
7.28 9.061% 8.362% 7.690% 7.045% 6.421%
7.30 8.878% 8.178% 7.505% 6.859% 6.235%
8.00 8.697% 7.996% 7.322% 6.675% 6.050%
8.02 8.519% 7.817% 7.142% 6.495% 5.869%
8.04 8.343% 7.640% 6.965% 6.316% 5.689%
Weighted Average
Life (yrs.) 9.56 9.18 8.84 8.53 8.26
First Principal
Payment Date 18-Jun-97 18-Jun-97 18-Jun-97 18-Jun-97 18-Jun-97
Last Principal
Payment Date 18-Apr-2027 18-Apr-2027 18-Apr-2027 18-Apr-2027 18-Apr-2027
</TABLE>
B-18
<PAGE>
Weighted Average Life, First Principal Payment Date, Last Principal Payment
Date, Pre-Tax Yield to Maturity and Modified
Duration of Class A1 Certificates
Scenario 2
<TABLE>
<CAPTION>
Price (32nds) 0% CPR 2% CPR 4% CPR 6% CPR 8% CPR
- ------------ ------------------ ------------------ ------------------ ------------------ ------------------
CBE Modified CBE Modified CBE Modified CBE Modified CBE Modified
Yield Duration Yield Duration Yield Duration Yield Duration Yield Duration
(%) (yrs.) (%) (yrs.) (%) (yrs.) (%) (yrs.) (%) (yrs.)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
100.00 7.170% 3.86 7.170% 3.86 7.170% 3.86 7.170% 3.86 7.170% 3.85
100.04 7.138% 3.86 7.138% 3.86 7.138% 3.86 7.138% 3.86 7.138% 3.86
100.08 7.106% 3.87 7.106% 3.86 7.106% 3.86 7.106% 3.86 7.105% 3.86
100.12 7.074% 3.87 7.074% 3.87 7.074% 3.86 7.073% 3.86 7.073% 3.86
100.16 7.042% 3.87 7.042% 3.87 7.042% 3.87 7.041% 3.86 7.041% 3.86
100.20 7.010% 3.87 7.010% 3.87 7.010% 3.87 7.009% 3.87 7.009% 3.86
100.24 6.978% 3.87 6.978% 3.87 6.978% 3.87 6.978% 3.87 6.977% 3.87
100.28 6.946% 3.88 6.946% 3.87 6.946% 3.87 6.946% 3.87 6.945% 3.87
101.00 6.914% 3.88 6.914% 3.88 6.914% 3.87 6.914% 3.87 6.914% 3.87
101.04 6.883% 3.88 6.883% 3.88 6.882% 3.88 6.882% 3.87 6.882% 3.87
101.08 6.851% 3.88 6.851% 3.88 6.851% 3.88 6.850% 3.88 6.850% 3.87
101.12 6.820% 3.89 6.819% 3.88 6.819% 3.88 6.819% 3.88 6.818% 3.88
101.16 6.788% 3.89 6.788% 3.88 6.787% 3.88 6.787% 3.88 6.787% 3.88
Weighted Average
Life (yrs.) 4.85 4.85 4.84 4.84 4.83
First Principal
Payment Date 18-Jun-97 18-Jun-97 18-Jun-97 18-Jun-97 18-Jun-97
Last Principal
Payment Date 18-Feb-2004 18-Feb-2004 18-Feb-2004 18-Feb-2004 18-Feb-2004
</TABLE>
B-19
<PAGE>
Weighted Average Life, First Principal Payment Date, Last Principal Payment
Date, Pre-Tax Yield to Maturity and Modified
Duration of Class A2 Certificates
Scenario 2
<TABLE>
<CAPTION>
Price (32nds) 0% CPR 2% CPR 4% CPR 6% CPR 8% CPR
- ------------ ------------------ ------------------ ------------------ ------------------ ------------------
CBE Modified CBE Modified CBE Modified CBE Modified CBE Modified
Yield Duration Yield Duration Yield Duration Yield Duration Yield Duration
(%) (yrs.) (%) (yrs.) (%) (yrs.) (%) (yrs.) (%) (yrs.)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
100.08 7.308% 5.70 7.308% 5.69 7.308% 5.69 7.308% 5.68 7.308% 5.68
100.12 7.286% 5.70 7.286% 5.70 7.286% 5.69 7.286% 5.68 7.286% 5.68
100.16 7.264% 5.70 7.264% 5.70 7.264% 5.69 7.264% 5.69 7.264% 5.68
100.20 7.243% 5.70 7.243% 5.70 7.242% 5.69 7.242% 5.69 7.242% 5.68
100.24 7.221% 5.71 7.221% 5.70 7.221% 5.70 7.221% 5.69 7.220% 5.69
100.28 7.200% 5.71 7.199% 5.70 7.199% 5.70 7.199% 5.69 7.199% 5.69
101.00 7.178% 5.71 7.178% 5.71 7.178% 5.70 7.177% 5.69 7.177% 5.69
101.04 7.156% 5.71 7.156% 5.71 7.156% 5.70 7.156% 5.70 7.156% 5.69
101.08 7.135% 5.72 7.135% 5.71 7.134% 5.70 7.134% 5.70 7.134% 5.69
101.12 7.114% 5.72 7.113% 5.71 7.113% 5.71 7.113% 5.70 7.112% 5.70
101.16 7.092% 5.72 7.092% 5.71 7.091% 5.71 7.091% 5.70 7.091% 5.70
101.20 7.071% 5.72 7.070% 5.72 7.070% 5.71 7.070% 5.70 7.069% 5.70
101.24 7.049% 5.72 7.049% 5.72 7.049% 5.71 7.048% 5.71 7.048% 5.70
Weighted Average
Life (yrs.) 7.75 7.74 7.73 7.72 7.71
First Principal
Payment Date 18-Feb-2004 18-Feb-2004 18-Feb-2004 18-Feb-2004 18-Feb-2004
Last Principal
Payment Date 18-Dec-2006 18-Dec-2006 18-Dec-2006 18-Nov-2006 18-Nov-2006
</TABLE>
B-20
<PAGE>
Weighted Average Life, First Principal Payment Date, Last Principal Payment
Date, Pre-Tax Yield to Maturity and Modified
Duration of Class A3 Certificates
Scenario 2
<TABLE>
<CAPTION>
Price (32nds) 0% CPR 2% CPR 4% CPR 6% CPR 8% CPR
- ------------ ------------------ ------------------ ------------------ ------------------ ------------------
CBE Modified CBE Modified CBE Modified CBE Modified CBE Modified
Yield Duration Yield Duration Yield Duration Yield Duration Yield Duration
(%) (yrs.) (%) (yrs.) (%) (yrs.) (%) (yrs.) (%) (yrs.)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
100.08 7.405% 6.70 7.405% 6.70 7.405% 6.70 7.405% 6.69 7.405% 6.69
100.12 7.387% 6.70 7.387% 6.70 7.387% 6.70 7.387% 6.70 7.387% 6.70
100.16 7.368% 6.70 7.368% 6.70 7.368% 6.70 7.368% 6.70 7.368% 6.70
100.20 7.350% 6.71 7.350% 6.70 7.350% 6.70 7.350% 6.70 7.350% 6.70
100.24 7.332% 6.71 7.332% 6.71 7.332% 6.71 7.331% 6.70 7.331% 6.70
100.28 7.313% 6.71 7.313% 6.71 7.313% 6.71 7.313% 6.71 7.313% 6.71
101.00 7.295% 6.71 7.295% 6.71 7.295% 6.71 7.295% 6.71 7.295% 6.71
101.04 7.277% 6.72 7.276% 6.71 7.276% 6.71 7.276% 6.71 7.276% 6.71
101.08 7.258% 6.72 7.258% 6.72 7.258% 6.72 7.258% 6.71 7.258% 6.71
101.12 7.240% 6.72 7.240% 6.72 7.240% 6.72 7.240% 6.72 7.240% 6.72
101.16 7.222% 6.72 7.222% 6.72 7.222% 6.72 7.222% 6.72 7.222% 6.72
101.20 7.204% 6.72 7.203% 6.72 7.203% 6.72 7.203% 6.72 7.203% 6.72
101.24 7.185% 6.73 7.185% 6.73 7.185% 6.73 7.185% 6.72 7.185% 6.72
Weighted Average
Life (yrs.) 9.69 9.69 9.69 9.69 9.68
First Principal
Payment Date 18-Dec-2006 18-Dec-2006 18-Dec-2006 18-Nov-2006 18-Nov-2006
Last Principal
Payment Date 18-Apr-2007 18-Apr-2007 18-Apr-2007 18-Apr-2007 18-Apr-2007
</TABLE>
B-21
<PAGE>
Weighted Average Life, First Principal Payment Date, Last Principal Payment
Date, Pre-Tax Yield to Maturity and Modified
Duration of Class B Certificates
Scenario 2
<TABLE>
<CAPTION>
Price (32nds) 0% CPR 2% CPR 4% CPR 6% CPR 8% CPR
- ------------ ------------------ ------------------ ------------------ ------------------ ------------------
CBE Modified CBE Modified CBE Modified CBE Modified CBE Modified
Yield Duration Yield Duration Yield Duration Yield Duration Yield Duration
(%) (yrs.) (%) (yrs.) (%) (yrs.) (%) (yrs.) (%) (yrs.)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
100.08 7.458% 6.77 7.458% 6.77 7.458% 6.77 7.458% 6.77 7.458% 6.77
100.12 7.439% 6.78 7.439% 6.78 7.439% 6.78 7.439% 6.78 7.439% 6.78
100.16 7.421% 6.78 7.421% 6.78 7.421% 6.78 7.421% 6.78 7.421% 6.78
100.20 7.403% 6.78 7.403% 6.78 7.403% 6.78 7.403% 6.78 7.403% 6.78
100.24 7.385% 6.78 7.385% 6.78 7.385% 6.78 7.385% 6.78 7.385% 6.78
100.28 7.366% 6.79 7.366% 6.79 7.366% 6.79 7.366% 6.79 7.366% 6.79
101.00 7.348% 6.79 7.348% 6.79 7.348% 6.79 7.348% 6.79 7.348% 6.79
101.04 7.330% 6.79 7.330% 6.79 7.330% 6.79 7.330% 6.79 7.330% 6.79
101.08 7.312% 6.79 7.312% 6.79 7.312% 6.79 7.312% 6.79 7.312% 6.79
101.12 7.294% 6.80 7.294% 6.80 7.294% 6.80 7.294% 6.80 7.294% 6.80
101.16 7.276% 6.80 7.276% 6.80 7.276% 6.80 7.276% 6.80 7.276% 6.80
101.20 7.258% 6.80 7.258% 6.80 7.258% 6.80 7.258% 6.80 7.258% 6.80
101.24 7.240% 6.80 7.240% 6.80 7.240% 6.80 7.240% 6.80 7.240% 6.80
Weighted Average
Life (yrs.) 9.89 9.89 9.89 9.89 9.89
First Principal
Payment Date 18-Apr-2007 18-Apr-2007 18-Apr-2007 18-Apr-2007 18-Apr-2007
Last Principal
Payment Date 18-Apr-2007 18-Apr-2007 18-Apr-2007 18-Apr-2007 18-Apr-2007
</TABLE>
B-22
<PAGE>
Weighted Average Life, First Principal Payment Date, Last Principal Payment
Date, Pre-Tax Yield to Maturity and Modified
Duration of Class C Certificates
Scenario 2
<TABLE>
<CAPTION>
Price (32nds) 0% CPR 2% CPR 4% CPR 6% CPR 8% CPR
- ------------ ------------------ ------------------ ------------------ ------------------ ------------------
CBE Modified CBE Modified CBE Modified CBE Modified CBE Modified
Yield Duration Yield Duration Yield Duration Yield Duration Yield Duration
(%) (yrs.) (%) (yrs.) (%) (yrs.) (%) (yrs.) (%) (yrs.)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
99.24 7.541% 6.76 7.541% 6.76 7.541% 6.76 7.541% 6.76 7.541% 6.76
99.28 7.523% 6.76 7.523% 6.76 7.523% 6.76 7.523% 6.76 7.523% 6.76
100.00 7.504% 6.76 7.504% 6.76 7.504% 6.76 7.504% 6.76 7.504% 6.76
100.04 7.486% 6.77 7.486% 6.77 7.486% 6.77 7.486% 6.77 7.486% 6.77
100.08 7.468% 6.77 7.468% 6.77 7.468% 6.77 7.468% 6.77 7.468% 6.77
100.12 7.449% 6.77 7.449% 6.77 7.449% 6.77 7.449% 6.77 7.449% 6.77
100.16 7.431% 6.77 7.431% 6.77 7.431% 6.77 7.431% 6.77 7.431% 6.77
100.20 7.413% 6.78 7.413% 6.78 7.413% 6.78 7.413% 6.78 7.413% 6.78
100.24 7.395% 6.78 7.395% 6.78 7.395% 6.78 7.395% 6.78 7.395% 6.78
100.28 7.377% 6.78 7.377% 6.78 7.377% 6.78 7.377% 6.78 7.377% 6.78
101.00 7.358% 6.78 7.358% 6.78 7.358% 6.78 7.358% 6.78 7.358% 6.78
101.04 7.340% 6.79 7.340% 6.79 7.340% 6.79 7.340% 6.79 7.340% 6.79
101.08 7.322% 6.79 7.322% 6.79 7.322% 6.79 7.322% 6.79 7.322% 6.79
Weighted Average
Life (yrs.) 9.89 9.89 9.89 9.89 9.89
First Principal
Payment Date 18-Apr-2007 18-Apr-2007 18-Apr-2007 18-Apr-2007 18-Apr-2007
Last Principal
Payment Date 18-Apr-2007 18-Apr-2007 18-Apr-2007 18-Apr-2007 18-Apr-2007
</TABLE>
B-23
<PAGE>
Weighted Average Life, First Principal Payment Date, Last Principal Payment
Date, Pre-Tax Yield to Maturity and Modified
Duration of Class D Certificates
Scenario 2
<TABLE>
<CAPTION>
Price (32nds) 0% CPR 2% CPR 4% CPR 6% CPR 8% CPR
- ------------ ------------------ ------------------ ------------------ ------------------ ------------------
CBE Modified CBE Modified CBE Modified CBE Modified CBE Modified
Yield Duration Yield Duration Yield Duration Yield Duration Yield Duration
(%) (yrs.) (%) (yrs.) (%) (yrs.) (%) (yrs.) (%) (yrs.)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
99.08 7.676% 6.82 7.676% 6.82 7.676% 6.82 7.676% 6.82 7.676% 6.82
99.12 7.658% 6.82 7.658% 6.82 7.658% 6.82 7.658% 6.82 7.658% 6.82
99.16 7.639% 6.82 7.639% 6.82 7.639% 6.82 7.639% 6.82 7.639% 6.82
99.20 7.621% 6.83 7.621% 6.83 7.621% 6.83 7.621% 6.83 7.621% 6.83
99.24 7.603% 6.83 7.603% 6.83 7.603% 6.83 7.603% 6.83 7.603% 6.83
99.28 7.585% 6.83 7.585% 6.83 7.585% 6.83 7.585% 6.83 7.585% 6.83
100.00 7.566% 6.84 7.566% 6.84 7.566% 6.84 7.566% 6.83 7.566% 6.83
100.04 7.548% 6.84 7.548% 6.84 7.548% 6.84 7.548% 6.84 7.548% 6.84
100.08 7.530% 6.84 7.530% 6.84 7.530% 6.84 7.530% 6.84 7.530% 6.84
100.12 7.512% 6.84 7.512% 6.84 7.512% 6.84 7.512% 6.84 7.512% 6.84
100.16 7.494% 6.85 7.494% 6.85 7.494% 6.85 7.494% 6.85 7.494% 6.85
100.20 7.476% 6.85 7.476% 6.85 7.476% 6.85 7.476% 6.85 7.476% 6.85
100.24 7.458% 6.85 7.458% 6.85 7.458% 6.85 7.458% 6.85 7.458% 6.85
Weighted Average
Life (yrs.) 10.09 10.09 10.09 10.09 10.09
First Principal
Payment Date 18-Apr-2007 18-Apr-2007 18-Apr-2007 18-Apr-2007 18-Apr-2007
Last Principal
Payment Date 18-Oct-2008 18-Oct-2008 18-Oct-2008 18-Oct-2008 18-Oct-2008
</TABLE>
B-24
<PAGE>
Weighted Average Life, First Principal Payment Date, Last Principal Payment
Date, Pre-Tax Yield to Maturity and Modified
Duration of Class E Certificates
Scenario 2
<TABLE>
<CAPTION>
Price (32nds) 0% CPR 2% CPR 4% CPR 6% CPR 8% CPR
- ------------ ------------------ ------------------ ------------------ ------------------ ------------------
CBE Modified CBE Modified CBE Modified CBE Modified CBE Modified
Yield Duration Yield Duration Yield Duration Yield Duration Yield Duration
(%) (yrs.) (%) (yrs.) (%) (yrs.) (%) (yrs.) (%) (yrs.)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
98.24 7.997% 7.32 7.997% 7.32 7.997% 7.32 7.997% 7.32 7.997% 7.32
98.26 7.980% 7.32 7.980% 7.32 7.980% 7.32 7.980% 7.32 7.980% 7.32
99.00 7.963% 7.33 7.963% 7.33 7.963% 7.33 7.963% 7.33 7.963% 7.33
99.04 7.946% 7.33 7.946% 7.33 7.946% 7.33 7.946% 7.33 7.946% 7.33
99.08 7.928% 7.33 7.928% 7.33 7.928% 7.33 7.928% 7.33 7.928% 7.33
99.12 7.911% 7.34 7.911% 7.34 7.911% 7.34 7.911% 7.34 7.911% 7.34
99.16 7.894% 7.34 7.894% 7.34 7.894% 7.34 7.894% 7.34 7.894% 7.34
99.20 7.877% 7.34 7.877% 7.34 7.877% 7.34 7.877% 7.34 7.877% 7.34
99.24 7.860% 7.35 7.860% 7.35 7.860% 7.35 7.860% 7.35 7.860% 7.35
99.28 7.843% 7.35 7.843% 7.35 7.843% 7.35 7.843% 7.35 7.843% 7.35
100.00 7.827% 7.35 7.827% 7.35 7.827% 7.35 7.827% 7.35 7.827% 7.35
100.04 7.810% 7.36 7.810% 7.36 7.810% 7.36 7.810% 7.36 7.810% 7.36
100.08 7.793% 7.36 7.793% 7.36 7.793% 7.36 7.793% 7.36 7.793% 7.36
Weighted Average
Life (yrs.) 11.52 11.52 11.52 11.52 11.52
First Principal
Payment Date 18-Oct-2008 18-Oct-2008 18-Oct-2008 18-Oct-2008 18-Oct-2008
Last Principal
Payment Date 18-Aug-2009 18-Aug-2009 18-Aug-2009 18-Aug-2009 18-Aug-2009
</TABLE>
B-25
<PAGE>
Weighted Average Life, First Principal Payment Date, Last Principal Payment
Date, and Pre-Tax Yield to Maturity of Class IO Certificates
Scenario 2
<TABLE>
<CAPTION>
Price (32nds) 0% CPR 2% CPR 4% CPR 6% CPR 8% CPR
- ------------ ------------------ ------------------ ------------------ ------------------ ------------------
CBE CBE CBE CBE CBE
Yield Yield Yield Yield Yield
(%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C>
7.12 10.622% 10.606% 10.591% 10.576% 10.563%
7.14 10.417% 10.401% 10.385% 10.371% 10.357%
7.16 10.215% 10.199% 10.183% 10.168% 10.154%
7.18 10.016% 9.999% 9.983% 9.968% 9.953%
7.20 9.820% 9.802% 9.786% 9.771% 9.756%
7.22 9.626% 9.609% 9.592% 9.576% 9.562%
7.24 9.435% 9.417% 9.401% 9.385% 9.370%
7.26 9.247% 9.229% 9.212% 9.196% 9.181%
7.28 9.061% 9.043% 9.026% 9.009% 8.994%
7.30 8.878% 8.860% 8.842% 8.825% 8.810%
8.00 8.697% 8.679% 8.661% 8.644% 8.628%
8.02 8.519% 8.500% 8.482% 8.465% 8.449%
8.04 8.343% 8.324% 8.306% 8.288% 8.272%
Weighted Average
Life (yrs.) 9.56 9.54 9.52 9.51 9.49
First Principal
Payment Date 18-Jun-97 18-Jun-97 18-Jun-97 18-Jun-97 18-Jun-97
Last Principal
Payment Date 18-Apr-2027 18-Apr-2027 18-Apr-2027 18-Apr-2027 18-Apr-2027
</TABLE>
B-26
<PAGE>
ANNEX C
FIRST UNION - LEHMAN BROTHERS
COMMERCIAL MORTGAGE TRUST
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1997-1
[LOGO OF STATE STREET]
REPORT TO CERTIFICATEHOLDERS FOR PAYMENT DATE: APRIL 20, 1997
PAYMENT SUMMARY
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
Pass-Through Interest Original Beginning Principal
Class CUSIP Rate Type Balance Balance Distrib. Amount
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------
Totals:
--------------------------------------------
* BASED ON A NOTIONAL BALANCE
</TABLE>
- ------------------------------------------
Class Interest Total Ending
Distribution Amt Payable Balance
- ------------------------------------------
- ------------------------------------------
- ------------------------------------------
<TABLE>
<CAPTION>
DISTRIBUTIONS PER CERTIFICATE (3) for complete information see Payment Detail
---------------------------------------------------------------------------------------------
Beginning Principal Interest Ending
Class Certificate Factor Distribution(1) Distribution(1) Certificate Factor
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
---------------------------------------------------------------------------------------------
</TABLE>
(1) represents net payment per certificate
- ------------------------------------------------------------
For additional information or with questions, please contact
- ------------------------------------------------------------
CORPORATE TRUST SECURITIES ADMINISTRATION
- ------------------------------------------------------------
Account Administrator:
Account Officer:
Street Connection: (factor and rate by cusip)(617)664-5500
- ------------------------------------------------------------
DISCLAIMER NOTICE:THIS REPORT HAS BEEN PREPARED BY OR BASED ON INFORMATION
FURNISHED TO STATE STREET BANK AND TRUST COMPANY ("STATE STREET") BY ONE OR MORE
THIRD PARTIES (E.G.,SERVICER, MASTER SERVICER, ETC.).STATE STREET SHALL not have
and does not undertake responsibility for the accuracy or completeness of
information provided by such third parties, and makes no representations or
warranties with respect to the accuracy or completeness thereof or the
sufficiency thereof for any particular purpose. State Street has not
independently verified information received from third parties, and shall have
no liability for any inaccuracies therein or caused thereby.
<PAGE>
FIRST UNION - LEHMAN BROTHERS
COMMERCIAL MORTGAGE TRUST
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1997-1
[LOGO OF STATE STREET]
REPORT TO CERTIFICATEHOLDERS FOR PAYMENT DATE: APRIL 20, 1997
PAYMENT DETAILS
<TABLE>
<CAPTION>
PRINCIPAL DETAIL
- ----------------------------------------------------------------------------------
Beginning Principal Realized Appraisal Ending
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------
------------------------------------------------------------------
<CAPTION>
INTEREST DETAIL
- -----------------------------------------------------------------------------------------------------------------------------------
Accrued Available Funds Excess Prepaymt Additional Interest Class Interest Class unpaid
Class Certificate Interest SF(-)/Receipt(+) Interest Shortfalls Expenses Distribution Amount Interest SF
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
TOTALS:
------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------
Total Interest Outstanding
Distribution Amount Unpaid Interest SF
- --------------------------------------------
- --------------------------------------------
- --------------------------------------------
<PAGE>
FIRST UNION - LEHMAN BROTHERS
COMMERCIAL MORTGAGE TRUST
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1997-1
[LOGO OF STATE STREET]
REPORT TO CERTIFICATEHOLDERS FOR PAYMENT DATE: APRIL 20, 1997
ADDITIONAL REPORTING INFORMATION
<TABLE>
<CAPTION>
MORTGAGE LOAN ACTIVITY FOR RELATED PAYMENT DATE:
- ------------------------------------------------------------------------------------------------------------------------------------
Principal # of Outstanding # of Outstanding Beginning Scheduled Ending Scheduled
Prepayments Mortgage Loans (beg) Mortgage Loans (end) # of Payoffs Principal Balance Principal Balance
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
--------------------
Aggregate Balance of
- ------------------------- Specially Serviced
# of Specially Srvcd
Mortgage Loans Mortgage Loans
- ---------------------------------------------
- ---------------------------------------------
INFORMATION ON LOAN-BY-LOAN FOR LOANS PAID-OFF AT MATURITY:
- -----------------------------------------------------------
Loan # Maturity Date Pay-off Balance
- -----------------------------------------------------------
- -----------------------------------------------------------
ADDITIONAL LOAN-BY-LOAN REPORTING INFORMATION:
- -------------------------------------------------------------------
Mortgage Mortgage Loan Mortgage Loan Mortgage Loan
Loan # Modifications Waivers Amendments
- -------------------------------------------------------------------
- -------------------------------------------------------------------
LOAN-BY-LOAN DELINQUENCY REPORTING INFORMATION:
- ---------------------------------------------------
Loan # Loan Balance Delinquency Status
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
AGGREGATE DELINQUENCY INFORMATION FOR RELATED PAYMENT DATE:
- ------------------------------------------------------------
# of Loans
- ------------------------------------------------------------
Agg Balances
- ------------------------------------------------------------
APPRAISAL REDUCTION INFORMATION: (DURING RELATED DUE PERIOD)
- ------------------------------------------------------------
Mortgage Current Appraisal Cumulative Appraisal
Loan # Reduction Amount Reduction Amounts
- ------------------------------------------------------------
- ------------------------------------------------------------
P&I ADVANCE INFORMATION:
- -------------------------------------------------------------
1.Current P&I Advances (incl interest)
- -------------------------------------------------------------
2. Amt P&I Advances have been reduced
due to Appraisal Reduction Amounts
- -------------------------------------------------------------
3. Amt of P&I Recoveries
- -------------------------------------------------------------
3. # of P&I Payments advanced
- -------------------------------------------------------------
4. Cumulative P&I Advances
- -------------------------------------------------------------
5. Cumulative P&I Recoveries
- -------------------------------------------------------------
FEE INFORMATION:
- -------------------------------------------------------------
Master Servicer Fee
- -------------------------------------------------------------
Special Servicing Fee
- -------------------------------------------------------------
PROPERTY PROTECTION ADVANCE INFORMATION:
- -------------------------------------------------------------
Loan # Aggregate Outstanding Cumulative Amount
- -------------------------------------------------------------
N/A
- -------------------------------------------------------------
<TABLE>
<CAPTION>
SUMMARY OF REO ACTIVITY AS OF 4/11/97 RELATED DETERMINATION DATE: 4/11/97
- ------------------------------------------------------------------------------------------------------------------------------------
Mortgage Date became REO Scheduled Principal Book Date of Final Amt of Proceeds Any Additional REO
Loan # Loan Balance as of REO date Value Recovery Determin in REO/Coll Account Funds Collected
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
FIRST UNION - LEHMAN BROTHERS
COMMERCIAL MORTGAGE TRUST
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1997-1
STATE STREET CORPORATE TRUST
CUSTOMER SERVICE (617)664-5433
PAYMENT
DISTRIBUTION OF CURRENT SCHEDULED PRINCIPAL BALANCES
- --------------------------------------------------------------------------------
Total
Current ------------------------------------------------------------------
Scheduled Weighted Averages
Principal # of Aggregate % Tot ------------------------
Balance Mtg Sched Prin Sched Mnths Mort
Loans Balance Bal DSCR to Mat Rate
- --------------------------------------------------------------------------------
$ 257,059+
$1,000,000+
$2,000,000+
$3,000,000+
$4,000,000+
$5,000,000+
$6,000,000+
$7,000,000+
$8,000,000+
$9,000,000+
$10,000,000+
$15,000,000+
$20,000,000+
- --------------------------------------------------------------------------------
Total
- --------------------------------------------------------------------------------
DISTRIBUTION OF CURRENT MORTGAGE INTEREST RATES
- --------------------------------------------------------------------------------
Total
Current ------------------------------------------------------------------
Mortgage Weighted Averages
Interest # of Aggregate % Tot ------------------------
Rate Mtg Sched Prin Sched Mnths Mort
Loans Balance Bal DSCR to Mat Rate
- --------------------------------------------------------------------------------
<7.000%
7.000% +
8.000% +
9.000% +
10.000% +
11.000% +
12.000% +
13.000% +
14.000% +
- --------------------------------------------------------------------------------
Total
- --------------------------------------------------------------------------------
DISTRIBUTION OF REMAINING STATED TERM (BALLOON LOANS ONLY)
- --------------------------------------------------------------------------------
Total
Remaining ---------------------------------------------------------------------
Stated Weighted Averages
Term # of Aggregate % Tot ------------------------
(Months) Mtg Sched Prin Sched Mnths Mort
Loans Balance Bal DSCR to Mat Rate
- --------------------------------------------------------------------------------
<12
13-24
25-36
37-48
49-60
61-72
73+
- --------------------------------------------------------------------------------
Total
- --------------------------------------------------------------------------------
DISTRIBUTION OF REMAINING STATED TERM (FULLY AMORTIZING LOANS ONLY)
- --------------------------------------------------------------------------------
Total
Remaining ---------------------------------------------------------------------
Stated Weighted Averages
Term # of Aggregate % Tot ------------------------
(Months) Mtg Sched Prin Sched Mnths Mort
Loans Balance Bal DSCR to Mat Rate
- --------------------------------------------------------------------------------
<12
13-24
25-36
37-60
61-120
121-180
181-240
241+
- --------------------------------------------------------------------------------
Total
- --------------------------------------------------------------------------------
<PAGE>
FIRST UNION - LEHMAN BROTHERS COMMERCIAL MORTGAGE TRUST
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1997-1
STATE STREET CORPORATE TRUST
CUSTOMER SERVICE (617)664-5433
PAYMENT
<TABLE>
<CAPTION>
DISTRIBUTION OF HIGHEST STATE CONCENTRATIONS AT CLOSING
- -----------------------------------------------------------------------------------------
TOTAL
--------------------------------------------------------------------------
WEIGHTED AVERAGES
TOP # OF AGGREGATE % TOT --------------------------------
10 MTG SCHED PRIN SCHED MNTHS MORT
STATES LOANS BALANCE BAL DSCR TO MAT RATE
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
TEXAS
CALIFORNIA
FLORIDA
NEW YORK
NEW JERSEY
OHIO
PENNSYLVANIA
OREGON
NEVADA
NORTH CAROLINA
OTHER
- -----------------------------------------------------------------------------------------
TOTAL
- -----------------------------------------------------------------------------------------
<CAPTION>
DISTRIBUTION OF PROPERTY TYPE
- -----------------------------------------------------------------------------------------
TOTAL
--------------------------------------------------------------------------
WEIGHTED AVERAGES
# OF AGGREGATE % TOT --------------------------------
PROPERTY MTG SCHED PRIN SCHED MNTHS MORT
TYPES LOANS BALANCE BAL DSCR TO MAT RATE
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
HEALTH CARE
HOSPITALITY
INDUSTRIAL
MULTIFAMILY/RETAIL
MOBILE HOME PARK
MULTI-FAMILY
OFFICE
ANCHORED RETAIL
UNANCHORED RETAIL
- -----------------------------------------------------------------------------------------
TOTAL
- -----------------------------------------------------------------------------------------
<CAPTION>
DISTRIBUTION OF SEASONING
- -----------------------------------------------------------------------------------------
TOTAL
--------------------------------------------------------------------------
WEIGHTED AVERAGES
# OF AGGREGATE % TOT --------------------------------
SEASONING MTG SCHED PRIN SCHED MNTHS MORT
(MONTHS) LOANS BALANCE BAL DSCR TO MAT RATE
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
<12
13-24
25-36
37-48
49-60
61-72
73+
- -----------------------------------------------------------------------------------------
TOTAL
- -----------------------------------------------------------------------------------------
<CAPTION>
DISTRIBUTION OF MOST RECENT DEBT SERVICE COVERAGE RATIO
- -----------------------------------------------------------------------------------------
TOTAL
--------------------------------------------------------------------------
WEIGHTED AVERAGES
# OF AGGREGATE % TOT --------------------------------
MTG SCHED PRIN SCHED MNTHS MORT
DSCR LOANS BALANCE BAL DSCR TO MAT RATE
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
<1.00
1.00-1.10
1.11-1.25
1.26-1.50
1.51-2.00
>2.00
- -----------------------------------------------------------------------------------------
TOTAL
- -----------------------------------------------------------------------------------------
</TABLE>
<PAGE>
FIRST UNION - LEHMAN BROTHERS COMMERCIAL MORTGAGE TRUST
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1997-1
STATE STREET CORPORATE TRUST
CUSTOMER SERVICE (617)664-5433
PAYMENT
<TABLE>
<CAPTION>
DISTRIBUTION OF LOAN TO VALUE RATIO
- -----------------------------------------------------------------------------------------
TOTAL
--------------------------------------------------------------------------
WEIGHTED AVERAGES
MOST # OF AGGREGATE % TOT --------------------------------
RECENT MTG SCHED PRIN SCHED MNTHS MORT
LTV LOANS BALANCE BAL DSCR TO MAT RATE
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
50%
50%+
60%+
70%+
80%+
90%+
100%+
- -----------------------------------------------------------------------------------------
TOTAL
- -----------------------------------------------------------------------------------------
<CAPTION>
DISTRIBUTION OF AMORTIZATION TYPE
- -----------------------------------------------------------------------------------------
TOTAL
--------------------------------------------------------------------------
WEIGHTED AVERAGES
# OF AGGREGATE % TOT --------------------------------
AMORTIZATION MTG SCHED PRIN SCHED MNTHS MORT
TYPE LOANS BALANCE BAL DSCR TO MAT RATE
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
FULLY AMORTIZING
AMORTIZING BALLON
IO/BALLON
IO/AMORTIZING
IO/AMORT/BALLON
PRINCIPAL ONLY
CASH FLOW BALLON
OTHER
- -----------------------------------------------------------------------------------------
TOTAL
- -----------------------------------------------------------------------------------------
<CAPTION>
DISTRIBUTION OF REMAINING AMORTIZATION TERM
- -----------------------------------------------------------------------------------------
TOTAL
--------------------------------------------------------------------------
WEIGHTED AVERAGES
ORIGINAL # OF AGGREGATE % TOT --------------------------------
AMORTIZATION MTG SCHED PRIN SCHED MNTHS MORT
TERM LOANS BALANCE BAL DSCR TO MAT RATE
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
0+
60+
120+
180+
240+
300+
360+
- -----------------------------------------------------------------------------------------
TOTAL
- -----------------------------------------------------------------------------------------
<CAPTION>
DISTRIBUTION OF ORIGINAL TERM TO STATED MATURITY
- -----------------------------------------------------------------------------------------
TOTAL
--------------------------------------------------------------------------
WEIGHTED AVERAGES
ORIGINAL # OF AGGREGATE % TOT --------------------------------
AMORTIZATION MTG SCHED PRIN SCHED MNTHS MORT
TERM LOANS BALANCE BAL DSCR TO MAT RATE
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
0+
60+
120+
180+
240+
300+
360+
- -----------------------------------------------------------------------------------------
TOTAL
- -----------------------------------------------------------------------------------------
</TABLE>
<PAGE>
FIRST UNION - LEHMAN BROTHERS COMMERCIAL MORTGAGE TRUST
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1997-1
STATE STREET CORPORATE TRUST
CUSTOMER SERVICE (617)664-5433
PAYMENT
<TABLE>
<CAPTION>
LOAN LEVEL DETAIL
- ------------------------------------------------------------------------------------------------------------------------
OFFER PROP TRANSFER MATURITY NEG BEG NOTE SCHED PREPAY/ PREPAY
CONTROL# TYPE DATE STATE DATE AM(Y/N) SCHED BAL RATE P&I LIQUID DATE
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
TOTALS 0.00 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------
LOAN STATUS:
1 = SPEC SERVICED, 2 = FORECLOSURE, 3 = BANKRUPTCY, 4 = REO, 5 = PREPAY IN FULL, 6 = DPO, 7 = FORECLOSURE SALE,
8 = BANKRUPTCY SALE, 9 = REO DISPOSITION, 10 = MOD/WORKOUT
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------
PAID THRU PREPMT LOAN
DATE PREMIUM STATUS
- --------------------------------
- --------------------------------
TOTALS 0.00
- --------------------------------
<PAGE>
FIRST UNION - LEHMAN BROTHERS COMMERCIAL MORTGAGE TRUST
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1997-1
STATE STREET CORPORATE TRUST
CUSTOMER SERVICE (617)664-5433
PAYMENT
REPORT
<TABLE>
<CAPTION>
DELINQUENCY/PREPAYMENT REPORTING HISTORY: ROLLING 12 MONTHS
DIST DELINQ 1 MONTH DELINQ 2 MONTHS DELINQ 3+ MONTHS FORECLOSURE/BANK REO MODIFICATIONS PREPAYMENTS
DATE --------------------------------------------------------------------------------------------------------------------
# BAL # BAL # BAL # BAL # BAL # BAL # BAL
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
FIRST UNION - LEHMAN BROTHERS COMMERCIAL MORTGAGE TRUST
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1997-1
STATE STREET CORPORATE TRUST
CUSTOMER SERVICE (617)664-5433
<TABLE>
<CAPTION>
DELINQUENCY LOAN DETAIL
- --------------------------------------------------------------------------------------------------------------------
OFFER PAID THRU CURRENT OUTSTAND OUTSTAND ADV LOAN SPEC SER
CONTROL# PERIOD DATE P&I ADV P&I ADV PROP ADV DESC(1) STATUS(2) TRANS DATE
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
- -----------------------------------
FORECLOSURE BANKRUPTCY REO
DATE DATE DATE
- -----------------------------------
- --------------------------------------------------------------------------------
(1) ADVANCE DESCRIPTION
- -----------------------
0 = LATE PAYMENT BUT < ONE MONTH DELINQUENT
1 = P&I ADVANCE - LOAN DELINQUENT 1 MONTH
2 = P&I ADVANCE - LOAN DELINQUENT 2 MONTHS
3 = P&I ADVANCE - LOAN DELINQUENT 3 MONTHS OR MORE
4 = P&I ADVANCE - LOAN IN GRACE PERIOD
5 = P&I ADVANCE - ASSUMED SCHEDULED PAYMENT
(2) LOAN STATUS:
- ----------------
1 = SPEC SERVICE
2 = FORECLOSURE
3 = BANKRUPTCY
4 = REO
5 = PREPAY IN FULL
6 = DPO
7 = FORECLOSURE SALE
8 = BANKRUPTCY SALE
9 = REO DISPOSITION
10 = MOD/WORKOUT
- --------------------------------------------------------------------------------
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
ANNEX D
DELINQUENT LOSN STATUS REPORT
AS OF ___________________
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e)=a+b+c+d
TOTAL TOTAL OTHER CURRENT
LOAN # SQ FT OR SCHEDULED OUTSTANDING OUTSTANDING ADVANCES TOTAL MONTHLY
CITY & PROPERTY UNITS / OCC PAID TO LOAN P&I EXPENSES (TAXES & EXPOSURE P&I
STATE TYPE % / DATE DATE BALANCE ADVANCES TO DATE ESCROW)
TO DATE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
FCL - Foreclosure
- ------------------------------------------------------------------------------------------------------------------------------------
LTM - Latest 12 Months
- ------------------------------------------------------------------------------------------------------------------------------------
(f) (g)=(.92*f)-e
CURRENT LTM NOI MOST APPRAISAL TRANSFER LOSS USING 92% DATE NOI
INTEREST MATURITY LTM NOI / DSCR VALUATION ACCURATE BPO OR DATE / 92% FILED /
RATE DATE DATE DATE PROPERTY INTERNAL CLOSING APPR. OR FCL SALE
VALUE VALUE** DATE BPO (F) DATE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
90 + DAYS DELINQUENT
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
60 DAYS DELINQUENT
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
30 DAYS DELINQUENT
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
CURRENT & AT SPECIAL SERVICER
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
STATUS * COMMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
* Status should containg a code indicating the current direction of each loan
such as (FCL - In Foreclosure, MOD - Modification, DPO - Discount Payoff, NS
- Note Sale, BK - Bankrupcy, PP - Payment Plan, Curr - Current, TBD - To Be
Determined etc...)
It is possible to combine the status codes if the loan is going in more
than one direction. (i.e. FCL/Mod, BK/Mod, BK/FCL/DPO)
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
ANNEX E
HISTORICAL LOAN MODIFICATION REPORT
AS OF _____________
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
BALANCE
WHEN BALANCE AT THE
SENT TO EFFECTIVE DATE
CITY / MOD / EFFECT SPEICAL OF OLD # MTHS /
LOAN ID STATE EXTENTION DATE SERVICER REHABILITATION RATE NEW RATE OLD P&I NEW P&I
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
THIS REPORT IS HISTORICAL
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
=========================================================================================================================
TOTAL FOR ALL LOANS:
- -------------------------------------------------------------------------------------------------------------------------
TOTAL FOR LOANS IN CURRENT MONTH:
- -------------------------------------------------------------------------------------------------------------------------
# OF LOANS $ BALANCE
- -------------------------------------------------------------------------------------------------------------------------
MODIFICATIONS:
- -------------------------------------------------------------------------------------------------------------------------
MATURITY DATE EXTENTIONS:
- -------------------------------------------------------------------------------------------------------------------------
TOTAL:
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
(2) EST.
FUTURE
TOTAL # INTEREST
MTHS (1) LOSS TO
FOR REALIZED TRUST $
OLD NEW CHANGE LOSS TO (RATE
MATURITY MATURITY OF MOD TRUST $ REDUCTION) COMMENT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) Actual principal loss taken by bonds
- --------------------------------------------------------------------------------
(2) Expected future loss due to a rate reduction. This is just an estimate
calculated at the time of the modification.
- --------------------------------------------------------------------------------
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
<TABLE>
<CAPTION>
ANNEX F
HISTORICAL LOSS ESTIMATE REPORT (REO-SOLD) OR DISCOUNTED PAYOFF)
AS OF ____________
(c)=ba (a) (b) (d) (e) (f)
- ------------------------------------------------------------------------------------------------------------------------------------
LATEST
APPRAISAL OR EFFECT NET AMT.
SERVICER % RECEIVED BROKERS DATE OF RECEIVED SCHEDULED TOTAL P&I
LOAN ID PROPERTY NAME CITY / STATE FROM SALE OPINION SALE SALES PRICE FROM SALE BALANCE ADVANCED
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
THIS REPORT IS HISTORICAL
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
====================================================================================================================================
TOTAL ALL LOANS:
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
CURRENT MONTH ONLY:
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
<CAPTION>
(g) (h) (i)=d-(f+g+h) (k)=i-e (m) (n)=k+m (o)=n/e
- ----------------------------------------
DATE
DATE MINOR
LOSS ADJ TOTAL LOSS LOSS % OF
TOTAL SERVICING ACTUAL LOSSES PASSED MINOR ADJ PASSED WITH SCHEDULED
EXPENSES FEES NET PROCEEDS PASSED THRU THRU TO TRUST THRU ADJUSTMENT BALANCE
=========================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
==========================================================================================================================
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
ANNEX G
REO STATUS REPORT
AS OF ___________
- --------------------------------------------------------------------------------
(a) (b) (c)
- --------------------------------------------------------------------------------
SQ FT TOTAL OTHER
LOAN NUM PROP- OR PAID SCHEDULED P&I ADVANCES
/CITY & ERTY UNITS / TO LOAN ADVANCES (TAXES &
STATE TYPE OCC % DATE BALANCE TO DATE ESCROW)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(d) (e) a+b+c+d
- --------------------------------------------------------------------------------
TOTAL CURRENT CURRENT NOI
EXPENSES TOTAL MONTHLY INTEREST MATURITY AS OF
TO DATE EXPOSURE P&I RATE DATE DATE
- --------------------------------------------------------------------------------
REAL ESTATE OWNED
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(f) (g) (92*f)-e
- --------------------------------------------------------------------------------
(YTD) (1) LOSS
MOST MOST APPRAISAL TRANSFER USING
RECENT ACCURATE BPO DATE / 92%
NOI / APPRAISAL PROPERTY INTERNAL CLOSING APPRAISAL
DSCR DATE VALUE VALUE DATE OR BPO
(f)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- ---------------------------------------
REO
ACQUISITION PENDING
DATE OFFERS COMMENTS
- ---------------------------------------
- ---------------------------------------
- ---------------------------------------
- ---------------------------------------
- ---------------------------------------
- ---------------------------------------
- ---------------------------------------
- ---------------------------------------
- ---------------------------------------
(1) USE THE FOLLLOWING CODES; APP. - APPRAISAL BPO - BROKERS OPINION,
INT - INTERNAL VALUE
- ---------------------------------------
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
ANNEX H
SERVICER WATCH LIST
AS OF _____________
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
CURRENT PAID %
LOAN PROPERTY SCHED THRU MATURITY CURRENT
NUMBER TYPE CITY STATE BALANCE DATE DATE DSC COMMENT / REASON ON WATCH LIST
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------
List all loans on watch list and reason sorted in decending balance order.
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
Total: $
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
ANNEX I
OPERATING STATEMENT ANALYSIS REPORT
AS OF _____________
<TABLE>
<CAPTION>
<S> <C>
PROPERTY OVERVIEW
--------------
LB Control Number
--------------------------
Current Balance/Paid to Date
-------------------------------------------------------------------------------------------------
Property Name
-------------------------------------------------------------------------------------------------
Property Type
-------------------------------------------------------------------------------------------------
Property Address, City, State
-------------------------------------------------------------------------------------------------
Net Rentable Square Feet
--------------
Year Built/Year Renovated
--------------------------
Year of Operations Underwriting 1993 1994 1995 YTD
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Occupancy Rate*
----------------------------------------------------------------
Average Rental Rate
----------------------------------------------------------------
*Occupancy rates are year end or the ending date of the financial statement for the period.
<CAPTION>
INCOME: No. of Mos.
------------
Number of Mos. Annualized Prior Year Current Yr.
--------------------------------------------------------------------------------------
Period Ended Underwriting 1993 1994 1995 1996 YTD** 1995-Base 1995-1994
------------
Statement Classification Base Line Normalized Normalized Normalized as of / /96 Variance Variance
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Rental Income (Category 1)
--------------------------------------------------------------------------------------
Rental Income (Category 2)
--------------------------------------------------------------------------------------
Rental Income (Category 3)
--------------------------------------------------------------------------------------
Pass Through/Escalations
--------------------------------------------------------------------------------------
Other Income
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
Effective Gross Income $0.00 $0.00 $0.00 $0.00 $0.00 % %
--------------------------------------------------------------------------------------
Normalized-Full year Financial statements that have been reviewed by the underwriter or Servicer.
**Servicer will not be expected to "Normalize" these YTD numbers.
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING EXPENSES:
--------------------------------------------------------------------------------------
Real Estate Taxes
--------------------------------------------------------------------------------------
Property Insurance
--------------------------------------------------------------------------------------
Utilities
--------------------------------------------------------------------------------------
Repairs and Maintenance
--------------------------------------------------------------------------------------
Management Fees
--------------------------------------------------------------------------------------
Payroll & Benefits Expense
--------------------------------------------------------------------------------------
Advertising & Marketing
--------------------------------------------------------------------------------------
Professional Fees
--------------------------------------------------------------------------------------
Other Expenses
--------------------------------------------------------------------------------------
Ground Rent
--------------------------------------------------------------------------------------
Total Operating Expenses $0.00 $0.00 $0.00 $0.00 $0.00 % %
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
Operating Expense Ratio
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
Net Operating Income $0.00 $0.00 $0.00 $0.00 $0.00
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
Leasing Commissions
--------------------------------------------------------------------------------------
Tenant Improvements
--------------------------------------------------------------------------------------
Replacement Reserve
--------------------------------------------------------------------------------------
Total Capital Items $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
N.O.I After Capital Items $0.00 $0.00 $0.00 $0.00 $0.00
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
Debt Service (per Servicer) $0.00 $0.00 $0.00 $0.00 $0.00
--------------------------------------------------------------------------------------
Cash Flow after debt service $0.00 $0.00 $0.00 $0.00 $0.00
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
(1) DSCR: (NOI/Debt Service)
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
DSCR: (after reserves/Cap exp.)
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
Source of Financial Data:
--------------------------------------------------------------------------------------
(i.e. operating statements, financial statements, tax return, other)
Notes and Assumptions:
========================================================================================================================
The years shown above will roll always showing a three year history. 1995 is the current year financials; 1994 is the prior year
financials.
This report may vary depending on the property type and because of the way information may vary in each borrowers statement.
Rental Income need to be broken down whenever possible differently for each property type as follows: Retail: 1) Base Rent
2) Percentage rents on cashflow Hotel: 1) Room Revenue 2) Food/Bev
Income: Comment
Expense: Comment
Capital Items: Comment
(1) Used in the Comparative Financial Status Report
</TABLE>
<PAGE>
(THIS PAGE INTENTIONALLY LEFT BLANK)
<PAGE>
ANNEX J
NOI ADJUSTMENT WORKSHEET FOR "YEAR"
AS OF _____________
<TABLE>
<CAPTION>
<S> <C>
PROPERTY OVERVIEW
--------------
LB Control Number
--------------------------
Current Balance/Paid to Date
-------------------------------------------------------------------------------------------------
Property Name
-------------------------------------------------------------------------------------------------
Property Type
-------------------------------------------------------------------------------------------------
Property Address, City, State
-------------------------------------------------------------------------------------------------
Net Rentable Square Feet
--------------
Year Built/Year Renovated
--------------------------
Year of Operations Borrower Adjustment Normalized
----------------------------------------------
<S> <C> <C> <C>
Occupancy Rate*
----------------------------------------------
Average Rental Rate
----------------------------------------------
*Occupancy rates are year end or the ending date of the financial statement for the period.
<CAPTION>
INCOME:
Number of Mos. Annualized "Year"
---------------------------------------------------------------------
Period Ended Borrower Adjustment Normalized
Actual
Statement Classification ---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Rental Income (Category 1)
---------------------------------------------------------------------
Rental Income (Category 2)
---------------------------------------------------------------------
Rental Income (Category 3)
---------------------------------------------------------------------
Pass Throughs Escalations
---------------------------------------------------------------------
Other Income
---------------------------------------------------------------------
---------------------------------------------------------------------
Effective Gross Income $0.00 $0.00 $0.00
---------------------------------------------------------------------
Normalized-Full year Financial statements that have been reviewed by the underwriter or Servicer.
<CAPTION>
<S> <C> <C> <C> <C> <C>
OPERATING EXPENSES:
---------------------------------------------------------------------
Real Estate Taxes
---------------------------------------------------------------------
Property Insurance
---------------------------------------------------------------------
Utilities
---------------------------------------------------------------------
Repairs and Maintenance
---------------------------------------------------------------------
Management Fees
---------------------------------------------------------------------
Payroll & Benefits Expense
---------------------------------------------------------------------
Advertising & Marketing
---------------------------------------------------------------------
Professional Fees
---------------------------------------------------------------------
Other Expenses
---------------------------------------------------------------------
Ground Rent
---------------------------------------------------------------------
Total Operating Expenses $0.00 $0.00 $0.00
---------------------------------------------------------------------
---------------------------------------------------------------------
Operating Expense Ratio
---------------------------------------------------------------------
---------------------------------------------------------------------
Net Operating Income $0.00 $0.00 $0.00
---------------------------------------------------------------------
---------------------------------------------------------------------
Leasing Commissions
---------------------------------------------------------------------
Tenant Improvements
---------------------------------------------------------------------
Replacement Reserve
---------------------------------------------------------------------
Total Capital Items $0.00 $0.00 $0.00
---------------------------------------------------------------------
---------------------------------------------------------------------
N.O.I After Capital Items $0.00 $0.00 $0.00
---------------------------------------------------------------------
---------------------------------------------------------------------
Debt Service (per Servicer) $0.00 $0.00 $0.00
---------------------------------------------------------------------
Cash Flow after debt service $0.00 $0.00 $0.00
---------------------------------------------------------------------
---------------------------------------------------------------------
(1) DSCR: (NOI/Debt Service)
---------------------------------------------------------------------
---------------------------------------------------------------------
DSCR: (after reserves/Cap exp.)
---------------------------------------------------------------------
---------------------------------------------------------------------
Source of Financial Data:
---------------------------------------------------------------------
(i.e. operating statements, financial statements, tax return, other)
Notes and Assumptions:
========================================================================================================
This report should be completed by the Servicer for any "Normalization" of the Borrowers numbers.
The "Normalized" column is used in the Operating Statement Analysis Report.
This report may vary depending on the property type and because of the way information may vary in each borrowers statement.
Income: Comments
Expense: Comments
Capital Items: Comments
(1) Used in the Comparative Financial Status Report
</TABLE>
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
<TABLE>
ANNEX K
COMPARATIVE FINANCIAL STATUS REPORT
AS OF _____________
=========================================================================================================
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
Original Underwriting Information
- ---------------------------------------------------------------------------------------------------------
Basis Year
- ---------------------------------------------------------------------------------------------------------
Last
Current Paid Annual Property Financial
Loan Sched Thru Debt Inspect Info as of % Total $ (1)
Number City State Balance Date Service Date Date Occ Revenue NOI DSC
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
List all loans currently in deal with or without information largest to smallest loan
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
Total $ $ WA $ $ WA
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
=========================================================================================================
Received
- ---------------------------------------------------------------------------------------------------------
Financial Information: Loans Balance
- ---------------------------------------------------------------------------------------------------------
# $ $ %
- ---------------------------------------------------------------------------------------------------------
Current Full Year:
- ---------------------------------------------------------------------------------------------------------
Current Full Yr. received with DSC less than 1:
- ---------------------------------------------------------------------------------------------------------
Prior Full Year:
- ---------------------------------------------------------------------------------------------------------
Prior Full Yr. received with DSC less than 1:
- ---------------------------------------------------------------------------------------------------------
Quarterly Financials
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
=========================================================================================================
- ---------------------------------------------------------------------------------------------------------
(1) DSC calculated using NOI/Debt Service
- ---------------------------------------------------------------------------------------------------------
(2) Net change should compare the latest year to the underwriting year
- ---------------------------------------------------------------------------------------------------------
=========================================================================================================
==============================================================================================================================
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Prior Full Year Operating Information Current Annual Operating Information
- ------------------------------------------------------------------------------------------------------------------------------
as of ___________ Normalized as of ___________ Normalized
- ------------------------------------------------------------------------------------------------------------------------------
Last Last
Property Financial (1) Property Financial
Inspect Info as of % Total $ DSC Inspect Info as of % Total $ (1)
Date Date Occ Revenue NOI x Date Date Occ Revenue NOI DSC
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
WA $ $ WA WA $ $ WA
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
==============================================================================================================================
Required
- ------------------------------------------------------------------------------------------------------------------------------
Loans Balance
- ------------------------------------------------------------------------------------------------------------------------------
# % $ %
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
==============================================================================================================================
<CAPTION>
"Actual" (2)
- -----------------------------------------------------------------
YTD Financial Information Net Change
- -----------------------------------------------------------------
Month Reported Current & Basis
- -----------------------------------------------------------------
Financial %
Info as of % Total $ % % Total (1)
Date Occ Revenue NOI DSC Occ Rev DSC
- -----------------------------------------------------------------
- -----------------------------------------------------------------
- -----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------
- -----------------------------------------------------------------
- -----------------------------------------------------------------
- -----------------------------------------------------------------
- -----------------------------------------------------------------
- -----------------------------------------------------------------
WA $ $ WA WA $ WA
- -----------------------------------------------------------------
- -----------------------------------------------------------------
- -----------------------------------------------------------------
=================================================================
</TABLE>
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
(ISSUABLE IN SERIES)
FIRST UNION COMMERCIAL MORTGAGE SECURITIES, INC.
DEPOSITOR
----------
This Prospectus describes the commercial mortgage pass-through
certificates (the "Offered Certificates") offered hereby and by the supplements
hereto (each, a "Prospectus Supplement"), which will be offered from time to
time in series. The Offered Certificates of each series, together with any other
commercial mortgage pass-through certificates of such series not offered hereby,
are collectively referred to herein as the "Certificates".
In the aggregate, the Certificates of each series of Certificates will
represent the entire beneficial ownership interest in a trust fund (with respect
to any series, the "Trust Fund") consisting primarily of a segregated pool of
one or more of various types of multifamily or commercial mortgage loans (the
"Mortgage Loans"), mortgage-backed securities ("CMBS") that evidence interests
in, or that are secured by pledges of, one or more of various types of
multifamily or commercial mortgage loans or a combination of Mortgage Loans and
CMBS (collectively, "Mortgage Assets"). Mortgage Loans (or mortgage loans
underlying a CMBS) may be secured by first or junior, recourse or non-recourse
liens and may be delinquent or non-performing as of the date Certificates of a
series are issued, if so specified in the related Prospectus Supplement. If so
specified in the related Prospectus Supplement, the Trust Fund for a series of
Certificates may include letters of credit, insurance policies, guarantees,
reserve funds or other types of credit support, or any combination thereof (with
respect to any series, collectively, "Credit Support"), and currency or interest
rate exchange agreements and other financial assets, or any combination thereof
(with respect to any series, collectively, "Cash Flow Agreements"). See
"Description of the Trust Funds", "Description of the Certificates" and
"Description of Credit Support".
(COVER CONTINUED ON NEXT PAGE)
----------
PROSPECTIVE INVESTORS SHOULD REVIEW THE INFORMATION APPEARING ON PAGE 18
UNDER THE CAPTION "RISK FACTORS" HEREIN AND UNDER SUCH CAPTION
IN THE RELATED PROSPECTUS SUPPLEMENT BEFORE PURCHASING ANY
OFFERED CERTIFICATE.
----------
THE CERTIFICATES WILL REPRESENT INTERESTS IN THE RELATED TRUST FUND ONLY AND
WILL NOT REPRESENT INTERESTS IN OR OBLIGATIONS OF FIRST UNION COMMERCIAL
MORTGAGE SECURITIES, INC. OR ANY AFFILIATE THEREOF, INCLUDING
WITHOUT LIMITATION, FIRST UNION NATIONAL BANK OF NORTH
CAROLINA. A CERTIFICATE IS NOT A DEPOSIT AND NEITHER
THE CERTIFICATES NOR THE UNDERLYING MORTGAGE ASSETS
ARE INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION OR ANY OTHER
GOVERNMENTAL AGENCY.
----------
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.
----------
Prior to issuance there will have been no market for the Certificates of
any series and there can be no assurance that a secondary market for any Offered
Certificates will develop or that, if it does develop, it will continue. See
"Risk Factors". This Prospectus may not be used to consummate sales of the
Offered Certificates of any series unless accompanied by the Prospectus
Supplement for such series.
The Offered Certificates of any series may be offered through one or more
different methods such as offerings through underwriters, including First Union
Capital Markets Corp., an affiliate of the Depositor, acting as principals for
their own account or as agents, as more fully described under "Method of
Distribution" herein and in the related Prospectus Supplement.
Each series of Certificates will consist of one or more classes of
Certificates, and such class or classes (including classes of Offered
Certificates) may (i) provide for the accrual of interest thereon based on a
fixed, variable or adjustable rate; (ii) be senior or subordinate to one or more
other classes of Certificates in entitlement to certain distributions on the
Certificates; (iii) be entitled to distributions of principal, with
disproportionately small, nominal or no distributions of interest; (iv) be
entitled to distributions of interest, with disproportionately small, nominal or
no distributions of principal; (v) provide for distributions of principal and/or
interest that commence only following the occurrence of certain events, such as
the retirement of one or more other classes of Certificates of such series; (vi)
provide for distributions of principal to be made, from time to time or for
designated periods, at a rate that is faster (and, in some cases, substantially
faster) or slower (and, in some cases, substantially slower) than the rate at
which payments or other collections of principal are received on the Mortgage
Assets in the related Trust Fund; or (vii) provide for distributions of
principal to be made, subject to available funds, based on a specified principal
payment schedule or other methodology. See "Description of the Certificates".
APRIL 29, 1997
<PAGE>
(COVER CONTINUED)
Distributions in respect of the Certificates will be made on a monthly,
quarterly or other periodic basis as specified in the related Prospectus
Supplement. Unless otherwise specified in the related Prospectus Supplement,
such distributions will be made only from the assets of the related Trust Fund.
This Prospectus and related Prospectus Supplements may be used by the
Depositor, First Union Capital Markets Corp., an affiliate of the Depositor, and
any other affiliate of the Depositor when required under the federal securities
laws in connection with offers and sales of Offered Certificates in furtherance
of market-making activities in Offered Certificates. First Union Capital Markets
Corp. or any such other affiliate may act as principal or agent in such
transactions. Such sales will be made at prices related to prevailing market
prices at the time of sale or otherwise.
No Certificates of any series will represent an obligation of or interest
in the Depositor or any of its affiliates, except to the limited extent
described herein and in the related Prospectus Supplement. Neither the
Certificates of any series nor the assets in the related Trust Fund will be
guaranteed or insured by any governmental agency or instrumentality or by any
other person, unless otherwise provided in the related Prospectus Supplement.
The assets in each Trust Fund will be held in trust for the benefit of the
holders of the related series of Certificates (the "Certificateholders")
pursuant to a Pooling Agreement, as more fully described herein.
The yield on each class of Certificates of a series will be affected by,
among other things, the rate of payment of principal (including prepayments,
repurchases and defaults) on the Mortgage Assets in the related Trust Fund and
the timing of receipt of such paymentsas described herein and in the related
Prospectus Supplement. See "Yield and Maturity Considerations". A Trust Fund may
be subjectto early termination under the circumstances described herein and in
the related Prospectus Supplement. See "Description ofthe Certificates".
If so provided in the related Prospectus Supplement, one or more elections
may be made to treat the related Trust Fund or a designated portion thereof as a
"real estate mortgage investment conduit" (a "REMIC") for federal income tax
purposes. See "Certain Federal Income Tax Consequences" herein.
Until 90 days after the date of each Prospectus Supplement, all dealers
effecting transactions in the Offered Certificates covered by such Prospectus
Supplement, whether or not participating in the distribution thereof, may be
required to deliver such Prospectus Supplement and this Prospectus. This is in
addition to the obligation of dealers to deliver a Prospectus and Prospectus
Supplement when acting as underwriters and with respect to their unsold
allotments or subscriptions.
2
<PAGE>
PROSPECTUS SUPPLEMENT
As more particularly described herein, each Prospectus Supplement will,
among other things, set forth, as and to the extent appropriate: (i) a
description of the class or classes of Offered Certificates of the related
series, including the aggregate principal amount of each such class (the
"Certificate Balance"), the rate at which interest will accrue from time to
time, if at all, with respect to each such class (the "Pass-Through Rate") or
the method of determining such rate; (ii) information with respect to any other
classes of Certificates of the same series not offered thereby; (iii) the
respective dates on which distributions are to be made to Certificateholders;
(iv) information as to the assets constituting the related Trust Fund, including
the general characteristics of the assets included therein, including the
Mortgage Assets and any Credit Support and Cash Flow Agreements (with respect to
the Certificates of any series, the "Trust Assets"); (v) the circumstances, if
any, under which the related Trust Fund may be subject to early termination;
(vi) additional information with respect to the method of distribution of such
Offered Certificates;(vii) whether one or more REMIC elections will be made, and
the designation of the "regular interests" and "residual interests" in each
REMIC to be created; (viii) the initial percentage ownership interest in the
related Trust Fund to be evidenced by each class of Certificates of such series;
(ix) information concerning the trustee (as to any series, the "Trustee") of the
related Trust Fund; (x) information concerning the master servicer (as to any
series, the "Master Servicer") and any special servicer (as to any series, the
"Special Servicer") engaged to administer the related Mortgage Assets; (xi)
information as to the nature and extent of any subordination in entitlement to
distributions of any class of Certificates of such series; and (xii) whether
such Offered Certificates will be initially issued in definitive or book-entry
form.
AVAILABLE INFORMATION
The Depositor has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement (of which this Prospectus forms a part)
under the Securities Act of 1933, as amended (the "Securities Act"), with
respect to the Offered Certificates. This Prospectus and the Prospectus
Supplement relating to the Offered Certificates of each series contain summaries
of the material terms of the documents referred to herein and therein, but do
not contain all of the information set forth in the Registration Statement
pursuant to the rules and regulations of the Commission. For further
information, reference is made to such Registration Statement and the exhibits
thereto. Such Registration Statement and exhibits can be inspected and copied at
prescribed rates at the public reference facilities maintained by the Commission
at its Public Reference Section, 450 Fifth Street, N.W., Washington, D.C. 20549,
and at its Regional Offices located as follows: Chicago Regional Office,
Northwest Atrium Center, 500 West Madison Street, 14th Floor, Chicago, Illinois
60661; and New York Regional Office, Seven World Trade Center, Suite 1300, New
York, New York 10048. The Commission also maintains a Web site that contains
reports, proxy and information statements, and other information regarding
registrants that file electronically with the Commission. The site may be
accessed at http:/www.sec.gov.
No person has been authorized to give any information or to make any
representation not contained in this Prospectus and any related Prospectus
Supplement and, if given or made, such information or representation must not be
relied upon. This Prospectus and any related Prospectus Supplement do not
constitute an offer to sell or a solicitation of an offer to buy any securities
other than the Offered Certificates, or an offer of the Offered Certificates to
any person in any state or other jurisdiction in which such offer would be
unlawful. The delivery of this Prospectus at any time does not imply that
information herein is correct as of any time subsequent to its date; however, if
any material change occurs while this Prospectus is required by law to be
delivered, this Prospectus will be amended or supplemented accordingly.
The related Master Servicer or Trustee will be required to mail to holders
of the Offered Certificates of each series periodic unaudited reports concerning
the related Trust Fund. If beneficial interests in a class of Offered
Certificates are being held and transferred in book-entry format through the
facilities of The Depository Trust Company ("DTC") as described herein, then,
unless otherwise provided in the related Prospectus Supplement, such reports
will be sent on behalf of the related Trust Fund to a nominee of DTC as the
registered holder of the Offered Certificates. The means by which notices and
other communications are conveyed by DTC to its participating organizations, and
directly or indirectly through such participating organizations to the
beneficial owners of the applicable Offered Certificates, will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time. See "Description of the
Certificates--Reports to
3
<PAGE>
Certificateholders" and "--Book-Entry Registration and Definitive Certificates"
and "Description of the Pooling Agreements--Evidence as to Compliance". The
Depositor will file or cause to be filed with the Commission such periodic
reports with respect to each Trust Fund as are required under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and
regulations of the Commission thereunder.
To the extent described in the related Prospectus Supplement, some or all
of the Mortgage Loans may be secured by an assignment of the lessors' (i.e., the
related Mortgagors') rights in one or more bond-type or credit-type net leases
(each, a "Lease") of the related Mortgaged Property. Unless otherwise specified
in the related Prospectus Supplement, no series of Certificates will represent
interests in or obligations of any lessee (each, a "Lessee") under a Lease. If
indicated, however, in the Prospectus Supplement for a given series, a
significant or the sole source of payments on the Mortgage Loans in such series,
and, therefore, of distributions on such Certificates, will be rental payments
due from the Lessees under the Leases. Under such circumstances, prospective
investors in the related series of Certificates may wish to consider publicly
available information, if any, concerning the Lessees. Reference should be made
to the related Prospectus Supplement for information concerning the Lessees and
whether any such Lessees are subject to the periodic reporting requirements of
the Exchange Act.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
There are incorporated herein by reference all documents and reports filed
or caused to be filed by the Depositor with respect to a Trust Fund pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act, prior to the termination
of an offering of Offered Certificates evidencing interests therein. The
Depositor, upon request, 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 Offered Certificates, a copy of any or all documents
or reports incorporated herein by reference, in each case to the extent such
documents or reports relate to one or more of such Offered Certificates, other
than the exhibits to such documents (unless such exhibits are specifically
incorporated by reference in such documents). Requests to the Depositor should
be directed in writing to its principal executive office at One First Union
Center, Charlotte, North Carolina 28228-0013, Attention: Secretary, or by
telephone at 704-374-6161. The Depositor has determined that its financial
statements will not be material to the offering of any Offered Certificates.
4
<PAGE>
TABLE OF CONTENTS
PAGE
----
PROSPECTUS SUPPLEMENT .................................................... 3
AVAILABLE INFORMATION .................................................... 3
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE ........................ 4
SUMMARY OF PROSPECTUS .................................................... 9
RISK FACTORS ............................................................. 18
Limited Liquidity ....................................................... 18
Limited Assets .......................................................... 18
Prepayments; Average Life of Certificates; Yields ....................... 18
Limited Nature of Ratings ............................................... 19
Risks Associated with Mortgage Loans and Mortgaged Properties ........... 20
Risks Associated with Certain Mortgage Loans and Related Leases ......... 21
Balloon Payments; Borrower Default ...................................... 21
Junior Mortgage Loans ................................................... 22
Credit Support Limitations .............................................. 22
Enforceability .......................................................... 22
Leases and Rents ........................................................ 23
Environmental Risks ..................................................... 23
ERISA Considerations .................................................... 23
Certain Federal Tax Considerations Regarding REMIC Residual
Certificates ........................................................... 23
Book-Entry Registration ................................................. 24
Delinquent and Non-Performing Mortgage Loans ............................ 24
DESCRIPTION OF THE TRUST FUNDS ........................................... 24
General ................................................................. 24
Mortgage Loans-Leases ................................................... 25
General ................................................................ 25
Leases ................................................................. 25
Default and Loss Considerations with Respect to the Mortgage Loans ..... 26
Payment Provisions of the Mortgage Loans ............................... 27
Mortgage Loan Information in Prospectus Supplements .................... 28
CMBS .................................................................... 28
Certificate Accounts .................................................... 29
Credit Support .......................................................... 29
Cash Flow Agreements .................................................... 29
YIELD AND MATURITY CONSIDERATIONS ........................................ 30
General ................................................................. 30
Pass-Through Rate ....................................................... 30
Payment Delays .......................................................... 30
Certain Shortfalls in Collections of Interest ........................... 30
Yield and Prepayment Considerations ..................................... 30
Weighted Average Life and Maturity ...................................... 32
Controlled Amortization Classes and Companion Classes ................... 32
Other Factors Affecting Yield, Weighted Average Life and Maturity ....... 33
Balloon Payments; Extensions of Maturity ............................... 33
Negative Amortization .................................................. 33
Foreclosures and Payment Plans ......................................... 34
Losses and Shortfalls on the Mortgage Assets ........................... 34
Additional Certificate Amortization .................................... 34
5
<PAGE>
PAGE
----
THE DEPOSITOR ............................................................ 34
USE OF PROCEEDS .......................................................... 34
DESCRIPTION OF THE CERTIFICATES .......................................... 35
General ................................................................. 35
Distributions ........................................................... 35
Distributions of Interest on the Certificates ........................... 36
Distributions of Certificate Principal .................................. 37
Distributions on the Certificates in Respect of Prepayment
Premiums or in Respect of Equity Participations ........................ 37
Allocation of Losses and Shortfalls ..................................... 37
Advances in Respect of Delinquencies .................................... 37
Reports to Certificateholders ........................................... 38
Voting Rights ........................................................... 40
Termination ............................................................. 40
Book-Entry Registration and Definitive Certificates ..................... 41
DESCRIPTION OF THE POOLING AGREEMENTS .................................... 42
General ................................................................. 42
Assignment of Mortgage Assets; Repurchases .............................. 42
Representations and Warranties; Repurchases ............................. 43
Certificate Account ..................................................... 44
General ................................................................ 44
Deposits ............................................................... 44
Withdrawals ............................................................ 45
Collection and Other Servicing Procedures ............................... 46
Modifications, Waivers and Amendments of Mortgage Loans ................. 47
Sub-Servicers ........................................................... 47
Special Servicers ....................................................... 47
Realization Upon Defaulted Mortgage Loans ............................... 47
Hazard Insurance Policies ............................................... 49
Due-on-Sale and Due-on-Encumbrance Provisions ........................... 50
Servicing Compensation and Payment of Expenses .......................... 50
Evidence as to Compliance ............................................... 50
Certain Matters Regarding the Master Servicer and the Depositor ......... 51
Events of Default ....................................................... 52
Rights Upon Event of Default ............................................ 52
Amendment ............................................................... 52
List of Certificateholders .............................................. 53
The Trustee ............................................................. 53
Duties of the Trustee ................................................... 53
Certain Matters Regarding the Trustee ................................... 53
Resignation and Removal of the Trustee .................................. 54
DESCRIPTION OF CREDIT SUPPORT ............................................ 54
General ................................................................. 54
Subordinate Certificates ................................................ 55
Cross-Support Provisions ................................................ 55
Insurance or Guarantees with Respect to Mortgage Loans .................. 55
Letter of Credit ........................................................ 55
Certificate Insurance and Surety Bonds .................................. 55
Reserve Funds ........................................................... 55
Credit Support with Respect to CMBS ..................................... 56
6
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CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS AND LEASES ....................... 56
General ................................................................. 56
Types of Mortgage Instruments ........................................... 57
Leases and Rents ........................................................ 57
Personalty .............................................................. 57
Cooperative Loans ....................................................... 57
Junior Mortgages; Rights of Senior Lenders .............................. 58
Foreclosure ............................................................. 59
General ................................................................ 59
Judicial Foreclosure ................................................... 60
Non-Judicial Foreclosure/Power of Sale ................................. 60
Equitable Limitations on Enforceability of Certain Provisions .......... 60
Public Sale ............................................................ 60
Rights of Redemption ................................................... 61
Anti-Deficiency Legislation ............................................ 61
Leasehold Risks ........................................................ 62
Regulated Healthcare Facilities ........................................ 62
Cross-Collateralization ................................................ 62
Cooperative Loans ...................................................... 62
Bankruptcy Laws ......................................................... 63
Environmental Considerations ............................................ 64
General ................................................................ 64
Superlien Laws ......................................................... 64
CERCLA ................................................................. 64
Certain Other State Laws ............................................... 65
Additional Considerations .............................................. 65
Due-on-Sale and Due-on-Encumbrance ...................................... 65
Subordinate Financing ................................................... 65
Default Interest and Limitations on Prepayments ......................... 66
Applicability of Usury Laws ............................................. 66
Soldiers' and Sailors' Civil Relief Act of 1940 ......................... 66
Americans with Disabilities Act ......................................... 67
Forfeitures in Drug and RICO Proceedings ................................ 67
CERTAIN FEDERAL INCOME TAX CONSEQUENCES .................................. 67
General ................................................................. 67
REMICs .................................................................. 68
Classification of REMICs ............................................... 68
Characterization of Investments in REMIC Certificates .................. 68
Tiered REMIC Structures ................................................ 69
Taxation of Owners of REMIC Regular Certificates ........................ 69
General ................................................................ 69
Original Issue Discount ................................................ 69
Market Discount ........................................................ 71
Premium ................................................................ 72
Realized Losses ........................................................ 72
Taxation of Owners of REMIC Residual Certificates ....................... 73
General ................................................................ 73
Taxable Income of the REMIC ............................................ 73
Basis Rules, Net Losses and Distributions .............................. 75
Excess Inclusions ...................................................... 75
Noneconomic REMIC Residual Certificates ................................ 76
Mark-to-Market Rules ................................................... 77
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Possible Pass-Through of Miscellaneous Itemized Deductions ............. 77
Sales of REMIC Certificates ............................................ 78
Prohibited Transactions Tax and Other Taxes ............................ 79
Tax and Restrictions on Transfers of REMIC Residual
Certificates to Certain Organizations ................................ 79
Termination ............................................................ 80
Reporting and Other Administrative Matters ............................. 80
Backup Withholding with Respect to REMIC Certificates .................. 81
Foreign Investors in REMIC Certificates ................................ 81
Grantor Trust Funds ..................................................... 82
Classification of Grantor Trust Funds .................................. 82
Characterization of Investments in Grantor Trust Certificates ........... 82
Grantor Trust Fractional Interest Certificates ......................... 82
Grantor Trust Strip Certificates ....................................... 82
Taxation of Owners of Grantor Trust Fractional Interest Certificates .... 82
General ................................................................ 82
If Stripped Bond Rules Apply ........................................... 83
If Stripped Bond Rules Do Not Apply .................................... 84
Market Discount ........................................................ 86
Premium ................................................................ 87
Taxation of Owners of Grantor Trust Strip Certificates ................. 87
Possible Application of Contingent Payment Rules ....................... 88
Sales of Grantor Trust Certificates .................................... 88
Grantor Trust Reporting ................................................ 89
Backup Withholding ..................................................... 89
Foreign Investor ....................................................... 89
STATE AND OTHER TAX CONSEQUENCES ......................................... 89
ERISA CONSIDERATIONS ..................................................... 90
General ................................................................. 90
Plan Asset Regulations ................................................. 90
Prohibited Transaction Exemptions ....................................... 90
LEGAL INVESTMENT ......................................................... 93
METHOD OF DISTRIBUTION ................................................... 94
LEGAL MATTERS ............................................................ 95
FINANCIAL INFORMATION .................................................... 95
RATING ................................................................... 95
INDEX OF PRINCIPAL DEFINITIONS ........................................... 96
8
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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 withthe offering of Offered Certificates of such series.
An Index of Principal Definitions is included at the end ofthis Prospectus.
Title of Certificates ...... Commercial Mortgage Pass-Through Certificates,
issuable in series (the "Certificates").
Depositor .................. First Union Commercial Mortgage Securities, Inc.,
a wholly-owned subsidiary of First Union
National Bank of North Carolina. See "The
Depositor".
Master Servicer ............ The master servicer (the "Master Servicer"), if
any, for a series of Certificates will be named
in the related Prospectus Supplement and maybe
an affiliate of the Depositor. See "Description
of the PoolingAgreements--Collection and Other
Servicing Procedures".
Special Servicer ........... The special servicer (the "Special Servicer"), if
any, for a series of Certificates will be named,
or the circumstances under which a Special
Servicer will be appointed will be described, in
the related Prospectus Supplement. See
"Description of the Pooling
Agreements--SpecialServicers".
Trustee .................... The trustee (the "Trustee") for each series of
Certificates will be named in the related
Prospectus Supplement. See "Description of the
Pooling Agreements--The Trustee".
The Trust Assets ........... Each series of Certificates will represent in the
aggregate the entire beneficial ownership
interest in a Trust Fund consisting primarily
of:
A. Mortgage Assets ...... The Mortgage Assets with respect to each series of
Certificates will, in general, consist of a pool
of mortgage loans (collectively, the "Mortgage
Loans") secured by first or junior liens on, or
security interests in, or installment contracts
for the sale of, fee simple or leasehold
interests in, (i) residential properties
consisting of five or more rental or
cooperatively owned dwelling units ("Multifamily
Properties") or (ii) office buildings, shopping
centers, retail stores, hotels or motels,
nursing homes, hospitals or other health-care
related facilities, mobile home parks, warehouse
facilities, mini-warehouse facilities or
self-storage facilities, industrial plants,
mixed use or other types of income-producing
properties or unimproved land ("Commercial
Properties"), (iii) CMBS or (iv) participations
in, or any combination of, the foregoing. If so
specified in the related Prospectus Supplement
and if permitted by applicable law, a Trust Fund
may include (i) Multifamily Properties or
Commercial Properties acquired by foreclosure or
by deed-in-lieu of foreclosure ("REO Property")
and (ii) Mortgage Loans secured by liens on real
estate projects under construction. If so
specified in the related Prospectus Supplement,
some Mortgage Loans may be delinquent or
non-performing as of the date of their deposit
into the related Trust Fund. The Mortgage Loans
will not be guaranteed or insured by the
Depositor, any of its affiliates or, unless
otherwise specified in the Prospectus
Supplement, by any governmental agency or
instrumentality or any other person.
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To the extent described in the related Prospectus
Supplement, some or all of the Mortgage Loans
may also be secured by an assignment of one or
more leases (a "Lease Assignment"), including
bond-type or credit-type net leases (each, a
"Lease") of one or more lessees (each, a
"Lessee") of all or a portion of the related
Mortgaged Properties (as defined herein). Unless
otherwise specified in the related Prospectus
Supplement, a significant or the sole source of
payments on certain Mortgage Loans will be the
rental payments due under the related Leases. In
certain circumstances, with respect to
Commercial Properties, the material terms and
conditions of the related Leases may be set
forth in the related Prospectus Supplement. See
"Description of the Trust Funds--Mortgage
Loans--Leases" and "Risk Factors--Limited
Assets" herein.
Unless otherwise provided in the related
Prospectus Supplement, the Mortgaged Properties
may be located in any one of the 50 states, the
District of Columbia or the Commonwealth of
Puerto Rico. Unless otherwise provided in the
related Prospectus Supplement, all Mortgage
Loans will have individual principal balances at
origination of not less than $100,000 and
original terms to maturity of not more than 40
years.
As and to the extent described in the related
Prospectus Supplement, a Mortgage Loan (i) may
provide for no accrual of interest or for
accrual of interest thereon at an interest rate
(a "Mortgage Rate") that is fixed over its term
or that adjusts from time to time, or that may
be converted at the borrower's election from an
adjustable to a fixed Mortgage Rate, or from a
fixed to an adjustable Mortgage Rate, (ii) may
provide for the formula, index or other method
by which the Mortgage Rate will be calculated,
(iii) may provide for level payments to maturity
or for payments that adjust from time to time to
accommodate changes in the Mortgage Rate or to
reflect the occurrence of certain events, and
may permit negative amortization or accelerated
amortization, (iv) may be fully amortizing over
its term to maturity, or may provide for little
or no amortization over its term and thus
require a balloon payment on its stated maturity
date, (v) may contain a prohibition on
prepayment or require payment of a premium or a
yield maintenance penalty in connection with a
prepayment and (vi) may provide for payments of
principal, interest or both, on due dates that
occur monthly or quarterly or at such other
interval as is specified in the related
Prospectus Supplement. See "Description of the
Trust Funds--Mortgage Loans--Leases".
If and to the extent specified in the related
Prospectus Supplement, the Mortgage Assets that
constitute a particular Trust Fund may also
include or consist solely of (i) private
mortgage participations, mortgage pass-through
certificates or other mortgage-backed securities
or (ii) certificates insured or guaranteed by
the Federal Home Loan Mortgage Corporation
("FHLMC"), the Federal National Mortgage
Association ("FNMA"), the Governmental National
Mortgage Association ("GNMA") or the Federal
Agricultural Mortgage Corporation ("FAMC")
(collectively, the mortgage-backed securities
referred to in clauses (i) and (ii), "CMBS"),
provided that each CMBS will evidence an
interest in, or will be secured by a pledge of,
one or more mortgage loans that conform to the
descriptions of the Mortgage Loans contained
herein. See "Description of the Trust
Funds--CMBS".
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Each Mortgage Asset will be selected by the
Depositor for inclu-sion in a Trust Fund from
among those purchased, either directly or
indirectly, from a prior holder thereof (a
"Mortgage Asset Seller"), which prior holder may
or may not be the originator of such Mortgage
Loan or the issuer of such CMBS and may be an
affiliate of theDepositor, all as more
particularly described in the related Prospectus
Supplement.
B. Certificate Account .. Each Trust Fund will include one or more accounts
(collectively, the"Certificate Account")
established and maintained on behalf of the
Certificateholders into which the person or
persons designated in the related Prospectus
Supplement will, to the extent described herein
and in such Prospectus Supplement, deposit all
payments and collections received or advanced
with respect to the Mortgage Assets and other
assets in the Trust Fund. A Certificate Account
may be maintained as an interest bearing or a
non-interest bearing account, and funds held
therein may be held as cash or invested in
certain short-term, investment grade
obligations, in each case as described in the
related Prospectus Supplement. See "Description
of the Trust Funds--Certificate Accounts" and
"Description of the Pooling
Agreements--Certificate Account".
C. Credit Support ....... If so provided in the related Prospectus
Supplement, partial or full protection against
certain defaults and losses on the Mortgage
Assets in the related Trust Fund may be provided
to one or more classes of Certificates of the
related series in the form of subordination of
one or more other classes of Certificates of
such series, which other classes may include one
or more classes of Offered Certificates, or by
one or more other types of credit support, such
as overcollateralization, a letter of credit,
insurance policy, guarantee, reserve fund or
another type of credit support, or a combination
thereof (any such coverage with respect to the
Certificates of any series, "Credit Support").
The amount and types of any Credit Support, the
identification of the entity providing it (if
applicable) and related information will be set
forth in the related Prospectus Supplement. The
Prospectus Supplement for any series of
Certificates evidencing an interest in a Trust
Fund that includes CMBS will describe in the
same fashion any similar forms of credit support
that are provided by or with respect to, or are
included as part of the trust fund evidenced by
or providing security for, such CMBS to the
extent information is available and deemed
material. The type, characteristic and amount of
Credit Support will be determined based on the
characteristics of the Mortgage Assets and other
factors and will be established, in part, on the
basis of requirements of each Rating Agency
rating the Certificates of such series. If so
specified in the related Prospectus Supplement,
any such Credit Support may apply only in the
event of certain types of losses or
delinquencies and the protection against losses
or delinquencies provided by such Credit Support
will be limited. See "Risk Factors--Credit
Support Limitations", "Description of the Trust
Funds--Credit Support" and "Description of
Credit Support".
D. Cash Flow Agreements . If so provided in the related Prospectus
Supplement, a Trust Fund may include guaranteed
investment contracts pursuant to which moneys
held in the funds and accounts established for
the related series will be invested at a
specified rate. The Trust Fund may also include
certain
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other agreements, such as interest rate exchange
agreements, interest rate cap or floor
agreements, currency exchange agreements or
similar agreements designed to reduce the
effects of interest rate or currency exchange
rate fluctuations on the Mortgage Assets or on
one or more classes of Certificates. The
principal terms of any such guaranteed
investment contract or other agreement (any such
agreement, a "Cash Flow Agreement"), including,
without limitation, provisions relating to the
timing, manner and amount of payments thereunder
and provisions relating to the termination
thereof, will be described in the Prospectus
Supplement for the related series. In addition,
the related Prospectus Supplement will contain
certain information that pertains to the obligor
under any such Cash Flow Agreement. The
Prospectus Supplement for any series of
Certificates evidencing an interest in a Trust
Fund that includes CMBS will describe in the
same fashion any Cash Flow Agreements that are
included as part of the trust fund evidenced by
or providing security for such CMBS to the
extent information is available and deemed
material. See "Description of the Trust
Funds--Cash Flow Agreements".
Description of Certificates Each series of Certificates will be issued
pursuant to a pooling and servicing agreement or
other agreement specified in the related
Prospectus Supplement (in either case, a
"Pooling Agreement") and will represent in the
aggregate the entire beneficial ownership
interest in the related Trust Fund.
Each series of Certificates may consist of one or
more classes of Certificates, and such class or
classes (including classes of Offered
Certificates) may (i) be senior (collectively,
"Senior Certificates") or subordinate
(collectively, "Subordinate Certificates") to
one or more other classes of Certificates in
entitlement to certain distributions on the
Certificates; (ii) be entitled to distributions
of principal, with disproportionately small,
nominal or no distributions of interest
(collectively, "Stripped Principal
Certificates"); (iii) be entitled to
distributions of interest, with
disproportionately small, nominal or no
distributions of principal (collectively,
"Stripped Interest Certificates"); (iv) provide
for distributions of principal and/or interest
that commence only after the occurrence of
certain events, such as the retirement of one or
more other classes of Certificates of such
series; (v) provide for distributions of
principal to be made, from time to time, or for
designated periods, at a rate that is faster
(and, in some cases, substantially faster) or
slower (and, in some cases, substantially
slower) than the rate at which payments or other
collections of principal are received on the
Mortgage Assets in the related Trust Fund; (vi)
provide for distributions of principal to be
made, subject to available funds, based on a
specified principal payment schedule or other
methodology; and/or (vii) provide for
distributions based on a combination of two or
more components thereof with one or more of the
characteristics described in this paragraph,
including a Stripped Principal Certificate
component and a Stripped Interest Certificate
component, to the extent of available funds, in
each case as described in the related Prospectus
Supplement. Any such classes may include classes
of Offered Certificates. With respect to
Certificates with two or more
components,references herein to Certificate
Balance, notional amount and
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Pass-Through Rate refer to the principal
balance, if any, notional amount, if any, and
the Pass-Through Rate, if any, for any
suchcomponent.
Each class of Certificates, other than certain
classes of Stripped Interest Certificates and
certain REMIC Residual Certificates (as defined
below), will have a stated principal amount (a
"Certificate Balance"), and each class of
Certificates, other than certain classes of
Stripped Principal Certificates and certain
REMIC Residual Certificates, will accrue
interest on its Certificate Balance or, in the
case of certain classes of Stripped Interest
Certificates, on a notional amount ("Notional
Amount"), based on a fixed, variable or
adjustable interest rate (a "Pass-Through
Rate"). The related Prospectus Supplement will
specify the Certificate Balance, Notional Amount
and Pass-Through Rate for each class of Offered
Certificates, as applicable, or, in the case of
a variable or adjustable Pass-Through Rate, the
method fordetermining the Pass-Through Rate.
The Certificates will not be guaranteed or insured
by the Depositor or any of its affiliates, by
any governmental agency or instrumentality or by
any other person, unless otherwise provided in
the related Prospectus Supplement. See "Risk
Factors--Limited Assets" and "Description of the
Certificates".
Distributions of Interest
on the Certificates ...... Interest on each class of Offered Certificates
Certificates (other than certain classes of
Stripped Principal Certificates and Stripped
Interest Certificates and certain REMIC Residual
Certificates) of each series will accrue at the
applicable Pass-Through Rate on the Certificate
Balance or, in the case of certain classes of
Stripped Interest Certificates, the Notional
Amount thereof outstanding from time to time and
will be distributed to Certificateholders as
provided in the related Prospectus Supplement
(each of the specified dates on which
distributions are to be made, a "Distribution
Date"). Distributions of interest with respect
to one or more classes of Certificates
(collectively, "Accrual Certificates") may not
commence until the occurrence of certain events,
such as the retirement of one or more other
classes of Certificates, and interest accrued
with respect to a class of Accrual Certificates
prior to the occurrence of such an event will
either be added to the Certificate Balance
thereof or otherwise deferred. Distributions of
interest with respect to one or more classes of
Certificates may be reduced to the extent of
certain delinquencies, losses and other
contingencies described herein and in the
related Prospectus Supplement. See "Risk
Factors--Prepayments; Average Life of
Certificates; Yields", "Yield and Maturity
Considerations", and "Description of the
Certificates--Distributions of Interest on the
Certificates".
Distributions of Certificate
Principal ................ Each class of the Certificates of each series
(other than certain classes of Stripped Interest
Certificates and/or REMIC Residual Certificates)
will have a Certificate Balance which, as of any
date, will represent the maximum amount that the
holders thereof are then entitled to receive in
respect of principal from future cash flow on
the Mortgage Assets in the related Trust Fund.
Unless otherwise specified in the related
Prospectus Supplement, the initial aggregate
Certificate Balance of all
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classes of a series of Certificates will not
exceed the outstanding principal balance of the
related Mortgage Assets as of a specified date
(the "Cut-off Date"), after application of
scheduled payments due on or before such date,
whether or not received. As and to the extent
described in the related Prospectus Supplement,
distributions of principal with respect to each
series of Certificates will be made on each
Distribution Date to the holders of the class or
classes of Certificates of such series entitled
thereto until the Certificate Balances of such
Certificates have been reduced to zero.
Distributions of principal with respect to one
or more classes of Certificates (i) may be made
at a rate that is faster (and, in some cases,
substantially faster) than the rate at which
payments or other collections of principal are
received on the Mortgage Assets in the related
Trust Fund; (ii) may not commence until the
occurrence of certain events, such as the
retirement of one or more other classes of
Certificates of the same series, or may be made
at a rate that is slower (and, in some cases,
substantially slower) than the rate at which
payments or other collections of principal are
received on the Mortgage Assets in the related
Trust Fund; (iii) may be made, subject to
available funds, based on a specified principal
payment schedule for any such class, a
"Controlled Amortization Class"); and (iv) may
be contingent on the specified principal payment
schedule for a Controlled Amortization Class of
the same series and the rate at which payments
and other collections of principal on the
Mortgage Assets in the related Trust Fund are
received (any such class, a "Companion Class").
Unless otherwise specified in the related
Prospectus Supplement, distributions of
principal of any class of Certificates will be
made on a pro rata basis among all of the
Certificates of such class. See "Description of
the Certificates--Distributions of
CertificatePrincipal".
Advances ................... If and to the extent provided in the related
Prospectus Supplement, the Master Servicer
and/or another specified person will be
obligated to make, or have the option of making,
certain advances with respect to delinquent
scheduled payments of principal and/or interest
on the Mortgage Loans in the related Trust Fund.
Any such advances made with respect to a
particular Mortgage Loan will be reimbursable
from subsequent recoveries in respect of such
Mortgage Loan and otherwise to the extent
described herein and in the related Prospectus
Supplement. If and to the extent provided in the
Prospectus Supplement for a series of
Certificates, the Master Servicer or other
specified person will be entitled to receive
interest on its advances for the period that
they are outstanding, payable from amounts in
the related Trust Fund. See "Description of the
Certificates--Advances in Respect of
Delinquencies". If a Trust Fund includes CMBS,
any comparable advancing obligation of a party
to the related Pooling Agreement, or of a
partyto the related CMBS Agreement, will be
described in the relatedProspectus Supplement.
Termination ................ If so specified in the related Prospectus
Supplement, a series of Certificates will be
subject to optional early termination by means
of the repurchase of the Mortgage Assets in the
related Trust Fund by the party or parties
specified therein, under the circumstances and
in the manner set forth therein. If so provided
in the related Prospectus Sup-
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plement, upon the reduction of the Certificate
Balance of a specified class or classes of
Certificates by a specified percentage or
amount, a party specified therein may be
authorized or required to solicit bids for the
purchase of all of the Mortgage Assets of the
Trust Fund, or of a sufficient portion of such
Mortgage Assets to retire such class or classes,
under the circumstances and in the manner set
forth therein. Further, if so provided in the
related Prospectus Supplement, certain classes
of Certificates may be purchased by a party or
parties specified therein under similar or other
conditions as described therein. See
"Description of the Certificates--Termination".
Registration of Book-Entry
Certificates ............. If so provided in the related Prospectus
Supplement, one or more classes of the Offered
Certificates of any series will be offered in
book-entry format (collectively, "Book-Entry
Certificates") through the facilities of DTC.
Each class of Book-Entry Certificates will be
initially represented by one or more
Certificates registered in the name of a nominee
of DTC. No person acquiring an interest in a
class of Book-Entry Certificates (a "Certificate
Owner") will be entitled to receive a
Certificate of such class in fully registered,
definitive form (a "Definitive Certificate"),
except under the limited circumstances described
herein. See "Risk Factors--Book-Entry
Registration" and "Description of the
Certificates--Book-Entry Registration and
Definitive Certificates".
Tax Status of the
Certificates ............. The Certificates of each series will constitute
either (i) "regular interests" ("REMIC Regular
Certificates") and "residual interests" ("REMIC
Residual Certificates") in a Trust Fund, or a
designated portion thereof, treated as a REMIC
under Sections 860A through 860G of the Internal
Revenue Code of 1986 (the "Code"), or (ii)
interests ("Grantor Trust Certificates") in a
Trust Fund treated as a grantor trust under
applicable provisions of the Code.
A. REMIC ................ REMIC Regular Certificates generally will be
treated as debt obligations of the applicable
REMIC for federal income tax purposes. In
general, to the extent the assets and income of
the REMIC are treated as qualifying assets and
income under the following sections of the Code,
REMIC Regular Certificates owned by a real
estate investment trust will be treated as "real
estate assets" for purposes of Section
856(c)(5)(A) of the Code and interest income
therefrom will be treated as "interest on
obligations secured by mortgages on real
property" for purposes of Section 856(c)(3)(B)
of the Code. In addition, REMIC Regular
Certificates will be "qualified mortgages"
within the meaning of Section 860G(a)(3) of the
Code. Moreover, if 95% or more of the assets and
the income of the REMIC qualify for any of the
foregoing treatments, the REMIC Regular
Certificates will qualify for the foregoing
treatments in their entirety. However, REMIC
Regular Certificates owned by a thrift
institution will constitute assets described in
Section 7701(a)(19)(C) of the Code only if so
specified in the related Prospectus Supplement.
If so specified in the related Prospectus
Supplement, certain of the REMIC Regular
Certificates may be issuedwith original issue
discount. See "Certain Federal Income
TaxConsequences--REMICs--Taxation of Owners of
REMIC Regular Certificates".
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REMIC Residual Certificates generally will be
treated as representing an interest in
qualifying assets and income to the same extent
described above for institutions subject to
Sections 856(c)(5)(A) and 856(c)(3)(B) of the
Code, but not for purposes of Section
7701(a)(19)(C) of the Code unless otherwise
stated in the related Prospectus Supplement. A
portion (or, in certain cases, all) of the
income from REMIC Residual Certificates (i) may
not be offset by any losses from other
activities of the holder of such REMIC Residual
Certificates, (ii) may be treated as unrelated
business taxable income for holders of REMIC
Residual Certificates that are subject to tax on
unrelated business taxable income (as defined in
Section 511 of the Code), and (iii) may be
subject to foreign withholding rules. See
"Certain Federal Income Tax
Consequences--REMICs--Taxation of Owners of
REMIC Residual Certificates".
B. Grantor Trust ........ Unless otherwise provided in the related
Prospectus Supplement, Grantor Trust
Certificates may be either Certificates that
have a Certificate Balance and a Pass-Through
Rate or that are Stripped Principal Certificates
(collectively, "Grantor Trust Fractional
Interest Certificates"), or may be Stripped
Interest Certificates. Holders of Grantor Trust
Fractional Interest Certificates generally will
be treated as owning an interest in qualifying
assets and income under Sections 856(c)(5)(A),
856(c)(3)(B) and 860G(a)(3) of the Code, but
will not be so treated for purposes of Section
7701(a)(19)(C) of the Code unless otherwise
stated in the related Prospectus Supplement.
It is unclear whether Stripped Interest
Certificates will be treated as representing an
ownership interest in qualifying assets and
income under Sections 856(c)(5)(A) and
856(c)(3)(B) of the Code, although the policy
considerations underlying those Sections suggest
that such treatment should be available.
However, such Certificates will not be treated
as representing an ownership interest in assets
described in Section 7701(a)(19)(C) of the Code
unless otherwise stated in the related
Prospectus Supplement. The taxation of holders
of Stripped Interest Certificates is uncertain
in various respects, including in particular the
method such holders should use to recover their
purchase price and to report their income with
respect to such Stripped Interest Certificates.
See "Certain Federal Income Tax
Consequences--Grantor Trust Funds".
Investors are advised to consult their tax
advisors with respect to the taxation of holders
of Stripped Interest Certificates and to review
"Certain Federal Income Tax Consequences" herein
and in the relatedProspectus Supplement.
ERISA Considerations ....... Fiduciaries of employee benefit plans and certain
other retirement plans and arrangements,
including individual retirement accounts,
annuities, Keogh plans, and collective
investment funds and separate accounts in which
such plans, accounts, annuities or arrangements
are invested, 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
Offered Certificates could give rise to a
transaction that is prohibited or is not
otherwise permissible either under ERISA or
Section
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4975 of the Code. See "ERISA Considerations"
herein and in the related Prospectus Supplement.
Legal Investment ........... The Offered Certificates of any series will
constitute "mortgage related securities" for
purposes of the Secondary Mortgage Market
Enhancement Act of 1984 only if so specified in
the related Prospectus Supplement. Investors
whose investment authority is subject to legal
restrictions should consult their own legal
advisors to determine whether and to what extent
the Offered Certificates constitute legal
investments for them. See "Legal Investment"
herein and in the related Prospectus Supplement.
Rating ..................... At their respective dates of issuance, each class
of Offered Certificates will be rated not lower
than investment grade by one or more nationally
recognized statistical rating agencies requested
by the Depositor to rate the Offered
Certificates (each, a "Rating Agency"). See
"Rating" herein and in the related Prospectus
Supplement.
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RISK FACTORS
In considering an investment in the Offered Certificates of any series,
investors should consider, among other things, the following factors and any
other factors set forth under the heading "Risk Factors" in the related
Prospectus Supplement. In general, to the extent that the factors discussed
below pertain to or are influenced by the characteristics or behavior of
Mortgage Loans included in a particular Trust Fund, they would similarly pertain
to and be influenced by the characteristics or behavior of the mortgage loans
underlying any CMBS included in such Trust Fund.
LIMITED LIQUIDITY
There can be no assurance that a secondary market for the Offered
Certificates of any series will develop or, if it does develop, that it will
provide holders with liquidity of investment or will continue for as long as
such Certificates remain outstanding. Furthermore, because, among other things,
the timing of receipt of payments with respect to a pool of multifamily or
commercial mortgage loans may be substantially more difficult to predict than
that of a pool of single family mortgage loans, any such secondary market that
does develop may provide less liquidity to investors than any comparable market
for securities that evidence interests in single-family mortgage loans.
The primary source of continuing information regarding the Offered
Certificates of any series, including information regarding the status of the
related Mortgage Assets and any Credit Support for such Certificates, will be
the periodic reports to Certificateholders delivered pursuant to the related
Pooling Agreement as described herein under the heading "Description of the
Certificates--Reports to Certificateholders". There can be no assurance that any
additional continuing information regarding the Offered Certificates of any
series will be available through any other source, and the limited nature of
such information may adversely affect the liquidity thereof, even if a secondary
market for such Certificates does develop.
Except to the extent described herein and in the related Prospectus
Supplement, Certificateholders will have no redemption rights, and the Offered
Certificates of each series are subject to early retirement only under certain
specified circumstances described herein and in the related Prospectus
Supplement. See "Description of the Certificates--Termination".
LIMITED ASSETS
Unless otherwise specified in the related Prospectus Supplement, neither
the Offered Certificates of any series nor the Mortgage Assets in the related
Trust Fund will be guaranteed or insured by the Depositor or any of its
affiliates, by any governmental agency or instrumentality or by any other
person; and no Offered Certificate of any series will represent a claim against
or security interest in the Trust Funds for any other series. Accordingly, if
the related Trust Fund has insufficient assets to make payments on such
Certificates, no other assets will be available for payment of the deficiency.
Additionally, certain amounts on deposit from time to time remaining in certain
funds or accounts constituting part of a Trust Fund, including the Certificate
Account and any accounts maintained as Credit Support, may be withdrawn under
certain conditions that will be described in the related Prospectus Supplement,
for purposes other than the payment of principal of or interest on the related
series of 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 Mortgage Assets have been incurred, 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.
PREPAYMENTS; AVERAGE LIFE OF CERTIFICATES; YIELDS
For a number of reasons, including the difficulty of predicting the rate
of prepayments on the Mortgage Loans in a particular Trust Fund, the amount and
timing of distributions of principal and/or interest on the Offered Certificates
of the related series may be highly unpredictable. Prepayments on the Mortgage
Loans in any Trust Fund 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 such Certificates,
including a class of Offered Certificates. The rate of principal payments on
pools of mortgage loans varies among pools and from time to time is influenced
by a variety of economic,
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demographic, geographic, social, tax, legal and other factors. For example, if
prevailing interest rates fall significantly below the Mortgage 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 borne by those
Mortgage Loans. Conversely, if prevailing interest rates rise significantly
above the Mortgage Rates borne by the Mortgage Loans included in a Trust Fund,
principal prepayments thereon are likely to be lower than if prevailing interest
rates remain at or below the rates borne by those Mortgage Loans. There can be
no assurance as to the rate of prepayments on the Mortgage Loans in any Trust
Fund or that such rate will conform to any model described herein or in any
Prospectus Supplement. As a result, depending on the anticipated rate of
prepayment for the Mortgage Loans in any Trust Fund, the retirement of any class
of Certificates of the related series could occur significantly earlier or later
than expected.
The extent to which prepayments on the Mortgage Loans in any Trust Fund
ultimately affect the average life of any class of Certificates of the related
series will depend on the terms of such Certificates. A class of Certificates,
including a class of Offered Certificates, may provide that on any Distribution
Date the holders of such Certificates are entitled to a pro rata share of the
prepayments (including prepayments occasioned by defaults) on the Mortgage Loans
in the related Trust Fund that are distributable on such date, to a
disproportionately large share (which, in some cases, may be all) of such
prepayments, or to a disproportionately small share (which, in some cases, may
be none) of such prepayments. A class of Certificates that entitles the holders
thereof to a disproportionately large share of prepayments enhances the risk of
early retirement of such class ("call risk") if the rate of prepayment is faster
than anticipated; while a class of Certificates that entitles the holders
thereof to a disproportionately small share of prepayments enhances the risk of
an extended average life of such class ("extension risk") if the rate of
prepayment is slower than anticipated. As and to the extent described in the
related Prospectus Supplement, the respective entitlements of the various
classes of Certificateholders of any series to receive payments (and, in
particular, prepayments) of principal of the Mortgage Loans in the related Trust
Fund may vary based on the occurrence of certain events (e.g., the retirement of
one or more classes of Certificates of such series) or subject to certain
contingencies (e.g., prepayment and default rates with respect to such Mortgage
Loans).
A series of Certificates may include one or more Controlled Amortization
Classes that will be entitled to receive principal distributions according to a
specified principal payment schedule. Although prepayment risk cannot be
eliminated entirely for any class of Certificates, it can be reduced
substantially in the case of a Controlled Amortization Class so long as the
actual rate of prepayments on the Mortgage Loans in the related Trust Fund
remains relatively constant at the rate, or within the range of rates, of
prepayment used to establish the specific principal payment schedule for such
Certificates. However, the reduction of prepayment risk afforded to a Controlled
Amortization Class comes at the expense of one or more Companion Classes of the
same series, any of which Companion Classes may also be a class of Offered
Certificates. In general, and as more specifically described in the related
Prospectus Supplement, a Companion Class will entitle the holders thereof to a
disproportionately large share of prepayments on the Mortgage Loans in the
related Trust Fund when the rate of prepayment is relatively fast, and to a
disproportionately small share of those prepayments when the rate of prepayment
is relatively slow, and thus absorbs some (but not all) of the "call risk"
and/or "extension risk" that would otherwise affect the related Controlled
Amortization Class if all payments of principal of the Mortgage Loans were
allocated on a pro rata basis.
A series of Certificates may also include one or more classes of Offered
Certificates offered at a premium or discount. Yields on such classes of
Certificates will be sensitive, and in some cases extremely sensitive, to
prepayments on the Mortgage Loans in the related Trust Fund and, where the
amount of interest payable with respect to a class is disproportionately large,
as compared to the amount of principal, as with certain classes of Stripped
Interest Certificates, a holder might fail to recoup its original investment
under some prepayment scenarios. An investor should consider, in the case of any
Offered Certificate purchased at a discount, the risk that a slower than
anticipated rate of principal payments on the Mortgage Loans could result in an
actual yield to such investor that is lower than the anticipated yield and, in
the case of any Offered Certificate purchased at a premium, 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. See "Yield and
Maturity Considerations" herein and, if applicable, in the related Prospectus
Supplement.
LIMITED NATURE OF RATINGS
Any rating assigned by a Rating Agency to a class of Offered Certificates
will reflect only its assessment of the likelihood that holders of Certificates
of such class will receive payments to which such Certificateholders are
entitled
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under the related Pooling Agreement. Such rating will not constitute an
assessment of the likelihood that principal prepayments (including those caused
by defaults) 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 related Trust Fund. Such rating
will not address the possibility that prepayments on the related Mortgage Loans
at a higher or lower rate than anticipated by an investor may cause such
investor to experience a lower than anticipated yield or that an investor that
purchases an Offered Certificate at a significant premium might fail to recoup
its initial investment under certain prepayment scenarios.
The amount, type and nature of Credit Support, if any, provided 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. Those criteria are sometimes based upon an actuarial analysis of the
behavior of mortgage loans in a larger group. However, there can be no assurance
that the historical data supporting any such actuarial analysis will accurately
reflect future experience, or that the data derived from a large pool of
mortgage loans will accurately predict the delinquency, foreclosure or loss
experience of any particular pool of Mortgage Loans. In other cases, such
criteria may be based upon determinations of the values of the Mortgaged
Properties that provide security for the Mortgage Loans. However, no assurance
can be given that those values will not decline in the future. See "Description
of Credit Support" and "Rating".
RISKS ASSOCIATED WITH MORTGAGE LOANS AND MORTGAGED PROPERTIES
Mortgage loans made on the security of 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 loans made on the
security of single-family property. See "Description of the Trust
Funds--Mortgage Loans-Leases". The ability of a borrower to repay a loan secured
by an income-producing property typically is dependent primarily upon the
successful operation of such property rather than upon the existence of
independent income or assets of the borrower; thus, the value of an income
producing property is directly related to the net operating income derived from
such property. If the net operating income of the property is reduced (for
example, if rental or occupancy rates decline or real estate tax rates or other
operating expenses increase), the borrower's ability to repay the loan may be
impaired. 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 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, acts of
God; and other factors beyond the control of a Master Servicer.
In addition, additional risk may be presented by the type and use of a
particular Mortgaged Property. For instance, Mortgaged Properties that operate
as hospitals and nursing homes may present special risks to lenders due to the
significant governmental regulation of the ownership, operation, maintenance and
financing of health care institutions. In particular, required licenses for
hospitals and nursing homes are generally nontransferable; thus it may be
impossible for a person acquiring such a property through foreclosure to operate
the property as a hospital or a nursing home. Hotel and motel properties are
often operated pursuant to franchise, management or operating agreements which
may be terminable by the franchiser or operator. Termination of such agreements
may be available to the franchiser or operator under a variety of circumstances,
including foreclosure. 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.
It is anticipated that some or all 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 those Mortgage Loans, recourse in the event
of borrower default will be limited to the specific real property and other
assets, if any, that were pledged to secure the Mortgage Loan. However, even
with respect to those Mortgage Loans that provide for recourse against the
borrower and its assets generally, there can be no assurance that enforcement of
such recourse provisions will be practicable, or that the assets of the borrower
will be sufficient to permit a recovery in respect of a defaulted Mortgage Loan
in excess of the liquidation value of the related Mortgaged Property.
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Further, the concentration of default, foreclosure and loss risks in
individual Mortgage Loans in a particular Trust Fund will generally be greater
than for pools of single-family loans because Mortgage Loans in a Trust Fund
will generally consist of a smaller number of higher balance loans than would a
pool of single-family loans of comparable aggregate unpaid principal balance.
RISKS ASSOCIATED WITH CERTAIN MORTGAGE LOANS AND RELATED LEASES
If so described in the related Prospectus Supplement, the borrower under a
Mortgage Loan may be an entity created by the owner or purchaser of the related
Mortgaged Property solely to own or purchase such property, in part to isolate
the property from the debts and liabilities of such owner or purchaser. Unless
otherwise specified, each such Mortgage Loan will represent a nonrecourse
obligation of the related borrower secured by the lien of the related Mortgage
and the related Lease Assignments. In the case of Commercial Properties, the
value of a property that is not itself an operating business generally will be
derived from rental payments under Leases of all or portions of the property.
Whether or not such loans are recourse or nonrecourse obligations, it is not
expected that the borrowers of Mortgage Loans secured by Commercial Properties
will have any significant assets other than the Commercial Properties and any
related Leases, which will be pledged to the Trustee under the related Pooling
Agreement. Therefore, the payment of amounts due on any such Mortgage Loans,
and, consequently, the payment of principal of and interest on the related
Certificates, will depend primarily or solely on rental payments by the Lessees.
Such rental payments will, in turn, depend on continued occupancy by, and/or the
creditworthiness of, such Lessees, which in either case may be adversely
affected by a general economic downturn or an adverse change in their financial
condition. Moreover, to the extent a Commercial Property was designed for the
needs of a specific type of tenant (e.g., a nursing home, hotel or motel), the
value of such property in the event of a default by the Lessee or the early
termination of such Lease may be adversely affected because of difficulty in
re-leasing the property to a suitable substitute lessee or, if re-leasing to
such a substitute is not possible, because of the cost of altering the property
for another more marketable use. As a result, without the benefit of the
Lessee's continued support of the Commercial Property, and absent significant
amortization of the Mortgage Loan, if such loan is foreclosed on and the
Commercial Property liquidated following a Lease default, the net proceeds might
be insufficient to cover the outstanding principal and interest owing on such
Mortgage Loan, thereby increasing the risk that holders of the Certificates will
suffer some loss.
The performance of a Mortgage Loan secured by an income-producing property
leased (pursuant to general commercial-type leases rather than credit- or
bond-type leases) by the Mortgagor to Lessees as well as the liquidation value
of such property may be dependent upon the business operated by such Lessees in
connection with such property, the creditworthiness of such Lessees or both; the
risks associated with such loans may be offset by the number of Lessees or, if
applicable, a diversity of types of business operated by such Lessees.
BALLOON PAYMENTS; BORROWER DEFAULT
Certain of the Mortgage Loans included in a Trust Fund may not be fully
amortizing (or may not amortize at all) over their terms to maturity and, thus,
will require substantial principal payments (that is, balloon payments) at their
stated maturity. Mortgage Loans of this type involve a greater degree of risk
than self-amortizing loans because the ability of a borrower to make a balloon
payment typically will depend upon its ability either to fully refinance the
loan or to sell the related 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,
including the value of the related Mortgaged Property, the level of available
mortgage rates at the time of sale or refinancing, the borrower's equity in the
related Mortgaged Property, the financial condition and operating history of the
borrower and the related Mortgaged Property, tax laws, rent control laws (with
respect to certain residential properties), Medicaid and Medicare reimbursement
rates (with respect to hospitals and nursing homes), prevailing general economic
conditions and the availability of credit for loans secured by commercial or
multifamily, as the case may be, real properties generally. In addition, a
Master Servicer or a Special Servicer may receive a workout fee based on
receipts from or proceeds of such Mortgage Loans.
If and to the extent specified in the related Prospectus Supplement, in
order to maximize recoveries on defaulted Mortgage Loans, the Master Servicer or
a Special Servicer will be permitted (within prescribed limits) to extend and
modify Mortgage Loans that are in default or as to which a payment default is
imminent. While a Master Servicer generally will be required to determine that
any such extension or modification is reasonably likely to produce a
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greater recovery on a present value basis than liquidation, there can be no
assurance that any such extension or modification will in fact increase the
present value of receipts from or proceeds of the affected Mortgage Loans.
JUNIOR MORTGAGE LOANS
To the extent specified in the related Prospectus Supplement, certain of
the Mortgage Loans may be secured primarily by junior mortgages. In the case of
liquidation, Mortgage Loans secured by junior mortgages are entitled to
satisfaction from proceeds that remain from the sale of the related Mortgaged
Property after the mortgage loans senior to such Mortgage Loans have been
satisfied. If there are not sufficient funds to satisfy such junior Mortgage
Loans and senior mortgage loans, the junior Mortgage Loans would suffer a loss
and, accordingly, one or more classes of Certificates would bear such loss.
Therefore, any risks of deficiencies associated with first Mortgage Loans will
be greater with respect to junior Mortgage Loans. See "--Risks Associated with
Mortgage Loans and Mortgaged Properties".
CREDIT SUPPORT LIMITATIONS
The Prospectus Supplement for the Offered Certificates of each series will
describe any Credit Support provided with respect thereto. Use of Credit Support
will be subject to the conditions and limitations described herein and in the
related Prospectus Supplement. Moreover, such Credit Support may not cover all
potential losses or risks; for example, Credit Support may or may not cover
fraud or negligence by a mortgage loan originator or other parties.
A series of Certificates may include one or more classes of Subordinate
Certificates (which may include 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 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
Support may be exhausted before the principal of the lower priority classes of
Certificates of such series has been fully repaid. As a result, the impact of
losses and shortfalls experienced with respect to the Mortgage Assets may fall
primarily upon those classes of Certificates having a lower priority of payment.
Moreover, if a form of Credit Support covers more than one series of
Certificates, holders of Certificates of one series will be subject to the risk
that such Credit Support will be exhausted by the claims of the holders of
Certificates of one or more other series.
The amount of any applicable Credit Support supporting one or more classes
of Offered Certificates, including the subordination of one or more classes of
Certificates, will be determined on the basis of criteria established by each
Rating Agency rating such classes of Certificates based on an assumed level of
defaults, delinquencies and losses on the underlying Mortgage Assets and other
factors. There can, however, be no assurance that the loss experience on the
related Mortgage Assets will not exceed such assumed levels. See "--Limited
Nature of Ratings", "Description of the Certificates" and "Description of Credit
Support".
Regardless of the form of credit enhancement provided, the amount of
coverage will be limited in amount and in most cases will be subject to periodic
reduction in accordance with a schedule or formula. The Master Servicer will
generally be permitted to reduce, terminate or substitute all or a portion of
the credit enhancement for any series of Certificates if the applicable Rating
Agency indicates that the then-current rating thereof will not be adversely
affected. The rating of any series of Certificates by any applicable Rating
Agency may be lowered following the initial issuance thereof as a result of the
downgrading of the obligations of any applicable credit support provider, or as
a result of losses on the related Mortgage Assets substantially in excess of the
levels contemplated by such Rating Agency at the time of its initial rating
analysis. None of the Depositor, the Master Servicer or any of their affiliates
will have any obligation to replace or supplement any credit enhancement, or to
take any other action to maintain any rating of any series of Certificates.
ENFORCEABILITY
Mortgages may contain a due-on-sale clause, which permits the lender to
accelerate the maturity of the Mortgage Loan if the borrower sells, transfers or
conveys the related Mortgaged Property or its interest in the Mortgaged
Property. Mortgages may also include a debt-acceleration clause, which permits
the lender to accelerate
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the debt upon a monetary or non-monetary default of the borrower. Such clauses
are not always enforceable. 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.
LEASES AND RENTS
The Mortgage Loans included in any Trust Fund typically will be secured by
an assignment of leases and rents pursuant to which the borrower assigns to the
lender its right, title and interest as landlord under the leases of the related
Mortgaged Property, and the income derived therefrom, as further security for
the related Mortgage Loan, while retaining a license to collect rents for so
long as there is no default. If the borrower defaults, the license terminates
and the lender is entitled to collect rents. Some state laws may require that
the lender 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 borrower, the lender's ability to collect the rents may be adversely
affected. See "Certain Legal Aspects of Mortgage Loans and Leases--Leases and
Rents".
ENVIRONMENTAL RISKS
Under the laws of certain states, contamination of real 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 an existing mortgage lien on 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 lender may be liable, as an "owner" or "operator", for costs of
addressing releases or threatened releases of hazardous substances at a
property, if agents or employees of the lender have become sufficiently involved
in the operations of the borrower, regardless of whether or not the
environmental damage or threat was caused by the borrower or a prior owner. A
lender also risks such liability on foreclosure of the mortgage. In addition,
liabilities imposed upon a borrower by CERCLA or other environmental laws may
adversely affect a borrower's ability to repay a loan. See "Certain Legal
Aspects of Mortgage Loans and Leases--Environmental Considerations". If a Trust
Fund includes Mortgage Loans and the related Prospectus Supplement does not
otherwise specify, the related Pooling Agreement will contain provisions
generally to the effect that the Master Servicer, acting on behalf of the Trust
Fund, may not acquire title to a Mortgaged Property or assume control of its
operation unless the Master Servicer, based upon a report prepared by a person
who regularly conducts environmental audits, has made the determination that it
is appropriate to do so, as described under "Description of the Pooling
Agreements--Realization Upon Defaulted Mortgage Loans". These provisions are
designed to reduce substantially the risk of liability for costs associated with
remediation of a hazardous environmental condition, but there can be no
assurance in a given case that those risks can be eliminated entirely. Moreover,
it is likely that any recourse against the person preparing the environmental
report, and such person's ability to satisfy a judgment, will be limited.
ERISA CONSIDERATIONS
Generally, ERISA applies 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 investors that are subject to
ERISA are urged to consult their own counsel regarding consequences under ERISA
of acquisition, ownership and disposition of the Offered Certificates of any
series. See "ERISA Considerations".
CERTAIN FEDERAL TAX CONSIDERATIONS REGARDING REMIC RESIDUAL CERTIFICATES
Holders of REMIC 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 under "Certain Federal Income Tax
Consequences--REMICs". Accordingly, under certain circumstances, holders of
Offered Certificates that constitute REMIC 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 REMIC 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 REMIC Residual Certificates have received full
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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 REMIC Residual Certificates may be limited in their
ability to deduct servicing fees and other expenses of the REMIC. In addition,
REMIC Residual Certificates are subject to certain restrictions on transfer.
Because of the special tax treatment of REMIC Residual Certificates, the taxable
income arising in a given year on a REMIC 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 a REMIC Residual Certificate may be
significantly less than that of a corporate bond or stripped instrument having
similar cash flow characteristics.
BOOK-ENTRY REGISTRATION
If so provided in the related Prospectus Supplement, one or more classes
of the Offered Certificates of any series will be issued as Book-Entry
Certificates. Each class of Book-Entry Certificates will be initially
represented by one or more Certificates registered in the name of a nominee for
DTC. As a result, unless and until corresponding Definitive Certificates are
issued, the Certificate Owners with respect to any class of Book-Entry
Certificates will be able to exercise the rights of Certificateholders only
indirectly through DTC and its participating organizations ("Participants"). In
addition, the access of Certificate Owners to information regarding the
Book-Entry Certificates in which they hold interests may be limited. The means
by which notices and other communications are conveyed by DTC to its
Participants, and directly and indirectly through such Participants to
Certificate Owners, will be governed by arrangements among them, subject to any
statutory or regulatory requirements as may be in effect from time to time.
Furthermore, as described herein, Certificate Owners may experience delays in
the receipt of payments on the Book-Entry Certificates, and the ability of any
Certificate Owner to pledge or otherwise take actions with respect to its
interest in the Book-Entry Certificates may be limited due to the lack of a
physical certificate evidencing such interest. See "Description of the
Certificates--Book-Entry Registration and Definitive Certificates".
DELINQUENT AND NON-PERFORMING 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 past due
or are non-performing as of the date they are deposited in 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 Support provided with
respect to a particular series of Certificates may not cover all losses related
to such delinquent or nonperforming 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 the Mortgage Loans
in the Trust Fund and the yield on the Offered Certificates of such series. See
"Description of the Trust Funds--Mortgage Loans-Leases--General".
DESCRIPTION OF THE TRUST FUNDS
GENERAL
The primary assets of each Trust Fund will consist of (i) multifamily and
or commercial mortgage loans (the "Mortgage Loans"), (ii) mortgage
participations, pass-through certificates or other mortgage-backed securities
("CMBS") that evidence interests in, or that are secured by pledges of, one or
more of various types of multifamily or commercial mortgage loans, or (iii) a
combination of Mortgage Loans and CMBS (collectively, "Mortgage Assets"). Each
Trust Fund will be established by First Union Commercial Mortgage Securities,
Inc. (the "Depositor"). Each Mortgage Asset will be selected by the Depositor
for inclusion in a Trust Fund from among those purchased, either directly or
indirectly, from a prior holder thereof (a "Mortgage Asset Seller"), which prior
holder may or may not be the originator of such Mortgage Loan or the issuer of
such CMBS and may be an affiliate of the Depositor. The Mortgage Assets will not
be guaranteed or insured by the Depositor or any of its affiliates or, unless
otherwise provided in the related Prospectus Supplement, by any governmental
agency or instrumentality or by any other person. The discussion below under the
heading "--Mortgage Loans", unless otherwise noted, applies equally to mortgage
loans underlying any CMBS included in a particular Trust Fund.
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MORTGAGE LOANS-LEASES
General. The Mortgage Loans will be evidenced by promissory notes (the
"Mortgage Notes") secured by mortgages, deeds of trust or similar security
instruments ("mortgages") that create first or junior liens on, or installment
contracts for the sale of, fee simple or leasehold interests in properties (the
"Mortgaged Properties") consisting of (i) residential properties consisting of
five or more rental or cooperatively owned dwelling units in high-rise, mid-rise
or garden apartment buildings or other residential structures ("Multifamily
Properties") or (ii) office buildings, retail stores, hotels or motels, nursing
homes, hospitals or other health care-related facilities, mobile home parks,
warehouse facilities, mini-warehouse facilities, self-storage facilities,
industrial plants, mixed use or other types of income-producing properties or
unimproved land ("Commercial Properties"). The Multifamily Properties may
include mixed commercial and residential structures and may include apartment
buildings owned by private cooperative housing corporations ("Cooperatives").
Unless otherwise specified in the related Prospectus Supplement, each Mortgage
will create a first priority mortgage lien on a Mortgaged Property. A Mortgage
may create a lien on a borrower's leasehold estate in a property; however,
unless otherwise specified in the related Prospectus Supplement, the term of any
such leasehold will exceed the term of the Mortgage Note by at least two years.
Each Mortgage Loan will have been originated by a person (the "Originator")
other than the Depositor.
If so specified in the related Prospectus Supplement, Mortgage Assets for
a series of Certificates may include Mortgage Loans made on the security of real
estate projects under construction. In that case, the related Prospectus
Supplement will describe the procedures and timing for making disbursements from
construction reserve funds as portions of the related real estate project are
completed. In addition, the Mortgage Assets for a particular series of
Certificates may include Mortgage Loans that are delinquent or non-performing as
of the date such Certificates are issued. In that case, the related Prospectus
Supplement will set forth, as to each such Mortgage Loan, available information
as to the period of such delinquency or non-performance, any forbearance
arrangement then in effect, the condition of the related Mortgaged Property and
the ability of the Mortgaged Property to generate income to service the mortgage
debt.
Leases. To the extent specified in the related Prospectus Supplement, the
Commercial Properties may be leased to Lessees that respectively occupy all or a
portion of such properties. Pursuant to a Lease Assignment, the related borrower
may assign its right, title and interest as lessor 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 borrower defaults,
the license terminates and the mortgagee or its agent is entitled to collect the
rents from the related Lessee or Lessees for application to the monetary
obligations of the borrower. State law may limit or restrict the enforcement of
the Lease Assignments by a mortgagee until it takes possession of the related
Mortgaged Property and/or a receiver is appointed. See "Certain Legal Aspects of
the Mortgage Loans and Leases--Leases and Rents." Alternatively, to the extent
specified in the related Prospectus Supplement, the borrower and the mortgagee
may agree that payments under Leases are to be made directly to the Master
Servicer or the Special Servicer.
To the extent described in the related Prospectus Supplement, the Leases,
which may include "bond-type" or "credit-type" leases, may require the Lessees
to pay rent that is sufficient in the aggregate to cover all scheduled payments
of principal and interest on the related Mortgage Loans and, in certain cases,
their pro rata share of the operating expenses, insurance premiums and real
estate taxes associated with the Mortgaged Properties. A "bond-type" lease is a
lease between a lessor and a lessee for a specified period of time with
specified rent payments that are at least sufficient to repay the related
note(s). A bond-type lease requires the lessee to perform all obligations
related to the leased premises; also, no matter what occurs with regard to the
leased premises, the lessee is obligated to continue to pay its rent. A
"credit-type" lease is a lease between a lessor and a lessee for a specified
period of time with specified rent payments at least sufficient to repay the
related note(s). A credit-type lease requires the lessee to perform most of the
obligations related to the leased premises, excluding only a few landlord duties
which remain the responsibility of the borrower/lessor. Certain of the Leases
(including credit-type leases) may require the borrower to bear costs associated
with structural repairs and/or the maintenance of the exterior or other portions
of the Mortgaged Property or provide for certain limits on the aggregate amount
of operating expenses, insurance premiums, taxes and other expenses that the
Lessees are required to pay. If so specified in the related Prospectus
Supplement, under certain circumstances the Lessees may be permitted to set off
their rental obligations against the obligations of the borrower under the
Leases. In those cases where payments under the Leases (net of any operating
expenses payable by the borrowers) are insufficient to pay all of the scheduled
principal and interest on the related Mortgage Loans, the borrowers must rely on
other income or sources generated by the related Mortgaged Property to make
payments on
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the related Mortgage Loan. To the extent specified in the related Prospectus
Supplement, some Commercial Properties may be leased entirely to one Lessee.
This would generally be the case in bond-type leases and credit-type leases. In
such cases, absent the availability of other funds, the borrower must rely
entirely on rent paid by such Lessee in order for the borrower to pay all of the
scheduled principal and interest on the related Mortgage Loan. To the extent
specified in the related Prospectus Supplement, certain of the Leases (not
including bond-type leases) may expire prior to the stated maturity of the
related Mortgage Loan. In such cases, upon expiration of the Leases the Borrower
will have to look to alternative sources of income, including rent payment by
any new Lessees or proceeds from the sale or refinancing of the Mortgaged
Property, to cover the payments of principal and interest due on such Mortgage
Loans unless the Lease is renewed. As specified in the related Prospectus
Supplement, certain of the Leases may provide that upon the occurrence of a
casualty affecting a Mortgaged Property, the Lessee will have the right to
terminate its Lease, unless the borrower, as lessor, is able to cause the
Mortgaged Property to be restored within a specified period of time. Certain
Leases may provide that it is the lessor's responsibility, while other Leases
provide that it is the Lessee's responsibility, to restore the Mortgaged
Property after a casualty to its original condition. Certain Leases may provide
a right of termination to the related Lessee if a taking of a material or
specified percentage of the leased space in the Mortgage Property occurs, or if
the ingress or egress to the leased space has been materially impaired.
Default and Loss Considerations with Respect to the Mortgage Loans.
Mortgage loans secured by liens on income-producing properties are substantially
different from loans made on the security of owner-occupied single-family homes.
The repayment of a loan secured by a lien on an income producing property is
typically dependent upon the successful operation of such property (that is, its
ability to generate income). Moreover, some or all of the Mortgage Loans
included in a particular Trust Fund may be non-recourse loans, which means that,
absent special facts, recourse in the case of default will be limited to the
Mortgaged Property and such other assets, if any, that were pledged to secure
repayment of the Mortgage Loan.
Lenders typically look to the Debt Service Coverage Ratio of a loan
secured by income-producing property as an important measure of the risk of
default on such a loan. Unless otherwise defined in the related Prospectus
Supplement, the "Debt Service Coverage Ratio" of a Mortgage Loan at any given
time is the ratio of (i) the Net Operating Income of the related Mortgaged
Property for a twelve-month period to (ii) the annualized scheduled payments on
the Mortgage Loan and on any other loan that is secured by a lien on the
Mortgaged Property prior to the lien of the related Mortgage. Unless otherwise
defined in the related Prospectus Supplement, "Net Operating Income" means, for
any given period, the total operating revenues derived from a Mortgaged Property
during such period, minus the total operating expenses incurred in respect of
such Mortgaged Property during such period other than (i) non-cash items such as
depreciation and amortization, (ii) capital expenditures and (iii) debt service
on loans (including the related Mortgage Loan) secured by liens on the Mortgaged
Property. The Net Operating Income of a Mortgaged Property will fluctuate over
time and may or may not be sufficient to cover debt service on the related
Mortgage Loan at any given time. An insufficiency of Net Operating Income can be
compounded or solely caused by an ARM Loan, a Mortgage Loan that carries an
adjustable Mortgage Rate. As the primary source of the operating revenues of a
non-owner occupied income-producing property, rental income (and maintenance
payments from tenant-stockholders of a Cooperative) may be affected by the
condition of the applicable real estate market and/or area economy. In addition,
properties typically leased, occupied or used on a short-term basis, such as
certain health care-related facilities, hotels and motels, and miniwarehouse and
self-storage facilities, tend to be affected more rapidly by changes in market
or business conditions than do properties typically leased for longer periods,
such as warehouses, retail stores, office buildings and industrial plants.
Commercial Properties may be owner-occupied or leased to a single tenant. Thus,
the Net Operating Income of such a Mortgaged Property may depend substantially
on the financial condition of the borrower or the single tenant, and Mortgage
Loans secured by liens on such properties may pose greater risks than loans
secured by liens on Multifamily Properties or on multitenant Commercial
Properties.
Increases in operating expenses due to the general economic climate or
economic conditions in a locality or industry segment, such as increases in
interest rates, real estate tax rates, energy costs, labor costs and other
operating expenses, and/or changes in governmental rules, regulations and fiscal
policies may also affect the risk of default on a Mortgage Loan. As may be
further described in the related Prospectus Supplement, in some cases leases of
Mortgaged Properties may provide that the Lessee, rather than the
borrower/landlord, is responsible for payment of operating expenses. However,
the existence of such "net of expense" provisions will result in stable Net
Operating
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Income to the borrower/landlord only to the extent that the Lessee is able to
absorb operating expense increases while continuing to make rent payments. See
"--Leases" above.
While the duration of leases and the existence of any "net of expense"
provisions are often viewed as the primary considerations in evaluating the
credit risk of mortgage loans secured by certain income-producing properties,
such risk may be affected equally or to a greater extent by changes in
government regulation of the operator of the property. Examples of the latter
include mortgage loans secured by health care-related facilities, the income
from which and the operating expenses of which are subject to state and/or
federal regulations, such as Medicare and Medicaid, and multifamily properties
and mobile home parks, which may be subject to state or local rent control
regulation and, in certain cases, restrictions on changes in use of the
property. Low- and moderate-income housing in particular may be subject to legal
limitations and regulations but, because of such regulations, may also be less
sensitive to fluctuations in market rents generally.
Lenders also look to the Loan-to-Value Ratio of a mortgage loan as a
measure of risk of loss if a property must be liquidated following a default.
Unless otherwise defined in the related Prospectus Supplement, the
"Loan-to-Value Ratio" of a Mortgage Loan at any given time is the ratio
(expressed as a percentage) of (i) the then outstanding principal balance of the
Mortgage Loan and the outstanding principal balance of any loan secured by a
lien on the related Mortgaged Property prior to the lien of the related
Mortgage, to (ii) the Value of such Mortgaged Property. The "Value" of a
Mortgaged Property, is generally its fair market value determined in an
appraisal obtained by the originator at the origination of such loan. The lower
the Loan-to-Value Ratio, the greater the percentage of the borrower's equity in
a Mortgaged Property, and thus the greater the cushion provided to the lender
against loss on liquidation following a default.
Loan-to-Value Ratios will not necessarily constitute an accurate measure
of the risk of liquidation loss in a pool of Mortgage Loans. For example, the
value of a Mortgaged Property as of the date of initial issuance of the related
series of Certificates may be less than the Value determined at loan
origination, and will likely continue to fluctuate from time to time based upon
changes in economic conditions and the real estate market. Moreover, even when
current, an appraisal is not necessarily a reliable estimate of value. Appraised
values of income-producing properties are generally based on the market
comparison method (recent resale value of comparable properties at the date of
the appraisal), the cost replacement method (the cost of replacing the property
at such date), the income capitalization method (a projection of value based
upon the property's projected net cash flow), or upon a selection from or
interpolation of the values derived from such methods. Each of these appraisal
methods can present analytical difficulties. It is often difficult to find truly
comparable properties that have recently been sold; the replacement cost of a
property may have little to do with its current market value; and income
capitalization is inherently based on inexact projections of income and expense
and the selection of an appropriate capitalization rate. Where more than one of
these appraisal methods are used and provide significantly different results, an
accurate determination of value and, correspondingly, a reliable analysis of
default and loss risks, is even more difficult.
While the Depositor believes that the foregoing considerations are
important factors that generally distinguish loans secured by liens on
income-producing real estate from single-family mortgage loans, there is no
assurance that all of such factors will in fact have been prudently considered
by the Originators of the Mortgage Loans, or that, for a particular Mortgage
Loan, they are complete or relevant. See "Risk Factors--Risks Associated with
Mortgage Loans and Mortgaged Properties" and "--Balloon Payments; Borrower
Default".
Payment Provisions of the Mortgage Loans. Unless otherwise specified in
the related Prospectus Supplement, all of the Mortgage Loans will have had
original terms to maturity of not more than 40 years and will provide for
scheduled payments of principal, interest or both, to be made on specified dates
that occur monthly or quarterly or at such other interval as is specified in the
Prospectus Supplement. A Mortgage Loan (i) may provide for no accrual of
interest or for accrual of interest thereon at an interest rate (a "Mortgage
Rate") that is fixed over its term or that adjusts from time to time, or that
may be converted at the borrower's election from an adjustable to a fixed
Mortgage Rate, or from a fixed to an adjustable Mortgage Rate, (ii) may provide
for the formula, index or other method by which the Mortgage Rate will be
calculated, (iii) may provide for level payments to maturity or for payments
that adjust from time to time to accommodate changes in the Mortgage Rate or to
reflect the occurrence of certain events, and may permit negative amortization
or accelerated amortization, (iv) may be fully amortizing over its term to
maturity, or may provide for little or no amortization over its term and thus
require a balloon payment on its stated maturity date, and (v) may contain a
prohibition on prepayment (the period of such prohibition, a "Lockout Period")
or require
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payment of a premium or a yield maintenance penalty (a "Prepayment Premium") in
connection with a prepayment, in each case as described in the related
Prospectus Supplement. A Mortgage Loan may also contain a provision that
entitles the lender to a share of profits realized from the operation or
disposition of the Mortgaged Property (an "Equity Participation"), as described
in the related Prospectus Supplement. If holders of any class or classes of
Offered Certificates of a series will be entitled to all or a portion of an
Equity Participation, the related Prospectus Supplement will describe the Equity
Participation and the method or methods by which distributions in respect
thereof will be made to such holders.
Mortgage Loan Information in Prospectus Supplements. Each Prospectus
Supplement will contain certain information pertaining to the Mortgage Loans
which will generally be current as of a date specified in the related Prospectus
Supplement and which, to the extent then applicable and specifically known to
the Depositor, will include the following: (i) the aggregate outstanding
principal balance and the largest, smallest and average outstanding principal
balance of the Mortgage Loans as of the applicable Cut-off Date, (ii) the type
or types of property that provide security for repayment of the Mortgage Loans,
(iii) the original and remaining terms to maturity of the Mortgage Loans, and
the seasoning of the Mortgage Loans, (iv) the earliest and latest origination
date and maturity date and weighted average original and remaining terms to
maturity of the Mortgage Loans, (v) the original Loan-to-Value Ratios of the
Mortgage Loans, (vi) the Mortgage Rates or range of Mortgage Rates and the
weighted average Mortgage Rate carried by the Mortgage Loans, (vii) the
geographic distribution of the Mortgaged Properties on a state-by-state basis,
(viii) information with respect to the prepayment provisions, if any, of the
Mortgage Loans, (ix) with respect to Mortgage Loans with adjustable Mortgage
Rates ("ARM Loans"), the index or indices upon which such adjustments are based,
the adjustment dates, the range of gross margins and the weighted average gross
margin, and any limits on Mortgage Rate adjustments at the time of any
adjustment and over the life of the ARM Loan, (x) Debt Service Coverage Ratios
either at origination or as of a more recent date (or both) and (xi) information
regarding the payment characteristics of the Mortgage Loans, including without
limitation balloon payment and other amortization provisions. In appropriate
cases, the related Prospectus Supplement will also contain certain information
available to the Depositor that pertains to the provisions of leases and the
nature of tenants of the Mortgaged Properties. If the Depositor is unable to
tabulate the specific information described above at the time Offered
Certificates of a series are initially offered, more general information of the
nature described above will be provided in the related Prospectus Supplement,
and specific information will be set forth in a report which will be available
to purchasers of those Certificates at or before the initial issuance thereof
and will be filed as part of a Current Report on Form 8-K with the Commission
within 15 days following such issuance.
CMBS
CMBS may include (i) private (that is, not guaranteed or insured by the
United States or any agency or instrumentality thereof) mortgage participations,
mortgage pass-through certificates or other mortgage-backed securities or (ii)
certificates insured or guaranteed by FHLMC, FNMA, GNMA or FAMC, provided that
each CMBS will evidence an interest in, or will be secured by a pledge of,
mortgage loans that conform to the descriptions of the Mortgage Loans contained
herein.
Any CMBS will have been issued pursuant to a participation and servicing
agreement, a pooling and servicing agreement, an indenture or similar agreement
(a "CMBS Agreement"). The issuer (the "CMBS Issuer") of the CMBS and/or the
servicer (the "CMBS Servicer") of the underlying mortgage loans will have
entered into the CMBS Agreement, generally with a trustee (the "CMBS Trustee")
or, in the alternative, with the original purchaser or purchasers of the CMBS.
The CMBS may have been issued in one or more classes with characteristics
similar to the classes of Certificates described herein. Distributions in
respect of the CMBS will be made by the CMBS Servicer or the CMBS Trustee on the
dates specified in the related Prospectus Supplement. The CMBS Issuer or the
CMBS Servicer or another person specified in the related Prospectus Supplement
may have the right or obligation to repurchase or substitute assets underlying
the CMBS after a certain date or under other circumstances specified in the
related Prospectus Supplement.
Reserve funds, subordination or other credit support similar to that
described for the Certificates under "Description of Credit Support" may have
been provided with respect to the CMBS. The type, characteristics and amount of
such credit support, if any, will be a function of the characteristics of the
underlying mortgage loans and
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other factors and generally will have been established on the basis of the
requirements of any Rating Agency that may have assigned a rating to the CMBS,
or by the initial purchasers of the CMBS.
The Prospectus Supplement for a series of Certificates that evidence
interests in CMBS will specify, to the extent available and deemed material, (i)
the aggregate approximate initial and outstanding principal amount and type of
the CMBS to be included in the Trust Fund, (ii) the original and remaining term
to stated maturity of the CMBS, if applicable, (iii) the pass-through or bond
rate of the CMBS or the formula for determining such rates, (iv) the payment
characteristics of the CMBS, (v) the CMBS Issuer, CMBS Servicer and CMBS
Trustee, as applicable, (vi) a description of the credit support, if any, (vii)
the circumstances under which the related underlying mortgage loans, or the CMBS
themselves, may be purchased prior to their maturity, (viii) the terms on which
mortgage loans may be substituted for those originally underlying the CMBS, (ix)
the servicing fees payable under the CMBS Agreement, (x) the type of information
in respect of the underlying mortgage loans described under "--Mortgage
Loans--Leases--Mortgage Loan Information in Prospectus Supplements" and (xi) the
characteristics of any cash flow agreements that relate to the CMBS.
CERTIFICATE ACCOUNTS
Each Trust Fund will include one or more accounts (collectively, the
"Certificate Account") established and maintained on behalf of the
Certificateholders into which the person or persons designated in the related
Prospectus Supplement will, to the extent described herein and in such
Prospectus Supplement, deposit all payments and collections received or advanced
with respect to the Mortgage Assets and other assets in the Trust Fund. A
Certificate Account may be maintained as an interest bearing or a non-interest
bearing account, and funds held therein may be held as cash or invested in
certain short-term, investment grade obligations, in each case as described in
the related Prospectus Supplement.
CREDIT SUPPORT
If so provided in the related Prospectus Supplement, partial or full
protection against certain defaults and losses on the Mortgage Assets in the
related Trust Fund may be provided to one or more classes of Certificates in the
related series in the form of subordination of one or more other classes of
Certificates in such series or by one or more other types of credit support,
such as overcollateralization, a letter of credit, insurance policy, guarantee
or reserve fund, among others, or by a combination thereof (any such coverage
with respect to the Certificates of any series, "Credit Support"). The amount
and types of Credit Support, the identity of the entity providing it (if
applicable) and related information with respect to each type of Credit Support,
if any, will be set forth in the Prospectus Supplement for the Offered
Certificates of each series. The Prospectus Supplement for any series of
Certificates evidencing an interest in a Trust Fund that includes CMBS will
describe in the same fashion any similar forms of credit support that are
provided by or with respect to, or are included as part of the trust fund
evidenced by or providing security for, such CMBS to the extent information is
available and deemed material. The type, characteristic and amount of Credit
Support will be determined based on the characteristics of the Mortgage Assets
and other factors and will be established, in part, on the basis of requirements
of each Rating Agency rating the Certificates of such series. If so specified in
the related Prospectus Supplement, any such Credit Support may apply only in the
event of certain types of losses or delinquencies and the protection against
losses or delinquencies provided by such Credit Support will be limited. See
"Risk Factors--Credit Support Limitations" and "Description of Credit Support".
CASH FLOW AGREEMENTS
If so provided in the related Prospectus Supplement, the Trust Fund may
include guaranteed investment contracts pursuant to which moneys held in the
funds and accounts established for the related series will be invested at a
specified rate. The Trust Fund may also include certain other agreements, such
as interest rate exchange agreements, interest rate cap or floor agreements,
currency exchange agreements or similar agreements designed to reduce the
effects of interest rate or currency exchange rate fluctuations on the Mortgage
Assets on one or more classes of Certificates. The principal terms of any such
guaranteed investment contract or other agreement (any such agreement, a "Cash
Flow Agreement"), and the identity of the Cash Flow Agreement obligor, will be
described in the related Prospectus Supplement. The Prospectus Supplement for
any series of Certificates evidencing an interest in a Trust Fund that includes
CMBS will describe in the same fashion any cash flow agreements that are
included as part of the trust fund evidenced by or providing security for such
CMBS to the extent information is available and deemed material.
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YIELD AND MATURITY CONSIDERATIONS
GENERAL
The yield on any Offered Certificate will depend on the price paid by the
Certificateholder, the Pass-Through Rate of the Certificate and the amount and
timing of distributions on the Certificate. See "Risk Factors--Prepayments;
Average Life of Certificates; Yields". The following discussion contemplates a
Trust Fund that consists solely of Mortgage Loans. While the characteristics and
behavior of mortgage loans underlying CMBS can generally be expected to have the
same effect on the yield to maturity and/or weighted average life of a Class of
Certificates as will the characteristics and behavior of comparable Mortgage
Loans, the effect may differ due to the payment characteristics of the CMBS. If
a Trust Fund includes CMBS, the related Prospectus Supplement will discuss the
effect that the CMBS payment characteristics may have on the yield to maturity
and weighted average lives of the Offered Certificates offered thereby.
PASS-THROUGH RATE
The Certificates of any class within a series may have a fixed, variable
or adjustable Pass-Through Rate, which may or may not be based upon the interest
rates borne by the Mortgage Loans in the related Trust Fund. The Prospectus
Supplement with respect to the Offered Certificates of any series will specify
the Pass-Through Rate for each class of such Certificates or, in the case of a
class of Offered Certificates with a variable or adjustable Pass-Through Rate,
the method of determining the Pass-Through Rate; the effect, if any, of the
prepayment of any Mortgage Loan on the Pass-Through Rate of one or more classes
of Offered Certificates; and whether the distributions of interest on the
Offered Certificates of any class will be dependent, in whole or in part, on the
performance of any obligor under a Cash Flow Agreement.
PAYMENT DELAYS
With respect to any series of Certificates, a period of time will elapse
between the date upon which payments on the Mortgage Loans in the related Trust
Fund are due and the Distribution Date on which such payments are passed through
to Certificateholders. That delay will effectively reduce the yield that would
otherwise be produced if payments on such Mortgage Loans were distributed to
Certificateholders on or near the date they were due.
CERTAIN SHORTFALLS IN COLLECTIONS OF INTEREST
When a principal prepayment in full or in part is made on a Mortgage Loan,
the borrower is generally charged interest only for the period from the Due Date
of the preceding scheduled payment up to the date of such prepayment, instead of
for the full accrual period, that is, the period from the Due Date of the
preceding scheduled payment up to the Due Date for the next scheduled payment.
However, interest accrued on any series of Certificates and distributable
thereon on any Distribution Date will generally correspond to interest accrued
on the principal balance of Mortgage Loans for their respective full accrual
periods. Consequently, if a prepayment on any Mortgage Loan is distributable to
Certificateholders on a particular Distribution Date, but such prepayment is not
accompanied by interest thereon for the full accrual period, the interest
charged to the borrower (net of servicing and administrative fees) may be less
(such shortfall, a "Prepayment Interest Shortfall") than the corresponding
amount of interest accrued and otherwise payable on the Certificates of the
related series. If and to the extent that any such shortfall is allocated to a
class of Offered Certificates, the yield thereon will be adversely affected. The
Prospectus Supplement for a series of Certificates will describe the manner in
which any such shortfalls will be allocated among the classes of such
Certificates. If so specified in the related Prospectus Supplement, the Master
Servicer will be required to apply some or all of its servicing compensation for
the corresponding period to offset the amount of any such shortfalls. The
related Prospectus Supplement will also describe any other amounts available to
offset such shortfalls. See "Description of the Pooling Agreements--Servicing
Compensation and Payment of Expenses".
YIELD AND PREPAYMENT CONSIDERATIONS
A Certificate's yield to maturity will be affected by the rate of
principal payments on the Mortgage Loans in the related Trust Fund and the
allocation thereof to reduce the principal balance (or Notional Amount, if
applicable) of such Certificate. The rate of principal payments on the Mortgage
Loans will in turn be affected by the amortization
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schedules thereof (which, in the case of ARM Loans, will change periodically to
accommodate adjustments to their Mortgage Rates), the dates on which any balloon
payments are due, and the rate of principal prepayments thereon (including for
this purpose, prepayments resulting from liquidations of Mortgage Loans due to
defaults, casualties or condemnations affecting the Mortgaged Properties, or
purchases of Mortgage Loans out of the Trust Fund). Because the rate of
principal prepayments on the Mortgage Loans in any Trust Fund will depend on
future events and a variety of factors (as discussed more fully below), it is
impossible to predict with assurance.
The extent to which the yield to maturity of a class of Offered
Certificates of any series 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 in the related Trust
Fund are in turn distributed on such Certificates (or, in the case of a class of
Stripped Interest Certificates, result in the reduction of the Notional Amount
thereof). Further, an investor should consider, in the case of any Offered
Certificate purchased at a discount, the risk that a slower than anticipated
rate of principal payments on the Mortgage Loans in the related Trust Fund could
result in an actual yield to such investor that is lower than the anticipated
yield and, in the case of any Offered Certificate purchased at a premium, 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 prepayment of principal on the Mortgage Loans is
distributed on an Offered Certificate purchased at a discount or premium (or, if
applicable, is allocated in reduction of the Notional Amount thereof), the
greater will be the effect on the investor's yield to maturity. As a result, the
effect on such investor's yield of principal payments (to the extent
distributable in reduction of the principal balance or Notional Amount of such
investor's Offered Certificates) 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 principal
payments.
A class of Certificates, including a class of Offered Certificates, may
provide that on any Distribution Date the holders of such Certificates are
entitled to a pro rata share of the prepayments (including prepayments
occasioned by defaults) on the Mortgage Loans in the related Trust Fund that are
distributable on such date, to a disproportionately large share (which, in some
cases, may be all) of such prepayments, or to a disproportionately small share
(which, in some cases, may be none) of such prepayments. As and to the extent
described in the related Prospectus Supplement, the respective entitlements of
the various classes of Certificateholders of any series to receive payments
(and, in particular, prepayments) of principal of the Mortgage Loans in the
related Trust Fund may vary based on the occurrence of certain events (e.g., the
retirement of one or more classes of Certificates of such series) or subject to
certain contingencies (e.g., prepayment and default rates with respect to such
Mortgage Loans).
In general, the Notional Amount of a class of Stripped Interest
Certificates will either (i) be based on the principal balances of some or all
of the Mortgage Assets in the related Trust Fund or (ii) equal the Certificate
Balances of one or more of the other classes of Certificates of the same series.
Accordingly, the yield on such Stripped Interest Certificates will be directly
related to the amortization of such Mortgage Assets or such classes of
Certificates, as the case may be. Thus, if a class of Certificates of any series
consists of Stripped Interest Certificates or Stripped Principal Certificates, a
lower than anticipated rate of principal prepayments on the Mortgage Loans in
the related Trust Fund will negatively affect the yield to investors in Stripped
Principal Certificates, and a higher than anticipated rate of principal
prepayments on such Mortgage Loans will negatively affect the yield to investors
in Stripped Interest Certificates.
The Depositor is not aware of any relevant publicly available or
authoritative statistics with respect to the historical prepayment experience of
a large group of multifamily or commercial mortgage loans. However, the extent
of prepayments of principal of the Mortgage Loans in any Trust Fund may be
affected by a number of factors, including, without limitation, the availability
of mortgage credit, the relative economic vitality of the area in which the
Mortgaged Properties are located, the quality of management of the Mortgaged
Properties, the servicing of the Mortgage Loans, possible changes in tax laws
and other opportunities for investment. In addition, the rate of principal
payments on the Mortgage Loans in any Trust Fund may be affected by the
existence of Lockout Periods and requirements that principal prepayments be
accompanied by Prepayment Premiums, and by the extent to which such provisions
may be practicably enforced.
The rate of prepayment on a pool of mortgage loans is also affected by
prevailing market interest rates for mortgage loans of a comparable type, term
and risk level. When the prevailing market interest rate is below a mortgage
coupon, a borrower may have an increased incentive to refinance its mortgage
loan. In addition, as prevailing market interest rates decline, even borrowers
with ARM Loans that have experienced a corresponding
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interest rate decline may have an increased incentive to refinance for purposes
of either (i) converting to a fixed rate loan and thereby "locking in" such rate
or (ii) taking advantage of the initial "teaser rate" (a mortgage interest rate
below what it would otherwise be if the applicable index and gross margin were
applied) on another adjustable rate mortgage loan.
Depending on prevailing market interest rates, the outlook for market
interest rates and economic conditions generally, some borrowers may sell
Mortgaged Properties in order to realize their equity therein, to meet cash flow
needs or to make other investments. In addition, some borrowers may be motivated
by federal and state tax laws (which are subject to change) to sell Mortgaged
Properties prior to the exhaustion of tax depreciation benefits. The Depositor
will make no representation as to the particular factors that will affect the
prepayment of the Mortgage Loans in any Trust Fund, as to the relative
importance of such factors, as to the percentage of the principal balance of
such Mortgage Loans that will be paid as of any date or as to the overall rate
of prepayment on such Mortgage Loans.
WEIGHTED AVERAGE LIFE AND MATURITY
The rate at which principal payments are received on the Mortgage Loans in
any Trust Fund will affect the ultimate maturity and the weighted average life
of one or more classes of the Certificates of such series. Weighted average life
refers to the average amount of time that will elapse from the date of issuance
of an instrument until each dollar of the principal amount of such instrument is
repaid to the investor.
The weighted average life and maturity of a class of Certificates of any
series will be influenced by the rate at which principal on the related Mortgage
Loans, whether in the form of scheduled amortization or prepayments (for this
purpose, the term "prepayment" includes voluntary prepayments, liquidations due
to default and purchases of Mortgage Loans out of the related Trust Fund), is
paid to such class. Prepayment rates on loans are commonly measured relative to
a prepayment standard or model, such as the Constant Prepayment Rate ("CPR")
prepayment model or the Standard Prepayment Assumption ("SPA") prepayment model.
CPR represents an assumed constant rate of prepayment each month (expressed as
an annual percentage) relative to the then outstanding principal balance of a
pool of loans for the life of such loans. SPA represents an assumed variable
rate of prepayment each month (expressed as an annual percentage) relative to
the then outstanding principal balance of a pool of loans, with different
prepayment assumptions often expressed as percentages of SPA. For example, a
prepayment assumption of 100% of SPA assumes prepayment rates of 0.2% per annum
of the then outstanding principal balance of such loans in the first month of
the life of the loans and an additional 0.2% per annum in each month thereafter
until the 30th month. Beginning in the 30th month, and in each month thereafter
during the life of the loans, 100% of SPA assumes a constant prepayment rate of
6% per annum each month.
Neither CPR nor SPA nor any other prepayment model or assumption purports
to be a historical description of prepayment experience or a prediction of the
anticipated rate of prepayment of any particular pool of loans. Moreover, the
CPR and SPA models were developed based upon historical prepayment experience
for single-family loans. Thus, it is unlikely that the prepayment experience of
the Mortgage Loans included in any Trust Fund will conform to any particular
level of CPR or SPA.
The Prospectus Supplement with respect to each series of Certificates will
contain tables, if applicable, setting forth the projected weighted average life
of each class of Offered Certificates of such series and the percentage of the
initial Certificate Balance of each such class that would be outstanding on
specified Distribution Dates based on the assumptions stated in such Prospectus
Supplement, including assumptions that prepayments on the related Mortgage Loans
are made at rates corresponding to various percentages of CPR or SPA, or at such
other rates specified in such Prospectus Supplement. Such tables and assumptions
will illustrate the sensitivity of the weighted average lives of the
Certificates to various assumed prepayment rates and will not be intended to
predict, or to provide information that will enable investors to predict, the
actual weighted average lives of the Certificates.
CONTROLLED AMORTIZATION CLASSES AND COMPANION CLASSES
A series of Certificates may include one or more Controlled Amortization
Classes that are designed to provide increased protection against prepayment
risk by transferring that risk to one or more Companion Classes. Unless
otherwise specified in the related Prospectus Supplement, each Controlled
Amortization Class will either be a Planned Amortization Class (a "PAC") or a
Targeted Amortization Class (a "TAC"). In general, distributions of principal on
a PAC are made in accordance with a specified amortization schedule so long as
prepayments on the underlying Mortgage Loans occur within a specified range of
constant prepayment rates and, as described below, so
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long as one or more Companion Classes remain to absorb excess cash flows and
make up for shortfalls. For example, if the rate of prepayments is significantly
higher than expected, the excess prepayments may retire the Companion Classes
much earlier than expected, thus leaving the PAC without further prepayment
protection. A TAC is similar to a PAC, but a TAC structure generally does not
draw on Companion Classes to make up cash flow shortfalls, and will generally
not provide protection to the TAC against the risk that prepayments occur more
slowly than expected.
In general, the reduction of prepayment risk afforded to a Controlled
Amortization Class comes at the expense of one or more Companion Classes of the
same series (any of which may also be a class of Offered Certificates) which
absorb a disproportionate share of the overall prepayment risk of a given
structure. As more particularly described in the related Prospectus Supplement,
the holders of a Companion Class will receive a disproportionately large share
of prepayments when the rate of prepayment exceeds the rate assumed in
structuring the Controlled Amortization Class, and (in the case of a Companion
Class that supports a PAC) a disproportionately small share of prepayments (or
no prepayments) when the rate of prepayment falls below that assumed rate. Thus,
as and to the extent described in the related Prospectus Supplement, a Companion
Class will absorb a disproportionate share of the risk that a relatively fast
rate of prepayments will result in the early retirement of the investment, that
is, "call risk", and, if applicable, the risk that a relatively slow rate of
prepayments will extend the average life of the investment, that is, "extension
risk" that would otherwise be allocated to the related Controlled Amortization
Class. Accordingly, Companion Classes can exhibit significant average life
variability.
OTHER FACTORS AFFECTING YIELD, WEIGHTED AVERAGE LIFE AND MATURITY
Balloon Payments; Extensions of Maturity. Some or all of the Mortgage
Loans included in a particular Trust Fund may require that balloon payments be
made at maturity. Because the ability of a borrower to make a balloon payment
typically will depend upon its ability either to refinance the loan or to sell
the related Mortgaged Property, there is a risk that Mortgage Loans that require
balloon payments may default at maturity, or that the maturity of such a
Mortgage Loan may be extended in connection with a workout. In the case of
defaults, recovery of proceeds may be delayed by, among other things, bankruptcy
of the borrower or adverse conditions in the market where the property is
located. In order to minimize losses on defaulted Mortgage Loans, the Master
Servicer or a Special Servicer, to the extent and under the circumstances set
forth herein and in the related Prospectus Supplement, may be authorized to
modify Mortgage Loans that are in default or as to which a payment default is
imminent. Any defaulted balloon payment or modification that extends the
maturity of a Mortgage Loan may delay distributions of principal on a class of
Offered Certificates and thereby extend the weighted average life of such
Certificates and, if such Certificates were purchased at a discount, reduce the
yield thereon.
Negative Amortization. The weighted average life of a class of
Certificates can be affected by Mortgage Loans that permit negative
amortization. In general, such Mortgage Loans by their terms limit the amount by
which scheduled payments may adjust in response to changes in Mortgage Rates
and/or provide that scheduled payment amounts will adjust less frequently than
the Mortgage Rates. Accordingly, during a period of rising interest rates, the
scheduled payment on a Mortgage Loan that permits negative amortization may be
less than the amount necessary to amortize the loan fully over its remaining
amortization schedule and pay interest at the then applicable Mortgage Rate. In
that case, the Mortgage Loan balance would amortize more slowly than necessary
to repay it over such schedule and, if the amount of scheduled payment were less
than the amount necessary to pay current interest at the applicable Mortgage
Rate, the loan balance would negatively amortize to the extent of the amount of
the interest shortfall. Conversely, during a period of declining interest rates,
the scheduled payment on such a Mortgage Loan may exceed the amount necessary to
amortize the loan fully over its remaining amortization schedule and pay
interest at the then applicable Mortgage Rate. In that case, the excess would be
applied to principal, thereby resulting in amortization at a rate faster than
necessary to repay the Mortgage Loan balance over such schedule.
A slower or negative rate of Mortgage Loan amortization would
correspondingly be reflected in a slower or negative rate of amortization for
one or more classes of Certificates of the related series. Accordingly, the
weighted average lives of Mortgage Loans that permit negative amortization (and
that of the classes of Certificates to which any such negative amortization
would be allocated or which would bear the effects of a slower rate of
amortization on such Mortgage Loans) may increase as a result of such feature. A
faster rate of Mortgage Loan amortization will shorten the weighted average life
of such Mortgage Loans and, correspondingly, the weighted average lives of those
classes of Certificates then entitled to a portion of the principal payments on
such Mortgage Loans. The related Prospectus Supplement will describe, if
applicable, the manner in which negative amortization in respect of the Mortgage
Loans in any Trust Fund is allocated among the respective classes of
Certificates of the related series.
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Foreclosures and Payment Plans. The number of foreclosures and the
principal amount of the Mortgage Loans that are foreclosed in relation to the
number and principal amount of Mortgage Loans that are repaid in accordance with
their terms will affect the weighted average lives of those Mortgage Loans and,
accordingly, the weighted average lives of and yields on the Certificates of the
related series. Servicing decisions made with respect to the Mortgage Loans,
including the use of payment plans prior to a demand for acceleration and the
restructuring of Mortgage Loans in bankruptcy proceedings, may also have an
effect upon the payment patterns of particular Mortgage Loans and thus the
weighted average lives of and yields on the Certificates of the related series.
Losses and Shortfalls on the Mortgage Assets. The yield to holders of the
Offered Certificates of any series will directly depend on the extent to which
such holders are required to bear the effects of any losses or shortfalls in
collections arising out of defaults on the Mortgage Assets in the related Trust
Fund and the timing of such losses and shortfalls. In general, the earlier that
any such loss or shortfall occurs, the greater will be the negative effect on
yield for any class of Certificates that is required to bear the effects
thereof.
The amount of any losses or shortfalls in collections on the Mortgage
Assets in any Trust Fund (to the extent not covered or offset by draws on any
reserve fund or under any instrument of Credit Support) will be allocated among
the respective classes of Certificates of the related series in the priority and
manner, and subject to the limitations, specified in the related Prospectus
Supplement. As described in the related Prospectus Supplement, such allocations
may result in reductions in the entitlements to interest and/or Certificate
Balances of one or more such classes of Certificates, or may be effected simply
by a prioritization of payments among such classes of Certificates. The yield to
maturity on a class of Subordinate Certificates may be extremely sensitive to
losses and shortfalls in collections on the Mortgage Assets in the related Trust
Fund.
Additional Certificate Amortization. In addition to entitling the holders
thereof to a specified portion (which may range from none to all) of the
principal payments received on the Mortgage Assets in the related Trust Fund,
one or more classes of Certificates of any series, including one or more classes
of Offered Certificates of such series, may provide for distributions of
principal thereof from (i) amounts attributable to interest accrued but not
currently distributable on one or more classes of Accrual Certificates, (ii)
Excess Funds or (iii) any other amounts described in the related Prospectus
Supplement. Unless otherwise specified in the related Prospectus Supplement,
"Excess Funds" will, in general, represent that portion of the amounts
distributable in respect of the Certificates of any series on any Distribution
Date that represent (i) interest received or advanced on the Mortgage Assets in
the related Trust Fund that is in excess of the interest currently distributable
on the Certificates of such series, as well as any interest accrued but not
currently distributable on any Accrual Certificates of such series or (ii)
Prepayment Premiums, payments from Equity Participations or any other amounts
received on the Mortgage Assets in the related Trust Fund that do not constitute
interest thereon or principal thereof.
The amortization of any class of Certificates out of the sources described
in the preceding paragraph would shorten the weighted average life of such
Certificates and, if such Certificates were purchased at a premium, reduce the
yield thereon. The related Prospectus Supplement will discuss the relevant
factors to be considered in determining whether distributions of principal of
any class of Certificates out of such sources would have any material effect on
the rate at which such Certificates are amortized.
THE DEPOSITOR
First Union Commercial Mortgage Securities, Inc., the Depositor, is a
North Carolina corporation organized on August 17, 1988 as a wholly owned
subsidiary of First Union National Bank of North Carolina, which is a subsidiary
of First Union Corporation, a North Carolina corporation registered as a bank
holding company under the Bank Holding Company Act of 1956, as amended. The
Depositor maintains its principal office at 301 South College St., Charlotte,
N.C. 28228-0600. Its telephone number is 704-374-6161. There can be no assurance
that the Depositor will have any significant assets.
USE OF PROCEEDS
The net proceeds to be received from the sale of the Certificates of any
series will be applied by the Depositor to the purchase of Trust Assets or will
be used by the Depositor for general corporate purposes. The Depositor expects
to sell the Certificates from time to time, but the timing and amount of
offerings of Certificates will depend on a number of factors, including the
volume of Mortgage Assets acquired by the Depositor, prevailing interest rates,
availability of funds and general market conditions.
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DESCRIPTION OF THE CERTIFICATES
GENERAL
In the aggregate, the Certificates of each series of Certificates will
represent the entire beneficial ownership interest in the Trust Fund created
pursuant to the related Pooling Agreement. Each series of Certificates may
consist of one or more classes of Certificates (including classes of Offered
Certificates), and such class or classes may (i) provide for the accrual of
interest thereon at a fixed, variable or adjustable rate; (ii) be senior
(collectively, "Senior Certificates") or subordinate (collectively, "Subordinate
Certificates") to one or more other classes of Certificates in entitlement to
certain distributions on the Certificates; (iii) be entitled to distributions of
principal, with disproportionately small, nominal or no distributions of
interest (collectively, "Stripped Principal Certificates"); (iv) be entitled to
distributions of interest, with disproportionately small, nominal or no
distributions of principal (collectively "Stripped Interest Certificates"); (v)
provide for distributions of principal and/or interest thereon that commence
only after the occurrence of certain events such as the retirement of one or
more other classes of Certificates of such series; (vi) provide for
distributions of principal to be made, from time to time or for designated
periods, at a rate that is faster (and, in some cases, substantially faster) or
slower (and, in some cases, substantially slower) than the rate at which
payments or other collections of principal are received on the Mortgage Assets
in the related Trust Fund; (vii) provide for distributions of principal to be
made, subject to available funds, based on a specified principal payment
schedule or other methodology; and/or (viii) provide for distributions based on
a combination of two or more components thereof with one or more of the
characteristics described in this paragraph, including a Stripped Principal
Certificate component and a Stripped Interest Certificate component, to the
extent of available funds, in each case as described in the related Prospectus
Supplement. Any such classes may include classes of Offered Certificates. With
respect to Certificates with two or more components, references herein to
Certificate Balance, Notional Amount and Pass-Through Rate refer to the
principal balance, if any, Notional Amount, if any, and the Pass-Through Rate,
if any, for any such component.
Each class of Offered Certificates of a series will be issued in minimum
denominations corresponding to the Certificate Balances or, in case of Stripped
Interest Certificates or REMIC Residual Certificates, Notional Amounts or
percentage interests specified in the related Prospectus Supplement. As provided
in the related Prospectus Supplement, one or more classes of Offered
Certificates of any series may be issued in fully registered, definitive form
(such Certificates, "Definitive Certificates") or may be offered in book-entry
format (such Certificates, "Book-Entry Certificates") through the facilities of
DTC. The Offered Certificates of each series (if issued as Definitive
Certificates) may be transferred or exchanged, subject to any restrictions on
transfer described in the related Prospectus Supplement, at the location
specified in the related Prospectus Supplement, without the payment of any
service charge, other than any tax or other governmental charge payable in
connection therewith. Interests in a class of Book-Entry Certificates will be
transferred on the book-entry records of DTC and its participating
organizations. See "Risk Factors--Limited Liquidity", "--Limited Assets" and
"--Book-Entry Registration".
DISTRIBUTIONS
Distributions on the Certificates of each series will be made by or on
behalf of the related Trustee or Master Servicer on each Distribution Date as
specified in the related Prospectus Supplement from the Available Distribution
Amount for such series and such Distribution Date. Unless otherwise provided in
the related Prospectus Supplement, the "Available Distribution Amount" for any
series of Certificates and any Distribution Date will refer to the total of all
payments or other collections (or advances in lieu thereof) on, under or in
respect of the Mortgage Assets and any other assets included in the related
Trust Fund that are available for distribution to the Certificateholders of such
series on such date. The particular components of the Available Distribution
Amount for any series on each Distribution Date will be more specifically
described in the related Prospectus Supplement.
Except as otherwise specified in the related Prospectus Supplement,
distributions on the Certificates of each series (other than the final
distribution in retirement of any such Certificate) will be made to the persons
in whose names such Certificates are registered at the close of business on the
last business day of the month preceding the month in which the applicable
Distribution Date occurs (the "Record Date"), and the amount of each
distribution will be determined as of the close of business on the date (the
"Determination Date") specified in the related Prospectus Supplement. All
distributions with respect to each class of Certificates on each Distribution
Date will be allocated pro
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rata among the outstanding Certificates in such class. Payments will be made
either by wire transfer in immediately available funds to the account of a
Certificateholder at a bank or other entity having appropriate facilities
therefor, if such Certificateholder has provided the Trustee or other person
required to make such payments with wiring instructions (which may be provided
in the form of a standing order applicable to all subsequent distributions) no
later than the date specified in the related Prospectus Supplement (and, if so
provided in the related Prospectus Supplement, such Certificateholder holds
Certificates in the requisite amount or denomination specified therein), or by
check mailed to the address of such Certificateholder as it appears on the
Certificate Register; provided, however, that the final distribution in
retirement of any class of Certificates (whether Definitive Certificates or
Book-Entry Certificates) will be made only upon presentation and surrender of
such Certificates at the location specified in the notice to Certificateholders
of such final distribution.
DISTRIBUTIONS OF INTEREST ON THE CERTIFICATES
Each class of Certificates of each series (other than certain classes of
Stripped Principal Certificates and certain REMIC Residual Certificates that
have no Pass-Through Rate) may have a different Pass-Through Rate, which may be
fixed, variable or adjustable. The related Prospectus Supplement will specify
the Pass-Through Rate or, in the case of a variable or adjustable Pass-Through
Rate, the method for determining the Pass-Through Rate, for each class. Unless
otherwise specified in the related Prospectus Supplement, interest on the
Certificates of each series will be calculated on the basis of a 360-day year
consisting of twelve 30-day months.
Distributions of interest in respect of the Certificates of any class
(other than any class of Certificates that will be entitled to distributions of
accrued interest commencing only on the Distribution Date, or under the
circumstances, specified in the related Prospectus Supplement ("Accrual
Certificates"), and other than any class of Stripped Principal Certificates or
REMIC Residual Certificates that is not entitled to any distributions of
interest) will be made on each Distribution Date based on the Accrued
Certificate Interest for such class and such Distribution Date, subject to the
sufficiency of the portion of the Available Distribution Amount allocable to
such class on such Distribution Date. Prior to the time interest is
distributable on any class of Accrual Certificates, the amount of Accrued
Certificate Interest otherwise distributable on such class will be added to the
Certificate Balance thereof on each Distribution Date. With respect to each
class of Certificates (other than certain classes of Stripped Interest
Certificates and REMIC Residual Certificates), "Accrued Certificate Interest"
for each Distribution Date will be equal to interest at the applicable
Pass-Through Rate accrued for a specified period (generally the period between
Distribution Dates) on the outstanding Certificate Balance thereof immediately
prior to such Distribution Date. Unless otherwise provided in the related
Prospectus Supplement, Accrued Certificate Interest for each Distribution Date
on Stripped Interest Certificates will be similarly calculated except that it
will accrue on a notional amount (a "Notional Amount") that is either (i) based
on the principal balances of some or all of the Mortgage Assets in the related
Trust Fund or (ii) equal to the Certificate Balances of one or more other
classes of Certificates of the same series. Reference to a Notional Amount with
respect to a class of Stripped Interest Certificates is solely for convenience
in making certain calculations and does not represent the right to receive any
distributions of principal. If so specified in the related Prospectus
Supplement, the amount of Accrued Certificate Interest that is otherwise
distributable on (or, in the case of Accrual Certificates, that may otherwise be
added to the Certificate Balance of) one or more classes of the Certificates of
a series will be reduced to the extent that any Prepayment Interest Shortfalls,
as described under "Yield and Maturity Considerations--Certain Shortfalls in
Collections of Interest", exceed the amount of any sums (including, if and to
the extent specified in the related Prospectus Supplement, the Master Servicer's
servicing compensation) that are applied to offset such shortfalls. The
particular manner in which such shortfalls will be allocated among some or all
of the classes of Certificates of that series will be specified in the related
Prospectus Supplement. The related Prospectus Supplement will also describe the
extent to which the amount of Accrued Certificate Interest that is otherwise
distributable on (or, in the case of Accrual Certificates, that may otherwise be
added to the Certificate Balance of) a class of Offered Certificates may be
reduced as a result of any other contingencies, including delinquencies, losses
and deferred interest on or in respect of the Mortgage Assets in the related
Trust Fund. Unless otherwise provided in the related Prospectus Supplement, any
reduction in the amount of Accrued Certificate Interest otherwise distributable
on a class of Certificates by reason of the allocation to such class of a
portion of any deferred interest on or in respect of the Mortgage Assets in the
related Trust Fund will result in a corresponding increase in the Certificate
Balance of such class. See "Risk Factors--Prepayments; Average Life of
Certificates; Yields" and "Yield and Maturity Considerations".
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DISTRIBUTIONS OF CERTIFICATE PRINCIPAL
Each class of Certificates of each series (other than certain classes of
Stripped Interest Certificates of REMIC Residual Certificates) will have a
Certificate Balance which, at any time, will equal the then maximum amount that
the holders of Certificates of such class will be entitled to receive in respect
of principal out of the future cash flow on the Mortgage Assets and other assets
included in the related Trust Fund. The outstanding Certificate Balance of a
class of Certificates will be reduced by distributions of principal made thereon
from time to time and, if so provided in the related Prospectus Supplement,
further by any losses incurred in respect of the related Mortgage Assets
allocated thereto from time to time. In turn, the outstanding Certificate
Balance of a class of Certificates may be increased as a result of any deferred
interest on or in respect of the related Mortgage Assets that is allocated
thereto from time to time, and will be increased, in the case of a class of
Accrual Certificates prior to the Distribution Date on which distributions of
interest thereon are required to commence, by the amount of any Accrued
Certificate Interest in respect thereof (reduced as described above). Unless
otherwise provided in the related Prospectus Supplement, the initial aggregate
Certificate Balance of all classes of a series of Certificates will not be
greater than the aggregate outstanding principal balance of the related Mortgage
Assets as of the applicable Cut-off Date, after application of scheduled
payments due on or before such date, whether or not received. As and to the
extent described in the related Prospectus Supplement, distributions of
principal with respect to a series of Certificates will be made on each
Distribution Date to the holders of the class or classes of Certificates of such
series entitled thereto until the Certificate Balances of such Certificates have
been reduced to zero. Distributions of principal with respect to one or more
classes of Certificates may be made at a rate that is faster (and, in some
cases, substantially faster) than the rate at which payments or other
collections of principal are received on the Mortgage Assets in the related
Trust Fund, may not commence until the occurrence of certain events, such as the
retirement of one or more other classes of Certificates of the same series, or
may be made at a rate that is slower (and, in some cases, substantially slower)
than the rate at which payments or other collections of principal are received
on such Mortgage Assets. In addition, distributions of principal with respect to
one or more classes of Certificates (each such class, a "Controlled Amortization
Class") may be made, subject to available funds, based on a specified principal
payment schedule and, with respect to one or more classes of Certificates (each
such class, a "Companion Class"), may be contingent on the specified principal
payment schedule for a Controlled Amortization Class of the same series and the
rate at which payments and other collections of principal on the Mortgage Assets
in the related Trust Fund are received. Unless otherwise specified in the
related Prospectus Supplement, distributions of principal of any class of
Certificates will be made on a pro rata basis among all of the Certificates of
such class.
DISTRIBUTIONS ON THE CERTIFICATES IN RESPECT OF PREPAYMENT PREMIUMS OR IN
RESPECT OF EQUITY PARTICIPATIONS
If so provided in the related Prospectus Supplement, Prepayment Premiums
or payments in respect of Equity Participations received on or in connection
with the Mortgage Assets in any Trust Fund will be distributed on each
Distribution Date to the holders of the class of Certificates of the related
series entitled thereto in accordance with the provisions described in such
Prospectus Supplement.
ALLOCATION OF LOSSES AND SHORTFALLS
The amount of any losses or shortfalls in collections on the Mortgage
Assets in any Trust Fund (to the extent not covered or offset by draws on any
reserve fund or under any instrument of Credit Support) will be allocated among
the respective classes of Certificates of the related series in the priority and
manner, and subject to the limitations, specified in the related Prospectus
Supplement. As described in the related Prospectus Supplement, such allocations
may result in reductions in the entitlements to interest and/or in the
Certificate Balances of one or more such classes of Certificates, or may be
effected simply by a prioritization of payments among such classes of
Certificates.
ADVANCES IN RESPECT OF DELINQUENCIES
If and to the extent provided in the related Prospectus Supplement, the
related Master Servicer and/or another specified person (including a provider of
Credit Support) may be obligated to advance, or have the option of advancing, on
or before each Distribution Date, from its or their own funds or from excess
funds held in the related Certificate Account that are not part of the Available
Distribution Amount for the related series of Certificates for such Distribution
Date, an amount up to the aggregate of any payments of principal (other than any
balloon payments) and
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interest that were due on or in respect of such Mortgage Loans during the
related Due Period and were delinquent on the related Determination Date. Unless
otherwise provided in the related Prospectus Supplement, a "Due Period" is the
period between Distribution Dates, and scheduled payments on the Mortgage Loans
in any Trust Fund that became due during a given Due Period will, to the extent
received by the related Determination Date or advanced by the related Master
Servicer or other specified person, be distributed on the Distribution Date next
succeeding such Determination Date.
Advances are intended to maintain a regular flow of scheduled interest and
principal payments to holders of the class or classes of Certificates entitled
thereto, rather than to guarantee or insure against losses. Accordingly, all
advances made from the advancing person's own funds will be reimbursable out of
related recoveries on the Mortgage Loans (including amounts received under any
instrument of Credit Support) respecting which such advances were made (as to
any Mortgage Loan, "Related Proceeds") and such other specific sources as may be
identified in the related Prospectus Supplement, including in the case of a
series that includes one or more classes of Subordinate Certificates,
collections on other Mortgage Loans in the related Trust Fund that would
otherwise be distributable to the holders of one or more classes of such
Subordinate Certificates. No advance will be required to be made by the Master
Servicer or by any other person if, in the good faith judgment of the Master
Servicer or such other person, such advance would not be recoverable from
Related Proceeds or another specifically identified source (any such advance, a
"Nonrecoverable Advance"); and, if previously made by a Master Servicer or
another person, a Nonrecoverable Advance will be reimbursable from any amounts
in the related Certificate Account prior to any distributions being made to the
related series of Certificateholders.
If advances have been made from excess funds in a Certificate Account, the
Master Servicer or other person that advanced such funds will be required to
replace such funds in the Certificate Account on any future Distribution Date to
the extent that funds then in the Certificate Account are insufficient to permit
full distributions to Certificateholders on such date. If so specified in the
related Prospectus Supplement, the obligation of a Master Servicer or other
specified person to make advances may be secured by a cash advance reserve fund
or a surety bond. If applicable, information regarding the characteristics of,
and the identity of any obligor on, any such surety bond will be set forth in
the related Prospectus Supplement.
If and to the extent so provided in the related Prospectus Supplement, any
entity making advances will be entitled to receive interest thereon for the
period that such advances are outstanding at the rate specified in such
Prospectus Supplement, and such entity will be entitled to payment of such
interest periodically from general collections on the Mortgage Loans in the
related Trust Fund prior to any payment to Certificateholders or as otherwise
provided in the related Pooling Agreement and described in such Prospectus
Supplement.
The Prospectus Supplement for any series of Certificates evidencing an
interest in a Trust Fund that includes CMBS will describe any comparable
advancing obligation of a party to the related Pooling Agreement or of a party
to the related CMBS Agreement.
REPORTS TO CERTIFICATEHOLDERS
On each Distribution Date, together with the distribution to the holders
of each class of the Offered Certificates of a series, a Master Servicer or
Trustee, as provided in the related Prospectus Supplement, will forward to each
such holder, a statement (a "Distribution Date Statement") that, unless
otherwise provided in the related Prospectus Supplement, will set forth, among
other things, in each case to the extent applicable:
(i) the amount of such distribution to holders of Certificates of
such class that was applied to reduce the Certificate Balance thereof;
(ii) the amount of such distribution to holders of Certificates of
such class that is allocable to Accrued Certificate Interest;
(iii) the amount, if any, of such distribution to holders of
Certificates of such class that is allocable to (A) Prepayment Premiums
and (B) payments on account of Equity Participations;
(iv) the amount of servicing compensation received by the related
Master Servicer (and, if payable directly out of the related Trust Fund,
by any Special Servicer and any Sub-Servicer (as defined herein)) and such
other customary information as such Master Servicer or the related
Trustee, as the case may be, deems necessary,
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or desirable, or that a Certificateholder reasonably requests, to enable
Certificateholders to prepare their tax returns;
(v) the aggregate amount of advances included in such distribution,
and the aggregate amount of unreimbursed advances at the close of business
on such Distribution Date;
(vi) the aggregate principal balance of the related Mortgage Loans
on, or as of a specified date shortly prior to, such Distribution Date;
(vii) the number and aggregate principal balance of any Mortgage
Loans in respect of which (A) one scheduled payment is delinquent, (B) two
scheduled payments are delinquent, (C) three or more scheduled payments
are delinquent and (D) foreclosure proceedings have been commenced;
(viii) with respect to each Mortgage Loan that is delinquent in
respect of three or more scheduled payments, (A) the loan number thereof,
(B) the unpaid balance thereof, (C) whether the delinquency is in respect
of any balloon payment, (D) the aggregate amount of unreimbursed servicing
expenses and unreimbursed advances in respect thereof, (E) if applicable,
the aggregate amount of any interest accrued and payable to the related
Master Servicer, a Special Servicer and/or any other entity on related
servicing expenses and related advances, (F) whether a notice of
acceleration has been sent to the borrower and, if so, the date of such
notice and (G) a brief description of the status of any foreclosure
proceedings or negotiations with the borrower;
(ix) with respect to any Mortgage Loan liquidated during the related
Prepayment Period (that is, the specified period, generally equal in
length to the time period between Distribution Dates, during which
prepayments and other unscheduled collections on the Mortgage Loans in the
related Trust Fund must be received in order to be distributed on a
particular Distribution Date (the "Prepayment Period")) in connection with
a default thereon or by reason of being purchased out of the related Trust
Fund, (A) the loan number thereof, (B) the manner in which it was
liquidated, (C) the aggregate amount of Liquidation Proceeds received, (D)
the portion of such Liquidation Proceeds payable or reimbursable to the
related Master Servicer or a Special Servicer in respect of such Mortgage
Loan and (E) the amount of any loss to Certificateholders;
(x) with respect to each Mortgaged Property acquired through
foreclosure, deed-in-lieu of foreclosure or otherwise ("REO Property") and
included in the related Trust Fund as of the end of the related Due Period
or Prepayment Period, as applicable, (A) the loan number of the related
Mortgage Loan, (B) the date of acquisition, (C) the principal balance of
the related Mortgage Loan (calculated as if such Mortgage Loan were still
outstanding taking into account certain limited modifications to the terms
thereof specified in the related Pooling Agreement), (D) the aggregate
amount of unreimbursed servicing expenses and unreimbursed advances in
respect thereof and (E) if applicable, the aggregate amount of interest
accrued and payable to the related Master Servicer, a Special Servicer
and/or any other entity on related servicing expenses and related
advances;
(xi) with respect to any REO Property sold during the related
Prepayment Period, (A) the loan number of the related Mortgage Loan, (B)
the aggregate amount of sales proceeds, (C) the portion of such sales
proceeds payable or reimbursable to the related Master Servicer or a
Special Servicer in respect of such REO Property or the related Mortgage
Loan and (D) the amount of any loss to Certificateholders in respect of
the related Mortgage Loan;
(xii) the Certificate Balance or Notional Amount, as the case may
be, of each class of Certificates (including any class of Certificates not
offered hereby) at the close of business on such Distribution Date,
separately identifying any reduction in such Certificate Balance due to
the allocation of any losses in respect of the related Mortgage Loans and
any increase in the Certificate Balance of a class of Accrual Certificates
in the event that Accrued Certificate Interest has been added to such
balance;
(xiii) the aggregate amount of principal prepayments made on the
Mortgage Loans during the related Prepayment Period;
(xiv) the amount deposited in or withdrawn from any reserve fund on
such Distribution Date, and the amount remaining on deposit in such
reserve fund as of the close of business on such Distribution Date;
(xv) the amount of any Accrued Certificate Interest due but not paid
on such class of Offered Certificates at the close of business on such
Distribution Date;
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(xvi) if such class of Offered Certificates has a variable
Pass-Through Rate or an adjustable Pass-Through Rate, the Pass-Through
Rate applicable thereto for such Distribution Date and, if determinable,
for the next succeeding Distribution Date; and
(xvii) if the related Trust Fund includes one or more instruments of
Credit Support, such as a letter of credit, an insurance policy and/or a
surety bond, the amount of coverage under each such instrument as of the
close of business on such Distribution Date.
In the case of information furnished pursuant to subclauses (i)-(iv)
above, the amounts will be expressed as a dollar amount per minimum denomination
of the relevant class of Offered Certificates or per a specified portion of such
minimum denomination. The Prospectus Supplement for each series of Offered
Certificates will describe any additional information to be included in reports
to the holders of such Certificates.
Within a reasonable period of time after the end of each calendar year,
the related Master Servicer or Trustee, as the case may be, will be required to
furnish to each person who at any time during the calendar year was a holder of
an Offered Certificate a statement containing the information set forth in
subclauses (i)-(iv) above, aggregated for such calendar year or the applicable
portion thereof during which such person was a Certificateholder. Such
obligation will be deemed to have been satisfied to the extent that
substantially comparable information is provided pursuant to any requirements of
the Code as are from time to time in force. See, however, "Description of the
Certificates--Book-Entry Registration and Definitive Certificates".
If the Trust Fund for a series of Certificates includes CMBS, the ability
of the related Master Servicer or Trustee, as the case may be, to include in any
Distribution Date Statement information regarding the mortgage loans underlying
such CMBS will depend on the reports received with respect to such CMBS. In such
cases, the related Prospectus Supplement will describe the loan-specific
information to be included in the Distribution Date Statements that will be
forwarded to the holders of the Offered Certificates of that series in
connection with distributions made to them.
VOTING RIGHTS
The Voting Rights evidenced by each series of Certificates will be
allocated among the respective classes of such series in the manner described in
the related Prospectus Supplement.
Certificateholders will generally have a right to vote only with respect
to required consents to certain amendments to the related Pooling Agreement and
as otherwise specified in the related Prospectus Supplement. See "Description of
the Pooling Agreements--Amendment". The holders of specified amounts of
Certificates of a particular series will have the collective right to remove the
related Trustee and also to cause the removal of the related Master Servicer in
the case of an Event of Default on the part of the Master Servicer. See
"Description of thePooling Agreements--Events of Default", "--Rights Upon Event
of Default" and "--Resignation and Removal of the Trustee".
TERMINATION
The obligations created by the Pooling Agreement for each series of
Certificates will terminate upon the payment (or provision for payment) to
Certificateholders of that series of all amounts held in the related Certificate
Account, or otherwise by the related Master Servicer or Trustee or by a Special
Servicer, and required to be paid to such Certificateholders pursuant to such
Pooling Agreement following the earlier of (i) the final payment or other
liquidation of the last Mortgage Asset subject thereto or the disposition of all
property acquired upon foreclosure of any Mortgage Loan subject thereto and (ii)
the purchase of all of the assets of the related Trust Fund by the party
entitled to effect such termination, under the circumstances and in the manner
that will be described in the related Prospectus Supplement. Written notice of
termination of a Pooling Agreement will be given to each Certificateholder of
the related series, and the final distribution will be made only upon
presentation and surrender of the Certificates of such series at the location to
be specified in the notice of termination.
If so specified in the related Prospectus Supplement, a series of
Certificates will be subject to optional early termination through the
repurchase of the assets in the related Trust Fund by a party that will be
specified therein, under the circumstances and in the manner set forth therein.
If so provided in the related Prospectus Supplement, upon
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the reduction of the Certificate Balance of a specified class or classes of
Certificates by a specified percentage or amount, a party identified therein
will be authorized or required to solicit bids for the purchase of all the
assets of the related Trust Fund, or of a sufficient portion of such assets to
retire such class or classes, under the circumstances and in the manner set
forth therein. Further, if so provided in the related Prospectus Supplement,
certain classes of Certificates may be purchased by a party or parties specified
therein under similar or other conditions as described therein.
BOOK-ENTRY REGISTRATION AND DEFINITIVE CERTIFICATES
If so provided in the related Prospectus Supplement, one or more classes
of the Offered Certificates of any series will be offered in book-entry format
through the facilities of The Depository Trust Company, and each such class will
be represented by one or more global Certificates registered in the name of DTC
or its nominee.
DTC is a limited-purpose trust company organized under the New York
Banking Law, a "banking corporation" within the meaning of the New York Banking
Law, 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 the provisions of Section 17A of the Exchange Act. DTC
holds securities that its Participants deposit with DTC. DTC also facilitates
the settlement among Participants of securities transactions, such as transfers
and pledges, in deposited securities through electronic computerized book entry
changes in their accounts, thereby eliminating the need for physical movement of
securities certificates. "Direct Participants", which maintain accounts with
DTC, include securities brokers and dealers, banks, trust companies and clearing
corporations and may include certain other organizations. 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. Access to the DTC system also is available to others such as
securities brokers and dealers, banks and trust companies that clear through or
maintain a custodial relationship with a Direct Participant, either directly or
indirectly ("Indirect Participants"). The rules applicable to DTC and its
Participants are on file with the Commission.
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 actual purchaser
of a Book-Entry Certificate (a "Certificate Owner") will in turn be recorded on
the records of Direct and Indirect Participants. Certificate Owners will not
receive written confirmation from DTC of their purchases, but Certificate Owners
are expected to receive written confirmations providing details of such
transactions, as well as periodic statements of their holdings, from the Direct
or Indirect Participant through which each Certificate Owner entered into the
transaction. Transfers of ownership interest in the Book-Entry Certificates will
be accomplished by entries made on the books of Participants acting on behalf of
Certificate Owners. Certificate Owners will not receive certificates
representing their ownership interests in the Book-Entry Certificates, except in
the event that use of the book-entry system for the Book-Entry Certificates of
any series is discontinued as described below.
DTC will not know the identity of actual Certificate Owners of the
Book-Entry Certificates; DTC's records reflect only the identity of the Direct
Participants to whose accounts such Certificates are credited. The Participants
will remain responsible for keeping account of their holdings on behalf of their
customers. Notices and other communications conveyed by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Certificate Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
Distributions on the Book-Entry Certificates will be made to DTC. DTC's
practice is to credit Direct Participants' accounts on the related Distribution
Date in accordance with their respective holdings shown on DTC's records unless
DTC has reason to believe that it will not receive payment on such date.
Disbursement of such distributions by Participants to Certificate Owners will be
governed by standing instructions and customary practices, as is the case with
securities held for the accounts of customers in bearer form or registered in
"street name", and will be the responsibility of each such Participant (and not
of DTC, the Depositor or any Trustee or Master Servicer), subject to any
statutory or regulatory requirements as may be in effect from time to time.
Under a book-entry system, Certificate Owners may receive payments after the
related Distribution Date.
Unless otherwise provided in the related Prospectus Supplement, the only
"Certificateholder"(as such term is used in the related Pooling Agreement) of a
Book-Entry Certificate will be the nominee of DTC, and the Certificate Owners
will not be recognized as Certificateholders under the Pooling Agreement.
Certificate Owners will be
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permitted to exercise the rights of Certificateholders under the related Pooling
Agreement only indirectly through the Participants who in turn will exercise
their rights through DTC. The Depositor is informed that DTC will take action
permitted to be taken by a Certificateholder under a Pooling Agreement only at
the direction of one or more Participants to whose account with DTC interests in
the Book-Entry Certificates are credited.
Because DTC can act only on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain Certificate Owners, the ability of a
Certificate Owner to pledge its interest in Book-Entry Certificates to persons
or entities that do not participate in the DTC system, or otherwise take actions
in respect of its interest in Book-Entry Certificates, may be limited due to the
lack of a physical certificate evidencing such interest.
Unless otherwise specified in the related Prospectus Supplement,
Certificates initially issued in book-entry form will be issued as Definitive
Certificates to Certificate Owners or their nominees, rather than to DTC or its
nominee, only if (i) the Depositor advises the Trustee in writing that DTC is no
longer willing or able to properly discharge its responsibilities as depository
with respect to such Certificates and the Depositor is unable to locate a
qualified successor or (ii) the Depositor, at its option, elects to terminate
the book-entry system through DTC with respect to such Certificates. Upon the
occurrence of either of the events described in the preceding sentence, DTC will
be required to notify all Participants of the availability through DTC of
Definitive Certificates. Upon surrender by DTC of the certificate or
certificates representing a class of Book-Entry Certificates, together with
instructions for reregistration, the Trustee or other designated party will be
required to issue to the Certificate Owners identified in such instructions the
Definitive Certificates to which they are entitled, and thereafter the holders
of such Definitive Certificates will be recognized as Certificateholders under
the related Pooling Agreement.
DESCRIPTION OF THE POOLING AGREEMENTS
GENERAL
The Certificates of each series will be issued pursuant to a pooling and
servicing agreement or other agreement specified in the related Prospectus
Supplement (in either case, a "Pooling Agreement"). In general, the parties to a
Pooling Agreement will include the Depositor, the Trustee, the Master Servicer
and, in some cases, a Special Servicer appointed as of the date of the Pooling
Agreement. However, a Pooling Agreement that relates to a Trust Fund that
consists solely of CMBS may not include a Master Servicer or other servicer as a
party. All parties to each Pooling Agreement under which Certificates of a
series are issued will be identified in the related Prospectus Supplement.
A form of a pooling and servicing agreement has been filed as an exhibit
to the Registration Statement of which this Prospectus is a part. However, the
provisions of each Pooling Agreement will vary depending upon the nature of the
Certificates to be issued thereunder and the nature of the related Trust Fund.
The following summaries describe certain provisions that may appear in a Pooling
Agreement under which Certificates that evidence interests in Mortgage Loans
will be issued. The Prospectus Supplement for a series of Certificates will
describe any provision of the related Pooling Agreement that materially differs
from the description thereof contained in this Prospectus and, if the related
Trust Fund includes CMBS, will summarize all of the material provisions of the
related Pooling Agreement. The summaries herein do not purport to be complete
and are subject to, and are qualified in their entirety by reference to, all of
the provisions of the Pooling Agreement for each series of Certificates and the
description of such provisions in the related Prospectus Supplement. As used
herein with respect to any series, the term "Certificate" refers to all of the
Certificates of that series, whether or not offered hereby and by the related
Prospectus Supplement, unless the context otherwise requires. The Depositor will
provide a copy of the Pooling Agreement (without exhibits) that relates to any
series of Certificates without charge upon written request of a holder of a
Certificate of such series addressed to First Union Commercial Mortgage
Securities, Inc., One First Union Center, Charlotte, N.C. 28288-0166, Attention:
Securitization Services.
ASSIGNMENT OF MORTGAGE ASSETS; REPURCHASES
At the time of issuance of any series of Certificates, the Depositor will
assign (or cause to be assigned) to the designated Trustee the Mortgage Loans to
be included in the related Trust Fund, together with, unless otherwise specified
in the related Prospectus Supplement, all principal and interest to be received
on or with respect to such Mortgage Loans after the Cut-off Date, other than
principal and interest due on or before the Cut-off Date. The Trustee will,
concurrently with such assignment, deliver the Certificates to or at the
direction of the Depositor in exchange for
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the Mortgage Loans and the other assets to be included in the Trust Fund for
such series. Each Mortgage Loan will be identified in a schedule appearing as an
exhibit to the related Pooling Agreement. Such schedule generally will include
detailed information that pertains to each Mortgage Loan included in the related
Trust Fund, which information will typically include the address of the related
Mortgaged Property and type of such property; the Mortgage Rate and, if
applicable, the applicable index, gross margin, adjustment date and any rate cap
information; the original and remaining term to maturity; the original
amortization term; the original and outstanding principal balance; and the
Loan-to-Value Ratio and Debt Service Coverage Ratio as of the date indicated.
With respect to each Mortgage Loan to be included in a Trust Fund, the
Depositor will deliver (or cause to be delivered) to the related Trustee (or to
a custodian appointed by the Trustee) certain loan documents which, unless
otherwise specified in the related Prospectus Supplement, will include the
original Mortgage Note endorsed, without recourse, to the order of the Trustee,
the original Mortgage (or a certified copy thereof) with evidence of recording
indicated thereon and an assignment of the Mortgage to the Trustee in recordable
form. Unless otherwise provided in the related Prospectus Supplement, the
related Pooling Agreement will require that the Depositor or other party thereto
promptly cause each such assignment of Mortgage to be recorded in the
appropriate public office for real property records.
The related Trustee (or the custodian appointed by the Trustee) will be
required to review the Mortgage Loan documents within a specified period of days
after receipt thereof, and the Trustee (or the custodian) will hold such
documents in trust for the benefit of the Certificateholders of the related
series. Unless otherwise specified in the related Prospectus Supplement, if any
such document is found to be missing or defective, in either case such that
interests of the Certificateholders are materially and adversely affected, the
Trustee (or such custodian) will be required to notify the Master Servicer and
the Depositor, and the Master Servicer will be required to notify the relevant
Mortgage Asset Seller. In that case, and if the Mortgage Asset Seller cannot
deliver the document or cure the defect within a specified number of days after
receipt of such notice, then unless otherwise specified in the related
Prospectus Supplement, the Mortgage Asset Seller will be obligated to replace
the related Mortgage Loan or repurchase it from the Trustee at a price that will
be specified in the related Prospectus Supplement.
If so provided in the related Prospectus Supplement, the Depositor will,
as to some or all of the Mortgage Loans, assign or cause to be assigned to the
Trustee the related Lease Assignments. In certain cases, the Trustee, or Master
Servicer, as applicable, may collect all moneys under the related Leases and
distribute amounts, if any, required under the Leases for the payment of
maintenance, insurance and taxes, to the extent specified in the related Leases.
The Trustee, or if so specified in the Prospectus Supplement, the Master
Servicer, as agent for the Trustee, may hold the Leases in trust for the benefit
of the Certificateholders.
With respect to each CMBS in certificate form, the Depositor will deliver
or cause to be delivered to the Trustee (or the custodian) the original
certificate or other definitive evidence of such CMBS together with bond power
or other instruments, certifications or documents required to transfer fully
such CMBS to the Trustee for the benefit of the Certificateholders. With respect
to each CMBS in uncertificated or book-entry form or held through a "clearing
corporation" within the meaning of the New York Uniform Commercial Code, the
Depositor and the Trustee will cause such CMBS to be registered directly or on
the books of such clearing corporation or of a financial intermediary in the
name of the Trustee for the benefit of the Certificateholders. Unless otherwise
provided in the related Prospectus Supplement, the related Pooling Agreement
will require that either the Depositor or the Trustee promptly cause any CMBS in
certificated form not registered in the name of the Trustee to be reregistered,
with the applicable persons, in the name of the Trustee.
REPRESENTATIONS AND WARRANTIES; REPURCHASES
Unless otherwise provided in the related Prospectus Supplement, the
Depositor will, with respect to each Mortgage Loan in the related Trust Fund,
make or assign certain representations and warranties, (the person making such
representations and warranties, the "Warranting Party") covering, by way of
example: (i) the accuracy of the information set forth for such Mortgage Loan on
the schedule of Mortgage Loans appearing as an exhibit to the related Pooling
Agreement; (ii) the enforceability of the related Mortgage Note and Mortgage and
the existence of title insurance insuring the lien priority of the related
Mortgage; (iii) the Warranting Party's title to the Mortgage Loan and the
authority of the Warranting Party to sell the Mortgage Loan; and (iv) the
payment status of the Mortgage Loan. Each Warranting Party will be identified in
the related Prospectus Supplement.
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Unless otherwise provided in the related Prospectus Supplement, each
Pooling Agreement will provide that the Master Servicer and/or Trustee will be
required to notify promptly any Warranting Party of any breach of any
representation or warranty made by it in respect of a Mortgage Loan that
materially and adversely affects the interests of the related
Certificateholders. If such Warranting Party cannot cure such breach within a
specified period following the date on which it was notified of such breach,
then, unless otherwise provided in the related Prospectus Supplement, it will be
obligated to repurchase such Mortgage Loan from the Trustee within a specified
period at a price that will be specified in the related Prospectus Supplement.
If so provided in the Prospectus Supplement for a series of Certificates, a
Warranting Party, in lieu of repurchasing a Mortgage Loan as to which a breach
has occurred, will have the option, exercisable upon certain conditions and/or
within a specified period after initial issuance of such series of Certificates,
to replace such Mortgage Loan with one or more other mortgage loans, in
accordance with standards that will be described in the Prospectus Supplement.
Unless otherwise specified in the related Prospectus Supplement, this repurchase
or substitution obligation will constitute the sole remedy available to holders
of Certificates of any series for a breach of representation and warranty by a
Warranting Party. Moreover, neither the Depositor (unless it is the Warranting
Party) nor the Master Servicer will be obligated to purchase or replace a
Mortgage Loan if a Warranting Party defaults on its obligation to do so.
Unless otherwise provided in the related Prospectus Supplement, the
Warranting Party will, with respect to a Trust Fund that includes CMBS, make or
assign certain representations or warranties, as of a specified date, with
respect to such CMBS, covering (i) the accuracy of the information set forth
therefor on the schedule of Mortgage Assets appearing as an exhibit to the
related Pooling Agreement and (ii) the authority of the Warranting Party to sell
such Mortgage Assets.
The dates as of which representations and warranties have been made by a
Warranting Party will be specified in the related Prospectus Supplement. In some
cases, such representations and warranties will have been made as of a date
prior to the date upon which the related series of Certificates is issued, and
thus may not address events that may occur following the date as of which they
were made. 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 made in respect of such Mortgage Loan will not be accurate in all
material respects as of such date of issuance.
CERTIFICATE ACCOUNT
General. The Master Servicer and/or the Trustee will, as to each Trust
Fund, establish and maintain or cause to be established and maintained
Certificate Accounts for the collection of payments on the related Mortgage
Loans, which will be established so as to comply with the standards of each
Rating Agency that has rated any one or more classes of Certificates of the
related series. As described in the related Prospectus Supplement, a Certificate
Account may be maintained either as an interest-bearing or a
non-interest-bearing account, and the funds held therein may be held as cash or
invested in United States government securities and other investment grade
obligations specified in the related Pooling Agreement ("Permitted
Investments"). Unless otherwise provided in the related Prospectus Supplement,
any interest or other income earned on funds in the Certificate Account will be
paid to the related Master Servicer or Trustee as additional compensation. If
permitted by such Rating Agency or Agencies and so specified in the related
Prospectus Supplement, a Certificate Account may contain funds relating to more
than one series of mortgage pass-through certificates and may contain other
funds representing payments on mortgage loans owned by the related Master
Servicer or serviced by it on behalf of others.
Deposits. Unless otherwise provided in the related Pooling Agreement and
described in the related Prospectus Supplement, the related Master Servicer,
Trustee or Special Servicer will be required to deposit or cause to be deposited
in the Certificate Account for each Trust Fund within a certain period following
receipt (in the case of collections and payments), the following payments and
collections received, or advances made, by the Master Servicer, the Trustee or
any Special Servicer subsequent to the Cut-off Date (other than payments due on
or before the Cut-off Date):
(i) all payments on account of principal, including principal
prepayments, on the Mortgage Loans;
(ii) all payments on account of interest on the Mortgage Loans,
including any default interest collected, in each case net of any portion
thereof retained by the Master Servicer, any Special Servicer or
Sub-Servicer as its servicing compensation or as compensation to the
Trustee;
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(iii) all proceeds received under any hazard, title or other
insurance policy that provides coverage with respect to a Mortgaged
Property or the related Mortgage Loan (other than proceeds applied to the
restoration of the property or released to the related borrower in
accordance with the customary servicing practices of the Master Servicer
(or, if applicable, a Special Servicer) and/or the terms and conditions of
the related Mortgage (collectively, "Insurance Proceeds") and all other
amounts received and retained in connection with the liquidation of
defaulted Mortgage Loans or property acquired in respect thereof, by
foreclosure or otherwise ("Liquidation Proceeds"), together with the net
operating income (less reasonable reserves for future expenses) derived
from the operation of any Mortgaged Properties acquired by the Trust Fund
through foreclosure or otherwise;
(iv) any amounts paid under any instrument or drawn from any fund
that constitutes Credit Support for the related series of Certificates as
described under "Description of Credit Support";
(v) any advances made as described under "Description of the
Certificates--Advances in Respect of Delinquencies";
(vi) any amounts paid under any Cash Flow Agreement, as described
under "Description of the Trust Funds--Cash Flow Agreements";
(vii) all proceeds of the purchase of any Mortgage Loan, or property
acquired in respect thereof, by the Depositor, any Mortgage Asset Seller
or any other specified person as described under "--Assignment of Mortgage
Assets; Repurchases" and "--Representations and Warranties; Repurchases",
all proceeds of the purchase of any defaulted Mortgage Loan as described
under "--Realization Upon Defaulted Mortgage Loans", and all proceeds of
any Mortgage Asset purchased as described under "Description of the
Certificates--Termination" (all of the foregoing, also, "Liquidation
Proceeds");
(viii) any amounts paid by the Master Servicer to cover Prepayment
Interest Shortfalls arising out of the prepayment of Mortgage Loans as
described under "--Servicing Compensation and Payment of Expenses";
(ix) to the extent that any such item does not constitute additional
servicing compensation to the Master Servicer or a Special Servicer, any
payments on account of modification or assumption fees, late payment
charges, Prepayment Premiums or Equity Participations on the Mortgage
Loans;
(x) all payments required to be deposited in the Certificate Account
with respect to any deductible clause in any blanket insurance policy
described under "--Hazard Insurance Policies";
(xi) any amount required to be deposited by the Master Servicer or
the Trustee in connection with losses realized on investments for the
benefit of the Master Servicer or the Trustee, as the case may be, of
funds held in the Certificate Account; and
(xii) any other amounts required to be deposited in the Certificate
Account as provided in the related Pooling Agreement and described in the
related Prospectus Supplement.
Withdrawals. Unless otherwise provided in the related Pooling Agreement
and described in the related Prospectus Supplement, a Master Servicer, Trustee
or Special Servicer may make withdrawals from the Certificate Account for each
Trust Fund for any of the following purposes:
(i) to make distributions to the Certificateholders on each
Distribution Date;
(ii) to reimburse the Master Servicer or any other specified person
for unreimbursed amounts advanced by it as described under "Description of
the Certificates--Advances in Respect of Delinquencies", such
reimbursement to be made out of amounts received which were identified and
applied by the Master Servicer as late collections of interest (net of
related servicing fees) on and principal of the particular Mortgage Loans
with respect to which the advances were made or out of amounts drawn under
any form of Credit Support with respect to such Mortgage Loans;
(iii) to reimburse the Master Servicer or a Special Servicer for
unpaid servicing fees earned by it and certain unreimbursed servicing
expenses incurred by it with respect to Mortgage Loans in the Trust Fund
and properties acquired in respect thereof, such reimbursement to be made
out of amounts that represent Liquidation Proceeds and Insurance Proceeds
collected on the particular Mortgage Loans and properties, and net income
collected on the particular properties, with respect to which such fees
were earned or such expenses were
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incurred or out of amounts drawn under any form of Credit Support with
respect to such Mortgage Loans and properties;
(iv) to reimburse the Master Servicer or any other specified person
for any advances described in clause (ii) above made by it, any servicing
expenses referred to in clause (iii) above incurred by it and any
Servicing Fees earned by it which, in the good faith judgment of the
Master Servicer or such other person, will not be recoverable from the
amounts described in clauses (ii) and (iii), respectively, such
reimbursement to be made from amounts collected on other Mortgage Loans in
the related Trust Fund or, if and to the extent so provided by the related
Pooling Agreement and described in the related Prospectus Supplement, only
from that portion of amounts collected on such other Mortgage Loans that
is otherwise distributable on one or more classes of Subordinate
Certificates of the related series;
(v) if and to the extent described in the related Prospectus
Supplement, to pay the Master Servicer, a Special Servicer or another
specified entity (including a provider of Credit Support) interest accrued
on the advances described in clause (ii) above made by it and the
servicing expenses described in clause (iii) above incurred by it while
such remain outstanding and unreimbursed;
(vi) to pay for costs and expenses incurred by the Trust Fund for
environmental site assessments performed with respect to Mortgaged
Properties that constitute security for defaulted Mortgage Loans, and for
any containment, clean-up or remediation of hazardous wastes and materials
present on such Mortgaged Properties, as described under "--Realization
Upon Defaulted Mortgage Loans";
(vii) to reimburse the Master Servicer, the Depositor, or any of
their respective directors, officers, employees and agents, as the case
may be, for certain expenses, costs and liabilities incurred thereby, as
and to the extent described under "--Certain Matters Regarding the Master
Servicer and the Depositor";
(viii) if and to the extent described in the related Prospectus
Supplement, to pay the fees of the Trustee;
(ix) to reimburse the Trustee or any of its directors, officers,
employees and agents, as the case may be, for certain expenses, costs and
liabilities incurred thereby, as and to the extent described under
"--Certain Matters Regarding the Trustee";
(x) to pay the Master Servicer or the Trustee, as additional
compensation, interest and investment income earned in respect of amounts
held in the Certificate Account;
(xi) to pay (generally from related income) for costs incurred in
connection with the operation, management and maintenance of any Mortgaged
Property acquired by the Trust Fund by foreclosure or otherwise;
(xii) if one or more elections have been made to treat the Trust
Fund or designated portions thereof as a REMIC, to pay any federal, state
or local taxes imposed on the Trust Fund or its assets or transactions, as
and to the extent described under "Certain Federal Income Tax
Consequences--REMICS--Taxation of Owners of REMIC Residual
Certificates--Prohibited Transactions Tax and Other Taxes";
(xiii) to pay for the cost of an independent appraiser or other
expert in real estate matters retained to determine a fair sale price for
a defaulted Mortgage Loan or a property acquired in respect thereof in
connection with the liquidation of such Mortgage Loan or property;
(xiv) to pay for the cost of various opinions of counsel obtained
pursuant to the related Pooling Agreement for the benefit of
Certificateholders;
(xv) to make any other withdrawals permitted by the related Pooling
Agreement and described in the related Prospectus Supplement; and
(xvi) to clear and terminate the Certificate Account upon the
termination of the Trust Fund.
COLLECTION AND OTHER SERVICING PROCEDURES
The Master Servicer for any mortgage pool, directly or through
Sub-Servicers, will be required to make reasonable efforts to collect all
scheduled Mortgage Loan payments and will be required to follow such collection
procedures as it would follow with respect to mortgage loans that are comparable
to such Mortgage Loans and held for
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its own account, provided such procedures are consistent with (i) the terms of
the related Pooling Agreement and any related instrument of Credit Support
included in the related Trust Fund, (ii) applicable law and (iii) the servicing
standard specified in the Pooling Agreement and in the related Prospectus
Supplement (the "Servicing Standard").
The Master Servicer will also be required to perform other customary
functions of a servicer of comparable loans, including maintaining escrow or
impound accounts for payment of taxes, insurance premiums and similar items, or
otherwise monitoring the timely payment of those items; attempting to collect
delinquent payments; supervising foreclosures; conducting property inspections
on a periodic or other basis; managing REO Properties; and maintaining servicing
records relating to the Mortgage Loans. Unless otherwise specified in the
related Prospectus Supplement, the Master Servicer will be responsible for
filing and settling claims in respect of particular Mortgage Loans under any
applicable instrument of Credit Support. See "Description of Credit Support".
MODIFICATIONS, WAIVERS AND AMENDMENTS OF MORTGAGE LOANS
A Master Servicer may agree to modify, waive or amend any term of any
Mortgage Loan serviced by it in a manner consistent with the Servicing Standard;
provided that, unless otherwise set forth in the related Prospectus Supplement,
the modification, waiver or amendment will not (i) affect the amount or timing
of any scheduled payments of principal or interest on the Mortgage Loan or (ii)
in the judgment of the Master Servicer, materially impair the security for the
Mortgage Loan or reduce the likelihood of timely payment of amounts due thereon.
Unless otherwise provided in the related Prospectus Supplement, a Master
Servicer also may agree to any other modification, waiver or amendment if, in
its judgment (x) a material default on the Mortgage Loan has occurred or a
payment default is imminent and (y) such modification, waiver or amendment is
reasonably likely to produce a greater recovery with respect to the Mortgage
Loan on a present value basis than would liquidation.
SUB-SERVICERS
A Master Servicer may delegate its servicing obligations in respect of the
Mortgage Loans serviced by it to one or more third-party servicers (each, a
"Sub-Servicer"), but the Master Servicer will remain liable for such obligations
under the related Pooling Agreement unless otherwise provided in the related
Prospectus Supplement. Unless otherwise provided in the related Prospectus
Supplement, each sub-servicing agreement between a Master Servicer and a
Sub-Servicer (a "Sub-Servicing Agreement") must provide that, if for any reason
the Master Servicer is no longer acting in such capacity, the Trustee or any
successor Master Servicer may assume the Master Servicer's rights and
obligations under such Sub-Servicing Agreement.
Unless otherwise provided in the related Prospectus Supplement, the Master
Servicer will be solely liable for all fees owed by it to any Sub-Servicer,
irrespective of whether the Master Servicer's compensation pursuant to the
related Pooling Agreement is sufficient to pay such fees. Each Sub-Servicer will
be reimbursed by the Master Servicer for certain expenditures which it makes,
generally to the same extent the Master Servicer would be reimbursed under a
Pooling Agreement. See "--Certificate Account" and "--Servicing Compensation and
Payment of Expenses".
SPECIAL SERVICERS
If and to the extent specified in the related Prospectus Supplement, a
special servicer (the "Special Servicer") may be a party to the related Pooling
Agreement or may be appointed by the Master Servicer or another specified party
to perform certain specified duties (for example, the servicing of defaulted
Mortgage Loans) in respect of the servicing of the related Mortgage Loans. The
Master Servicer will be liable for the performance of a Special Servicer only
if, and to the extent, set forth in such Prospectus Supplement.
REALIZATION UPON DEFAULTED MORTGAGE LOANS
A borrower's failure to make required Mortgage Loan payments may mean that
operating income is insufficient to service the mortgage debt, or may reflect
the diversion of that income from the servicing of the mortgage debt. In
addition, a borrower that is unable to make Mortgage Loan payments may also be
unable to make timely payment of taxes and to otherwise maintain and insure the
related Mortgaged Property. In general, the related Master Servicer
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will be required to monitor any Mortgage Loan that is in default, evaluate
whether the causes of the default can be corrected over a reasonable period
without significant impairment of the value of the related Mortgaged Property,
initiate corrective action in cooperation with the borrower if cure is likely,
inspect the related Mortgaged Property and take such other actions as are
consistent with the Servicing Standard. A significant period of time may elapse
before the Master Servicer is able to assess the success of any such corrective
action or the need for additional initiatives.
The time within which the Master Servicer can make the initial
determination of appropriate action, evaluate the success of corrective action,
develop additional initiatives, institute foreclosure proceedings and actually
foreclose (or accept a deed to a Mortgaged Property in lieu of foreclosure) on
behalf of the Certificateholders may vary considerably depending on the
particular Mortgage Loan, the Mortgaged Property, the borrower, the presence of
an acceptable party to assume the Mortgage Loan and the laws of the jurisdiction
in which the Mortgaged Property is located. If a borrower files a bankruptcy
petition, the Master Servicer may not be permitted to accelerate the maturity of
the related Mortgage Loan or to foreclose on the Mortgaged Property for a
considerable period of time. See "Certain Legal Aspects of Mortgage Loans and
Leases".
A Pooling Agreement may grant to the Master Servicer, a Special Servicer,
a provider of Credit Support and/or the holder or holders of certain classes of
Certificates of the related series a right of first refusal to purchase from the
Trust Fund, at a predetermined purchase price (which, if insufficient to fully
fund the entitlements of Certificateholders to principal and interest thereon,
will be specified in the related Prospectus Supplement), any Mortgage Loan as to
which a specified number of scheduled payments are delinquent. In addition,
unless otherwise specified in the related Prospectus Supplement, the Master
Servicer may offer to sell any defaulted Mortgage Loan if and when the Master
Servicer determines, consistent with the Servicing Standard, that such a sale
would produce a greater recovery on a present value basis than would liquidation
of the related Mortgaged Property. Unless otherwise provided in the related
Prospectus Supplement, the related Pooling Agreement will require that the
Master Servicer accept the highest cash bid received from any person (including
itself, an affiliate of the Master Servicer or any Certificateholder) that
constitutes a fair price for such defaulted Mortgage Loan. In the absence of any
bid determined in accordance with the related Pooling Agreement to be fair, the
Master Servicer will generally be required to proceed with respect to such
defaulted Mortgage Loan as described below.
If a default on a Mortgage Loan has occurred or, in the Master Servicer's
judgment, is imminent, the Master Servicer, on behalf of the Trustee, may at any
time institute foreclosure proceedings, exercise any power of sale contained in
the related Mortgage, obtain a deed in lieu of foreclosure, or otherwise acquire
title to the related Mortgaged Property, by operation of law or otherwise, if
such action is consistent with the Servicing Standard. Unless otherwise
specified in the related Prospectus Supplement, the Master Servicer may not,
however, acquire title to any Mortgaged Property or take any other action that
would cause the Trustee, for the benefit of Certificateholders of the related
series, or any other specified person to be considered to hold title to, to be a
"mortgagee-in-possession" of, or to be an "owner" or an "operator" of such
Mortgaged Property within the meaning of certain federal environmental laws,
unless the Master Servicer has previously determined, based on a report prepared
by a person who regularly conducts environmental audits (which report will be an
expense of the Trust Fund), that:
(i) either the Mortgaged Property is in compliance with applicable
environmental laws and regulations or, if not, that taking such actions as
are necessary to bring the Mortgaged Property into compliance therewith is
reasonably likely to produce a greater recovery on a present value basis
than not taking such actions; and
(ii) either there are no circumstances or conditions present at the
Mortgaged Property relating to the use, management or disposal of
hazardous materials for which investigation, testing, monitoring,
containment, cleanup or remediation could be required under any applicable
environmental laws and regulations or, if such circumstances or conditions
are present for which any such action could reasonably be expected to be
required, taking such actions with respect to the Mortgaged Property is
reasonably likely to produce a greater recovery on a present value basis
than not taking such actions. See "Certain Legal Aspects of Mortgage Loans
and Leases--Environmental Considerations".
Unless otherwise provided in the related Prospectus Supplement, if title
to any Mortgaged Property is acquired by a Trust Fund as to which a REMIC
election has been made, the Master Servicer, on behalf of the Trust Fund, will
be required to sell the Mortgaged Property within two years of acquisition,
unless (i) the Internal Revenue Service grants an extension of time to sell such
property or (ii) the Trustee receives an opinion of independent counsel to the
effect that the holding of the property by the Trust Fund for more than two
years after its acquisition will not result in the
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imposition of a tax on the Trust Fund or cause the Trust Fund to fail to qualify
as a REMIC under the Code at any time that any Certificate is outstanding.
Subject to the foregoing, the Master Servicer will generally be required to
solicit bids for any Mortgaged Property so acquired in such a manner as will be
reasonably likely to realize a fair price for such property. If the Trust Fund
acquires title to any Mortgaged Property, the Master Servicer, on behalf of the
Trust Fund, may retain an independent contractor to manage and operate such
property. The retention of an independent contractor, however, will not relieve
the Master Servicer of its obligation to manage such Mortgaged Property in a
manner consistent with the Servicing Standard.
If Liquidation Proceeds collected with respect to a defaulted Mortgage
Loan are less than the outstanding principal balance of the defaulted Mortgage
Loan plus interest accrued thereon plus the aggregate amount of reimbursable
expenses incurred by the Master Servicer with respect to such Mortgage Loan, the
Trust Fund will realize a loss in the amount of such difference. The Master
Servicer will be entitled to reimburse itself from the Liquidation Proceeds
recovered on any defaulted Mortgage Loan (prior to the distribution of such
Liquidation Proceeds to Certificateholders), amounts that represent unpaid
servicing compensation in respect of the Mortgage Loan, unreimbursed servicing
expenses incurred with respect to the Mortgage Loan and any unreimbursed
advances of delinquent payments made with respect to the Mortgage Loan.
If any Mortgaged Property suffers damage that the proceeds, if any, of the
related hazard insurance policy are insufficient to fully restore, the Master
Servicer will not be required to expend its own funds to restore the damaged
property unless (and to the extent not otherwise provided in the related
Prospectus Supplement) it determines (i) that such restoration will increase the
proceeds to Certificateholders on liquidation of the Mortgage Loan after
reimbursement of the Master Servicer for its expenses and (ii) that such
expenses will be recoverable by it from related Insurance Proceeds or
Liquidation Proceeds.
HAZARD INSURANCE POLICIES
Unless otherwise specified in the related Prospectus Supplement, each
Pooling Agreement will require the related Master Servicer to cause each
Mortgage Loan borrower to maintain a hazard insurance policy that provides for
such coverage as is required under the related Mortgage or, if the Mortgage
permits the holder thereof to dictate to the borrower the insurance coverage to
be maintained on the related Mortgaged Property, such coverage as is consistent
with the requirements of the Servicing Standard. Unless otherwise specified in
the related Prospectus Supplement, such coverage generally will be in an amount
equal to the lesser of the principal balance owing on such Mortgage Loan and the
replacement cost of the Mortgaged Property, but in either case not less than the
amount necessary to avoid the application of any co-insurance clause contained
in the hazard insurance policy. The ability of the Master Servicer to assure
that hazard insurance proceeds are appropriately applied may be dependent upon
its being named as an additional insured under any hazard insurance policy and
under any other insurance policy referred to below, or upon the extent to which
information concerning covered losses is furnished by borrowers. All amounts
collected by the Master Servicer under any such policy (except for amounts to be
applied to the restoration or repair of the Mortgaged Property or released to
the borrower in accordance with the Master Servicer's normal servicing
procedures and/or to the terms and conditions of the related Mortgage and
Mortgage Note) will be deposited in the related Certificate Account. The Pooling
Agreement may provide that the Master Servicer may satisfy its obligation to
cause each borrower to maintain such a hazard insurance policy by maintaining a
blanket policy insuring against hazard losses on all of the Mortgage Loans in
the related Trust Fund. If such blanket policy contains a deductible clause, the
Master Servicer will be required, in the event of a casualty covered by such
blanket policy, to deposit in the related Certificate Account all sums that
would have been deposited therein but for such deductible clause.
In general, the standard form of fire and extended coverage policy covers
physical damage to or destruction of the improvements of the property by fire,
lightning, explosion, smoke, windstorm and hail, and riot, strike and civil
commotion, subject to the conditions and exclusions specified in each policy.
Although the policies covering the Mortgaged Properties will be underwritten by
different insurers under different state laws in accordance with different
applicable state forms, and therefore will not contain identical terms and
conditions, most such policies typically do not cover any physical damage
resulting from war, revolution, governmental actions, floods and other
water-related causes, earth movement (including earthquakes, landslides and
mudflows), wet or dry rot, vermin, domestic animals and certain other kinds of
risks.
The hazard insurance policies covering the Mortgaged Properties will
typically contain co-insurance clauses that in effect require an insured at all
times to carry insurance of a specified percentage (generally 80% to 90%) of the
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full replacement value of the improvements on the property in order to recover
the full amount of any partial loss. If the insured's coverage falls below this
specified percentage, such clauses generally provide that the insurer's
liability in the event of partial loss does not exceed the lesser of (i) the
replacement cost of the improvements less physical depreciation and (ii) such
proportion of the loss as the amount of insurance carried bears to the specified
percentage of the full replacement cost of such improvements.
DUE-ON-SALE AND DUE-ON-ENCUMBRANCE PROVISIONS
Certain of the Mortgage Loans may contain a due-on-sale clause that
entitles the lender to accelerate payment of the Mortgage Loan upon any sale or
other transfer of the related Mortgaged Property made without the lender's
consent. Certain of the Mortgage Loans may also contain a due-on-encumbrance
clause that entitles the lender to accelerate the maturity of the Mortgage Loan
upon the creation of any other lien or encumbrance upon the Mortgaged Property.
Unless otherwise provided in the related Prospectus Supplement, the Master
Servicer will determine whether to exercise any right the Trustee may have under
any such provision in a manner consistent with the Servicing Standard. Unless
otherwise specified in the related Prospectus Supplement, the Master Servicer
will be entitled to retain as additional servicing compensation any fee
collected in connection with the permitted transfer of a Mortgaged Property. See
"Certain Legal Aspects of Mortgage Loans and Leases--Due-on-Sale and Due-on
Encumbrance".
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
Unless otherwise specified in the related Prospectus Supplement, a Master
Servicer's primary servicing compensation with respect to a series of
Certificates will come from the periodic payment to it of a portion of the
interest payments on each Mortgage Loan in the related Trust Fund. Since that
compensation is generally based on a percentage of the principal balance of each
such Mortgage Loan outstanding from time to time, it will decrease in accordance
with the amortization of the Mortgage Loans. The Prospectus Supplement with
respect to a series of Certificates may provide that, as additional
compensation, the Master Servicer may retain all or a portion of late payment
charges, Prepayment Premiums, modification fees and other fees collected from
borrowers and any interest or other income that may be earned on funds held in
the Certificate Account. Any Sub-Servicer will receive a portion of the Master
Servicer's compensation as its sub-servicing compensation.
In addition to amounts payable to any Sub-Servicer, a Master Servicer may
be required, to the extent provided in the related Prospectus Supplement, to pay
from amounts that represent its servicing compensation certain expenses incurred
in connection with the administration of the related Trust Fund, including,
without limitation, payment of the fees and disbursements of independent
accountants and payment of expenses incurred in connection with distributions
and reports to Certificateholders. Certain other expenses, including certain
expenses related to Mortgage Loan defaults and liquidations and, to the extent
so provided in the related Prospectus Supplement, interest on such expenses at
the rate specified therein, and the fees of the Trustee and any Special
Servicer, may be required to be borne by the Trust Fund.
If and to the extent provided in the related Prospectus Supplement, the
Master Servicer may be required to apply a portion of the servicing compensation
otherwise payable to it in respect of any period to Prepayment Interest
Shortfalls. See "Yield and Maturity Considerations--Certain Shortfalls in
Collections of Interest".
EVIDENCE AS TO COMPLIANCE
Unless otherwise provided in the related Prospectus Supplement, each
Pooling Agreement will require that, on or before a specified date in each year,
the Master Servicer cause a firm of independent public accountants to furnish a
statement to the Trustee to the effect that, based on an examination by such
firm conducted substantially in compliance with either the Uniform Single Audit
Program for Mortgage Bankers or the Audit Program for
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Mortgages serviced for FHLMC, the servicing by or on behalf of the Master
Servicer of mortgage loans under pooling and servicing agreements substantially
similar to each other (which may include the related Pooling Agreement) was
conducted through the preceding calendar year or other specified twelve-month
period in compliance with the terms of such agreements except for any
significant exceptions or errors in records that, in the opinion of such firm,
either the Audit Program for Mortgages serviced for FHLMC or paragraph 4 of the
Uniform Single Audit Program for Mortgage Bankers, as the case may be, requires
it to report. Each Pooling Agreement will also provide for delivery to the
Trustee, on or before a specified date in each year, of a statement signed by
one or more officers of the Master Servicer to the effect that the Master
Servicer has fulfilled its material obligations under the Pooling Agreement
throughout the preceding calendar year or other specified twelve-month period.
Unless otherwise provided in the related Prospectus Supplement, copies of
the annual accountants' statement and the statement of officers of a Master
Servicer will be made available to Certificateholders without charge upon
written request to the Master Servicer.
CERTAIN MATTERS REGARDING THE MASTER SERVICER AND THE DEPOSITOR
The Master Servicer under a Pooling Agreement may be an affiliate of the
Depositor and may have other normal business relationships with the Depositor or
the Depositor's affiliates. Unless otherwise specified in the Prospectus
Supplement for a series of Certificates, the related Pooling Agreement will
permit the Master Servicer to resign from its obligations thereunder only upon a
determination that such obligations are no longer permissible under applicable
law or are in material conflict by reason of applicable law with any other
activities carried on by it at the date of the Pooling Agreement. No such
resignation will become effective until the Trustee or a successor servicer has
assumed the Master Servicer's obligations and duties under the Pooling
Agreement. Unless otherwise specified in the related Prospectus Supplement, the
Master Servicer will also be required to maintain a fidelity bond and errors and
omissions policy that provides coverage against losses that may be sustained as
a result of an officer's or employee's misappropriation of funds, errors and
omissions or negligence, subject to certain limitations as to amount of
coverage, deductible amounts, conditions, exclusions and exceptions.
Unless otherwise specified in the related Prospectus Supplement, each
Pooling Agreement will further provide that none of the Master Servicer, the
Depositor and any director, officer, employee or agent of either of them will be
under any liability to the related Trust Fund or Certificateholders for any
action taken, or not taken, in good faith pursuant to the Pooling Agreement or
for errors in judgment; provided, however, that none of the Master Servicer, the
Depositor and any such person will be protected against any breach of a
representation, warranty or covenant made in such Pooling Agreement, or against
any expense or liability that such person is specifically required to bear
pursuant to the terms of such Pooling Agreement, or against any liability that
would otherwise be imposed by reason of willful misfeasance, bad faith or gross
negligence in the performance of obligations or duties thereunder or by reason
of reckless disregard of such obligations and duties. Unless otherwise specified
in the related Prospectus Supplement, each Pooling Agreement will further
provide that the Master Servicer, the Depositor and any director, officer,
employee or agent of either of them will be entitled to indemnification by the
related Trust Fund against any loss, liability or expense incurred in connection
with the Pooling Agreement or the related series of Certificates; provided,
however, that such indemnification will not extend to any loss, liability or
expense (i) that such person is specifically required to bear pursuant to the
terms of such agreement, or is incidental to the performance of obligations and
duties thereunder and is not reimbursable pursuant to the Pooling Agreement;
(ii) incurred in connection with any breach of a representation, warranty or
covenant made in the Pooling Agreement; (iii) incurred by reason of misfeasance,
bad faith or gross negligence in the performance of obligations or duties under
the Pooling Agreement, or by reason of reckless disregard of such obligations or
duties; or (iv) incurred in connection with any violation of any state or
federal securities law. In addition, each Pooling Agreement will provide that
neither the Master Servicer nor the Depositor will be under any obligation to
appear in, prosecute or defend any legal action that is not incidental to its
respective responsibilities under the Pooling Agreement and that in its opinion
may involve it in any expense or liability. However, each of the Master Servicer
and the Depositor will be permitted, in the exercise of its discretion, to
undertake any such action that it may deem necessary or desirable with respect
to the enforcement and/or protection of the rights and duties of the parties to
the Pooling Agreement and the interests of the Certificateholders thereunder. In
such event, the legal expenses and costs of such action, and any liability
resulting therefrom, will be expenses, costs and liabilities of the
Certificateholders, and the Master Servicer or the Depositor, as the case may
be, will be entitled to charge the related Certificate Account therefor.
Subject, in certain cases, to the satisfaction of certain conditions that
may be required in the related Pooling Agreement any person into which the
Master Servicer or the Depositor may be merged or consolidated, or any person
resulting from any merger or consolidation to which the Master Servicer or the
Depositor is a party, or any person succeeding to the business of the Master
Servicer or the Depositor, will be the successor of the Master Servicer or the
Depositor, as the case may be, under the related Pooling Agreement.
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EVENTS OF DEFAULT
Unless otherwise provided in the Prospectus Supplement for a series of
Certificates, "Events of Default" under the related Pooling Agreement will
include (i) any failure by the Master Servicer to distribute or cause to be
distributed to Certificateholders, or to remit to the Trustee for distribution
to Certificateholders in a timely manner, any amount required to be so
distributed or remitted, which failure continues unremedied for five days after
written notice of such failure has been given to the Master Servicer by the
Trustee or the Depositor, or to the Master Servicer, the Depositor and the
Trustee by Certificateholders entitled to not less than 25% (or such other
percentage specified in the related Prospectus Supplement) of the Voting Rights
for such series, (ii) any failure by the Master Servicer duly to observe or
perform in any material respect any of its other covenants or obligations under
the Pooling Agreement which continues unremedied for 60 days after written
notice of such failure has been given to the Master Servicer by the Trustee or
the Depositor, or to the Master Servicer, the Depositor and the Trustee by
Certificateholders entitled to not less than 25% (or such other percentage
specified in the related Prospectus Supplement) of the Voting Rights for such
series; and (iii) certain events of insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings in respect of or
relating to the Master Servicer and certain actions by or on behalf of the
Master Servicer indicating its insolvency or inability to pay its obligations.
Material variations to the foregoing Events of Default (other than to add
thereto or shorten cure periods or eliminate notice requirements) will be
specified in the related Prospectus Supplement.
RIGHTS UPON EVENT OF DEFAULT
Unless otherwise provided in the Prospectus Supplement, so long as an
Event of Default under a Pooling Agreement remains unremedied, the Depositor or
the Trustee will be authorized, and at the direction of Certificateholders
entitled to not less than 51% (or such other percentage specified in the related
Prospectus Supplement) of the Voting Rights for such series, the Trustee will be
required, to terminate all of the rights and obligations of the Master Servicer
as master servicer under the Pooling Agreement, whereupon the Trustee will
succeed to all of the responsibilities, duties and liabilities of the Master
Servicer under the Pooling Agreement (except that if the Master Servicer is
required to make advances in respect of Mortgage Loan delinquencies, but the
Trustee is prohibited by law from obligating itself to do so, or if the related
Prospectus Supplement so specifies, the Trustee will not be obligated to make
such advances) and will be entitled to similar compensation arrangements. Unless
otherwise specified in the related Prospectus Supplement, if the Trustee is
unwilling or unable so to act, it may (or, at the written request of
Certificateholders entitled to at least 51% (or such other percentage specified
in the related Prospectus Supplement) of the Voting Rights for such series, it
will be required to) appoint, or petition a court of competent jurisdiction to
appoint, a loan servicing institution that (unless otherwise provided in the
related Prospectus Supplement) is acceptable to each Rating Agency that assigned
ratings to the Offered Certificates of such series to act as successor to the
Master Servicer under the Pooling Agreement. Pending such appointment, the
Trustee will be obligated to act in such capacity.
No Certificateholder will have the right under any Pooling Agreement to
institute any proceeding with respect thereto unless such holder previously has
given to the Trustee written notice of default and unless Certificateholders
entitled to at least 25% (or such other percentage specified in the related
Prospectus Supplement) of the Voting Rights for the related series shall have
made written request upon the Trustee to institute such proceeding in its own
name as Trustee thereunder and shall have offered to the Trustee reasonable
indemnity, and the Trustee for 60 days (or such other period specified in the
related Prospectus Supplement) shall have neglected or refused to institute any
such proceeding. The Trustee, however, will be under no obligation to exercise
any of the trusts or powers vested in it by any Pooling Agreement or to make any
investigation of matters arising thereunder or to institute, conduct or defend
any litigation thereunder or in relation thereto at the request, order or
direction of any of the holders of Certificates of the related series, unless
such Certificateholders have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which may be incurred
therein or thereby.
AMENDMENT
Unless otherwise provided in the Prospectus Supplement, each Pooling
Agreement may be amended by the parties thereto, without the consent of any of
the holders of the related Certificates, (i) to cure any ambiguity, (ii) to
correct a defective provision therein or to correct, modify or supplement any
provision therein that may be
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inconsistent with any other provision therein, (iii) to add any other provisions
with respect to matters or questions arising under the Pooling Agreement that
are not inconsistent with the provisions thereof, (iv) to comply with any
requirements imposed by the Code or (v) for any other purpose; provided that
such amendment (other than an amendment for the purpose specified in clause (iv)
above) may not (as evidenced by an opinion of counsel to such effect
satisfactory to the Trustee) adversely affect in any material respect the
interests of any such holder. Unless otherwise specified in the related
Prospectus Supplement, each Pooling Agreement may also be amended for any
purpose by the parties, with the consent of Certificateholders entitled to at
least 51% (or such other percentage specified in the related Prospectus
Supplement) of the Voting Rights for the related series allocated to the
affected classes; provided, however, that unless otherwise specified in the
related Prospectus Supplement, no such amendment may (x) reduce in any manner
the amount of, or delay the timing of, payments received or advanced on Mortgage
Loans that are required to be distributed in respect of any Certificate without
the consent of the holder of such Certificate, (y) adversely affect in any
material respect the interests of the holders of any class of Certificates, in a
manner other than as described in clause (x), without the consent of the holders
of all Certificates of such class or (z) modify the provisions of the Pooling
Agreement described in this paragraph without the consent of the holders of all
Certificates of the related series. However, unless otherwise specified in the
related Prospectus Supplement, the Trustee will be prohibited from consenting to
any amendment of a Pooling Agreement pursuant to which a REMIC election is to be
or has been made unless the Trustee shall first have received an opinion of
counsel to the effect that such amendment will not result in the imposition of a
tax on the related Trust Fund or cause the related Trust Fund to fail to qualify
as a REMIC at any time that the related Certificates are outstanding.
LIST OF CERTIFICATEHOLDERS
Upon written request of any Certificateholder of record made for purposes
of communicating with other holders of Certificates of the same series with
respect to their rights under the related Pooling Agreement, the Trustee or
other specified person will afford such Certificateholder access, during normal
business hours, to the most recent list of Certificateholders of that series
then maintained by such person.
THE TRUSTEE
The Trustee under each Pooling Agreement will be named in the related
Prospectus Supplement. The commercial bank, national banking association,
banking corporation or trust company that serves as Trustee may have typical
banking relationships with the Depositor and its affiliates and with any Master
Servicer and its affiliates.
DUTIES OF THE TRUSTEE
The Trustee for a series of Certificates will make no representation as to
the validity or sufficiency of the related Pooling Agreement, the Certificates
or any Mortgage Loan or related document and will not be accountable for the use
or application by or on behalf of any Master Servicer of any funds paid to the
Master Servicer or any Special Servicer in respect of the Certificates or the
Mortgage Loans, or any funds deposited into or withdrawn from the Certificate
Account or any other account by or on behalf of the Master Servicer or any
Special Servicer. If no Event of Default has occurred and is continuing, the
Trustee will be required to perform only those duties specifically required
under the related Pooling Agreement. However, upon receipt of any of the various
certificates, reports or other instruments required to be furnished to it
pursuant to the Pooling Agreement, the Trustee will be required to examine such
documents and to determine whether they conform to the requirements of the
Pooling Agreement.
CERTAIN MATTERS REGARDING THE TRUSTEE
Unless otherwise specified in the related Prospectus Supplement, the
Trustee for a series of Certificates will be entitled to indemnification, from
amounts held in the related Certificate Account, for any loss, liability or
expense incurred by the Trustee in connection with the Trustee's acceptance or
administration of its trusts under the related Pooling Agreement; provided,
however, that such indemnification will not extend to any loss, liability or
expense that constitutes a specific liability imposed on the Trustee pursuant to
the Pooling Agreement, or to any loss, liability or expense incurred by reason
of willful misfeasance, bad faith or negligence on the part of the Trustee in
the performance of its obligations and duties thereunder, or by reason of its
reckless disregard of such obligations or
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duties, or as may arise from a breach of any representation, warranty or
covenant of the Trustee made therein. As and to the extent described in the
related Prospectus Supplement, the fees and normal disbursements of any Trustee
may be the expense of the related Master Servicer or other specified person or
may be required to be borne by the related Trust Fund.
RESIGNATION AND REMOVAL OF THE TRUSTEE
The Trustee for a series of Certificates will be permitted at any time to
resign from its obligations and duties under the related Pooling Agreement by
giving written notice thereof to the Depositor. Upon receiving such notice of
resignation, the Master Servicer (or such other person as may be specified in
the related Prospectus Supplement) will be required to use reasonable efforts to
promptly appoint a successor trustee. If no successor trustee shall have
accepted an appointment within a specified period after the giving of such
notice of resignation, the resigning Trustee may petition any court of competent
jurisdiction to appoint a successor trustee.
Unless otherwise provided in the related Prospectus Supplement, if at any
time the Trustee ceases to be eligible to continue as such under the related
Pooling Agreement, or if at any time the Trustee becomes incapable of acting, or
if certain events of (or proceedings in respect of) bankruptcy or insolvency
occur with respect to the Trustee, the Depositor will be authorized to remove
the Trustee and appoint a successor trustee. In addition, unless otherwise
provided in the related Prospectus Supplement, holders of the Certificates of
any series entitled to at least 51% (or such other percentage specified in the
related Prospectus Supplement) of the Voting Rights for such series may at any
time (with or without cause) remove the Trustee and appoint a successor trustee.
Any resignation or removal of the Trustee and appointment of a successor
trustee will not become effective until acceptance of appointment by the
successor trustee.
DESCRIPTION OF CREDIT SUPPORT
GENERAL
Credit Support may be provided with respect to one or more classes of the
Certificates of any series, or with respect to the related Mortgage Assets.
Credit Support may be in the form of overcollateralization, a letter of credit,
the subordination of one or more classes of Certificates, the use of a pool
insurance policy or guarantee insurance, the establishment of one or more
reserve funds or another method of Credit Support described in the related
Prospectus Supplement, or any combination of the foregoing. If so provided in
the related Prospectus Supplement, any form of Credit Support may provide credit
enhancement for more than one series of Certificates to the extent described
therein.
Unless otherwise provided in the related Prospectus Supplement for a
series of Certificates, the Credit Support will not provide protection against
all risks of loss and will not guarantee payment to Certificateholders of all
amounts to which they are entitled under the related Pooling Agreement. If
losses or shortfalls occur that exceed the amount covered by the Credit Support
or that are not covered by the Credit Support, Certificateholders will bear
their allocable share of deficiencies. Moreover, if a form of Credit Support
covers more than one series of Certificates, holders of Certificates of one
series will be subject to the risk that such Credit Support will be exhausted by
the claims of the holders of Certificates of one or more other series before the
former receive their intended share of such coverage.
If Credit Support is provided with respect to one or more classes of
Certificates of a series, or with respect to the related Mortgage Assets, the
related Prospectus Supplement will include a description of (i) the nature and
amount of coverage under such Credit Support, (ii) any conditions to payment
thereunder not otherwise described herein, (iii) the conditions (if any) under
which the amount of coverage under such Credit Support may be reduced and under
which such Credit Support may be terminated or replaced and (iv) the material
provisions relating to such Credit Support. Additionally, the related Prospectus
Supplement will set forth certain information with respect to the obligor under
any instrument of Credit Support, generally including (w) a brief description of
its principal business activities, (x) its principal place of business, place of
incorporation and the jurisdiction under which it is chartered or licensed to do
business, (y) if applicable, the identity of the regulatory agencies that
exercise primary jurisdiction over the conduct of its business and (z) its total
assets, and its stockholders' equity or policyholders' surplus, if applicable,
as of a date that will be specified in the Prospectus Supplement. See "Risk
Factors--Credit Support Limitations".
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SUBORDINATE CERTIFICATES
If so specified in the related Prospectus Supplement, one or more classes
of Certificates of a series may be Subordinate Certificates. To the extent
specified in the related Prospectus Supplement, the rights of the holders of
Subordinate Certificates to receive distributions from the Certificate Account
on any Distribution Date will be subordinated to the corresponding rights of the
holders of Senior Certificates. If so provided in the related Prospectus
Supplement, the subordination of a class may apply only in the event of (or may
be limited to) certain types of losses or shortfalls. The related Prospectus
Supplement will set forth information concerning the amount of subordination
provided by a class or classes of Subordinate Certificates in a series, the
circumstances under which such subordination will be available and the manner in
which the amount of subordination will be made available.
CROSS-SUPPORT PROVISIONS
If the Mortgage Assets in any Trust Fund are divided into separate groups,
each supporting a separate class or classes of Certificates of a series, Credit
Support may be provided by cross-support provisions requiring that distributions
be made on Senior Certificates evidencing interests in one group of Mortgage
Assets prior to distributions on Subordinate Certificates evidencing interests
in a different group of Mortgage Assets within the Trust Fund. The Prospectus
Supplement for a series that includes a cross-support provision will describe
the manner and conditions for applying such provisions.
INSURANCE OR GUARANTEES WITH RESPECT TO MORTGAGE LOANS
If so provided in the Prospectus Supplement for a series of Certificates,
Mortgage Loans included in the related Trust Fund will be covered for certain
default risks by insurance policies or guarantees. To the extent material, a
copy of each such instrument will accompany the Current Report on Form 8-K to be
filed with the Commission within 15 days of issuance of the Certificates of the
related series.
LETTER OF CREDIT
If so provided in the Prospectus Supplement for a series of Certificates,
deficiencies in amounts otherwise payable on such Certificates or certain
classes thereof will be covered by one or more letters of credit, issued by a
bank or financial institution specified in such Prospectus Supplement (the "L/C
Bank"). Under a letter of credit, the L/C Bank will be obligated to honor draws
thereunder in an aggregate fixed dollar amount, net of unreimbursed payments
thereunder, generally equal to a percentage specified in the related Prospectus
Supplement of the aggregate principal balance of the Mortgage Assets on the
related Cut-off Date or of the initial aggregate Certificate Balance of one or
more classes of Certificates. If so specified in the related Prospectus
Supplement, the letter of credit may permit draws only in the event of certain
types of losses and shortfalls. The amount available under the letter of credit
will, in all cases, be reduced to the extent of the unreimbursed payments
thereunder and may otherwise be reduced as described in the related Prospectus
Supplement. The obligations of the L/C Bank under the letter of credit for each
series of Certificates will expire at the earlier of the date specified in the
related Prospectus Supplement or the termination of the Trust Fund. A copy of
any such letter of credit will accompany the Current Report on Form 8-K to be
filed with the Commission within 15 days of issuance of the Certificates of the
related series.
CERTIFICATE INSURANCE AND SURETY BONDS
If so provided in the Prospectus Supplement for a series of Certificates,
deficiencies in amounts otherwise payable on such Certificates or certain
classes thereof will be covered by insurance policies and/or surety bonds
provided by one or more insurance companies or sureties. Such instruments may
cover, with respect to one or more classes of Certificates of the related
series, timely distributions of interest and/or full distributions of principal
on the basis of a schedule of principal distributions set forth in or determined
in the manner specified in the related Prospectus Supplement. A copy of any such
instrument will accompany the Current Report on Form 8-K to be filed with the
Commission within 15 days of issuance of the Certificates of the related series.
RESERVE FUNDS
If so provided in the Prospectus Supplement for a series of Certificates,
deficiencies in amounts otherwise payable on such Certificates or certain
classes thereof will be covered (to the extent of available funds) by one or
more
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reserve funds in which cash, a letter of credit, Permitted Investments, a demand
note or a combination thereof will be deposited, in the amounts specified in
such Prospectus Supplement. If so specified in the related Prospectus
Supplement, the reserve fund for a series may also be funded over time by a
specified amount of the collections received on the related Mortgage Assets.
Amounts on deposit in any reserve fund for a series, together with the
reinvestment income thereon, if any, will be applied for the purposes, in the
manner, and to the extent specified in the related Prospectus Supplement. If so
specified in the related Prospectus Supplement, reserve funds may be established
to provide protection only against certain types of losses and shortfalls.
Following each Distribution Date, amounts in a 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.
If so specified in the related Prospectus Supplement, amounts deposited in
any reserve fund will be invested in Permitted Investments. Unless otherwise
specified in the related Prospectus Supplement, 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. However, such income may be payable to any related Master Servicer
or another service provider as additional compensation for its services. The
reserve fund, if any, for a series will not be a part of the Trust Fund unless
otherwise specified in the related Prospectus Supplement.
CREDIT SUPPORT WITH RESPECT TO CMBS
If so provided in the Prospectus Supplement for a series of Certificates,
any CMBS included in the related Trust Fund and/or the related underlying
mortgage loans may be covered by one or more of the types of Credit Support
described herein. The related Prospectus Supplement for any series of
Certificates evidencing an interest in a Trust Fund that includes CMBS will
describe to the extent information is available and deemed material, any similar
forms of Credit Support that are provided by or with respect to, or are included
as part of the trust fund evidenced by or providing security for, such CMBS. The
type, characteristic and amount of Credit Support will be determined based on
the characteristics of the Mortgage Assets and other factors and will be
established, in part, on the basis of requirements of each Rating Agency rating
the Certificates of such series. If so specified in the related Prospectus
Supplement, any such Credit Support may apply only in the event of certain types
of losses or delinquencies and the protection against losses or delinquencies
provided by such Credit Support will be limited.
CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS AND LEASES
The following discussion contains general summaries of certain legal
aspects of loans secured by commercial and multifamily residential properties.
Because such legal aspects are governed by applicable state law (which laws may
differ substantially), the summaries do not purport to be complete, to reflect
the laws of any particular state, or to encompass the laws of all states in
which the security for the Mortgage Loans (or mortgage loans underlying any
CMBS) is situated. Accordingly, the summaries are qualified in their entirety by
reference to the applicable laws of those states. See "Description of the Trust
Funds--Mortgage Loans--Leases". For purposes of the following discussion,
"Mortgage Loan" includes a mortgage loan underlying a CMBS.
GENERAL
Each Mortgage Loan will be evidenced by a note or bond and secured by an
instrument granting a security interest in real property, which may be a
mortgage, deed of trust or a deed to secure debt, depending upon the prevailing
practice and law in the state in which the related Mortgaged Property is
located. Mortgages, deeds of trust and deeds to secure debt are herein
collectively referred to as "mortgages". A mortgage creates a lien upon, or
grants a title interest in, the real property covered thereby, and represents
the security for the repayment of the indebtedness customarily evidenced by a
promissory note. The priority of the lien created or interest granted will
depend on the terms of the mortgage and, in some cases, on the terms of separate
subordination agreements or intercreditor agreements with others that hold
interests in the real property, the knowledge of the parties to the mortgage
and, generally, the order of recordation of the mortgage in the appropriate
public recording office. However, the lien of a recorded mortgage will generally
be subordinate to later-arising liens for real estate taxes and assessments and
other charges imposed under governmental police powers. Additionally, in some
states, mechanic's and materialman's liens have priority over mortgage liens.
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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 provisions of the related instrument, the law of the
state in which the real property is located, certain federal laws (including,
without limitation, the Soldiers' and Sailors' Civil Relief Act of 1940) and, in
some deed of trust transactions, the directions of the beneficiary.
TYPES OF MORTGAGE INSTRUMENTS
There are two parties to a mortgage: a mortgagor (the borrower and usually
the owner of the subject property) and a mortgagee (the lender). In a mortgage,
the mortgagor grants a lien on the subject property in favor of the mortgagee. A
deed of trust is a three-party instrument, among a trustor (the equivalent of a
borrower), a trustee to whom the real property is conveyed, and a beneficiary
(the lender) for whose benefit the conveyance is made. Under a deed of trust,
the trustor grants the property to the trustee, in trust, irrevocably until the
debt is paid, and generally with a power of sale. A deed to secure debt
typically has two parties. The borrower, or grantor, conveys title to the real
property to the grantee, or lender, generally with a power of sale, until such
time as the debt is repaid. In a case where the borrower is a land trust, there
would be an additional party to a mortgage instrument because legal title to the
property is held by a land trustee under a land trust agreement for the benefit
of the borrower. At origination of a mortgage loan involving a land trust, the
borrower generally executes a separate undertaking to make payments on the
mortgage note. 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 provisions of the related instrument,
the law of the state in which the real property is located, certain federal laws
and, in some deed of trust transactions, the directions of the beneficiary.
References herein and in any Prospectus Supplement to "mortgage" shall include a
mortgage, a deed of trust or a deed to secure debt, as the case may be.
LEASES AND RENTS
Mortgages that encumber income-producing property often contain an
assignment of rents and leases, pursuant to which the borrower assigns to the
lender the borrower's right, title and interest as landlord under each lease and
the income derived therefrom, while (unless rents are to be paid directly to the
lender) retaining a revocable license to collect the rents for so long as there
is no default. If the borrower defaults, the license terminates and the lender
is entitled to collect the rents. Local law may require that the lender take
possession of the property and/or obtain a court-appointed receiver before
becoming entitled to collect the rents.
In most states, hotel and motel room rates are considered accounts
receivable under the Uniform Commercial Code ("UCC"); in cases where hotels or
motels constitute loan security, the rates are generally pledged by the borrower
as additional security for the loan. In general, the lender must file financing
statements in order to perfect its security interest in the rates and must file
continuation statements, generally every five years, to maintain perfection of
such security interest. Even if the lender's security interest in room rates is
perfected under the UCC, it will generally be required to commence a foreclosure
action or otherwise take possession of the property in order to collect the room
rates following a default. See "--Bankruptcy Laws".
PERSONALTY
In the case of certain types of mortgaged properties, such as hotels,
motels and nursing homes, personal property (to the extent owned by the borrower
and not previously pledged) may constitute a significant portion of the
property's value as security. The creation and enforcement of liens on personal
property are governed by the UCC. Accordingly, if a borrower pledges personal
property as security for a mortgage loan, the lender generally must file UCC
financing statements in order to perfect its security interest therein, and must
file continuation statements, generally every five years, to maintain that
perfection.
COOPERATIVE LOANS
If specified in the related Prospectus Supplement, the Mortgage Loans may
consist of loans secured by "blanket mortgages" on the property owned by
cooperative housing corporations (each a "Cooperative"). If specified in the
related Prospectus Supplement, the Mortgage Loans may consist of cooperative
apartment loans ("Cooperative Loans") secured by security interests in shares
issued by Cooperatives and in the related proprietary leases or
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occupancy agreements granting exclusive rights to occupy specific dwelling units
in the Cooperatives' buildings. The security agreement will create a lien upon,
or grant a title interest in, the property which it covers, the priority of
which will depend on the terms of the particular security agreement as well as
the order of recordation of the agreement in the appropriate recording office.
Such a lien or title interest is not prior to the lien for real estate taxes and
assessments and other charges imposed under governmental police powers.
A Cooperative generally owns in fee or has a leasehold interest in land
and owns in fee or leases the building or buildings thereon and all separate
dwelling units in the buildings. The Cooperative is owned by tenant-stockholders
who, through ownership of stock or shares in the corporation, receive
proprietary lease or occupancy agreements which confer exclusive rights to
occupy specific units. Generally, a tenant-stockholder of a Cooperative must
make a monthly payment to the Cooperative representing such tenant-stockholder's
pro rata share of the Cooperative's payments for its blanket mortgage, real
property taxes, maintenance expenses and other capital or ordinary expenses. The
Cooperative is directly responsible for property management and, in most cases,
payment of real estate taxes, other governmental impositions and hazard and
liability insurance. If there is a blanket mortgage or mortgages on the
Cooperative apartment building or underlying land, as is generally the case, or
an underlying lease of the land, as is the case in some instances, the
Cooperative, as property mortgagor, or lessee, as the case may be, is also
responsible for meeting these mortgage or rental obligations. A blanket mortgage
is ordinarily incurred by the Cooperative in connection with either the
construction or purchase of the Cooperative's apartment building or obtaining of
capital by the Cooperative. The interest of the occupant under proprietary
leases or occupancy agreements as to which that Cooperative is the landlord are
generally subordinate to the interest of the holder of a blanket mortgage and to
the interest of the holder of a land lease. If the Cooperative is unable to meet
the payment obligations (i) arising under a blanket mortgage, the mortgagee
holding a blanket mortgage could foreclose on that mortgage and terminate all
subordinate proprietary leases and occupancy agreements, or (ii) arising under
its land lease, the holder of the landlord's interest under the land lease could
terminate it and all subordinate proprietary leases and occupancy agreements.
Also, a blanket mortgage on a Cooperative may provide financing in the form of a
mortgage that does not fully amortize, with a significant portion of principal
being due in one final payment at maturity. The inability of the Cooperative to
refinance a mortgage and its consequent inability to make such final payment
could lead to foreclosure by the mortgagee. Similarly, a land lease has an
expiration date and the inability of the Cooperative to extend its term, or, in
the alternative, to purchase the land, could lead to termination of the
Cooperatives' interest in the property and termination of all proprietary leases
and occupancy agreements. Upon foreclosure of a blanket mortgage on a
Cooperative, the lender would normally be required to take the Mortgaged
Property subject to state and local regulations that afford tenants who are not
shareholders various rent control and other protections. A foreclosure by the
holder of a blanket mortgage or the termination of the underlying lease could
eliminate or significantly diminish the value of any collateral held by a party
who financed the purchase of cooperative shares by an individual tenant
stockholder.
An ownership interest in a Cooperative and accompanying occupancy rights
are financed through a cooperative share loan evidenced by a promissory note and
secured by an assignment of and a security interest in the occupancy agreement
or proprietary lease and a security interest in the related cooperative shares.
The lender generally takes possession of the share certificate and a counterpart
of the proprietary lease or occupancy agreement and a financing statement
covering the proprietary lease or occupancy agreement and the cooperative shares
are filed in the appropriate state and local offices to perfect the lender's
interest in its collateral. Subject to the limitations discussed below, upon
default of the tenant-stockholder, the lender may sue for judgment on the
promissory note, dispose of the collateral at a public or private sale or
otherwise proceed against the collateral or tenant-stockholder as an individual
as provided in the security agreement covering the assignment of the proprietary
lease or occupancy agreement and the pledge of cooperative shares. See
"--Foreclosure--Cooperative Loans" below.
JUNIOR MORTGAGES; RIGHTS OF SENIOR LENDERS
Some of the Mortgage Loans included in a Trust Fund may be secured by
mortgage instruments that are subordinate to mortgage instruments held by other
lenders. The rights of the Trust Fund (and therefore the Certificateholders), as
holder of a junior mortgage instrument, are subordinate to those of the senior
lender, including the prior rights of the senior lender to receive rents, hazard
insurance and condemnation proceeds and to cause the Mortgaged Property to be
sold upon borrower's default and thereby extinguish the Trust Fund's junior lien
unless the Master Servicer or Special Servicer asserts its subordinate interest
in a property in a foreclosure litigation or satisfies
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the defaulted senior loan. As discussed more fully below, in many states a
junior lender may satisfy a defaulted senior loan in full, adding the amounts
expended to the balance due on the junior loan. Absent a provision in the senior
mortgage instrument, no notice of default is required to be given to the junior
lender.
The form of the mortgage instrument used by many institutional lenders
confers on the lender the right both to receive all proceeds collected under any
hazard insurance policy and all awards made in connection with any condemnation
proceedings, and (subject to any limits imposed by applicable state law) to
apply such proceeds and awards to any indebtedness secured by the mortgage
instrument in such order as the lender may determine. Thus, if improvements on a
property are damaged or destroyed by fire or other casualty, or if the property
is taken by condemnation, the holder of the senior mortgage instrument will have
the prior right to collect any insurance proceeds payable under a hazard
insurance policy and any award of damages in connection with the condemnation
and to apply the same to the senior indebtedness. Accordingly, only the proceeds
in excess of the amount of senior indebtedness will be available to be applied
to the indebtedness secured by a junior mortgage instrument.
The form of mortgage instrument used by many institutional lenders
typically contains a "future advance" clause, which provides, in general, that
additional amounts advanced to or on behalf of the mortgagor or trustor by the
mortgagee or beneficiary are to be secured by the mortgage instrument. While
such a clause is valid under the laws of most states, the priority of any
advance made under the clause depends, in some states, on whether the advance
was an "obligatory" or an "optional" advance. If the lender is obligated to
advance the additional amounts, the advance may be entitled to receive the same
priority as the amounts advanced at origination, notwithstanding that
intervening junior liens may have been recorded between the date of recording of
the senior mortgage instrument and the date of the future advance, and
notwithstanding that the senior lender had actual knowledge of such intervening
junior liens at the time of the advance. Where the senior lender is not
obligated to advance the additional amounts and has actual knowledge of the
intervening junior liens, the advance may be subordinate to such intervening
junior liens. Priority of advances under a "future advance" clause rests, in
many other states, on state law giving priority to all advances made under the
loan agreement up to a "credit limit" amount stated in the recorded mortgage.
Another provision typically found in the form of mortgage instrument used
by many institutional lenders permits the lender to itself perform certain
obligations of the borrower (for example, the obligations to pay when due all
taxes and assessments on the property and, when due, all encumbrances, charges
and liens on the property that are senior to the lien of the mortgage
instrument, to maintain hazard insurance on the property, and to maintain and
repair the property) upon a failure of the borrower to do so, with all sums so
expended by the lender becoming part of the indebtedness secured by the mortgage
instrument.
The form of mortgage instrument used by many institutional lenders
typically requires the borrower to obtain the consent of the lender in respect
of actions affecting the mortgaged property, including the execution of new
leases and the termination or modification of existing leases, the performance
of alterations to buildings forming a part of the mortgaged property and the
execution of management and leasing agreements for the mortgaged property.
Tenants will often refuse to execute leases unless the lender executes a written
agreement with the tenant not to disturb the tenant's possession of its premises
in the event of a foreclosure. A senior lender may refuse to consent to matters
approved by a junior lender, with the result that the value of the security for
the junior mortgage instrument is diminished.
FORECLOSURE
General. Foreclosure is a legal procedure that allows the lender to seek
to recover its mortgage debt by enforcing its rights and available legal
remedies under the mortgage in respect of the mortgaged property. If the
borrower defaults in payment or performance of its obligations under the note or
mortgage, the lender has the right to institute foreclosure proceedings to sell
the real property at public auction to satisfy the indebtedness.
Foreclosure procedures vary from state to state. Two primary methods of
foreclosing a mortgage are judicial foreclosure, involving court proceedings,
and non-judicial foreclosure pursuant to a power of sale usually granted in the
mortgage instrument. Other foreclosure procedures are available in some states,
but they are either infrequently used or available only in limited
circumstances.
A foreclosure action is subject to most of the delays and expenses of
other lawsuits if defenses are raised or counterclaims are interposed, and
sometimes requires years to complete. Moreover, the filing by or against the
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borrower-mortgagor of a bankruptcy petition would impose an automatic stay on
such proceedings and could further delay a foreclosure sale.
Judicial Foreclosure. A judicial foreclosure proceeding is conducted in a
court having jurisdiction over the mortgaged property. Generally, the action is
initiated by the service of legal pleadings upon all parties having a
subordinate interest of record in the real property and all parties in
possession of the property, under leases or otherwise, whose interests are
subordinate to the mortgage. Delays in completion of the foreclosure may
occasionally result from difficulties in locating proper defendants. As stated
above, if the lender's right to foreclose is contested by any defendant, the
legal proceedings may be time-consuming. In addition, judicial foreclosure is a
proceeding in equity and, therefore, equitable defenses may be raised against
the foreclosure. Upon successful completion of a judicial foreclosure
proceeding, the court generally issues a judgment of foreclosure and appoints a
referee or other officer to conduct a public sale of the mortgaged property, the
proceeds of which are used to satisfy the judgment. Such sales are made in
accordance with procedures that vary from state to state.
Non-Judicial Foreclosure/Power of Sale. Foreclosure of a deed of trust is
generally accomplished by a non-judicial trustee's sale pursuant to a power of
sale typically granted in the deed of trust. A power of sale may also be
contained in any other type of mortgage instrument if applicable law so permits.
A power of sale under a deed of trust or mortgage allows a non-judicial public
sale to be conducted generally following a request from the beneficiary/lender
to the trustee to sell the property upon default by the borrower and after
notice of sale is given in accordance with the terms of the mortgage and
applicable state law. In some states, prior to such sale, the trustee under the
deed of trust must record a notice of default and notice of sale and send a copy
to the borrower and to any other party who has recorded a request for a copy of
a notice of default and notice of sale. In addition, in some states the trustee
must provide notice to any other party having an interest of record in the real
property, including junior lienholders. A notice of sale must be posted in a
public place and, in most states, published for a specified period of time in
one or more newspapers. The borrower or a junior lienholder may then have the
right, during a reinstatement period required in some states, to cure the
default by paying the entire actual amount in arrears (without regard to the
acceleration of the indebtedness), plus the lender's expenses incurred in
enforcing the obligation. In other states, the borrower or the junior lienholder
is not provided a period to reinstate the loan, but has only the right to pay
off the entire debt to prevent the foreclosure sale. In addition to such cure
rights, in most jurisdictions, the borrower-mortgagor or a subordinate
lienholder can seek to enjoin the non-judicial foreclosure by commencing a court
proceeding. Generally, state law governs the procedure for public sale, the
parties entitled to notice, the method of giving notice and the applicable time
periods.
Both judicial and non-judicial foreclosures may result in the termination
of leases at the mortgaged property, which in turn could result in the reduction
in the income for such property. Some of the factors that will determine whether
or not a lease will be terminated by a foreclosure are: the provisions of
applicable state law, the priority of the mortgage vis-a-vis the lease in
question, the terms of the lease and the terms of any subordination,
non-disturbance and attornment agreement between the tenant under the lease and
the mortgagee.
Equitable Limitations on Enforceability of Certain Provisions. United
States courts have traditionally imposed general equitable principles to limit
the remedies available to lenders in foreclosure actions. These principles are
generally designed to relieve borrowers from the effects of mortgage defaults
perceived as harsh or unfair. Relying on such principles, a court may alter the
specific terms of a loan to the extent it considers necessary to prevent or
remedy an injustice, undue oppression or overreaching, or may require the lender
to undertake affirmative actions to determine the cause of the borrower's
default and the likelihood that the borrower will be able to reinstate the loan.
In some cases, courts have substituted their judgment for the lender's and have
required that lenders reinstate loans or recast payment schedules in order to
accommodate borrowers who are suffering from a temporary financial disability.
In other cases, courts have limited the right of the lender to foreclose in the
case of a non-monetary default, such as a failure to adequately maintain the
mortgaged property or placing a subordinate mortgage or other encumbrance upon
the mortgaged property. Finally, some courts have addressed the issue of whether
federal or state constitutional provisions reflecting due process concerns for
adequate notice require that a borrower receive notice in addition to
statutorily prescribed minimum notice. For the most part, these cases have
upheld the reasonableness of the notice provisions or have found that a public
sale under a mortgage providing for a power of sale does not involve sufficient
state action to trigger constitutional protections.
Public Sale. A third party may be unwilling to purchase a mortgaged
property at a public sale for a number of reasons, including the difficulty in
determining the exact status of title to the property (due to, among other
things,
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redemption rights that may exist) and because of the possibility that physical
deterioration of the property may have occurred during the foreclosure
proceedings. Potential buyers may also 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. The court in Durrett held that even a non-collusive, regularly
conducted foreclosure sale was a fraudulent transfer under Section 67d of the
former Bankruptcy Act (Section 548 of the current Bankruptcy Code, Bankruptcy
Reform Act of 1978, as amended, 11 U.S.C. ss.ss. 101-1330 (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 were 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 with provisions similar to those construed in
Durrett. For these reasons, it is common for the lender to purchase the
mortgaged property for an amount equal to the secured indebtedness and accrued
and unpaid interest plus the expenses of foreclosure, in which event the
borrower's debt will be extinguished. Thereafter, subject to the borrower's
right in some states to remain in possession during a redemption period, the
lender will become the owner of the property and have both the benefits and
burdens of ownership, including the obligation to pay debt service on any senior
mortgages, to pay taxes, to obtain casualty insurance and to make such repairs
as are necessary to render the property suitable for sale. The costs involved in
a foreclosure process can often be quite expensive; such costs may include,
depending on the jurisdiction involved, legal fees, court administration fees,
referee fees and transfer taxes or fees. The costs of operating and maintaining
a commercial or multifamily residential property may be significant and may be
greater than the income derived from that property. The lender also will
commonly obtain the services of a real estate broker and pay the broker's
commission in connection with the sale or lease of the property. Depending upon
market conditions, the ultimate proceeds of the sale of the property may not
equal the lender's investment in the property. Moreover, because of the expenses
associated with acquiring, owning and selling a mortgaged property, a lender
could realize an overall loss on a mortgage loan even if the mortgaged property
is sold at foreclosure, or resold after it is acquired through foreclosure, for
an amount equal to the full outstanding principal amount of the loan plus
accrued interest.
The holder of a junior mortgage that forecloses on a mortgaged property
does so subject to senior mortgages and any other prior liens, and may be
obliged to keep senior mortgage loans current in order to avoid foreclosure of
its interest in the property. In addition, if the foreclosure of a junior
mortgage triggers the enforcement of a "due-on-sale" clause contained in a
senior mortgage, the junior mortgagee could be required to pay the full amount
of the senior mortgage indebtedness, including penalty fees and court costs, or
face foreclosure.
Rights of Redemption. The purposes of a foreclosure action are to enable
the lender to realize upon its security and to bar the borrower, and all persons
who have interests in the property that are subordinate to that of the
foreclosing lender, from exercise of their "equity of redemption". The doctrine
of equity of redemption provides that, until the property encumbered by a
mortgage has been sold in accordance with a properly conducted foreclosure and
foreclosure sale, those having interests that are subordinate to that of the
foreclosing lender have an equity of redemption and may redeem the property by
paying the entire debt with interest. Those having an equity of redemption must
generally be made parties and joined in the foreclosure proceeding in order for
their equity of redemption to be terminated.
The equity of redemption is a common-law (non-statutory) right which
should be distinguished from post-sale statutory rights of redemption. In some
states, after sale pursuant to a deed of trust or foreclosure of a mortgage, the
borrower and foreclosed junior lienors are given a statutory period in which to
redeem the property. In some states, statutory redemption may occur only upon
payment of the foreclosure sale price. In other states, redemption may be
permitted if the former borrower pays only a portion of the sums due. The effect
of a statutory right of redemption is to diminish the ability of the lender to
sell the foreclosed property because the exercise of a right of redemption would
defeat the title of any purchaser through a foreclosure. Consequently, the
practical effect of the redemption right is to force the lender to maintain the
property and pay the expenses of ownership until the redemption period has
expired. In some states, a post-sale statutory right of redemption may exist
following a judicial foreclosure, but not following a trustee's sale under a
deed of trust.
Anti-Deficiency Legislation. Some or all of the Mortgage Loans may be
nonrecourse loans, as to which recourse in the case of default will be limited
to the Mortgaged Property and such other assets, if any, that were pledged to
secure the Mortgage Loan. However, even if a mortgage loan by its terms provides
for recourse to the
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borrower's other assets, a lender's ability to realize upon those assets may be
limited by state law. For example, in some states a lender cannot obtain a
deficiency judgment against the borrower following a non-judicial foreclosure. A
deficiency judgment is a personal judgment against the former borrower equal to
the difference between the net amount realized upon the public sale of the real
property and the amount due to the lender. Other statutes may require the lender
to exhaust the security afforded under a mortgage before bringing a personal
action against the borrower. In certain other states, the lender has the option
of bringing a personal action against the borrower on the debt without first
exhausting such security; however, in some of those states, the lender,
following judgment on such personal action, may be deemed to have elected a
remedy and thus may be precluded from foreclosing upon the security.
Consequently, lenders in those states where such an election of remedy provision
exists will usually proceed first against the security. Finally, other statutory
provisions, designed to protect borrowers from exposure to large deficiency
judgments that might result from bidding at below-market values at the
foreclosure sale, limit any deficiency judgment to the excess of the outstanding
debt over the judicially determined fair market value of the property at the
time of the sale.
Leasehold Risks. Mortgage Loans may be secured by a mortgage on the
borrower's leasehold interest in a ground lease. Leasehold mortgage loans are
subject to certain risks not associated with mortgage loans secured by a lien on
the fee estate of the borrower. The most significant of these risks is that if
the borrower's leasehold were to be terminated upon a lease default or the
bankruptcy of the lessee or the lessor, the leasehold mortgagee would lose its
security. This risk may be substantially lessened if the ground lease contains
provisions protective of the leasehold mortgagee, such as a provision that
requires the ground lessor to give the leasehold mortgagee notices of lessee
defaults and an opportunity to cure them, a provision that permits the leasehold
estate to be assigned to and by the leasehold mortgagee or the purchaser at a
foreclosure sale, a provision that gives the leasehold mortgagee the right to
enter into a new ground lease with the ground lessor on the same terms and
conditions as the old ground lease or a provision that prohibits the ground
lessee/borrower 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. Certain mortgage loans, however, may be secured by
liens on ground leases that do not contain these provisions.
Regulated Healthcare Facilities. A Mortgage Loan may be secured by a
mortgage on a nursing home or other regulated healthcare facility. In most
jurisdictions, a license (which is nontransferable and may not be assigned or
pledged) granted by the appropriate state regulatory authority is required to
operate a regulated healthcare facility. Accordingly, the ability of a person
acquiring this type of property upon a foreclosure sale to take possession of
and operate the same as a regulated healthcare facility may be prohibited by
applicable law. Notwithstanding the foregoing, however, in certain jurisdictions
the person acquiring this type of property at a foreclosure sale may have the
right to terminate the use of the same as a regulated health care facility and
convert it to another lawful purpose.
Cross-Collateralization. Certain of the Mortgage Loans may be secured by
more than one mortgage covering Mortgaged Properties located in more than one
state. Because of various state laws governing foreclosure or the exercise of a
power of sale and because, in general, foreclosure actions are brought in state
court and the courts of one state cannot exercise jurisdiction over property in
another state, it may be necessary upon a default under a cross-collateralized
Mortgage Loan to foreclose on the related Mortgaged Properties in a particular
order rather than simultaneously in order to ensure that the lien of the
mortgages is not impaired or released.
Cooperative Loans. The cooperative shares owned by the tenant-stockholder
and pledged to the lender are, in almost all cases, subject to restrictions on
transfer as set forth in the Cooperative's Certificate of Incorporation and
By-laws, as well as the proprietary lease or occupancy agreement, and may be
cancelled by the Cooperative for failure by the tenant-stockholder to pay rent
or other obligations or charges owed by such tenant-stockholder, including
mechanics' liens against the cooperative apartment building incurred by such
tenant-stockholder. The proprietary lease or occupancy agreement generally
permit the Cooperative to terminate such lease or agreement in the event an
obligor fails to make payments or defaults in the performance of covenants
required thereunder. Typically, the lender and the Cooperative enter into a
recognition agreement which establishes the rights and obligations of both
parties in the event of a default by the tenant-stockholder. A default under the
proprietary lease or occupancy agreement will usually constitute a default under
the security agreement between the lender and the tenant-stockholder.
The recognition agreement generally provides that, in the event that the
tenant-stockholder has defaulted under the proprietary lease or the occupancy
agreement is terminated, the Cooperative will recognize the lender's lien
against proceeds from the sale of the Cooperative apartment, subject, however,
to the Cooperative's right to sums due under such proprietary lease or occupancy
agreement. The total amount owed to the Cooperative by the
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tenant-stockholder, which the lender generally cannot restrict and does not
monitor, could reduce the value of the collateral below the outstanding
principal balance of the Cooperative Loan and accrued and unpaid interest
thereon.
Recognition agreements also provide that in the event of a foreclosure on
a Cooperative Loan, the lender must obtain the approval or consent of the
Cooperative as required by the proprietary lease before transferring the
Cooperative shares or assigning the proprietary lease. Generally, the lender is
not limited in any rights it may have to dispossess the tenant-stockholders.
In some states, foreclosure on the Cooperative shares is accomplished by a
sale in accordance with the provisions of Article 9 of the UCC and the security
agreement relating to those shares. Article 9 of the UCC requires that a sale be
conducted in a "commercially reasonable" manner. Whether a foreclosure sale has
been conducted in a "commercially reasonable" manner will depend on the facts in
each case. In determining commercial reasonableness, a court will look to the
notice given the debtor and the method, manner, time, place and terms of the
foreclosure. Generally, a sale conducted according to the usual practice of
banks selling similar collateral will be considered reasonably conducted.
Article 9 of the UCC provides that the proceeds of the sale will be
applied first to pay the costs and expenses of the sale and then to satisfy the
indebtedness secured by the lender's security interest. The recognition
agreement, however, generally provides that the lender's right to reimbursement
is subject to the right of the Cooperatives to receive sums due under the
proprietary lease or occupancy agreement. If there are proceeds remaining, the
lender must account to the tenant-stockholder for the surplus. Conversely, if a
portion of the indebtedness remains unpaid, the tenant-stockholder is generally
responsible for the deficiency.
BANKRUPTCY LAWS
Operation of the Bankruptcy Code and related state laws may interfere with
or affect the ability of a lender 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) to
collect a debt 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 case. The delay and the consequences thereof caused by
the automatic stay can be significant. Also, under the Bankruptcy Code, the
filing of a petition in bankruptcy by or on behalf of a junior lienor would stay
the senior lender from proceeding with any foreclosure action.
Under the Bankruptcy Code, provided certain substantive and procedural
safeguards protective of the lender's second claim are met, the amount and terms
of a mortgage loan secured by a lien on property of the debtor may be modified
under certain circumstances. For example, if the loan is undersecured, the
outstanding amount of the loan which would remain secured may be reduced to the
then-current value of the property (with a corresponding partial reduction of
the amount of lender's security interest) pursuant to a confirmed plan, thus
leaving the lender a general unsecured creditor for the difference between such
value and the outstanding balance of the loan. Other modifications may include
the reduction in the amount of each scheduled payment by means of a reduction in
the rate of interest and/or an alteration of the repayment schedule (with or
without affecting the unpaid principal balance of the loan), and/or by an
extension (or shortening) of the term to maturity. Some bankruptcy courts have
approved plans, based on the particular facts of the reorganization case, that
effected the cure of a mortgage loan default by paying arrearages over a number
of years. Also, a bankruptcy court may permit a debtor, through its
rehabilitative plan, to reinstate a loan mortgage payment schedule even if the
lender has obtained a final judgment of foreclosure prior to the filing of the
debtor's petition.
Federal bankruptcy law may also have the effect of interfering with or
affecting the ability of the secured lender to enforce the borrower's assignment
of rents and leases related to the mortgaged property. Under Section 362 of the
Bankruptcy Code, the lender will be stayed from enforcing the assignment, and
the legal proceedings necessary to resolve the issue could be time-consuming,
with resulting delays in the lender's receipt of the rents. However, the
Bankruptcy Code has recently been amended to provide that a lender's perfected
pre-petition security interest in leases, rents and hotel revenues continues in
the post-petition leases, rents and hotel revenues, unless a bankruptcy court
orders to the contrary "based on the equities of the case." Thus, unless a court
orders otherwise, revenues from a mortgaged property generated after the date
the bankruptcy petition is filed will constitute "cash collateral" under the
Bankruptcy Code. Debtors may only use cash collateral upon obtaining the
lender's consent or a prior court order finding that the lender's interest in
the mortgaged properties and the cash collateral is "adequately protected" as
such term is defined and interpreted under the Bankruptcy Code.
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If a borrower's ability to make payment on a mortgage loan is dependent on
its receipt of rent payments under a lease of the related property, that ability
may be impaired by the commencement of a bankruptcy proceeding relating to a
lessee under such lease. Under the Bankruptcy Code, the filing of a petition in
bankruptcy by or on behalf of a lessee results in a stay in bankruptcy against
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
trustee or debtor-in-possession may, subject to approval of the court, (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 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, and any assurances provided to
the lessor may, in fact, be inadequate. 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. The Bankruptcy Code also limits a lessor's damages
for lease rejection to the rent reserved by the lease (without regard to
acceleration) for the greater of one year, or 15%, not to exceed three years, of
the remaining term of the lease.
ENVIRONMENTAL CONSIDERATIONS
General. A lender may be subject to environmental risks when taking a
security interest in real property. Of particular concern may be properties that
are or have been used for industrial, manufacturing, military, disposal or
certain commercial activity. Such environmental risks include the possible
diminution of the value of a contaminated property or, as discussed below,
potential liability for clean-up costs or other remedial actions that could
exceed the value of the property or the amount of the lender's loan. In certain
circumstances, a lender may decide to abandon a contaminated mortgaged property
as collateral for its loan rather than foreclose and risk liability for clean-up
costs.
Superlien Laws. Under the laws of many states, contamination on a property
may give rise to a lien on the property for clean-up costs. In several states,
such a lien has priority over all existing liens, including those of existing
mortgages. In these states, the lien of a mortgage may lose its priority to such
a "superlien".
CERCLA. The federal Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA"), imposes strict liability on
present and past "owners" and "operators" of contaminated real property for the
costs of clean-up. Excluded from CERCLA's definition of "owner" or "operator,"
however, is a lender that, "without participating in the management" of the
facility, holds indicia of ownership primarily to protect his security interest
in the facility. This so-called secured creditor exemption is intended to
provide a lender protection from liability under CERCLA as an owner or operator
of contaminated property. The secured creditor exemption, however, does not
necessarily protect a lender from liability for cleanup of hazardous substances
in every situation. A secured lender may be liable as an "owner" or "operator"
of a contaminated mortgaged property if agents or employees of the lender are
deemed to have participated in the management of such mortgaged property or the
operations of the borrower. Such liability may exist even if the lender did not
cause or contribute to the contamination and regardless of whether the lender
has actually taken possession of a mortgaged property through foreclosure, deed
in lieu of foreclosure or otherwise. Moreover, 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.
In addition, lenders may face potential liability for remediation of
releases of petroleum or hazardous substances from underground storage tanks
under Subtitle I of the Federal Resource Conservation and Recovery Act ("RCRA"),
if they are deemed to be the "owners" or "operators" of facilities in which they
have a security interest or upon which they have foreclosed.
The Federal Asset Conservation, Lender Liability and Deposit Insurance
Protection Act of 1996 (the "Lender Liability Act") seeks to clarify the actions
a lender may take without incurring liability as an "owner" or "operator" of
contaminated property or underground petroleum storage tanks. The Lender
Liability Act amends CERCLA and RCRA to provide guidance on actions that do or
do not constitute "participation in management."
Importantly, the Lender Liability Act does not, among other things: (1)
completely eliminate potential liability to lenders under CERCLA or RCRA, (2)
reduce credit risks associated with lending to borrowers having significant
environmental liabilities or potential liabilities, (3) eliminate environmental
risks associated with taking possession of contaminated property or underground
storage tanks or assuming control of the operations thereof, or (4) affect
liabilities or potential liabilities under state environmental laws.
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Certain Other State Laws. Many states have statutes similar to CERCLA and
RCRA, and not all of those statutes provide for a secured creditor exemption.
In a few states, transfers of some types of properties are conditioned
upon cleanup of contamination prior to transfer. In these cases, a lender that
becomes the owner of a property through foreclosure, deed in lieu of foreclosure
or otherwise, may be required to clean up the contamination before selling or
otherwise transferring the property.
Beyond statute-based environmental liability, there exist common law
causes of action (for example, actions based on nuisance or on toxic tort
resulting in death, personal injury, or damage to property) related to hazardous
environmental conditions on a property. While it may be more difficult to hold a
lender liable in such cases, unanticipated or uninsured liabilities of the
borrower may jeopardize the borrower's ability to meet its loan obligations.
Additional Considerations. The cost of remediating hazardous substance
contamination at a property can be substantial. If a lender becomes liable, it
can bring an action for contribution against other potentially liable parties,
but such parties may be without substantial assets. Accordingly, it is possible
that such costs could become a liability of the Trust Fund and occasion a loss
to the Certificateholders.
To reduce the likelihood of such a loss, unless otherwise specified in the
related Prospectus Supplement, the Pooling and Servicing Agreement will provide
that the Master Servicer, acting on behalf of the Trustee, may not take
possession of a Mortgaged Property or take over its operation unless the Master
Servicer, based solely on a report (as to environmental matters) prepared by a
person who regularly conducts environmental site assessments, has made the
determination that it is appropriate to do so, as described under "Description
of the Pooling Agreements--Realization Upon Defaulted Mortgage Loans."
If a lender forecloses on a mortgage secured by a property, the operations
of which are subject to environmental laws and regulations, the lender may be
required to operate the property in accordance with those laws and regulations.
Such compliance may entail substantial expense, especially in the case of
industrial or manufacturing properties.
In addition, a lender may be obligated to disclose environmental
conditions on a property to government entities and/or to prospective buyers
(including prospective buyers at a foreclosure sale or following foreclosure).
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 lender to recoup its investment in a loan upon foreclosure.
DUE-ON-SALE AND DUE-ON-ENCUMBRANCE
Certain of the Mortgage Loans may contain "due-on-sale" and
"due-on-encumbrance" clauses that purport to permit the lender to accelerate the
maturity of the loan if the borrower transfers or encumbers the related
Mortgaged Property. In recent years, court decisions and legislative actions
placed substantial restrictions on the right of lenders to enforce such clauses
in many states. By virtue, however, of the Garn-St. Germain Depository
Institutions Act of 1982 (the "Garn Act"), effective October 15, 1982 (which
purports to preempt state laws that prohibit the enforcement of due-on-sale
clauses by providing, among other matters, that "due-on-sale" clauses in certain
loans made after the effective date of the Garn Act are enforceable, within
certain limitations as set forth in the Garn Act and the regulations promulgated
thereunder), a Master Servicer may nevertheless have the right to accelerate the
maturity of a Mortgage Loan that contains a "due-on-sale" provision upon
transfer of an interest in the property, regardless of the Master Servicer's
ability to demonstrate that a sale threatens its legitimate security interest.
SUBORDINATE FINANCING
Certain of the Mortgage Loans may not restrict the ability of the borrower
to use the Mortgaged Property as security for one or more additional loans.
Where a borrower encumbers a mortgaged property with one or more junior liens,
the senior lender is subjected to additional risk. First, the borrower may have
difficulty servicing and repaying multiple loans. Moreover, if the subordinate
financing permits recourse to the borrower (as is frequently the case) and the
senior loan does not, a borrower may have more incentive to repay sums due on
the subordinate loan. Second, acts of the senior lender that prejudice the
junior lender or impair the junior lender's security may create a superior
equity in favor of the junior lender. For example, if the borrower and the
senior lender agree to an increase in the principal
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amount of or the interest rate payable on the senior loan, the senior lender may
lose its priority to the extent any existing junior lender is harmed or the
borrower is additionally burdened. Third, if the borrower defaults on the senior
loan and/or any junior loan or loans, the existence of junior loans and actions
taken by junior lenders can impair the security available to the senior lender
and can interfere with or delay the taking of action by the senior lender.
Moreover, the bankruptcy of a junior lender may operate to stay foreclosure or
similar proceedings by the senior lender.
DEFAULT INTEREST AND LIMITATIONS ON PREPAYMENTS
Notes and mortgages may contain provisions that obligate the borrower to
pay a late charge or additional interest if payments are not timely made, and in
some circumstances, may prohibit prepayments for a specified period and/or
condition prepayments upon the borrower's payment of prepayment fees or yield
maintenance penalties. In certain states, there are or may be specific
limitations upon the late charges which a lender may collect from a borrower for
delinquent payments. Certain states also limit the amounts that a lender may
collect from a borrower as an additional charge if the loan is prepaid. In
addition, the enforceability of provisions that provide for prepayment fees or
penalties upon an involuntary prepayment is unclear under the laws of many
states.
APPLICABILITY OF USURY LAWS
Title V of the Depository Institutions Deregulation and Monetary Control
Act of 1980 ("Title V") provides that state usury limitations shall not apply to
certain types of residential (including multifamily) first mortgage loans
originated by certain lenders after March 31, 1980. Title V authorized any state
to reimpose interest rate limits by adopting, before April 1, 1983, a law or
constitutional provision that expressly rejects application of the federal law.
In addition, even where Title V is not so rejected, any state is authorized by
the law to adopt a provision limiting discount points or other charges on
mortgage loans covered by Title V. Certain states have taken action to reimpose
interest rate limits and/or to limit discount points or other charges.
No Mortgage Loan originated in any state in which application of Title V
has been expressly rejected or a provision limiting discount points or other
charges has been adopted will (if originated after that rejection or adoption)
be eligible for inclusion in a Trust Fund unless (i) such Mortgage Loan provides
for such interest rate, discount points and charges as are permitted in such
state or (ii) such Mortgage Loan provides that the terms thereof are to be
construed in accordance with the laws of another state under which such interest
rate, discount points and charges would not be usurious and the borrower's
counsel has rendered an opinion that such choice of law provision would be given
effect.
SOLDIERS' AND SAILORS' CIVIL RELIEF ACT OF 1940
Under the terms of the Soldiers' and Sailors' Civil Relief Act of 1940, as
amended (the "Relief Act"), a borrower who enters military service after the
origination of such borrower's mortgage loan (including a borrower who was in
reserve status and is called to active duty after origination of the Mortgage
Loan), may not be charged interest (including fees and charges) above an annual
rate of 6% during the period of such borrower's active duty status, unless a
court orders otherwise upon application of the lender. The Relief Act applies to
individuals who are members of the Army, Navy, Air Force, Marines, National
Guard, Reserves, Coast Guard and officers of the U.S. Public Health Service
assigned to duty with the military. Because the Relief Act applies to
individuals who enter military service (including reservists who are called to
active duty) after origination of the related mortgage loan, no information can
be provided as to the number of loans with individuals as borrowers that may be
affected by the Relief Act. Application of the Relief Act would adversely
affect, for an indeterminate period of time, the ability of any servicer to
collect full amounts of interest on certain of the Mortgage Loans. Any
shortfalls in interest collections resulting from the application of the Relief
Act would result in a reduction of the amounts distributable to the holders of
the related series of Certificates, and would not be covered by advances or,
unless otherwise specified in the related Prospectus Supplement, any form of
Credit Support provided in connection with such Certificates. In addition, the
Relief Act imposes limitations that would impair the ability of the servicer to
foreclose on an affected Mortgage Loan during the borrower's period of active
duty status and, under certain circumstances, during an additional three-month
period thereafter.
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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 architectural and communication barriers that are
structural in nature from existing places of public accommodation to the extent
"readily achievable". In addition, under the ADA, alterations to a place of
public accommodation or a commercial facility are to be made so that, to the
maximum extent feasible, 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. The requirements of the ADA may also
be imposed on a foreclosing lender who succeeds to the interest of the borrower
as owner or landlord. Since the "readily achievable" standard may vary depending
on the financial condition of the owner or landlord, a foreclosing lender who is
financially more capable than the borrower of complying with the requirements of
the ADA may be subject to more stringent requirements than those to which the
borrower is subject.
FORFEITURES IN DRUG AND RICO PROCEEDINGS
Federal law provides that property owned by persons convicted of
drug-related crimes or of criminal violations of the Racketeer Influenced and
Corrupt Organizations ("RICO") statute can be seized by the government if the
property was used in, or purchased with the proceeds of, such crimes. Under
procedures contained in the Comprehensive Crime Control Act of 1984, the
government may seize the property even before conviction. The government must
publish notice of the forfeiture proceeding and may give notice to all parties
"known to have an alleged interest in the property", including the holders of
mortgage loans.
A lender may avoid forfeiture of its interest in the property if it
establishes that: (i) its mortgage was executed and recorded before commission
of the crime upon which the forfeiture is based or (ii) the lender was, at the
time of execution of the mortgage, "reasonably without cause to believe" that
the property was used in, or purchased with the proceeds of, illegal drug or
RICO activities.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
GENERAL
The following is a general discussion of the anticipated material federal
income tax consequences of the purchase, ownership and disposition of Offered
Certificates. This discussion is directed solely to Certificateholders that hold
the Certificates as capital assets within the meaning of Section 1221 of the
Internal Revenue Code of 1986 (the "Code") and it does not purport to discuss
all federal income tax consequences that may be applicable to particular
categories of investors, some of which (such as banks, insurance companies and
foreign investors) may be subject to special rules. Further, the authorities on
which this discussion, and the opinion referred to below, are based are subject
to change or differing interpretations, which could apply retroactively.
Taxpayers and preparers of tax returns (including those filed by any REMIC or
other issuer) should be aware that under applicable Treasury regulations a
provider of advice on specific issues of law is not considered an income tax
return preparer unless the advice (i) is given with respect to the consequences
of contemplated actions and (ii) is directly relevant to the determination of an
entry on a tax return. Accordingly, taxpayers should consult their own tax
advisors and tax return preparers regarding the preparation of any item on a tax
return, even where the anticipated tax treatment has been discussed herein. In
addition to the federal income tax consequences described herein, potential
investors should consider the state and local tax consequences, if any, of the
purchase, ownership and disposition of Offered Certificates. See "State and
Other Tax Consequences". Certificateholders are advised to consult their own tax
advisors concerning the federal, state, local or other tax consequences to them
of the purchase, ownership and disposition of Offered Certificates.
The following discussion addresses securities of two general types: (i)
certificates ("REMIC Certificates") representing interests in a Trust Fund, or a
portion thereof, that the Master Servicer or the Trustee will elect to have
treated as a real estate mortgage investment conduit ("REMIC") under Sections
860A through 860G (the "REMIC Provisions") of the Code and (ii) certificates
("Grantor Trust Certificates") representing interests in a Trust Fund ("Grantor
Trust Fund") as to which no such election will be made. The Prospectus
Supplement for each series of Certificates will indicate whether a REMIC
election (or elections) will be made for the related Trust Fund and, if such an
election is to be made, will identify all "regular interests" and "residual
interests" in the REMIC. For purposes of this tax discussion, references to a
"Certificateholder" or a "holder" are to the beneficial owner of a Certificate.
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The following discussion is limited in applicability to Offered
Certificates. Moreover, this discussion applies only to the extent that Mortgage
Assets held by a Trust Fund consist solely of Mortgage Loans. To the extent that
other Mortgage Assets, including REMIC certificates and mortgage pass-through
certificates, are to be held by a Trust Fund, the tax consequences associated
with the inclusion of such assets will be disclosed in the related Prospectus
Supplement. In addition, if Cash Flow Agreements, other than guaranteed
investment contracts, are included in a Trust Fund, the tax consequences
associated with such Cash Flow Agreements also will be disclosed in the related
Prospectus Supplement. See "Description of the Trust Funds--Cash Flow
Agreements".
Furthermore, the following discussion is based in part upon the rules
governing original issue discount that are set forth in Sections 1271-1273 and
1275 of the Code and in the Treasury regulations issued thereunder (the "OID
Regulations"), and in part upon the REMIC Provisions and the Treasury
regulations issued thereunder (the "REMIC Regulations"). The OID Regulations do
not adequately address certain issues relevant to, and in some instances provide
that they are not applicable to, securities such as the Certificates.
REMICS
Classification of REMICs. It is the opinion of Willkie Farr & Gallagher,
counsel to the Depositor, that upon the issuance of each series of REMIC
Certificates, assuming compliance with all provisions of the related Pooling
Agreement and based upon the law on the date hereof, for federal income tax
purposes the related Trust Fund (or each applicable portion thereof) will
qualify as a REMIC and the REMIC Certificates offered with respect thereto will
be considered to evidence ownership of "regular interests" ("REMIC Regular
Certificates") or "residual interests" ("REMIC Residual Certificates") in that
REMIC within the meaning of the REMIC Provisions.
If an entity electing to be treated as a REMIC fails to comply with one or
more of the ongoing requirements of the Code for such status during any taxable
year, the Code provides that the entity will not be treated as a REMIC for such
year and thereafter. In that event, such entity may be taxable as a corporation
under Treasury regulations, and the related REMIC Certificates may not be
accorded the status or given the tax treatment described below. Although the
Code authorizes the Treasury Department to issue regulations providing relief in
the event of an inadvertent termination of REMIC status, no such regulations
have been issued. Any such relief, moreover, may be accompanied by sanctions,
such as the imposition of a corporate tax on all or a portion of the Trust
Fund's income for the period during which the requirements for such status are
not satisfied. The Pooling Agreement with respect to each REMIC will include
provisions designed to maintain the Trust Fund's status as a REMIC under the
REMIC Provisions. It is not anticipated that the status of any Trust Fund as a
REMIC will be terminated.
Characterization of Investments in REMIC Certificates. In general, unless
otherwise provided in the related Prospectus Supplement, the REMIC Certificates
will be "real estate assets" within the meaning of Section 856(c)(5)(A) of the
Code and assets described in Section 7701(a)(19)(C) of the Code in the same
proportion that the assets of the REMIC underlying such Certificates would be so
treated. However, to the extent that the REMIC assets constitute mortgages on
property not used for residential or certain other prescribed purposes, the
REMIC Certificates will not be treated as assets qualifying under Section
7701(a)(19)(C)(v) of the Code. Moreover, if 95% or more of the assets of the
REMIC qualify for any of the foregoing treatments at all times during a calendar
year, the REMIC Certificates will qualify for the corresponding status in their
entirety for that calendar year. Interest (including original issue discount) on
the REMIC Regular Certificates and income allocated to the class of REMIC
Residual Certificates will be interest described in Section 856(c)(3)(B) of the
Code to the extent that such Certificates are treated as "real estate assets"
within the meaning of Section 856(c)(5)(A) of the Code. In addition, the REMIC
Regular Certificates will be "qualified mortgages" within the meaning of Section
860G(a)(3) of the Code. The determination as to the percentage of the REMIC's
assets that constitute assets described in the foregoing sections of the Code
will be made with respect to each calendar quarter based on the average adjusted
basis of each category of the assets held by the REMIC during such calendar
quarter. The Master Servicer or the Trustee will report those determinations to
Certificateholders in the manner and at the times required by the applicable
Treasury regulations.
The assets of the REMIC will include, in addition to Mortgage Loans,
payments on Mortgage Loans held pending distribution on the REMIC Certificates
and property acquired by foreclosure held pending sale, and may include amounts
in reserve accounts. It is unclear whether property acquired by foreclosure held
pending sale and amounts in reserve accounts would be considered to be part of
the Mortgage Loans, or whether such assets (to the extent not invested in assets
described in the foregoing sections) otherwise would receive the same treatment
as the Mortgage Loans for purposes of all of the foregoing sections. In
addition, in some instances Mortgage Loans may not be treated entirely as assets
described in the foregoing sections. If so, the related Prospectus Supplement
will describe
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those Mortgage Loans that may not be so treated. The REMIC Regulations do
provide, however, that payments on Mortgage Loans held pending distribution are
considered part of the Mortgage Loans for purposes of Section 856(c)(5)(A) of
the Code.
Tiered REMIC Structures. For certain series of REMIC Certificates, two or
more separate elections may be made to treat designated portions of the related
Trust Fund as REMICs ("Tiered REMICs") for federal income tax purposes. Upon the
issuance of any such series of REMIC Certificates, counsel to the Depositor will
deliver its opinion generally to the effect that, assuming compliance with all
provisions of the related Pooling Agreement, the Tiered REMICs will each qualify
as a REMIC and the REMIC Certificates issued by the Tiered REMICs, respectively,
will be considered to evidence ownership of REMIC Regular Certificates or REMIC
Residual Certificates in the related REMIC within the meaning of the REMIC
Provisions.
Solely for purposes of determining whether the REMIC Certificates will be
"real estate assets" within the meaning of Section 856(c)(5)(A) of the Code, and
"loans secured by an interest in real property" under Section 7701(a)(19)(C) of
the Code, and whether the income on such Certificates is interest described in
Section 856(c)(3)(B) of the Code, the Tiered REMICs will be treated as one
REMIC.
TAXATION OF OWNERS OF REMIC REGULAR CERTIFICATES
General. Except as otherwise stated in this discussion, REMIC Regular
Certificates will be treated for federal income tax purposes as debt instruments
issued by the REMIC and not as ownership interests in the REMIC or its assets.
Moreover, holders of REMIC Regular Certificates that otherwise report income
under a cash method of accounting will be required to report income with respect
to REMIC Regular Certificates under an accrual method.
Original Issue Discount. Certain REMIC Regular Certificates may be issued
with "original issue discount" within the meaning of Section 1273(a) of the
Code. Any holders of REMIC Regular Certificates issued with original issue
discount generally will be required to include original issue discount in income
as it accrues, in accordance with the method described below, in advance of the
receipt of the cash attributable to such income. In addition, Section 1272(a)(6)
of the Code provides special rules applicable to REMIC Regular Certificates and
certain other debt instruments issued with original issue discount. Regulations
have not been issued under that section.
The Code requires that a prepayment assumption be used with respect to
Mortgage Loans held by a REMIC in computing the accrual of original issue
discount on REMIC Regular Certificates issued by that REMIC, and that
adjustments be made in the amount and rate of accrual of such discount to
reflect differences between the actual prepayment rate and the prepayment
assumption. The prepayment assumption is to be determined in a manner prescribed
in Treasury regulations; as noted above, those regulations have not been issued.
The Conference Committee Report accompanying the Tax Reform Act of 1986 (the
"Committee Report") indicates that the regulations will provide that the
prepayment assumption used with respect to a REMIC Regular Certificate must be
the same as that used in pricing the initial offering of such REMIC Regular
Certificate. The prepayment assumption (the "Prepayment Assumption") used in
reporting original issue discount for each series of REMIC Regular Certificates
will be consistent with this standard and will be disclosed in the related
Prospectus Supplement. However, neither the Depositor nor any other person will
make any representation that the Mortgage Loans will in fact prepay at a rate
conforming to the Prepayment Assumption or at any other rate.
The original issue discount, if any, on a REMIC Regular Certificate will
be the excess of its stated redemption price at maturity over its issue price.
The issue price of a particular class of REMIC Regular Certificates will be the
first cash price at which a substantial amount of REMIC Regular Certificates of
that class is sold (excluding sales to bond houses, brokers and underwriters).
If less than a substantial amount of a particular class of REMIC Regular
Certificates is sold for cash on or prior to the date of their initial issuance
(the "Closing Date"), the issue price for such class will be the fair market
value of such class on the Closing Date. Under the OID Regulations, the stated
redemption price of a REMIC Regular Certificate is equal to the total of all
payments to be made on such Certificate other than "qualified stated interest".
"Qualified stated interest" includes interest that is unconditionally payable at
least annually at a single fixed rate, at a "qualified floating rate", or at an
"objective rate", a combination of a single fixed rate and one or more
"qualified floating rates" or one "qualified inverse floating rate", or a
combination of "qualified floating rates" that does not operate in a manner that
accelerates or defers interest payments on such REMIC Regular Certificate.
In the case of REMIC Regular Certificates bearing adjustable interest
rates, the determination of the total amount of original issue discount and the
timing of the inclusion thereof will vary according to the characteristics of
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such REMIC Regular Certificates. If the original issue discount rules apply to
such Certificates, the related Prospectus Supplement will describe the manner in
which such rules will be applied with respect to those Certificates in preparing
information returns to the Certificateholders and the Internal Revenue Service
(the "IRS").
Certain classes of the REMIC Regular Certificates may provide for the
first interest payment with respect to such Certificates to be made more than
one month after the date of issuance, a period which is longer than the
subsequent monthly intervals between interest payments. Assuming the "accrual
period" (as defined below) for original issue discount is each monthly period
that ends on a Distribution Date, in some cases, as a consequence of this "long
first accrual period", some or all interest payments may be required to be
included in the stated redemption price of the REMIC Regular Certificate and
accounted for as original issue discount. Because interest on REMIC Regular
Certificates must in any event be accounted for under an accrual method,
applying this analysis would result in only a slight difference in the timing of
the inclusion in income of the yield on the REMIC Regular Certificates.
In addition, if the accrued interest to be paid on the first Distribution
Date is computed with respect to a period that begins prior to the Closing Date,
a portion of the purchase price paid for a REMIC Regular Certificate will
reflect such accrued interest. In such cases, information returns provided to
the Certificateholders and the IRS will be based on the position that the
portion of the purchase price paid for the interest accrued with respect to
periods prior to the Closing Date is treated as part of the overall cost of such
REMIC Regular Certificate (and not as a separate asset the cost of which is
recovered entirely out of interest received on the next Distribution Date) and
that portion of the interest paid on the first Distribution Date in excess of
interest accrued for a number of days corresponding to the number of days from
the Closing Date to the first Distribution Date should be included in the stated
redemption price of such REMIC Regular Certificate. However, the OID Regulations
state that all or some portion of such accrued interest may be treated as a
separate asset the cost of which is recovered entirely out of interest paid on
the first Distribution Date. It is unclear how an election to do so would be
made under the OID Regulations and whether such an election could be made
unilaterally by a Certificateholder.
Notwithstanding the general definition of original issue discount,
original issue discount on a REMIC Regular Certificate will be considered to be
de minimis if it is less than 0.25% of the stated redemption price of the REMIC
Regular Certificate multiplied by its weighted average life. For this purpose,
the weighted average life of the REMIC Regular Certificate is computed as the
sum of the amounts determined, as to each payment included in the stated
redemption price of such REMIC Regular Certificate, by multiplying (i) the
number of complete years (rounding down for partial years) from the issue date
until such payment is expected to be made (presumably taking into account the
Prepayment Assumption) by (ii) a fraction, the numerator of which is the amount
of the payment, and the denominator of which is the stated redemption price at
maturity of such REMIC Regular Certificate. Under the OID Regulations, original
issue discount of only a de minimis amount (other than de minimis original
discount attributable to a so-called "teaser" interest rate or an initial
interest holiday) will be included in income as each payment of stated principal
is made, based on the product of the total amount of such de minimis original
issue discount and a fraction, the numerator of which is the amount of such
principal payment and the denominator of which is the outstanding stated
principal amount of the REMIC Regular Certificate. The OID Regulations also
would permit a Certificateholder to elect to accrue de minimis original issue
discount into income currently based on a constant yield method. See "--Taxation
of Owners of REMIC Regular Certificates--Market Discount" for a description of
such election under the OID Regulations.
If original issue discount on a REMIC Regular Certificate is in excess of
a de minimis amount, the holder of such Certificate must include in ordinary
gross income the sum of the "daily portions" of original issue discount for each
day during its taxable year on which it held such REMIC Regular Certificate,
including the purchase date but excluding the disposition date. In the case of
an original holder of a REMIC Regular Certificate, the daily portions of
original issue discount will be determined as follows.
As to each "accrual period", that is, unless otherwise stated in the
related Prospectus Supplement, each period that ends on a date that corresponds
to a Distribution Date and begins on the first day following the immediately
preceding accrual period (or in the case of the first such period, begins on the
Closing Date), a calculation will be made of the portion of the original issue
discount that accrued during such accrual period. The portion of original issue
discount that accrues in any accrual period will equal the excess, if any, of
(i) the sum of (a) the present value, as of the end of the accrual period, of
all of the distributions remaining to be made on the REMIC Regular Certificate,
if any, in future periods and (b) the distributions made on such REMIC Regular
Certificate during the accrual period of amounts included in the stated
redemption price, over (ii) the adjusted issue price of such REMIC Regular
Certificate at the beginning of the accrual period. The present value of the
remaining distributions referred to in the preceding
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sentence will be calculated (x) assuming that distributions on the REMIC Regular
Certificate will be received in future periods based on the Mortgage Loans being
prepaid at a rate equal to the Prepayment Assumption and (y) using a discount
rate equal to the original yield to maturity of the Certificate. For these
purposes, the original yield to maturity of the Certificate will be calculated
based on its issue price and assuming that distributions on the Certificate will
be made in all accrual periods based on the Mortgage Loans being prepaid at a
rate equal to the Prepayment Assumption. The adjusted issue price of a REMIC
Regular Certificate at the beginning of any accrual period will equal the issue
price of such Certificate, increased by the aggregate amount of original issue
discount that accrued with respect to such Certificate in prior accrual periods,
and reduced by the amount of any distributions made on such REMIC Regular
Certificate in prior accrual periods of amounts included in the stated
redemption price. The original issue discount accruing during any accrual
period, computed as described above, will be allocated ratably to each day
during the accrual period to determine the daily portion of original issue
discount for such day.
A subsequent purchaser of a REMIC Regular Certificate that purchases such
Certificate at a cost (excluding any portion of such cost attributable to
accrued qualified stated interest) less than its remaining stated redemption
price will also be required to include in gross income the daily portions of any
original issue discount with respect to such Certificate. However, each such
daily portion will be reduced, if such cost is in excess of its "adjusted issue
price", in proportion to the ratio such excess bears to the aggregate original
issue discount remaining to be accrued on such REMIC Regular Certificate. The
adjusted issue price of a REMIC Regular Certificate on any given day equals the
sum of (i) the adjusted issue price (or, in the case of the first accrual
period, the issue price) of such Certificate at the beginning of the accrual
period which includes such day and (ii) the daily portions of original issue
discount for all days during such accrual period prior to such day.
Market Discount. A Certificateholder that purchases a REMIC Regular
Certificate at a market discount, that is, in the case of a REMIC Regular
Certificate issued without original issue discount, at a purchase price less
than its remaining stated principal amount, or in the case of a REMIC Regular
Certificate issued with original issue discount, at a purchase price less than
its adjusted issue price, will recognize gain upon receipt of each distribution
representing stated redemption price. In particular, under Section 1276 of the
Code such a Certificateholder generally will be required to allocate the portion
of each such distribution representing stated redemption price first to accrued
market discount not previously included in income, and to recognize ordinary
income to that extent. A Certificateholder may elect to include market discount
in income currently as it accrues rather than including it on a deferred basis
in accordance with the foregoing. If made, such election will apply to all
market discount bonds acquired by such Certificateholder on or after the first
day of the first taxable year to which such election applies. In addition, the
OID Regulations permit a Certificateholder to elect to accrue all interest,
discount (including de minimis market or original issue discount) and premium in
income as interest, based on a constant yield method. If such an election were
made with respect to a REMIC Regular Certificate with market discount, the
Certificateholder would be deemed to have made an election to currently include
market discount in income with respect to all other debt instruments having
market discount that such Certificateholder acquires during the taxable year of
the election or thereafter, and possibly previously acquired instruments.
Similarly, a Certificateholder that made this election for a Certificate that is
acquired at a premium would be deemed to have made an election to amortize bond
premium with respect to all debt instruments having amortizable bond premium
that such Certificateholder owns or acquires. See "--Taxation of Owners of REMIC
Regular Certificates --Premium". Each of these elections to accrue interest,
discount and premium with respect to a Certificate on a constant yield method or
as interest would be irrevocable.
However, market discount with respect to a REMIC Regular Certificate will
be considered to be de minimis for purposes of Section 1276 of the Code if such
market discount is less than 0.25% of the remaining stated redemption price of
such REMIC Regular Certificate multiplied by the number of complete years to
maturity remaining after the date of its purchase. In interpreting a similar
rule with respect to original issue discount on obligations payable in
installments, the OID Regulations refer to the weighted average maturity of
obligations, and it is likely that the same rule will be applied with respect to
market discount, presumably taking into account the Prepayment Assumption. If
market discount is treated as de minimis under this rule, it appears that the
actual discount would be treated in a manner similar to original issue discount
of a de minimis amount. See "--Taxation of Owners of REMIC Regular
Certificates--Original Issue Discount". Such treatment would result in discount
being included in income at a slower rate than discount would be required to be
included in income using the method described above.
Section 1276(b)(3) of the Code specifically authorizes the Treasury
Department to issue regulations providing for the method for accruing market
discount on debt instruments, the principal of which is payable in more than one
installment. Until regulations are issued by the Treasury Department, certain
rules described in the Committee Report
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apply. The Committee Report indicates that in each accrual period market
discount on REMIC Regular Certificates should accrue, at the Certificateholder's
option: (i) on the basis of a constant yield method; (ii) in the case of a REMIC
Regular Certificate issued without original issue discount, in an amount that
bears the same ratio to the total remaining market discount as the stated
interest paid in the accrual period bears to the total amount of stated interest
remaining to be paid on the REMIC Regular Certificate as of the beginning of the
accrual period or (iii) in the case of a REMIC Regular Certificate issued with
original issue discount, in an amount that bears the same ratio to the total
remaining market discount as the original issue discount accrued in the accrual
period bears to the total original issue discount remaining on the REMIC Regular
Certificate at the beginning of the accrual period. Moreover, the Prepayment
Assumption used in calculating the accrual of original issue discount is also
used in calculating the accrual of market discount. Because the regulations
referred to in this paragraph have not been issued, it is not possible to
predict what effect such regulations might have on the tax treatment of a REMIC
Regular Certificate purchased at a discount in the secondary market.
To the extent that REMIC Regular Certificates provide for monthly or other
periodic distributions throughout their term, the effect of these rules may be
to require market discount to be includible in income at a rate that is not
significantly slower than the rate at which such discount would accrue if it
were original issue discount. Moreover, in any event a holder of a REMIC Regular
Certificate generally will be required to treat a portion of any gain on the
sale or exchange of such Certificate as ordinary income to the extent of the
market discount accrued to the date of disposition under one of the foregoing
methods, less any accrued market discount previously reported as ordinary
income.
Further, under Section 1277 of the Code a holder of a REMIC Regular
Certificate may be required to defer a portion of its interest deductions for
the taxable year attributable to any indebtedness incurred or continued to
purchase or carry a REMIC Regular Certificate purchased with market discount.
For these purposes, the de minimis rule referred to above applies. Any such
deferred interest expense would not exceed the market discount that accrues
during such taxable year and is, in general, allowed as a deduction not later
than the year in which such market discount is includible in income. If such
holder elects to include market discount in income currently as it accrues on
all market discount instruments acquired by such holder in that taxable year or
thereafter, the interest deferral rule described above will not apply.
Premium. A REMIC Regular Certificate purchased at a cost (excluding any
portion of such cost attributable to accrued qualified stated interest) greater
than its remaining stated redemption price will be considered to be purchased at
a premium. The holder of such a REMIC Regular Certificate may elect under
Section 171 of the Code to amortize such premium under the constant yield method
over the life of the Certificate. If made, such an election will apply to all
debt instruments having amortizable bond premium that the holder owns or
subsequently acquires. Amortizable premium will be treated as an offset to
interest income on the related debt instrument, rather than as a separate
interest deduction. The OID Regulations also permit Certificateholders to elect
to include all interest, discount and premium in income based on a constant
yield method, further treating the Certificateholder as having made the election
to amortize premium generally. See "--Taxation of Owners of REMIC Regular
Certificates--Market Discount". The Committee Report states that the same rules
that apply to accrual of market discount (which rules will require use of a
Prepayment Assumption in accruing market discount with respect to REMIC Regular
Certificates without regard to whether such Certificates have original issue
discount) will also apply in amortizing bond premium under Section 171 of the
Code.
Realized Losses. Under Section 166 of the Code, both corporate holders of
the REMIC Regular Certificates and noncorporate holders of the REMIC Regular
Certificates that acquire such Certificates in connection with a trade or
business should be allowed to deduct, as ordinary losses, any losses sustained
during a taxable year in which their Certificates become wholly or partially
worthless as the result of one or more realized losses on the Residential Loans.
However, it appears that a noncorporate holder that does not acquire a REMIC
Regular Certificate in connection with a trade or business will not be entitled
to deduct a loss under Section 166 of the Code until such holder's Certificate
becomes wholly worthless (i.e., until its outstanding principal balance has been
reduced to zero) and that the loss will be characterized as a short-term capital
loss.
Each holder of a REMIC Regular Certificate will be required to accrue
interest and original issue discount with respect to such Certificate, without
giving effect to any reductions in distributions attributable to defaults or
delinquencies on the Residential Loans or the underlying Certificates until it
can be established that any such reduction ultimately will not be recoverable.
As a result, the amount of taxable income reported in any period by the holder
of a REMIC Regular Certificate could exceed the amount of economic income
actually realized by the holder
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in such period. Although the holder of a REMIC Regular Certificate eventually
will recognize a loss or reduction in income attributable to previously accrued
and included income that as the result of a realized loss ultimately will not be
realized, the law is unclear with respect to the timing and character of such
loss or reduction in income.
TAXATION OF OWNERS OF REMIC RESIDUAL CERTIFICATES
General. As residual interests, the REMIC Residual Certificates will be
subject to tax rules that differ significantly from those that would apply if
the REMIC Residual Certificates were treated for federal income tax purposes as
direct ownership interests in the Mortgage Loans or as debt instruments issued
by the REMIC.
An original holder of a REMIC Residual Certificate generally will be
required to report its daily portion of the taxable income or, subject to the
limitations noted in this discussion, the net loss of the REMIC for each day
during a calendar quarter that such holder owned such REMIC Residual
Certificate. For this purpose, the taxable income or net loss of the REMIC will
be allocated to each day in the calendar quarter ratably using a "30 days per
month/90 days per quarter/360 days per year" convention unless otherwise
disclosed in the related Prospectus Supplement. The daily amounts so allocated
will then be allocated among the REMIC Residual Certificateholders in proportion
to their respective ownership interests on such day. Any amount included in the
gross income or allowed as a loss of any REMIC Residual Certificateholder by
virtue of this paragraph will be treated as ordinary income or loss. The taxable
income of the REMIC will be determined under the rules described below in
"--Taxable Income of the REMIC" and will be taxable to the REMIC Residual
Certificateholders without regard to the timing or amount of cash distributions
by the REMIC. Ordinary income derived from REMIC Residual Certificates will be
"portfolio income" for purposes of the taxation of taxpayers subject to
limitations under Section 469 of the Code on the deductibility of "passive
losses".
A holder of a REMIC Residual Certificate that purchased such Certificate
from a prior holder of such Certificate also will be required to report on its
federal income tax return amounts representing its daily share of the taxable
income (or net loss) of the REMIC for each day that it holds such REMIC Residual
Certificate. Those daily amounts generally will equal the amounts of taxable
income or net loss determined as described above. The Committee Report indicates
that certain modifications of the general rules may be made, by regulations,
legislation or otherwise, to reduce (or increase) the income of a REMIC Residual
Certificateholder that purchased such REMIC Residual Certificate from a prior
holder of such Certificate at a price greater than (or less than) the adjusted
basis (as defined below) such REMIC Residual Certificate would have had in the
hands of an original holder of such Certificate. The REMIC Regulations, however,
do not provide for any such modifications.
Any payments received by a holder of a REMIC Residual Certificate in
connection with the acquisition of such REMIC Residual Certificate will be taken
into account in determining the income of such holder for federal income tax
purposes. Although it appears likely that any such payment would be includible
in income immediately upon its receipt, the IRS might assert that such payment
should be included in income over time according to an amortization schedule or
according to some other method. Because of the uncertainty concerning the
treatment of such payments, holders of REMIC Residual Certificates should
consult their tax advisors concerning the treatment of such payments for income
tax purposes.
The amount of income REMIC Residual Certificateholders will be required to
report (or the tax liability associated with such income) may exceed the amount
of cash distributions received from the REMIC for the corresponding period.
Consequently, REMIC Residual Certificateholders should have other sources of
funds sufficient to pay any federal income taxes due as a result of their
ownership of REMIC Residual Certificates or unrelated deductions against which
income may be offset, subject to the rules relating to "excess inclusions",
residual interests without "significant value" and "noneconomic" residual
interests discussed below. The fact that the tax liability associated with the
income allocated to REMIC Residual Certificateholders may exceed the cash
distribution received by such REMIC Residual Certificateholders for the
corresponding period may significantly adversely affect such REMIC Residual
Certificateholders' after-tax rate of return.
Taxable Income of the REMIC. The taxable income of the REMIC will equal
the income from the Mortgage Loans and other assets of the REMIC plus any
cancellation of indebtedness income due to the allocation of realized losses to
REMIC Regular Certificates, less the deductions allowed to the REMIC for
interest (including original issue discount and reduced by any premium on
issuance) on the REMIC Regular Certificates (and any other class of REMIC
Certificates constituting "regular interests" in the REMIC not offered hereby),
amortization of any premium on the Mortgage Loans, bad debt losses with respect
to the Mortgage Loans and, except as described below, for servicing,
administrative and other expenses.
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For purposes of determining its taxable income, the REMIC will have an
initial aggregate basis in its assets equal to the sum of the issue prices of
all REMIC Certificates (or, if a class of REMIC Certificates is not sold
initially, their fair market values). Such aggregate basis will be allocated
among the Mortgage Loans and the other assets of the REMIC in proportion to
their respective fair market values. The issue price of any REMIC Certificates
offered hereby will be determined in the manner described above under
"--Taxation of Owners of REMIC Regular Certificates--Original Issue Discount".
The issue price of a REMIC Certificate received in exchange for an interest in
the Mortgage Loans or other property will equal the fair market value of such
interests in the Mortgage Loans or other property. Accordingly, if one or more
classes of REMIC Certificates are retained initially rather than sold, the
Master Servicer or the Trustee may be required to estimate the fair market value
of such interests in order to determine the basis of the REMIC in the Mortgage
Loans and other property held by the REMIC.
Subject to possible application of the de minimis rules, the method of
accrual by the REMIC of original issue discount income and market discount
income with respect to Mortgage Loans that it holds will be equivalent to the
method for accruing original issue discount income for holders of REMIC Regular
Certificates (that is, under the constant yield method taking into account the
Prepayment Assumption). However, a REMIC that acquires loans at a market
discount must include such market discount in income currently, as it accrues,
on a constant interest basis. See "--Taxation of Owners of REMIC Regular
Certificates" above, which describes a method for accruing such discount income
that is analogous to that required to be used by a REMIC as to Mortgage Loans
with market discount that it holds.
A Mortgage Loan will be deemed to have been acquired with discount (or
premium) to the extent that the REMIC's basis therein, determined as described
in the preceding paragraph, is less than (or greater than) its stated redemption
price. Any such discount will be includible in the income of the REMIC as it
accrues, in advance of receipt of the cash attributable to such income, under a
method similar to the method described above for accruing original issue
discount on the REMIC Regular Certificates. It is anticipated that each REMIC
will elect under Section 171 of the Code to amortize any premium on the Mortgage
Loans. Premium on any Mortgage Loan to which such election applies may be
amortized under a constant yield method, presumably taking into account a
Prepayment Assumption. Further, such an election would not apply to any Mortgage
Loan originated on or before September 27, 1985. Instead, premium on such a
Mortgage Loan should be allocated among the principal payments thereon and be
deductible by the REMIC as those payments become due or upon the prepayment of
such Mortgage Loan.
A REMIC will be allowed deductions for interest (including original issue
discount) on the REMIC Regular Certificates (including any other class of REMIC
Certificates constituting "regular interests" in the REMIC not offered hereby)
equal to the deductions that would be allowed if the REMIC Regular Certificates
(including any other class of REMIC Certificates constituting "regular
interests" in the REMIC not offered hereby) were indebtedness of the REMIC.
Original issue discount will be considered to accrue for this purpose as
described above under "--Taxation of Owners of REMIC Regular
Certificates--Original Issue Discount", except that the de minimis rule and the
adjustments for subsequent holders of REMIC Regular Certificates (including any
other class of REMIC Certificates constituting "regular interests" in the REMIC
not offered hereby) described therein will not apply.
If a class of REMIC Regular Certificates is issued at a price in excess of
the stated redemption price of such class (such excess, "Issue Premium"), the
net amount of interest deductions that are allowed the REMIC in each taxable
year with respect to the REMIC Regular Certificates of such class will be
reduced by an amount equal to the portion of the Issue Premium that is
considered to be amortized or repaid in that year. Although the matter is not
entirely certain, it is likely that Issue Premium would be amortized under a
constant yield method in a manner analogous to the method of accruing original
issue discount described above under "--Taxation of Owners of REMIC Regular
Certificates--Original Issue Discount".
As a general rule, the taxable income of a REMIC will be determined in the
same manner as if the REMIC were an individual having the calendar year as its
taxable year and using the accrual method of accounting. However, no item of
income, gain, loss or deduction allocable to a prohibited transaction will be
taken into account. See "--Prohibited Transactions Tax and Other Taxes" below.
Further, the limitation on miscellaneous itemized deductions imposed on
individuals by Section 67 of the Code (which allows such deductions only to the
extent they exceed in the aggregate two percent of the taxpayer's adjusted gross
income) will not be applied at the REMIC level so that the REMIC will be allowed
deductions for servicing, administrative and other non-interest expenses in
determining its taxable income. All such expenses will be allocated as a
separate item to the holders of REMIC Certificates, subject to the limitation of
Section 67 of the Code. See "--Possible Pass-Through of Miscellaneous
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Itemized Deductions". If the deductions allowed to the REMIC exceed its gross
income for a calendar quarter, such excess will be the net loss for the REMIC
for that calendar quarter.
Basis Rules, Net Losses and Distributions. The adjusted basis of a REMIC
Residual Certificate will be equal to the amount paid for such REMIC Residual
Certificate, increased by amounts included in the income of the REMIC Residual
Certificateholder and decreased (but not below zero) by distributions made, and
by net losses allocated, to such REMIC Residual Certificateholder.
A REMIC Residual Certificateholder is not allowed to take into account any
net loss for any calendar quarter to the extent such net loss exceeds such REMIC
Residual Certificateholder's adjusted basis in its REMIC Residual Certificate as
of the close of such calendar quarter (determined without regard to such net
loss). Any loss that is not currently deductible by reason of this limitation
may be carried forward indefinitely to future calendar quarters and, subject to
the same limitation, may be used only to offset income from the REMIC Residual
Certificate. The ability of REMIC Residual Certificateholders to deduct net
losses may be subject to additional limitations under the Code, as to which
REMIC Residual Certificateholders should consult their tax advisors.
Any distribution on a REMIC Residual Certificate will be treated as a
nontaxable return of capital to the extent it does not exceed the holder's
adjusted basis in such REMIC Residual Certificate. To the extent a distribution
on a REMIC Residual Certificate exceeds such adjusted basis, it will be treated
as gain from the sale of such REMIC Residual Certificate. Holders of certain
REMIC Residual Certificates may be entitled to distributions early in the term
of the related REMIC under circumstances in which their bases in such REMIC
Residual Certificates will not be sufficiently large that such distributions
will be treated as nontaxable returns of capital. Their bases in such REMIC
Residual Certificates will initially equal the amount paid for such REMIC
Residual Certificates and will be increased by their allocable shares of taxable
income of the Trust Fund. However, such bases increases may not occur until the
end of the calendar quarter, or perhaps the end of the calendar year, with
respect to which such REMIC taxable income is allocated to the REMIC Residual
Certificateholders. To the extent such REMIC Residual Certificateholders'
initial bases are less than the distributions to such REMIC Residual
Certificateholders, and increases in such initial bases either occur after such
distributions or (together with their initial bases) are less than the amount of
such distributions, gain will be recognized to such REMIC Residual
Certificateholders on such distributions and will be treated as gain from the
sale of their REMIC Residual Certificates.
The effect of these rules is that a REMIC Residual Certificateholder may
not amortize its basis in a REMIC Residual Certificate, but may only recover its
basis through distributions, through the deduction of any net losses of the
REMIC or upon the sale of its REMIC Residual Certificate. See "--Sales of REMIC
Certificates". For a discussion of possible modifications of these rules that
may require adjustments to income of a holder of a REMIC Residual Certificate
other than an original holder in order to reflect any difference between the
cost of such REMIC Residual Certificate to such REMIC Residual Certificateholder
and the adjusted basis such REMIC Residual Certificate would have in the hands
of an original holder, see "--Taxation of Owners of REMIC Residual
Certificates--General".
Excess Inclusions. Any "excess inclusions" with respect to a REMIC
Residual Certificate will, with an exception discussed below for certain REMIC
Residual Certificates held by thrift institutions, be subject to federal income
tax in all events.
In general, the "excess inclusions" with respect to a REMIC Residual
Certificate for any calendar quarter will be the excess, if any, of (i) the sum
of the daily portions of REMIC taxable income allocable to such REMIC Residual
Certificate over (ii) the sum of the "daily accruals" (as defined below) for
each day during such quarter that such REMIC Residual Certificate was held by
such REMIC Residual Certificateholder. The daily accruals of a REMIC Residual
Certificateholder will be determined by allocating to each day during a calendar
quarter its ratable portion of the product of the "adjusted issue price" of the
REMIC Residual Certificate at the beginning of the calendar quarter and 120% of
the "long-term Federal rate" in effect on the Closing Date. For this purpose,
the adjusted issue price of a REMIC Residual Certificate as of the beginning of
any calendar quarter will be equal to the issue price of the REMIC Residual
Certificate, increased by the sum of the daily accruals for all prior quarters
and decreased (but not below zero) by any distributions made with respect to
such REMIC Residual Certificate before the beginning of such quarter. The issue
price of a REMIC Residual Certificate is the initial offering price to the
public (excluding bond houses and brokers) at which a substantial amount of the
REMIC Residual Certificates were sold. The "long-term Federal rate" is an
average of current yields on Treasury securities with a remaining term of
greater than nine years, computed and published monthly by the IRS.
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For REMIC Residual Certificateholders, an excess inclusion (i) will not be
permitted to be offset by deductions, losses or loss carryovers from other
activities, (ii) will be treated as "unrelated business taxable income" to an
otherwise tax-exempt organization and (iii) will not be eligible for any rate
reduction or exemption under any applicable tax treaty with respect to the 30%
United States withholding tax imposed on distributions to REMIC Residual
Certificateholders that are foreign investors. See, however, "--Foreign
Investors in REMIC Certificates" below.
As an exception to the general rules described above, thrift institutions
are allowed to offset their excess inclusions with unrelated deductions, losses
or loss carryovers, but only if the REMIC Residual Certificates are considered
to have "significant value". The REMIC Regulations provide that in order to be
treated as having significant value, the REMIC Residual Certificates must have
an aggregate issue price, at least equal to two percent of the aggregate issue
prices of all of the related REMIC's Regular and Residual Certificates. In
addition, based on the Prepayment Assumption, the anticipated weighted average
life of the REMIC Residual Certificates must equal or exceed 20% of the
anticipated weighted average life of the REMIC, based on the Prepayment
Assumption and on any required or permitted cleanup calls or required
liquidation provided for in the REMIC's organizational documents. Although it
has not done so, the Treasury also has authority to issue regulations that would
treat the entire amount of income accruing on a REMIC Residual Certificate as an
excess inclusion if the REMIC Residual Certificates are considered not to have
"significant value". The related Prospectus Supplement will disclose whether
offered REMIC Residual Certificates may be considered to have "significant
value" under the REMIC Regulations; provided, however, that any disclosure that
a REMIC Residual Certificate will have "significant value" will be based upon
certain assumptions, and the Depositor will make no representation that a REMIC
Residual Certificate will have "significant value" for purposes of the
above-described rules. The above-described exception for thrift institutions
applies only to those residual interests held directly by, and deductions,
losses and loss carryovers incurred by, such institutions (and not by other
members of an affiliated group of corporations filing a consolidated income tax
return) or by certain wholly owned direct subsidiaries of such institutions
formed or operated exclusively in connection with the organization and operation
of one or more REMICs.
In the case of any REMIC Residual Certificates held by a real estate
investment trust, the aggregate excess inclusions with respect to such REMIC
Residual Certificates, reduced (but not below zero) by the real estate
investment trust taxable income (within the meaning of Section 857(b)(2) of the
Code, excluding any net capital gain), will be allocated among the shareholders
of such trust in proportion to the dividends received by such shareholders from
such trust, and any amount so allocated will be treated as an excess inclusion
with respect to a REMIC Residual Certificate as if held directly by such
shareholder. Treasury regulations yet to be issued could apply a similar rule to
regulated investment companies, common trust funds and certain cooperatives; the
REMIC Regulations currently do not address this subject.
Noneconomic REMIC Residual Certificates. Under the REMIC Regulations,
transfers of "noneconomic" REMIC Residual Certificates will be disregarded for
all federal income tax purposes if "a significant purpose of the transfer was to
enable the transferor to impede the assessment or collection of tax". If such
transfer is disregarded, the purported transferor will continue to remain liable
for any taxes due with respect to the income on such "noneconomic" REMIC
Residual Certificate. The REMIC Regulations provide that a REMIC Residual
Certificate is noneconomic unless, based on the Prepayment Assumption and on any
required or permitted cleanup calls, or required liquidation provided for in the
REMIC's organizational documents, (i) the present value of the expected future
distributions (discounted using the "applicable Federal rate" for obligations
whose term ends on the close of the last quarter in which excess inclusions are
expected to accrue with respect to the REMIC Residual Certificate, which rate is
computed and published monthly by the IRS) on the REMIC Residual Certificate
equals at least the present value of the expected tax on the anticipated excess
inclusions and (ii) the transferor reasonably expects that the transferee will
receive distributions with respect to the REMIC Residual Certificate at or after
the time the taxes accrue on the anticipated excess inclusions in an amount
sufficient to satisfy the accrued taxes. Accordingly, all transfers of REMIC
Residual Certificates that may constitute noneconomic residual interests will be
subject to certain restrictions under the terms of the related Pooling Agreement
that are intended to reduce the possibility of any such transfer being
disregarded. Such restrictions will require each party to a transfer to provide
an affidavit that no purpose of such transfer is to impede the assessment or
collection of tax, including certain representations as to the financial
condition of the prospective transferee, as to which the transferor is also
required to make a reasonable investigation to determine such transferee's
historic payment of its debts and ability to continue to pay its debts as they
come due in the future. Prior to purchasing a REMIC Residual Certificate,
prospective purchasers should consider the
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possibility that a purported transfer of such REMIC Residual Certificate by such
a purchaser to another purchaser at some future date may be disregarded in
accordance with the above-described rules which would result in the retention of
tax liability by such purchaser.
The related Prospectus Supplement will disclose whether offered REMIC
Residual Certificates may be considered "noneconomic" residual interests under
the REMIC Regulations; provided, however, that any disclosure that a REMIC
Residual Certificate will not be considered "noneconomic" will be based upon
certain assumptions, and the Depositor will make no representation that a REMIC
Residual Certificate will not be considered "noneconomic" for purposes of the
above-described rules. See "--Taxation of Owners of REMIC Residual
Certificates--Foreign Investors in REMIC Certificates" below for additional
restrictions applicable to transfers of certain REMIC Residual Certificates to
foreign persons.
Mark-to-Market Rules. Prospective purchasers of a REMIC Residual
Certificate should be aware that on December 28, 1993, the IRS released
temporary regulations under Code Section 475 (the "Temporary Mark-to-Market
Regulations") relating to the requirement that a securities dealer mark to
market securities held for sale to customers. This mark-to-market requirement
applies to all securities owned by a dealer except to the extent that the dealer
has specifically identified a security as held for investment. The Temporary
Mark-to-Market Regulations provide that for purposes of this mark-to-market
requirement, a "negative value" REMIC Residual Certificate is not treated as a
security and thus may not be marked to market. In general, a REMIC Residual
Certificate has negative value if, as of the date a taxpayer acquires the REMIC
Residual Certificate, the present value of the tax liabilities associated with
holding the REMIC Residual Certificate exceeds the sum of (i) the present value
of the expected future distributions on the REMIC Residual Certificate, and (ii)
the present value of the anticipated tax savings associated with holding the
REMIC Residual Certificate as the REMIC generates losses. The amounts and
present values of the anticipated tax liabilities, expected future distributions
and anticipated tax savings are all to be determined using (x) the prepayments
and reinvestment assumptions adopted under Section 1272(a)(6) of the Code, or
that would have been adopted had the REMIC's regular interests been issued with
original issue discount, (y) any required or permitted cleanup calls, or
required qualified liquidation, provided for in the REMIC's organizational
documents and (z) a discount rate equal to the "applicable Federal rate" (as
specified in Section 1274(d)(1) of the Code) that would apply to a debt
instrument issued on the date of acquisition of the REMIC Residual Certificate.
The Temporary Mark-to-Market Regulations apply to taxable years ending on or
after December 31, 1993. Furthermore, the Temporary Mark-to-Market Regulations
provide the IRS with the authority to treat any REMIC Residual Certificate
having substantially the same economic effect as a "negative value" residual
interest as a "negative value" residual interest. On January 3, 1995, the IRS
released proposed regulations under Section 475 of the Code (the "Proposed
Mark-to-Market Regulations"). The Proposed Mark-to-Market Regulations provide
that any residual interest (regardless of whether it has negative value) that is
acquired on or after January 4, 1995 is not a "security" for the purposes of
Section 475 of the Code, and thus is not subject to the mark-to-market rules.
Prospective purchasers of a REMIC Residual Certificate should consult their tax
advisors regarding the possible application of the Temporary Mark-to-Market
Regulations and the Proposed Mark-to-Market Regulations.
Possible Pass-Through of Miscellaneous Itemized Deductions. Fees and
expenses of a REMIC generally will be allocated to the holders of the related
REMIC Residual Certificates. The applicable Treasury regulations indicate,
however, that in the case of a REMIC that is similar to a single class grantor
trust, all or a portion of such fees and expenses should be allocated to the
holders of the related REMIC Regular Certificates. Unless otherwise stated in
the related Prospectus Supplement, such fees and expenses will be allocated to
holders of the related REMIC Residual Certificates in their entirety and not to
the holders of the related REMIC Regular Certificates.
With respect to REMIC Residual Certificates or REMIC Regular Certificates
the holders of which receive an allocation of fees and expenses in accordance
with the preceding discussion, if any holder thereof is an individual, estate or
trust, or a "pass-through entity" beneficially owned by one or more individuals,
estates or trusts, (i) an amount equal to such individual's, estate's or trust's
share of such fees and expenses will be added to the gross income of such holder
and (ii) such individual's, estate's or trust's share of such fees and expenses
will be treated as a miscellaneous itemized deduction allowable subject to the
limitation of Section 67 of the Code, which permits such deductions only to the
extent they exceed in the aggregate two percent of a taxpayer's adjusted gross
income. In addition, Section 68 of the Code provides that the amount of itemized
OSC
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deductions otherwise allowable for an individual whose adjusted gross income
exceeds a specified amount will be reduced by the lesser of (x) three percent of
the excess of the individual's adjusted gross income over such amount or (y) 80%
of the amount of itemized deductions otherwise allowable for the taxable year.
The amount of additional taxable income reportable by REMIC Certificateholders
that are subject to the limitations of either Section 67 or Section 68 of the
Code may be substantial. Furthermore, in determining the alternative minimum
taxable income of such a holder of a REMIC Certificate that is an individual,
estate or trust, or a "pass-through entity" beneficially owned by one or more
individuals, estates or trusts, no deduction will be allowed for such holder's
allocable portion of servicing fees and other miscellaneous itemized deductions
of the REMIC, even though an amount equal to the amount of such fees and other
deductions will be included in such holder's gross income. Accordingly, such
REMIC Certificates may not be appropriate investments for individuals, estates
or trusts, or pass-through entities beneficially owned by one or more
individuals, estates or trusts. Such prospective investors should carefully
consult with their own tax advisors prior to making an investment in such
Certificates.
Sales of REMIC Certificates. If a REMIC Certificate is sold, the selling
Certificateholder will recognize gain or loss equal to the difference between
the amount realized on the sale and its adjusted basis in the REMIC Certificate.
The adjusted basis of a REMIC Regular Certificate generally will equal the cost
of such REMIC Regular Certificate to such Certificateholder, increased by income
reported by such Certificateholder with respect to such REMIC Regular
Certificate (including original issue discount and market discount income) and
reduced (but not below zero) by distributions on such REMIC Regular Certificate
received by such Certificateholder and by any amortized premium. The adjusted
basis of a REMIC Residual Certificate will be determined as described under
"--Basis Rules, Net Losses and Distributions". Except as provided in the
following two paragraphs, any such gain or loss will be capital gain or loss,
provided such REMIC Certificate is held as a capital asset (generally, property
held for investment) within the meaning of Section 1221 of the Code. The Code as
of the date of this Prospectus provides for a top marginal tax rate of 39.6% for
individuals and a maximum marginal rate for long-term capital gains of
individuals of 28%. No such rate differential exists for corporations. In
addition, the distinction between a capital gain or loss and ordinary income or
loss remains relevant for other purposes.
Gain from the sale of a REMIC Regular Certificate that might otherwise be
capital gain will be treated as ordinary income to the extent such gain does not
exceed the excess, if any, of (i) the amount that would have been includible in
the seller's income with respect to such REMIC Regular Certificate assuming that
income had accrued thereon at a rate equal to 110% of the "applicable Federal
rate" (generally, a rate based on an average of current yields on Treasury
securities having a maturity comparable to that of the Certificate based on the
application of the Prepayment Assumption to such Certificate, which rate is
computed and published monthly by the IRS), determined as of the date of
purchase of such REMIC Regular Certificate, over (ii) the amount of ordinary
income actually includible in the seller's income prior to such sale. In
addition, gain recognized on the sale of a REMIC Regular Certificate by a seller
who purchased such REMIC Regular Certificate at a market discount will be
taxable as ordinary income in an amount not exceeding the portion of such
discount that accrued during the period such REMIC Certificate was held by such
holder, reduced by any market discount included in income under the rules
described above under "--Taxation of Owners of REMIC Regular
Certificates--Market Discount" and "--Premium".
REMIC Certificates will be "evidences of indebtedness" within the meaning
of Section 582(c)(1) of the Code, so that gain or loss recognized from the sale
of a REMIC Certificate by a bank or thrift institution to which such section
applies will be ordinary income or loss.
A portion of any gain from the sale of a REMIC Regular Certificate that
might otherwise be capital gain may be treated as ordinary income to the extent
that such Certificate is held as part of a "conversion transaction" within the
meaning of Section 1258 of the Code. A conversion transaction generally is one
in which the taxpayer has taken two or more positions in the same or similar
property that reduce or eliminate market risk, if substantially all of the
taxpayer's return is attributable to the time value of the taxpayer's net
investment in such transaction. The amount of gain so realized in a conversion
transaction that is recharacterized as ordinary income generally will not exceed
the amount of interest that would have accrued on the taxpayer's net investment
at 120% of the appropriate "applicable Federal rate" (which rate is computed and
published monthly by the IRS) at the time the taxpayer enters into the
conversion transaction, subject to appropriate reduction for prior inclusion of
interest and other ordinary income items from the transaction.
Finally, a taxpayer may elect to have net capital gain taxed at ordinary
income rates rather than capital gains rates in order to include such net
capital gain in total net investment income for the taxable year, for purposes
of the rule that limits the deduction of interest on indebtedness incurred to
purchase or carry property held for investment to a taxpayer's net investment
income.
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Except as may be provided in Treasury regulations yet to be issued, if the
seller of a REMIC Residual Certificate reacquires a REMIC Residual Certificate,
or acquires any other residual interest in a REMIC or any similar interest in a
"taxable mortgage pool" (as defined in Section 7701(i) of the Code) during the
period beginning six months before, and ending six months after, the date of
such sale, such sale will be subject to the "wash sale" rules of Section 1091 of
the Code. In that event, any loss realized by the REMIC Residual
Certificateholder on the sale will not be deductible, but instead will be added
to such REMIC Residual Certificateholder's adjusted basis in the newly acquired
asset.
Prohibited Transactions Tax and Other Taxes. The Code imposes a tax on
REMICs equal to 100% of the net income derived from "prohibited transactions" (a
"Prohibited Transactions Tax"). In general, subject to certain specified
exceptions, a prohibited transaction means the disposition of a Mortgage Loan,
the receipt of income from a source other than a Mortgage Loan or certain other
permitted investments, the receipt of compensation for services, or gain from
the disposition of an asset purchased with the payments on the Mortgage Loans
for temporary investment pending distribution on the REMIC Certificates. It is
not anticipated that the REMIC will engage in any prohibited transactions in
which it would recognize a material amount of net income.
In addition, certain contributions to a REMIC made after the day on which
the REMIC issues all of its interests could result in the imposition of a tax on
the REMIC equal to 100% of the value of the contributed property (a
"Contributions Tax"). Each Pooling Agreement will include provisions designed to
prevent the acceptance of any contributions that would be subject to such tax.
REMICs also are subject to federal income tax at the highest corporate
rate on "net income from foreclosure property", determined by reference to the
rules applicable to real estate investment trusts. "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.
Unless otherwise disclosed in the related Prospectus Supplement, it is not
anticipated that any REMIC will recognize "net income from foreclosure property"
subject to federal income tax.
Unless otherwise disclosed in the related Prospectus Supplement, it is not
anticipated that any material state or local income or franchise tax will be
imposed on any REMIC.
Unless otherwise stated in the related Prospectus Supplement, and to the
extent permitted by then applicable laws, any Prohibited Transactions Tax,
Contributions Tax, tax on "net income from foreclosure property" or state or
local income or franchise tax that may be imposed on the REMIC will be borne by
the related Master Servicer, Special Servicer or Trustee in any case out of its
own funds, provided that such person has sufficient assets to do so, and
provided further that such tax arises out of a breach of such person's
obligations under the related Pooling Agreement and in respect of compliance
with applicable laws and regulations. Any such tax not borne by a Master
Servicer, Special Servicer or Trustee will be charged against the related Trust
Fund resulting in a reduction in amounts payable to holders of the related REMIC
Certificates.
Tax and Restrictions on Transfers of REMIC Residual Certificates to
Certain Organizations. If a REMIC Residual Certificate is transferred to a
"disqualified organization" (as defined below), a tax would be imposed in an
amount (determined under the REMIC Regulations) equal to the product of (i) the
present value (discounted using the "applicable Federal rate" for obligations
whose term ends on the close of the last quarter in which excess inclusions are
expected to accrue with respect to the REMIC Residual Certificate, which rate is
computed and published monthly by the IRS) of the total anticipated excess
inclusions with respect to such REMIC Residual Certificate for periods after the
transfer and (ii) the highest marginal federal income tax rate applicable to
corporations. The anticipated excess inclusions must be determined as of the
date that the REMIC Residual Certificate is transferred and must be based on
events that have occurred up to the time of such transfer, the Prepayment
Assumption and any required or permitted cleanup calls or required liquidation
provided for in the REMIC's organizational documents. Such a tax generally would
be imposed on the transferor of the REMIC Residual Certificate, except that
where such transfer is through an agent for a disqualified organization, the tax
would instead be imposed on such agent. However, a transferor of a REMIC
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. Moreover, an entity will not qualify as a REMIC unless there are
reasonable arrangements designed to ensure that (x) residual interests in such
entity are not held by disqualified organizations and (y) information necessary
for the application of the tax described herein will be made available.
Restrictions on the transfer of REMIC Residual Certificates and certain other
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provisions that are intended to meet this requirement will be included in the
Pooling Agreement, and will be discussed more fully in any Prospectus Supplement
relating to the offering of any REMIC Residual Certificate.
In addition, if a "pass-through entity" (as defined below) includes in
income excess inclusions with respect to a REMIC Residual Certificate, and a
disqualified organization is the record holder of an interest in such entity,
then a tax will be imposed on such entity equal to the product of (i) the amount
of excess inclusions on the REMIC Residual Certificate that are allocable to the
interest in the pass-through entity held by such disqualified organization and
(ii) the highest marginal federal income tax rate imposed on corporations. A
pass-through entity will not be subject to this tax for any period, however, if
each record holder of an interest in such pass-through entity furnishes to such
pass-through entity (x) such holder's social security number and a statement
under penalty of perjury that such social security number is that of the record
holder or (y) a statement under penalty of perjury that such record holder is
not a disqualified organization.
For these purposes, a "disqualified organization" means (i) the United
States, any State or political subdivision thereof, any foreign government, any
international organization, or any agency or instrumentality of the foregoing
(but would not include instrumentalities described in Section 168(h)(2)(D) of
the Code or the FHLMC), (ii) any organization (other than a cooperative
described in Section 521 of the Code) that is exempt from federal income tax,
unless it is subject to the tax imposed by Section 511 of the Code or (iii) any
organization described in Section 1381(a)(2)(C) of the Code. For these purposes,
a "pass-through entity" means any regulated investment company, real estate
investment trust, trust, partnership or certain other entities described in
Section 860E(e)(6) of the Code. In addition, a person holding an interest in a
pass-through entity as a nominee for another person will, with respect to such
interest, be treated as a pass-through entity.
Termination. A REMIC will terminate immediately after the Distribution
Date following receipt by the REMIC of the final payment in respect of the
Mortgage Loans or upon a sale of the REMIC's assets following the adoption by
the REMIC of a plan of complete liquidation. The last distribution on a REMIC
Regular Certificate will be treated as a payment in retirement of a debt
instrument. In the case of a REMIC Residual Certificate, if the last
distribution on such REMIC Residual Certificate is less than the REMIC Residual
Certificateholder's adjusted basis in such REMIC Residual Certificate, such
REMIC Residual Certificateholder should (but may not) be treated as realizing a
loss equal to the amount of such difference, and such loss may be treated as a
capital loss.
Reporting and Other Administrative Matters. Solely for purposes of the
administrative provisions of the Code, the REMIC will be treated as a
partnership and REMIC Residual Certificateholders will be treated as partners.
Unless otherwise stated in the related Prospectus Supplement, either the Trustee
or the Master Servicer generally will hold at least a nominal amount of REMIC
Residual Certificates, will file REMIC federal income tax returns on behalf of
the related REMIC, and will be designated as and will act as the "tax matters
person" with respect to the REMIC in all respects.
As the tax matters person, the Trustee or the Master Servicer, as the case
may be, will, subject to certain notice requirements and various restrictions
and limitations, generally have the authority to act on behalf of the REMIC and
the REMIC Residual Certificateholders in connection with the administrative and
judicial review of items of income, deduction, gain or loss of the REMIC, as
well as the REMIC's classification. REMIC Residual Certificateholders will
generally be required to report such REMIC items consistently with their
treatment on the related REMIC's tax return and may in some circumstances be
bound by a settlement agreement between the Trustee or the Master Servicer, as
the case may be, as tax matters person, and the IRS concerning any such REMIC
item. Adjustments made to the REMIC tax return may require a REMIC Residual
Certificateholder to make corresponding adjustments on its return, and an audit
of the REMIC's tax return, or the adjustments resulting from such an audit,
could result in an audit of a REMIC Residual Certificateholder's return. No
REMIC will be registered as a tax shelter pursuant to Section 6111 of the Code
because it is not anticipated that any REMIC will have a net loss for any of the
first five taxable years of its existence. Any person that holds a REMIC
Residual Certificate as a nominee for another person may be required to furnish
to the related REMIC, in a manner to be provided in Treasury regulations, the
name and address of such person and other information.
Reporting of interest income, including any original issue discount, with
respect to REMIC Regular Certificates is required annually, and may be required
more frequently under Treasury regulations. These information reports generally
are required to be sent to individual holders of REMIC Regular Interests and the
IRS; holders of REMIC Regular Certificates that are corporations, trusts,
securities dealers and certain other non-individuals will be provided
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interest and original issue discount income information and the information set
forth in the following paragraph upon request in accordance with the
requirements of the applicable regulations. The information must be provided by
the later of 30 days after the end of the quarter for which the information was
requested, or two weeks after the receipt of the request. The REMIC must also
comply with rules requiring a REMIC Regular Certificate issued with original
issue discount to disclose on its face the amount of original issue discount and
the issue date, and requiring such information to be reported to the IRS.
Reporting with respect to the REMIC Residual Certificates, including income,
excess, inclusions, investment expenses and relevant information regarding
qualification of the REMIC's assets will be made as required under the Treasury
regulations, generally on a quarterly basis.
As applicable, the REMIC Regular Certificate information reports will
include a statement of the adjusted issue price of the REMIC Regular Certificate
at the beginning of each accrual period. In addition, the reports will include
information required by regulations with respect to computing the accrual of any
market discount. Because exact computation of the accrual of market discount on
a constant yield method would require information relating to the holder's
purchase price that the REMIC may not have, such regulations only require that
information pertaining to the appropriate proportionate method of accruing
market discount be provided. See "--Taxation of Owners of REMIC Regular
Certificates--Market Discount".
The responsibility for complying with the foregoing reporting rules will
be borne by either the Trustee or the Master Servicer, unless otherwise stated
in the related Prospectus Supplement.
Backup Withholding with Respect to REMIC Certificates. Payments of
interest and principal, as well as payments of proceeds from the sale of REMIC
Certificates, may be subject to the "backup withholding tax" under Section 3406
of the Code at a rate of 31% if recipients of such payments fail to furnish to
the payor certain information, including their taxpayer identification numbers,
or otherwise fail to establish an exemption from such tax. Any amounts deducted
and withheld from a distribution to a recipient would be allowed as a credit
against such recipient's federal income tax. Furthermore, certain penalties may
be imposed by the IRS on a recipient of payments that is required to supply
information but that does not do so in the proper manner.
Foreign Investors in REMIC Certificates. A REMIC Regular Certificateholder
that is not a "United States person" (as defined below) and is not subject to
federal income tax as a result of any direct or indirect connection to the
United States in addition to its ownership of a REMIC Regular Certificate will
not, unless otherwise disclosed in the related Prospectus Supplement, be subject
to United States federal income or withholding tax in respect of a distribution
on a REMIC Regular Certificate, provided that the holder complies to the extent
necessary with certain identification requirements (including delivery of a
statement, signed by the Certificateholder under penalties of perjury,
certifying that such Certificateholder is not a United States person and
providing the name and address of such Certificateholder). For these purposes,
"United States person" 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 political subdivision thereof, or an estate or
trust whose income from sources without the United States is includible in gross
income for United States federal income tax purposes regardless of its
connection with the conduct of a trade or business within the United States. It
is possible that the IRS may assert that the foregoing tax exemption should not
apply with respect to a REMIC Regular Certificate held by a REMIC Residual
Certificateholder that owns directly or indirectly a 10% or greater interest in
the REMIC Residual Certificates. If the holder does not qualify for exemption,
distributions of interest, including distributions in respect of accrued
original issue discount, to such holder may be subject to a tax rate of 30%,
subject to reduction under any applicable tax treaty.
In addition, the foregoing rules will not apply to exempt a United States
shareholder of a controlled foreign corporation from taxation on such United
States shareholder's allocable portion of the interest income received by such
controlled foreign corporation.
Further, it appears that a REMIC Regular Certificate would not be included
in the estate of a nonresident alien individual and would not be subject to
United States estate taxes. However, Certificateholders who are non-resident
alien individuals should consult their tax advisors concerning this question.
Unless otherwise stated in the related Prospectus Supplement, transfers of
REMIC Residual Certificates to investors that are not United States persons will
be prohibited under the related Pooling Agreement.
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GRANTOR TRUST FUNDS
Classification of Grantor Trust Funds. With respect to each series of
Grantor Trust Certificates, counsel to the Depositor will deliver its opinion to
the effect that, assuming compliance with all provisions of the related Pooling
Agreement, the related Grantor Trust Fund will be classified as a grantor trust
under subpart E, part I of subchapter J of the Code and not as a partnership or
an association taxable as a corporation. Accordingly, each holder of a Grantor
Trust Certificate generally will be treated as the owner of an interest in the
Mortgage Loans included in the Grantor Trust Fund.
For purposes of the following discussion, a Grantor Trust Certificate
representing an undivided equitable ownership interest in the principal of the
Mortgage Loans constituting the related Grantor Trust Fund, together with
interest thereon at a pass-through rate, will be referred to as a "Grantor Trust
Fractional Interest Certificate". A Grantor Trust Certificate representing
ownership of all or a portion of the difference between interest paid on the
Mortgage Loans constituting the related Grantor Trust Fund (net of normal
administration fees and any spread) and interest paid to the holders of Grantor
Trust Fractional Interest Certificates issued with respect to such Grantor Trust
Fund will be referred to as a "Grantor Trust Strip Certificate". A Grantor Trust
Strip Certificate may also evidence a nominal ownership interest in the
principal of the Mortgage Loans constituting the related Grantor Trust Fund.
CHARACTERIZATION OF INVESTMENTS IN GRANTOR TRUST CERTIFICATES
Grantor Trust Fractional Interest Certificates. In the case of Grantor
Trust Fractional Interest Certificates, unless otherwise disclosed in the
related Prospectus Supplement, counsel to the Depositor will deliver an opinion
that, in general, Grantor Trust Fractional Interest Certificates will represent
interests in (i) assets described in Section 7701(a)(19)(C) of the Code; (ii)
"obligation[s] (including any participation or certificate of beneficial
ownership therein) which . . . [are] principally secured by an interest in real
property" within the meaning of Section 860G(a)(3)(A) of the Code; and (iii)
"real estate assets" within the meaning of Section 856(c)(5)(A) of the Code. In
addition, counsel to the Depositor will deliver an opinion that interest on
Grantor Trust Fractional Interest Certificates will to the same extent be
considered "interest on obligations secured by mortgages on real property or on
interests in real property" within the meaning of Section 856(c)(3)(B) of the
Code.
Grantor Trust Strip Certificates. Even if Grantor Trust Strip Certificates
evidence an interest in a Grantor Trust Fund consisting of Mortgage Loans that
are assets described in Section 7701(a)(19)(C) of the Code and "real estate
assets" within the meaning of Section 856(c)(5)(A) of the Code, and the interest
on which is "interest on obligations secured by mortgages on real property"
within the meaning of Section 856(c)(3)(B) of the Code, it is unclear whether
the Grantor Trust Strip Certificates, and the income therefrom, will be so
characterized. However, the policies underlying such sections (namely, to
encourage or require investments in mortgage loans by thrift institutions and
real estate investment trusts) may suggest that such characterization is
appropriate. Counsel to the Depositor will not deliver any opinion on these
questions. Prospective purchasers to which such characterization of an
investment in Grantor Trust Strip Certificates is material should consult their
tax advisors regarding whether the Grantor Trust Strip Certificates, and the
income therefrom, will be so characterized.
The Grantor Trust Strip Certificates will be "obligation[s] (including any
participation or certificate of beneficial ownership therein) which . . . [are]
principally secured by an interest in real property" within the meaning of
Section 860G(a)(3)(A) of the Code.
TAXATION OF OWNERS OF GRANTOR TRUST FRACTIONAL INTEREST CERTIFICATES
General. Holders of a particular series of Grantor Trust Fractional
Interest Certificates generally will be required to report on their federal
income tax returns their shares of the entire income from the Mortgage Loans
(including amounts used to pay reasonable servicing fees and other expenses) and
will be entitled to deduct their shares of any such reasonable
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servicing fees and other expenses. Because of stripped interests, market or
original issue discount, or premium, the amount includible in income on account
of a Grantor Trust Fractional Interest Certificate may differ significantly from
the amount distributable thereon representing interest on the Mortgage Loans.
Under Section 67 of the Code, an individual, estate or trust holding a Grantor
Trust Fractional Interest Certificate, directly or through certain pass-through
entities, will be allowed a deduction for such reasonable servicing fees and
expenses only to the extent that the aggregate of such holder's miscellaneous
itemized deductions exceeds two percent of such holder's adjusted gross income.
In addition, Section 68 of the Code provides that the amount of itemized
deductions otherwise allowable for an individual whose adjusted gross income
exceeds a specified amount will be reduced by the lesser of (i) three percent of
the excess of the individual's adjusted gross income over such amount or (ii)
80% of the amount of itemized deductions otherwise allowable for the taxable
year. The amount of additional taxable income reportable by holders of Grantor
Trust Fractional Interest Certificates who are subject to the limitations of
either Section 67 or Section 68 of the Code may be substantial. Further,
Certificateholders (other than corporations) subject to the alternative minimum
tax may not deduct miscellaneous itemized deductions in determining their
alternative minimum taxable income. Although it is not entirely clear, it
appears that in transactions in which multiple classes of Grantor Trust
Certificates (including Grantor Trust Strip Certificates) are issued, such fees
and expenses should be allocated among the classes of Grantor Trust Certificates
using a method that recognizes that each such class benefits from the related
services. In the absence of statutory or administrative clarification as to the
method to be used, it currently is intended to base information returns or
reports to the IRS and Certificateholders on a method that allocates such
expenses among classes of Grantor Trust Certificates with respect to each period
based on the distributions made to each such class during that period.
The federal income tax treatment of Grantor Trust Fractional Interest
Certificates of any series will depend on whether they are subject to the
"stripped bond" rules of Section 1286 of the Code. Grantor Trust Fractional
Interest Certificates may be subject to those rules if (i) a class of Grantor
Trust Strip Certificates is issued as part of the same series of Certificates or
(ii) the Depositor or any of its affiliates retains (for its own account or for
purposes of resale) a right to receive a specified portion of the interest
payable on a Mortgage Asset. Further, the IRS has ruled that an unreasonably
high servicing fee retained by a seller or servicer will be treated as a
retained ownership interest in mortgages that constitutes a stripped coupon. For
purposes of determining what constitutes reasonable servicing fees for various
types of mortgages the IRS has established certain "safe harbors". The servicing
fees paid with respect to the Mortgage Loans for certain series of Grantor Trust
Certificates may be higher than the "safe harbors" and, accordingly, may not
constitute reasonable servicing compensation. The related Prospectus Supplement
will include information regarding servicing fees paid to a Master Servicer, a
Special Servicer, any Sub-Servicer or their respective affiliates necessary to
determine whether the preceding "safe harbor" rules apply.
If Stripped Bond Rules Apply. If the stripped bond rules apply, each
Grantor Trust Fractional Interest Certificate will be treated as having been
issued with "original issue discount" within the meaning of Section 1273(a) of
the Code, subject, however, to the discussion below regarding the treatment of
certain stripped bonds as market discount bonds and the discussion regarding de
minimis market discount. See "--Taxation of Owners of Grantor Trust Fractional
Interest Certificates--Market Discount". Under the stripped bond rules, the
holder of a Grantor Trust Fractional Interest Certificate (whether a cash or
accrual method taxpayer) will be required to report interest income from its
Grantor Trust Fractional Interest Certificate for each month in an amount equal
to the income that accrues on such Certificate in that month calculated under a
constant yield method, in accordance with the rules of the Code relating to
original issue discount.
The original issue discount on a Grantor Trust Fractional Interest
Certificate will be the excess of such Certificate's stated redemption price
over its issue price. The issue price of a Grantor Trust Fractional Interest
Certificate as to any purchaser will be equal to the price paid by such
purchaser for the Grantor Trust Fractional Interest Certificate. The stated
redemption price of a Grantor Trust Fractional Interest Certificate will be the
sum of all payments to be made on such Certificate, other than "qualified stated
interest", if any, as well as such Certificate's share of reasonable servicing
fees and other expenses. See "--Taxation of Owners of Grantor Trust Fractional
Interest Certificates--If Stripped Bond Rules Do Not Apply" for a definition of
"qualified stated interest". In general, the amount of such income that accrues
in any month would equal the product of such holder's adjusted basis in such
Grantor Trust Fractional Interest Certificate at the beginning of such month
(see "--Sales of Grantor Trust Certificates") and the yield of such Grantor
Trust Fractional Interest Certificate to such holder. Such yield would be
computed at the rate (compounded based on the regular interval between payment
dates) that, if used to discount the holder's share of future payments on the
Mortgage Loans, would cause the present value of those future payments to equal
the price at which the holder purchased such Certificate. In computing yield
under the stripped bond rules, a Certificateholder's share of future payments on
the Mortgage Loans will not include any payments made in respect of any spread
or any other ownership interest in the Mortgage Loans retained by the Depositor,
a Master Servicer, a Special Servicer, any Sub-Servicer or their respective
affiliates, but will include such Certificateholder's share of any reasonable
servicing fees and other expenses.
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Section 1272(a)(6) of the Code requires (i) the use of a reasonable
prepayment assumption in accruing original issue discount and (ii) adjustments
in the accrual of original issue discount when prepayments do not conform to the
prepayment assumption, with respect to certain categories of debt instruments,
and regulations could be adopted applying those provisions to the Grantor Trust
Fractional Interest Certificates. It is unclear whether those provisions would
be applicable to the Grantor Trust Fractional Interest Certificates or whether
use of a reasonable prepayment assumption may be required or permitted without
reliance on these rules. It is also uncertain, if a prepayment assumption is
used, whether the assumed prepayment rate would be determined based on
conditions at the time of the first sale of the Grantor Trust Fractional
Interest Certificate or, with respect to any holder, at the time of purchase of
the Grantor Trust Fractional Interest Certificate by that holder.
Certificateholders are advised to consult their own tax advisors concerning
reporting original issue discount in general and, in particular, whether a
prepayment assumption should be used in reporting original issue discount with
respect to Grantor Trust Fractional Interest Certificates.
In the case of a Grantor Trust Fractional Interest Certificate acquired at
a price equal to the principal amount of the Mortgage Loans allocable to such
Certificate, the use of a prepayment assumption generally would not have any
significant effect on the yield used in calculating accruals of interest income.
In the case, however, of a Grantor Trust Fractional Interest Certificate
acquired at a discount or premium (that is, at a price less than or greater than
such principal amount, respectively), the use of a reasonable prepayment
assumption would increase or decrease such yield, and thus accelerate or
decelerate, respectively, the reporting of income.
If a prepayment assumption is not used, then when a Mortgage Loan prepays
in full, the holder of a Grantor Trust Fractional Interest Certificate acquired
at a discount or a premium generally will recognize ordinary income or loss
equal to the difference between the portion of the prepaid principal amount of
the Mortgage Loan that is allocable to such Certificate and the portion of the
adjusted basis of such Certificate that is allocable to such Certificateholder's
interest in the Mortgage Loan. If a prepayment assumption is used, it appears
that no separate item of income or loss should be recognized upon a prepayment.
Instead, a prepayment should be treated as a partial payment of the stated
redemption price of the Grantor Trust Fractional Interest Certificate and
accounted for under a method similar to that described for taking account of
original issue discount on REMIC Regular Certificates. See "--Taxation of Owners
of REMIC Regular Certificates--Original Issue Discount". It is unclear whether
any other adjustments would be required to reflect differences between an
assumed prepayment rate and the actual rate of prepayments.
In the absence of statutory or administrative clarification, it is
currently intended to base information reports or returns to the IRS and
Certificateholders in transactions subject to the stripped bond rules on a
prepayment assumption (the "Stripped Bond Prepayment Assumption") that will be
disclosed in the related Prospectus Supplement and on a constant yield computed
using a representative initial offering price for each class of Certificates.
However, neither the Depositor nor any other person will make any representation
that the Mortgage Loans will in fact prepay at a rate conforming to such
Stripped Bond Prepayment Assumption or any other rate and Certificateholders
should bear in mind that the use of a representative initial offering price will
mean that such information returns or reports, even if otherwise accepted as
accurate by the IRS, will in any event be accurate only as to the initial
Certificateholders of each series who bought at that price.
Under Treasury regulation Section 1.1286-1T, certain stripped bonds are to
be treated as market discount bonds and, accordingly, any purchaser of such a
bond is to account for any discount on the bond as market discount rather than
original issue discount. This treatment only applies, however, if immediately
after the most recent disposition of the bond by a person stripping one or more
coupons from the bond and disposing of the bond or coupon (i) there is no
original issue discount (or only a de minimis amount of original issue discount)
or (ii) the annual stated rate of interest payable on the original bond is no
more than one percentage point lower than the gross interest rate payable on the
original mortgage loan (before subtracting any servicing fee or any stripped
coupon). If interest payable on a Grantor Trust Fractional Interest Certificate
is more than one percentage point lower than the gross interest rate payable on
the Mortgage Loans, the related Prospectus Supplement will disclose that fact.
If the original issue discount or market discount on a Grantor Trust Fractional
Interest Certificate determined under the stripped bond rules is less than 0.25%
of the stated redemption price multiplied by the weighted average maturity of
the Mortgage Loans, then such original issue discount or market discount will be
considered to be de minimis. Original issue discount or market discount of only
a de minimis amount will be included in income in the same manner as de minimis
original issue discount and market discount described in "--If Stripped Bond
Rules Do Not Apply" and "--Market Discount".
If Stripped Bond Rules Do Not Apply. Subject to the discussion below on
original issue discount, if the stripped bond rules do not apply to a Grantor
Trust Fractional Interest Certificate, the Certificateholder will be required to
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report its share of the interest income on the Mortgage Loans in accordance with
such Certificateholder's normal method of accounting. The original issue
discount rules will apply to a Grantor Trust Fractional Interest Certificate to
the extent it evidences an interest in Mortgage Loans issued with original issue
discount.
The original issue discount, if any, on the Mortgage Loans will equal the
difference between the stated redemption price of such Mortgage Loans and their
issue price. Under the OID Regulations, the stated redemption price is equal to
the total of all payments to be made on such Mortgage Loan other than "qualified
stated interest". "Qualified stated interest" includes interest that is
unconditionally payable at least annually at a single fixed rate, at a
"qualified floating rate", or at an "objective rate", a combination of a single
fixed rate and one or more "qualified floating rates" or one "qualified inverse
floating rate", or a combination of "qualified floating rates" that does not
operate in a manner that accelerates or defers interest payments on such
Mortgage Loan. In general, the issue price of a Mortgage Loan will be the amount
received by the borrower from the lender under the terms of the Mortgage Loan,
less any "points" paid by the borrower, and the stated redemption price of a
Mortgage Loan will equal its principal amount, unless the Mortgage Loan provides
for an initial below-market rate of interest or the acceleration or the deferral
of interest payments.
In the case of Mortgage Loans bearing adjustable or variable interest
rates, the related Prospectus Supplement will describe the manner in which such
rules will be applied with respect to those Mortgage Loans in preparing
information returns to the Certificateholders and the IRS.
Notwithstanding the general definition of original issue discount,
original issue discount will be considered to be de minimis if such original
issue discount is less than 0.25% of the stated redemption price multiplied by
the weighted average maturity of the Mortgage Loan. For this purpose, the
weighted average maturity of the Mortgage Loan will be computed as the sum of
the amounts determined, as to each payment included in the stated redemption
price of such Mortgage Loan, by multiplying (i) the number of complete years
(rounding down for partial years) from the issue date until such payment is
expected to be made by (ii) a fraction, the numerator of which is the amount of
the payment and the denominator of which is the stated redemption price of the
Mortgage Loan. Under the OID Regulations, original issue discount of only a de
minimis amount (other than de minimis original issue discount attributable to a
so-called "teaser" rate or initial interest holiday) will be included in income
as each payment of stated principal price is made, based on the product of the
total amount of such de minimis original issue discount and a fraction, the
numerator of which is the amount of each such payment and the denominator of
which is the outstanding stated principal amount of the Mortgage Loan. The OID
Regulations also permit a Certificateholder to elect to accrue de minimis
original issue discount into income currently based on a constant yield method.
See "--Market Discount" below.
If original issue discount is in excess of a de minimis amount, all
original issue discount with respect to a Mortgage Loan will be required to be
accrued and reported in income each month, based on a constant yield. The OID
Regulations suggest that no prepayment assumption is appropriate in computing
the yield on prepayable obligations issued with original issue discount. In the
absence of statutory or administrative clarification, it currently is not
intended to base information reports or returns to the IRS and
Certificateholders on the use of a prepayment assumption in transactions not
subject to the stripped bond rules. However, Section 1272(a)(6) of the Code may
require that a prepayment assumption be made in computing yield with respect to
all mortgage-backed securities. Certificateholders are advised to consult their
own tax advisors concerning whether a prepayment assumption should be used in
reporting original issue discount with respect to Grantor Trust Fractional
Interest Certificates. Certificateholders should refer to the related Prospectus
Supplement with respect to each series to determine whether and in what manner
the original issue discount rules will apply to Mortgage Loans in such series.
A purchaser of a Grantor Trust Fractional Interest Certificate that
purchases such Grantor Trust Fractional Interest Certificate at a cost less than
such Certificate's allocable portion of the aggregate remaining stated
redemption price of the Mortgage Loans held in the related Trust Fund will also
be required to include in gross income such Certificate's daily portions of any
original issue discount with respect to such Mortgage Loans. However, each such
daily portion will be reduced, if the cost of such Grantor Trust Fractional
Interest Certificate to such purchaser is in excess of such Certificate's
allocable portion of the aggregate "adjusted issue prices" of the Mortgage Loans
held in the related Trust Fund, approximately in proportion to the ratio such
excess bears to such Certificate's allocable portion of the aggregate original
issue discount remaining to be accrued on such Mortgage Loans. The adjusted
issue price of a Mortgage Loan on any given day equals the sum of (i) the
adjusted issue price (or, in the case of the first accrual period, the issue
price) of such Mortgage Loan at the beginning of the accrual period that
includes such day and (ii) the daily portions of original issue discount for all
days during such accrual period prior to such day. The
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adjusted issue price of a Mortgage Loan at the beginning of any accrual period
will equal the issue price of such Mortgage Loan, increased by the aggregate
amount of original issue discount with respect to such Mortgage Loan that
accrued in prior accrual periods, and reduced by the amount of any payments made
on such Mortgage Loan in prior accrual periods of amounts included in its stated
redemption price.
Unless otherwise provided in the related Prospectus Supplement, the
Trustee or Master Servicer, as applicable, will provide to any holder of a
Grantor Trust Fractional Interest Certificate such information as such holder
may reasonably request from time to time with respect to original issue discount
accruing on Grantor Trust Fractional Interest Certificates. See "--Grantor Trust
Reporting" below.
Market Discount. If the stripped bond rules do not apply to the Grantor
Trust Fractional Interest Certificate, a Certificateholder may be subject to the
market discount rules of Sections 1276 through 1278 of the Code to the extent an
interest in a Mortgage Loan is considered to have been purchased at a "market
discount", that is, in the case of a Mortgage Loan issued without original issue
discount, at a purchase price less than its remaining stated redemption price
(as defined above), or in the case of a Mortgage Loan issued with original issue
discount, at a purchase price less than its adjusted issue price (as defined
above). If market discount is in excess of a de minimis amount (as described
below), the holder generally will be required to include in income in each month
the amount of such discount that has accrued (under the rules described in the
next paragraph) through such month that has not previously been included in
income, but limited, in the case of the portion of such discount that is
allocable to any Mortgage Loan, to the payment of stated redemption price on
such Mortgage Loan that is received by (or, in the case of accrual basis
Certificateholders, due to) the Trust Fund in that month. A Certificateholder
may elect to include market discount in income currently as it accrues (under a
constant yield method based on the yield of the Certificate to such holder)
rather than including it on a deferred basis in accordance with the foregoing.
If made, such election will apply to all market discount bonds acquired by such
Certificateholder during or after the first taxable year to which such election
applies. In addition, the OID Regulations would permit a Certificateholder to
elect to accrue all interest, discount (including de minimis market or original
issue discount) and premium in income as interest, based on a constant yield
method. If such an election were made with respect to a Mortgage Loan with
market discount, the Certificateholder would be deemed to have made an election
to currently include market discount in income with respect to all other debt
instruments having market discount that such Certificateholder acquires during
the taxable year of the election and thereafter and, possibly, previously
acquired instruments. Similarly, a Certificateholder that made this election for
a Certificate acquired at a premium would be deemed to have made an election to
amortize bond premium with respect to all debt instruments having amortizable
bond premium that such Certificateholder owns or acquires. See "--Taxation of
Owners of REMIC Regular Certificates--Premium". Each of these elections to
accrue interest, discount and premium with respect to a Certificate on a
constant yield method or as interest is irrevocable.
Section 1276(b)(3) of the Code authorized the Treasury Department to issue
regulations providing for the method for accruing market discount on debt
instruments, the principal of which is payable in more than one installment.
Until such time as regulations are issued by the Treasury Department, certain
rules described in the Committee Report apply. Under those rules, in each
accrual period market discount on the Mortgage Loans should accrue, at the
Certificateholder's option: (i) on the basis of a constant yield method, (ii) in
the case of a Mortgage Loan issued without original issue discount, in an amount
that bears the same ratio to the total remaining market discount as the stated
interest paid in the accrual period bears to the total stated interest remaining
to be paid on the Mortgage Loan as of the beginning of the accrual period or
(iii) in the case of a Mortgage Loan issued with original issue discount, in an
amount that bears the same ratio to the total remaining market discount as the
original issue discount accrued in the accrual period bears to the total
original issue discount remaining at the beginning of the accrual period. The
prepayment assumption, if any, used in calculating the accrual of original issue
discount is to be used in calculating the accrual of market discount. The effect
of using a prepayment assumption could be to accelerate the reporting of such
discount income. Because the regulations referred to in this paragraph have not
been issued, it is not possible to predict what effect such regulations might
have on the tax treatment of a Mortgage Loan purchased at a discount in the
secondary market.
Because the Mortgage Loans will provide for periodic payments of stated
redemption price, such discount may be required to be included in income at a
rate that is not significantly slower than the rate at which such discount would
be included in income if it were original issue discount.
Market discount with respect to Mortgage Loans generally will be
considered to be de minimis if it is less than 0.25% of the stated redemption
price of the Mortgage Loans multiplied by the number of complete years to
maturity
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remaining after the date of its purchase. In interpreting a similar rule with
respect to original issue discount on obligations payable in installments, the
OID Regulations refer to the weighted average maturity of obligations, and it is
likely that the same rule will be applied with respect to market discount,
presumably taking into account the prepayment assumption used, if any. The
effect of using a prepayment assumption could be to accelerate the reporting of
such discount income. If market discount is treated as de minimis under the
foregoing rule, it appears that actual discount would be treated in a manner
similar to original issue discount of a de minimis amount. See "--If Stripped
Bond Rules Do Not Apply".
Further, under the rules described in "--Taxation of Owners of REMIC
Regular Certificates--Market Discount", any discount that is not original issue
discount and exceeds a de minimis amount may require the deferral of interest
expense deductions attributable to accrued market discount not yet includible in
income, unless an election has been made to report market discount currently as
it accrues. This rule applies without regard to the origination dates of the
Mortgage Loans.
Premium. If a Certificateholder is treated as acquiring the underlying
Mortgage Loans at a premium, that is, at a price in excess of their remaining
stated redemption price, such Certificateholder may elect under Section 171 of
the Code to amortize using a constant yield method the portion of such premium
allocable to Mortgage Loans originated after September 27, 1985. Amortizable
premium is treated as an offset to interest income on the related debt
instrument, rather than as a separate interest deduction. However, premium
allocable to Mortgage Loans originated before September 28, 1985 or to Mortgage
Loans for which an amortization election is not made, should be allocated among
the payments of stated redemption price on the Mortgage Loan and be allowed as a
deduction as such payments are made (or, for a Certificateholder using the
accrual method of accounting, when such payments of stated redemption price are
due).
It is unclear whether a prepayment assumption should be used in computing
amortization of premium allowable under Section 171 of the Code. If premium is
not subject to amortization using a prepayment assumption and a Mortgage Loan
prepays in full, the holder of a Grantor Trust Fractional Interest Certificate
acquired at a premium should recognize a loss, equal to the difference between
the portion of the prepaid principal amount of the Mortgage Loan that is
allocable to the Certificate and the portion of the adjusted basis of the
Certificate that is allocable to the Mortgage Loan. If a prepayment assumption
is used to amortize such premium, it appears that such a loss would be
unavailable. Instead, if a prepayment assumption is used, a prepayment should be
treated as a partial payment of the stated redemption price of the Grantor Trust
Fractional Interest Certificate and accounted for under a method similar to that
described for taking account of original issue discount on REMIC Regular
Certificates. See "--Taxation of Owners of REMIC Regular Certificates--Original
Issue Discount". It is unclear whether any other adjustments would be required
to reflect differences between the prepayment assumption used, if any, and the
actual rate of prepayments.
Taxation of Owners of Grantor Trust Strip Certificates. The "stripped
coupon" rules of Section 1286 of the Code will apply to the Grantor Trust Strip
Certificates. Except as described above in "--If Stripped Bond Rules Apply", no
regulations or published rulings under Section 1286 of the Code have been issued
and some uncertainty exists as to how it will be applied to securities such as
the Grantor Trust Strip Certificates. Accordingly, holders of Grantor Trust
Strip Certificates should consult their own tax advisors concerning the method
to be used in reporting income or loss with respect to such Certificates.
The OID Regulations do not apply to "stripped coupons", although they
provide general guidance as to how the original issue discount sections of the
Code will be applied. In addition, the discussion below is subject to the
discussion under "--Possible Application of Contingent Payment Rules" below and
assumes that the holder of a Grantor Trust Strip Certificate will not own any
Grantor Trust Fractional Interest Certificates.
Under the stripped coupon rules, it appears that original issue discount
will be required to be accrued in each month on the Grantor Trust Strip
Certificates based on a constant yield method. In effect, each holder of Grantor
Trust Strip Certificates would include as interest income in each month an
amount equal to the product of such holder's adjusted basis in such Grantor
Trust Strip Certificate at the beginning of such month and the yield of such
Grantor Trust Strip Certificate to such holder. Such yield would be calculated
based on the price paid for that Grantor Trust Strip Certificate by its holder
and the payments remaining to be made thereon at the time of the purchase, plus
an allocable portion of the servicing fees and expenses to be paid with respect
to the Mortgage Loans. See "--If Stripped Bond Rules Apply" above.
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As noted above, Section 1272(a)(6) of the Code requires that a prepayment
assumption be used in computing the accrual of original issue discount with
respect to certain categories of debt instruments, and that adjustments be made
in the amount and rate of accrual of such discount when prepayments do not
conform to such prepayment assumption. Regulations could be adopted applying
those provisions to the Grantor Trust Strip Certificates. It is unclear whether
those provisions would be applicable to the Grantor Trust Strip Certificates or
whether use of a prepayment assumption may be required or permitted in the
absence of such regulations. It is also uncertain, if a prepayment assumption is
used, whether the assumed prepayment rate would be determined based on
conditions at the time of the first sale of the Grantor Trust Strip Certificate
or, with respect to any subsequent holder, at the time of purchase of the
Grantor Trust Strip Certificate by that holder.
The accrual of income on the Grantor Trust Strip Certificates will be
significantly slower if a prepayment assumption is permitted to be made than if
yield is computed assuming no prepayments. In the absence of statutory or
administrative clarification, it currently is intended to base information
returns or reports to the IRS and Certificateholders on the Stripped Bond
Prepayment Assumption disclosed in the related Prospectus Supplement and on a
constant yield computed using a representative initial offering price for each
class of Certificates. However, neither the Depositor nor any other person will
make any representation that the Mortgage Loans will in fact prepay at a rate
conforming to the Stripped Bond Prepayment Assumption or at any other rate and
Certificateholders should bear in mind that the use of a representative initial
offering price will mean that such information returns or reports, even if
otherwise accepted as accurate by the IRS, will, in any event be accurate only
as to the initial Certificateholders of each series who bought at that price.
Prospective purchasers of the Grantor Trust Strip Certificates should consult
their own tax advisors regarding the use of the Stripped Bond Prepayment
Assumption.
It is unclear under what circumstances, if any, the prepayment of a
Mortgage Loan will give rise to a loss to the holder of a Grantor Trust Strip
Certificate. If a Grantor Trust Strip Certificate is treated as a single
instrument (rather than an interest in discrete mortgage loans) and the effect
of prepayments is taken into account in computing yield with respect to such
Grantor Trust Strip Certificate, it appears that no loss may be available as a
result of any particular prepayment unless prepayments occur at a rate faster
than the Stripped Bond Prepayment Assumption. However, if a Grantor Trust Strip
Certificate is treated as an interest in discrete Mortgage Loans, or if the
Stripped Bond Prepayment Assumption is not used, then when a Mortgage Loan is
prepaid, the holder of a Grantor Trust Strip Certificate should be able to
recognize a loss equal to the portion of the adjusted issue price of the Grantor
Trust Strip Certificate that is allocable to such Mortgage Loan.
Possible Application of Contingent Payment Rules. The coupon stripping
rules' general treatment of stripped coupons is to regard them as newly issued
debt instruments in the hands of each purchaser. To the extent that payments on
the Grantor Trust Strip Certificates would cease if the Mortgage Loans were
prepaid in full, the Grantor Trust Strip Certificates could be considered to be
debt instruments providing for contingent payments. Under the OID Regulations,
debt instruments providing for contingent payments are not subject to the same
rules as debt instruments providing for noncontingent payments. Final
regulations have been promulgated with respect to contingent payment debt
instruments. However, like the OID Regulations, such regulations do not
specifically address securities, such as the Grantor Trust Strip Certificates,
that are subject to the stripped bond rules of Section 1286 of the Code.
Certificateholders should consult their tax advisors concerning the
possible application of the contingent payment rules to the Grantor Trust Strip
Certificates.
Sales of Grantor Trust Certificates. Any gain or loss, equal to the
difference between the amount realized on the sale or exchange of a Grantor
Trust Certificate and its adjusted basis, recognized on such sale or exchange of
a Grantor Trust Certificate by an investor who holds such Grantor Trust
Certificate as a capital asset, will be capital gain or loss, except to the
extent of accrued and unrecognized market discount, which will be treated as
ordinary income, and (in the case of banks and other financial institutions)
except as provided under Section 582(c) of the Code. The adjusted basis of a
Grantor Trust Certificate generally will equal its cost, increased by any income
reported by the seller (including original issue discount and market discount
income) and reduced (but not below zero) by any previously reported losses, any
amortized premium and by any distributions with respect to such Grantor Trust
Certificate. The Code as of the date of this Prospectus provides a top marginal
tax rate of 39.6% for individuals and a maximum marginal rate for long-term
capital gains of individuals of 28%. No such rate differential exists for
corporations. In addition, the distinction between a capital gain or loss and
ordinary income or loss remains relevant for other purposes.
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Gain or loss from the sale of a Grantor Trust Certificate may be partially
or wholly ordinary and not capital in certain circumstances. Gain attributable
to accrued and unrecognized market discount will be treated as ordinary income,
as will gain or loss recognized by banks and other financial institutions
subject to Section 582(c) of the Code. Furthermore, a portion of any gain that
might otherwise be capital gain may be treated as ordinary income to the extent
that the Grantor Trust Certificate is held as part of a "conversion transaction"
within the meaning of Section 1258 of the Code. A conversion transaction
generally is one in which the taxpayer has taken two or more positions in the
same or similar property that reduce or eliminate market risk, if substantially
all of the taxpayer's return is attributable to the time value of the taxpayer's
net investment in such transaction. The amount of gain realized in a conversion
transaction that is recharacterized as ordinary income generally will not exceed
the amount of interest that would have accrued on the taxpayer's net investment
at 120% of the appropriate "applicable Federal rate" (which rate is computed and
published monthly by the IRS) at the time the taxpayer enters into the
conversion transaction, subject to appropriate reduction for prior inclusion of
interest and other ordinary income items from the transaction. Finally, a
taxpayer may elect to have net capital gain taxed at ordinary income rates
rather than capital gains rates in order to include such net capital gain in
total net investment income for that taxable year, for purposes of the rule that
limits the deduction of interest on indebtedness incurred to purchase or carry
property held for investment to a taxpayer's net investment income.
Grantor Trust Reporting. Unless otherwise provided in the related
Prospectus Supplement, the Trustee or Master Servicer, as applicable, will
furnish to each holder of a Grantor Trust Certificate, with each distribution, a
statement setting forth the amount of such distribution allocable to principal
on the underlying Mortgage Loans and to interest thereon at the related
Pass-Through Rate. In addition, within a reasonable time after the end of each
calendar year, the Trustee or Master Servicer, as applicable, will furnish to
each Certificateholder during such year such customary factual information as
the Depositor or the reporting party deems necessary or desirable to enable
holders of Grantor Trust Certificates to prepare their tax returns and will
furnish comparable information to the IRS as and when required by law to do so.
Because the rules for accruing discount and amortizing premium with respect to
the Grantor Trust Certificates are uncertain in various respects, there is no
assurance the IRS will agree with the Trustee's or Master Servicer's, as the
case may be, information reports of such items of income and expense. Moreover,
such information reports, even if otherwise accepted as accurate by the IRS,
will in any event be accurate only as to the initial Certificateholders that
bought their Certificates at the representative initial offering price used in
preparing such reports.
Backup Withholding. In general, the rules described in "--Taxation of
Owners of REMIC Residual Certificates--Backup Withholding with Respect to REMIC
Certificates" will also apply to Grantor Trust Certificates.
Foreign Investor. In general, the discussion with respect to REMIC Regular
Certificates in "--Taxation of Owners of REMIC Residual Certificates--Foreign
Investors in REMIC Certificates" applies to Grantor Trust Certificates except
that Grantor Trust Certificates will, unless otherwise disclosed in the related
Prospectus Supplement, be eligible for exemption from United States withholding
tax, subject to the conditions described in such discussion, only to the extent
the related Mortgage Loans were originated after July 18, 1984.
To the extent that interest on a Grantor Trust Certificate would be exempt
under Sections 871(h)(1) and 881(c) of the Code from United States withholding
tax, and the Grantor Trust Certificate is not held in connection with a
Certificateholder's trade or business in the United States, such Grantor Trust
Certificate will not be subject to United States estate taxes in the estate of a
non-resident alien individual.
STATE AND OTHER TAX CONSEQUENCES
In addition to the federal income tax consequences described in "Certain
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 tax 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.
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ERISA CONSIDERATIONS
GENERAL
The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
and the Code impose certain requirements on employee benefit plans, and on
certain other retirement plans and arrangements, including individual retirement
accounts and annuities, medical savings accounts, Keogh plans and collective
investment funds and separate accounts in which such plans, accounts or
arrangements are invested that are subject to the fiduciary responsibility
provisions of ERISA and Section 4975 of the Code (all of which are hereinafter
referred to as "Plans"), and on persons who are fiduciaries with respect to
Plans, in connection with the investment of Plan assets. Certain employee
benefit plans, such as governmental plans (as defined in ERISA Section 3(32)),
and, if no election has been made under Section 410(d) of the Code, church plans
(as defined in Section 3(33) of ERISA) are not subject to ERISA requirements.
Accordingly, assets of such plans may be invested in Offered Certificates
without regard to the ERISA considerations described below, subject to the
provisions of other applicable federal and state law. Any such plan which is
qualified and exempt from taxation under Sections 401(a) and 501(a) of the Code,
however, is subject to the prohibited transaction rules set forth in Section 503
of the Code.
ERISA generally imposes on Plan fiduciaries certain general fiduciary
requirements, including those of investment prudence and diversification and the
requirement that a Plan's investments be made in accordance with the documents
governing the Plan. In addition, ERISA and the Code prohibit a broad range of
transactions involving assets of a Plan and persons ("Parties-in-Interest") who
have certain specified relationships to the Plan, unless a statutory or
administrative exemption is available. Certain Parties-in-Interest that
participate in a prohibited transaction may be subject to an excise tax imposed
pursuant to Section 4975 of the Code, unless a statutory or administrative
exemption is available. These prohibited transactions generally are set forth in
Section 406 of ERISA and Section 4975 of the Code.
Plan Asset Regulations. A Plan's investment in Offered Certificates may
cause the Trust Assets to be deemed Plan assets. Section 2510.3-101 of the
regulations of the United States Department of Labor (the "DOL") provides that
when a Plan acquires an equity interest in an entity, the Plan's assets include
both such equity interest and an undivided interest in each of the underlying
assets of the entity, unless certain exceptions not applicable to this
discussion apply, or unless the equity participation in the entity by "benefit
plan investors" (that is, Plans and certain employee benefit plans not subject
to ERISA) is not "significant". For this purpose, in general, equity
participation in a Trust Fund will be "significant" on any date if, immediately
after the most recent acquisition of any Certificate, 25% or more of any class
of Certificates is held by benefit plan investors.
Any person who has discretionary authority or control respecting the
management or disposition of Plan assets, and any person who provides investment
advice with respect to such assets for a fee, is a fiduciary of the investing
Plan. If the Trust Assets constitute Plan assets, then any party exercising
management or discretionary control regarding those assets, such as a Master
Servicer, a Special Servicer or any Sub-Servicer, may be deemed to be a Plan
"fiduciary" with respect to the investing Plan, and thus subject to the
fiduciary responsibility provisions and prohibited transaction provisions of
ERISA and the Code. In addition, if the Trust Assets constitute Plan assets, the
purchase of Certificates by a Plan, as well as the operation of the Trust Fund,
may constitute or involve a prohibited transaction under ERISA and the Code.
PROHIBITED TRANSACTION EXEMPTIONS
First Union Corporation ("First Union") has received from the DOL an
individual prohibited transaction exemption (the "Exemption"), which generally
exempts from the application of the prohibited transaction provisions of
Sections 406(a) and (b) and 407(a) of ERISA, and the excise taxes imposed on
such prohibited transactions pursuant to Section 4975(a) and (b) of the Code,
certain transactions, among others, relating to the servicing and operation of
mortgage pools and the purchase, sale and holding of mortgage pass-through
certificates underwritten by an Underwriter (as hereinafter defined), provided
that certain conditions set forth in the Exemption application are satisfied.
For purposes of this Section, "ERISA Considerations", the term "Underwriter"
includes (i) First Union, (ii) any person directly or indirectly, through one or
more intermediaries, controlling, controlled by or under common control with
First Union, and (iii) any member of the underwriting syndicate or selling group
of which First Union or a person described in (ii) is a manager or co-manager
with respect to a class of Certificates. See "Method of Distribution".
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The Exemption sets forth six general conditions which must be satisfied
for a transaction involving the purchase, sale and holding of Offered
Certificates to be eligible for exemptive relief under the Exemption:
First, the acquisition of Offered Certificates by a Plan must be on
terms that are at least as favorable to the Plan as they would be in an
arm's-length transaction with an unrelated party.
Second, the Offered Certificates must evidence rights and interests
which are not subordinated to the rights and interests evidenced by other
Certificates of the same trust.
Third, the Offered Certificates at the time of acquisition by the
Plan must be rated in one of the three highest generic rating categories
by Standard & Poor's Corporation ("Standard & Poor's"), Moody's Investors
Service, Inc. ("Moody's"), Duff & Phelps, Inc. ("Duff & Phelps") or Fitch
Investors Service, Inc. ("Fitch").
Fourth, the Trustee cannot be an affiliate of any other member of
the "Restricted Group", which consists of any Underwriter, the Depositor,
the Trustee, the Master Servicer, the Special Servicer, any Sub-Servicer,
the provider of any Credit Support and any obligor with respect to
Mortgage Assets (including mortgage loans underlying a CMBS not issued by
FNMA, FHLMC or GNMA) constituting more than 5% of the aggregate
unamortized principal balance of the Mortgage Assets in the related Trust
Fund as of the date of initial issuance of the Certificates.
Fifth, the sum of all payments made to and retained by the
Underwriter(s) must represent not more than reasonable compensation for
underwriting or placing the Certificates; the sum of all payments made to
and retained by the Depositor pursuant to the assignment of the Mortgage
Assets to the related Trust Fund must represent not more than the fair
market value of such obligations; and the sum of all payments made to and
retained by the Master Servicer and any Sub-Servicer must represent not
more than reasonable compensation for such person's services under the
related Pooling Agreement and reimbursement of such person's reasonable
expenses in connection therewith.
Sixth, the investing Plan must be an accredited investor as defined
in Rule 501(a)(1) of Regulation D of the Commission under the Securities
Act.
The Exemption also requires that the Trust Fund meet the following
requirements: (i) the Trust Fund must consist solely of assets of the type that
have been included in other investment pools; (ii) certificates in such other
investment pools must have been rated in one of the three highest categories of
Standard & Poor's, Moody's, Duff & Phelps or Fitch for at least one year prior
to the Plan's acquisition of Certificates; and (iii) certificates in such other
investment pools must have been purchased by investors other than Plans for at
least one year prior to any Plan's acquisition of Certificates.
It is not clear whether certain Offered Certificates would constitute
"certificates" for purposes of the Exemption, including but not limited to, (i)
Certificates evidencing an interest in Mortgage Loans secured by liens on real
estate projects under construction, (ii) Certificates evidencing an interest in
a Trust Fund including Cash Flow Agreements or (iii) subordinated Classes of
Certificates.
If the general conditions set forth in the Exemption are satisfied, the
Exemption may provide an exemption from the restrictions imposed by Sections
406(a) and 407(a) of ERISA (as well as the excise taxes imposed by Sections
4975(a) and (b) of the Code by reason of Sections 4975(c)(1) (A) through (D) of
the Code) in connection with (i) the direct or indirect sale, exchange or
transfer of Offered Certificates acquired by a Plan upon issuance from the
Depositor or Underwriter when the Depositor, Underwriter, Master Servicer,
Special Servicer, Sub-Servicer, Trustee, provider of Credit Support, or obligor
with respect to Mortgage Assets is a "Party in Interest" under ERISA with
respect to the investing Plan, (ii) the direct or indirect acquisition or
disposition in the secondary market of Offered Certificates by a Plan and (iii)
the holding of Offered Certificates by a Plan. However, no exemption is provided
from the restrictions of Sections 406(a)(1)(E), 406(a)(2) and 407 of ERISA for
the acquisition or holding of a Certificate on behalf of an "Excluded Plan" by
any person who has discretionary authority or renders investment advice with
respect to the assets of such Excluded Plan. For this purpose, an Excluded Plan
is a Plan sponsored by any member of the Restricted Group.
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If certain specific conditions set forth in the Exemption are also
satisfied, the Exemption may provide an exemption from the restrictions imposed
by Sections 406(b)(1) and (b)(2) of ERISA and the taxes imposed by Sections
4975(a) and (b) of the Code by reason of Section 4975(c)(1)(E) of the Code in
connection with (i) the direct or indirect sale, exchange or transfer of Offered
Certificates in the initial issuance of Offered Certificates between the
Depositor or an Underwriter and a Plan (other than an Excluded Plan) when the
person who has discretionary authority or renders investment advice with respect
to the investment of the Plan's assets in such Certificates is (a) an obligor
with respect to 5% or less of the fair market value of the Mortgage Assets
(including mortgage loans underlying a CMBS not issued by FNMA, FHLMC or GNMA)
in the related Trust Fund or (b) an affiliate of such a person, (ii) the direct
or indirect acquisition or disposition in the secondary market of Offered
Certificates by such Plan and (iii) the holding of Offered Certificates by such
Plan.
Further, if certain specific conditions set forth in the Exemption are
satisfied, the Exemption may provide an exemption from the restrictions imposed
by Sections 406(a), 406(b) and 407(a) of ERISA, and the taxes imposed by
Sections 4975(a) and (b) of the Code by reason of Section 4975(c) of the Code,
for transactions in connection with the servicing, management and operation of
the Trust Assets. The Depositor expects that the specific conditions set forth
in the Exemption that are required for this purpose will be satisfied with
respect to the Certificates so that the Exemption would provide an exemption
from the restrictions imposed by Sections 406(a) and (b) of ERISA (as well as
the excise taxes imposed by Sections 4975(a) and (b) of the Code by reason of
Section 4975(c) of the Code) for transactions in connection with the servicing,
management and operation of the pools of Mortgage Assets, provided that the
general conditions set forth in the Exemption are satisfied.
The Exemption also provides an exemption from the restrictions imposed by
Sections 406(a) and 407(a) of ERISA, and the taxes imposed by Section 4975(a)
and (b) of the Code by reason of Sections 4975(c)(1) (A) through (D) of the Code
if such restrictions are deemed to otherwise apply merely because a person is
deemed to be a Party in Interest with respect to an investing Plan by virtue of
providing services to the Plan (or by virtue of having certain specified
relationships to such a person) solely as a result of the Plan's ownership of
Offered Certificates.
Before purchasing an Offered Certificate, a fiduciary of a Plan should
itself confirm (i) that the Offered Certificates constitute "certificates" for
purposes of the Exemption and (ii) that the specific and general conditions and
the other requirements set forth in the Exemption would be satisfied. In
addition to making its own determination as to the availability of the exemptive
relief that may be provided in the Exemption the Plan fiduciary should consider
its general fiduciary obligations under ERISA in determining whether to purchase
any Offered Certificates on behalf of a Plan.
The DOL recently issued a Prohibited Transaction Class Exemption 95-60
(the "Class Exemption"), which exempts from the application of the prohibited
transactions provisions of Sections 406(a), 406(b) and 407(a) of ERISA and
Section 4975 of the Code transactions in connection with the servicing,
management and operation of a trust in which an insurance company general
account has an interest as a result of its acquisition of certificates issued by
the trust, provided that certain conditions are satisfied. Insurance company
general accounts are allowed to purchase, in reliance on the Class Exemption,
classes of Certificates that (i) are subordinated to other classes of
Certificates and/or (ii) have not received a rating at the time of the
acquisition in one of the three highest rating categories from Standard &
Poor's, Moody's, Duff & Phelps or Fitch. In addition to the foregoing Class
Exemption, certain insurance company general accounts, which support policies
issued by any insurer on or before December 31, 1998 to or for the benefit of
employee benefit plans, are allowed to purchase Certificates in reliance upon
regulations to be promulgated by the DOL pursuant to Section 1460 of the Small
Business Job Protection Act of 1996. If such policies satisfy the Section 1460
regulations, then the insurer will be deemed in compliance with ERISA's
fiduciary requirements and prohibited transaction rules with respect to those
assets of the insurer's general account which support such policies.
Any fiduciary of a Plan that proposes to cause the Plan to purchase
Offered Certificates should consult with its counsel with respect to the
potential applicability of ERISA and the Code to such investment and the
availability of (and scope of relief provided by) the Exemption or any other
prohibited transaction exemption in connection therewith. The Prospectus
Supplement with respect to a series of Certificates may contain additional
information regarding the application of the Exemption or any other exemption,
with respect to the Certificates offered thereby. In addition, any Plan
fiduciary that proposes to cause a Plan to purchase Stripped Interest
Certificates should consider the federal income tax consequences of such
investment.
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LEGAL INVESTMENT
The Offered Certificates of any series will constitute "mortgage related
securities" for purposes of the Secondary Mortgage Market Enhancement Act of
1984 ("SMMEA") only if so specified in the related Prospectus Supplement.
Accordingly, investors whose investment authority is subject to legal
restrictions should consult their own legal advisors to determine whether and to
what extent the Offered 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 and (ii) are
part of a series evidencing interests in a Trust Fund consisting of loans
directly secured by a first lien on a single parcel of real estate upon which is
located a dwelling or mixed residential and commercial structure, such as
certain multifamily loans, and originated by types of Originators specified in
SMMEA, will be "mortgage related securities" for purposes of SMMEA. "Mortgage
related securities" are legal investments to the same extent that, under
applicable law, obligations issued by or guaranteed as to principal and interest
by the United States or any agency or instrumentality thereof constitute, legal
investments for persons, trusts, corporations, partnerships, associations,
business trusts and business entities (including depository institutions,
insurance companies and pension funds created pursuant to or existing under the
laws of the United States or of any state, the authorized investments of which
are subject to state regulation). Under SMMEA, if a state enacted legislation
prior to October 3, 1991 that specifically limits the legal investment authority
of any such entities with respect to "mortgage related securities", Offered
Certificates would constitute legal investments for entities subject to such
legislation only to the extent provided in such legislation.
Pursuant to final implementing regulations under the Riegle Community
Development and Regulatory Improvement Act of 1994 (the "Riegle Act") and the
terms of the Riegle Act, a modification of the definition of "mortgage related
securities" became effective December 31, 1996 to include among the types of
loans to which such securities may relate loans directly secured by a first lien
on "one or more parcels of real estate upon which is located one or more
commercial structures". The regulations also imposed on national banks
purchasing "mortgage related securities" the requirement that the securities be
fully secured by interests in a pool of loans to numerous obligors. In addition,
the related legislative history of the Riegle Act indicates that this expanded
definition includes multifamily loans secured by more than one parcel of real
estate upon which is located more than one structure. Until September 23, 2001
any state may enact legislation limiting the extent to which "commercial
mortgage related securities" would constitute legal investments under that
state's laws.
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 with "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. 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")
amended 12 C.F.R. Part 1 to authorize national banks to purchase and sell for
their own account, without limitation as to a percentage of the bank's capital
and surplus (but subject to compliance with certain general standards concerning
"safety and soundness" and retention of credit information in 12 C.F.R. Section
1.5), 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 Offered 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 703.5(f)-(k), which prohibit
federal credit unions from investing in certain mortgage related securities
(including securities such as certain classes of Offered Certificates), except
under limited circumstances.
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All depository institutions considering an investment in the Offered
Certificates of any series should review the Federal Financial Institutions
Examination Council's Supervisory Policy Statement on the Selection of
Securities Dealers and Unsuitable Investment Practices (to the extent adopted by
their respective regulatory authorities), setting forth, in relevant part,
certain investment practices deemed to be unsuitable for an institution's
investment portfolio, as well as guidelines for investing in certain types of
mortgage related securities.
The foregoing does not take into consideration the applicability of
statutes, rules, regulations, orders, guidelines or agreements generally
governing investments made by a particular investor, including, but not limited
to, "prudent investor" provisions, percentage-of-assets limits and provisions
which may restrict or prohibit investment in securities which are not "interest
bearing" or "income paying".
There may be other restrictions on the ability of certain investors,
including depository institutions, either to purchase Offered Certificates or to
purchase Offered Certificates representing more than a specified percentage of
the investor's assets. Investors should consult their own legal advisors in
determining whether and to what extent the Offered Certificates constitute legal
investments for such investors.
METHOD OF DISTRIBUTION
The Offered Certificates offered hereby and by the Prospectus Supplements
hereto will be offered in series. The distribution of the Offered Certificates
may be effected from time to time in one or more transactions, including
negotiated transactions, at a fixed public offering price or at varying prices
to be determined at the time of sale or at the time of commitment therefor. The
Prospectus Supplement for the Offered Certificates of each series will, as to
each class of such Certificates, set forth the method of the offering, either
the initial public offering price or the method by which the price at which the
Certificates of such class will be sold to the public can be determined, the
amount of any underwriting discounts, concessions and commissions to
underwriters, any discounts or commissions to be allowed to dealers and the
proceeds of the offering to the Depositor.
If so specified in the related Prospectus Supplement, the Offered
Certificates of a series will be distributed in a firm commitment underwriting,
subject to the terms and conditions of the underwriting agreement, by First
Union Capital Markets Corp. acting as underwriter with other underwriters, if
any, named therein. Alternatively, the Prospectus Supplement may specify that
Offered Certificates will be distributed by First Union Capital Markets Corp.
acting as agent. If First Union Capital Markets Corp. acts as agent in the sale
of Offered Certificates, First Union Capital Markets Corp. will receive a
selling commission with respect to such Offered Certificates, depending on
market conditions, expressed as a percentage of the aggregate Certificate
Balance or Notional Amount of such Offered Certificates as of the date of
issuance. The exact percentage for each series of Certificates will be disclosed
in the related Prospectus Supplement. To the extent that First Union Capital
Markets Corp. elects to purchase Offered Certificates as principal, First Union
Capital Markets Corp. may realize losses or profits based upon the difference
between its purchase price and the sales price. The Prospectus Supplement with
respect to any Series offered other than through underwriters will contain
information regarding the nature of such offering and any agreements to be
entered into between the Depositor and purchasers of Offered Certificates of
such series.
This Prospectus and related Prospectus Supplements may be used by the
Depositor, First Union Capital Markets Corp., an affiliate of the Depositor, and
any other affiliate of the Depositor when required under the federal securities
laws in connection with offers and sales of Offered Certificates in furtherance
of market-making activities in Offered Certificates. First Union Capital Markets
Corp. or any such other affiliate may act as principal or agent in such
transactions. Such sales will be made at prices related to prevailing market
prices at the time of sale or otherwise.
The Depositor will agree to indemnify First Union Capital Markets Corp.
and any underwriters and their respective controlling persons against certain
civil liabilities, including liabilities under the Securities Act, or will
contribute to payments that any such person may be required to make in respect
thereof.
In the ordinary course of business, First Union Capital Markets Corp. and
the Depositor may engage in various securities and financing transactions,
including repurchase agreements to provide interim financing of the Depositor's
mortgage loans pending the sale of such mortgage loans or interests therein,
including the Certificates.
The Depositor anticipates that the Offered Certificates will be sold
primarily to institutional investors. Purchasers of Offered Certificates,
including dealers, may, depending on the facts and circumstances of such
purchases, be deemed to be "underwriters" within the meaning of the Securities
Act in connection with reoffers and
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<PAGE>
sales by them of Offered Certificates. Certificateholders should consult with
their legal advisors in this regard prior to any such reoffer or sale.
As to each series of Certificates, only those classes rated in an
investment grade rating category by any Rating Agency will be offered hereby.
Any class of Certificates not offered hereby may be initially retained by the
Depositor, and may be sold by the Depositor at any time to one or more
institutional investors.
Underwriters or agents and their associates may be customers of (including
borrowers from), engage in transactions with, and/or perform services for the
Depositor, its affiliates, and the Trustee in the ordinary course of business.
LEGAL MATTERS
Unless otherwise specified in the related Prospectus Supplement, certain
legal matters in connection with the Certificates of each series, including
certain federal income tax consequences, will be passed upon for the Depositor
by Willkie Farr & Gallagher, New York, New York and for First Union Capital
Markets Corp. by Kilpatrick Stockton, LLP, Charlotte, North Carolina.
FINANCIAL INFORMATION
A new Trust Fund will be formed with respect to each series of
Certificates, and no Trust Fund will engage in any business activities or have
any assets or obligations prior to the issuance of the related series of
Certificates. Accordingly, no financial statements with respect to any Trust
Fund will be included in this Prospectus or in the related Prospectus
Supplement.
RATING
It is a condition to the issuance of any class of Offered Certificates
that they shall have been rated not lower than investment grade, that is, in one
of the four highest rating categories, by at least one Rating Agency.
Ratings on commercial mortgage pass-through certificates address the
likelihood of receipt by the holders thereof of all collections on the
underlying mortgage assets to which such holders are entitled. These ratings
address the structural, legal and issuer-related aspects associated with such
certificates, the nature of the underlying mortgage assets and the credit
quality of the guarantor, if any. Ratings on commercial mortgage pass-through
certificates do not represent any assessment of the likelihood of principal
prepayments by borrowers or of the degree by which such prepayments might differ
from those originally anticipated. As a result, Certificateholders might suffer
a lower than anticipated yield, and, in addition, holders of Stripped Interest
Certificates in extreme cases might fail to recoup their initial investments.
There can be no assurance that any rating agency not requested to rate the
Offered Certificates will not nonetheless issue a rating to any or all Classes
thereof and, if so, what such rating or ratings would be. A rating assigned to
any Class of Offered Certificates by a rating agency that has not been requested
by the Depositor to do so may be lower than the rating assigned thereto by one
or more of the Rating Agencies.
A security rating is not a recommendation to buy, sell or hold securities
and may be subject to revision or withdrawal at any time by the assigning rating
organization. Each security rating should be evaluated independently of any
other security rating.
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INDEX OF PRINCIPAL DEFINITIONS
PAGE
----
Accrual Certificates .................................... 13, 36
Accrued Certificate Interest ............................ 36
ADA ..................................................... 67
ARM Loans ............................................... 28
Available Distribution Amount ........................... 35
Bond-type ............................................... 35
Book-Entry Certificates ................................. 15, 35
Cash Flow Agreement ..................................... Front Cover, 12, 29
CERCLA .................................................. 23
Certificate ............................................. Front Cover, 9
Certificate Account ..................................... 11, 29
Certificate Balance ..................................... 3, 13
Certificate Owner ....................................... 15, 4
Certificateholders ...................................... Front Cover
Closing Date ............................................ 69
CMBS .................................................... Front Cover, 10, 24
CMBS Agreement .......................................... 28
CMBS Issuer ............................................. 28
CMBS Servicer ........................................... 28
CMBS Trustee ............................................ 28
Code .................................................... 15, 67
Commercial Properties ................................... 9, 25
Commission .............................................. 3
Committee Report ........................................ 69
Companion Class ......................................... 14, 37
Contributions Tax ....................................... 79
Controlled Amortization Class ........................... 14, 37
Cooperative Loans ....................................... 57
Cooperatives ............................................ 25, 57
CPR ..................................................... 32
Credit Support .......................................... Front Cover, 11, 29
Cut-off Date ............................................ 14
Debt Service Coverage Ratio ............................. 26
Definitive Certificate .................................. 15
Definitive Certificates ................................. 35
Depositor ............................................... 24
Determination Date ...................................... 35
Direct Participants ..................................... 41
Distribution Date ....................................... 13
Distribution Date Statement ............................. 38
DOL ..................................................... 90
DTC ..................................................... 3
Due Period .............................................. 28
Equity Participation .................................... 28
ERISA ................................................... 16, 90
Event of Default ........................................ 52
Excess Funds ............................................ 34
Exchange Act ............................................ 4
Exemption ............................................... 90
FAMC .................................................... 10
FHLMC ................................................... 10
First Union ............................................. 90
FNMA .................................................... 10
Garn Act ................................................ 65
96
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PAGE
----
GNMA .................................................... 10
Grantor Trust Certificates .............................. 16, 67
Grantor Trust Fractional Interest Certificates .......... 82
Grantor Trust Fund ...................................... 67
Grantor Trust Strip Certificate ......................... 82
Indirect Participants ................................... 41
Insurance Proceeds ...................................... 45
IRS ..................................................... 70
Issue Premium ........................................... 74
L/C Bank ................................................ 55
Lease ................................................... 4, 10
Lease Assignment ........................................ 10
Lessee .................................................. 4, 10
Liquidation Proceeds .................................... 45
Loan-to-Value Ratio ..................................... 27
Lock-out Period ......................................... 27
Master Servicer ......................................... 3, 9
Mortgage Asset Seller ................................... 11, 24
Mortgage Assets ......................................... Front Cover, 24
Mortgage Loans .......................................... Front Cover, 9, 24
Mortgage Notes .......................................... 25
Mortgage Rate ........................................... 10, 27
Mortgaged Properties .................................... 25
Mortgages ............................................... 25
Multifamily Properties .................................. 9, 25
Net Operating Income .................................... 26
Nonrecoverable Advance .................................. 38
Notional Amount ......................................... 13, 36
Offered Certificates .................................... 1
OID Regulations ......................................... 68
Originator .............................................. 25
PAC ..................................................... 32
Participants ............................................ 24
Parties in Interest ..................................... 90
Pass-Through Rate ....................................... 3, 13
Permitted Investments ................................... 44
Plans ................................................... 90
Pooling Agreement ....................................... 12, 42
Prepayment Assumption ................................... 69
Prepayment Interest Shortfall ........................... 30
Prepayment Period ....................................... 39
Prepayment Premium ...................................... 28
Prohibited Transactions Tax ............................. 79
Proposed Mark-to-Market Regulations ..................... 77
Prospectus Supplement ................................... Front Cover
Rating Agency ........................................... 17
Record Date ............................................. 35
Related Proceeds ........................................ 38
Relief Act .............................................. 66
REMIC ................................................... Front Cover, 67
REMIC Certificates ...................................... 67
REMIC Provisions ........................................ 67
REMIC Regular Certificates .............................. 15, 68
REMIC Regulations ....................................... 68
REMIC Residual Certificates ............................. 15, 68
REO Property ............................................ 9, 39
97
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PAGE
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RICO .................................................... 67
Securities Act .......................................... 3, 35
Senior Certificates ..................................... 12
Servicing Standard ...................................... 93
SMMEA ................................................... 91
SPA ..................................................... 32
Special Servicer ........................................ 3, 9, 47
Stripped Bond Prepayment Assumption ..................... 84
Stripped Interest Certificates .......................... 12, 35
Stripped Principal Certificates ......................... 12, 35
Subordinate Certificates ................................ 12, 35
Sub-Servicer ............................................ 47
Sub-Servicing Agreement ................................. 47
TAC ..................................................... 32
Temporary Mark-to-Market Regulations .................... 77
Tiered REMICs ........................................... 69
Title V ................................................. 66
Trust Assets ............................................ 3
Trust Fund .............................................. Front Cover
Trustee ................................................. 3, 9
UCC ..................................................... 57
Value ................................................... 27
Warranting Party ........................................ 43
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[POUCH & DISKETTE HERE]
(1) "FULB97C1.XLS" is a Microsoft Excel*, Version 5.0 spreadsheet that provides
in electronic format certain loan-level information shown in Annex A, as well as
certain Mortgage Loan and Mortgaged Property information shown in the Prospectus
Supplement. This spreadsheet can be put on a user-specified hard drive or
network drive. Open this file as you would normally open any spreadsheet in
Microsoft Excel. After the file is opened, a securities law legend will be
displayed. READ THE LEGEND CAREFULLY. To view the Annex A data, see the
worksheet labeled "Annex A".
(2) "CSSA.XLS" is a Microsoft Excel, Version 5.0 spreadsheet that provides in
electronic format certain loan- and Certificate-level information. This
spreadsheet can be put on a user-specified hard drive or network drive. The
information contained in this file is the CSSA 100.1 format. As described under
"Reports to Certificateholders; Available Information" on page S-73 of the
Prospectus Supplement, each month the Trustee will make available through its
bulletin board system an electronic file in the CSSA 100.1 format updating and
supplementing the information contained in the "CSSA.XLS" file. Open this file
as you would normally open any spreadsheet in Microsoft Excel. After the file is
opened, a securities law legend will be displayed. READ THE LEGEND CAREFULLY. To
view the CSSA 100.1 data, see the worksheet labeled "CSSA".
* Microsoft Excel is a registered trademark of Microsoft Corporation.
<PAGE>
================================================================================
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS
SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE DEPOSITOR OR BY THE UNDERWRITERS. THIS PROSPECTUS SUPPLEMENT AND THE
ACCOMPANYING PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF
AN OFFER TO BUY, THE SECURITIES OFFERED HEREBY TO ANYONE IN ANY JURISDICTION IN
WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR
TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE ANY SUCH OFFER OR SOLICITATION. NEITHER
THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION
THAT INFORMATION HEREIN OR THEREIN IS CORRECT AS OF ANY TIME SINCE THE DATE OF
THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS.
-----------------
TABLE OF CONTENTS
PAGE
----
PROSPECTUS SUPPLEMENT
Summary of Prospectus Supplement ...................................... S-5
Risk Factors .......................................................... S-25
Description of the Mortgage Pool ...................................... S-29
Servicing of the Mortgage Loans ....................................... S-51
Description of the Certificates ....................................... S-58
Yield and Maturity Considerations ..................................... S-75
Use of Proceeds ....................................................... S-82
Certain Federal Income Tax Consequences ............................... S-82
ERISA Considerations .................................................. S-83
Legal Investment ...................................................... S-85
Method of Distribution ................................................ S-86
Legal Matters ......................................................... S-86
Ratings ............................................................... S-86
Index of Principal Definitions ........................................ S-88
Annex A ............................................................... A-1
Annex B ............................................................... B-1
Annex C ............................................................... C-1
Annex D ............................................................... D-1
Annex E ............................................................... E-1
Annex F ............................................................... F-1
Annex G ............................................................... G-1
Annex H ............................................................... H-1
Annex I ............................................................... I-1
Annex J ............................................................... J-1
Annex K ............................................................... K-1
PROSPECTUS
Prospectus Supplement ................................................. 3
Available Information ................................................. 3
Incorporation of Certain Information by Reference ..................... 4
Summary of Prospectus ................................................. 9
Risk Factors .......................................................... 18
Description of the Trust Funds ........................................ 24
Yield and Maturity Considerations ..................................... 30
The Depositor ......................................................... 34
Use of Proceeds ....................................................... 34
Description of the Certificates ....................................... 35
Description of the Pooling Agreements ................................. 42
Description of Credit Support ......................................... 54
Certain Legal Aspects of Mortgage Loans and Leases .................... 56
Certain Federal Income Tax Consequences ............................... 67
State and Other Tax Consequences ...................................... 89
ERISA Considerations .................................................. 90
Legal Investment ...................................................... 93
Method of Distribution ................................................ 94
Legal Matters ......................................................... 95
Financial Information ................................................. 95
Rating ................................................................ 95
Index of Principal Definitions ........................................ 96
================================================================================
================================================================================
FIRST UNION COMMERCIAL
MORTGAGE SECURITIES, INC.
(DEPOSITOR)
$1,166,079,000
FIRST UNION-LEHMAN BROTHERS
COMMERCIAL MORTGAGE TRUST
COMMERCIAL MORTGAGE
PASS-THROUGH CERTIFICATES
SERIES 1997-C1
---------------------
PROSPECTUS SUPPLEMENT
---------------------
LEHMAN BROTHERS
FIRST
UNION(R)
CAPITAL MARKETS CORP.
MAY 9, 1997
================================================================================
