<PAGE>
Filed pursuant to Rule 424(b)(5)
Registration File No. 333-62671
PROSPECTUS SUPPLEMENT
(to Prospectus dated May 11, 1999)
$1,060,380,830 (APPROXIMATE)
FIRST UNION NATIONAL BANK-CHASE MANHATTAN BANK
COMMERCIAL MORTGAGE TRUST
Commercial Mortgage Pass-Through Certificates
Series 1999-C2
FIRST UNION COMMERCIAL MORTGAGE SECURITIES, INC.
(Depositor)
YOU SHOULD CAREFULLY CONSIDER THE RISK FACTORS BEGINNING ON PAGE S-30 OF THIS
PROSPECTUS SUPPLEMENT AND ON PAGE 19 OF THE PROSPECTUS.
Neither the Offered Certificates nor the underlying Mortgage Loans are insured
or guaranteed by any government agency or instrumentality.
The Offered Certificate will represent interests in the Trust Fund only and will
not represent obligations of any other party.
The Offered Certificates will not be listed on any national securities exchange
or any automated quotation system of any registered securities association.
This Prospectus Supplement may be used to offer and sell the Offered
Certificates only if it is accompanied by the Prospectus dated May 11, 1999.
THE TRUST FUND:
o The Trust Fund will consist of a pool of 223 fixed rate Mortgage Loans.
o The Mortgage Loans are secured by first liens on commercial and multifamily
properties.
o As of the Cut-Off Date, the Mortgage Loans have an aggregate principal
balance of approximately $1,181,484,821.
o All of the Mortgage Loans were originated or acquired by either First Union
National Bank or The Chase Manhattan Bank.
THE CERTIFICATES:
o The Trust Fund will issue eighteen classes of Certificates.
o Only the Certificates described on the following table are being offered by
this Prospectus Supplement and the accompanying Prospectus.
<TABLE>
<CAPTION>
CLOSING DATE
CERTIFICATE BALANCE PERCENTAGE OF PASS- ASSUMED FINAL
OR NOTIONAL CUT-OFF DATE THROUGH DISTRIBUTION FITCH/MOODY'S
CLASS AMOUNT (1) POOL BALANCE RATE DATE (2) CUSIP NO. RATING (3)
<S> <C> <C> <C> <C> <C> <C>
Class A-1... $ 203,500,000 17.22% 6.36% June 2008 337366 AA6 AAA/Aaa
Class A-2... $ 673,747,967 57.03% 6.65% April 2009 337366 AB4 AAA/Aaa
Class IO.... $ 1,181,484,821(4) N/A (5) February 2029 337366 AC2 AAA/Aaa
Class B..... $ 47,260,093 4.00% 6.80% April 2009 337366 AD0 AA/Aa2
Class C..... $ 62,028,874 5.25% 6.94%(6) May 2009 337366 AE8 A/A2
Class D..... $ 14,768,779 1.25% 7.06%(6) May 2009 337366 AF5 A-/A3
Class E..... $ 41,352,582 3.50% (7) June 2009 337366 AG3 BBB/Baa2
Class F..... $ 17,722,535 1.50% (7) September 2009 337366 AH1 BBB-/Baa3
</TABLE>
(Footnotes explaining the table are on page S-4)
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THE OFFERED CERTIFICATES OR HAS
DETERMINED THAT THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS IS
ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
On or about May 24, 1999 (the "Closing Date"), we expect that the
underwriters will offer the Offered Certificates (other than a portion of the
Class A-2 and Class IO Certificates which we will sell to First Union National
Bank as described in this Prospectus Supplement) to you in book-entry form only
through the facilities of The Depository Trust Company from time to time in
negotiated transactions or otherwise at varying prices to be determined at the
time of sale. Chase Securities Inc. and First Union Capital Markets Corp. are
acting as co-lead managers and co-bookrunners and J.P. Morgan Securities Inc. is
acting as co-manager for the offering. Chase Securities Inc. and First Union
Capital Markets Corp. are required to purchase the Offered Certificates (other
than a portion of the Class A-2 and Class IO Certificates as described in this
Prospectus Supplement) from us, subject to certain conditions. J.P. Morgan
Securities Inc. is not required to sell any specific amount of the Offered
Certificates but will use their best efforts to sell the Offered Certificates.
See "Method of Distribution" in this Prospectus Supplement. We expect to receive
from this offering approximately 106.66% of the Closing Date Certificate Balance
of the Offered Certificates, plus accrued interest from May 1, 1999, before
deducting expenses.
CHASE SECURITIES INC. FIRST UNION CAPITAL MARKETS CORP.
Joint Book Running Manager Joint Book Running Manager
J.P. MORGAN & CO.
MAY 11, 1999
<PAGE>
[MAP APPEARS HERE]
<PAGE>
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS PROSPECTUS
SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
We provide information to you about the Offered Certificates in two
separate documents that progressively provide more detail: (a) the accompanying
Prospectus, which provides general information, some of which may not apply to
the Offered Certificates and (b) this Prospectus Supplement, which describes the
specific terms of the Offered Certificates. You should read both this Prospectus
Supplement and the Prospectus before investing in any of the Offered
Certificates.
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS
SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS. IF THE DESCRIPTIONS OF THE OFFERED
CERTIFICATES VARY BETWEEN THE PROSPECTUS AND THIS PROSPECTUS SUPPLEMENT, YOU
SHOULD RELY ON THE INFORMATION IN THIS PROSPECTUS SUPPLEMENT.
THIS PROSPECTUS SUPPLEMENT IS NOT AN OFFER TO SELL THESE OFFERED
CERTIFICATES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE OFFERED
CERTIFICATES IN ANY STATE WHERE SUCH OFFER OR SALE IS NOT PERMITTED.
This Prospectus Supplement begins with several introductory sections
describing the Series 1999-C2 Certificates and the Trust Fund in abbreviated
form:
Summary of Prospectus Supplement, commencing on page S-8 of this
Prospectus Supplement, which gives a brief introduction of the key
features of the Series 1999-C2 Certificates and a description of the
Mortgage Loans; and
Risk Factors, commencing on page S-30 of this Prospectus Supplement,
which describes risks that apply to the Series 1999-C2 Certificates
which are in addition to those described in the Prospectus with
respect to the securities issued by the Trust Fund generally.
This Prospectus Supplement and the accompanying Prospectus include cross
references to sections in these materials where you can find further related
discussions. The Tables of Contents in this Prospectus Supplement and the
Prospectus identify the pages where these sections are located.
Certain capitalized terms are defined and used in this Prospectus
Supplement and the Prospectus to assist you in understanding the terms of the
Offered Certificates and this offering. The capitalized terms used in this
Prospectus Supplement are defined on the pages indicated under the caption
"Index of Principal Definitions" beginning on page S-128 in this Prospectus
Supplement. The capitalized terms used in the Prospectus are defined on the
pages indicated under the caption "Index of Principal Definitions" beginning on
page 107 in the Prospectus.
In this Prospectus Supplement, the terms "Depositor," "we," "us" and "our"
refer to First Union Commercial Mortgage Securities, Inc.
This Prospectus Supplement and the Prospectus may be used by us, First
Union Capital Markets, our affiliate, and any other of our affiliates 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 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.
We expect to sell approximately $50 million of the initial certificate
balance of the Class A-2 Certificates and approximately 42.0% (by notional
amount) of the initial notional amount of the Class IO Certificates in an
arm's-length transaction to First Union National Bank, our affiliate, on the
Closing Date. This Prospectus Supplement and the accompanying Prospectus may be
used by First Union National Bank to resell the portions of the Class A-2 and
Class IO Certificates purchased by it from us on the Closing Date publicly or
privately to affiliated or unaffiliated parties either directly or indirectly
through an underwriter, including First Union Capital Markets Corp.
S-3
<PAGE>
(Footnotes to table on the front cover)
- ------------------
(1) Subject to a permitted variance of plus or minus 5.0%.
(2) The Assumed Final Distribution Date has been determined on the basis of the
assumptions set forth in "DESCRIPTION OF THE CERTIFICATES--Assumed Final
Distribution Date; Rated Final Distribution Date" in this Prospectus
Supplement and a 0% CPR (as defined in this Prospectus Supplement). The
"Rated Final Distribution Date" is the Distribution Date to occur in June
2031. See "DESCRIPTION OF THE CERTIFICATES--Assumed Final Distribution Date;
Rated Final Distribution Date" and "RATINGS" in this Prospectus Supplement.
(3) By each of Fitch IBCA, Inc. and Moody's Investors Service, Inc.
(4) The Class IO Certificates will not have a Certificate Balance and their
holders will not receive distributions of principal, but such holders are
entitled to receive payments of the aggregate interest accrued on the
notional amount of each component of the Class IO Certificates, as described
in this Prospectus Supplement. See "DESCRIPTION OF THE
CERTIFICATES--Certificate Balances and Notional Amount" and "--Pass-Through
Rates" in this Prospectus Supplement.
(5) The Pass-Through Rate applicable to the Class IO Certificates for each
Distribution Date will equal the excess, if any, of the Weighted Average Net
Mortgage Rate (as defined in this Prospectus Supplement) for such
Distribution Date over the weighted average Pass-Through Rates then
applicable to the Classes of Sequential Pay Certificates.
(6) The Pass-Through Rate applicable to the Class C and Class D Certificates as
of each Distribution Date will equal the lesser of the rate set forth in the
table on the front cover and the applicable Weighted Average Net Mortgage
Rate (as defined in this Prospectus Supplement) for such Distribution Date.
(7) The Pass-Through Rate applicable to the Class E and Class F Certificates on
each Distribution Date will equal the Weighted Average Net Mortgage Rate (as
defined in this Prospectus Supplement) minus 0.10%.
S-4
<PAGE>
TABLE OF CONTENTS
PAGE
-----
SUMMARY OF PROSPECTUS SUPPLEMENT...................................... S-8
RISK FACTORS.......................................................... S-30
Certain Risks Associated with the Certificates...................... S-30
Limited Assets................................................... S-30
Certain Yield and Maturity Considerations........................ S-30
Risks Relating to Enforceability of Prepayment Premiums.......... S-32
Risks Relating to Certain Payments............................... S-32
Potential Conflicts of Interest.................................. S-32
Risk of Year 2000................................................ S-32
Limited Liquidity for Offered Certificates....................... S-33
Lack of Control Over Trust Fund.................................. S-33
Certain Risk Factors Associated with the Mortgage Loans............. S-33
Risks of Lending on Income-Producing Properties.................. S-33
Risks Relating to Certain Property Types......................... S-35
Certain Risks Associated with Credit Lease Loans................. S-36
Some Mortgaged Properties May Not Be Readily Convertible To
Alternative Uses................................................ S-37
Nonrecourse Mortgage Loans....................................... S-37
Environmental Law Considerations................................. S-37
Risks Associated with Balloon Loans and ARD Loans................ S-38
Risks Associated with Borrower Concentration and Related
Borrowers....................................................... S-39
Geographic Concentration of Properties Increasing Isolated
Geographic Risk................................................. S-39
Risks Associated with High Balance Mortgage Loans................ S-39
Certain Risks Associated with Concentration of Mortgaged Property
Types........................................................... S-40
No Reunderwriting of Mortgage Loans.............................. S-40
Tax Consideration Related to Foreclosure......................... S-40
Special Hazards Losses........................................... S-40
Other Financing.................................................. S-40
Risks Related to the Borrower's Form of Entity................... S-41
Limitations of Appraisals and Engineering Reports................ S-42
Zoning Compliance................................................ S-42
Costs of Compliance with Applicable Laws and Regulations......... S-42
Limitations on Enforceability of Due-on-Sale Clauses and
Assignments of Leases and Rents................................. S-42
Limitations on Enforceability of Cross-Collateralization......... S-43
Tenant Matters................................................... S-43
Litigation....................................................... S-44
Tenant Bankruptcy Entails Risks.................................. S-44
Lack of Skillful Property Management Entail Risks................ S-44
Condemnations.................................................... S-44
Risks of Different Timing of Mortgage Loan Amortization.......... S-44
Risks Associated with Ground Leases and Other Leasehold
Interests....................................................... S-45
Risks Associated with the Mortgage Loan Sellers.................. S-45
Risks Associated with One Action Rules........................... S-45
Property Managers May Experience Conflicts of Interest in
Managing Multiple Properties.................................... S-45
DESCRIPTION OF THE MORTGAGE POOL...................................... S-46
General............................................................. S-46
Mortgage Loan History............................................... S-48
Certain Terms and Conditions of the Mortgage Loans.................. S-48
Mortgage Rates; Calculations of Interest......................... S-48
Mortgage Loan Payments........................................... S-48
Due Dates........................................................ S-48
Amortization..................................................... S-49
S-5
<PAGE>
PAGE
-----
Residual Value Insurance Policy.................................. S-49
Prepayment Provisions............................................ S-49
Other Financing.................................................. S-50
Nonrecourse Obligations.......................................... S-51
"Due-On-Sale" and "Due-On-Encumbrance" Provisions................ S-51
Cross-Default and Cross-Collateralization of Certain Mortgage
Loans........................................................... S-51
Assessments of Property Condition................................... S-51
Property Inspections............................................. S-51
Appraisals....................................................... S-51
Environmental Assessments........................................ S-51
Engineering Assessments.......................................... S-52
Earthquake Analyses.............................................. S-52
Credit Lease Loans.................................................. S-52
Lease Enhancement Policies....................................... S-56
Additional Mortgage Loan Information................................ S-56
The Mortgage Pool................................................ S-56
Ten Largest Mortgage Loans.......................................... S-73
The Mortgage Loan Sellers........................................... S-74
Underwriting Standards.............................................. S-74
General.......................................................... S-74
Loan Analysis.................................................... S-75
Loan Approval.................................................... S-75
Debt Service Coverage Ratio and LTV Ratio........................ S-75
Escrow Requirements.............................................. S-75
Assignment of the Mortgage Loans; Repurchases and Substitutions..... S-76
Representations and Warranties; Repurchases and Substitutions....... S-78
Changes in Mortgage Pool Characteristics............................ S-80
SERVICING OF THE MORTGAGE LOANS....................................... S-81
General............................................................. S-81
The Master Servicer and Special Servicer............................ S-81
The Special Servicer................................................ S-82
Servicing and other Compensation and Payment of Expenses............ S-83
Modifications, Waivers and Amendments............................... S-85
The Controlling Class Representative................................ S-86
Limitation on Liability of Controlling Class Representative...... S-87
REO Properties; Sale of Mortgage Loans.............................. S-87
Inspections; Collection of Operating Information.................... S-88
DESCRIPTION OF THE CERTIFICATES....................................... S-89
General............................................................. S-89
Registration and Denominations...................................... S-89
Certificate Balances and Notional Amount............................ S-92
Pass-Through Rates.................................................. S-92
Distributions....................................................... S-93
General.......................................................... S-93
The Available Distribution Amount................................ S-94
Interest Reserve Account......................................... S-94
Application of the Available Distribution Amount................. S-95
Distributable Certificate Interest............................... S-98
Principal Distribution Amount.................................... S-98
Treatment of REO Properties...................................... S-99
Allocation of Prepayment Premiums and Yield Maintenance
Charges......................................................... S-100
Distributions of Additional Interest............................. S-101
Subordination; Allocation of Losses and Certain Expenses............ S-101
S-6
<PAGE>
PAGE
-----
P&I Advances........................................................ S-103
Appraisal Reductions................................................ S-104
Reports to Certificateholders; Available Information................ S-104
Trustee Reports.................................................. S-104
Book-Entry Certificates.......................................... S-108
Information Available Electronically............................. S-108
Other Information................................................ S-108
Assumed Final Distribution Date; Rated Final Distribution Date...... S-109
Voting Rights....................................................... S-110
Termination......................................................... S-110
The Trustee......................................................... S-111
YIELD AND MATURITY CONSIDERATIONS..................................... S-112
Yield Considerations................................................ S-112
General.......................................................... S-112
Rate and Timing of Principal Payment............................. S-112
Losses and Shortfalls............................................ S-113
Pass-Through Rates............................................... S-113
Certain Relevant Factors......................................... S-113
Delay in Payment of Distributions................................ S-114
Unpaid Distributable Certificate Interest........................ S-114
Yield Sensitivity of the Class IO Certificates................... S-114
Price/Yield Tables.................................................. S-115
Weighted Average Life............................................... S-116
Yield Sensitivity of the Class IO Certificates...................... S-119
USE OF PROCEEDS....................................................... S-121
MATERIAL FEDERAL INCOME TAX CONSEQUENCES.............................. S-121
ERISA CONSIDERATIONS.................................................. S-122
LEGAL INVESTMENT...................................................... S-125
METHOD OF DISTRIBUTION................................................ S-125
LEGAL MATTERS......................................................... S-126
RATINGS............................................................... S-126
INDEX OF PRINCIPAL DEFINITIONS........................................ S-128
ANNEX A-1 -- CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS AND
MORTGAGE PROPERTIES...................................... A-1
ANNEX A-2 -- DEBT SERVICE PAYMENT SCHEDULES FOR CERTAIN CREDIT LEASE
LOANS.................................................... A-2
ANNEX A-3 -- CERTAIN INFORMATION REGARDING MULTIFAMILY MORTGAGED
PROPERTIES............................................... A-3
ANNEX A-4 -- RESERVE ACCOUNT.......................................... A-4
ANNEX B -- TERM SHEET............................................... B-1
ANNEX C -- FORM OF DISTRIBUTION DATE STATEMENT...................... C-1
ANNEX D -- DELINQUENT LOAN STATUS REPORT............................ D-1
ANNEX E -- HISTORICAL LOAN MODIFICATION REPORT...................... E-1
ANNEX F -- HISTORICAL LOSS ESTIMATE REPORT.......................... F-1
ANNEX G -- REO STATUS REPORT........................................ G-1
ANNEX H -- SERVICER WATCH LIST...................................... H-1
ANNEX I -- FORM OF OPERATING STATEMENT ANALYSIS REPORT.............. I-1
ANNEX J -- FORM OF NOI ADJUSTMENT WORKSHEET FOR "YEAR".............. J-1
ANNEX K -- COMPARATIVE FINANCIAL STATUS REPORT...................... K-1
ANNEX L -- PAYOFF NOTIFICATION REPORT............................... L-1
S-7
<PAGE>
SUMMARY OF PROSPECTUS SUPPLEMENT
o THIS SUMMARY HIGHLIGHTS SELECTED INFORMATION FROM THIS PROSPECTUS SUPPLEMENT
AND DOES NOT CONTAIN ALL OF THE INFORMATION THAT YOU NEED TO CONSIDER IN
MAKING YOUR INVESTMENT DECISION. TO UNDERSTAND THE TERMS OF THE OFFERED
CERTIFICATES, YOU MUST CAREFULLY READ THIS ENTIRE PROSPECTUS SUPPLEMENT AND
THE ACCOMPANYING PROSPECTUS.
o THIS SUMMARY PROVIDES AN OVERVIEW OF CERTAIN CALCULATIONS, CASH FLOWS AND
OTHER INFORMATION TO AID YOUR UNDERSTANDING AND IS QUALIFIED BY THE FULL
DESCRIPTION OF THESE CALCULATIONS, CASH FLOWS AND OTHER INFORMATION IN THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS.
o WE PROVIDE INFORMATION ON THE NON-OFFERED CERTIFICATES IN THIS PROSPECTUS
SUPPLEMENT ONLY TO ENHANCE YOUR UNDERSTANDING OF THE OFFERED CERTIFICATES.
o UNLESS OTHERWISE STATED, ALL PERCENTAGES OF THE MORTGAGE LOANS, OR OF ANY
SPECIFIED GROUP OF MORTGAGE LOANS, REFERRED TO IN THIS PROSPECTUS SUPPLEMENT
ARE CALCULATED USING THE AGGREGATE BALANCE OF ALL THE MORTGAGE LOANS AS OF
THE CUT-OFF DATE (THE "CUT-OFF DATE POOL BALANCE"). PERCENTAGES OF MORTGAGED
PROPERTIES ARE REFERENCES TO THE PERCENTAGES OF THE CUT-OFF DATE POOL BALANCE
REPRESENTED BY THE AGGREGATE CUT-OFF DATE BALANCE OF THE RELATED MORTGAGE
LOANS.
o ALL NUMERICAL INFORMATION CONCERNING THE MORTGAGE LOANS IS PROVIDED ON AN
APPROXIMATE BASIS.
OVERVIEW OF THE CERTIFICATES
The table below lists certain summary information concerning the First Union
National Bank-Chase Manhattan Bank Commercial Mortgage Trust, Commercial
Mortgage Pass-Through Certificates, Series 1999-C2, which we are offering
pursuant to the Prospectus and this Prospectus Supplement. Each Certificate
represents an interest in the Mortgage Loans and the other assets of the Trust
Fund. The table also describes the Non-Offered Certificates (other than the
Class R-I, Class R-II and Class R-III Certificates) which have not been
registered under the Securities Act of 1933 and will be sold to investors in
private transactions.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLOSING DATE
CERTIFICATE PERCENTAGE PASS- INITIAL WEIGHTED
BALANCE OR OF CUT-OFF THROUGH PASS- AVERAGE PRINCIPAL FITCH/
NOTIONAL DATE POOL CREDIT RATE THROUGH LIFE WINDOW MOODY'S
CLASS AMOUNT (1) BALANCE SUPPORT DESCRIPTION RATE (YEARS) (2) (MON./YR.) (2) RATING (3)
- ------------ -------------- ---------- ------- ------------------ ------- ----------- -------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Offered
Certificates
Class A-1... $ 203,500,000 17.22% 25.75% Fixed Coupon 6.36% 5.39 Jun 99-Jun 08 AAA/Aaa
Class A-2... $ 673,747,967 57.03% 25.75% Fixed Coupon 6.65% 9.58 Jun 08-Apr 09 AAA/Aaa
Class IO.... $1,181,484,821(4) N/A -- Variable IO Strip 0.9083%(5) N/A Jun 99-Feb 29 AAA/Aaa
Class B..... $ 47,260,093 4.00% 21.75% Fixed Coupon 6.80% 9.89 Apr 09-Apr 09 AA/Aa2
Class C..... $ 62,028,874 5.25% 16.50% Fixed Coupon 6.94%(6) 9.89 Apr 09-May 09 A/A2
Class D..... $ 14,768,779 1.25% 15.25% Fixed Coupon 7.06%(6) 9.98 May 09-May 09 A--/A3
Class E..... $ 41,352,582 3.50% 11.75% Variable 7.40%(7) 10.02 May 09-Jun 09 BBB/Baa2
Class F..... $ 17,722,535 1.50% 10.25% Variable 7.40%(7) 10.21 Jun 09-Sep 09 BBB--/Baa3
Non-Offered
Certificates
Class G..... $ 41,352,582 3.50% 6.75% Fixed Coupon 5.95% 11.92 Sep 09-Dec 11 --
Class H..... $ 11,815,024 1.00% 5.75% Fixed Coupon 5.95% 13.31 Dec 11-Mar 13 --
Class J..... $ 11,815,023 1.00% 4.75% Fixed Coupon 5.95% 13.96 Mar 13-Sep 13 --
Class K..... $ 11,815,024 1.00% 3.75% Fixed Coupon 5.95% 15.08 Sep 13-Apr 15 --
Class L..... $ 11,815,023 1.00% 2.75% Fixed Coupon 5.95% 16.72 Apr 15-Jun 16 --
Class M..... $ 11,815,024 1.00% 1.75% Fixed Coupon 5.95% 17.67 Jun 16-Dec 17 --
Class N..... $ 20,676,291 1.75% 0.00% Fixed Coupon 5.95% 20.68 Dec 17-Feb 29 --
</TABLE>
- ------------------
(1) Subject to a permitted variance of plus or minus 5.0%.
(2) Based on no prepayments and the other assumptions set forth under "YIELD AND
MATURITY CONSIDERATIONS--Weighted Average Life" in this Prospectus
Supplement.
(3) By each of Fitch IBCA, Inc. and Moody's Investors Service, Inc.
(4) The Class IO Certificates will not have a Certificate Balance and their
holders will not receive distributions of principal, but such holders are
entitled to receive payments of the aggregate interest accrued on the
notional amount of each of the components of the Class IO Certificates as
described in this Prospectus Supplement.
(5) The Pass-Through Rate applicable to the Class IO Certificates for each
Distribution Date will equal the excess, if any, of the Weighted Average Net
Mortgage Rate (as defined in this Prospectus Supplement) for such
Distribution Date over the weighted average Pass-Through Rates then
applicable to the Classes of Sequential Pay Certificates.
(6) The Pass-Through Rate applicable to the Class C and Class D Certificates on
each Distribution Date will equal the lesser of the rate set forth above and
the applicable Weighted Average Net Mortgage Rate (as defined in this
Prospectus Supplement) for such Distribution Date.
(7) The Pass-Through Rate applicable to the Class E and Class F Certificates on
each Distribution Date will equal the Weighted Average Net Mortgage Rate (as
defined in this Prospectus Supplement) minus 0.10%.
S-8
<PAGE>
THE PARTIES
THE TRUST FUND.......... The Trust Fund will be created on or about May 24, 1999
(the "Closing Date") pursuant to a Pooling and
Servicing Agreement dated as of May 1, 1999 by and
among the Depositor, the Master Servicer, the Special
Servicer and the Trustee (the "Pooling and Servicing
Agreement").
THE DEPOSITOR........... First Union Commercial Mortgage Securities, Inc. We are
a wholly owned limited-purpose finance subsidiary of
First Union National Bank, which is one of the Mortgage
Loan Sellers and the Master Servicer, and an affiliate
of one of the Underwriters. Our principal executive
office is located at One First Union Center, Charlotte,
North Carolina 28228-0013 and our telephone number is
(704) 374-6161. Neither we nor any of our affiliates
have insured or guaranteed the Offered Certificates.
For more detailed information, see "THE DEPOSITOR" in
the Prospectus.
On the Closing Date, we will sell the Mortgage Loans
and related assets to the Trustee to create the Trust
Fund.
THE ISSUER.............. The Trust Fund to be established under the Pooling and
Servicing Agreement. For more detailed information, see
"DESCRIPTION OF THE CERTIFICATES" in the Prospectus.
THE MORTGAGE LOAN
SELLERS................ First Union National Bank ("FUNB") and The Chase
Manhattan Bank ("Chase Manhattan"). For more
information, see "DESCRIPTION OF THE MORTGAGE POOL--The
Mortgage Loan Sellers" in this Prospectus Supplement.
The Mortgage Loan Sellers will sell and assign the
Mortgage Loans to us on the Closing Date. See
"DESCRIPTION OF THE MORTGAGE POOL--Representations and
Warranties; Repurchases and Substitutions" in this
Prospectus Supplement.
THE MASTER SERVICER..... First Union National Bank. The Master Servicer will be
primarily responsible for collecting payments and
gathering information with respect to the Mortgage
Loans. See "SERVICING OF THE MORTGAGE LOANS--The Master
Servicer and Special Servicer" in this Prospectus
Supplement.
THE SPECIAL SERVICER.... Banc One Mortgage Capital Markets, LLC. 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. Certain holders of Certificates will have
the right pursuant to the Pooling and Servicing
Agreement to replace the Special Servicer and to select
a representative from whom the Special Servicer will
seek advice and approval and take directions, all
subject to certain conditions and certain
circumstances, as described in this Prospectus
Supplement. See "SERVICING OF THE MORTGAGE LOANS--The
Special Servicer" in this Prospectus Supplement.
THE TRUSTEE............. Norwest Bank Minnesota, National Association, a
national banking association. The Trustee will be
responsible for distributing payments to
Certificateholders and delivering to
S-9
<PAGE>
Certificateholders certain reports on the Mortgage
Loans and the Certificates. See "DESCRIPTION OF THE
CERTIFICATES--The Trustee" in this Prospectus
Supplement.
THE UNDERWRITERS........ Chase Securities Inc. ("Chase Securities"), First Union
Capital Markets Corp. ("First Union Capital Markets")
and J.P. Morgan Securities Inc. ("J.P. Morgan"). Chase
Securities is an affiliate of Chase Manhattan. First
Union Capital Markets is our affiliate and is an
affiliate of FUNB and the Master Servicer. Chase
Securities and First Union Capital Markets are acting
as co-lead managers and co-bookrunners and J.P. Morgan
is acting as co-manager for the offering.
IMPORTANT DATES AND PERIODS
CLOSING DATE............ On or about May 24, 1999.
CUT-OFF DATE............ For 168 of the Mortgage Loans, or approximately 57.20%
of the Cut-Off Date Pool Balance, May 1, 1999, and for
55 of the Mortgage Loans, or approximately 42.80% of
the Cut-Off Date Pool Balance, May 10, 1999. The
Cut-Off Date Balance of each Mortgage Loan and each
Cut-Off Date Certificate Balance in this Prospectus
Supplement assumes the timely receipt of principal
scheduled to be paid in May on each Mortgage Loan and
no defaults, delinquencies or prepayments on any
Mortgage Loan as of the Cut-Off Date. References to the
Cut-Off Date in this Prospectus Supplement should be
understood to refer to the Cut-Off Date applicable to
the Mortgage Loans being discussed.
DISTRIBUTION DATE....... The 15th day of each month (or if such day is not a
business day, the next succeeding business day),
provided, however, that the Distribution Date will be
no earlier than the fourth business day following the
Determination Date in the month in which such
Distribution Date occurs. The first Distribution Date
on which investors in the Offered Certificates may
receive distributions will be the Distribution Date
occurring in June 1999.
DETERMINATION DATE...... With respect to each Distribution Date, the 11th day of
each month (or, if not a business day, the immediately
succeeding business day).
COLLECTION PERIOD....... For each Distribution Date the related Collection
Period 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 CERTIFICATES
OFFERED CERTIFICATES.... We are offering the Class A-1, Class A-2, Class IO,
Class B, Class C, Class D, Class E and Class F
Certificates of our Commercial Mortgage Pass-Through
Certificates, Series 1999-C2 to you pursuant to this
Prospectus Supplement.
S-10
<PAGE>
NON-OFFERED
CERTIFICATES........... The Class G, Class H, Class J, Class K, Class L, Class
M, Class N, Class R-I, Class R-II and Class R-III
Certificates of our Commercial Mortgage Pass-Through
Certificates, Series 1999-C2. The Non-Offered
Certificates are not offered pursuant to this
Prospectus Supplement or the accompanying Prospectus.
We provide information on the Non-Offered Certificates
solely to enhance your understanding of the Offered
Certificates.
PRIORITY OF
DISTRIBUTIONS.......... On each Distribution Date, you will be entitled to
distributions of all payments or other collections on
the Mortgage Loans that the Master Servicer collected
or advanced during or with respect to the related
Collection Period after deducting certain fees and
expenses. The Trustee will distribute such amounts to
the extent that the money is available, in the
following order of priority, to pay:
Interest, pro rata, on the Class IO, Class A-1 and
Class A-2 Certificates.
Principal on the Class A-1 Certificates, up to the
Principal Distribution Amount, until their Certificate
Balance is reduced to zero.
Principal on the Class A-2 Certificates, up to the
Principal Distribution Amount, until their Certificate
Balance is reduced to zero.
Reimbursement to the Class A-1 and Class A-2
Certificates, pro rata, for any realized losses and
trust fund expenses borne by such classes.
Interest on the Class B Certificates.
Principal on the Class B Certificates, up to the
Principal Distribution Amount, until their Certificate
Balance is reduced to zero.
Reimbursement to the Class B Certificates for any
realized losses and trust fund expenses borne by such
class.
Interest on the Class C Certificates.
Principal on the Class C Certificates, up to the
Principal Distribution Amount, until their Certificate
Balance is reduced to zero.
Reimbursement to the Class C Certificates for any
realized losses and trust fund expenses borne by such
class.
Interest on the Class D Certificates.
Principal on the Class D Certificates, up to the
Principal Distribution Amount, until their Certificate
Balance is reduced to zero.
Reimbursement to the Class D Certificates for any
realized losses and trust fund expenses borne by such
class.
S-11
<PAGE>
Interest on the Class E Certificates.
Principal on the Class E Certificates, up to the
Principal Distribution Amount, until their Certificate
Balance is reduced to zero.
Reimbursement to the Class E Certificates for any
realized losses and trust fund expenses borne by such
class.
Interest on the Class F Certificates.
Principal on the Class F Certificates, up to the
Principal Distribution Amount, until their Certificate
Balance is reduced to zero.
Reimbursement to the Class F Certificates for any
realized losses and trust fund expenses borne by such
class.
Distributions to the Non-Offered Certificates.
If, on any Distribution Date, the Certificate Balances
of the Class B through Class N Certificates have been
reduced to zero, but the Class A-1 and Class A-2
Certificates remain outstanding, distributions of
principal will be made pro rata to the Class A-1 and
Class A-2 Certificates. See "DESCRIPTION OF THE
CERTIFICATES--Distributions" in this Prospectus
Supplement.
PRINCIPAL
DISTRIBUTIONS.......... On the Closing Date, each class of Certificates other
than the Class IO Certificates and the Class R-I, Class
R-II and Class R-III Certificates (collectively, the
"Sequential Pay Certificates"), will have the
Certificate Balance shown in the table at the beginning
of this Summary. The "Certificate Balance" for each
class of Sequential Pay Certificates may be reduced by:
o distributions of principal; and
o allocations of realized losses and trust fund
expenses.
The Certificate Balance for any class of Sequential Pay
Certificates cannot be reduced below zero. The
Certificate Principal Balance of a class of Sequential
Pay Certificates may be increased in certain
circumstances by the allocation to such class of
Certificate Deferred Interest. See "DESCRIPTION OF THE
CERTIFICATES--Certificate Balances and Notional Amount"
in this Prospectus Supplement.
The Class IO Certificates have no principal balance and
will not receive distributions of principal.
As reflected on the preceding distribution chart:
o Principal is distributed to each class of
Sequential Pay Certificates in alphabetical and,
if applicable, numerical order.
o Principal is only distributed on a class of
Sequential Pay Certificates to the extent funds
remain after the Trustee makes all distributions
of principal and interest on each class of
Certificates with a higher priority of
distribution.
S-12
<PAGE>
o Generally, no class of Sequential Pay Certificates
is entitled to distributions of principal until
the Certificate Balance of each class of
Sequential Pay Certificates with an earlier
alphabetical and, if applicable, numerical
designation has been reduced to zero.
o The maximum amount of principal that the class of
Sequential Pay Certificates which is then entitled
to distributions of principal on a Distribution
Date will receive is an amount equal to the
Principal Distribution Amount for such
Distribution Date.
The "Principal Distribution Amount" for each
Distribution Date generally will be an amount equal to:
o the scheduled principal payments (other than
balloon payments) due on the Mortgage Loans during
the related Collection Period whether or not such
scheduled payments are actually received;
o balloon payments actually received with respect to
Mortgage Loans during the related Collection
Period;
o prepayments received with respect to the Mortgage
Loans during the related Collection Period; and
o all liquidation proceeds, insurance proceeds,
condemnation awards and repurchase and
substitution amounts received during the related
Collection Period that are allocable to principal.
You may, in certain circumstances, also receive
distributions of prepayment premiums and yield
maintenance charges collected on the Mortgage Loans.
Such distributions are in addition to the distributions
of principal and interest described above. See
"DESCRIPTION OF THE CERTIFICATES--Distributions" in
this Prospectus Supplement.
INTEREST................ On each Distribution Date, each class of Certificates
other than the Class R-I, Class R-II, and Class R-III
Certificates will be entitled to receive:
o the Distributable Certificate Interest for such
class of Certificates on such Distribution Date;
and
o any unpaid Distributable Certificate Interest for
such class of Certificates from all prior
Distribution Dates.
On any Distribution Date, the "Distributable
Certificate Interest" for each class of Certificates
generally will equal the greater of zero and:
o in the case of each class of Sequential Pay
Certificates, one month's interest at the
applicable Pass-Through Rate accrued during the
calendar month prior to the related Distribution
Date, on the Certificate Balance of such class of
Certificates immediately prior to such
Distribution Date and, in the case of the Class IO
Certificates, the aggregate of one month's
interest accrued during the calendar month prior
to the related Distribution Date, on the notional
amount of each of the IO Components;
S-13
<PAGE>
o minus (other than in the case of the Class IO
Certificates) such class' allocable share of any
shortfalls in interest collections due to
prepayments on Mortgage Loans that are not offset
by certain payments made by the Master Servicer.
The Class IO Certificates have fourteen components
(each an "IO Component") with one IO Component
corresponding to each class of Sequential Pay
Certificates. On each Distribution Date, each IO
Component will have a notional amount equal to the
Certificate Balance (before any reductions because of
principal distributions or losses allocated on such
Distribution Date) of the class of the Sequential Pay
Certificates that corresponds to such IO Component.
Each IO Component will accrue interest at a rate as
described under "Pass-Through Rates" below.
As of the Closing Date, the aggregate of the notional
amounts of each of the IO Components will be
$1,181,484,821.
Interest on the Certificates will be calculated on the
basis of a 360-day year consisting of twelve 30-day
months.
As reflected on the preceding distribution chart, on
each Distribution Date, the Trustee will distribute
interest to the holders of the Offered Certificates:
o first, pro rata, to the Class IO Certificates,
Class A-1 Certificates and Class A-2 Certificates,
and then to each other class of Offered
Certificates in alphabetical order; and
o only to the extent funds remain after the Trustee
makes all distributions of interest and principal
required to be made on such date on each class of
Certificates with a higher priority of
distribution.
PASS-THROUGH RATES...... The Pass-Through Rate applicable to each class of
Sequential Pay Certificates for each Distribution Date
will equal the rate per annum set forth with respect to
such class in the table at the beginning of this
Summary.
Each IO Component accrues interest at a rate equal to
the excess, if any, of the Weighted Average Net
Mortgage Rate for any Distribution Date over the
Pass-Through Rate applicable to the corresponding Class
of Sequential Pay Certificates.
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 on the first day of the related Collection
Period.
The "Net Mortgage Rate" for each Mortgage Loan will
generally equal (x) the Mortgage Rate in effect for
such Mortgage Loan as of the Closing Date, minus
(y) the applicable Administrative Cost 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 Certificates), then, solely for
S-14
<PAGE>
the purpose of calculating the Weighted Average Net
Mortgage Rate, the Mortgage Rate of such Mortgage
Loan in effect during any calendar month will be
deemed to be the annualized rate at which interest
would have to accrue in respect of such loan on a
30/360 basis in order to derive the aggregate amount of
interest (other than default interest) actually accrued
in respect of such loan during such calendar month;
provided, further, that, with respect to each Interest
Reserve Loan (as defined in this Prospectus
Supplement), the Mortgage Rate in effect during
(a) December of each year that does not immediately
precede a leap year, (b) January of each year and
(c) February of each year will be the per annum rate
stated in the related Mortgage Note (as defined in this
Prospectus Supplement).
The "Stated Principal Balance" of each Mortgage Loan
outstanding at any time represents the outstanding
principal balance of such Mortgage Loan ultimately due
and payable thereon and will generally equal the
Cut-Off Date Balance thereof, reduced as of any such
date (to not less than zero) by:
(i) any payments or other collections (or
advances in lieu thereof) of principal on such
Mortgage Loan that are due or received, as the
case may be, during the related Collection Period
and distributed on the Certificates on and prior
to such 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 on the first Distribution Date
following the Collection Period during which such event
occurred, the Stated Principal Balance of such Mortgage
Loan will be zero.
SUBORDINATION;
ALLOCATION OF LOSSES
AND CERTAIN EXPENSES... Credit support for any class of Sequential Pay
Certificates is provided by the subordination of
payments and allocation of any losses to the classes of
Sequential Pay Certificates which have a later
alphabetical class designation. The Certificate Balance
of a class of Sequential Pay Certificates will be
reduced on each Distribution Date by any losses on the
Mortgage Loans ("Realized Losses") and certain Trust
Fund expenses ("Additional Trust Fund Expenses")
actually allocated to such class of Certificates on
such Distribution Date. Realized Losses and Additional
Trust Fund Expenses will first be allocated to the
Sequential Pay Certificates that are Non-Offered
Certificates and then to the Sequential Pay
Certificates that are Offered Certificates in reverse
alphabetical order as indicated on the following table.
S-15
<PAGE>
<TABLE>
<CAPTION>
CLOSING PERCENTAGE OF ORDER OF
DATE CUT-OFF DATE APPLICATION
CLASS CERTIFICATE POOL OF LOSSES AND
DESIGNATION BALANCE BALANCE EXPENSES
------------------ ------------ ------------- -------------
<S> <C> <C> <C>
Class A-1......... $203,500,000 17.22% 7
Class A-2......... $673,747,967 57.03% 7
Class B........... $ 47,260,093 4.00% 6
Class C........... $ 62,028,874 5.25% 5
Class D........... $ 14,768,779 1.25% 4
Class E........... $ 41,352,582 3.50% 3
Class F........... $ 17,722,535 1.50% 2
Non-Offered
Certificates.... $121,103,991 10.25% 1
</TABLE>
Any Realized Losses 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 IO Component of the Class IO Certificates that is
related to such Class of Sequential Pay Certificates.
See "DESCRIPTION OF THE CERTIFICATES--Subordination;
Allocation of Losses and Certain Expenses" in this
Prospectus Supplement.
PREPAYMENT PREMIUMS;
YIELD MAINTENANCE
CHARGES................ On each Distribution Date, any Prepayment Premium or
Yield Maintenance Charge collected on a Mortgage Loan
during the related Collection Period will be
distributed to the holders of each class of Offered
Certificates then entitled to distributions as follows:
On each Distribution Date and with respect to the
collection of any Prepayment Premiums, the holders of
each Class of Offered Certificates then entitled to
distributions of principal on such Distribution Date
will be entitled to an amount of Prepayment Premiums
equal to the product of (a) the amount of such
Prepayment Premiums, multiplied by (b) a fraction, the
numerator of which is equal to the amount of principal
distributable to such class of Sequential Pay
Certificates on such Distribution Date, and the
denominator of which is the Principal Distribution
Amount for such Distribution Date, multiplied by
(c) 25%. The remaining portion of Prepayment Premiums
will be distributed to the Class IO Certificates.
On each Distribution Date and with respect to the
collection of any Yield Maintenance Charges, the
holders of each class of Offered Certificates then
entitled to distributions of principal on such
Distribution Date will be entitled to an amount of
Yield Maintenance Charges equal to the product of
(a) the amount of such Yield Maintenance Charges,
multiplied by (b) a fraction (which in no event may be
greater than one), the numerator of which is equal to
the excess, if any, of the Pass-Through Rate of such
Class of Offered Certificates over the relevant
Discount Rate (as defined below), and the denominator
of which is equal to the excess, if any, of the
Mortgage Rate of the prepaid
S-16
<PAGE>
Mortgage Loan over the relevant Discount Rate,
multiplied by (c) a fraction, the numerator of which is
equal to the amount of principal distributable on such
class of Offered Certificates on such Distribution
Date, and the denominator of which is the Principal
Distribution Amount for such Distribution Date. If
there is more than one class of Offered Certificates
entitled to distributions of principal on any
particular Distribution Date on which a Yield
Maintenance Charge is distributable, the aggregate
amount of such Yield Maintenance Charge will be
allocated among all such classes up to, and on a pro
rata basis in accordance with their respective
entitlements thereto, in accordance with the foregoing
sentence. The portion, if any, of the Yield Maintenance
Charges remaining after any such payments to the
holders of the Offered Certificates will be distributed
to the holders of the Class IO Certificates.
The "Discount Rate" applicable to any class of Offered
Certificates will be equal to the discount rate stated
in the related mortgage loan documents used in
calculating the Yield Maintenance Charge with respect
to such principal prepayment. To the extent a discount
rate is not stated therein, the "Discount Rate" will
equal the yield (when compounded monthly) on the U.S.
Treasury issue with a maturity date closest to the
maturity date for the prepaid Mortgage Loan. In the
event that there are two or more such U.S. Treasury
issues (a) with the same coupon, the issue with the
lowest yield will be utilized, and (b) with maturity
dates equally close to the maturity date for the
prepaid Mortgage Loan, the issue with the earliest
maturity date will be utilized.
If there is more than one class of Offered Certificates
entitled to distributions of principal on any
particular Distribution Date on which a Prepayment
Premium or Yield Maintenance Charge is distributable,
the aggregate amount of such Prepayment Premium or
Yield Maintenance Charge will be allocated among all
such classes up to, and on a pro rata basis in
accordance with their respective entitlements to
principal as previously described. The portion, if any,
of the Prepayment Premium or Yield Maintenance Charge
remaining after any such payments to the holders of the
Sequential Pay Certificates will be distributed to the
holders of the Class IO Certificates.
Examples of Allocation of Yield Maintenance Charges
Mortgage Rate = 8%
Pass-Through Rate for applicable
class = 6%
Discount Rate = 5%
ALLOCATION PERCENTAGE ALLOCATION PERCENTAGE
FOR APPLICABLE CLASS FOR CLASS IO
----------------------- ---------------------
6% - 5% 100% - 33 1/3% = 66 2/3%
------- = 33 1/3%
8% - 5%
See "DESCRIPTION OF THE CERTIFICATES--Allocation of
Prepayment Premiums and Yield Maintenance Charges" in
this Prospectus Supplement.
S-17
<PAGE>
ADVANCING............... In the event the Master Servicer fails to receive one
or more Periodic Payments on a Mortgage Loan by the
related Determination Date and the Master Servicer
determines that such Periodic Payments will be
ultimately recoverable from the related Mortgage Loan,
the Master Servicer is required to make an advance (a
"P&I Advance") of such Periodic Payment. The Trust Fund
will pay interest to the Master Servicer on the amount
of any P&I Advance calculated at the prime rate and
will reimburse the Master Servicer for any P&I Advances
that are later determined to be not recoverable. See
"DESCRIPTION OF THE CERTIFICATES--P&I Advances" in this
Prospectus Supplement.
OPTIONAL TERMINATION
OF THE TRUST FUND...... The Trust Fund may be terminated when the aggregate
principal balance of the Mortgage Loans is less than 1%
of the Cut-Off Date Pool Balance. See "DESCRIPTION OF
THE CERTIFICATES--Termination" in this Prospectus
Supplement and in the Prospectus.
REGISTRATION AND
DENOMINATION........... The Offered Certificates will be registered in the name
of Cede & Co., as nominee for The Depository Trust
Company ("DTC") in the United States, or in Europe
through Cedelbank or The Euroclear System
("Euroclear"). You will not receive a definitive
certificate representing your interest in the Trust
Fund, except in the limited circumstances described in
the accompanying Prospectus. See "DESCRIPTION OF THE
CERTIFICATES--Book-Entry Registration and Definitive
Certificates" in the Prospectus.
Beneficial interests in the Class A-1, Class A-2,
Class B, Class C, Class D, Class E and Class F
Certificates will be offered in minimum denominations
of $10,000 actual principal amount and in integral
multiples of $1 in excess of those amounts. The
Class IO Certificates will be offered in minimum
denominations of $1,000,000 notional amount and in
integral multiples of $1 in excess of those amounts.
MATERIAL FEDERAL
INCOME TAX
CONSEQUENCES........... One or more separate "real estate mortgage investment
conduit" ("REMIC") elections will be made with respect
to the Trust Fund (other than any Additional Interest
collected on the ARD Loans). The Certificates will
evidence "regular interests" in a REMIC and generally
will be treated as debt instruments of such REMIC.
Certificateholders' entitlement to a portion of the
Additional Interest will be treated as a Grantor Trust
Strip Certificate (as defined in the accompanying
Prospectus) issued by an entity treated as a grantor
trust for United States federal income tax purposes.
Based on expected issue prices, the Class IO
Certificates will, and certain of the classes of
Sequential Pay Certificates, depending on their issue
prices, may, be treated as having been issued with
original issue discount for federal income tax
reporting purposes.
S-18
<PAGE>
For further information regarding the federal income
tax consequences of investing in the Offered
Certificates, see "MATERIAL FEDERAL INCOME TAX
CONSEQUENCES" in this Prospectus Supplement and in the
Prospectus.
ERISA CONSIDERATIONS.... We expect that the following Certificates will be
treated as ERISA eligible:
Class A-1
Class A-2
Class IO
See "ERISA CONSIDERATIONS" in this Prospectus
Supplement and in the Prospectus.
SMMEA ELIGIBILITY....... We expect that the following Certificates will
constitute "mortgage related securities" pursuant to
the Secondary Mortgage Market Enhancement Act of 1984
("SMMEA"):
Class A-1
Class A-2
Class IO
Class B
See "LEGAL INVESTMENT" in this Prospectus Supplement
and in the Prospectus.
RATINGS................. The Offered Certificates will not be issued unless they
have received the following ratings from Fitch and
Moody's (the "Rating Agencies"):
RATING FROM
CLASS FITCH/MOODY'S
------------ ----------------
Class A-1... AAA/Aaa
Class A-2... AAA/Aaa
Class IO.... AAA/Aaa
Class B..... AA/Aa2
Class C..... A/A2
Class D..... A-/A3
Class E..... BBB/Baa2
Class F..... BBB-/Baa3
A rating agency may downgrade, qualify or withdraw a
security rating at any time. A rating agency not
requested to rate the Offered Certificates may
nonetheless issue a rating and, if one does, it may be
lower than those stated above. The security ratings do
not address the frequency of prepayment (whether
voluntary or involuntary) of mortgage loans, or the
degree to which such prepayments might differ from
those originally anticipated, or the likelihood of
collection of Additional Interest, default interest,
Prepayment Premiums or Yield Maintenance Charges, or
the tax treatment of the Offered Certificates. Even
though the Class IO certificates will be rated
"AAA/Aaa," it is still possible that you may fail to
recover your full initial investment due to a rapid
rate of prepayments, defaults or liquidations. See
"YIELD AND MATURITY CONSIDERATIONS" in this Prospectus
Supplement, "RISK FACTORS" and "RATINGS" in this
Prospectus Supplement
S-19
<PAGE>
and in the Prospectus, and "YIELD AND MATURITY
CONSIDERATIONS" in the Prospectus. See "RATINGS" in
this Prospectus Supplement and "RISK FACTORS--Limited
Nature of Ratings on Certificates" in the Prospectus
for further explanation of the ratings and the
conclusions that may not be drawn from a rating.
THE MORTGAGE LOANS
GENERAL................. It is expected that the Mortgage Loans will have the
following approximate characteristics as of the Cut-Off
Date. Where a Mortgage Loan is secured by multiple
properties, statistical information in this Prospectus
Supplement relating to geographical locations and
property types of the Mortgaged Properties is based on
the loan amount allocated to such property. Such
allocation is based on the relative appraised values of
such properties. In addition, wherever information is
presented in this Prospectus Supplement with respect to
LTVs or DSC Ratios, the LTV or DSC Ratio of each
Mortgaged Property securing a Mortgage Loan secured by
multiple Mortgaged Properties is assumed to be the
weighted average LTV or DSC Ratio of such Mortgage
Loan. The totals in the following tables may not add up
to 100% due to rounding.
Number of Mortgage Loans............. 223
Number of Mortgaged Properties....... 260
Cut-Off Date Pool Balance............ $1,181,484,821
Minimum Cut-Off Date Balance......... $ 412,861
Maximum Cut-Off Date Balance......... $ 50,443,313
Average Cut-Off Date Balance......... $ 5,298,138
Minimum Mortgage Rate................ 6.125%
Maximum Mortgage Rate................ 9.500%
Weighted Average Mortgage Rate....... 7.360%
Minimum Remaining Term to Maturity or
Anticipated Repayment Date
(months)........................... 56
Maximum Remaining Term to Maturity or
Anticipated Repayment Date
(months)........................... 357
Weighted Average Remaining Term to
Maturity or Anticipated Repayment
Date (months)...................... 128
Weighted Average Loan to Value Ratio
(1)................................ 71.07%
Weighted Average Debt Service
Coverage
Ratio (1).......................... 1.36x
------------------
(1) The Weighted Average Loan to Value Ratio and the
Weighted Average DSC Ratio information shown above
does not reflect the 27 Credit Lease Loans, or
approximately 6.67% of the Cut-Off Date Pool
Balance, which typically have debt service coverage
ratios at origination that range from 1.00x - 1.05x
and loan to value ratios at origination that
generally range from 90 - 100%.
Twenty-seven (27) of the Mortgage Loans, or
approximately 6.67% of the Cut-Off Date Pool Balance,
are Credit Lease Loans. Credit Lease Loans are
generally underwritten based upon the creditworthiness
of the Tenant leasing the related Mortgaged Property or
the related Guarantor.
S-20
<PAGE>
<TABLE>
<S> <C>
MONTH AND YEAR OF
MORTGAGE LOAN
ORIGINATION............ The following table describes the month and year of
origination for each of the Mortgage Loans:
</TABLE>
<TABLE>
<CAPTION>
MONTH AND YEAR OF MORTGAGE LOAN ORIGINATION
CUMULATIVE
AGGREGATE PERCENTAGE OF PERCENTAGE
ORIGINATION MONTH NUMBER OF CUT-OFF CUT-OFF DATE OF CUT-OFF DATE
AND YEAR MORTGAGE LOANS DATE BALANCE POOL BALANCE POOL BALANCE
----------------- -------------- -------------- --------------- ---------------
<S> <C> <C> <C> <C>
September 1997... 1 $ 24,502,544 2.07% 2.07%
February 1998.... 8 31,011,655 2.62 4.70%
April 1998....... 3 12,521,945 1.06 5.76%
May 1998......... 13 60,856,420 5.15 10.91%
June 1998........ 4 22,293,568 1.89 12.81%
July 1998........ 9 42,663,487 3.61 16.41%
August 1998...... 33 79,668,056 6.74 23.15%
September 1998... 8 30,222,509 2.56 25.71%
October 1998..... 24 130,122,729 11.01 36.72%
November 1998.... 23 186,271,065 15.77 52.49%
December 1998.... 12 90,756,456 7.68 60.17%
January 1999..... 10 31,825,233 2.69 62.86%
February 1999.... 25 108,550,650 9.19 72.05%
March 1999....... 37 251,558,673 21.29 93.34%
April 1999....... 7 37,014,831 3.13 95.48%
May 1999......... 6 41,645,000 3.52 100.00%
---- -------------- -------
Total......... 223 $1,181,484,821 100.00% 100.00%
---- -------------- -------
---- -------------- -------
</TABLE>
SECURITY FOR THE
MORTGAGE LOANS......... o Generally, all of the Mortgage Loans are
non-recourse obligations of the related borrowers.
o No Mortgage Loan is insured or guaranteed by any
government agency or private insurer.
o All of the Mortgage Loans are secured by first
lien fee mortgages or leasehold mortgages on
commercial or multifamily properties.
PROPERTY TYPES.......... The following table describes the Mortgage Loans based
upon property type:
<TABLE>
<CAPTION>
MORTGAGE LOANS BY PROPERTY TYPE
NUMBER OF PERCENTAGE OF
MORTGAGE AGGREGATE CUT-OFF CUT-OFF DATE
PROPERTY TYPE LOANS DATE BALANCE POOL BALANCE
------------------- --------- ----------------- -------------
<S> <C> <C> <C>
Multifamily........ 62 $ 365,399,773 30.93%
Retail
(Anchored)....... 55 272,577,634 23.07
Hospitality........ 19 166,306,763 14.08
Office............. 19 143,185,620 12.12
Credit Lease
Loans (1)........ 27 78,808,932 6.67
Mixed Use.......... 5 50,193,888 4.25
Industrial......... 13 37,267,470 3.15
Retail
(Unanchored)..... 12 31,612,142 2.68
Healthcare......... 7 24,679,110 2.09
Mobile Home Park... 3 9,460,434 0.80
Self Storage....... 1 1,993,054 0.17
--- --------------- -------
Total......... 223 $ 1,181,484,821 100.00%
--- --------------- -------
--- --------------- -------
</TABLE>
------------------
(1) Includes 20 retail properties, or approximately
4.71% of the Cut-Off Date Pool Balance, 6
hospitality properties, or approximately 1.84% of
the Cut-Off Date Pool Balance and 1 restaurant
property, or approximately 0.12% of the Cut-Off
Date Pool Balance.
S-21
<PAGE>
[PIE CHART]
Retail (Anchored) 23.07%
Hospitality 14.08%
Office 12.12%
Credit Lease Loans 6.67%
Mixed Use 4.25%
Industrial 3.15%
Retail (Unanchored) 2.68%
Healthcare 2.09%
Mobile Home Park 0.80%
Self Storage 0.17%
Multifamily 30.93%
GEOGRAPHIC
CONCENTRATION.......... The Mortgaged Properties are located throughout 38
states. The following table lists the number and
percentage of Mortgaged Properties in states which have
concentrations of Mortgaged Properties above 5.0%:
<TABLE>
<CAPTION>
MORTGAGE LOANS BY GEOGRAPHIC CONCENTRATION
NUMBER OF PERCENTAGE OF
MORTGAGED AGGREGATE CUT-OFF CUT-OFF DATE
STATES PROPERTIES DATE BALANCE (1) POOL BALANCE (1)
----------------- --------- ----------------- ----------------
<S> <C> <C> <C>
California....... 40 $ 152,085,127 12.87%
Georgia.......... 17 114,892,601 9.72
Texas............ 14 85,621,908 7.25
Florida.......... 21 81,141,569 6.87
North Carolina... 21 74,332,885 6.29
New York......... 16 68,164,832 5.77
Pennsylvania..... 9 64,402,823 5.45
Other States..... 122 540,843,077 45.78
--- --------------- ------
Total....... 260 $ 1,181,484,821 100.00%
--- --------------- ------
--- --------------- ------
</TABLE>
------------------
(1) With respect to 1 Mortgage Loan, or approximately
4.27% of the Cut-Off Date Pool Balance, this table
presents information relating to the 3 Mortgaged
Properties securing such Mortgage Loan, allocating
the principal amount of such Mortgage Loan to each
such Mortgaged Property pro rata according to the
appraised value of each such Mortgaged Property as
of the date of origination.
PRINCIPAL AND INTEREST
PAYMENT TERMS.......... o All of the Mortgage Loans accrue interest at a
fixed rate.
o As of the Cut-Off Date, payments on 168 of the
Mortgage Loans, or approximately 57.20% of the
Cut-Off Date Pool Balance, are due on the first
day of the month and payments on 55 of the
Mortgage Loans, or approximately 42.80% of the
Cut-Off Date Pool Balance, are due on the tenth
day of the month (any payment received after the
tenth day of the month is deemed late).
S-22
<PAGE>
o As of the Cut-Off Date, 33 of the Mortgage Loans,
or approximately 11.41% of the Cut-Off Date Pool
Balance, bear interest on a 30/360 basis.
o As of the Cut-Off Date, 190 of the Mortgage Loans,
or approximately 88.59% of the Cut-Off Date Pool
Balance, bear interest on an Actual/360 basis.
Seven (7) of such Mortgage Loans, or approximately
6.91% of the Cut-Off Date Pool Balance, have
periods during which only interest is due. Two (2)
of such Mortgage Loans with an interest only
period, or approximately 2.95% of the Cut-Off Date
Pool Balance, provide that during such period
interest is payable in equal monthly installments.
The following tables set forth certain anticipated
characteristics of the Mortgage Loans as of the Cut-Off
Date:
<TABLE>
<CAPTION>
RANGE OF MORTGAGE RATES
PERCENTAGE OF
NUMBER OF AGGREGATE CUT-OFF CUT-OFF DATE
RANGE OF MORTGAGE RATES LOANS DATE BALANCE POOL BALANCE
----------------------- --------- ----------------- -------------
<S> <C> <C> <C>
(less than)7.000%...... 39 $ 277,347,969 23.47%
7.000-7.499%........... 90 383,263,588 32.44
7.500-7.999%........... 66 417,910,609 35.37
8.000-8.499%........... 20 76,273,586 6.46
8.500-8.999%........... 5 19,823,829 1.68
(greater than)8.999%... 3 6,865,241 0.58
--- --------------- -------
Total............. 223 $ 1,181,484,821 100.00%
--- --------------- -------
--- --------------- -------
</TABLE>
<TABLE>
<CAPTION>
RANGE OF CUT-OFF DATE BALANCES
PERCENTAGE OF
NUMBER OF AGGREGATE CUT-OFF CUT-OFF DATE
RANGE OF CUT-OFF DATE BALANCES LOANS DATE BALANCE POOL BALANCE
------------------------------ --------- ----------------- -------------
<S> <C> <C> <C>
(less than or equal to)
$2,000,000................... 65 $ 90,793,422 7.68%
$2,000,001- 4,000,000........ 63 175,192,285 14.83
$4,000,001- 6,000,000........ 39 187,261,792 15.85
$6,000,001- 8,000,000........ 17 115,449,163 9.77
$8,000,001-10,000,000........ 9 81,924,968 6.93
$10,000,001-15,000,000........ 15 178,504,729 15.11
$15,000,001-20,000,000........ 8 140,449,746 11.89
$20,000,001-25,000,000........ 3 68,979,057 5.84
$25,000,001-30,000,000........ 2 55,013,571 4.66
$35,000,001-40,000,000........ 1 37,472,777 3.17
(greater than)$40,000,000..... 1 50,443,313 4.27
--- --------------- -------
Total.................... 223 $ 1,181,484,821 100.00%
--- --------------- -------
--- --------------- -------
</TABLE>
S-23
<PAGE>
<TABLE>
<CAPTION>
RANGE OF CUT-OFF DATE DSC RATIOS
PERCENTAGE OF
RANGE OF CUT-OFF DATE NUMBER OF AGGREGATE CUT-OFF CUT-OFF DATE
DSC RATIOS LOANS (1) DATE BALANCE BALANCE (1)
--------------------- --------- ----------------- ------------------
<S> <C> <C> <C>
(less than)1.20x..... 4 $ 15,033,915 1.36%
1.20-1.29x........... 67 436,731,434 39.61
1.30-1.39x........... 69 268,683,401 24.37
1.40-1.49x........... 30 218,421,253 19.81
1.50-1.59x........... 12 109,384,045 9.92
1.60-1.69x........... 6 24,351,105 2.21
(greater than)1.69x.. 8 30,070,736 2.73
--- --------------- ------
Total........... 196 $ 1,102,675,889 100.00%
--- --------------- ------
--- --------------- ------
</TABLE>
------------------
(1) Excludes 27 Credit Lease Loans, or approximately
6.67% of the Cut-Off Date Pool Balance, secured by
credit leased properties. The DSC Ratio for all
such Mortgage Loans is generally 1.00x-1.05x.
<TABLE>
<CAPTION>
RANGE OF CUT-OFF DATE LTV RATIOS
PERCENTAGE OF
RANGE OF CUT-OFF DATE NUMBER OF AGGREGATE CUT-OFF CUT-OFF DATE
LTV RATIOS LOANS (1) DATE BALANCE BALANCE (1)
---------------------- --------- ----------------- -------------
<S> <C> <C> <C>
(less than)
40.01%................. 1 $ 3,480,963 0.32%
40.01-50.00%........... 3 11,992,981 1.09
50.01-60.00%........... 13 91,332,843 8.28
60.01-70.00%........... 68 325,096,658 29.48
70.01-80.00%........... 108 647,363,879 58.71
80.01-85.00%........... 2 20,704,234 1.88
(greater than) 85.00%.. 1 2,704,332 0.25
--- --------------- -------
Total............. 196 $ 1,102,675,889 100.00%
--- --------------- -------
--- --------------- -------
</TABLE>
------------------
(1) Excludes 27 Credit Lease Loans, or approximately
6.67% of the Cut-Off Date Pool Balance, secured by
credit leased properties. The LTV ratio for all
such Mortgage Loans at origination is generally
90-100%.
<TABLE>
<CAPTION>
RANGE OF REMAINING TERM TO MATURITY DATE OR
ANTICIPATED REPAYMENT DATE
RANGE OF REMAINING PERCENTAGE OF
TERMS NUMBER OF AGGREGATE CUT-OFF CUT-OFF DATE
(MOS.) LOANS DATE BALANCE POOL BALANCE
--------------------- --------- ----------------- -------------
<S> <C> <C> <C>
(less than) 85....... 3 $ 26,290,235 2.23%
85-120.............. 151 972,514,535 82.31
121-156.............. 27 45,261,342 3.83
157-180.............. 8 29,405,454 2.49
181-228.............. 8 25,154,095 2.13
229-252.............. 17 60,322,292 5.11
253-300.............. 7 19,475,845 1.65
(greater than)300.... 2 3,061,022 0.26
--- --------------- -------
Total........... 223 $ 1,181,484,821 100.00%
--- --------------- -------
--- --------------- -------
</TABLE>
S-24
<PAGE>
<TABLE>
<CAPTION>
AMORTIZATION TYPES
PERCENTAGE OF
NUMBER OF AGGREGATE CUT-OFF CUT-OFF DATE
TYPE OF AMORTIZATION LOANS DATE BALANCE POOL BALANCE
-------------------- --------- ----------------- -------------
<S> <C> <C> <C>
Balloon Loans....... 182 $ 899,196,820 76.11%
ARD Loans........... 15 205,456,095 17.39
Fully Amortizing
Loans............. 26 76,831,906 6.50
--- --------------- -------
Total.......... 223 $ 1,181,484,821 100.00%
--- --------------- -------
--- --------------- -------
</TABLE>
PREPAYMENT
RESTRICTIONS........... As of the Cut-Off Date, all of the Mortgage Loans
restrict or prohibit voluntary prepayments of principal
in some manner for some period of time.
<TABLE>
<CAPTION>
TYPES OF PREPAYMENT RESTRICTIONS
PERCENTAGE OF
NUMBER OF AGGREGATE CUT-OFF CUT-OFF DATE
TYPE OF PREPAYMENT RESTRICTION LOANS DATE BALANCE POOL BALANCE
------------------------------------------- ----------------- -------------
<S> <C> <C> <C>
Prohibit prepayment until date
specified in related Mortgage
Note and then only permit
defeasance
for most of remaining
term (1) ....................... 201 $ 1,039,559,311 87.99%
Prohibit prepayment until date
specified in related Mortgage
Note and then impose either a
Yield Maintenance Charge or a
Prepayment Premium (but not
both) for most of remaining
term (1)........................ 14 $ 109,879,887 9.30%
Prohibit prepayment until date
specified in related Mortgage
Note, then permit defeasance
until the date specified in the
related Mortgage Note and then
impose a Yield Maintenance
Charge or a Prepayment Premium
but not both for most of
remaining term (1).............. 7 $ 30,064,778 2.54%
(Continued on next page)
</TABLE>
S-25
<PAGE>
<TABLE>
<CAPTION>
TYPES OF PREPAYMENT RESTRICTIONS
PERCENTAGE OF
NUMBER OF AGGREGATE CUT-OFF CUT-OFF DATE
TYPE OF PREPAYMENT RESTRICTION LOANS DATE BALANCE POOL BALANCE
---------------------------------- --- --------------- -----
<S> <C> <C> <C>
Prohibit prepayment until date
specified in related Mortgage
Note, then impose a Yield
Maintenance Charge for the
period specified in the related
Mortgage Note, and then a
Prepayment Premium for most of
the remaining term (1).......... 1 $ 1,980,845 0.17%
</TABLE>
------------------
(1) For the purposes hereof, "remaining term" refers to
either remaining term to maturity or Anticipated
Repayment Date, as applicable.
See "DESCRIPTION OF THE MORTGAGE POOL--Additional
Mortgage Loan Information" in this Prospectus
Supplement.
The ability of the Special Servicer to modify the terms
of any Mortgage Loan relating to the payment of a
Prepayment Premium will be limited as described in this
Prospectus Supplement. See "SERVICING OF THE MORTGAGE
LOANS--Modifications, Waivers and Amendments" in this
Prospectus Supplement. We make no representations as to
the enforceability of the provisions of any Mortgage
Notes requiring the payment of a Prepayment Premium.
DEFEASANCE.............. Two hundred eight (208) of the Mortgage Loans, or
approximately 90.53% of the Cut-Off Date Pool Balance,
permit the borrower, under certain conditions, to
substitute direct non-callable United States Treasury
obligations (the "Defeasance Collateral") as collateral
for the related Mortgage Loans (or a portion thereof)
following their respective lock-out periods. Upon such
substitution, the related Mortgaged Property (or, in
the case of a Mortgage Loan secured by multiple
Mortgaged Properties, one or more of such Mortgaged
Properties) will no longer secure such Mortgage Loan.
The payments on the Defeasance Collateral are required
to approximate the amount and timing of payments on the
related Mortgage Loan or allocated to the related
Mortgaged Property. The Master Servicer may not permit
borrowers to defease a Mortgage Loan in this manner
under certain circumstances.
See "RISK FACTORS--Certain Risk Factors Associated with
the Mortgage Loans" and "DESCRIPTION OF THE MORTGAGE
POOL" in this Prospectus Supplement.
TEN LARGEST MORTGAGE
LOANS.................. The following table and summaries describe the ten
largest Mortgage Loans in the Mortgage Pool by Cut-Off
Date Balance:
S-26
<PAGE>
TEN LARGEST MORTGAGE LOANS BY CUT-OFF DATE BALANCE
<TABLE>
<CAPTION>
PERCENTAGE OF
CUT-OFF
NUMBER OF CUT-OFF DATE DATE POOL MORTGAGE CURRENT DSC
PROPERTY NAME PROPERTIES BALANCE BALANCE PROPERTY TYPE RATE CURRENT LTV RATIO
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Sheraton Suites
Portfolio............. 3 $ 50,443,313 4.27% Hospitality 6.75% 66.2% 1.55x
Olen Portfolio.......... 6 37,472,777 3.17 Mixed Use 7.61% 67.5% 1.30x
Lakeside Apartments .... 1 29,750,000 2.52 Multifamily 7.05% 80.0% 1.22x
Wynfrey Hotel........... 1 25,263,571 2.14 Hospitality 7.40% 69.2% 1.40x
Wilshire Portfolio...... 3 24,502,544 2.07 Office 8.25% 69.8% 1.23x
Hickory Lake............ 1 22,492,277 1.90 Multifamily 7.65% 79.3% 1.20x
Westgate Village........ 1 21,984,235 1.86 Retail 6.57% 73.3% 1.43x
1055 Washington Blvd.... 1 19,932,471 1.69 Office 7.72% 59.0% 1.31x
Oak Park Commons........ 1 19,154,363 1.62 Retail 6.57% 74.7% 1.48x
Vista Ridge Plaza I, II
& Shops............... 1 18,917,890 1.60 Retail 6.57% 51.7% 1.44x
--- ------------ -------
Total/Weighted
Average............... 19 $269,913,441 22.85% 7.21% 69.2% 1.37x
--- ------------ -------
--- ------------ -------
</TABLE>
Sheraton Suites
Portfolio.............. The Sheraton Suites Portfolio loan is secured by
3 luxury, all suite, full service hotels, two of which
are fee interests and one of which is a leasehold
interest. The combined hotels contain approximately 732
suites which are generally larger than traditional
hotel rooms with two physically separated rooms in the
suite. The properties are located in Wilmington,
Delaware (approximately 228 suites), Elk Grove,
Illinois (approximately 253 suites), and Dallas, Texas
(approximately 251 suites). The sponsor of the borrower
is Sheraton Suites Investment Limited Partnership
("SSILP"). ITT Sheraton Corporation directly or
indirectly owns 24% of the limited partnership
interests and the 1% general partnership interest in
SSILP. ITT Sheraton Corporation is ultimately a
wholly-owned subsidiary of Starwood Hotels & Resorts
Worldwide, Inc.
Olen Portfolio.......... The Olen Portfolio loan is secured by 5
office/industrial flex properties and 1 office
building, each located in Orange County, California.
The properties contain a total of 608,644 rentable
square feet, ranging in size from 30,000 square feet to
186,500 square feet. As of March 1999, the properties
had an aggregate occupancy of 99.3%, ranging from 97.4%
to 100%. The borrower is a newly formed special purpose
Nevada corporation. The sponsor of the borrower is The
Olen Companies, a real estate management and
development company founded in 1973. The Olen Companies
currently own commercial and multifamily real estate
throughout the United States, including, as of April
1999, 47 office and industrial properties located in
Southern California containing in excess of three
million square feet.
Lakeside Apartments..... The Lakeside Apartments loan is secured by a 461-unit
luxury apartment complex located in Newnan, Georgia,
which is part of the metropolitan Atlanta, Georgia
area. The first phase of the
S-27
<PAGE>
complex was built in 1991 and the third and final
phase, containing 200 units, was completed in March
1998. As of March 1999, Lakeside Apartments had an
occupancy rate of 93.5%. The borrower is a newly formed
special purpose Illinois limited partnership. The
sponsor of the borrower is an executive officer of
Executive Affiliates, Inc., a real estate management
and development company founded in 1966. As of April
1999 the sponsor, through various entities, owned
18 multifamily properties and 3 hotels throughout the
United States.
Wynfrey Hotel........... The Wynfrey Hotel loan is secured by the Wynfrey Hotel,
a full-service luxury hotel in the metropolitan
Birmingham, Alabama area. In addition to the hotel's
329 guest rooms on 14 floors and approximately 27,716
square feet of meeting and banquet space, the hotel
also has a 224 seat formal dining restaurant, a 221
seat casual dining restaurant, a piano bar and lounge,
an outdoor swimming pool, a fitness room and a gift
shop. The sponsors of the borrower are James W. Wilson,
III and William B. Wilson.
Wilshire Portfolio...... The Wilshire Portfolio loan is secured by 3 properties
(one fee and two leasehold interests), the Wilshire
Doheny, the Wilshire Lapeer and the Wilshire Palm. Each
property is a class "A" office building located on
Wilshire Boulevard in Beverly Hills, California. The
properties contain a total of 207,682 rentable square
feet and were 95.5% occupied as of March 1999. The
sponsor of the borrowers (3 co-obligors) is Casden
Properties Inc., a newly organized Maryland
corporation, and a real estate investment trust
sponsor.
Hickory Lake............ The Hickory Lake loan is secured by a 726 unit
apartment complex built in 1969, was renovated between
1994 and 1996 and was 90.9% occupied as of June 1998.
The complex is located in Atlanta, Georgia and consists
of three separate phases: The Arbors at Hickory Lake,
The Meadows at Hickory Lake and The Gardens at Hickory
Lake. The sponsor of the borrower is The Pinnacle
Companies, which was formed in 1976 and owns 14
multifamily properties containing 3,994 units in
Georgia, South Carolina and Florida.
Westgate Village........ The Westgate Village loan is secured by a 342,853
square foot retail center comprised of two
single-story, free-standing buildings, located in
Amarillo, Texas. The north building contains 142,808
square feet and as of February 1999 was 100% leased to
Builders Square and Circuit City. The south building
contains 200,045 square feet, as of February 1999 was
93.4% leased to seven tenants, and is anchored by
K-Mart, PetsMart and Office Max. The sponsor of the
borrower is the Kimco Realty Corporation, a publicly
traded owner and operator of neighborhood and community
shopping centers. As of April 1999, Kimco Realty
Corporation's portfolio was comprised of 445 property
interests totaling approximately 58.0 million square
feet of gross leasable area located in 40 states.
1055 Washington
Blvd. ................. The 1055 Washington Boulevard loan is secured by a
leasehold interest in a ten-story, class "A" office
building containing
S-28
<PAGE>
181,360 rentable square feet, located in Stamford,
Connecticut. The property was 92.2% occupied as of
September 1998. The sponsors of the borrowers are
Robert C. Elder and Raymond W. Miller.
Oak Park Commons........ The Oak Park Commons loan is secured by a 136,939
square foot, one-story neighborhood shopping center
located in South Plainfield, New Jersey. The center was
completed in April 1998 and is anchored by A&P, Sears
and CVS. As of October 1998 the center was 100%
occupied. The sponsor of the borrower is the Kimco
Realty Corporation, which is described above under the
summary of the Westgate Village loan.
Vista Ridge Plaza I, II
& Shops................ The Vista Ridge Plaza I, II and Shops loan is secured
by 290,227 square feet of community shopping center
space located in Lewisville, Texas. The center was
developed in three phases between 1996 and 1998. The
center is anchored by Homeplace, Babies "R" Us and Drug
Emporium and was 100% occupied as of September 1998.
The sponsor of the borrower is the Kimco Realty
Corporation, which is described above under the summary
of the Westgate Village loan.
S-29
<PAGE>
RISK FACTORS
o YOU SHOULD CAREFULLY CONSIDER, AMONG OTHER THINGS, THE FOLLOWING RISK
FACTORS (AS WELL AS THE RISK FACTORS SET FORTH UNDER "RISK FACTORS" IN
THE PROSPECTUS) BEFORE MAKING YOUR INVESTMENT DECISION. ADDITIONAL RISKS
ARE DESCRIBED ELSEWHERE IN THIS PROSPECTUS SUPPLEMENT UNDER SEPARATE
HEADINGS IN CONNECTION WITH DISCUSSIONS REGARDING PARTICULAR ASPECTS OF
THE MORTGAGE LOANS OR THE CERTIFICATES.
o THE RISKS AND UNCERTAINTIES DESCRIBED BELOW ARE NOT THE ONLY ONES
RELATING TO YOUR CERTIFICATES. ADDITIONAL RISKS AND UNCERTAINTIES NOT
PRESENTLY KNOWN TO US OR THAT WE CURRENTLY DEEM IMMATERIAL MAY ALSO
IMPAIR YOUR INVESTMENT.
o IF ANY OF THE FOLLOWING RISKS ARE REALIZED, YOUR INVESTMENT COULD BE
MATERIALLY AND ADVERSELY AFFECTED.
o THIS PROSPECTUS SUPPLEMENT CONTAINS FORWARD-LOOKING STATEMENTS THAT
INVOLVE RISKS AND UNCERTAINTIES. ACTUAL RESULTS COULD DIFFER MATERIALLY
FROM THOSE ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS AS A RESULT OF
CERTAIN FACTORS, INCLUDING THE RISKS DESCRIBED BELOW AND ELSEWHERE IN
THIS PROSPECTUS SUPPLEMENT.
CERTAIN RISKS ASSOCIATED WITH THE CERTIFICATES
Limited Assets. Distributions on your Certificates will depend on payments
received on the Trust Fund assets, which consist primarily of the Mortgage
Loans. Therefore, you should carefully consider the risks associated with the
Mortgage Loans and the Mortgaged Properties described in this Prospectus
Supplement and in the Prospectus.
Certain Yield and Maturity Considerations. Your yield on the Offered
Certificates may be adversely affected by the rate, amount and timing of
principal payments (or, in the case of the Class IO Certificates, the reduction
in the notional amounts of the IO Components) on your Certificates. The
following factors affect the rate and timing of payments on the Certificates:
o The rate, amount and timing of principal payments and collections on the
Mortgage Loans, particularly voluntary prepayments, may be affected by:
o The level of prevailing interest rates (if interest rates fall,
borrowers will have an increased incentive to refinance their
Mortgage Loans, which will result in prepayments).
o Restrictions and penalties on voluntary prepayments in the terms of
the Mortgage Loans. See "DESCRIPTION OF THE MORTGAGE POOL--Certain
Terms and Conditions of the Mortgage Loans--Prepayment Provisions"
in this Prospectus Supplement.
o The availability of mortgage credit.
o Other economic, demographic, geographic, tax and legal factors that
affect the timing of payments on the Mortgage Loans.
o The terms of the Mortgage Loans.
o Principal losses or payment delays with respect to Mortgage Loans due to
defaults, casualties or condemnations whether before or after the
scheduled maturity date of the Mortgage Loans. Losses on the Mortgage
Loans and certain expenses of the Trust Fund will be allocated to reduce
the Certificate Balance of certain Classes of the Certificates.
o Involuntary prepayments with respect to Mortgage Loans during any
applicable lockout period due to defaults, casualties or condemnations,
and
o The order of priority of distributions of principal in respect of the
Sequential Pay Certificates. As described in this Prospectus Supplement
under "DESCRIPTION OF THE CERTIFICATES--Application of Available
Distribution Amount", the Principal Distribution Amount for each
Distribution Date will be distributable to each class of Sequential Pay
Certificates in alphabetical and, if applicable, numerical order and no
class of Sequential Pay Certificates will be entitled to distributions of
principal until the Certificate Balance of each class of Certificates
with an earlier alphabetical and, if applicable, numerical designation
has been reduced to zero. Therefore, the actual
S-30
<PAGE>
rate of principal payments on the Mortgage Loans may have different
effects on the yields of the respective classes of Offered Certificates.
The yield on the Class IO Certificates is particularly sensitive to the
rate and timing of principal payments on the Mortgage Loans and the Sequential
Pay Certificates. Investors in the Class IO Certificates should consider the
risk that a rapid rate of prepayments on the Mortgage Loans could result in the
failure to fully recoup your initial investment. Any payment in reduction of
the Certificate Balance of any class of Sequential Pay Certificates and any
losses allocated in reduction of the Certificate Balance of any class of
Sequential Pay Certificates will also result in a corresponding reduction in the
notional amount of the related IO 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
IO Component is reduced, the greater will be the negative effect on the yield of
the Class IO Certificates, to the extent such effect is not offset by
distributions to you of a portion of any applicable Prepayment Premiums or Yield
Maintenance Charges as described under "DESCRIPTION OF THE
CERTIFICATES--Distributions--Allocation of Prepayment Premiums and Yield
Maintenance Charges" in this Prospectus Supplement.
You should also consider that 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. Also, in the
event of a liquidation of a Mortgage Loan following a default, the liquidation
proceeds may be insufficient to cover any Prepayment Premium or Yield
Maintenance Charge, together with all principal, interest and other sums that
may be due and owing in respect of such Mortgage Loan, or the obligation to pay
such Prepayment Premium or Yield Maintenance Charge under those circumstances
may be unenforceable.
In addition, if a Mortgage Loan Seller repurchases any Mortgage Loan from
the Trust due to breaches of representations or warranties, the repurchase price
paid will be passed through to the holders of the Certificates with the same
effect as if the Mortgage Loan had been prepaid in part or in full, except that
no Prepayment Premium or Yield Maintenance Charge would be payable. Such a
repurchase may therefore adversely affect the yield to maturity on your
Certificates.
The yield on your Certificates also will be affected by the rate, amount
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 your
Certificates or otherwise reduce the amount of funds available for distribution
on your Certificates. Generally, the Non-Offered Certificates are 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, Class E and Class F
Certificates are subordinate in right and time of payment to the Class IO, Class
A-1 and Class A-2 Certificates and will bear such shortfalls and losses prior to
the Class A-1 and Class A-2 Certificates, in reverse alphabetical order of class
designation. The Class A-1 and Class A-2 Certificates will bear shortfalls in
collections and losses 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 Class B, Class C, Class D, Class E,
Class F Certificates and the Non-Offered Certificates (together, the
"Subordinate Certificates") has been reduced to zero, 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 Certificates generally will have a greater
effect on the Class A-2 Certificates than on the Class A-1 Certificates.
Investors in the Class IO Certificates should also consider that 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 IO
Component. See "DESCRIPTION OF THE CERTIFICATES--Subordination; Allocation of
Losses and Certain Expenses" in this Prospectus Supplement and "DESCRIPTION OF
THE CERTIFICATES--Distributions", "YIELD AND MATURITY CONSIDERATIONS" in this
Prospectus Supplement and in the accompanying Prospectus.
The Pass-Through Rate applicable to each IO Component will be variable and
will be equal to the excess, if any, of the Weighted Average Net Mortgage Rate
from time to time, over the Pass-Through Rate on the Class of Sequential Pay
Certificates related to such IO Component. Accordingly, the Pass-Through Rate
applicable to each such IO Component and, correspondingly, the yield on the
Class IO Certificates, will
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be sensitive to changes in the relative composition of the Mortgage Pool as a
result of scheduled amortization, voluntary prepayments and liquidations. The
yield on the Class IO, Class C, Class D, Class E and Class F Certificates could
also be adversely affected if Mortgage Loans with higher interest rates pay
faster than the Mortgage Loans with lower interest rates since those classes
bear interest at a rate limited by the Weighted Average Net Mortgage Rate of the
Mortgage Loans. The Pass-Through Rates on the Class E and Class F Certificates
may be limited by the weighted average of the net interest rates on the Mortgage
Loans even if principal prepayments do not occur. See "DESCRIPTION OF THE
CERTIFICATES--Distributions" and "Subordination; Allocation of Losses and
Certain Expenses" in this Prospectus Supplement and "YIELD AND MATURITY
CONSIDERATIONS" in this Prospectus Supplement and in the accompanying
Prospectus.
Risks Relating to Enforceability of Prepayment Premiums. Provisions
requiring Yield Maintenance Charges or Prepayment Premiums may not be
enforceable in some states or under federal bankruptcy law. Those provisions
also may constitute interest for usury purposes. Accordingly, we cannot assure
you that the obligation to pay a Yield Maintenance Charge or Prepayment Premium
will be enforceable. Also, we cannot assure you that foreclosure proceeds will
be sufficient to pay an enforceable Yield Maintenance Charge or Prepayment
Premium. Additionally, although the collateral substitution provisions related
to defeasance do not have the same effect on Certificateholders as a prepayment,
we cannot assure you that a court would not interpret those provisions as
requiring a Yield Maintenance Charge or Prepayment Premium. In certain
jurisdictions those collateral substitution provisions might therefore be deemed
unenforceable under applicable law, or usurious.
Risks Relating to Certain Payments. To the extent described in this
Prospectus Supplement, the Master Servicer, the Special Servicer or the Trustee,
as applicable, will be entitled to receive interest on unreimbursed Advances.
This interest will generally accrue from the date on which the related P&I
Advance is made or the related expense is incurred through the date of
reimbursement. In addition, under certain circumstances, including delinquencies
in the payment of principal and interest, a mortgage loan will be specially
serviced and the Special Servicer is entitled to compensation for such special
servicing activities. The right to receive interest on Advances or special
servicing compensation is senior to the rights of certificateholders to receive
distributions on the offered certificates. The payment of interest on Advances
and the payment of compensation to the Special Servicer may lead to shortfalls
in amounts otherwise distributable on your Certificates.
Potential Conflicts of Interest. Certain holders of the Subordinate
Certificates have the right to appoint the Controlling Class Representative and
to replace the Special Servicer. The Special Servicer may own such Subordinate
Certificates or be affiliated with such Subordinate Certificateholders. Although
the actions of the Special Servicer will be governed by the terms of the Pooling
and Servicing Agreement, the Special Servicer will have considerable latitude in
determining whether to liquidate or modify troubled Mortgage Loans. The Special
Servicer may, especially if it owns Subordinate Certificates, have interests
when dealing with troubled Mortgage Loans that are in conflict with those of
holders of Offered Certificates. For example, a Special Servicer 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. Such action
could result in less proceeds to the Trust Fund than would have been realized if
earlier action had been taken. The Special Servicer or an affiliate thereof will
not be prohibited from purchasing any class of Certificates.
Risk of Year 2000. The transition from the year 1999 to the year 2000 may
disrupt the ability of computerized systems to process information (the "Year
2000 Problem"). The Year 2000 Problem is pervasive and complex; virtually every
computer operation will be affected in some way by the rollover of the two digit
year value to 00. The issue is whether computer systems will properly recognize
date-sensitive information when the year changes to 2000. Systems that do not
properly recognize such information could generate erroneous data or cause a
system to fail. The collection of payments on the Mortgage Loans, the servicing
of the Mortgage Loans and the distributions on your Certificates are highly
dependent upon computer systems of the Master Servicer, the Special Servicer,
the Trustee, the borrowers and other third parties. We have been advised by the
Master Servicer, the Special Servicer and the Trustee that, with respect to
those computer systems identified as being critical for the performance and
servicing functions described in this Prospectus Supplement, they are currently
modifying, or are committed to modifying, their computer systems and
applications such that they will be year 2000 compliant by August 31, 1999, or
are acquiring
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new or upgraded computer systems that are year 2000 compliant. However, we have
not made any independent investigation of the computer systems of the Master
Servicer, the Special Servicer or the Trustee. If the Master Servicer, the
Special Servicer or the Trustee is unable to complete such modifications by the
year 2000 or if the borrowers or other third parties are not year 2000
compliant, the ability of the Master Servicer, the Special Servicer or the
Trustee to service the Mortgage Loans and make distributions to the
Certificateholders, respectively, may be materially and adversely affected.
DTC has further advised us that management of DTC is aware that some
computer applications, systems, and the like for processing data ("Systems")
that are dependent upon calendar dates, including dates before, on, and after
January 1, 2000, may encounter Year 2000 Problems. DTC has informed its
participants and other members of the financial community (the "Industry") that
it has developed and is implementing a program so that its Systems, as the same
relate to the timely payment of distributions (including principal and income
payments) to securityholders, book-entry deliveries, and settlement of trades
within DTC ("DTC Services"), continue to function appropriately. This program
includes a technical assessment and a remediation plan, each of which is
complete. Additionally, DTC's plan includes a testing phase, which is expected
to be completed within appropriate time frames.
However, DTC's ability to perform properly its services is also dependent
upon other parties, including but not limited to issuers and their agents, as
well as DTC's direct and indirect participants and third-party vendors from whom
DTC licenses software and hardware, and third party vendors on whom DTC relies
for information or the provision of services, including telecommunication and
electrical utility service providers, among others. DTC has informed the
Industry that it is contacting (and will continue to contact) third-party
vendors from whom DTC acquires services to: (i) impress upon them the importance
of such services being year 2000 compliant; and (ii) determine the extent of
their efforts for year 2000 remediation (and, as appropriate, testing) of their
services. In addition, DTC is in the process of developing such contingency
plans as it deems appropriate.
According to DTC, the foregoing information with respect to DTC has been
provided to the Industry for informational purposes only and is not intended to
serve as a representation, warranty, or contract modification of any kind.
Limited Liquidity for Offered Certificates. 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, we can give no assurance
that a secondary market for your Certificates will develop. Moreover, if a
secondary market does develop, we can give no assurance that it will provide you
with liquidity of investment or that it will continue for the life of your
Certificates. Any such secondary market may provide less liquidity to you than
any comparable market for securities that evidence, for example, interests
solely in single-family mortgage loans. Lack of liquidity could result in a
substantial decrease in the market value of your Certificates. The market value
of your Certificates may also be affected by many other factors, including the
then prevailing interest rates. Your Certificates will not be listed on any
securities exchange or traded in any automated quotation system of any
registered securities association such as NASDAQ.
Lack of Control Over Trust Fund. You and other Certificateholders
generally will not have a right to vote and will not have the right to make
decisions with respect to the administration of the Trust Fund. See "SERVICING
OF THE MORTGAGE LOANS--General" in this Prospectus Supplement. Such decisions
are generally made, subject to the express terms of the Pooling and Servicing
Agreement, by the Master Servicer, the Special Servicer or the Trustee, as
applicable. Any decision made by one of those parties in respect of the Trust
Fund, even if such decision is determined to be in your best interests by such
party, may be contrary to the decision that you or other Certificateholders
would have made and may negatively affect your interests.
CERTAIN RISK FACTORS ASSOCIATED WITH THE MORTGAGE LOANS
Risks of Lending on Income-Producing Properties. The Mortgaged Properties
consist entirely of income-producing real estate. Lending which is secured by
income-producing real estate is generally viewed as exposing a lender (and your
investment in the Trust Fund) to a greater risk of loss than lending which is
secured by single-family residences. Income-producing property lending typically
involves larger loans than single-family lending. In addition, and unlike loans
which are secured by single-family residences, repayment
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of loans which are secured by income-producing real property depends upon the
ability of the related real estate project:
o to generate income sufficient to pay operating expenses and leasing
commissions, to make necessary repairs, tenant improvements and capital
improvements and to pay debt service; and
o 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, may 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:
o economic conditions generally and in the area of the project;
o the age, quality and design of the project;
o the degree to which the project competes with other projects in the area;
o changes or continued weakness in specific industry segments;
o increases in operating costs;
o the willingness and ability of the owner to provide capable property
management and maintenance;
o 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;
o an increase in the capital expenditures needed to maintain the properties
or make improvements;
o a decline in the financial condition of a major tenant;
o the location of a Mortgaged Property;
o whether a Mortgaged Property can be easily converted to alternative uses;
o an increase in vacancy rates;
o perceptions regarding the safety, convenience and attractiveness of such
properties;
o vulnerability to litigation by tenants and patrons; and
o environmental contamination caused by adjacent properties.
If leases are not renewed or replaced, if tenants default, 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.
Other factors are more general in nature, such as:
o national, regional or local economic conditions (including plant and
military installation closings, industry slowdowns and unemployment
rates);
o local real estate conditions (such as an oversupply of retail space,
office space or multifamily housing);
o demographic factors;
o consumer confidence;
o consumer tastes and preferences; and
o changes in building codes and other applicable laws.
The volatility of net operating income will be influenced by many of the
foregoing factors, as well as by:
o the length of tenant leases;
o the creditworthiness of tenants;
o in the case of rental properties, the rate at which new rentals occur;
and
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o the property's "operating leverage" (i.e., the percentage of total
property expenses in relation to revenue, the ratio of fixed operating
expenses to those that vary with revenues and the level of capital
expenditures required to maintain the property and to retain or replace
tenants).
A decline in the real estate market or in the financial condition of a major
tenant will tend to have a more immediate effect on the net operating income of
properties with short-term revenue sources, such as short-term or month-to-month
leases, and may lead to higher rates of delinquency or defaults.
Risks Relating to Certain Property Types. In addition, particular types of
income properties are exposed to particular risks. For instance:
o Multifamily Projects. 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. Multifamily
properties secure 62 of the Mortgage Loans, or approximately 30.93% of
the Cut-Off Date Pool Balance. A large number of factors may adversely
affect the value and successful operation of a multifamily property,
including:
o the physical attributes of the apartment building (for example, its
age, appearance and construction quality);
o the location of the property (for example, a change in the
neighborhood over time);
o the ability of management to provide adequate maintenance and
insurance;
o the types of services and amenities that the property provides;
o the property's reputation;
o the level of mortgage interest rates (which may encourage tenants to
purchase rather than lease housing);
o the presence of competing properties;
o adverse local or national economic conditions; and
o state and local regulations.
o Shopping Centers and other Retail Properties. 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, including the
popularity of home shopping networks, shopping via Internet web sites and
telemarketing. 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).
In the case of retail properties, the failure of an anchor tenant to
renew its lease, the termination of an anchor tenant's lease, the
bankruptcy or economic decline of an anchor tenant, or the cessation of
the business of an anchor tenant at its store, notwithstanding its
continued payment of rent after "going dark", may have a particularly
negative effect on the economic performance of a shopping center property
given the importance of anchor tenants in attracting traffic to other
stores within the same shopping center. In addition, the failure of one
or more major tenants, such as an anchor tenant, to operate from its
premises may entitle other tenants to rent reductions or the right to
terminate their leases. For several Mortgage Loans, the land and
improvements utilized by an anchor or other tenant are not subject to the
related Mortgage. Retail properties, including shopping centers, secure
67 of the Mortgage Loans, or approximately 25.75% of the Cut-Off Date
Pool Balance.
o Hotels. Hotels are affected by various factors, including location,
quality, management ability, amenities and franchise affiliation (or lack
thereof). 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 be
affected more quickly by adverse economic conditions and competition than
other commercial properties. The
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successful operation of a hotel 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 any 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 any franchise license agreement. With
respect to 1 Mortgage Loan (control number 1), or aproximately 4.27% of
the Cut-Off Date Pool Balance, the franchise agreements will expire in
December 2018, prior to the Mortgage Loan's maturity date of November
10, 2023, but after the Mortgage Loan's Anticipated Repayment Date of
November 10, 2008. 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). Hotels secure 19 of
the Mortgage Loans, or approximately 14.08% of the Cut-Off Date Pool
Balance.
Factors that may adversely affect the economic performance of a hotel
include:
o adverse economic and social conditions, either local, regional or
national (which may limit the amount that can be charged for a room
and reduce occupancy levels);
o the existence or construction of competing hotels or resorts;
o continuing expenditures for modernizing, refurbishing and
maintaining existing facilities prior to the expiration of their
anticipated useful lives;
o a deterioration in the financial strength or managerial capabilities
of the owner and operator of a hotel; and
o changes in travel patterns caused by changes in access, energy
prices, strikes, relocation of highways, the construction of
additional highways or other factors.
Moreover, the hotel and lodging industry is generally seasonal in nature;
different seasons affect different hotels depending on type and location.
This seasonality can be expected to cause periodic fluctuations in a hotel
property's room and restaurant revenues, occupancy levels, room rates and
operating expenses. Because hotel rooms generally are rented for short
periods of time, the financial performance of hotels tends to be affected by
adverse economic conditions and competition more quickly than other
commercial properties.
o Office Properties. 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. Office properties that
are not equipped to accommodate the needs of modern businesses may become
functionally obsolete and thus non-competitive. Office properties secure
19 of the Mortgage Loans, or approximately 12.12% of the Cut-Off Date
Pool Balance.
In addition, a large number of factors may adversely affect the value of office
properties, including:
o the quality of an office building's tenants;
o the physical attributes of the building in relation to competing
buildings (e.g., age, condition, design, access to transportation and
ability to offer certain amenities, such as sophisticated building
systems);
o the desirability of the area as a business location; and
o the strength and nature of the local economy (including labor costs and
quality, tax environment and quality of life for employees).
Moreover, the cost of refitting office space for a new tenant is often higher
than the cost of refitting other types of property.
Certain Risks Associated with Credit Lease Loans. Twenty-seven (27) of the
Mortgage Loans, or approximately 6.67% of the Cut-Off Date Pool Balance, are
Credit Lease Loans (as defined in this Prospectus Supplement). The payment of
interest and principal on Credit Lease Loans is dependent principally on the
payment by each Tenant (as defined in this Prospectus Supplement) or guarantor
of the Credit Lease (the "Guarantor"), if any, of monthly rental payments and
other payments due under the terms of its Credit Lease.
A downgrade in the credit rating of the Tenant and/or the Guarantor may
adversely affect the rating of your Certificates.
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In addition, because the ability of a borrower to make payments on the
related Credit Lease Loan is dependent on revenue from a single Tenant, in the
event of a default under a Credit Lease or the associated guarantee, as the case
may be, the related borrower may not have the ability to make required payments
on such Credit Lease Loan until the premises are re-let. If a payment default on
the Credit Lease Loan occurs, the Special Servicer may be entitled to foreclose
upon or otherwise realize upon the related Mortgage Property to recover amounts
due under the Credit Lease Loan, and will also be entitled to pursue any
available remedies against the defaulting Tenant and any Guarantor.
Any failure by the provider of any lease enhancement policy or residual
value policy to pay under the terms of any such policy, or any downgrade of the
credit rating of such provider, may have an adverse effect on the ratings of
your Certificates. See "DESCRIPTION OF THE MORTGAGE POOL--Credit Lease Loans"
and "--Risks Associated with Balloon Loans" in this Prospectus Supplement.
Some Mortgaged Properties May Not Be Readily Convertible To Alternative
Uses. Some of the Mortgaged Properties may not be readily convertible to
alternative uses if those properties were to become unprofitable for any reason.
Converting commercial properties to alternate uses generally requires
substantial capital expenditures. The liquidation value of any such Mortgaged
Property consequently may be substantially less than would be the case if the
property were readily adaptable to other uses.
Nonrecourse Mortgage Loans. The Mortgage Loans are not insured or
guaranteed by any governmental entity or private mortgage insurer (other than
certain Credit Lease Loans with respect to which a lease enhancement policy or
residual value insurance policy is in effect). We have not evaluated 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, you should assume all of the Mortgage Loans are
nonrecourse loans; recourse in the case of default will be limited to the
related Mortgaged Property. However, in certain circumstances the Mortgage Loan
Sellers will be obligated to repurchase or substitute a Mortgage Loan if
(i) there is a defect with respect to certain of the documents relating to such
Mortgage Loan or (ii) certain of their respective representations or warranties
concerning such Mortgage Loan are breached, and such defect or breach materially
and adversely affects the interests of the Certificateholders and such defect or
breach is not cured as required. There can be no assurance that the applicable
Mortgage Loan Seller will be in a financial position to effect such repurchase
or substitution.
Environmental Law Considerations. If an adverse environmental condition
exists with respect to a Mortgaged Property, the Trust Fund will be subject to
certain risks including the following:
o a diminution in the value of such Mortgaged Property or the inability to
foreclose against such Mortgaged Property;
o the potential that the related borrower may default on the related
Mortgage Loan due to such borrower's inability to pay high remediation
costs or difficulty in bringing its operations into compliance with
environmental laws;
o liability for clean-up costs or other remedial actions, which could
exceed the value of such Mortgaged Property or the unpaid balance of the
related Mortgage Loan; and
o the inability to sell the related Mortgage Loan in the secondary market
or to lease such Mortgaged Property to potential tenants.
Under certain federal and state laws, federal and state agencies may impose
a statutory lien over the subject property to secure the reimbursement of
remedial costs incurred by these agencies to correct environmental conditions.
This lien may be prior to the lien of an existing mortgage. Any such lien
arising with respect to a Mortgaged Property would adversely affect the value of
such Mortgaged Property and could make impracticable the foreclosure by the
Special Servicer on such Mortgaged Property in the event of a default by the
related borrower.
Under various federal, state and local laws, ordinances and regulations, a
current or previous owner or operator of real property, as well as certain other
categories of parties, may be liable for the costs of removal or remediation of
hazardous or toxic substances on, under, adjacent to or in such property. The
cost of any required remediation and the owner's liability therefor is generally
not limited under applicable laws. Such liability could exceed the value of the
property and/or the aggregate assets of the owner. Under some environmental
laws, a secured lender (such as the Trust Fund) may be found to be an "owner" or
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"operator" of the related Mortgaged Property if it is determined that the lender
actually participated in the management of the borrower, regardless of whether
the borrower actually caused the environmental damage. In such cases, a secured
lender may be liable for the costs of any required removal or remediation of
hazardous substances. The Trust Fund's potential exposure to liability for
cleanup costs will increase if the Trust Fund, or an agent of the Trust Fund,
actually takes possession of a Mortgaged Property or control of its day-to-day
operations. See "CERTAIN LEGAL ASPECTS OF THE MORTGAGE LOANS--Environmental
Considerations" in the Prospectus, and "DESCRIPTION OF THE MORTGAGE
POOL--Assessment of Property Condition--Environmental Assessments" in this
Prospectus Supplement.
The Pooling and Servicing Agreement will require 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, we can give 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 Liability May Affect Lien on
Mortgaged Property and Expose Lender to Costs" and "CERTAIN LEGAL ASPECTS OF THE
MORTGAGE LOANS AND LEASES--Environmental Considerations" in the Prospectus.
Risks Associated with Balloon Loans and ARD Loans. One hundred eighty-two
(182) of the Mortgage Loans, or approximately 76.11% of the Cut-Off Date Pool
Balance, provide for Periodic Payments based on amortization schedules
significantly longer than their respective remaining terms to maturity (such
Mortgage Loans, the "Balloon Loans"). Fifteen (15) of the Mortgage Loans, or
approximately 17.39% of the Cut-Off Date Pool Balance, are ARD Loans.
o A borrower's ability to make a Balloon Payment or repay its ARD Loan on
the Anticipated Repayment Date typically will depend upon its ability
either to refinance fully the loan or to sell the related Mortgaged
Property at a price sufficient to permit the borrower to make such
payment.
o Whether or not losses are ultimately sustained, any delay in the
collection of a Balloon Payment on the maturity date or repayment on the
Anticipated Repayment Date that would otherwise be distributable on your
Certificates will likely extend the weighted average life of your
Certificates.
o 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 and regional economic
conditions and the availability of credit for loans secured by
multifamily or commercial properties, as the case may be.
We cannot assure you that each borrower under a Balloon Loan or an ARD Loan will
have the ability to repay the principal balance of such Mortgage Loan on the
related Maturity Date or Anticipated Repayment Date, as applicable. For
additional description of risks associated with Balloon Loans, see "RISK
FACTORS--Balloon Payments on Mortgage Loans; Heightened Risk of 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" in this Prospectus Supplement. We
cannot ensure, 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 on your 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 your
Certificates. See "YIELD AND MATURITY CONSIDERATIONS" in this Prospectus
Supplement and in the Prospectus.
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Risks Associated with Borrower Concentration and Related Borrowers.
Certain borrowers under the Mortgage Loans are affiliated or under common
control with one another. In such circumstances, any adverse circumstances
relating to a borrower or an affiliate thereof and affecting one of the related
Mortgage Loans or Mortgaged Properties could also affect other Mortgage Loans or
Mortgaged Properties of the related borrower. In particular, the bankruptcy or
insolvency of any such borrower or affiliate could have an adverse effect on the
operation of all of the Mortgaged Properties of that borrower and its affiliates
and on the ability of such related Mortgaged Properties to produce sufficient
cash flow to make required payments on the Mortgage Loans. For example, if a
person that owns or directly or indirectly controls several Mortgaged Properties
experiences financial difficulty at one Mortgaged Property, it could defer
maintenance at one or more other Mortgaged Properties in order to satisfy
current expenses with respect to the Mortgaged Property experiencing financial
difficulty, or it could attempt to avert foreclosure by filing a bankruptcy
petition that might have the effect of interrupting payments for an indefinite
period on all the related Mortgage Loans.
Mortgaged properties owned by related borrowers are likely to:
o have common management, increasing the risk that financial or other
difficulties experienced by the property manager could have a greater
impact on the pool of Mortgage Loans; and
o have common general partners which would increase the risk that a
financial failure or bankruptcy filing would have a greater impact on the
pool of Mortgage Loans.
SIGNIFICANT BORROWER CONCENTRATIONS
<TABLE>
<CAPTION>
PERCENTAGE OF
CUT-OFF CUT-OFF CUT-OFF
NUMBER OF CUT-OFF DATE DATE POOL MORTGAGE DATE DATE
BORROWER NAME LOANS BALANCE BALANCE PROPERTY TYPE RATE LTV DSC RATIO
- --------------------- --------- ------------ ------------- ------------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Kimco Realty
Corp. ............. 12 $120,322,399 10.18% Retail 6.60% 69.7% 1.44x
Pinnacle
Companies ......... 7 66,717,768 5.65 Multifamily 7.65% 77.3% 1.21x
--- ------------ -----
Total.............. 19 $187,040,167 15.83%
--- ------------ -----
--- ------------ -----
</TABLE>
Geographic Concentration of Properties Increasing Isolated Geographic
Risk. Forty (40) Mortgaged Properties, or approximately 12.87% of the Cut-Off
Date Pool Balance, are located in California, 17 Mortgaged Properties, or
approximately 9.72% of the Cut-Off Date Pool Balance, are located in Georgia,
14 Mortgaged Properties, or approximately 7.25% of the Cut-Off Date Pool
Balance, are located in Texas and 21 Mortgaged Properties, or approximately
6.87% of the Cut-Off Date Pool Balance, are located in Florida (in each case,
based on loan balances allocated on the basis of the appraised value of the
related Mortgaged Properties as of the date of origination). Concentrations of
Mortgaged Properties in geographic areas may increase the risk that adverse
economic or other developments or a natural disaster affecting a particular
region of the country could increase the frequency and severity of losses on
Mortgage Loans secured by those properties. In the past, several regions of the
United States have experienced significant real estate downturns. Regional
economic declines or conditions in regional real estate markets could adversely
affect the income from, and market value of, the Mortgaged Properties. In
general, such concentrations increase the exposure of the Mortgage Loans to any
adverse economic or other developments that may occur in California, Georgia,
Texas and Florida.
Risks Associated with High Balance Mortgage Loans. Several of the Mortgage
Loans, individually or together with other Mortgage Loans with which they are
cross-collateralized, have Cut-Off Date Balances that are substantially higher
than the average Cut-Off Date Balance.
In general, concentrations in a mortgage pool of loans with
larger-than-average balances can result in losses that are more severe, relative
to the size of the pool, than would be the case if the aggregate balance of the
pool were more evenly distributed.
o The largest Mortgage Loan represents approximately 4.27% of the Cut-Off
Date Pool Balance.
o The 5 largest Mortgage Loans represent, in the aggregate, approximately
14.17% of the Cut-Off Date Pool Balance.
o The 10 largest Mortgage Loans represent, in the aggregate, approximately
22.85% of the Cut-Off Date Pool Balance.
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<PAGE>
Certain Risks Associated with Concentration of Mortgaged Property Types. A
concentration of mortgaged property types can increase the risk that a decline
in a particular industry or business would have a disproportionately large
impact on the pool of mortgage loans. For example, if there is a decline in
tourism, the hotel industry might be adversely affected, leading to increased
losses on loans secured by hotel properties as compared to the mortgage loans
secured by other property types.
In that regard:
o multifamily properties represent approximately 30.93% of the Cut-Off Date
Pool Balance;
o retail properties represent approximately 25.75% of the Cut-Off Date Pool
Balance (based on the primary property type for combined office/retail
properties);
o hotel properties represent approximately 14.08% of the Cut-Off Date Pool
Balance; and
o office properties represent approximately 12.12% of the Cut-Off Date Pool
Balance (based on the primary property type for combined office/retail
properties).
No Reunderwriting of Mortgage Loans. We have not reunderwritten the
Mortgage Loans. Instead, we have relied on the representations and warranties
made by the Mortgage Loan Sellers, and the applicable Mortgage Loan Seller's
obligation to repurchase, cure or substitute a Mortgage Loan in the event that a
representation or warranty was not true when made. These representations and
warranties do not cover all of the matters that we would review in underwriting
a mortgage loan and you should not view them as a substitute for reunderwriting
the Mortgage Loans. If we had reunderwritten the Mortgage Loans, it is possible
that the reunderwriting process may have revealed problems with a Mortgage Loan
not covered by a representation or warranty. In addition, we can give no
assurance that the applicable Mortgage Loan Seller will be able to repurchase or
substitute a Mortgage Loan if a representation or warranty has been breached.
See "DESCRIPTION OF THE MORTGAGE POOL--Representations and Warranties;
Repurchases and Substitutions" in this Prospectus Supplement.
Tax Consideration Related to Foreclosure. One or more of the REMICs
established under the Pooling and Servicing Agreement might become subject to
federal (and possibly state or local) tax on certain of its net income from the
operation and management of a Mortgaged Property subsequent to the Trust Fund's
acquisition of a Mortgaged Property pursuant to a foreclosure or deed-in-lieu of
foreclosure, including in some circumstances a 100% prohibited transaction tax.
Any such tax would substantially reduce net proceeds available for distribution
to Certificateholders. See "MATERIAL FEDERAL INCOME TAX
CONSEQUENCES--REMICs--Taxation of Owners of REMIC Regular Certificates," and
"--Taxation of Owners of REMIC Residual Certificates" in the Prospectus.
Special Hazard Losses. The Master Servicer and/or Special Servicer will
generally be required to cause the borrower on each Mortgage Loan serviced by it
to maintain such insurance coverage in respect of the related Mortgaged Property
as is required under the related Mortgage, including hazard insurance; provided
that each of the Master Servicer and the Special Servicer may satisfy its
obligation to cause hazard insurance to be maintained with respect to any
Mortgaged Property through its acquisition of a blanket or master single
interest insurance policy. In general, the standard form of fire and extended
coverage policy covers physical damage to or destruction of the improvements on
the related Mortgaged 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 are underwritten by different insurers under different
state laws in accordance with different applicable state forms, and therefore do
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 mud flows), wet or dry rot, vermin, domestic animals and other
kinds of risks not specified in the preceding sentence. Any losses incurred with
respect to Mortgage Loans due to uninsured risks or insufficient hazard
insurance proceeds could adversely affect distributions to the
Certificateholders.
Other Financing. In general, the borrowers: (i) are required to satisfy
any existing indebtedness encumbering the related Mortgaged Property as of the
closing of the related Mortgage Loan and (ii) are prohibited from encumbering
the related Mortgaged Property with additional secured debt without the lender's
prior approval. With respect to 1 Mortgage Loan (control number 36), or
approximately 0.76% of
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<PAGE>
the Cut-Off Date Pool Balance, the related Mortgage Loan documents provide that
the borrower, under certain specified circumstances, with the consent of the
lender, may encumber the related Mortgaged Property with a subordinate mortgage
in the future.
The existence of secured 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, foreclosure by
any senior lienholder (including the Trust Fund) on the Mortgaged Property could
be delayed. Notwithstanding the foregoing, with respect to many of the Mortgage
Loans, the Mortgage Loan documents do not prohibit the borrower from incurring
additional indebtedness provided such indebtedness is not secured by a lien on
the related Mortgaged Properties. A default by the borrower on such additional
indebtedness could impair the borrower's financial condition and result in the
bankruptcy or receivership of the borrower in which event foreclosure by the
Trust Fund on the Mortgaged Property would be delayed. However, with respect to
any such future subordinate second lien debt, a violation of such prohibition
may not become evident until the related Mortgage Loan otherwise defaults. In
cases in which one or more subordinate liens are imposed on a Mortgaged Property
or the borrower incurs other indebtedness, the Trust Fund is subject to
additional risks, including, without limitation, the following:
o the risk that the necessary maintenance of the Mortgaged Property could
be deferred to allow the borrower to pay the required debt service on the
subordinate financing and that the value of the Mortgaged Property may
fall as a result;
o the risk that the borrower may have a greater incentive to repay the
subordinate or unsecured indebtedness first;
o the risk that it may be more difficult for the borrower to refinance the
Mortgage Loan or to sell the Mortgaged Property for purposes of making
any Balloon Payment upon the maturity of the Mortgage Loan;
o 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;
o 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 THE
MORTGAGE LOANS--Subordinate Financing" and "--'Due-on-Sale' and
'Due-on-Encumbrance' Provisions" in the Prospectus and "DESCRIPTION OF
THE MORTGAGE POOL--Certain Terms and Conditions of the Mortgage
Loans--'Due-on-Sale' and 'Due-on-Encumbrance' Provisions" in this
Prospectus Supplement; and
o with respect to many of the Mortgage Loans, the Mortgage Loan documents
do not prohibit the borrower from incurring additional indebtedness which
is not secured by a lien on the related Mortgaged Properties. If a
borrower defaults on such additional indebtedness, its financial
condition may be impaired and result in the bankruptcy or receivership of
the borrower, in which event foreclosure by the Trust Fund on the
Mortgaged Property may be delayed.
See "CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS AND LEASES--'Due-on-Sale' and
'Due-on-Encumbrance' Provisions " in the Prospectus and "DESCRIPTION OF THE
MORTGAGE POOL--Certain Terms and Conditions of the Mortgage Loans--'Due-on-Sale'
and 'Due-on-Encumbrance' Provisions" in this Prospectus Supplement.
Risks Related to the Borrower's Form of Entity. The borrowers may be
either individuals or legal entities. Mortgage loans made to legal entities may
entail risks of loss greater than those of mortgage loans made to individuals.
For example, a legal entity, as opposed to an individual, may be more inclined
to seek legal protection from its creditors under the bankruptcy laws. Unlike
individuals involved in bankruptcies, various types of entities generally do not
have personal assets and creditworthiness at stake. The bankruptcy of a
borrower, or a general partner or managing member of a borrower, may impair the
ability of the lender to enforce its rights and remedies under the related
mortgage. The borrowers are generally not bankruptcy-remote entities, and
therefore may be more likely to become insolvent or the subject of a voluntary
or
S-41
<PAGE>
involuntary bankruptcy proceeding because such borrowers may be (i) operating
entities with businesses distinct from the operation of the property with the
associated liabilities and risks of operating an ongoing business and
(ii) individuals who have personal liabilities unrelated to the property.
However, any borrower, even a bankruptcy-remote entity, as owner of real estate
will be subject to certain potential liabilities and risks. We can give no
assurances that a borrower will not file for bankruptcy protection or that
creditors of a borrower or a corporate or individual general partner or managing
member of a borrower will not initiate a bankruptcy or similar proceeding
against such borrower or corporate or individual general partner or managing
member. See "CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS AND LEASES--Bankruptcy
Laws" in the Prospectus.
Limitations of Appraisals and Engineering Reports. In general, appraisals
represent only the analysis and opinion of qualified experts and are not
guaranties of present or future value, and may determine a value of a property
that is significantly higher than the amount that can be obtained from the sale
of a Mortgaged Property under a distress or liquidation sale. Information
regarding the values of the Mortgaged Properties at the date of such report is
presented under "DESCRIPTION OF THE MORTGAGE POOL--Additional Mortgage Loan
Information" in this Prospectus Supplement for illustrative purposes only. Any
engineering reports obtained in connection with this offering represent only the
analysis of the individual engineers or site inspectors preparing such reports
at the time of such report, and may not reveal all necessary or desirable
repairs, maintenance or capital improvement items.
Zoning Compliance. The Mortgaged Properties are typically subject to
applicable building and zoning ordinances and codes ("Zoning Laws") affecting
the construction and use of real property. Since the Zoning Laws applicable to a
Mortgaged Property (including, without limitation, density, use, parking and
set-back requirements) are generally subject to change by the applicable
regulatory authority at any time, certain of the improvements upon the Mortgaged
Properties may not comply fully with all applicable current and future Zoning
Laws. Such changes may limit the ability of the related borrower to
rehabilitate, renovate and update the premises, and to rebuild or utilize the
premises "as is" in the event of a substantial casualty loss with respect
thereto. Such limitations may adversely affect the cash flow of the Mortgaged
Property following such loss.
In addition, certain of the Mortgaged Properties which are non-conforming
may not be "permitted non-conforming" uses. The failure of a Mortgaged Property
to comply with zoning laws or to be a "permitted non-conforming" use may
adversely affect the market value of the Mortgaged Property or the borrower's
ability to continue to use it in the manner it is currently being used.
In addition, certain of the Mortgaged Properties are subject to certain use
restrictions imposed pursuant to reciprocal easement agreements or operating
agreements. Such use restrictions include, for example, limitations on the
character of the improvements or the properties, limitations affecting noise and
parking requirements, among other things, and limitations on the borrowers'
right to operate certain types of facilities within a prescribed radius. These
limitations could adversely affect the ability of the related borrower to lease
the Mortgaged Property on favorable terms, thus adversely affecting the
borrower's ability to fulfill its obligations under the related Mortgage Loan.
Costs of Compliance with Applicable Laws and Regulations. A borrower may
be required to incur costs to comply with various existing and future federal,
state or local laws and regulations applicable to the related Mortgaged
Property, for example, Zoning Laws and the Americans with Disabilities Act of
1990, which requires all public accommodations to meet certain federal
requirements related to access and use by disabled persons. See "CERTAIN LEGAL
ASPECTS OF MORTGAGE LOANS AND LEASES--Americans with Disabilities Act" in the
Prospectus. The expenditure of such costs or the imposition of injunctive
relief, penalties or fines in connection with the borrower's noncompliance could
negatively impact the borrower's cash flow and, consequently, its ability to pay
its Mortgage Loan.
Limitations on Enforceability of Due-on-Sale Clauses and Assignments of
Leases and Rents. The Mortgages generally contain due-on-sale clauses, which
permit the acceleration of the maturity of the related Mortgage Loan if the
borrower sells, transfers or conveys the related Mortgaged Property or its
interest in the Mortgaged Property without the consent of the lender. There also
may be limitations on the enforceability of such clauses. The Mortgages also
generally include a debt-acceleration clause, which permits the acceleration of
the related Mortgage Loan upon a monetary or non-monetary default by the
borrower. The courts of all
S-42
<PAGE>
states will generally enforce clauses providing for acceleration in the event of
a material payment default, but may refuse the foreclosure of a Mortgaged
Property when acceleration of the indebtedness would be inequitable or unjust or
the circumstances would render acceleration unconscionable. See "CERTAIN LEGAL
ASPECTS OF MORTGAGE LOANS AND LEASES--Due-on-Sale and Due-on-Encumbrance" in the
Prospectus.
The Mortgage Loans may also be secured by an assignment of leases and rents
pursuant to which the borrower typically assigns its right, title and interest
as landlord under the leases on the related Mortgaged Property and the income
derived therefrom to the lender as further security for the related Mortgage
Loan, while retaining a license to collect rents for so long as there is no
default. In the event the borrower defaults, the license terminates and the
lender is entitled to collect the rents. Such assignments are typically not
perfected as security interests prior to the lender's taking possession of the
related Mortgaged Property and/or appointment of a receiver. 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 THE MORTGAGE LOANS AND
LEASES--Leases and Rents" in the Prospectus.
Limitations on Enforceability of Cross-Collateralization. Three (3) groups
of Mortgage Loans (control numbers 74, 89, 123, 142, 150 and 182; control
numbers 220 and 222; and control numbers 162, 186 and 217), or approximately
2.01% of the Cut-Off Date Pool Balance (the "Cross-Collateralized Loans") are
cross-collateralized and cross-defaulted with one or more related
Cross-Collateralized Loans. Such arrangements could be challenged as fraudulent
conveyances by creditors of any of the related borrowers or by the
representative of the bankruptcy estate of any related borrower if one or more
of such borrowers becomes a debtor in a bankruptcy case. Generally, under
federal and most state fraudulent conveyance statutes, a lien granted by any
such borrower could be avoided if a court determines that:
o such borrower was insolvent at the time of granting the lien, was
rendered insolvent by the granting of the lien, was left with inadequate
capital or was not able to pay its debts as they matured; and
o the borrower did not, when it allowed its mortgaged property to be
encumbered by the liens securing the indebtedness represented by the
other cross-collateralized loans, receive "fair consideration" or
"reasonably equivalent value" for pledging such mortgaged property for
the equal benefit of the other related borrowers.
We can give no assurances that a lien granted by a borrower on a
Cross-Collateralized Loan to secure the Mortgage Loan of another borrower, or
any payment thereon, would not be avoided as a fraudulent conveyance. See
"DESCRIPTION OF THE MORTGAGE POOL--Certain Terms and Conditions of the Mortgage
Loans--Cross-Default and Cross-Collateralization of Certain Mortgage Loans" and
Annex A hereto for more information regarding the Cross-Collateralized Loans.
Tenant Matters. Certain of the Mortgaged Properties are leased wholly or
in large part to a single tenant or are wholly or in large part owner-occupied.
Any default by a major tenant could adversely affect the related borrower's
ability to make payments on the related Mortgage Loan. We can give no assurances
that any major tenant will continue to perform its obligations under its lease
(or, in the case of an owner-occupied Mortgaged Property, under the related
Mortgage Loan documents).
Mortgaged Properties leased to a single tenant, or a small number of
tenants, also are more likely to experience interruptions of cash flow if a
tenant fails to renew its lease because there may be less or no rental income
until new tenants are found and it may be necessary to expend substantial
amounts of capital to make the space acceptable to new tenants.
Retail and office properties also may be adversely affected if there is a
concentration of particular tenants among the Mortgaged Properties or of tenants
in a particular business or industry.
S-43
<PAGE>
SIGNIFICANT TENANT CONCENTRATIONS
<TABLE>
<CAPTION>
PERCENTAGE OF WEIGHTED
CUT-OFF AVERAGE CUT-OFF CUT-OFF
NUMBER OF CUT-OFF DATE DATE POOL MORTGAGE DATE DATE
TENANT NAME LOANS BALANCE BALANCE PROPERTY TYPE RATE LTV DSC RATIO
- ----------------- --------- ------------ ------------- ------------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Heilig Meyers.... 26 $ 33,261,342 2.82% Retail 7.41% 67.7% 1.31x
Accor, S.A.
(1)............ 6 21,794,388 1.84 Hospitality 7.24% 94.5% (1) 1.00x (1)
--- ------------ -----
Total ......... 32 $ 55,055,730 4.66%
--- ------------ -----
--- ------------ -----
</TABLE>
- ------------------
(1) The Accor, S.A. loan portfolio are Credit Lease Loans. Such loans are
secured by mortgages on credit leased properties. The loan to value ratio
for Credit Lease Loans is generally 90-100% and the debt service coverage
ratio for Credit Lease Loans is generally 1.00x-1.05x.
Litigation. From time to time, there may be legal proceedings pending or
threatened against the borrowers and their affiliates relating to the business
of, or arising out of the ordinary course of business of, the borrowers and
their affiliates. We can give no assurance that any such litigation will not
have a material adverse effect on any borrower's ability to meet its obligations
under the related Mortgage Loan and, thus, on the distributions to
Certificateholders.
Tenant Bankruptcy Entails Risks. The bankruptcy or insolvency of a major
tenant, or a number of smaller tenants, in retail, industrial and office
properties may adversely affect the income produced by a Mortgaged Property.
Under the Bankruptcy Code, a tenant has the option of assuming or rejecting any
unexpired lease. If the tenant rejects the lease, the landlord's claim for
breach of the lease would be a general unsecured claim against the tenant
(absent collateral securing the claim) and the amounts the landlord could claim
would be limited.
Lack of Skillful Property Management Entail Risks. The successful
operation of a real estate project depends upon the property manager's
performance and viability. The property manager is responsible for:
o responding to changes in the local market;
o planning and implementing the rental structure;
o operating the property and providing building services;
o managing operating expenses; and
o assuring that maintenance and capital improvements are carried out in a
timely fashion.
Properties deriving revenues primarily from short-term sources, such as
short term leases, are generally more management intensive than properties
leased to creditworthy tenants under long-term leases.
We make no representation or warranty as to the skills of any present or
future managers. Additionally, we cannot assure you that the property managers
will be in a financial condition to fulfill their management responsibilities
throughout the terms of their respective management agreements.
Condemnations. From time to time, there may be Condemnations pending or
threatened against one or more of the Mortgaged Properties. We can give no
assurances that the proceeds payable in connection with a total Condemnation
will be sufficient to restore the related Mortgaged Property or to satisfy the
remaining indebtedness of the related Mortgage Loan. The occurrence of a partial
Condemnation may have a material adverse effect on the continued use of, or
income generation from, the affected Mortgaged Property. Therefore, we can give
no assurances that the occurrence of any Condemnation will not have a negative
impact upon the distributions to Certificateholders.
Risks of Different Timing of Mortgage Loan Amortization. If and as
principal payments, property releases, or prepayments are made on a Mortgage
Loan, the remaining Mortgage Pool may be subject to more concentrated risk with
respect to the diversity of properties, types of properties and property
characteristics and with respect to the number of borrowers. See each table
entitled "Remaining Terms" under "DESCRIPTION OF THE MORTGAGE POOL--Additional
Mortgage Loan Information--The Mortgage Pool" in this Prospectus Supplement for
a description of the respective maturity dates of the Mortgage Loans. Because
principal on your Certificates (other than the Class IO Certificates) is payable
in sequential order to the extent described in this Prospectus Supplement under
"DESCRIPTION OF CERTIFICATES--Distributions", classes that have a lower priority
of distributions are more likely to be
S-44
<PAGE>
exposed to the risk of concentration discussed under "--Risks Associated with
High Balance Mortgage Loans" above than classes with a higher sequential
priority.
Risks Associated with Ground Leases and Other Leasehold Interests. Certain
of the Mortgage Loans, are secured in whole or in part by leasehold interests.
Pursuant to Section 365(h) of the Bankruptcy Code, ground lessees are currently
afforded rights not to treat a ground lease as terminated and to remain in
possession of their leased premises upon the bankruptcy of their ground lessor
and the rejection of the ground lease by the representative of such ground
lessor's bankruptcy estate. The leasehold mortgages provide that the borrower
may not elect to treat the ground lease as terminated on account of any such
bankruptcy of, and rejection by, the ground lessor without the prior approval of
the holder of the Mortgage Note. In the event of a bankruptcy of a ground
lessee/borrower, the ground lessee/borrower under the protection of the
Bankruptcy Code has the right to assume (continue) or reject (terminate) any or
all of its ground leases. In the event of concurrent bankruptcy proceedings
involving the ground lessor and the ground lessee/borrower, the Trustee may be
unable to enforce the bankrupt ground lessee/borrower's obligation to refuse to
treat a ground lease rejected by a bankrupt ground lessor as terminated. In such
circumstances, a ground lease could be terminated notwithstanding lender
protection provisions contained therein or in the related Mortgage.
Risks Associated with the Mortgage Loan Sellers. Each Mortgage Loan Seller
is the sole warranting party in respect of the Mortgage Loans sold by such
Mortgage Loan Seller to us. Neither we nor any of our affiliates are obligated
to repurchase or substitute any Mortgage Loan in connection with either a breach
of the Mortgage Loan Seller's representations and warranties or any document
defects, if such Mortgage Loan Seller defaults on its obligation to do so. We
can give no assurances that either Mortgage Loan Seller will have the financial
ability to effect such repurchases or substitutions. See "DESCRIPTION OF THE
MORTGAGE POOL--Assignment of the Mortgage Loans; Repurchases and Substitutions"
and "--Representations and Warranties; Repurchases and Substitutions" in this
Prospectus Supplement and "DESCRIPTION OF THE POOLING
AGREEMENTS--Representations and Warranties; Repurchases" in the Prospectus.
Risks Associated with One Action Rules. Several states (including
California) have laws that prohibit more than one "judicial action" to enforce a
mortgage obligation, and some courts have construed the term "judicial action"
broadly. Accordingly, the Special Servicer is required to obtain advice of
counsel prior to enforcing any of the Trust Fund's rights under any of the
Mortgage Loans that include Mortgage Properties where the rule could be
applicable. In the case of either a cross-collateralized and cross-defaulted
Mortgage Loan or a multi-property Mortgage Loan which is secured by mortgaged
properties located in multiple states, the Special Servicer may be required to
foreclose first on properties located in states where such "one action" rules
apply (and where non-judicial foreclosure is permitted) before foreclosing on
properties located in the states where judicial foreclosure is the only
permitted method of foreclosure. See "CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS
AND LEASES--Foreclosure" in the Prospectus.
Property Managers May Experience Conflicts of Interest in Managing Multiple
Properties. The managers of the Mortgaged Properties and the borrowers may
experience conflicts of interest in the management and/or ownership of such
properties because:
o a substantial number of the Mortgaged Properties are managed by property
managers affiliated with the respective borrowers;
o these property managers also may manage and/or franchise additional
properties, including properties that may compete with the Mortgaged
Properties; and
o affiliates of the managers and/or the borrowers, or the managers and/or
the borrowers themselves, also may own other properties, including
competing properties.
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<PAGE>
DESCRIPTION OF THE MORTGAGE POOL
GENERAL
The Mortgage Pool will consist of 223 fixed rate Mortgage Loans, with a
Cut-Off Date Pool Balance of approximately $1,181,484,821. 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 payment of principal due on or
before such date, whether or not received. The Cut-Off Date Balances of the
Mortgage Loans range from $412,861 to $50,443,313 and the Mortgage Loans have an
average Cut-Off Date Balance of $5,298,138. All percentages of the Mortgage
Loans, or of any specified group of Mortgage Loans, referred to in this
Prospectus Supplement without further description are approximate percentages
calculated using the Cut-Off Date Pool Balance. References to percentages of
Mortgaged Properties referred to in this Prospectus Supplement without further
description are references to the percentages of the Cut-Off Date Pool Balance
represented by the aggregate Cut-Off Date Balance of the related Mortgage Loans.
Where a Mortgage Loan is secured by multiple properties, statistical information
in this Prospectus Supplement relating to geographical locations and property
types of the Mortgaged Properties is based on the loan amount allocated to such
property. Such allocation is based on the relative appraised values of such
properties. In addition, wherever information is presented in this Prospectus
Supplement with respect to LTV Ratios or DSC Ratios, the LTV Ratio or DSC Ratio
of each Mortgaged Property securing a Mortgage Loan secured by multiple
Mortgaged Properties is assumed to be the weighted average LTV Ratio or DSC
Ratio of such Mortgage Loan. All numerical information provided in this
Prospectus Supplement with respect to the Mortgage Loans is provided on an
approximate basis.
All of the Mortgage Loans are evidenced by a promissory note (each a
"Mortgage Note"). All of the Mortgage Loans are secured by a mortgage, deed of
trust or other similar security instrument (each, a "Mortgage") that creates a
first mortgage lien on a borrower's fee simple estate (or, with respect to 11
Mortgaged Properties, or approximately 6.16% of the Cut-Off Date Pool Balance,
on the borrower's leasehold estate) in an income-producing real property (each,
a "Mortgaged Property").
Set forth below are the number of Mortgage Loans, and the approximate
percentage of the Cut-Off Date Pool Balance represented by such Mortgage Loans,
that are secured by Mortgaged Properties operated for each indicated purpose:
MORTGAGE LOANS BY PROPERTY TYPE
<TABLE>
<CAPTION>
PERCENTAGE
AGGREGATE OF CUT-OFF
NUMBER OF CUT-OFF DATE DATE POOL
PROPERTY TYPE LOANS BALANCE BALANCE
- ------------------------ --------- -------------- ----------
<S> <C> <C> <C>
Multifamily............. 62 $ 365,399,773 30.93%
Retail.................. 67 304,189,776 25.75
Hospitality(1).......... 19 166,306,763 14.08
Office.................. 19 143,185,620 12.12
Credit Lease Loans(2)... 27 78,808,932 6.67
Mixed Use............... 5 50,193,888 4.25
Industrial/Warehouse.... 13 37,267,470 3.15
Health Care(3).......... 7 24,679,110 2.09
Mobile Home Park........ 3 9,460,434 0.80
Self Storage............ 1 1,993,054 0.17
--- -------------- ------
Total................. 223 $1,181,484,821 100.00%
--- -------------- ------
--- -------------- ------
</TABLE>
- ------------------
(1) All but 2 of such Mortgage Loans, or approximately 3.73% of the Cut-Off Date
Pool Balance, are secured by Mortgaged Properties which are affiliated with
recognized hotel/motel franchisors.
(Footnotes continued on next page)
S-46
<PAGE>
(Footnotes continued from previous page)
(2) Including 20 Mortgage Loans, or approximately 4.71% of the Cut-Off Date Pool
Balance, secured by retail properties, 6 Mortgage Loans, or approximately
1.84% of the Cut-Off Date Pool Balance, secured by hospitality properties,
and 1 Mortgage Loan, or approximately 0.12% of the Cut-Off Date Pool
Balance, secured by a restaurant property.
(3) Including 4 Mortgage Loans, or approximately 1.10% of the Cut-Off Date Pool
Balance, secured by assisted living facilities; 1 Mortgage Loan, or
approximately 0.16% of the Cut-Off Date Pool Balance, secured by a
congregate care facility; and 2 Mortgage Loans, or approximately 0.83% of
the Cut-Off Date Pool Balance, secured by skilled nursing facilities.
Set forth below are the month and year of origination of the Mortgage Loans
and the approximate percentage of the Cut-Off Date Pool Balance represented by
such Mortgage Loans:
MONTH AND YEAR OF MORTGAGE LOAN ORIGINATION
<TABLE>
<CAPTION>
AGGREGATE PERCENTAGE OF
ORIGINATION MONTH NUMBER OF CUT-OFF DATE CUT-OFF DATE CUMULATIVE PERCENTAGE OF
AND YEAR MORTGAGE LOANS BALANCE POOL BALANCE CUT-OFF DATE POOL BALANCE
- ------------------ -------------- -------------- ------------- -------------------------
<S> <C> <C> <C> <C>
September 1997.... 1 $ 24,502,544 2.07% 2.07%
February 1998..... 8 31,011,655 2.62 4.70%
April 1998........ 3 12,521,945 1.06 5.76%
May 1998.......... 13 60,856,420 5.15 10.91%
June 1998......... 4 22,293,568 1.89 12.81%
July 1998......... 9 42,663,487 3.61 16.41%
August 1998....... 33 79,668,056 6.74 23.15%
September 1998.... 8 30,222,509 2.56 25.71%
October 1998...... 24 130,122,729 11.01 36.72%
November 1998..... 23 186,271,065 15.77 52.49%
December 1998..... 12 90,756,456 7.68 60.17%
January 1999...... 10 31,825,233 2.69 62.86%
February 1999..... 25 108,550,650 9.19 72.05%
March 1999........ 37 251,558,673 21.29 93.34%
April 1999........ 7 37,014,831 3.13 95.48%
May 1999.......... 6 41,645,000 3.52 100.00%
---- -------------- -------
Total........... 223 $1,181,484,821 100.00% 100.00%
---- -------------- -------
---- -------------- -------
</TABLE>
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<PAGE>
The Mortgaged Properties are located throughout 38 states. Set forth below
are the number of Mortgage Loans, and the approximate percentage of the Cut-Off
Date 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%:
MORTGAGE LOANS BY GEOGRAPHIC CONCENTRATION
<TABLE>
<CAPTION>
PERCENTAGE
AGGREGATE OF CUT-OFF
NUMBER OF MORTGAGED CUT-OFF DATE DATE POOL
STATES PROPERTIES BALANCE BALANCE
- ----------------- -------------------- -------------- ----------
<S> <C> <C> <C>
California....... 40 $ 152,085,127 12.87%
Georgia.......... 17 114,892,601 9.72
Texas............ 14 85,621,908 7.25
Florida.......... 21 81,141,569 6.87
North Carolina... 21 74,332,885 6.29
New York......... 16 68,164,832 5.77
Pennsylvania..... 9 64,402,823 5.45
Other States..... 122 540,843,077 45.78
---- -------------- ------
Total.......... 260 $1,181,484,821 100.00%
---- -------------- ------
---- -------------- ------
</TABLE>
MORTGAGE LOAN HISTORY
All of the Mortgage Loans will be acquired on the Closing Date by the
Depositor from the Mortgage Loan Sellers, which either originated each such
Mortgage Loan or acquired it in connection with their commercial and multifamily
mortgage loan conduit programs. None of the Mortgage Loans was 30 days or more
delinquent as of the Cut-Off Date, and no Mortgage Loan has been 30 days or more
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 rates (each a "Mortgage Rate") that will remain fixed for their
remaining terms, provided, however, that after the applicable Anticipated
Repayment Date the interest rate on the related ARD Loans will increase as
described in this Prospectus Supplement. See "Amortization" below. Thirty-three
(33) of the Mortgage Loans, or approximately 11.41% of the Cut-Off Date Pool
Balance, accrue interest on the basis (a "30/360 basis") of a 360-day year
consisting of twelve 30-day months and 190 of the Mortgage Loans, or
approximately 88.59% of the Cut-Off Date Pool Balance, accrue interest on the
basis (an "Actual/360 basis") of the actual number of days elapsed over a 360
day year. Seven (7) of the 190 Mortgage Loans that accrue interest on an
Actual/360 basis, or approximately 6.91% of the Cut-Off Date Pool Balance, have
periods during which only interest is due. Two (2) of such 7 Mortgage Loans that
provide for an interest only period, or approximately 2.95% of the Cut-Off Date
Pool Balance, provide for interest payments during such period to be paid in
equal monthly installments.
Mortgage Loan Payments. Scheduled payments of principal and interest (the
"Periodic Payments") on 217 of the Mortgage Loans, or approximately 98.16% of
the Cut-Off Date Pool Balance, are due monthly and on 6 of the Mortgage Loans,
or approximately 1.84% of the Cut-Off Date Pool Balance, are due semi-annually
(the "Semi-Annual Loans"). With respect to each Semi-Annual Loan the Depositor
has arranged for the Master Servicer to advance at the Depositor's sole cost, on
a monthly basis, the interest payments that would have otherwise been payable if
the Periodic Payments had been paid monthly by the related borrower.
Due Dates. One hundred sixty-eight (168) of the Mortgage Loans, or
approximately 57.20% of the Cut-Off Date Pool Balance are due on the date (each
such date, a "Due Date") occurring on the first day of the month and 55 of the
Mortgage Loans, or approximately 42.80% of the Cut-Off Date Pool Balance, have
Due Dates occurring on the tenth day of the month.
S-48
<PAGE>
Amortization. One hundred eighty-two (182) of the Mortgage Loans (the
"Balloon Loans"), or approximately 76.11% of the Cut-Off Date Pool Balance,
provide for Periodic Payments based on amortization schedules significantly
longer than their respective terms to maturity. Twenty-six (26) of the Mortgage
Loans, or approximately 6.50% of the Cut-Off Date Pool Balance, (the "Fully
Amortizing Loans") fully or substantially amortize through their respective
remaining terms to maturity. Fifteen (15) of the Mortgage Loans (the "ARD
Loans"), or approximately 17.39% of the Cut-Off Date Pool Balance, provide that
if the unamortized principal amount thereof is not repaid on a date set forth in
the related Mortgage Note (the "Anticipated Repayment Date"), the Mortgage Loan
will accrue additional interest (the "Additional Interest") at the rate set
forth therein and the borrower will be required to apply excess monthly cash
flow (the "Excess Cash Flow") generated by the Mortgaged Property (as determined
in the related loan documents) to the repayment of principal outstanding on the
Mortgage Loan. Additional Interest will not be included in the calculation of
the Mortgage Rate for a Mortgage Loan, and will only be paid after the
outstanding Principal Balance of the Mortgage Loan together with all interest
thereon at the Mortgage Rate has been paid. With respect to such Mortgage Loans,
no Prepayment Premiums or Yield Maintenance Charges will be due in connection
with any principal prepayment after the Anticipated Repayment Date. Six (6) of
the Balloon Loans, or approximately 1.84% of the Cut-Off Date Pool Balance and 9
of the Fully Amortizing Loans, or approximately 1.84% of the Cut-Off Date Pool
Balance, provide for changes in the amount of their respective Periodic Payments
at specified times in the future which coincide with rent increases on the
underlying property leases.
Thirteen (13) Mortgage Loans, or approximately 3.78% of the Cut-Off Date
Pool Balance, all of which are Credit Lease Loans, have a Balloon Payment which
is insured (an "Insured Balloon Payment") through a Residual Value Insurance
Policy (defined below). With respect to all such Mortgage Loans, the related
Tenant is obligated to make a rent payment corresponding to such Balloon Payment
(a "Tenant Balloon Payment"). If a default occurs under such Balloon Loans with
respect to an Insured Balloon Payment and no recovery is available from the
related borrower, the Tenant or any Guarantor, the Special Servicer will be
entitled to recover in full the amount of the Balloon Payment due under such
Mortgage Loan through the Residual Value Insurance Policy after the maturity
date for such Mortgage Loan. In the event a Residual Value Insurer defaults on
an Insured Balloon Payment, the Special Servicer will still be able to assert
whatever other remedies it has with respect to the related Mortgaged Property
and the Residual Value Insurer.
Residual Value Insurance Policy. With respect to each Mortgage Loan which
has an Insured Balloon Payment, the Trustee will be named as the loss-payee
under a related non-cancelable Residual Value Insurance Policy obtained to cover
the Balloon Payment relating to such Mortgaged Property (each such policy, a
"Residual Value Insurance Policy"). The Residual Value Insurance Policy will be
or has been issued by either R.V.I. America Insurance Company which, as of April
1, 1999, had a rating of "A" by Standard & Poor's and a claims paying rating of
"AA-" by Duff & Phelps Credit Rating Co. ("DCR") or Financial Structures,
Limited (the "Residual Value Insurers"), which possesses a cut-through
endorsement issued by Royal Indemnity Company. Royal Indemnity Company possesses
a rating by S&P of "AA-". Each Residual Value Insurance Policy is subject to
certain limited exclusions. The Residual Value Insurer under each Residual Value
Insurance Policy is not required to pay amounts due under the Mortgage Loan
other than the related Balloon Payment and, subject to certain limitations set
forth in the Residual Value Insurance Policy, accrued interest, and therefore is
not required to pay any Prepayment Premium or interest due thereunder or any
amounts the related borrower may be obligated to pay thereunder as reimbursement
for outstanding P&I Advances.
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 payments for a period ending on a date
specified in the related Mortgage Note and then only permit defeasance principal
in some manner for most of their respective terms (201 Mortgage Loans, or
approximately 87.99% of the Cut-Off Date Pool Balance); (ii) prohibit voluntary
prepayments of principal for a period ending on a date specified in the related
Mortgage Note, and thereafter either impose a Yield Maintenance Change or
Prepayment Premium (but not both) for most of the remaining term (14 Mortgage
Loans, or approximately 9.30% of the Cut-Off Date Pool Balance); (iii) prohibit
voluntary prepayments of principal for a period ending on a date specified in
the related Mortgage Note and then only permit defeasance for a 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 (7 Mortgage
Loans, or approximately 2.54% of the Cut-Off Date Pool Balance); or
(iv) prohibit voluntary prepayments of principal for a period ending
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<PAGE>
on a date specified in related Mortgage Note, then impose a Yield Maintenance
Charge for a period, and then a Prepayment Premium for most of the remaining
term (1 Mortgage Loan, or approximately 0.17% of the Cut-Off Date Pool Balance);
provided that, for purposes of each of the foregoing, "remaining term" refers to
either the remaining term to maturity or the Anticipated Repayment Date, as
applicable, of the related Mortgage Loan. With respect to the 15 Mortgage Loans,
or approximately 9.47% of the Cut-Off Date Pool Balance, which impose Yield
Maintenance Charges, such Mortgage Loans provide for the calculation of the
Yield Maintenance Charge using a discount rate equal to the Discount Rate. See
"--Additional Mortgage Loan Information" in this Prospectus Supplement.
Prepayment Premiums and Yield Maintenance Charges, if and to the extent
collected, will be distributed to the holders of the Offered Certificates as
described in this Prospectus Supplement 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.
Certain state laws limit the amounts that a lender may collect from a
borrower as an additional charge in connection with the prepayment of a mortgage
loan. None of the Mortgage Loans require the payment of Prepayment Premiums or
Yield Maintenance Charges in connection with a prepayment of the related
Mortgage Loan as a result of a total casualty or condemnation. Furthermore, the
enforceability, under the laws of a number of states, of provisions providing
for payments comparable to the Prepayment Premiums and/or Yield Maintenance
Charges upon an involuntary prepayment is unclear. No assurance can be given
that, at the time a Prepayment Premium or a Yield Maintenance Charge is required
to be made on a Mortgage Loan in connection with an involuntary prepayment, the
obligation to pay such Prepayment Premium or Yield Maintenance Charge will be
enforceable under applicable state law.
Two hundred eight (208) of the Mortgage Loans, or approximately 90.53% of
the Cut-Off Date Pool Balance, provide that, in general, under certain
conditions, the related borrower will have the right, after two years following
the Closing Date, to substitute a pledge of "Defeasance Collateral" in exchange
for a release of the related Mortgaged Property from the lien of the related
Mortgage without the prepayment of the Mortgage Loan or the payment of the
applicable Yield Maintenance Charge or Prepayment Premium. Mortgage Loans
secured by more than one Mortgaged Property which provide for defeasance
generally require that (i) prior to the release of a related Mortgaged Property,
a specified percentage (generally 125%) of the allocated loan amount for such
Mortgaged Property be defeased and (ii) that certain DSCR and LTV tests (if
applicable) be satisfied with respect to the remaining Mortgaged Properties
after the defeasance. 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 (or the Anticipated Repayment Date in the case of the
ARD Loans), with each such payment being equal to or greater than (with any
excess to be returned to the borrower), the Periodic Payment due on such date or
(i) in the case of a Balloon Loan on the scheduled maturity date, the Balloon
Payment, or (ii) in the case of an ARD Loan, the principal balance on its
Anticipated Repayment Date. The Pooling and Servicing Agreement requires the
Master Servicer or the Special Servicer to require each borrower that proposes
to prepay its Mortgage Loan to pledge Defeasance Collateral in lieu of making a
prepayment, to the extent provided for in the related Mortgage Note, but in each
case subject to certain conditions, including that the defeasance would not have
an adverse effect on the REMIC status of any of the REMICs (accordingly, no
defeasance would be required or permitted prior to the second anniversary of the
Closing Date). The cash amount a borrower must expend to purchase, or deliver to
the Master Servicer in order for the Master Servicer to purchase, such United
States Treasury obligations may be in excess of the principal balance of the
related Mortgage Loan. There can be no assurances that a court would not
interpret such portion of the cash amount that exceeds the principal balance as
a form of prepayment consideration and would not take it into account for usury
purposes. In some states some forms of prepayment consideration are
unenforceable.
Neither the Master Servicer nor the Special Servicer is 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" in this Prospectus
Supplement.
Other Financing. With limited exceptions, all of the Mortgage Loans either
prohibit the related borrower from encumbering the Mortgaged Property with
additional secured debt without the lender's prior consent. With
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<PAGE>
respect to 1 Mortgage Loan (control number 36), or approximately 0.76% of the
Cut-Off Date Pool Balance, the related Mortgage Loan documents provide that the
borrower may, under certain specified circumstances and, with the consent of the
lender, encumber the related Mortgaged Property with a subordinate mortgage in
the future. See "--'Due-On-Sale' and 'Due-On-Encumbrance' Provisions" below.
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. Substantially 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, certain of the Mortgage
Loans permit one or more transfers of the related Mortgaged Property. As
provided in the Pooling and Servicing Agreement, the Special Servicer, with
respect to Specially Serviced Mortgage Loans, and the Master Servicer, with
respect to all other Mortgage Loans, on behalf of the Trust Fund, will
determine, in a manner consistent with the servicing standard described in this
Prospectus Supplement 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. Three
(3) groups of Mortgage Loans, or approximately 2.01% of the Cut-Off Date Pool
Balance (control numbers: 74, 89, 123, 142, 150 and 182; 220 and 222; and 162,
186 and 217), are cross-collateralized and cross-defaulted with one or more
Mortgage Loans in the Mortgage Pool as indicated in Annex A. No Mortgage Loans
are cross-collateralized or cross-defaulted with any loans that 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.
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
in accordance with the Federal Institutions Reform, Recovery and Enforcement Act
of 1989. The primary purpose of each appraisal was to provide an opinion of the
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 by independent environmental consultants 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. Generally, in each case where
environmental assessments recommended corrective action, the originator
determined that the necessary corrective action had been undertaken in a
satisfactory manner, was being undertaken in a satisfactory manner or that such
corrective action would be adequately addressed post-closing. In some instances,
the originator required that reserves be established to cover the estimated cost
of such remediation.
S-51
<PAGE>
Engineering Assessments. In connection with the origination of 206 of the
Mortgage Loans, or approximately 96.66% of the Cut-Off Date Pool Balance, a
licensed engineer or architect 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 17 Mortgage Loans (including Credit Lease Loans), or approximately
3.34% of the Cut-Off Date Pool Balance, which were determined by the applicable
Mortgage Loan Seller to be either "new 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 a majority of 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 40 Mortgaged Properties, or approximately 12.87% of the
Cut-Off Date Pool Balance, 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 concluded that in the
event of an earthquake, only 3 of the Mortgaged Properties, or approximately
0.95% of the Cut-Off Date Pool Balance, is likely to suffer a probable maximum
loss in excess of 25% of the amount of the estimated replacement cost of the
improvements. Five (5) of the 40 Mortgaged Properties described above are
covered by earthquake insurance in an amount at least equal to the outstanding
principal balance of the related Mortgage Loan, including each of the 3
Mortgaged Properties likely to suffer a probable maximum loss in excess of 25%
in the event of an earthquake.
CREDIT LEASE LOANS
Twenty-seven (27) of the Mortgage Loans, or approximately 6.67% of the
Cut-Off Date Pool Balance (the "Credit Lease Loans"), are secured by Mortgages
on Mortgaged Properties that are, in each case, subject to a lease (a "Credit
Lease") to a tenant (each a "Tenant" and, collectively, the "Tenants") which
possesses (or the parent of which or other affiliate of which guarantees the
Credit Lease obligation possesses) the rating indicated in the Credit Lease
Table below. Scheduled monthly rent payments (the "Monthly Rental Payments")
under the Credit Leases are generally determined in underwriting to be
sufficient to pay in full and on a timely basis all interest and principal
scheduled to be paid with respect to the related Credit Lease Loans.
The Credit Leases generally provide that the Tenant is responsible for all
costs and expenses incurred in connection with the maintenance and operation of
the related Mortgaged Property. In the event of a casualty or condemnation of a
material portion of the related Mortgaged Property, either (i) the Credit Lease
provides that the Tenant is obligated to continue making payments, and/or the
Tenant must make an offer to purchase the applicable Mortgaged Property for an
amount not less than the unpaid principal balance plus accrued interest on the
related Credit Lease Loan or (ii) the Trustee on behalf of the
Certificateholders will have the benefit of certain non-cancelable credit lease
enhancement insurance policies (the "Lease Enhancement Policies") obtained to
cover certain casualty and/or condemnation risks. See "--Lease Enhancement
Policies" in this Prospectus Supplement.
The payment of interest and principal on Credit Lease Loans is dependent
principally on the payment by each Tenant or guarantor of the Tenant's Credit
Lease (the "Guarantor"), if any, of Monthly Rental Payments and other payments
due under the terms of its Credit Lease. Each Credit Lease has a primary lease
term (the "Primary Term") that expires on or after the scheduled final maturity
date of the related Credit Lease Loan. The Credit Lease Loans are scheduled to
be fully repaid from (i) Monthly Rental Payments made over the Primary Term of
the related Credit Lease or (ii) with respect to Credit Lease Loans which are
Balloon Loans, Monthly Rental Payments and the related Balloon Payments (which
Balloon Payments, in the case of Credit Lease Loans that are guaranteed by a
Residual Value Insurance Policy). Certain of the Credit Leases give the Tenant
the right to extend the term of the Credit Lease by one or more renewal periods
after the end of the Primary Term.
The amount of the Monthly Rental Payments payable by each Tenant (plus, in
the case of certain Mortgage Loans, the amount in the debt service reserve
account, which will be drawn upon through the date of the termination of any
rent credits) is equal to or greater than the scheduled payment of all
principal, interest and
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<PAGE>
other amounts due each month on the related Credit Lease Loan. In the case of
Credit Lease Loans with debt service reserve accounts, withdrawals of funds on
deposit in the debt service reserve account will be used to supplement Monthly
Rental Payments in an amount necessary to fully amortize such Credit Lease
Loans.
Thirteen (13) of the Credit Lease Loans, or approximately 3.78% of the
Cut-Off Date Pool Balance, are Balloon Loans which require the related Tenant to
make a rent payment corresponding to the Tenant Balloon Payment. Each Credit
Lease Loan which is a Balloon Loan is insured to the extent of the related
Balloon Payment through a Residual Value Insurance Policy. Pursuant to the terms
of such policies, if a default occurs under such Credit Lease Loans and no
recovery is available from the related Mortgagor, the Tenant or any Guarantor,
the Special Servicer will be entitled to recover in full the amount of the
Balloon Payment due under such Credit Lease Loan after the maturity date for
such Credit Lease Loan.
Set forth in the table below (the "Credit Lease Loan Table") for each
Credit Lease Loan, is the name of the Tenant, the Cut-Off Date Balance of the
related Credit Lease Loan, the Guarantor, if any, the rating of the Tenant or
Guarantor and the Credit Lease type.
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<PAGE>
CREDIT LEASE LOAN TABLE
<TABLE>
<CAPTION>
MOODY'S LEASE
CONTROL CUT-OFF S&P RATING TYPE
NUMBER PROPERTY NAME GUARANTOR/TENANT PROPERTY TYPE DATE BALANCE RATING (1) (1) CODE (2)
- ------- -------------------- ----------------------- ------------------ -------------- ----------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Circuit City Norwalk Circuit City Stores
40 444 Inc. Electronics Store $ 7,898,702 (3) -- NN
193 CVS Greenville Old CVS Corporation Drug Store 1,306,853 A A3 NN
Buncombe
CVS Lansdowne
169 Hollins Ferry CVS Corporation Drug Store 1,831,525 A A3 NN
134 CVS Yarmouth Main CVS Corporation Drug Store 2,556,250 A A3 NN
180 CVS Rocky Mount CVS Corporation Drug Store 1,520,209 A A3 NN
--------------
TOTAL CVS $ 7,214,837
Eagle Davenport Eagle Food Centers,
92 Locust Inc. Grocery Store $ 4,085,191 B+ B2 NNN
Eckerd Oveido Red
145 Bug Lake Eckerd Corporation Drug Store 2,418,557 N/A Baa2 NNN
Eckerd Ferber
168 Tallahassee Eckerd Corporation Drug Store 1,839,504 N/A Baa2 NNN
175 Eckerd, Tarboro Eckerd Corporation Drug Store 1,690,369 N/A Baa2 NN
--------------
TOTAL ECKERD $ 5,948,430
IHOP Rock Hill North
190 Cherry IHOP Corporation Restaurant $ 1,389,770 (3) -- NNN
Motel 6 1081 Little
95 Rock (W) Accor SA Limited Service 4,043,344 BBB -- B
54 Motel 6 1115 Raleigh Accor SA Limited Service 6,235,064 BBB -- B
Motel 6 1129 Hilton
87 Head Accor SA Limited Service 4,232,286 BBB -- B
Motel 6 202
218 Lumberton Accor SA Limited Service 1,039,177 BBB -- B
111 Motel 6 608 Mobile Accor SA Limited Service 3,079,744 BBB -- B
Motel 6 740 Reno
109 Sparks Accor SA Limited Service 3,164,767 BBB -- B
--------------
TOTAL MOTEL 6 $ 21,794,383
122 Rite Aid--Holland Rite Aid Corporation Drug Store $ 2,764,695 BBB+ Baa1 B
147 Rite Aid--Ironton Rite Aid Corporation Drug Store 2,385,499 BBB+ Baa1 B
113 Rite Aid--Commerce Rite Aid Corporation Drug Store 3,046,015 BBB+ Baa1 B
Township
137 Rite Aid--Claremont Rite Aid Corporation Drug Store 2,527,844 BBB+ Baa1 B
--------------
TOTAL RITE AID $ 10,724,053
Southland Ormond
Beach The Southland Convenience
Nova Corporation Store $ 1,068,620 BB+ Ba1 NN
216
Staples York Loucks
127 Road Staples, Inc. Office Supplies 2,647,603 BBB- Baa2 NN
Walgreen Franklin
132 Fieldstone Walgreen Company Drug Store 2,563,871 A+ Aa3 NN
135 Walgreen Duncanville Walgreen Company Drug Store 2,550,305 A+ Aa3 NN
Wheatland
Walgreens at Silver
125 Lakes Walgreen Company Drug Store 2,672,432 A+ Aa3 NN
119 Walgreen Colleyville Walgreen Company Drug Store 2,805,603 A+ Aa3 NN
--------------
TOTAL WALGREENS $ 10,592,211
Winn Dixie
62 Chesapeake Cedar Winn-Dixie Stores, Inc. Grocery Store 5,445,132 A2(4) P2(4) NNN
--------------
Total: $ 78,808,932
--------------
--------------
</TABLE>
- ----------------
(1) Unless otherwise indicated, such ratings were the highest assigned to the
applicable Tenant or Guarantor, as applicable, by Moody's and Standard &
Poor's respectively.
(2) "NNN" means triple net lease; "NN" means double net lease, "B" means
bond-type lease.
(3) Not publicly rated.
(4) Such ratings are short-term ratings. Long-term ratings have not been
assigned by either Moody's or Standard & Poor's.
S-54
<PAGE>
Generally, each Credit Lease provides that the related Tenant is
responsible for all real property taxes and assessments levied or assessed
against the related Mortgaged Property, and except as discussed below in the
case of certain of the Double Net Leases, all charges for utility services,
insurance and other operating expenses incurred in connection with the operation
of the related Mortgaged Property.
Generally, each Credit Lease Loan provides that if the Tenant defaults
beyond applicable notice and grace periods in the performance of any covenant or
agreement in such Credit Lease (a "Credit Lease Default"), then the holder of
the related Mortgage may require the related Mortgagor either (i) to terminate
such Credit Lease or (ii) refrain from the exercise of any of its rights
thereunder. A Credit Lease Default will constitute a default under the related
Credit Lease Loan, although in certain cases the Mortgagor may possess certain
cure rights.
In addition, most of the Credit Leases permit the Tenant, at its own
expense, and generally with the consent of the Mortgagor, to make such
alterations or improvements on the related Mortgaged Property as the Tenant may
deem necessary or desirable. Such actions, if undertaken by the Tenant, will not
affect the Tenant's obligations under the Credit Lease.
Lease termination rights and rent abatement rights, if any, provide that
Tenants in the Credit Leases may be divided into three categories: (i)
termination and abatement rights directly arising from certain casualty
occurrences or condemnations ("Casualty or Condemnation Rights"), (ii)
termination and abatement rights arising from a Mortgagor's default relating to
its obligations under a Credit Lease to perform required maintenance, repairs or
replacements with respect to the related Mortgaged Property ("Maintenance
Rights") and (iii) termination and abatement rights arising from a Mortgagor's
default in the performance of various other obligations under the Credit Lease,
including remediating environmental conditions not caused by the Tenant,
enforcement of restrictive covenants affecting other property owned by the
Mortgagor in the area of the related Mortgaged Property and complying with laws
affecting such Mortgaged Property or common areas related to such Mortgaged
Property ("Additional Rights"). Certain Credit Leases ("Bond-Type Leases")
provide neither Casualty or Condemnation Rights, Maintenance Rights nor
Additional Rights and the Tenants thereunder are required, at their expense, to
maintain their related Mortgaged Property in good order and repair. Other Credit
Leases provide Casualty or Condemnation Rights and may provide Additional Rights
("Triple Net Leases"). The Tenants under Triple Net Leases are required, at
their expense, to maintain their Mortgaged Properties, including the roof and
structure, in good order and repair. Additionally, certain of the Credit Leases
provide Casualty or Condemnation Rights and Maintenance Rights and may provide
Additional Rights ("Double Net Leases"). If the Mortgagor defaults in the
performance of certain obligations under a Triple Net Lease or a Double Net
Lease and the Tenant exercises its Additional Rights or Maintenance Rights,
there could be a disruption in the stream of Monthly Rental Payments available
to pay principal and interest to the Credit Lease Loans. Generally, Additional
Rights and Maintenance Rights are mitigated by repair and maintenance reserves,
debt service coverage ratios in excess of 1.0x and, prior to the disbursement of
such Mortgage Loan, receiving Tenant estoppel certificates (i.e., Tenant
certificates confirming the non-existence of landlord default).
Credit Leases with respect to 10 of the Mortgage Loans, or approximately
2.75% of the Cut-Off Date Pool Balance, are Bond-Type Leases, Credit Leases with
respect to 5 Mortgage Loans, or approximately 1.28% of the Cut-Off Date Pool
Balance, are Triple Net Leases and Credit Leases with respect to 12 of the
Mortgage Loans, or approximately 2.63% of the Cut-Off Date Pool Balance, are
Double Net Leases.
At the end of the term of the Credit Leases, Tenants are generally
obligated to surrender the related Mortgaged Properties in good order and in its
original condition received by the Tenant, except for ordinary wear and tear and
repairs required to be performed by the Mortgagor.
Pursuant to the terms of each assignment of a Credit Lease (the "Credit
Lease Assignment"), the related Mortgagor has assigned to the mortgagee of the
related Credit Lease Loan, as security for such Mortgagor's obligations
thereunder, such Mortgagor's rights under the Credit Leases and its rights to
all income and profits to be derived from the operation and leasing of the
related Mortgaged Property including, but not limited to, an assignment of any
guarantee of the Tenant's obligations under the Credit Lease and an assignment
of the right to receive all Monthly Rental Payments due under the Credit Leases.
Pursuant to the terms of the Credit Lease Assignments, each Tenant is obligated
under its Credit Lease to make all Monthly Rental Payments directly to the owner
of the related Credit Lease Loan. Repayment of the Credit Lease Loans and other
obligations of the Mortgagors are expected to be funded from such Monthly Rental
Payments. Notwithstanding the foregoing, the
S-55
<PAGE>
Mortgagors remain liable for all obligations under the Credit Lease Loans
(subject to the non-recourse provisions thereof).
Lease Enhancement Policies. Each Credit Lease Loan that provides the
Tenant with a Casualty or Condemnation Right has the benefit of a noncancelable
Lease Enhancement Policy issued by Chubb Custom Insurance Company (the
"Enhancement Insurer"), which, as of April 1, 1999, was rated "AAA" by Standard
& Poor's. Each Lease Enhancement Policy provides, subject to customary
exclusions, that in the event of a permitted termination by a Tenant of its
Credit Lease as a result of a casualty or condemnation, the Enhancement Insurer
will pay to the Master Servicer on behalf of the Trustee the "Loss of Rents"
(that is, a lump sum payment of all outstanding principal plus, subject to the
limitation below, accrued interest on the Credit Lease Loan). The Enhancement
Insurer is not required to pay interest for a period greater than 75 days past
the date of the exercise of a Casualty or Condemnation Right. If the Credit
Lease permits the Tenant to abate all or a portion of the rent in the event of a
condemnation, the "Loss of Rents" will be in an amount equal to the portion of
any Monthly Rental Payments not made by such Tenant for the period from the date
the abatement commences until the earlier of the date the abatement ceases or
the expiration date of the initial term of such Credit Lease; provided that in
the event such payments would exceed the limits of liability under the policy,
then the related Enhancement Insurer may, at its option, pay the present value
of the stream of partial abatement payments in a lump sum. The Enhancement
Insurer is not required to pay amounts due under the Credit Lease Loan other
than principal and, subject to the limitation above, accrued interest, and
therefore is not required to pay any Prepayment Premium or Yield Maintenance
Charge due thereunder or any amounts the Mortgagor is obligated to pay
thereunder to reimburse the Master Servicer or the Trustee for outstanding
Advances.
Each Lease Enhancement Policy contains certain exclusions from coverage,
including loss arising from damage or destruction directly or indirectly caused
by war, insurrection, rebellion, revolution, usurped power, pollutants or
radioactive matter, or from a taking (other than by condemnation).
The Mortgage Loans which are Credit Lease Loans are indicated on Annex A
hereto.
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 Annexes A-1, A-2, A-3 and A-4 hereto. Certain additional
information regarding the Mortgage Loans is contained in this Prospectus
Supplement under "--Assignment of the Mortgage Loans; Repurchases and
Substitutions" and "--Representations and Warranties; Repurchases and
Substitutions," and in the Prospectus under "DESCRIPTION OF THE TRUST FUNDS" and
"CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS AND LEASES."
In the schedule and tables set forth in Annexes A-1, A-2, A-3 and A-4
hereto, with respect to Mortgage Loans evidenced by one Note but secured by
multiple Mortgaged Properties, for certain purposes, separate amounts for each
such related Mortgaged Property are shown where available. Cross collateralized
Mortgage Loans are not grouped together on Annexes A-1, A-2, A-3 and A-4;
instead, references are made under the heading "Cross Collateralized Group" with
respect to the other Mortgage Loans with which they are cross collateralized.
However, certain information, such as DSCR and Loan-to-Value Ratio, is presented
on an aggregate basis.
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 Annexes A-1, A-2, A-3 and A-4:
(i) References to "DSC Ratio" and "DSCR" 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
(other than a Credit Lease 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"
S-56
<PAGE>
of such Mortgaged Property as set forth in, or determined by the Mortgage
Loan Sellers 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 Mortgage Loan Sellers 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" and "Cut-Off Date DSCR" 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 and an allowance for
vacancies and credit losses. 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 and an allowance for vacancies and credit losses.
In determining the "revenue" component of Net Cash Flow for each
Rental Property, the Mortgage Loan Sellers generally relied on the most
recent rent roll supplied and, where the actual vacancy shown thereon and
the market vacancy was less than 5.0%, assumed a 5.0% vacancy in
determining revenue from rents, except that in the case of certain
non-Multifamily Properties, space occupied by such anchor or single tenants
or other large creditworthy 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. Where the actual or market
vacancy was not less than 5.0%, the Mortgage Loan Sellers determined
revenue from rents by generally relying on the most recent rent roll
supplied and the greater of (a) actual historical vacancy at the related
Mortgaged Property, (b) historical vacancy at comparable properties in the
same market as the related Mortgaged Property, and (c) 5.0%. In determining
rental revenue for multifamily, self storage and mobile home park
properties, the Mortgage Loan Sellers generally 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 Mortgage Loan Sellers
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
generally determined based upon the average occupancy not to exceed 80.0%
and daily rates achieved during the prior two to three year annual
reporting period. In the case of residential health care facilities,
receipts were based on historical occupancy levels, historical operating
revenues and the then current occupancy rates. Occupancy rates for the
private health care facilities were generally within the then current
market ranges and vacancy levels were generally 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 Sellers generally relied on rolling
12-month operating statements and/or full-year 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 3.0% to 7.0% of
effective gross revenue (except with respect to full service hospitality
properties, where a minimum of 3.5% of gross receipts was assumed, and with
respect to limited service hospitality properties, where a minimum 4.0% of
gross receipts was assumed and, with respect to single tenant properties,
where fees as low as 1.5% 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. See "--Underwriting
Standards--Escrow Requirements--Replacement Reserves" in this Prospectus
Supplement. In addition, in some instances, the Mortgage Loan
S-57
<PAGE>
Sellers recharacterized as capital expenditures those items reported by
borrowers as operating expenses (thus increasing "net cash flow") where the
Mortgage Loan Sellers 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" and "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 Mortgage Loan Sellers.
(iii) References to "Maturity Date LTV Ratio" and "LTV at ARD or
Maturity" are references to the ratio, expressed as a percentage, of the
expected balance of a Balloon Loan on its scheduled maturity date (or ARD
Loan on its Anticipated Repayment Date) (prior to the payment of any
Balloon Payment or principal prepayments) to the appraised value of the
related Mortgaged Property as shown on the most recent third-party
appraisal thereof available to the Mortgage Loan Sellers 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 renovated.
With respect to any 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 "Underwritten Replacement Reserves" represent
estimated annual capital costs, as used by the Mortgage Loan Sellers in
determining Net Cash Flow.
(viii) References to "Administrative Cost Rate" for each Mortgage Loan
represent the sum of (a) the Master Servicing Fee Rate for such Mortgage
Loan, (b) 0.00225%, which percentage represents the trustee fee rate with
respect to each Mortgage Loan and (c) with respect to the Semi-Annual Loans
(control numbers 54, 87, 95, 109, 111 and 218) 0.0135%, which percentage
represents costs of the Depositor to provide for the advance of monthly
interest on such Semi-Annual Loans.
(ix) 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 (or the
remaining number of months to the Anticipated Repayment Date with respect
to each ARD Loan).
(x) 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 or any interest-only period, if any, due on such Mortgage
Loan.
(xi) References to "L ( )" or "Lockout" or "Lockout Period" represent,
with respect to each Mortgage Loan, the period during which prepayments of
principal are prohibited and no substitution of Defeasance Collateral is
permitted. The number indicated in the parentheses indicates the duration
in years of such period. References to "X ( )" represent the percentage of
Prepayment Premium percentages and the duration such Prepayment Premium is
assessed. References to "O ( )" represent the period for which no (A)
Prepayment Premium or Yield Maintenance Charge is assessed or (B)
defeasance can be required. References to "YMx% ( )" 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 x% of
such Mortgage Loan's outstanding principal balance. References to "YM ( )"
represent the period for which the
S-58
<PAGE>
Yield Maintenance Charge is assessed. The periods, if any, between
consecutive Due Dates occurring prior to the maturity date or Anticipated
Repayment Date, as applicable, of a Mortgage Loan during which the related
borrower will have the right to prepay such Mortgage Loan without being
required to pay a Prepayment Premium or a Yield Maintenance Charge (each
such period, an "Open Period") with respect to one hundred
sixty-seven (167) of the Mortgage Loans, or approximately 55.13% of the
Cut-Off Date Pool Balance, have been calculated as those Open Periods
occurring immediately prior to the maturity date or Anticipated Repayment
Date, as applicable, of such Mortgage Loan as set forth in the related
Mortgage Loan documents. The Open Periods, if any, with respect to
fifty-six (56) of the Mortgage Loans, or approximately 44.87% of the
Cut-Off Date Pool Balance, have been calculated as those Open Periods
occurring immediately prior to the Due Date immediately preceding the
related maturity date or Anticipated Repayment Date, as applicable, as set
forth in the related Mortgage Loan Documents.
(xii) References to "D" or "Defeasance" represent, with respect to
each Mortgage Loan, the right of the related holder of the Mortgage to
require the related borrower, in lieu of a prepayment premium, to pledge to
such holder Defeasance Collateral.
(xiii) References to "Occupancy Percentage" are, with respect to any
Mortgaged Property, references as of the most recently available rent rolls
to (a) in the case of multifamily properties and assisted living/congregate
care facilities, the percentage of units rented, (b) in the case of office
and retail properties, the percentage of the net rentable square footage
rented, and (c) 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).
(xiv) References to "Original Term to Maturity" are references to the
term from origination to maturity for each Mortgage Loan (or the term from
origination to the Anticipated Repayment Date with respect to each ARD
Loan).
(xv) References to "NAP" indicate that with respect to a particular
category of data, that such data is not applicable.
(xvi) References to "NAV" indicates that, with respect to a particular
category of data, such data is not available.
(xvii) References to "Capital Imp. Reserve" are references to funded
reserves escrowed for repairs, replacements and corrections of issues
outlined in the engineering reports.
(xviii) References to "Replacement Reserve" are references to funded
reserves escrowed for ongoing items such as repairs and replacements,
including, in the case of hospitality properties, reserves for furniture,
fixtures and equipment. In certain cases, however, the subject reserve will
be subject to a maximum amount, and once such maximum amount is reached,
such reserve will not thereafter be funded, except, in some such cases, to
the extent it is drawn upon.
(xix) References to "TI/LC Reserve" are references to funded reserves
escrowed for tenant improvement allowances and leasing commissions. In
certain cases, however, the subject reserve will be subject to a maximum
amount, and once such maximum amount is reached, such reserve will not
thereafter be funded, except, in some such cases, to the extent it is drawn
upon.
The sum in any column of any of the following tables may not equal the
indicated total due to rounding.
The Cut-Off Date DSC Ratio and the Cut-Off Date LTV Ratio calculations for
the Mortgage Loans are exclusive of Credit Lease Loans because the Credit Lease
Loans were originated primarily on the basis of the creditworthiness of the
related Tenants or Guarantors.
S-59
<PAGE>
MORTGAGE LOANS BY STATE
(ALL MORTGAGE LOANS)
<TABLE>
<CAPTION>
WTD. AVG.
NUMBER OF AGGREGATE % BY AVERAGE HIGHEST CUT-OFF DATE
MORTGAGED CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE LTV
STATE PROPERTIES BALANCE POOL BALANCE BALANCE BALANCE RATIO (1)
- ----------------- --------- -------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
California....... 40 $ 152,085,127 12.87% $ 3,802,128 $15,788,274 69.21%
Georgia.......... 17 114,892,601 9.72 $ 6,758,388 $29,750,000 74.52%
Texas............ 14 85,621,908 7.25 $ 6,115,851 $21,984,235 67.62%
Florida.......... 21 81,141,569 6.87 $ 3,863,884 $10,227,394 75.08%
North Carolina... 21 74,332,885 6.29 $ 3,539,661 $13,500,000 72.35%
New York......... 16 68,164,832 5.77 $ 4,260,302 $15,231,468 66.64%
Pennsylvania..... 9 64,402,823 5.45 $ 7,155,869 $14,582,212 74.93%
New Jersey....... 7 55,447,497 4.69 $ 7,921,071 $19,154,363 75.46%
Connecticut...... 6 53,249,911 4.51 $ 8,874,985 $19,932,471 66.87%
Virginia......... 19 38,716,224 3.28 $ 2,037,696 $ 5,445,132 69.70%
Nevada........... 5 34,922,882 2.96 $ 6,984,576 $15,668,057 76.35%
Alabama.......... 5 34,326,760 2.91 $ 6,865,352 $25,263,571 69.59%
Missouri......... 5 27,860,214 2.36 $ 5,572,043 $12,000,000 64.55%
Illinois......... 10 27,474,371 2.33 $ 2,747,437 $15,887,658 68.27%
Arizona.......... 5 24,219,141 2.05 $ 4,843,828 $16,978,212 68.97%
Massachusetts.... 6 23,902,651 2.02 $ 3,983,775 $ 7,244,831 67.03%
Delaware......... 1 22,507,515 1.91 $22,507,515 $22,507,515 66.20%
Kansas........... 4 20,442,469 1.73 $ 5,110,617 $ 7,816,076 74.28%
South Carolina... 4 19,868,185 1.68 $ 4,967,046 $12,939,276 58.80%
Washington....... 1 18,779,010 1.59 $18,779,010 $18,779,010 64.30%
Michigan......... 3 18,335,710 1.55 $ 6,111,903 $12,525,000 78.30%
Indiana.......... 3 16,561,231 1.40 $ 5,520,410 $ 8,937,414 76.26%
Minnesota........ 2 14,317,319 1.21 $ 7,158,659 $ 9,110,457 74.59%
Ohio............. 5 11,549,707 0.98 $ 2,309,941 $ 5,024,014 75.15%
Nebraska......... 8 11,177,452 0.95 $ 1,397,182 $ 5,196,149 77.82%
Tennessee........ 4 10,661,748 0.90 $ 2,665,437 $ 4,940,520 74.43%
Wisconsin........ 3 10,635,446 0.90 $ 3,545,149 $ 4,369,922 74.15%
Maryland......... 2 9,521,525 0.81 $ 4,760,762 $ 7,690,000 79.30%
Hawaii........... 1 6,290,673 0.53 $ 6,290,673 $ 6,290,673 74.40%
Louisiana........ 2 5,958,572 0.50 $ 2,979,286 $ 3,500,000 70.54%
Kentucky......... 4 5,284,465 0.45 $ 1,321,116 $ 1,507,846 66.89%
Iowa............. 1 4,085,191 0.35 $ 4,085,191 $ 4,085,191 0.00%
Arkansas......... 1 4,043,344 0.34 $ 4,043,344 $ 4,043,344 0.00%
Utah............. 1 3,295,000 0.28 $ 3,295,000 $ 3,295,000 74.90%
Oregon........... 1 2,640,656 0.22 $ 2,640,656 $ 2,640,656 66.00%
New Hampshire.... 1 2,527,844 0.21 $ 2,527,844 $ 2,527,844 0.00%
Mississippi...... 1 1,168,550 0.10 $ 1,168,550 $ 1,168,550 67.70%
Rhode Island..... 1 1,071,814 0.09 $ 1,071,814 $ 1,071,814 63.00%
--- -------------- ------
Total/Avg/Wtd
Avg/Min/Max..... 260 $1,181,484,821 100% $ 4,544,172 $29,750,000 71.07%
--- -------------- ------
--- -------------- ------
<CAPTION>
WTD. AVG. MINIMUM MAXIMUM
CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE WTD. AVG. WTD. AVG.
DSC DSC DSC OCCUPANCY MORTGAGE
STATE RATIO (1) RATIO (1) RATIO (1) RATE (2) RATE
- ----------------- ------------ ------------ ------------ --------- ---------
<S> <C> <C> <C> <C> <C>
California....... 1.29x 1.22x 1.65x 97.59% 7.67%
Georgia.......... 1.25x 1.20x 1.79x 93.53% 7.47%
Texas............ 1.41x 1.20x 1.55x 96.48% 6.85%
Florida.......... 1.35x 1.20x 1.66x 95.40% 7.29%
North Carolina... 1.32x 1.19x 1.82x 92.65% 7.34%
New York......... 1.51x 1.20x 4.42x 97.03% 7.72%
Pennsylvania..... 1.34x 1.21x 1.41x 94.25% 7.22%
New Jersey....... 1.41x 1.23x 1.59x 98.47% 6.75%
Connecticut...... 1.33x 1.27x 1.41x 94.57% 7.67%
Virginia......... 1.58x 1.14x 2.45x 98.05% 7.32%
Nevada........... 1.23x 1.20x 1.30x 95.18% 7.61%
Alabama.......... 1.39x 1.27x 1.41x 100.00% 7.34%
Missouri......... 1.52x 1.31x 1.60x 100.00% 6.90%
Illinois......... 1.44x 1.28x 1.55x 100.00% 7.04%
Arizona.......... 1.36x 1.25x 1.76x 95.94% 7.52%
Massachusetts.... 1.30x 1.25x 1.34x 97.03% 7.64%
Delaware......... 1.55x 1.55x 1.55x 0.00% 6.75%
Kansas........... 1.44x 1.25x 1.50x 98.60% 6.78%
South Carolina... 1.46x 1.46x 1.46x 100.00% 8.09%
Washington....... 1.56x 1.56x 1.56x 0.00% 7.21%
Michigan......... 1.25x 1.25x 1.25x 100.00% 7.39%
Indiana.......... 1.29x 1.25x 1.33x 92.22% 7.36%
Minnesota........ 1.42x 1.40x 1.43x 98.45% 6.77%
Ohio............. 1.25x 1.21x 1.31x 97.87% 7.75%
Nebraska......... 1.29x 1.20x 1.34x 94.58% 7.65%
Tennessee........ 1.34x 1.18x 1.40x 96.65% 7.32%
Wisconsin........ 1.31x 1.28x 1.32x 100.00% 7.86%
Maryland......... 1.21x 1.21x 1.21x 95.07% 7.25%
Hawaii........... 1.21x 1.21x 1.21x 91.07% 6.91%
Louisiana........ 1.39x 1.32x 1.50x 81.16% 7.86%
Kentucky......... 1.36x 1.31x 1.49x 100.00% 7.40%
Iowa............. 0.00x 0.00x 0.00x 100.00% 8.11%
Arkansas......... 0.00x 0.00x 0.00x 100.00% 7.24%
Utah............. 1.30x 1.30x 1.30x 94.90% 7.85%
Oregon........... 1.30x 1.30x 1.30x 82.81% 7.75%
New Hampshire.... 0.00x 0.00x 0.00x 100.00% 6.94%
Mississippi...... 1.31x 1.31x 1.31x 100.00% 7.41%
Rhode Island..... 1.32x 1.32x 1.32x 100.00% 8.50%
Total/Avg/Wtd
Avg/Min/Max..... 1.36x 1.14x 4.42x 96.09% 7.36%
</TABLE>
- ------------------
(1) The Cut-Off Date DSC Ratio and Cut-Off Date LTV Ratio information shown
above do not reflect the 27 Credit Lease Loans, or approximately 6.67% of
the Cut-Off Date Pool Balance, which typically have debt service coverage
ratios below 1.05x and loan-to-value ratios in excess of 90%.
(2) Occupancy Rates were calculated without reference to hospitality properties.
S-60
<PAGE>
MORTGAGE LOANS BY PROPERTY TYPE
(ALL MORTGAGE LOANS)
<TABLE>
<CAPTION>
WTD. AVG.
AGGREGATE % BY AVERAGE HIGHEST CUT-OFF DATE
PROPERTY NUMBER OF CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE LTV
TYPE LOANS BALANCE POOL BALANCE BALANCE BALANCE RATIO (1)
- ------------------------ --------- -------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Multifamily............. 62 $ 365,399,773 30.93% $ 5,893,545 $29,750,000 75.71%
Retail-Anchored......... 55 272,577,634 23.07 $ 4,955,957 $21,984,235 71.53%
Hospitality............. 19 166,306,763 14.08 $ 8,752,988 $50,443,313 67.54%
Office.................. 19 143,185,620 12.12 $ 7,536,085 $24,502,544 66.08%
Credit Lease Loans(3)... 27 78,808,932 6.67 $ 2,918,849 $ 7,898,702 0.00%
Mixed Use............... 5 50,193,888 4.25 $10,038,778 $37,472,777 67.51%
Industrial.............. 13 37,267,470 3.15 $ 2,866,728 $ 5,080,691 70.70%
Retail--Unanchored...... 12 31,612,142 2.68 $ 2,634,345 $ 4,107,613 64.78%
Healthcare.............. 7 24,679,110 2.09 $ 3,525,587 $ 5,383,759 64.32%
Mobile Home Park........ 3 9,460,434 0.80 $ 3,153,478 $ 5,206,861 75.48%
Self Storage............ 1 1,993,054 0.17 $ 1,993,054 $ 1,993,054 71.20%
--- -------------- ------
Total/Avg/Wtd
Avg/Min/Max:........... 223 $1,181,484,821 100% $ 5,298,138 $50,443,313 71.07%
--- -------------- ------
--- -------------- ------
<CAPTION>
WTD. AVG. MINIMUM MAXIMUM
CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE WTD. AVG. WTD. AVG.
PROPERTY DSC DSC DSC OCCUPANCY MORTGAGE
TYPE RATIO (1) RATIO (1) RATIO (1) RATIO (2) RATE
- ------------------------ ------------ ------------ ------------ --------- ---------
<S> <C> <C> <C> <C> <C>
Multifamily............. 1.25x 1.14x 1.81x 94.43% 7.45%
Retail-Anchored......... 1.38x 1.25x 1.65x 97.29% 7.07%
Hospitality............. 1.52x 1.18x 2.45x 0.00% 7.23%
Office.................. 1.33x 1.21x 1.60x 94.43% 7.57%
Credit Lease Loans(3)... 0.00x 0.00x 0.00x 100.00% 7.20%
Mixed Use............... 1.32x 1.30x 1.59x 98.20% 7.65%
Industrial.............. 1.33x 1.25x 1.76x 98.59% 7.68%
Retail--Unanchored...... 1.68x 1.25x 4.42x 95.52% 7.67%
Healthcare.............. 1.65x 1.25x 1.93x 96.69% 7.74%
Mobile Home Park........ 1.33x 1.22x 1.40x 99.07% 7.57%
Self Storage............ 1.48x 1.48x 1.48x 87.00% 7.37%
Total/Avg/Wtd
Avg/Min/Max:........... 1.36x 1.14x 4.42x 96.09% 7.36%
</TABLE>
- ------------------
(1) The Cut-Off Date DSC Ratio and Cut-Off Date LTV Ratio information shown
above do not reflect the 27 Credit Lease Loans, or approximately 6.67% of
the Cut-Off Date Pool Balance, which typically have debt service coverage
ratios below 1.05x and loan-to-value ratios in excess of 90%.
(2) Occupancy Rates were calculated without reference to hospitality properties.
(3) Including 20 Mortgage Loans, or approximately 4.71% of the Cut-Off Date Pool
Balance, secured by retail properties, 6 Mortgage Loans, or approximately
1.84% of the Cut-Off Date Pool Balance, secured by hospitality properties,
and 1 Mortgage Loan, or approximately 0.12% of the Cut-Off Date Pool
Balance, secured by a restaurant property.
S-61
<PAGE>
CUT-OFF DATE DSC RATIOS
<TABLE>
<CAPTION>
RANGE OF WTD. AVG. WTD. AVG.
CUT-OFF DATE AGGREGATE % BY AVERAGE HIGHEST CUT-OFF DATE CUT-OFF DATE
DSC NUMBER OF CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE LTV DSC
RATIOS(X) LOANS BALANCE BALANCE (1) BALANCE BALANCE RATIO (2) RATIO (2)
- ----------------- --------- -------------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
1.00-1.14........ 1(4) $ 1,424,638 0.13% $ 1,424,638 $ 1,424,638 68.50% 1.14x
1.15-1.19........ 3 13,609,276 1.23 $ 4,536,425 $ 9,824,768 75.23% 1.19x
1.20-1.24........ 26 250,197,867 22.69 $ 9,622,995 $29,750,000 75.67% 1.21x
1.25-1.29........ 41 186,533,567 16.92 $ 4,549,599 $16,978,212 73.67% 1.26x
1.30-1.34........ 57 196,951,893 17.86 $ 3,455,296 $37,472,777 68.90% 1.31x
1.35-1.39........ 12 71,731,507 6.51 $ 5,977,626 $14,582,212 72.27% 1.37x
1.40-1.44........ 24 177,097,240 16.06 $ 7,379,052 $25,263,571 70.48% 1.42x
1.45-1.49........ 6 41,324,013 3.75 $ 6,887,335 $19,154,363 68.49% 1.47x
1.50-1.54........ 8 35,481,224 3.22 $ 4,435,153 $ 8,115,184 73.12% 1.52x
1.55-1.59........ 4 73,902,821 6.70 $18,475,705 $50,443,313 65.99% 1.55x
1.60-1.64........ 4 18,260,419 1.66 $ 4,565,105 $12,000,000 58.33% 1.61x
1.65-1.69........ 2 6,090,687 0.55 $ 3,045,343 $ 4,300,000 60.33% 1.65x
1.75-1.79........ 3 11,938,477 1.08 $ 3,979,492 $ 5,019,952 62.47% 1.77x
1.80-1.84........ 2 5,155,230 0.47 $ 2,577,615 $ 3,196,352 67.76% 1.82x
1.90-1.94........ 1 5,383,759 0.49 $ 5,383,759 $ 5,383,759 43.60% 1.93x
2.00-10.00....... 2 7,593,270 0.69 $ 3,796,635 $ 4,112,307 35.83% 3.35x
--- -------------- ------
Total/Avg/Wtd
Avg/Min/Max:... 196 $1,102,675,889 100% $ 5,625,897 $50,443,313 71.07% 1.36x
--- -------------- ------
--- -------------- ------
<CAPTION>
RANGE OF MINIMUM MAXIMUM
CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE WTD. AVG. WTD. AVG.
DSC DSC DSC OCCUPANCY MORTGAGE
RATIOS(X) RATIO (2) RATIO (2) RATIO (3) RATE
- ----------------- ------------ ------------ --------- ---------
<S> <C> <C> <C> <C>
1.00-1.14........ 1.14x 1.14x 100.00% 6.88%
1.15-1.19........ 1.18x 1.19x 88.00% 7.08%
1.20-1.24........ 1.20x 1.24x 92.85% 7.54%
1.25-1.29........ 1.25x 1.29x 97.41% 7.58%
1.30-1.34........ 1.30x 1.34x 95.80% 7.66%
1.35-1.39........ 1.35x 1.39x 96.95% 7.30%
1.40-1.44........ 1.40x 1.44x 96.75% 6.96%
1.45-1.49........ 1.46x 1.49x 99.04% 7.28%
1.50-1.54........ 1.50x 1.53x 100.00% 6.89%
1.55-1.59........ 1.55x 1.59x 98.73% 6.90%
1.60-1.64........ 1.60x 1.64x 100.00% 6.89%
1.65-1.69........ 1.65x 1.66x 96.12% 7.24%
1.75-1.79........ 1.75x 1.79x 97.22% 7.52%
1.80-1.84........ 1.81x 1.82x 99.13% 7.03%
1.90-1.94........ 1.93x 1.93x 95.60% 9.38%
2.00-10.00....... 2.45x 4.42x 98.32% 7.20%
Total/Avg/Wtd
Avg/Min/Max:... 1.14x 4.42x 95.76% 7.37%
</TABLE>
The weighted average Cut-Off Date DSC Ratio is 1.36x.
- ------------------
(1) Excludes the 27 Credit Lease Loans, or approximately 6.67% of the Cut-Off
Date Pool Balance.
(2) The Cut-Off Date DSC Ratio and Cut-Off Date LTV Ratio information shown
above do not reflect the 27 Credit Lease Loans, or approximately 6.67% of
the Cut-Off Date Pool Balance, which typically have debt service coverage
ratios below 1.05x and loan-to-value ratios in excess of 90%.
(3) Occupancy Rates were calculated without reference to hospitality properties.
(4) 506-508 Fairfax Street, is part of a group of 3 Mortgage Loans, or
approximately 0.38% of the Cut-Off Date Pool Balance, which are cross
collateralized and have a weighted average Cut-Off Date DSC Ratio of 1.49x.
S-62
<PAGE>
CUT-OFF DATE LTV RATIOS
<TABLE>
<CAPTION>
RANGE OF WTD. AVG. WTD. AVG.
CUT-OFF DATE AGGREGATE % BY AVERAGE HIGHEST CUT-OFF DATE CUT-OFF DATE
LTV NUMBER OF CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE LTV DSC
RATIOS(%) LOANS BALANCE BALANCE (1) BALANCE BALANCE RATIO (2) RATIO (2)
- -------------- --------- -------------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
0.01- 25.00 1 $ 3,480,963 0.32% $ 3,480,963 $ 3,480,963 23.70% 4.42x
40.01- 45.00 1 5,383,759 0.49 $ 5,383,759 $ 5,383,759 43.60% 1.93x
45.01- 50.00 2 6,609,222 0.60 $ 3,304,611 $ 4,112,307 47.20% 2.19x
50.01- 55.00 6 42,670,654 3.87 $ 7,111,776 $18,917,890 52.29% 1.46x
55.01- 60.00 7 48,662,189 4.41 $ 6,951,741 $19,932,471 58.57% 1.39x
60.01- 65.00 11 50,917,248 4.62 $ 4,628,841 $18,779,010 64.03% 1.41x
65.01- 70.00 57 274,179,410 24.86 $ 4,810,165 $50,443,313 67.67% 1.38x
70.01- 75.00 63 377,053,903 34.19 $ 5,984,983 $21,984,235 73.39% 1.35x
75.01- 80.00 45 270,309,976 24.51 $ 6,006,888 $29,750,000 78.56% 1.26x
80.01- 85.00 2 20,704,234 1.88 $10,352,117 $10,476,840 80.70% 1.28x
85.01-100.16 1(4) 2,704,332 0.25 $ 2,704,332 $ 2,704,332 100.20% 1.18x
- -------------- --- -------------- ------
Total/Avg/Wtd
Avg/Min/Max: 196 $1,102,675,889 100% $ 5,625,897 $50,443,313 71.07% 1.36x
- -------------- --- -------------- ------
- -------------- --- -------------- ------
<CAPTION>
RANGE OF MIMIMUM MAXIMUM
CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE WTD. AVG. WTD. AVG.
LTV DSC DSC OCCUPANCY MORTGAGE
RATIOS(%) RATIO (2) RATIO (2) RATIO (3) RATE
- -------------- ------------ ------------ --------- ---------
<S> <C> <C> <C> <C>
0.01- 25.00 4.42x 4.42x 98.32% 7.00%
40.01- 45.00 1.93x 1.93x 95.60% 9.38%
45.01- 50.00 1.76x 2.45x 100.00% 7.48%
50.01- 55.00 1.27x 1.60x 97.99% 7.01%
55.01- 60.00 1.25x 1.65x 93.34% 7.87%
60.01- 65.00 1.25x 1.66x 95.08% 7.49%
65.01- 70.00 1.14x 1.82x 95.86% 7.38%
70.01- 75.00 1.20x 1.56x 95.80% 7.25%
75.01- 80.00 1.18x 1.62x 95.55% 7.43%
80.01- 85.00 1.27x 1.28x 96.55% 7.44%
85.01-100.16 1.18x 1.18x 0.00% 7.37%
- --------------
Total/Avg/Wtd
Avg/Min/Max: 1.14x 4.42x 95.76% 7.37%
- --------------
- --------------
</TABLE>
The weighted average Cut-Off Date LTV Ratio is 71.07%.
- ------------------
(1) Excludes the 27 Credit Lease Loans, or approximately 6.67% of the Cut-Off
Date Pool Balance.
(2) The Cut-Off Date DSC Ratio and Cut-Off Date LTV Ratio information shown
above do not reflect the 27 Credit Lease Loans, or approximately 6.67% of
the Cut-Off Date Pool Balance, which typically have debt service coverage
ratios below 1.05x and loan-to-value ratios in excess of 90%.
(3) Occupancy Rates were calculated without reference to hospitality properties.
(4) Days Inn Fredericksburg South, part of a group of 6 Mortgage Loans, or
approximately 1.53% of the Cut-Off Date Pool Balance, which are cross
collateralized and have a weighted average Cut-Off Date LTV Ratio of 68.1%.
S-63
<PAGE>
MATURITY DATE LTV RATIOS
(BALLOON AND ARD LOANS ONLY)
<TABLE>
<CAPTION>
RANGE OF WTD. AVG. WTD. AVG.
MATURITY DATE AGGREGATE % BY AVERAGE HIGHEST CUT-OFF DATE CUT-OFF DATE
LTV NUMBER OF CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE LTV DSC
RATIOS (%) LOANS BALANCE (1) BALANCE (1) BALANCE BALANCE RATIO (2) RATIO (2)
- ----------------- --------- -------------- --------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
0.00-25.00....... 1 $ 3,480,963 0.33% $ 3,480,963 $ 3,480,963 23.70% 4.42x
25.01-30.00...... 1 2,811,140 0.27 $ 2,811,140 $ 2,811,140 70.30% 1.25x
30.01-35.00...... 1 2,113,270 0.20 $ 2,113,270 $ 2,113,270 72.20% 1.27x
40.01-45.00...... 4 29,277,771 2.76 $ 7,319,443 $18,917,890 53.03% 1.47x
45.01-50.00...... 39 82,657,688 7.80 $ 2,119,428 $12,939,276 62.18% 1.42x
50.01-55.00...... 16 125,288,916 11.82 $ 7,830,557 $50,443,313 64.07% 1.47x
55.01-60.00...... 21 152,971,709 14.43 $ 7,284,367 $37,472,777 69.13% 1.34x
60.01-65.00...... 45 307,539,958 29.01 $ 6,834,221 $24,502,544 72.71% 1.35x
65.01-70.00...... 37 210,145,388 19.83 $ 5,679,605 $15,231,468 76.04% 1.29x
70.01-75.00...... 19 143,669,751 13.55 $ 7,561,566 $29,750,000 79.89% 1.24x
--- -------------- -------
Total/Avg/Wtd
Avg/Min/Max:... 184 $1,059,956,553 100% $ 5,760,633 $50,443,313 71.27% 1.35x
--- -------------- -------
--- -------------- -------
<CAPTION>
RANGE OF MINIMUM MAXIMUM
MATURITY DATE CUT-OFF DATE CUT-OFF DATE WTD. AVG. WTD. AVG.
LTV DSC DSC OCCUPANCY MORTGAGE
RATIOS (%) RATIO (2) RATIO (2) RATIO (3) RATE
- ----------------- ------------ ------------ --------- ---------
<S> <C> <C> <C> <C>
0.00-25.00....... 4.42x 4.42x 98.32% 7.00%
25.01-30.00...... 1.25x 1.25x 100.00% 7.00%
30.01-35.00...... 1.27x 1.27x 100.00% 7.00%
40.01-45.00...... 1.34x 1.76x 97.42% 6.93%
45.01-50.00...... 1.25x 1.79x 98.38% 7.59%
50.01-55.00...... 1.26x 1.66x 93.88% 7.20%
55.01-60.00...... 1.14x 1.82x 96.04% 7.41%
60.01-65.00...... 1.20x 1.53x 95.50% 7.31%
65.01-70.00...... 1.20x 1.62x 96.72% 7.45%
70.01-75.00...... 1.20x 1.40x 94.70% 7.43%
Total/Avg/Wtd
Avg/Min/Max:... 1.14x 4.42x 95.84% 7.37%
</TABLE>
The weighted average Maturity Date LTV Ratio is 61.36%.
- ------------------
(1) Excludes the Fully Amortizing Loans and the Credit Lease Loans (including
the 13 Credit Lease Loans that are Balloon Loans), aggregating approximately
10.29% percent of the Cut-Off Date Pool Balance.
(2) The Cut-Off Date DSC Ratio and Cut-Off Date LTV Ratio information shown
above do not reflect the 13 Credit Lease Loans that are Balloon Loans,
comprising approximately 3.78% of the Cut-Off Date Pool Balance, which
typically have debt service coverage ratios below 1.05x and loan-to-value
ratios in excess of 90%.
(3) Occupancy Rates were calculated without reference to hospitality properties.
S-64
<PAGE>
MORTGAGE RATES
<TABLE>
<CAPTION>
WTD. AVG. WTD. AVG.
RANGE OF AGGREGATE % BY AVERAGE HIGHEST CUT-OFF DATE CUT-OFF DATE
MORTGAGE NUMBER OF CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE LTV DSC
RATES(%) LOANS BALANCE POOL BALANCE BALANCE BALANCE RATIO (1) RATIO (1)
- ----------------- --------- -------------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
6.000-6.249...... 1 $ 4,971,334 0.42% $4,971,334 $ 4,971,334 78.90% 1.33x
6.500-6.749...... 17 138,979,624 11.76 $8,175,272 $21,984,235 70.05% 1.45x
6.750-6.999...... 21 133,397,011 11.29 $6,352,239 $50,443,313 67.82% 1.46x
7.000-7.249...... 32 179,783,660 15.22 $5,618,239 $29,750,000 72.33% 1.45x
7.250-7.499...... 58 203,479,928 17.22 $3,508,275 $25,263,571 73.06% 1.34x
7.500-7.749...... 36 307,041,076 25.99 $8,528,919 $37,472,777 71.71% 1.28x
7.750-7.999...... 30 110,869,533 9.38 $3,695,651 $10,570,531 70.59% 1.30x
8.000-8.249...... 13 37,646,877 3.19 $2,895,914 $ 5,024,014 72.20% 1.28x
8.250-8.499...... 7 38,626,708 3.27 $5,518,101 $24,502,544 71.67% 1.25x
8.500-8.749...... 3 15,746,442 1.33 $5,248,814 $12,939,276 60.57% 1.43x
8.750-8.999...... 2 4,077,387 0.35 $2,038,694 $ 2,997,211 68.45% 1.28x
9.000-9.249...... 1 1,068,620 0.09 $1,068,620 $ 1,068,620 0.00% 0.00x
9.250-9.499...... 1 5,383,759 0.46 $5,383,759 $ 5,383,759 43.60% 1.93x
9.500-9.749...... 1 412,861 0.03 $ 412,861 $ 412,861 55.00% 1.25x
--- -------------- ------
Total/Avg/Wtd
Avg/Min/Max:... 223 $1,181,484,821 100% $5,298,138 $50,443,313 71.07% 1.36x
--- -------------- ------
--- -------------- ------
<CAPTION>
MINIMUM MAXIMUM
RANGE OF CUT-OFF DATE CUT-OFF DATE WTD. AVG. WTD. AVG.
MORTGAGE DSC DSC OCCUPANCY MORTGAGE
RATES(%) RATIO (1) RATIO (1) RATIO (2) RATE
- ----------------- ------------ ------------ --------- ---------
<S> <C> <C> <C> <C>
6.000-6.249...... 1.33x 1.33x 99.16% 6.12%
6.500-6.749...... 1.39x 1.66x 98.04% 6.57%
6.750-6.999...... 1.14x 1.81x 97.09% 6.82%
7.000-7.249...... 1.20x 4.42x 96.07% 7.11%
7.250-7.499...... 1.18x 2.45x 95.15% 7.37%
7.500-7.749...... 1.20x 1.79x 95.81% 7.62%
7.750-7.999...... 1.22x 1.53x 95.20% 7.82%
8.000-8.249...... 1.21x 1.40x 95.29% 8.07%
8.250-8.499...... 1.23x 1.38x 95.91% 8.27%
8.500-8.749...... 1.27x 1.46x 98.02% 8.51%
8.750-8.999...... 1.18x 1.31x 94.91% 8.79%
9.000-9.249...... 0.00x 0.00x 100.00% 9.13%
9.250-9.499...... 1.93x 1.93x 95.60% 9.38%
9.500-9.749...... 1.25x 1.25x 100.00% 9.50%
Total/Avg/Wtd
Avg/Min/Max:... 1.14x 4.42x 96.09% 7.36%
</TABLE>
The weighted average Mortgage Rate is 7.36%.
- ------------------
(1) The Cut-Off Date DSC Ratio and Cut-Off Date LTV Ratio information shown
above do not reflect the 27 Credit Lease Loans, or approximately 6.67% of
the Cut-Off Date Pool Balance, which typically have debt service coverage
ratios below 1.05x and loan-to-value ratios in excess of 90%.
(2) Occupancy Rates were calculated without reference to hospitality properties.
S-65
<PAGE>
ORIGINAL TERMS TO MATURITY OR ANTICIPATED REPAYMENT DATE
(ALL MORTGAGE LOANS)
<TABLE>
<CAPTION>
RANGE OF
ORIGINAL TERMS
TO MATURITY WTD. AVG.
OR ANTICIPATED AGGREGATE % BY AVERAGE HIGHEST CUT-OFF DATE
REPAYMENT DATE NUMBER OF CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE LTV
(MONTHS) LOANS BALANCE POOL BALANCE BALANCE BALANCE RATIO (1)
- ----------------- --------- -------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
49- 60.......... 1 $ 10,570,531 0.89% $10,570,531 $10,570,531 72.90%
73- 84.......... 2 15,719,705 1.33 $ 7,859,852 $14,018,261 72.79%
109-120.......... 149 942,286,104 79.75 $ 6,324,068 $50,443,313 71.55%
121-132.......... 3 42,228,431 3.57 $14,076,144 $24,502,544 65.02%
145-156.......... 26 33,261,342 2.82 $ 1,279,282 $ 1,693,551 67.67%
169-180.......... 8 29,405,454 2.49 $ 3,675,682 $10,966,031 67.90%
205-216.......... 6 21,794,383 1.84 $ 3,632,397 $ 6,235,064 0.00%
229-240.......... 11 40,497,106 3.43 $ 3,681,555 $ 9,824,768 67.90%
241-252.......... 2 5,120,121 0.43 $ 2,560,060 $ 2,563,871 0.00%
253-264.......... 11 32,874,023 2.78 $ 2,988,548 $ 5,019,952 68.08%
289-300.......... 2 4,666,601 0.39 $ 2,333,300 $ 3,276,831 77.10%
349-360.......... 2 3,061,022 0.26 $ 1,530,511 $ 1,980,845 76.03%
--- -------------- ------
Total/Avg/Wtd
Avg/Min/Max:... 223 $1,181,484,821 100% $ 5,298,138 $50,443,313 71.07%
--- -------------- ------
--- -------------- ------
<CAPTION>
RANGE OF
ORIGINAL TERMS
TO MATURITY WTD. AVG. MINIMUM MAXIMUM
OR ANTICIPATED CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE WTD. AVG. WTD. AVG.
REPAYMENT DATE DSC DSC DSC OCCUPANCY MORTGAGE
(MONTHS) RATIO (1) RATIO (1) RATIO (1) RATIO (2) RATE
- ----------------- ------------ ------------ ------------ --------- ---------
<S> <C> <C> <C> <C> <C>
49- 60.......... 1.32x 1.32x 1.32x 90.20% 7.88%
73- 84.......... 1.43x 1.32x 1.44x 97.29% 6.59%
109-120.......... 1.35x 1.14x 4.42x 95.75% 7.36%
121-132.......... 1.36x 1.23x 1.60x 96.98% 7.77%
145-156.......... 1.31x 1.31x 1.31x 100.00% 7.41%
169-180.......... 1.47x 1.25x 1.93x 94.64% 7.64%
205-216.......... 0.00x 0.00x 0.00x 100.00% 7.24%
229-240.......... 1.19x 1.19x 1.19x 96.82% 7.00%
241-252.......... 0.00x 0.00x 0.00x 100.00% 7.25%
253-264.......... 1.71x 1.18x 2.45x 100.00% 7.33%
289-300.......... 1.43x 1.43x 1.43x 100.00% 7.40%
349-360.......... 1.21x 1.18x 1.23x 91.96% 7.97%
Total/Avg/Wtd
Avg/Min/Max:... 1.36x 1.14x 4.42x 96.09% 7.36%
</TABLE>
The weighted average original term to maturity is 134 months.
- ------------------
(1) The Cut-Off Date DSC Ratio and Cut-Off Date LTV Ratio information shown
above do not reflect the 27 Credit Lease Loans, or approximately 6.67% of
the Cut-Off Date Pool Balance, which typically have debt service coverage
ratios below 1.05x and loan-to-value ratios in excess of 90%.
(2) Occupancy Rates are calculated without reference to hospitality properties.
S-66
<PAGE>
REMAINING TERMS TO MATURITY OR ANTICIPATED REPAYMENT DATE
<TABLE>
<CAPTION>
RANGE OF
REMAINING TERMS
TO MATURITY WTD. AVG. WTD. AVG.
OR ANTICIPATED AGGREGATE % BY AVERAGE HIGHEST CUT-OFF DATE CUT-OFF DATE
REPAYMENT DATE NUMBER OF CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE LTV DSC
(MONTHS) LOANS BALANCE POOL BALANCE BALANCE BALANCE RATIO (1) RATIO (1)
- ----------------- --------- -------------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
49-60............ 1 $ 10,570,531 0.89% $10,570,531 $10,570,531 72.90% 1.32x
73-84............ 2 15,719,705 1.33 $ 7,859,852 $14,018,261 72.79% 1.43x
97-108........... 2 6,796,057 0.58 $ 3,398,029 $ 3,599,706 67.99% 1.60x
109-120.......... 149 965,718,478 81.74 $ 6,481,332 $50,443,313 71.54% 1.35x
121-132.......... 1 12,000,000 1.02 $12,000,000 $12,000,000 51.70% 1.60x
145-156.......... 26 33,261,342 2.82 $ 1,279,282 $ 1,693,551 67.67% 1.31x
157-168.......... 3 13,341,504 1.13 $ 4,447,168 $10,966,031 78.90% 1.40x
169-180.......... 5 16,063,950 1.36 $ 3,212,790 $ 5,383,759 58.91% 1.53x
205-216.......... 6 21,794,383 1.84 $ 3,632,397 $ 6,235,064 0.00% 0.00x
217-228.......... 2 3,359,713 0.28 $ 1,679,856 $ 1,839,504 0.00% 0.00x
229-240.......... 11 42,257,514 3.58 $ 3,841,592 $ 9,824,768 67.90% 1.19x
241-252.......... 6 18,064,778 1.53 $ 3,010,796 $ 5,019,952 68.08% 1.71x
253-264.......... 5 14,809,244 1.25 $ 2,961,849 $ 4,085,191 0.00% 0.00x
277-288.......... 1 1,389,770 0.12 $ 1,389,770 $ 1,389,770 0.00% 0.00x
289-300.......... 1 3,276,831 0.28 $ 3,276,831 $ 3,276,831 77.10% 1.43x
337-348.......... 1 1,980,845 0.17 $ 1,980,845 $ 1,980,845 74.20% 1.23x
349-360.......... 1 1,080,177 0.09 $ 1,080,177 $ 1,080,177 79.40% 1.18x
--- -------------- ------
Total/Avg/Wtd
Avg/Min/Max:... 223 $1,181,484,821 100% $ 5,298,138 $50,443,313 71.07% 1.36x
--- -------------- ------
--- -------------- ------
<CAPTION>
RANGE OF
REMAINING TERMS
TO MATURITY MINIMUM MAXIMUM
OR ANTICIPATED CUT-OFF DATE CUT-OFF DATE WTD. AVG. WTD. AVG.
REPAYMENT DATE DSC DSC OCCUPANCY MORTGAGE
(MONTHS) RATIO (1) RATIO (1) RATIO (2) RATE
- ----------------- ------------ ------------ --------- ---------
<S> <C> <C> <C> <C>
49-60............ 1.32x 1.32x 90.20% 7.88%
73-84............ 1.32x 1.44x 97.29% 6.59%
97-108........... 1.41x 1.82x 98.60% 7.49%
109-120.......... 1.14x 4.42x 95.73% 7.38%
121-132.......... 1.60x 1.60x 100.00% 6.86%
145-156.......... 1.31x 1.31x 100.00% 7.41%
157-168.......... 1.40x 1.40x 89.97% 7.41%
169-180.......... 1.25x 1.93x 98.53% 7.82%
205-216.......... 0.00x 0.00x 100.00% 7.24%
217-228.......... 0.00x 0.00x 100.00% 7.14%
229-240.......... 1.19x 1.19x 96.95% 7.02%
241-252.......... 1.18x 2.45x 0.00% 7.37%
253-264.......... 0.00x 0.00x 100.00% 7.26%
277-288.......... 0.00x 0.00x 100.00% 7.75%
289-300.......... 1.43x 1.43x 100.00% 7.25%
337-348.......... 1.23x 1.23x 88.64% 7.47%
349-360.......... 1.18x 1.18x 98.04% 8.90%
Total/Avg/Wtd
Avg/Min/Max:... 1.14x 4.42x 96.09% 7.36%
</TABLE>
The weighted average remaining term to maturity is 128 months.
- ------------------
(1) The Cut-Off Date DSC Ratio and Cut-Off Date LTV Ratio information shown
above do not reflect the 27 Credit Lease Loans, or approximately 6.67% of
the Cut-Off Date Pool Balance, which typically have debt service coverage
ratios below 1.05x and loan-to-value ratios in excess of 90%.
(2) Occupancy Rates were calculated without reference to hospitality properties.
S-67
<PAGE>
CUT-OFF DATE BALANCES
<TABLE>
<CAPTION>
WTD. AVG.
AGGREGATE % BY AVERAGE HIGHEST CUT-OFF DATE
RANGE OF NUMBER OF CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE LTV
CUT-OFF DATE BALANCES ($) LOANS BALANCE POOL BALANCE BALANCE BALANCE RATIO (1)
- --------------------------- --------- -------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
0- 2,000,000 65 $ 90,793,422 7.68% $ 1,396,822 $ 1,994,698 69.10%
2,000,001- 4,000,000 63 175,192,284 14.83 $ 2,780,830 $ 3,947,212 71.23%
4,000,001- 6,000,000 39 187,261,792 15.85 $ 4,801,584 $ 5,725,887 71.18%
6,000,001- 8,000,000 17 115,449,163 9.77 $ 6,791,127 $ 7,898,702 72.38%
8,000,001-10,000,000 9 81,924,968 6.93 $ 9,102,774 $ 9,824,768 73.00%
10,000,001-15,000,000 15 178,504,729 15.11 $11,900,315 $14,582,212 72.73%
15,000,001-20,000,000 8 140,449,746 11.89 $17,556,218 $19,932,471 67.42%
20,000,001-25,000,000 3 68,979,057 5.84 $22,993,019 $24,502,544 74.01%
25,000,001-30,000,000 2 55,013,571 4.66 $27,506,785 $29,750,000 75.04%
35,000,001-40,000,000 1 37,472,777 3.17 $37,472,777 $37,472,777 67.50%
50,000,001-55,000,000 1 50,443,313 4.27 $50,443,313 $50,443,313 66.20%
--- -------------- ------
Total/Avg/Wtd
Avg/Min/Max:............. 223 $1,181,484,821 100% $ 5,298,138 $50,443,313 71.07%
--- -------------- ------
--- -------------- ------
<CAPTION>
WTD. AVG. MINIMUM MAXIMUM
CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE WTD. AVG. WTD. AVG.
RANGE OF DSC DSC DSC OCCUPANCY MORTGAGE
CUT-OFF DATE BALANCES ($) RATIO (1) RATIO (1) RATIO (1) RATIO (2) RATE
- --------------------------- ------------ ------------ ------------ --------- ---------
<S> <C> <C> <C> <C> <C>
0- 2,000,000 1.34x 1.14x 1.81x 98.36% 7.57%
2,000,001- 4,000,000 1.43x 1.18x 4.42x 96.84% 7.48%
4,000,001- 6,000,000 1.41x 1.20x 2.45x 96.51% 7.39%
6,000,001- 8,000,000 1.34x 1.21x 1.53x 97.52% 7.27%
8,000,001-10,000,000 1.29x 1.19x 1.53x 90.54% 7.17%
10,000,001-15,000,000 1.34x 1.20x 1.60x 95.15% 7.45%
15,000,001-20,000,000 1.35x 1.20x 1.56x 97.03% 7.25%
20,000,001-25,000,000 1.28x 1.20x 1.43x 94.16% 7.52%
25,000,001-30,000,000 1.30x 1.22x 1.40x 93.49% 7.21%
35,000,001-40,000,000 1.30x 1.30x 1.30x 99.25% 7.61%
50,000,001-55,000,000 1.55x 1.55x 1.55x 0.00% 6.75%
Total/Avg/Wtd
Avg/Min/Max:............. 1.36x 1.14x 4.42x 96.09% 7.36%
</TABLE>
The average Cut-Off Date Balance is $5,298,138.
- ------------------
(1) The Cut-Off Date DSC Ratio and Cut-Off Date LTV Ratio information shown
above do not reflect the 27 Credit Lease Loans, or approximately 6.67% of
the Cut-Off Date Pool Balance, which typically have debt service coverage
ratios below 1.05x and loan-to-value ratios in excess of 90%.
(2) Occupancy Rates were calculated without reference to hospitality properties.
S-68
<PAGE>
REMAINING AMORTIZATION TERMS
<TABLE>
<CAPTION>
WTD. AVG. WTD. AVG.
REMAINING AGGREGATE % BY AVERAGE HIGHEST CUT-OFF DATE CUT-OFF DATE
AMORTIZATION NUMBER OF CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE LTV DSC
TERM (MONTHS) LOANS BALANCE POOL BALANCE BALANCE BALANCE RATIO (1) RATIO (1)
- ----------------- --------- -------------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
157-168.......... 2 $ 2,375,473 0.20% $ 1,187,737 $ 1,306,853 0.00% 0.00x
169-180.......... 2 8,491,936 0.72 $ 4,245,968 $ 5,383,759 51.84% 1.68x
217-228.......... 4 9,607,022 0.81 $ 2,401,755 $ 3,599,706 68.60% 1.41x
229-240.......... 18 57,477,697 4.86 $ 3,193,205 $ 9,824,768 68.74% 1.38x
241-252.......... 6 18,064,778 1.53 $ 3,010,796 $ 5,019,952 68.08% 1.71x
253-264.......... 6 21,794,383 1.84 $ 3,632,397 $ 6,235,064 0.00% 0.00x
265-276.......... 1 5,445,132 0.46 $ 5,445,132 $ 5,445,132 0.00% 0.00x
277-288.......... 3 11,200,848 0.95 $ 3,733,616 $ 5,725,887 72.50% 1.42x
289-300.......... 59 254,430,640 21.53 $ 4,312,384 $50,443,313 67.53% 1.43x
301-312.......... 2 5,810,710 0.49 $ 2,905,355 $ 3,046,015 0.00% 0.00x
313-324.......... 4 16,575,399 1.40 $ 4,143,850 $ 8,962,055 69.16% 1.23x
325-336.......... 4 32,484,698 2.75 $ 8,121,174 $13,500,000 74.67% 1.23x
337-348.......... 4 40,645,772 3.44 $10,161,443 $24,502,544 72.27% 1.32x
349-360.......... 108 697,080,334 59.00 $ 6,454,448 $37,472,777 72.57% 1.33x
--- -------------- ------
Total/Avg/Wtd
Avg/Min/Max:... 223 $1,181,484,821 100% $ 5,298,138 $50,443,313 71.07% 1.36x
--- -------------- ------
--- -------------- ------
<CAPTION>
MINIMUM MAXIMUM
REMAINING CUT-OFF DATE CUT-OFF DATE WTD. AVG. WTD. AVG.
AMORTIZATION DSC DSC OCCUPANCY MORTGAGE
TERM (MONTHS) RATIO (1) RATIO (1) RATIO (2) RATE
- ----------------- ------------ ------------ --------- ---------
<S> <C> <C> <C> <C>
157-168.......... 0.00x 0.00x 100.00% 8.02%
169-180.......... 1.25x 1.93x 97.21% 8.55%
217-228.......... 1.41x 1.41x 100.00% 7.36%
229-240.......... 1.19x 1.79x 96.72% 7.21%
241-252.......... 1.18x 2.45x 0.00% 7.37%
253-264.......... 0.00x 0.00x 100.00% 7.24%
265-276.......... 0.00x 0.00x 100.00% 6.75%
277-288.......... 1.42x 1.42x 100.00% 7.82%
289-300.......... 1.25x 1.60x 97.05% 7.32%
301-312.......... 0.00x 0.00x 100.00% 6.94%
313-324.......... 1.21x 1.31x 86.00% 7.10%
325-336.......... 1.20x 1.38x 91.47% 7.43%
337-348.......... 1.23x 1.82x 93.33% 7.86%
349-360.......... 1.14x 4.42x 96.22% 7.35%
Total/Avg/Wtd
Avg/Min/Max:... 1.14x 4.42x 96.09% 7.36%
</TABLE>
The weighted average remaining amortization term is 328 months.
- ------------------
(1) The Cut-Off Date DSC Ratio and Cut-Off Date LTV Ratio information shown
above do not reflect the 27 Credit Lease Loans, or approximately 6.67% of
the Cut-Off Date Pool Balance, which typically have debt service coverage
ratios below 1.05x and loan-to-value ratios in excess of 90%.
(2) Occupancy Rates were calculated without reference to hospitality properties.
S-69
<PAGE>
AMORTIZATION TYPES
<TABLE>
<CAPTION>
WTD. AVG. WTD. AVG.
AGGREGATE % BY AVERAGE HIGHEST CUT-OFF DATE CUT-OFF DATE
AMORTIZATION NUMBER OF CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE LTV DSC
TYPES (4) LOANS BALANCE POOL BALANCE BALANCE BALANCE RATIO (1) RATIO (1)
- ----------------- --------- -------------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balloon(3)....... 182 $ 899,196,820 76.11% $ 4,940,642 $37,472,777 71.65% 1.33x
ARD.............. 15 205,456,095 17.39 $13,697,073 $50,443,313 69.69% 1.47x
Fully
Amortizing..... 26 76,831,906 6.50 $ 2,955,073 $ 9,824,768 66.07% 1.53x
--- --------------
Total/Avg/Wtd
Avg/Min/Max.... 223 $1,181,484,821 100% $ 5,298,138 $50,443,313 71.07% 1.36x
--- -------------- ------
--- -------------- ------
<CAPTION>
MINIMUM MAXIMUM
CUT-OFF DATE CUT-OFF DATE WTD. AVG. WTD. AVG.
AMORTIZATION DSC DSC OCCUPANCY MORTGAGE
TYPES (4) RATIO (1) RATIO (1) RATIO (2) RATE
- ----------------- ------------ ------------ --------- ---------
<S> <C> <C> <C> <C>
Balloon(3)....... 1.14x 4.42x 95.67% 7.50%
ARD.............. 1.28x 1.56x 98.45% 6.73%
Fully
Amortizing..... 1.18x 2.45x 96.99% 7.39%
Total/Avg/Wtd
Avg/Min/Max.... 1.14x 4.42x 96.09% 7.36%
</TABLE>
- ------------------
(1) The Cut-Off Date DSC Ratio and Cut-Off Date LTV Ratio information shown
above do not reflect the 27 Credit Lease Loans, or approximately 6.67% of
the Cut-Off Date Pool Balance, which typically have debt service coverage
ratios below 1.05x and loan-to-value ratios in excess of 90%.
(2) Occupancy Rates were calculated without reference to hospitality property.
(3) Includes 7 Mortgage Loans, or approximately 6.91% of the Cut-Off Date Pool
Balance which require payments of interest only for a period of 12 to 84
months from origination prior to the commencement of payments of principal
and interest.
(4) Each category of Amortization Type contains Mortgage Loans that are subject
to changes in the amount of the monthly payment at specified times in the
future. Refer to the sheet named "Step" in the file "FUNCM992.XLS" on the
diskette in the back cover of the Prospectus Supplement.
S-70
<PAGE>
OCCUPANCY RATES (1)
<TABLE>
<CAPTION>
WTD. AVG. WTD. AVG.
RANGE OF AGGREGATE % BY AVERAGE HIGHEST CUT-OFF DATE CUT-OFF DATE
OCCUPANCY NUMBER OF CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE LTV DSC
RATIOS(%) LOANS BALANCE BALANCE (1) BALANCE BALANCE RATIO (2) RATIO (2)
- --------------------- --------- -------------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
75.00-79.99.......... 1 $ 8,962,055 0.88% $8,962,055 $ 8,962,055 67.40% 1.21x
80.00-84.99.......... 5 23,829,904 2.35 $4,765,981 $13,500,000 71.01% 1.28x
85.00-89.99.......... 14 68,950,889 6.79 $4,925,064 $10,966,031 71.96% 1.29x
90.00-94.99.......... 32 232,897,971 22.94 $7,278,062 $29,750,000 73.56% 1.27x
95.00-99.99.......... 38 295,964,677 29.15 $7,788,544 $37,472,777 71.74% 1.37x
100.00............... 114 384,572,562 37.88 $3,373,444 $19,154,363 70.37% 1.37x
--- -------------- ------
Total/Avg/Wtd
Avg/Min/Max ....... 204 $1,015,178,058 100% $4,976,363 $37,472,777 71.70% 1.33x
--- -------------- ------
--- -------------- ------
<CAPTION>
MINIMUM MAXIMUM
RANGE OF CUT-OFF DATE CUT-OFF DATE WTD. AVG. WTD. AVG.
OCCUPANCY DSC DSC OCCUPANCY MORTGAGE
RATIOS(%) RATIO (2) RATIO (2) RATIO RATE
- --------------------- ------------ ------------ --------- ---------
<S> <C> <C> <C> <C>
75.00-79.99.......... 1.21x 1.21x 77.30% 7.00%
80.00-84.99.......... 1.24x 1.42x 83.42% 7.57%
85.00-89.99.......... 1.19x 1.66x 87.72% 7.48%
90.00-94.99.......... 1.20x 1.43x 92.64% 7.47%
95.00-99.99.......... 1.18x 4.42x 97.26% 7.41%
100.00............... 1.14x 1.81x 100.00% 7.29%
Total/Avg/Wtd
Avg/Min/Max ....... 1.14x 4.42x 96.09% 7.38%
</TABLE>
- ------------------
(1) Excludes hotel properties, or approximately 14.08% of the Cut-Off Date Pool
Balance.
(2) The Cut-Off Date DSC Ratio and Cut-Off Date LTV Ratio information shown
above do not reflect the 27 Credit Lease Loans, or approximately 6.67% of
the Cut-Off Date Pool Balance, which typically have debt service coverage
ratios below 1.05x and loan to value ratios in excess of 90%.
S-71
<PAGE>
PERCENTAGE OF MORTGAGE POOL BY
PREPAYMENT RESTRICTION (ASSUMING NO PREPAYMENT)
<TABLE>
<CAPTION>
PREPAYMENT RESTRICTION MAY 1999 MAY 2000 MAY 2001 MAY 2002 MAY 2003 MAY 2004 MAY 2005 MAY 2006
- ------------------------ -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Lock-Out Defeasance..... 100.00% 100.00% 95.21% 90.99% 89.96% 89.89% 89.92% 89.81%
Yield Maintenance/
Prepayment Premium.... 0.00 0.00 4.79 9.01 10.04 10.11 10.08 10.19
------ ------ ------ ------ ------ ------ ------ ------
Sub Total........... 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
------ ------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------ ------
PREPAYMENT PREMIUM
5.0..................... 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
4.0..................... 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
3.0..................... 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
2.0..................... 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
1.5..................... 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
1.0..................... 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Open.................... 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
------ ------ ------ ------ ------ ------ ------ ------
Total............... 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
------ ------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------ ------
<CAPTION>
PREPAYMENT RESTRICTION MAY 2007 MAY 2008
- ------------------------ -------- --------
<S> <C> <C> <C>
Lock-Out Defeasance..... 89.65% 83.85%
Yield Maintenance/
Prepayment Premium.... 10.35 6.31
------ ------
Sub Total........... 100.00% 90.16%
------ ------
------ ------
PREPAYMENT PREMIUM
5.0..................... 0.00% 0.00%
4.0..................... 0.00 0.00
3.0..................... 0.00 0.00
2.0..................... 0.00 0.00
1.5..................... 0.00 0.00
1.0..................... 0.00 0.18
Open.................... 0.00 9.67
------ ------
Total............... 100.00% 100.00%
------ ------
------ ------
</TABLE>
S-72
<PAGE>
TEN LARGEST MORTGAGE LOANS
The following table and summaries describe the 10 largest Mortgages Loans
in the Mortgage Pool by Cut-Off Date Balance:
TEN LARGEST MORTGAGE LOANS BY CUT-OFF DATE BALANCE
<TABLE>
<CAPTION>
PERCENTAGE OF
CUT-OFF
NUMBER OF CUT-OFF DATE DATE POOL MORTGAGE CURRENT DSC
PROPERTY NAME PROPERTIES BALANCE BALANCE PROPERTY TYPE RATE CURRENT LTV RATIO
- ------------------------- --------- ------------ ------------- -------------- -------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Sheraton Suites
Portfolio.............. 3 $ 50,443,313 4.27% Hospitality 6.75% 66.2% 1.55x
Olen Portfolio........... 6 37,472,777 3.17 Mixed Use 7.61% 67.5% 1.30x
Lakeside Apartments...... 1 29,750,000 2.52 Multifamily 7.05% 80.0% 1.22x
Wynfrey Hotel............ 1 25,263,571 2.14 Hospitality 7.40% 69.2% 1.40x
Wilshire Portfolio....... 3 24,502,544 2.07 Office 8.25% 69.8% 1.23x
Hickory Lake............. 1 22,492,277 1.90 Multifamily 7.65% 79.3% 1.20x
Westgate Village......... 1 21,984,235 1.86 Retail 6.57% 73.3% 1.43x
1055 Washington Blvd..... 1 19,932,471 1.69 Office 7.72% 59.0% 1.31x
Oak Park Commons......... 1 19,154,363 1.62 Retail 6.57% 74.7% 1.48x
Vista Ridge Plaza I, II &
Shops.................. 1 18,917,890 1.60 Retail 6.57% 51.7% 1.44x
--- ------------ -----
Total/Weighted Average... 19 $269,913,441 22.85% 7.21% 69.2% 1.37x
--- ------------ -----
--- ------------ -----
</TABLE>
Sheraton Suites Portfolio. The Sheraton Suites Portfolio loan is secured
by 3 luxury, all suite, full service hotels, two of which are fee interests and
one of which is a leasehold interest. The combined hotels contain approximately
732 suites which are generally larger than traditional hotel rooms with two
physically separated rooms in the suite. The properties are located in
Wilmington, Delaware (approximately 228 suites), Elk Grove, Illinois
(approximately 253 suites), and Dallas, Texas (approximately 251 suites). The
sponsor of the borrower is Sheraton Suites Investment Limited Partnership
("SSILP"). ITT Sheraton Corporation directly or indirectly owns 24% of the
limited partnership interests and the 1% general partnership interest in SSILP.
ITT Sheraton Corporation is ultimately a wholly-owned subsidiary of Starwood
Hotels & Resorts Worldwide, Inc.
Olen Portfolio. The Olen Portfolio loan is secured by 5 office/industrial
flex properties and 1 office building, each located in Orange County,
California. The properties contain a total of 608,644 rentable square feet,
ranging in size from 30,000 square feet to 186,500 square feet. As of March
1999, the properties had an aggregate occupancy of 99.3%, ranging from 97.4% to
100%. The borrower is a newly formed special purpose Nevada corporation. The
sponsor of the borrower is The Olen Companies, a real estate management and
development company founded in 1973. The Olen Companies currently own commercial
and multifamily real estate throughout the United States, including, as of April
1999, 47 office and industrial properties located in Southern California
containing in excess of three million square feet.
Lakeside Apartments. The Lakeside Apartments loan is secured by a 461-unit
luxury apartment complex located in Newnan, Georgia, which is part of the
metropolitan Atlanta, Georgia area. The first phase of the complex was built in
1991 and the third and final phase, containing 200 units, was completed in March
1998. As of March 1999, Lakeside Apartments had an occupancy rate of 93.5%. The
borrower is a newly formed special purpose Illinois limited partnership. The
sponsor of the borrower is an executive officer of Executive Affiliates, Inc., a
real estate management and development company founded in 1966. As of April
1999, the sponsor, through various entities, owned 18 multifamily properties and
3 hotels throughout the United States.
Wynfrey Hotel. The Wynfrey Hotel loan is secured by the Wynfrey Hotel, a
full-service luxury hotel in the metropolitan Birmingham, Alabama area. In
addition to the hotel's 329 guest rooms on 14 floors and approximately
27,716 square feet of meeting and banquet space, the hotel also has a 224 seat
formal dining restaurant, a 221 seat casual dining restaurant, a piano bar and
lounge, an outdoor swimming pool, a fitness room and a gift shop. The sponsors
of the borrower are James W. Wilson, III and William B. Wilson.
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Wilshire Portfolio. The Wilshire Portfolio loan is secured by 3 properties
(one fee and two leasehold interests): the Wilshire Doheny, the Wilshire Lapeer
and the Wilshire Palm. Each property is a class "A" office building located on
Wilshire Boulevard in Beverly Hills, California. The properties contain a total
of 207,682 rentable square feet and were 95.5% occupied as of March 1999. The
sponsor of the borrowers (3 co-obligors) is Casden Properties Inc., a newly
organized Maryland corporation, and a real estate investment trust sponsor.
Hickory Lake. The Hickory Lake loan is secured by a 726 unit apartment
complex built in 1969, was renovated between 1994 and 1996 and was 90.9%
occupied as of June 1998. The complex is located in Atlanta, Georgia and
consists of three separate phases: The Arbors at Hickory Lake, The Meadows at
Hickory Lake and The Gardens at Hickory Lake. The sponsor of the borrower is The
Pinnacle Companies, which was formed in 1976 and owns 14 multifamily properties
containing 3,994 units in Georgia, South Carolina and Florida.
Westgate Village. The Westgate Village loan is secured by a 342,853 square
foot retail center comprised of two single-story, free-standing buildings,
located in Amarillo, Texas. The north building contains 142,808 square feet and
as of February 1999 was 100% leased to Builders Square and Circuit City. The
south building contains 200,045 square feet, as of February 1999 was 93.4%
leased to seven tenants, and is anchored by K-Mart, PetsMart and Office Max. The
sponsor of the borrower is the Kimco Realty Corporation, a publicly traded owner
and operator of neighborhood and community shopping centers. As of April 1999,
Kimco Realty Corporation's portfolio was comprised of 445 property interests
totaling approximately 58.0 million square feet of gross leasable area located
in 40 states.
1055 Washington Blvd. The 1055 Washington Boulevard loan is secured by a
leasehold interest in a ten-story, class "A" office building containing 181,360
rentable square feet, located in Stamford, Connecticut. The property was 92.2%
occupied as of September 1998. The sponsors of the borrowers are Robert C. Elder
and Raymond W. Miller.
Oak Park Commons. The Oak Park Commons loan is secured by a 136,939 square
foot, one-story neighborhood shopping center located in South Plainfield, New
Jersey. The center was completed in April 1998 and is anchored by A&P, Sears and
CVS. As of October 1998, the center was 100% occupied. The sponsor of the
borrower is the Kimco Realty Corporation, which is described above under the
summary of the Westgate Village loan.
Vista Ridge Plaza I, II & Shops. The Vista Ridge Plaza I, II and Shops
loan is secured by 290,227 square feet of community shopping center space
located in Lewisville, Texas. The center was developed in three phases between
1996 and 1998. The center is anchored by Homeplace, Babies "R" Us and Drug
Emporium and was 100% occupied as of September 1998. The sponsor of the borrower
is the Kimco Realty Corporation, which is described above under the summary of
the Westgate Village loan.
THE MORTGAGE LOAN SELLERS
The Depositor will acquire the Mortgage Loans from the Mortgage Loan
Sellers on or about May 24, 1999 (the "Closing Date") pursuant to separate
mortgage loan purchase agreements (each a "Mortgage Loan Purchase Agreement",
and together, the "Mortgage Loan Purchase Agreements"). The Mortgage Loan
Sellers acquired or originated the Mortgage Loans as described above under
"--Mortgage Loan History."
UNDERWRITING STANDARDS
General. Each Mortgage Loan Seller's commercial real estate finance or
commercial mortgage banking group has the authority to originate fixed-rate,
first lien mortgage loans for securitization. Each Mortgage Loan Seller's
commercial real estate finance or commercial mortgage banking operation is a
vertically integrated entity, staffed by real estate professionals, many of whom
have completed the credit training programs sponsored by such Mortgage Loan
Seller or such Mortgage Loan Seller's predecessors. Each Mortgage Loan Seller's
loan underwriting group is an integral component of the commercial real estate
finance or commercial mortgage banking group which also includes distinct groups
responsible for loan origination and closing mortgage loans. Chase Manhattan's
commercial mortgage banking group also includes a distinct group responsible for
servicing of mortgage loans.
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Upon receipt of a loan package, the respective Mortgage Loan Seller's loan
underwriters commence an extensive review of the borrower's financial condition
and creditworthiness and the real estate which will secure the loan.
Loan Analysis. Generally, each Mortgage Loan Seller performs both a credit
analysis and collateral analysis with respect to a loan applicant. The credit
analysis of the borrower includes a review of historical financial statements,
including operating statements and rent rolls (generally unaudited), historical
tax returns, third party credit reports, judgment, lien, bankruptcy and pending
litigation searches and, if applicable, the loan payment history of the
borrower. Each Mortgage Loan Seller also performs a qualitative analysis which
incorporates independent credit checks, periodical searches, industry research
and published debt and equity information with respect to certain principals of
the borrower as well as the borrower itself. Generally, borrowers are required
to be single-purpose entities. The collateral analysis includes an analysis of
the historical property operating statements, rent rolls and a projection of
future performance and a review of tenant leases. A member of the loan
underwriting team also conducts a site inspection or causes such inspection to
be performed to confirm the occupancy rate of the mortgaged property, analyzes
the market and assesses the utility of the mortgaged property within the market.
Each Mortgage Loan Seller requires third party appraisals, as well as
environmental and building condition reports. Each report is reviewed for
acceptability by a Mortgage Loan Seller staff member for compliance with program
standards and such staff member approves or rejects such report. The results of
these reviews are incorporated into the underwriting report.
Loan Approval. Prior to commitment, all mortgage loans must be approved by
the applicable Mortgage Loan Seller's credit committee in accordance with its
credit policies. The credit committee may approve a mortgage loan as
recommended, modify the loan terms or decline a loan transaction. All mortgage
loans purchased by either Mortgage Loan Seller from non-affiliated originators
must be reviewed by the underwriting staff and credit committee to determine if
they comply with such Mortgage Loan Seller's underwriting standards.
Debt Service Coverage Ratio and LTV Ratio. Each Mortgage Loan Seller's
underwriting standards generally require the following minimum debt service
coverage ratios for each of the indicated property types:
<TABLE>
<CAPTION>
PROPERTY TYPE DSC RATIO GUIDELINE LTV RATIO GUIDELINE
----------------------- ------------------- -------------------
<S> <C> <C>
Multifamily............ 1.20x 80%
Anchored Retail........ 1.20x-1.25x 75-80%
Unanchored Retail...... 1.25x-1.30x 75%
Office................. 1.25x 75%
Industrial/Warehouse... 1.25x 75%
Hospitality............ 1.35x-1.40x 70%
Credit Lease........... 1.00x 100%
Self-Storage........... 1.25x 75%
Parking Facility....... 1.30x 75%
Health Care............ 1.25x 75%
Mixed Use.............. 1.25x 75%
Mobile Home Park....... 1.20x 80%
</TABLE>
The debt service coverage ratio guidelines listed above are calculated
based on Net Cash Flow (as defined in the Prospectus) at the time of
origination. In addition, each Mortgage Loan Seller's underwriting guidelines
generally permit a maximum amortization period of 30 years. However,
notwithstanding the foregoing, in certain circumstances the actual debt service
coverage ratios, loan-to-value ratios and amortization periods for the mortgage
loans originated by such Mortgage Loan Seller may vary from these guidelines.
See Annex A-1 to this Prospectus Supplement.
Escrow Requirements. Except with respect to credit lease loans, each
Mortgage Loan Seller requires substantially all borrowers to fund various
escrows for taxes and insurance, capital expenses and replacement
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reserves. Generally, the required escrows for mortgage loans originated by each
Mortgage Loan Seller are as follows:
o Taxes--Typically an initial deposit and monthly escrow deposits equal to
1/12th of the annual property taxes (based on the most recent property
assessment and the current millage rate) are required to provide the
Mortgage Loan Seller with sufficient funds to satisfy all taxes and
assessments at least one month prior to their respective due dates.
o Insurance--If the property is insured under an individual policy (i.e.,
the property is not covered by a blanket policy), typically an initial
deposit and monthly escrow deposits equal to 1/12th of the annual
property insurance premium are required to provide the Mortgage Loan
Seller with sufficient funds to pay all insurance premiums at least one
month prior to their respective due dates. If the property is covered by
a blanket policy of insurance, the Mortgage Loan Seller reserves the
right in the mortgage to require a separate insurance policy and
insurance escrows.
o Replacement Reserves--Replacement reserves are calculated in accordance
with the expected useful life of the components of the property during
the term of the mortgage loan.
Notwithstanding the actual level of escrowed reserves, the following minimum
reserve levels were assumed by each Mortgage Loan Seller in determining Net Cash
Flow:
<TABLE>
<S> <C>
Multifamily............ $250 per unit
Retail................. $0.10-0.15 per square foot
Office................. $0.10-0.20 per square foot
Industrial/Warehouse... $0.10 per square foot
Hospitality............ 4%-5% of gross revenue
Self-Storage........... $0.15 per square foot
Parking Facility....... $45 per space
Health Care............ $200-350 per unit
Mixed Use.............. $0.10-0.20 per square foot
Mobile Home Park....... $50-100 per pad
</TABLE>
o Completion Repair/Environmental Remediation--Typically, a completion
repair or remediation reserve is required. An initial deposit, upon
funding of the mortgage loan, in an amount equal to at least 125% of the
estimated costs of repairs or replacements to be completed within the
first year of the mortgage loan pursuant to the building condition report
is required.
o Re-tenanting/Debt Service Coverage--In some cases, major tenants have
lease expirations within the Mortgage Loan term. To mitigate this risk,
special reserves are required to be funded either at closing of the
Mortgage Loan and/or during the Mortgage Loan term to cover certain
anticipated leasing commissions or tenant improvement costs which might
be associated with releasing the space occupied by such tenants.
ASSIGNMENT OF THE MORTGAGE LOANS; REPURCHASES AND SUBSTITUTIONS
On 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 sold by the applicable Mortgage Loan Seller
(collectively, as to each Mortgage Loan, the "Mortgage File"): (i) the original
Mortgage Note, endorsed on its face or by allonge attached thereto, without
recourse, to the order of the Trustee (or, if the original Mortgage Note has
been lost, an affidavit to such effect from the applicable Mortgage Loan Seller
or another prior holder, together with a copy of the Mortgage Note); (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;
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(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) the original assignment of all unrecorded documents relating to the
Mortgage Loan; (vii) originals or copies of all modification, consolidation,
assumption and substitution agreements in those instances in which the terms or
provisions of the Mortgage or Mortgage Note have been modified or the Mortgage
Loan has been assumed or consolidated; (viii) 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; (ix) any
filed copies (bearing evidence of filing) or other evidence of filing
satisfactory to the Trustee of any UCC financing statements, related amendments
and continuation statements in the possession of the applicable Mortgage Loan
Seller and (x) an original assignment in favor of the Trustee of any financing
statement executed and filed in favor of the applicable Mortgage Loan Seller in
the relevant jurisdiction; and (xi) the original or copy of any ground lease,
any Credit Lease, any Lease Enhancement Policy, Residual Value Insurance Policy
or guaranty relating to a Mortgage Loan.
As described in the Pooling and Servicing Agreement, the Trustee or a
Custodian on its behalf is 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 such
Mortgage Loan Seller's 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 (1) 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
applicable Mortgage Rate) to but not including the Due Date in the Collection
Period in which the purchase is to occur and (iii) certain Additional Trust Fund
Expenses in respect of such Mortgage Loan, including but not limited to,
servicing expenses that are reimbursable to the Master Servicer, the Special
Servicer or the Trustee plus any interest thereon and on any related P&I
Advances or (2) substitute a Qualified Substitute Mortgage Loan for such
Mortgage Loan and pay the Trustee a shortfall amount equal to the difference
between the Purchase Price of the deleted Mortgage Loan calculated as of the
date of substitution and the Stated Principal Balance of such Qualified
Substitute Mortgage Loan as of the date of substitution (the "Substitution
Shortfall Amount"); provided that the applicable Mortgage Loan Seller will
generally 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
or substitution obligation constitutes 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. Each Mortgage Loan
Seller is solely responsible for such Mortgage Loan Seller's repurchase or
substitution obligation, and such obligations will not be the responsibility of
the Depositor.
The Pooling and Servicing Agreement requires the Trustee promptly to cause
each of the assignments described in clauses (iv), (v) and (ix) 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.
A "Qualified Substitute Mortgage Loan" is a mortgage loan which must, on
the date of substitution: (i) have an outstanding Stated Principal Balance,
after application of all scheduled payments of principal and interest due during
or prior to the month of substitution, not in excess of the Stated Principal
Balance of the deleted Mortgage Loan as of the Due Date in the calendar month
during which the substitution occurs; (ii) have a Mortgage Rate not less than
the Mortgage Rate of the deleted Mortgage Loan; (iii) have the same Due Date as
the deleted Mortgage Loan; (iv) accrue interest on the same basis as the deleted
Mortgage Loan (for example, on the basis of a 360-day year consisting of twelve
30-day months); (v) have a remaining term to stated maturity not greater than,
and not more than two years less than, the remaining term to stated maturity of
the deleted Mortgage
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Loan; (vi) have an original loan-to-value ratio not higher than that of the
deleted Mortgage Loan and a current loan-to-value ratio not higher than the
then-current loan-to-value ratio of the deleted Mortgage Loan; (vii) comply as
of the date of substitution with all of the representations and warranties set
forth in the applicable Mortgage Loan Purchase Agreement; (viii) have an
environmental report with respect to the related Mortgaged Property which will
be delivered as a part of the related Mortgage File; (ix) have an original debt
service coverage ratio not less than the original debt service coverage ratio of
the deleted Mortgage Loan; (x) be determined by an Opinion of Counsel to be a
"qualified replacement mortgage" within the meaning of Section 860G(a)(4) of the
Code; (xi) not have a maturity date after the date three years prior to the
Rated Final Distribution Date; (xii) not be substituted for a deleted Mortgage
Loan unless the Trustee has received prior confirmation in writing by each
Rating Agency that such substitution will not result in the withdrawal,
downgrade, or qualification of the rating assigned by the Rating Agency to any
Class of Certificates then rated by the Rating Agency (the cost, if any, of
obtaining such confirmation to be paid by the applicable Mortgage Loan Seller);
(xiii) have a date of origination that is not more than 12 months prior to the
date of substitution; (xiv) has been approved by the Controlling Class
Representative; provided, that the Controlling Class Representative shall cease
to have the right to approve the substitution of a Qualified Substitute Mortgage
Loan for a deleted Mortgage Loan after the aggregate of the Stated Principal
Balances of all Qualified Substitute Mortgage Loans which were previously
substituted for deleted Mortgage Loans exceeds 10% of the aggregate Stated
Principal Balance of all the Mortgage Loans as of the Cut-Off Date; provided,
further, that such approval of the Controlling Class Representative may not be
unreasonably withheld, as determined by the Special Servicer; and (xv) not be
substituted for a deleted Mortgage Loan if it would result in the termination of
the REMIC status of any of the REMICs or the imposition of tax on any of the
REMICs other than a tax on income expressly permitted or contemplated to be
received by the terms of the Pooling and Servicing Agreement. In the event that
one or more mortgage loans are substituted for one or more deleted Mortgage
Loans, then the amounts described in clause (i) shall be determined on the basis
of aggregate principal balances and the rates described in clause (ii) above and
the remaining term to stated maturity referred to in clause (v) above shall be
determined on a weighted average basis. When a Qualified Substitute Mortgage
Loan is substituted for a deleted Mortgage Loan, the applicable Mortgage Loan
Seller shall certify that such Mortgage Loan meets all of the requirements of
the above definition and shall send such certification to the Trustee.
REPRESENTATIONS AND WARRANTIES; REPURCHASES AND SUBSTITUTIONS
In each Mortgage Loan Purchase Agreement, the applicable Mortgage Loan
Seller has represented and warranted with respect to each Mortgage Loan (subject
to certain exceptions specified in the applicable Mortgage Loan Purchase
Agreement), 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 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) 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) immediately prior to the sale, transfer and assignment to the
Depositor, the applicable Mortgage Loan Seller had good title to, and was
the sole owner of, each Mortgage Loan, and is transfering the Mortgage Loan
free and clear of any and all liens, pledges, charges or security interests
of any nature encumbering such mortgage loan;
(iv) the proceeds of such Mortgage Loan have been fully disbursed and
there is no requirement for future advances thereunder;
(v) each of the related Mortgage Note, related Mortgage, related
assignment of leases, if any, and other agreements executed in connection
with such Mortgage Loan are the legal, valid and binding obligations of the
related mortgagor (subject to any nonrecourse provisions therein and any
state anti-deficiency legislation), enforceable in accordance with their
terms, except with respect to provisions relating to default interest,
yield maintenance charges or prepayment premiums and except as such
enforcement may be limited
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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);
(vi) 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(s) or other agreements executed in
connection therewith, and, as of the Cut-Off Date, to the best 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;
(vii) the assignment of the related Mortgage and assignment of leases
in favor of the Trustee constitutes the legal, valid and binding assignment
of such Mortgage to the Trustee (subject to customary limitations);
(viii) the related Mortgage is a valid and enforceable first lien on
the related Mortgaged Property except for (a) liens for current real
property taxes, ground rents, water charges, sewer rents and assessments
not yet due and payable, (b) covenants, conditions and restrictions, rights
of way, easements and other matters of public record, none of which,
individually or in the aggregate, materially interferes with the current
use of the Mortgaged Property or the security intended to be provided by
such Mortgage or with the borrower's ability to pay its obligations when
they become due or materially and adversely affects the value of the
Mortgaged Property and (c) the exceptions (general and specific) set forth
in such policy or appearing of record, none of which, individually or in
the aggregate, materially interferes with the current use of the Mortgaged
Property or the security intended to be provided by such Mortgage or with
the borrower's ability to pay its obligations when they become due or
materially and adversely affects the value of the Mortgaged Property;
(ix) all taxes and governmental assessments that prior to the Cut-Off
Date became due and owing in respect of the related Mortgaged Property have
been paid, or an escrow of funds in an amount sufficient to cover such
payments has been established;
(x) to the applicable Mortgage Loan Seller's knowledge as of the
Cut-Off Date, after conducting due diligence consistent with the practice
of institutional lenders generally for properties of the same type as the
related Mortgaged Property, each related Mortgaged Property was free and
clear of any material damage that would affect materially and adversely the
value of such Mortgaged Property as security for the Mortgage Loan and as
of the Cut-Off Date there was no proceeding pending for the total or
partial condemnation of such Mortgaged Property;
(xi) as of the date of its origination, all insurance coverage
required under each related Mortgage, which insurance covered such risks as
were customarily acceptable to prudent commercial and multifamily mortgage
lending institutions lending on the security of property comparable to the
related Mortgaged Property in the jurisdiction in which such Mortgaged
Property is located, and with respect to a fire and extended perils
insurance policy, was in an amount (subject to a customary deductible) at
least equal to the replacement cost of improvements located on such
Mortgaged Property, or an amount at least equal to the initial principal
balance of the Mortgage Loan, was in full force and effect with respect to
each related Mortgaged Property;
(xii) as of the Cut-Off Date, the Mortgage Loan is not, and in the
prior 12 months (or since the date of origination if such Mortgage Loan has
been originated within the past 12 months), has not been, 30 days or more
past due in respect of any Scheduled Payment; and
(xiii) one or more environmental site assessments were performed by an
environmental consulting firm independent of the applicable Mortgage Loan
Seller and such Mortgage Loan Seller's affiliates with respect to each
related Mortgaged Property during the 18-month period preceding the
origination of the related Mortgage Loan, and the applicable Mortgage Loan
Seller, having made no independent inquiry other than to review the
report(s) prepared in connection with the assessment(s) referenced herein,
has no knowledge and has received no notice of any material and adverse
environmental condition or circumstance affecting such Mortgaged Property
that was not disclosed in such report(s).
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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, is
obligated pursuant to the applicable Mortgage Loan Purchase Agreement (the
relevant rights under which have been assigned by the Depositor to the Trustee)
to either substitute a Qualified Substitute Mortgage Loan and pay any
Substitution Shortfall Amount or to repurchase the affected Mortgage Loan within
such 90-day period at the applicable Purchase Price; provided, that the
applicable Mortgage Loan Seller generally has 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 substitution or repurchase obligation constitutes the sole
remedy available to the Certificateholders and the Trustee for any uncured
breach of any Mortgage Loan Seller's representations and warranties regarding
its Mortgage Loans. Each Mortgage Loan Seller is the sole warranting party in
respect of the Mortgage Loans sold by such Mortgage Loan Seller to the
Depositor, and none of the Depositor, the other Mortgage Loan Seller nor any of
such party's affiliates will be obligated to substitute or repurchase any such
affected Mortgage Loan in connection with a breach of such Mortgage Loan
Seller's representations and warranties if such Mortgage Loan Seller defaults on
its obligation to do so.
CHANGES IN MORTGAGE POOL CHARACTERISTICS
The descriptions in this Prospectus Supplement of the Mortgage Loans and
the Mortgaged Properties are based upon the Mortgage Pool as it is expected to
be constituted as of the close of business on the Closing Date, assuming that
(i) all scheduled principal and interest payments due on or before the Cut-Off
Date will be made, and (ii) there will be no principal prepayments on or before
the Cut-Off Date. Prior to the issuance of the Certificates, Mortgage Loans may
be removed from the Mortgage Pool as a result of prepayments, delinquencies,
incomplete documentation or otherwise, if the Depositor or the applicable
Mortgage Loan Seller deems such removal necessary, appropriate or desirable. A
limited number of other mortgage loans may be included in the Mortgage Pool
prior to the issuance of the Certificates, unless including such mortgage loans
would materially alter the characteristics of the Mortgage Pool as described in
this Prospectus Supplement. The Depositor believes that the information set
forth in this Prospectus Supplement will be representative of the
characteristics of the Mortgage Pool as it will be constituted at the time the
Certificates are issued, although the range of Mortgage Rates and maturities as
well as other characteristics of the Mortgage Loans described in this Prospectus
Supplement 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.
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SERVICING OF THE MORTGAGE LOANS
GENERAL
The Master Servicer and the Special Servicer, either directly or through
sub-servicers, are required to service and administer the Mortgage Loans on
behalf of the Trustee for the benefit of the Certificateholders, in accordance
with applicable law, the terms of the Pooling and Servicing Agreement and the
terms of the respective Mortgage Loans and, to the extent consistent with the
foregoing, (a) 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
with similar borrowers (i) for other third-parties, giving due consideration to
customary and usual standards of practice of prudent institutional commercial
mortgage lenders servicing their own loans, or (ii) held in its own portfolio,
whichever standard is higher, (b) with a view to the maximization of the
recovery on such Mortgage Loans on a net present value basis, and (c) 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, any Mortgage Loan Seller or any other party to the Pooling and
Servicing Agreement; (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 in this Prospectus Supplement); and (v) the ownership, servicing or
management for others of any other mortgage loans or real property.
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 in this Prospectus Supplement 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 has 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 in this
Prospectus Supplement). In addition to the circumstances for resignation of the
Master Servicer set forth in the Prospectus, the Master Servicer and the Special
Servicer each has the right to resign at any other time provided that (i) a
willing successor thereto has been found; provided that with respect to the
resignation of the Master Servicer, Chase Manhattan shall first have been
offered the opportunity to accept the appointment and Chase Manhattan and the
Master Servicer have been unable to agree upon terms or Chase Manhattan has
declined or otherwise been unable to accept such appointment, (ii) 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, (iii) the resigning party pays all costs
and expenses in connection with such transfer, and (iv) 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). As of March 31, 1999, the Master Servicer was rated "CMS3" by
Fitch and is currently ranked "strong" by Standard & Poor's as a commercial
mortgage loan master servicer. Although the Master Servicer will be authorized
to employ agents, including sub-servicers, to directly service the Mortgage
Loans for which it will be responsible, the Master Servicer will remain liable
for its servicing obligations under the Pooling and Servicing Agreement. The
Master Servicer will appoint Chase Manhattan as sub-servicer with respect to the
Mortgage Loans sold by Chase Manhattan to the Depositor. The Master Servicer is
a wholly owned subsidiary of First Union Corporation. The Master Servicer's
principal servicing offices are located at NC 1075, 8739 Research Drive--URP4,
Charlotte, North Carolina 28262-1075.
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As of March 31, 1999, the Master Servicer and its affiliates were
responsible for servicing approximately 4,202 commercial and multifamily loans,
totaling approximately $22.6 billion in aggregate outstanding principal amounts,
including loans securitized in mortgage-backed securitization transactions.
Banc One Mortgage Capital Markets, LLC ("BOMCM"), a Delaware limited
liability company, will be the Special Servicer and in such capacity will be
responsible for servicing the Specially Serviced Mortgage Loans. As of March 31,
1999, BOMCM served as the named special servicer on 63 securitized transactions
encompassing 14,853 loans, with an aggregate principal balance of approximately
$41 billion and was rated "CSS1" by Fitch. Additionally, BOMCM manages a master
servicing portfolio of commercial and multifamily loans with an aggregate
principal balance of approximately $26.7 billion, the collateral for which is
located in 49 states, Puerto Rico, the District of Columbia, Mexico and the
Caribbean. BOMCM's servicing operations are located at 1717 Main Street, Dallas,
Texas 75201.
The information set forth in this Prospectus Supplement concerning the
Master Servicer and the Special Servicer has been provided by the Master
Servicer and Special Servicer, respectively, and neither the Depositor nor
either Underwriter makes any representation or warranty as to the accuracy or
completeness of such information. The Master Servicer (apart from its
obligations as a Mortgage Loan Seller and except for the information in the
first two paragraphs under this heading) will make no representations as to the
validity or sufficiency of the Pooling and Servicing Agreement, the
Certificates, the Mortgage Loans, this Prospectus Supplement or related
documents.
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 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 "--The Controlling Class
Representative" in this Prospectus Supplement. The "Controlling Class" is 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; provided that if no Class of Sequential Pay
Certificates has a Certificate Balance that is greater than 25% of its original
Certificate Balance, the then outstanding class of Sequential Pay Certificates
with the latest alphabetical class designation will be the "Controlling Class."
The Class A-1 and Class A-2 Certificates will be treated as one class for
determining the Controlling Class. 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 THE CERTIFICATES--Voting
Rights" in this Prospectus Supplement.
The Special Servicer is responsible for servicing and administering any
Mortgage Loan as to which (a) any Periodic Payment shall be delinquent 60 or
more days (or, in the case of a Balloon Payment, if the related borrower
continues to make the Periodic Payment and the Master Servicer receives written
evidence that the related borrower has obtained a binding commitment from an
institutional lender 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 in its good faith reasonable judgment
based on communications with the related mortgagor that a default in making a
Periodic 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 reasonably expects the related borrower to continue to make the
Periodic Payment and the Master Servicer receives written evidence, among other
things, that the related borrower has obtained a binding commitment from an
institutional lender 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
60 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
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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 (each event described in clauses
(a) through (g) above, a "Servicing Transfer Event").
If a Servicing Transfer Event occurs with respect to any Mortgage Loan, the
Master Servicer is in general required to transfer its servicing
responsibilities with respect to such Mortgage Loan 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 in this Prospectus Supplement as "Specially Serviced
Mortgage Loans" and, together with any REO Properties, constitute "Specially
Serviced Trust Fund Assets." The Master Servicer has 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):
(a) with respect to the circumstances described in clause (a) of the
definition of Servicing Transfer Event, when the related borrower has made
three consecutive full and timely (or, in the case of any Semi-Annual Loan,
two consecutive) Periodic 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);
(b) with respect to any of the circumstances described in clauses
(b), (d), (e) and (f) of the definition of Servicing Transfer Event, 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;
(c) with respect to the circumstances described in clause (c) of the
definition of Servicing Transfer Event, when such default is cured; and
(d) with respect to the circumstances described in clause (g) of the
definition of Servicing Transfer Event, when such proceedings are
terminated;
so long as at that time no other Servicing Transfer Event then exists and
provided no additional default is foreseeable in the reasonable judgment of the
Special Servicer.
SERVICING AND OTHER COMPENSATION AND PAYMENT OF EXPENSES
The principal compensation to be paid to the Master Servicer in respect of
its servicing activities is the Master Servicing Fee. The "Master Servicing Fee"
is payable monthly (or, with respect to Semi-Annual Loans, semi-annually) on a
loan-by-loan basis from amounts received in respect of interest on each Mortgage
Loan (including each Specially Serviced Mortgage Loan and from REO Revenue with
respect to each REO Mortgage Loan), is calculated on the basis of a 360-day year
consisting of twelve 30-day months, accrues at the related Master Servicing Fee
Rate and is computed on the basis of the same principal amount respecting which
any related interest payment due on the Mortgage Loan is computed. The "Master
Servicing Fee Rate" is a per annum rate ranging from 0.05% to 0.1125%. As of the
Cut-Off Date the weighted average Master Servicing Fee Rate will be 0.07%
per annum.
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If a borrower voluntarily prepays a Mortgage Loan on a date that is prior
to its Due Date in any Collection Period, the amount of interest (net of related
Master Servicing Fees and, if applicable, Additional Interest) 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 and, if applicable, Additional Interest 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 (or, with respect
to any Semi-Annual Loan, the first day of the month). If such a principal
prepayment occurs during any Collection Period after the Due Date (or, with
respect to any Semi-Annual Loan, the first day of the month) for such Mortgage
Loan in such Collection Period, the amount of interest (net of related Master
Servicing Fees) 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, 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 is required to deposit
into the Certificate Account (such deposit, a "Compensating Interest Payment"),
without any right of reimbursement therefor, with respect to each Mortgage Loan
(other than a Specially Serviced Mortgage Loan) that was subject to a voluntary
Principal Prepayment during the most recently ended Collection Period creating a
Prepayment Interest Shortfall, an amount equal to the lesser of (i) the sum of
(A) the Master Servicing Fee (up to a Master Servicing Fee Rate of 0.03% per
annum) received by the Master Servicer during such Collection Period on such
Mortgage Loan and (B) investment income earned by the Master Servicer on the
related Principal Prepayment during the most recently ended Collection Period,
and (ii) the amount of the related Prepayment Interest Shortfall. 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 or involuntary prepayments.
The principal compensation to be paid to the Special Servicer in respect of
its special servicing activities is the Special Servicing Fee (together with the
Master Servicing Fee, the "Servicing Fees") and, under the circumstances
described in this Prospectus Supplement, Principal Recovery Fees and Workout
Fees. The "Special Servicing Fee" is calculated on the basis of a 360-day year
consisting of twelve 30-day months, accrues at a rate (the "Special Servicing
Fee Rate") equal to 0.25% per annum and is computed on the Stated Principal
Balance of such Specially Serviced Mortgage Loan or REO Mortgage Loan, as the
case may be. However, earned Special Servicing Fees are 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
(or REO Mortgage Loan) will cease to accrue if such loan (or the related REO
Property) is liquidated or if such loan becomes a Corrected Mortgage Loan. The
Special Servicer is entitled to a "Principal Recovery Fee" with respect to each
Specially Serviced Trust Fund Asset, which Principal Recovery Fee generally will
be in an amount equal to 1.00% of all amounts received in respect thereof.
However, no Principal Recovery Fee will be payable in connection with, or out
of, insurance proceeds, condemnation proceeds or Liquidation Proceeds (as
defined in the Prospectus) resulting from, the purchase of any Specially
Serviced Trust Fund Asset (i) by either Mortgage Loan Seller (as described in
this Prospectus Supplement under "DESCRIPTION OF THE MORTGAGE POOL--Assignment
of the Mortgage Loans; Repurchases and Substitutions" and "--Representations and
Warranties; Repurchases and Substitutions"), (ii) by the Master Servicer, the
Special Servicer, the Depositor or the Majority Subordinate Certificateholder as
described in this Prospectus Supplement under "DESCRIPTION OF THE
CERTIFICATES--Termination" or (iii) in certain other limited circumstances. The
Special Servicer also is entitled to a "Workout Fee" with respect to each
Corrected Mortgage Loan, which is generally equal to 1.00% of all payments of
interest and principal received on such Mortgage Loan for so long as it remains
a Corrected Mortgage Loan.
As additional servicing compensation, the Master Servicer or the Special
Servicer is entitled to retain all assumption and modification fees, assumption
application fees, late charges, penalty interest and Prepayment Interest
Excesses collected from borrowers on Mortgage Loans. In addition, each of the
Master Servicer and the Special Servicer 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
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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 is, in general, 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 is not entitled to reimbursement therefor
except as expressly provided in the Pooling and Servicing Agreement. However,
each of the Master Servicer and Special Servicer is 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 Mortgage Loan with respect to which such expenses were incurred.
See "DESCRIPTION OF THE CERTIFICATES--Distributions" in this Prospectus
Supplement and "DESCRIPTION OF THE POOLING AGREEMENTS--Certificate Account" and
"--Servicing Compensation and Payment of Expenses" in the Prospectus.
As and to the extent described in this Prospectus Supplement under
"DESCRIPTION OF THE CERTIFICATES--P&I Advances," each of the Master Servicer,
the Special Servicer and the Trustee is 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, first out of late payment
charges and penalty interest on such Mortgage Loan received during the
Collection Period in which such reimbursement is made and then from general
collections on the Mortgage Loans then on deposit in the Certificate Account.
MODIFICATIONS, WAIVERS AND AMENDMENTS
The Pooling and Servicing Agreement permits 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 related 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
corresponding principal prepayment in an amount not less than the fair market
value of the property released, (iv) permit the transfer of equity interests in
the related borrower or an equity owner of the borrower that is required to be a
special purpose entity that would result, in the aggregate during the term of
the related Mortgage Loan, in a transfer greater than 49% of the total interest
in the borrower and/or any equity owner of the borrower that is required to be a
special purpose entity without the prior written confirmation from each Rating
Agency that such change will not result in the qualification, downgrade or
withdrawal of the ratings then assigned to the Certificates or (v) in the good
faith, reasonable 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 Periodic 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
reasonable, good faith judgment of the Special Servicer, such default is
reasonably foreseeable, (y) in the reasonable, good faith judgment of the
Special Servicer, such modification, would increase the recovery to
Certificateholders on a net present value basis 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, is the Special Servicer permitted to (i) extend the maturity date of a
Mortgage Loan beyond
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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 and the
related borrower 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 (and
not by the corresponding fee simple interest), 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 is 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" in this Prospectus Supplement.
For any Mortgage Loan other than a Specially Serviced Mortgaged Loan and
subject to the rights of the Special Servicer, the Master Servicer is
responsible for any request by a borrower for the consent to modify, waive or
amend certain terms as specified in the Pooling and Servicing Agreement,
including, without limitation, (i) approving certain leasing activity,
(ii) approving certain substitute property managers and (iii) approving certain
consents with respect to right-of-ways and easements and consents to
subordination of the related Mortgage Loan to such easements or right-of-ways.
THE CONTROLLING CLASS REPRESENTATIVE
The Controlling Class Representative is entitled to advise the Special
Servicer with respect to the following actions of the Special Servicer (subject
to the succeeding paragraph), and the Special Servicer is not 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" in this
Prospectus Supplement);
(iv) any determination to bring an REO Property into compliance with
applicable environmental laws or to otherwise address hazardous materials
located at an REO Property;
(v) any acceptance of substitute or additional collateral for a
Mortgage Loan;
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(vi) any waiver of a "due-on-sale" or "due-on-encumbrance" clause;
and
(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 REMIC Provisions, provision of the
Pooling and Servicing Agreement or applicable law, 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; SALE OF MORTGAGE LOANS
If title to any Mortgaged Property is acquired by the Trustee on behalf of
the Certificateholders pursuant to foreclosure proceedings instituted by the
Special Servicer or otherwise, the Special Servicer, on behalf of such holders,
is required to sell the Mortgaged Property by the end of the third calendar year
following the year 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 three years after the end of the calendar year in which
it was acquired 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 is generally 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 is obligated to operate
and manage any Mortgaged Property acquired as REO Property in a manner that (i)
maintains its status as "foreclosure property" under the REMIC Provisions and
(ii) would, to the extent commercially feasible and consistent with the forgoing
clause (i), 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
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a tax on "prohibited transactions" under Section 860F of the Code (either such
tax referred to in this Prospectus Supplement 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 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 "MATERIAL FEDERAL
INCOME TAX CONSEQUENCES" in this Prospectus Supplement and "MATERIAL FEDERAL
INCOME TAX CONSEQUENCES--REMICs" in the Prospectus.
Each of the Majority Subordinate Certificateholder (as defined in this
Prospectus Supplement), the Special Servicer and the Master Servicer, in that
order, has been granted a right of first refusal to purchase any defaulted
Mortgage Loan at a cash price equal to the outstanding principal balance of such
Mortgage Loan as of the date of purchase, all accrued but unpaid interest, and
related fees and expenses. If such interested parties refuse to exercise such
right, the Special Servicer may offer to sell any defaulted Mortgage Loan if the
Special Servicer determines, consistent with the Servicing Standard, that such
sale would be in the best economic interest of the Trust Fund. In connection
with such a sale, the Special Servicer is not obligated to accept the highest
bid if the Special Servicer determines, in accordance with the Servicing
Standard, that rejection of the highest bid would be in the best interest of the
Certificateholders.
INSPECTIONS; COLLECTION OF OPERATING INFORMATION
The Special Servicer is 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,
with respect to each Mortgage Loan (other than a Specially Serviced Mortgage
Loan) with a principal balance at the time of such inspection of more than or
equal to $2 million, the Master Servicer is required to inspect or cause to be
inspected the related Mortgaged Property every calendar year and with respect to
each Mortgage Loan (other than a Specially Serviced Mortgage Loan) with a
principal balance at the time of such inspection of less than $2 million once
every other year. The Special Servicer and the Master Servicer each 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 or the Master Servicer is also required consistent
with the Servicing Standard 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.
Generally, the Mortgage Loans require 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 Master Servicer or 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 or the Master Servicer, as
applicable. See "DESCRIPTION OF THE CERTIFICATES--Reports to Certificateholders;
Available Information" in this Prospectus Supplement.
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DESCRIPTION OF THE CERTIFICATES
GENERAL
The First Union National Bank-Chase Manhattan Bank Commercial Mortgage
Trust, Commercial Mortgage Pass-Through Certificates, Series 1999-C2 (the
"Certificates") will be issued pursuant to a Pooling and Servicing Agreement,
dated as of May 1, 1999, among the Depositor, the Master Servicer, the Special
Servicer, and the Trustee (the "Pooling and Servicing Agreement"). The
Certificates 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 and in the case of Semi-Annual Loans, interest accrued 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, the Distribution Account, the REO Accounts and the Interest Reserve
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 consist of the following classes (each, a "Class")
designated as: (i) the Class A-1 and Class A-2 Certificates (together, the
"Class A Certificates"); (ii) the Class B, Class C, Class D, Class E, Class F,
Class G, Class H, Class J, Class K, Class L, Class M Certificates and Class N
Certificates (collectively, the "Subordinate Certificates" and, together 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 IO, Class B, Class C, Class D,
Class E and Class F Certificates (collectively, the "Offered Certificates") are
offered hereby. The Class G, Class H, Class J, Class K, Class L, Class M and
Class N Certificates (collectively, the "Non-Offered Certificates") and the
REMIC Residual Certificates have not been registered under the Securities Act
and are not offered hereby. Accordingly, information in this Prospectus
Supplement regarding the terms of the Non-Offered Certificates is provided
solely because of its potential relevance to a prospective purchaser of an
Offered Certificate.
REGISTRATION AND DENOMINATIONS
The Offered Certificates will be made available in book-entry format
through the facilities of The Depository Trust Company ("DTC"). The Class A-1,
Class A-2, Class B, Class C, Class D, Class E and Class F Certificates will be
offered in denominations of not less than $10,000 actual principal amount and in
integral multiples of $1 in excess thereof. The Class IO Certificates will be
offered in minimum denominations of $1,000,000 notional amount and in integral
multiples of $1 in excess of those amounts.
Holders of Offered Certificates may hold their Certificates through DTC (in
the United States) or Cedelbank or Euroclear (in Europe) if they are
Participants of such respective system, or indirectly through organizations that
are Participants in such systems. Cedelbank and Euroclear will hold omnibus
positions on behalf of the Cedelbank Participants and the Euroclear
Participants, respectively, through customers' securities accounts in Cedelbank
and Euroclear's names on the books of their respective depositaries
(collectively, the "Depositaries") which in turn will hold such positions in
customers' securities accounts in the Depositaries' names on the books of DTC.
DTC is a limited-purpose trust company organized under the New York Banking Law,
a "banking organization" 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 Section 17A of the Securities Exchange Act of 1934, as
amended. DTC was created to hold securities for its Participants and to
facilitate the clearance and settlement of securities transactions between
Participants through electronic computerized book-entries, thereby eliminating
the need for physical movement of certificates. Participants include securities
brokers and dealers, banks, trust companies and clearing corporations. Indirect
access to the DTC system also is available to others such as banks, brokers,
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dealers and trust companies that clear through or maintain a custodial
relationship with a Participant, either directly or indirectly ("Indirect
Participants").
Transfers between DTC Participants will occur in accordance with DTC rules.
Transfers between Cedelbank Participants and Euroclear Participants will occur
in accordance with their applicable rules and operating procedures.
Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly through Cedelbank Participants or
Euroclear Participants, on the other, will be effected in DTC in accordance with
DTC rules on behalf of the relevant European international clearing system by
its Depositary; however, such cross-market transactions will require delivery of
instructions to the relevant European international clearing system by the
counterparty in such system in accordance with its rules and procedures and
within its established deadlines (European time). The relevant European
international clearing system will, if the transaction meets its settlement
requirements, deliver instructions to its Depositary to take action to effect
final settlement on its behalf by delivering or receiving securities in DTC, and
making or receiving payment in accordance with normal procedures for same-day
funds settlement applicable to DTC. Cedelbank Participants and Euroclear
Participants may not deliver instructions directly to the Depositaries.
Because of time-zone differences, credits of securities in Cedelbank or
Euroclear as a result of a transaction with a DTC Participant will be made
during the subsequent securities settlement processing, dated the Business Day
following the DTC settlement date, and such credits or any transactions in such
securities settled during such processing will be reported to the relevant
Cedelbank Participant or Euroclear Participant on such Business Day. Cash
received in Cedelbank or Euroclear as a result of sales of securities by or
through a Cedelbank Participant or a Euroclear Participant to a DTC Participant
will be received with value on the DTC settlement date but will be available in
the relevant Cedelbank or Euroclear cash account only as of the Business Day
following settlement in DTC.
The holders of Offered Certificates that are not Participants or Indirect
Participants but desire to purchase, sell or otherwise transfer ownership of, or
other interests in, Offered Certificates may do so only through Participants and
Indirect Participants. In addition, holders of Offered Certificates will receive
all distributions of principal and interest from the Trustee through the
Participants who in turn will receive them from DTC. Similarly, reports
distributed to Certificateholders pursuant to the Pooling and Servicing
Agreement and requests for the consent of Certificateholders will be delivered
to beneficial owners only through DTC, Euroclear, Cedelbank and their respective
Participants. Under a book-entry format, holders of Offered Certificates may
experience some delay in their receipt of payments, reports and notices, since
such payments, reports and notices will be forwarded by the Trustee to Cedel &
Co., as nominee for DTC. DTC will forward such payments, reports and notices to
its Participants, which thereafter will forward them to Indirect Participants,
Cedelbank, Euroclear or holders of Offered Certificates, as applicable.
Under the rules, regulations and procedures creating and affecting DTC and
its operations (the "Rules"), DTC is required to make book-entry transfers of
Offered Certificates among Participants on whose behalf it acts with respect to
the Offered Certificates and to receive and transmit distributions of principal
of, and interest on, the Offered Certificates. Participants and Indirect
Participants with which the holders of Offered Certificates have accounts with
respect to the Offered Certificates similarly are required to make book-entry
transfers and receive and transmit such payments on behalf of their respective
holders of Offered Certificates. Accordingly, although the holders of Offered
Certificates will not possess the Offered Certificates, the Rules provide a
mechanism by which Participants will receive payments on Offered Certificates
and will be able to transfer their interest.
Because DTC can only act on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of a holder of
Offered Certificates to pledge such Certificates to persons or entities that do
not participate in the DTC system, or to otherwise act with respect to such
Certificates, may be limited due to the lack of a physical certificate for such
Certificates.
DTC has advised the Depositor that it will take any action permitted to be
taken by a holder of an Offered Certificate under the Pooling and Servicing
Agreement only at the direction of one or more Participants to whose accounts
with DTC the Offered Certificates are credited. DTC may take conflicting actions
with respect to other undivided interests to the extent that such actions are
taken on behalf of Participants whose holdings include such undivided interests.
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Except as required by law, none of the Depositor, the Underwriters, the
Master Servicer, nor the Trustee will have any liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests in the Offered Certificates held by Cede & Co., as nominee for DTC, or
for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.
Cedelbank is incorporated under the laws of Luxembourg as a professional
depository. Cedelbank holds securities for its participating organizations
("Cedelbank Participants") and facilitates the clearance and settlement of
securities transactions between Cedelbank Participants through electronic
book-entry changes in accounts of Cedelbank Participants, thereby eliminating
the need for physical movement of certificates. Transactions may be settled in
Cedelbank in any of 28 currencies, including United States dollars. Cedelbank
provides to its Cedelbank Participants, among other things, services for
safekeeping, administration, clearance and settlement of internationally traded
securities and securities lending and borrowing. Cedelbank interfaces with
domestic markets in several countries. As a professional depository, Cedel is
subject to regulation by the Luxembourg Monetary Institute. Cedelbank
Participants are recognized financial institutions around the world, including
underwriters, securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations and may include the Underwriters.
Indirect access to Cedel is also available to others, such as banks, brokers,
dealers and trust companies that clear through or maintain a custodial
relationship with a Cedelbank Participant, either directly or indirectly.
Euroclear was created in 1968 to hold securities for participants of the
Euroclear system ("Euroclear Participants") and to clear and settle transactions
between Euroclear Participants through simultaneous electronic book-entry
delivery against payment, thereby eliminating the need for physical movement of
certificates and any risk from lack of simultaneous transfers of securities and
cash. Transactions may now be settled in any of 27 currencies, including United
States dollars. The Euroclear system includes various other services, including
securities lending and borrowing and interfaces with domestic markets in several
countries generally similar to the arrangements for cross-market transfers with
DTC described above. Euroclear is operated by Morgan Guaranty Trust Company of
New York, Brussels, Belgium office (the "Euroclear Operator"), under the
contract with Euroclear Clearance System, S.C., a Belgian cooperative
corporation (the "Cooperative"). All operations are conducted by the Euroclear
Operator, and all Euroclear securities clearance accounts and Euroclear cash
accounts are accounts with the Euroclear Operator, not the Cooperative. The
Cooperative establishes policy for the Euroclear system on behalf of Euroclear
Participants. Euroclear Participants include banks (including central banks),
securities brokers and dealers and other professional financial intermediaries
and may include the Underwriters. Indirect access to the Euroclear system is
also available to other firms that clear through or maintain a custodial
relationship with a Euroclear Participant, either directly or indirectly.
The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it is
regulated and examined by the Board of Governors of the Federal Reserve System
and the New York State Banking Department, as well as by the Belgian Banking
Commission.
Securities clearance accounts and cash accounts with the Euroclear Operator
are governed by the Terms and Conditions Governing Use of Euroclear and the
related Operating Procedures of the Euroclear System and applicable Belgian law
(collectively, the "Terms and Conditions"). The Terms and Conditions govern
transfers of securities and cash within the Euroclear system, withdrawal of
securities and cash from the Euroclear system, and receipts of payments with
respect to securities in the Euroclear system. All securities in the Euroclear
system are held on a fungible basis without attribution of specific certificates
to specific securities clearance accounts. The Euroclear Operator acts under the
Terms and Conditions only on behalf of Euroclear Participants and has no record
of or relationship with persons holding through Euroclear Participants.
The information in this Prospectus Supplement concerning DTC, Cedelbank or
Euroclear and their book-entry systems has been obtained from sources believed
to be reliable, but the Depositor takes no responsibility for the accuracy or
completeness thereof.
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CERTIFICATE BALANCES AND NOTIONAL AMOUNT
Subject to a permitted variance of plus or minus 5.0%, the respective
Classes of Sequential Pay Certificates will have the Certificate Balances
representing the approximate percentage of the Cut-Off Date Pool Balance as set
forth in the following table:
<TABLE>
<CAPTION>
PERCENTAGE
OF
CLOSING DATE CUT-OFF DATE
CLASS OF CERTIFICATES CERTIFICATE BALANCE POOL BALANCE
- --------------------------- ------------------- ------------
<S> <C> <C>
Class A-1 Certificates..... $ 203,500,000 17.22%
Class A-2 Certificates..... $ 673,747,967 57.03%
Class B Certificates....... $ 47,260,093 4.00%
Class C Certificates....... $ 62,028,874 5.25%
Class D Certificates....... $ 14,768,779 1.25%
Class E Certificates....... $ 41,352,582 3.50%
Class F Certificates....... $ 17,722,535 1.50%
Non-Offered Certificates... $ 121,103,991 10.25%
</TABLE>
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 do not have a Certificate Balance, but 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 IO Components,
as described in this Prospectus Supplement. The Class IO Certificates have
fourteen separate components (each an "IO Component"), each corresponding to a
different Class of Sequential Pay Certificates. Each such IO Component has the
same letter and/or numerical designation as its related Class of Sequential Pay
Certificates. The notional amount of each IO Component will equal the
Certificate Balance of the corresponding Class of Sequential Pay Certificates
outstanding from time to time. On the Closing Date, the aggregate of the
notional amounts of all the IO Components will equal approximately
$1,181,484,821, which amount will equal the Cut-Off Date Pool Balance.
References in this Prospectus Supplement to the "notional amount" of the Class
IO Certificates shall mean the aggregate of the notional amounts of the IO
Components.
The Certificate Balance of any Class of Sequential Pay Certificates may be
increased by the amount, if any, of Certificate Deferred Interest added to such
Class's Certificate Balance. With respect to any Mortgage Loan as to which the
Mortgage Rate has been reduced through a modification and any Distribution Date,
"Mortgage Deferred Interest" is the amount by which (a) interest accrued at such
reduced rate is less than (b) the amount of interest that would have accrued on
such Mortgage Loan at the Mortgage Rate before such reduction. On each
Distribution Date the amount of interest distributable to a Class of Sequential
Pay Certificates will be reduced by the amount of Mortgage Deferred Interest
allocable to such Classes (any such amount, "Certificate Deferred Interest"),
such allocation being in reverse alphabetical order. The Certificate Balance of
each Class of Sequential Pay Certificates to which Certificate Deferred Interest
has been so allocated on a Distribution Date will be increased by the amount of
Certificate Deferred Interest.
The REMIC Residual Certificates do not have Certificate Balances or
notional amounts, but 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 the Class A-1, Class A-2 and Class B
Certificates for each Distribution Date will equal the respective fixed rate per
annum set forth on the front cover of this Prospectus Supplement. The
Pass-Through Rate applicable to the Class C and Class D Certificates for each
Distribution Date will equal the lesser of the respective rate set forth on the
cover of this Prospectus Supplement and the Weighted Average Net Mortgage Rate
as of the commencement of the related Interest Accrual Period. The Pass-Through
Rate
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applicable to the Class E and Class F Certificates for such Distribution Date
will be equal to the Weighted Average Net Mortgage Rate as of the commencement
of the related Interest Accrual Period minus 0.10%. Interest will accrue for
each Class of Certificates (other than the REMIC Residual Certificates) during
the calendar month prior to the related Distribution Date (each such period, an
"Interest Accrual Period") and will be calculated assuming that each month has
30 days and a 360-day year. Each IO Component accrues interest on its related
notional amount. The interest rate applicable to each IO Component for any
Distribution Date will equal the excess, if any, of the Weighted Average Net
Mortgage Rate for any Distribution Date over the Pass-Through Rate applicable to
the Classes of Sequential Pay Certificates.
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 Administrative Cost Rate for such Mortgage Loan.
Notwithstanding the foregoing, 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, for purposes of calculating the Weighted Average Net Mortgage Rate for
each Distribution Date, the Mortgage Rate of such Mortgage Loan in effect during
any calendar month will be deemed to be the annualized rate at which interest
would have to accrue in respect of such loan on a 30/360 basis in order to
derive the aggregate amount of interest (other than default interest) actually
accrued in respect of such loan during such calendar month; provided, however,
that, with respect to each Interest Reserve Loan (as defined in this Prospectus
Supplement), the Mortgage Rate in effect during (a) December of each year that
does not immediately precede a leap year, (b) January of each year and
(c) February of each year, will be the per annum rate stated in the related
Mortgage Note. The "Stated Principal Balance" of each Mortgage Loan outstanding
at any time will generally be an amount equal to the principal balance thereof
as of the Cut-Off Date, (a) 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
and (b) increased on each Distribution Date by any Mortgage Deferred Interest
added to the principal balance of such Mortgage Loan on such Distribution Date.
The Stated Principal Balance of a Mortgage Loan may also be reduced in
connection with any forced reduction of the actual unpaid principal balance
thereof imposed by a court presiding over a bankruptcy proceeding in which the
related borrower is a debtor. 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 is the period that
begins immediately following the Determination Date in the month preceding the
month in which such Distribution Date occurs and ends on and includes the
Determination Date in the same month as such Distribution Date. The
"Determination Date" will be the 11th day of each month (or, if not a business
day, the immediately succeeding business day).
DISTRIBUTIONS
General. Distributions on the Certificates are made by the Trustee, to the
extent of the Available Distribution Amount, on the 15th day of each month or,
if any such 15th day is not a business day, then on the next succeeding business
day with the same force and effect (each, a "Distribution Date"); provided,
however, that the Distribution Date will be no earlier than the fourth business
day following the related Determination 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
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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. The
first Distribution Date on which investors in the Offered Certificates may
receive distributions will be the Distribution Date occurring in June 1999.
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 and not previously
distributed with respect to the Certificates or applied for any other
permitted purpose, exclusive of any portion thereof that represents one or
more of the following:
(i) any Periodic Payments collected but due on a Due Date after the
related Collection Period;
(ii) any Prepayment Premiums and Yield Maintenance Charges;
(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;
(iv) any amounts deposited in the Certificate Account in error;
(v) any Additional Interest on the ARD Loans; and
(vi) if such Distribution Date occurs during February of any year
or during January of any year that is not a leap year, the Interest
Reserve Amounts with respect to the Interest Reserve Loans to be
deposited in the Interest Reserve Account and held for future
distribution;
(b) all P&I Advances made by the Master Servicer or the Trustee 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; and
(d) if such Distribution Date occurs during March of any year, the
aggregate of the Interest Reserve Amounts then on deposit in the Interest
Reserve Account in respect of each Interest Reserve Loan.
See "SERVICING OF THE MORTGAGE LOANS--Servicing and other Compensation and
Payment of Expenses" in this Prospectus Supplement, "--P&I Advances" below and
"DESCRIPTION OF THE POOLING AGREEMENTS--Certificate Account" in the Prospectus.
Any Prepayment Premiums or Yield Maintenance Charges actually collected
will be distributed separately from the Available Distribution Amount. See
"--Distributions--Allocation of Prepayment Premiums and Yield Maintenance
Charges."
Interest Reserve Account. The Master Servicer has established and will
maintain an "Interest Reserve Account" in the name of the Trustee for the
benefit of the holders of the Certificates. With respect to each Distribution
Date occurring in February and each Distribution Date occurring in any January
which occurs in a year that is not a leap year, there will be deposited to the
Interest Reserve Account in respect of each Mortgage Loan bearing interest
computed on an actual/360 basis (the "Interest Reserve Loans") an amount equal
to one day's interest at the related Mortgage Rate on its Stated Principal
Balance, as of the Due Date in the month in which such Distribution Date occurs,
to the extent a Periodic Payment or P&I Advance is timely made in respect
thereof for such Due Date (all amounts so deposited in any consecutive January
(if applicable) and February in respect of each Interest Reserve Loan, the
"Interest Reserve Amount"). With respect to each Distribution Date occurring in
March, there will be withdrawn from the Interest Reserve Account in respect of
each Interest Reserve Loan the amount by which thirty days' interest at the
Mortgage Rate exceeds the amount of interest that actually accrues on such
Mortgage Loan, and such withdrawn amount is to be included as part of the
Available Distribution Amount for such Distribution Date.
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Application of the Available Distribution Amount. On each Distribution
Date, 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 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 in this
Prospectus Supplement) 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 the Class A-1 Certificates) equal to the Principal Distribution
Amount (as defined in this Prospectus Supplement) 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 the
Class A-2 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) to distributions to the holders of the Class A-1 and Class A-2
Certificates, pro rata, in accordance with the respective amounts of
Realized Losses and Additional Trust Fund Expenses, if any, previously
allocated to such Classes of Certificates and for which no reimbursement
has previously been received, to reimburse such holders for all such
Realized Losses and Additional Trust Fund Expenses, if any;
(5) 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;
(6) after the Class A 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 thereof distributed in respect of the
Class A Certificates on such Distribution Date;
(7) 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;
(8) 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;
(9) after the Class A 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 and/or Class B Certificates on such Distribution Date;
(10) 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;
(11) 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;
(12) after the Class A, 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, Class B and/or Class C Certificates on such
Distribution Date;
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(13) 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;
(14) 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;
(15) after the Class A, 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 the Class E Certificates) equal to the Principal Distribution
Amount for such Distribution Date, less any portion thereof distributed in
respect of the Class A, Class B, Class C and/or Class D Certificates;
(16) 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;
(17) 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;
(18) after the Class A, 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 the Class F Certificates) equal to the
Principal Distribution Amount for such Distribution Date, less any portion
thereof distributed in respect of the Class A, Class B, Class C, Class D
and/or Class E Certificates;
(19) 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;
(20) 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;
(21) after the Class A, 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 the Class G Certificates) equal to the
Principal Distribution Amount for such Distribution Date, less any portion
thereof distributed in respect of the Class A, Class B, Class C, Class D,
Class E and/or Class F Certificates;
(22) 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;
(23) 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;
(24) after the Class A, 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 the Class H Certificates) equal to
the Principal Distribution Amount for such Distribution Date, less any
portion thereof distributed in respect of the Class A, Class B, Class C,
Class D, Class E, Class F and/or Class G Certificates;
(25) 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;
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(26) 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;
(27) after the Class A, 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 the Class J
Certificates) equal to the Principal Distribution Amount for such
Distribution Date, less any portion thereof distributed in respect of the
Class A, Class B, Class C, Class D, Class E, Class F, Class G and/or Class
H Certificates;
(28) 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;
(29) 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;
(30) after the Class A, 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 the Class
K Certificates) equal to the Principal Distribution Amount for such
Distribution Date, less any portion thereof distributed in respect of the
Class A, Class B, Class C, Class D, Class E, Class F, Class G, Class H
and/or Class J Certificates;
(31) 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 such Class of Certificates and
for which no reimbursement has previously been received;
(32) to distributions of interest to the holders of the Class L
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;
(33) after the Class A, Class B, Class C, Class D, Class E, Class F,
Class G, Class H, Class J, Class K Certificates have been retired, to
distributions of principal to the holders of the Class L Certificates in an
amount (not to exceed the then outstanding Certificate Balance of the Class
L Certificates) equal to the Principal Distribution Amount for such
Distribution Date, less any portion thereof distributed in respect of the
Class A, Class B, Class C, Class D, Class E, Class F, Class G, Class H,
Class J and/or Class K Certificates;
(34) to distributions to the holders of the Class L 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;
(35) to distributions of interest to the holders of the Class M
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;
(36) after the Class A, Class B, Class C, Class D, Class E, Class F,
Class G, Class H, Class J, Class K and Class L Certificates have been
retired, to distributions of principal to the holders of the Class M
Certificates in an amount (not to exceed the then outstanding Certificate
Balance of the Class M Certificates) equal to the Principal Distribution
Amount for such Distribution Date, less any portion thereof distributed in
respect of the Class A, Class B, Class C, Class D, Class E, Class F, Class
G, Class H, Class J, Class K and/or Class L Certificates;
(37) to distributions to the holders of the Class M 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;
(38) to distributions of interest to the holders of the Class N
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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(39) after the Class A, Class B, Class C, Class D, Class E, Class F,
Class G, Class H, Class J, Class K, Class L and Class M Certificates have
been retired, to distributions of principal to the holders of the Class N
Certificates in an amount (not to exceed the then outstanding Certificate
Balance of the Class N Certificates) equal to the Principal Distribution
Amount for such Distribution Date, less any portion thereof distributed in
respect of the Class A, Class B, Class C, Class D, Class E, Class F, Class
G, Class H, Class J, Class K, Class L and/or Class M Certificates;
(40) to distributions to the holders of the Class N 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
(41) 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 (40) above;
provided that, on each Distribution Date, if any, after the aggregate of the
Certificate Balances of the Subordinate Certificates has been reduced to zero
(prior to retirement of the Class A Certificates) as a result of the allocations
of Realized Losses and Additional Trust Fund Expenses, and in any event on the
final Distribution Date in connection with a termination of the Trust Fund (see
"DESCRIPTION OF THE CERTIFICATES--Termination" in this Prospectus Supplement),
the payments of principal to be made as contemplated by clauses (2) and (3)
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 between such Classes in accordance with, the respective then outstanding
Certificate Balances of such Classes of Certificates and without regard to the
Principal Distribution Amount for such date.
Distributable Certificate Interest. The "Distributable Certificate
Interest" in respect of each Class of REMIC Regular Certificates for each
Distribution Date equals the Accrued Certificate Interest in respect of such
Class of Certificates for such Distribution Date, reduced (other than in the
case of the Class IO Certificates) (to not less than zero) by (i) 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") and (ii) any Certificate Deferred Interest allocated to
such Class of REMIC Regular Certificates.
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 for the related Interest Accrual Period 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 of one month's interest on the
notional amount of each IO Component outstanding immediately prior to such
Distribution Date. Accrued Certificate Interest will be calculated on a 30/360
basis.
The portion of the Net Aggregate Prepayment Interest Shortfall for any
Distribution Date that is allocable to each Class of REMIC Regular Certificates
(other than the Class IO 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
(without duplication) to the extent paid by the related borrower during the
related Collection Period or advanced by the Master Servicer or the Trustee, as
applicable:
(a) the aggregate of the principal portions of all Scheduled Payments
(other than Balloon Payments) and of any Assumed Scheduled Payments due or
deemed due, on or in respect of the Mortgage Loans for their respective Due
Dates occurring during the related Collection Period, to the extent not
previously paid
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by the related borrower or advanced by the Master Servicer or Trustee, as
applicable, prior to such 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 the principal portion of all Liquidation
Proceeds, Insurance Proceeds (each as defined in the Prospectus),
condemnation awards and proceeds of Mortgage Loan repurchases and
Substitution Shortfall Amounts and, to the extent not otherwise included in
clause (a), (b) or (c) above, payments and other amounts 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 Periodic Payment (including Balloon Payments) 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, without regard to the accrual of
Additional Interest on or the application of any Excess Cash Flow to pay
principal on an ARD Loan, without regard to any acceleration of principal by
reason of default, and with the assumption that each prior Scheduled Payment has
been made in a timely manner. The "Assumed Scheduled Payment" is an amount
deemed due (i) on any Balloon Loan that is delinquent in respect of its Balloon
Payment beyond the first Determination Date that follows its stated maturity
date and (ii) on an REO Mortgage Loan. 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 Periodic 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, and to accrue interest at the Mortgage Rate in effect as of the Closing
Date. The Assumed Scheduled Payment deemed due on any REO Mortgage Loan on each
Due Date that the related REO Property remains part of the Trust Fund will equal
the Scheduled Payment that would have been due in respect of such Mortgage Loan
on such Due Date had it remained outstanding (or, if such Mortgage Loan was a
Balloon Mortgage Loan and such Due Date coincides with or follows what had been
its stated maturity date, the Assumed Scheduled Payment that would have been
deemed due in respect of such Mortgage Loan on such Due Date had it remained
outstanding).
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 determining (i) 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
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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."
Prepayment Premiums collected on a Mortgage Loan during the related
Collection Period will be distributed as follows: on each Distribution Date and
with respect to the collection of any Prepayment Premiums, the holders of each
Class of Offered Certificates then entitled to distributions of principal on
such Distribution Date will be entitled to an amount of Prepayment Premiums
equal to the product of (a) the amount of such Prepayment Premiums, multiplied
by (b) a fraction, the numerator of which is equal to the amount of principal
distributable to such Class of Offered Certificates on such Distribution Date,
and the denominator of which is the Principal Distribution Amount for such
Distribution Date, multiplied by (c) 25%. The remaining portion of Prepayment
Premiums will be distributed to the Class IO Certificates.
Yield Maintenance Charges collected on a Mortgage Loan during the related
Collection Period will be distributed as follows: on each Distribution Date and
with respect to the collection of any Yield Maintenance Charges, the holders of
each Class of Offered Certificates then entitled to distributions of principal
on such Distribution Date will be entitled to an amount of Yield Maintenance
Charges equal to the product of (a) the amount of such Yield Maintenance
Charges, multiplied by (b) a fraction (which in no event may be greater than
one), the numerator of which is equal to the excess, if any, of the Pass-Through
Rate of such Class of Offered Certificates over the relevant Discount Rate (as
defined below), and the denominator of which is equal to the excess, if any, of
the Mortgage Rate of the prepaid Mortgage Loan over the relevant Discount Rate,
multiplied by (c) a fraction, the numerator of which is equal to the amount of
principal distributable on such Class of Offered Certificates on such
Distribution Date, and the denominator of which is the Principal Distribution
Amount for such Distribution Date. If there is more than one Class of Offered
Certificates entitled to distributions of principal on any particular
Distribution Date on which a Yield Maintenance Charge is distributable, the
aggregate amount of such Yield Maintenance Charge will be allocated among all
such Classes up to, and on a pro rata basis in accordance with their respective
entitlements thereto in accordance with, the foregoing sentence. The portion, if
any, of the Yield Maintenance Charges remaining after any such payments to the
holders of the Offered Certificates will be distributed to the holders of the
Class IO Certificates.
The "Discount Rate" applicable to any Class of Offered Certificates will be
equal to the discount rate stated in the related mortgage loan documents used in
calculating the Yield Maintenance Charge with respect to such principal
prepayment. To the extent a discount rate is not stated therein, the "Discount
Rate" will equal the yield (when compounded monthly) on the U.S. Treasury issue
with a maturity date closest to the maturity date for the prepaid Mortgage Loan.
In the event that there are two or more such U.S. Treasury issues (a) with the
same coupon, the issue with the lowest yield will be utilized, and (b) with
maturity dates equally close to the maturity date for the prepaid Mortgage Loan,
the issue with the earliest maturity date will be utilized.
For an example of the foregoing allocation of Prepayment Premiums and Yield
Maintenance Charges, see "SUMMARY OF PROSPECTUS SUPPLEMENT" in this Prospectus
Supplement. 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 collectibility of any Prepayment Premium
or Yield
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Maintenance Charge. See "DESCRIPTION OF THE MORTGAGE POOL--Certain Terms and
Conditions of the Mortgage Loans--Prepayment Provisions" in this Prospectus
Supplement.
Distribution of Additional Interest. On each Distribution Date, 95% of any
Additional Interest collected on an ARD Loan during the related Collection
Period will be distributed among all the holders of the Class A-1, Class A-2,
Class B, Class C, Class D, Class E and Class F Certificates, on a pro rata basis
in accordance with the respective initial Certificate Balances of such Classes
of Certificates, and the remainder of such Additional Interest will be
distributed to the holders of the Class IO Certificates. There can be no
assurance that any Additional Interest will be collected on the ARD Loans.
SUBORDINATION; ALLOCATION OF LOSSES AND CERTAIN EXPENSES
The rights of holders of the Subordinate Certificates to receive
distributions of amounts collected or advanced on the Mortgage Loans will be
subordinated, to the extent described in this Prospectus Supplement, to the
rights of holders of 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, the Class E and the Class
F 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 F Certificates by means of
the subordination of the Non-Offered Certificates, to the holders of the Class E
Certificates by means of the subordination of the Class F and the Non-Offered
Certificates, to the holders of the Class D Certificates by means of the
subordination of the Class E, the Class F and the Non-Offered Certificates, to
the holders of the Class C Certificates by means of the subordination of the
Class D, the Class E, the Class F and the Non-Offered Certificates, to the
holders of the Class B Certificates by means of the subordination of the
Class C, the Class D, the Class E, the Class F and the Non-Offered Certificates,
and to the holders of the Senior Certificates by means of 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-2 Certificates will receive
principal payments only after the Certificate Balance of the Class A-1
Certificates has been reduced to zero. However, after the Distribution Date on
which the Certificate Balances of the Subordinate Certificates have been reduced
to zero, the Class A-1 and Class A-2 Certificates will bear shortfalls in
collections and losses incurred in respect of the Mortgage Loans pro rata in
respect of distributions of principal and then the Class A-1, Class A-2 and
Class IO Certificates will bear such shortfalls pro rata in respect of
distributions of interest. No other form of credit support will be available for
the benefit of the holders of the Offered Certificates.
Allocation to the Class A-1 and Class A-2 Certificates (unless the
aggregate Certificate Principal Balance of each Class of Subordinate
Certificates has been reduced to zero, first to the Class A-1 Certificates until
the Certificate Balance thereof has been reduced to zero, then to the Class A-2
Certificates until the Certificate Balance thereof has been reduced to zero),
for so long as they are outstanding, of the entire Principal Distribution Amount
for each Distribution Date will have the effect of reducing the aggregate
Certificate Balance of the Class A-1 and Class A-2 Certificates at a
proportionately faster rate than the rate at which the aggregate Stated
Principal Balance of the Mortgage Pool will reduce. Thus, as principal is
distributed to the holders of such Class A-1 and Class A-2 Certificates, the
percentage interest in the Trust Fund evidenced by such Class A -1 and
Class A-2 Certificates will be decreased (with a corresponding increase in the
percentage interest in the Trust Fund evidenced by the Subordinate
Certificates), thereby increasing, relative to their respective Certificate
Balances, the subordination afforded such Class A-1 and Class A-2 Certificates
by the Subordinate 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
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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 N
Certificates, until the remaining Certificate Balance of such Class of
Certificates is reduced to zero; second, to the Class M Certificates, until the
remaining Certificate Balance of such Class of Certificates is reduced to zero;
third, to the Class L Certificates, until the remaining Certificate Balance of
such Class of Certificates is reduced to zero; fourth, to the Class K
Certificates, until the remaining Certificate Balance of such Class of
Certificates is reduced to zero; fifth, to the Class J Certificates, until the
remaining Certificate Balance of such Class of Certificates is reduced to zero;
sixth, to the Class H Certificates, until the remaining Certificate Balance of
such Class of Certificates is reduced to zero; seventh, to the Class G
Certificates, until the remaining Certificate Balance of such Class of
Certificates is reduced to zero; eighth, to the Class F Certificates, until the
remaining Certificate Balance of such Class of Certificates is reduced to zero;
ninth, to the Class E Certificates, until the remaining Certificate Balance of
such Class of Certificates is reduced to zero; tenth, to the Class D
Certificates, until the remaining Certificate Balance of such Class of
Certificates is reduced to zero; eleventh, to the Class C Certificates, until
the remaining Certificate Balance of such Class of Certificates is reduced to
zero; twelfth, 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 and the Class A-2 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 Losses 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 IO
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 to but not including the Due Date in the
Collection Period in which the liquidation occurred (exclusive of any related
default interest in excess of the Mortgage Rate, Additional Interest, Prepayment
Premiums or Yield Maintenance Charges) 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 (other than Additional Interest and default interest
in excess of the Mortgage Rate) 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, Principal Recovery Fees, or Workout Fees paid to the
Special Servicer, (ii) any interest paid to the Master Servicer, the Special
Servicer and/or the Trustee in respect of unreimbursed Advances and amounts
payable to the Special Servicer in connection with inspections of Mortgaged
Properties required pursuant to the Pooling and Servicing Agreement to the
extent not otherwise offset by penalty interest received during the Collection
Period in which such reimbursement is made, and (iii) any of certain
unanticipated, non-Mortgage Loan specific expenses of the Trust Fund, including
certain indemnities and reimbursements to the Trustee of the type described
under "DESCRIPTION OF THE POOLING AGREEMENTS--Certain Matters Regarding the
Trustee" in the Prospectus, certain indemnities and 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 Servicer having the
same rights to indemnity and reimbursement as described thereunder with respect
to the Master Servicer), certain Rating Agency fees to the extent such fees are
not paid by any other party and certain federal, state and local taxes, and
certain tax related expenses, payable from the assets of the Trust Fund and
described under "MATERIAL FEDERAL INCOME TAX CONSEQUENCES--Prohibited
Transactions Tax and Other Taxes" in the Prospectus and "SERVICING OF THE
MORTGAGE LOANS--REO Properties; Sale of Mortgage Loans" in this Prospectus
Supplement. 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.
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P&I ADVANCES
On or about each Distribution Date, the Master Servicer is 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 (or paid to any other Person pursuant to the Pooling and
Servicing Agreement) on such Distribution Date, in an amount that is generally
equal to the aggregate of all Periodic Payments (other than Balloon Payments)
and any Assumed Scheduled Payments, net of related Servicing Fees and Trustee
Fees due or deemed due, as the case may be, in respect of the Mortgage Loans and
any REO 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. With
respect to each Semi-Annual Loan, the Master Servicer will make a P&I Advance
each month (other than any month in which its Due Date occurs) in an amount
equal to one-sixth of the interest portion of the following Periodic Payment due
on such Mortgage Loan and shall be entitled to reimbursement for such advances
from the related Periodic Payment when collected or, if non-recoverable from
such Periodic Payment, then from general collections, in accordance with the
next paragraph. No interest shall accrue on P&I Advances made in respect of any
Semi-Annual Loan until after any Due Date on which no related Periodic Payment
is collected in respect of such Semi-Annual Loan. 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 Periodic 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 the Special Servicer,
the Master Servicer will be required to advance only the amount of the reduced
Periodic Payment (net of related Servicing 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 sum of
(i) the product of (a) the amount of the interest portion of the P&I Advance
that would otherwise be required without regard to this sentence, multiplied by
(b) 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 and (ii) the amount of the principal portion of the P&I Advance that would
otherwise be required without regard to this sentence. Pursuant to the terms of
the Pooling and Servicing Agreement, 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, in such case, subject to the recoverability standard described below.
Neither the Master Servicer nor Trustee will be required to make a P&I Advance
for default interest, Yield Maintenance Charges, Prepayment Premiums or
Additional Interest.
The Master Servicer (or the Trustee) is 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 and Workout 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 and condemnation
proceeds or Liquidation Proceeds, or any other recovery of the related Mortgage
Loan or REO Property or, with respect to any Semi-Annual Loan, the related
Periodic Payment ("Related Proceeds"). Neither the Master Servicer nor the
Trustee is obligated to make any P&I Advance that it determines in accordance
with the servicing standards described in this Prospectus Supplement, would, if
made, not be recoverable from Related Proceeds (a "Nonrecoverable P&I Advance"),
and the Master Servicer (or the Trustee) is 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 the Master Servicer, the Special
Servicer or the Trustee 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, is entitled to be paid, out of
penalty interest and late payment charges received on the
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related Mortgage Loan during the Collection Period in which such reimbursement
is made and, in certain circumstances, out of any other 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 Non-Offered Certificates, interest accrued on
outstanding Advances will result in a reduction in amounts payable on the
Offered Certificates, subject to the distribution priorities described in this
Prospectus Supplement.
APPRAISAL REDUCTIONS
Upon the earliest of the date (each such date, a "Required Appraisal Date")
that (1) any Mortgage Loan is 90 days delinquent in respect of any Periodic
Payments, (2) any REO Property is acquired on behalf of the Trust Fund in
respect of any Mortgage Loan, (3) any Mortgage Loan has been modified by the
Special Servicer to reduce the amount of any Periodic Payment, other than a
Balloon Payment, (4) 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 becomes 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 is 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 Section 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 or the Master 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, is 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 advanced 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 (without duplication), as of the
Determination Date immediately succeeding the date on which the appraisal is
obtained, of (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 (plus accrued
interest thereon) 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 escorted 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 and estimated liquidation expenses) of the related Mortgaged
Property as determined by such appraisal.
REPORTS TO CERTIFICATEHOLDERS; AVAILABLE INFORMATION
Trustee Reports. Based solely on information provided in monthly reports
prepared by the Master Servicer and the Special Servicer and delivered to the
Trustee, the Trustee is required to provide or make available either
electronically (on the Trustee's internet website at "www.ctslink.com/cmbs") or
by first class mail on each Distribution Date to each Certificateholder:
1. A statement (a "Distribution Date Statement"), substantially in the
form of Annex C hereto, setting forth, among other things, for each
Distribution Date:
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(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 servicing
advances as of the close of business on the related Determination Date;
(C) the aggregate unpaid principal balance of the Mortgage Pool
outstanding 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 or Anticipated Repayment Date and
weighted average Mortgage Rate of the Mortgage Loans as of the close of
business on the related Determination Date;
(x) the number and aggregate Stated Principal Balance (immediately
after such Distribution Date) of Mortgage Loans (A) delinquent
30-59 days, (B) delinquent 60-89 days, (C) delinquent 90 days or more,
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 and (C) a brief
description of any loan modification;
(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 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 (C) 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 the Special Servicer has determined, in accordance with
accepted servicing standards, that all payments or recoveries with
respect to such property have been ultimately recovered (a "Final
Recovery Determination") was made during the related Collection Period,
(A) the loan number of the related Mortgage Loan, (B) 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 (C) 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 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 for such Distribution Date;
(xvii) the Principal Distribution Amount for such Distribution Date
(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);
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(xviii) the aggregate of all Realized Losses incurred during the
related Collection Period and all Additional Trust Fund Expenses
incurred during the related Collection Period;
(xix) the aggregate of all Realized Losses and Additional Trust
Fund Expenses that were allocated on 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 IO 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 or the Trustee during the related Collection Period;
(xxiii) the aggregate amount of interest on servicing advances paid
to the Master Servicer, the Special Servicer and the Trustee during the
related Collection Period;
(xxiv) the aggregate amount of servicing fees and Trustee fees paid
to the Master Servicer, the Special Servicer and the Trustee, as
applicable, during the related Collection Period;
(xxv) the loan number for each Required Appraisal Loan and any
related Appraisal Reduction Amount as of the related Determination Date;
(xxvi) the original and then current credit support levels for each
Class of REMIC Regular Certificates;
(xxvii) the original and then current ratings for each Class of
REMIC Regular Certificates; and
(xxviii) the aggregate amount of Prepayment Premiums, Yield
Maintenance Charges and Additional Interest collected.
2. A "CSSA Loan File" and a "CSSA Property File" (in electronic form
and substance as provided by the Master Servicer and/or the Special
Servicer) setting forth certain information with respect to the Mortgage
Loans and the Mortgaged Properties, respectively.
The Master Servicer and/or the Special Servicer is required to deliver (in
electronic format acceptable to the Trustee) to the Trustee prior to each
Distribution Date, and the Trustee is required to provide or make available
either electronically or by first class mail to each Certificateholder, the
Depositor, the Underwriters and each Rating Agency on each Distribution Date,
the following nine reports providing the required information (unless otherwise
specified below) 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 the Master
Servicer (combining reports prepared by the Master Servicer and the 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 then currently
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) and other amounts,
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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 Master Servicer
identifying each Mortgage Loan that is not a Specially Serviced Mortgage
Loan (i) with a debt service coverage ratio of less than 1.05x (other than
in the case of Credit Lease Loans), (ii) that has a stated maturity date
occurring in the next sixty days, (iii) that is delinquent in respect of
its real estate taxes, (iv) for which any outstanding Advances exist, (v)
that has been a Specially Serviced Mortgage Loan in the past 90 days, (vi)
for which the debt service coverage ratio has decreased by more than 10% in
the prior 12 months, (vii) for which any lease relating to more than 25% of
the related Mortgaged Property has expired, been terminated, is in default
or will expire within the next three months, (viii) that is late in making
its Periodic Payment three or more times in the preceding 12 months, (ix)
with material deferred maintenance at the related Mortgaged Property or (x)
that is 30 or more days delinquent.
(f) A "Loan Payoff Notification Report" setting forth among other
things for each Mortgage Loan where notice of anticipated payoff has been
received, the control number, the property name, the amount of principal
expected to be paid, the expected date of payment and the estimated amount
of Yield Maintenance Charge or Prepayment Premium due.
(g) An "Operating Statement Analysis" containing substantially the
content set forth in Annex I attached hereto, 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 Master Servicer or the Special Servicer is
required consistent with the servicing standards described in this
Prospectus Supplement to endeavor to obtain such operating statements and
rent rolls.
(h) With respect to any Mortgaged Property or REO Property, an "NOI
Adjustment Worksheet" containing substantially the content set forth in
Annex J attached hereto, for such property (with the related 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 Master Servicer or the
Special Servicer in the other reports referenced above.
(i) A "Comparative Financial Status Report" containing substantially
the content set forth in Annex K attached hereto, setting forth, among
other things, the occupancy, revenue, net operating income and DSCR for
each Mortgage Loan or the related Mortgaged Property, as applicable, as of
the end of the calendar month immediately preceding the preparation of such
report for each of the following three periods (to the extent such
information is in the Master Servicer's or Special Servicer's possession,
as applicable): (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 reports identified in clauses (a), (b), (c), (d) and (f) above are
referred to in this Prospectus Supplement as the "Unrestricted Servicer
Reports", and the reports identified in clauses (e), (g), (h) and (i) above are
referred to in this Prospectus Supplement as the "Restricted Servicer Reports".
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) certain 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 and information regarding the
expenses of the Trust Fund. Such requirements shall be deemed to be satisfied to
the extent such information is provided pursuant to applicable requirements of
the Code in force from time to time.
The information that pertains to Specially Serviced Trust Fund Assets
reflected in reports will be based solely upon the reports delivered by the
Special Servicer or the Master Servicer to the Trustee prior to related
Distribution Date. Absent manifest error, none of the Master Servicer, the
Special Servicer or the Trustee will be responsible for the accuracy or
completeness of any information supplied to it by a Mortgagor 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.
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Book-Entry Certificates. Until such time as Definitive Offered
Certificates are issued in respect of the Book-Entry Certificates, the foregoing
information 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 its
Participants. Any beneficial owner of a Book-Entry Certificate who does not
receive information through DTC or its Participants may request that the 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 its Participants, and by its Participants to the holders of the
Book-Entry Certificates, will be governed by arrangements among them, subject to
any statutory or regulatory requirements as may be in effect from time to time.
The Master Servicer, the Special Servicer, the Trustee and the Depositor are
required to recognize as Certificateholders only those persons in whose names
the Certificates are registered on the books and records of the Certificate
Registrar.
Information Available Electronically. The Trustee will make available each
month, to any interested party, the Distribution Date Statement via the
Trustee's internet website, electronic bulletin board and its fax-on-demand
service. In addition, the Trustee will make available each month the
Unrestricted Servicer Reports on the Trustee's internet website. The Trustee's
internet website will initially be located at "www.ctslink.com/cmbs". The
Trustee's electronic bulletin board may be accessed by calling (301) 815-6620,
and its fax-on-demand service may be accessed by calling (301) 815-6610. For
assistance with the above mentioned services, investors may call
(301) 815-6600. In addition, the Trustee will also make Mortgage Loan
information as presented in the CSSA loan setup file and CSSA Loan File format
available each month to any Certificateholder, any Certificate Owner, the Rating
Agencies, or any other interested party via the Trustee's internet website. In
addition, pursuant to the Pooling and Servicing Agreement, the Trustee will make
available, as a convenience for interested parties (and not in furtherance of
the distribution of the Prospectus or this Prospectus Supplement under the
securities laws), the Pooling and Servicing Agreement, the Prospectus and this
Prospectus Supplement via the Trustee's internet website. The Trustee will make
no representations or warranties as to the accuracy or completeness of such
documents and will assume no responsibility therefor. In addition, the Trustee
may disclaim responsibility for any information distributed by the Trustee for
which it is not the original source.
The Trustee will make available each month, the Restricted Servicer Reports
and the CSSA Property File, to any holder or Certificate Owner of an Offered
Certificate or any person identified to the Trustee as a prospective transferee
of an Offered Certificate or any interest therein, the Rating Agencies, the
Underwriters and to any of the parties to the Pooling and Servicing Agreement
(collectively, "Privileged Persons") via the Trustee's internet website with the
use of a password provided by the Trustee to such person upon receipt by the
Trustee from such person of a certification in the form attached to the Pooling
and Servicing Agreement; provided, however, that the Rating Agencies, the
Underwriters and the parties to the Pooling and Servicing Agreement will not be
required to provide such certification.
The Master Servicer may make available each month via the Master Servicer's
internet website, initially located at "www.firstunion.com", to any interested
party, the Delinquent Loan Status Report, the Historical Loan Modification
Report, the Historical Loss Estimate Report, the REO Status Report, the Watch
List Report, the Loan Payoff Notification Report, the Comparative Financial
Status Report, the CSSA loan setup file, the CSSA Loan File, the CSSA Property
File, and, as a convenience for interested parties (and not in furtherance of
the distribution thereof under the securities laws) the Prospectus and this
Prospectus Supplement. For assistance with the Master Servicer's internet
website, investors may call (800) 326-1334.
In connection with providing access to the Trustee's internet website or
electronic bulletin board or the Master Servicer's internet website, the Trustee
or the Master Servicer, as applicable, may require registration and the
acceptance of a disclaimer. Neither the Trustee nor the Master Servicer shall be
liable for the dissemination of information in accordance with the Pooling and
Servicing Agreement.
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,
or send the requesting party at the expense of such requesting party, for review
by any holder or Certificate Owner owning an Offered Certificate or an interest
therein or any person identified to the Master Servicer or Special Servicer, as
the case may be, as a prospective transferee of an Offered Certificate or an
interest therein, 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
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Class of Offered Certificates since the Closing Date, (c) all officer's
certificates delivered by 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 with
respect to the Master Servicer since the Closing Date as described under
"DESCRIPTION OF THE POOLING AGREEMENTS--Evidence as to Compliance" in the
Prospectus, (e) the most recent property inspection report prepared by or on
behalf of the Master Servicer in respect of each Mortgaged Property, (f) the
most recent Mortgaged Property annual operating statements and rent roll, if
any, collected by or on behalf of the Master Servicer, (g) any and all
modifications, waivers and amendments of the terms of a Mortgage Loan entered
into by the Special Servicer, (h) the Mortgage File relating to each Mortgage
Loan, and (i) any and all officers' certificates and other evidence prepared by
the Master Servicer or the Special Servicer to support its 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 or Special Servicer, as the case may be, upon request; however, the
Master Servicer or Special Servicer, as the case may be, will be permitted to
require a certification from the person seeking such information (covering among
other matters, confidentiality) and payment of a sum sufficient to cover the
reasonable costs and expenses of providing such information to
Certificateholders, Certificate Owners and their prospective transferees,
including, without limitation, copy charges and reasonable fees for employee
time and for space.
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
of such Class of Certificates (or, in the case of the Class IO Certificates, the
aggregate of the notional amounts of the respective IO Components) would be
reduced to zero based on the assumption that no Mortgage Loan is voluntarily
prepaid prior to its stated maturity date (except for the ARD Loans which are
assumed to be paid in full on their respective Anticipated Repayment Dates) and
otherwise based on the "Table Assumptions" set forth under "YIELD AND MATURITY
CONSIDERATIONS--Weighted Average Life" in this Prospectus Supplement, which
Distribution Date shall in each case be as follows:
<TABLE>
<CAPTION>
ASSUMED FINAL
CLASS DESIGNATION DISTRIBUTION DATE
----------------- -----------------
<S> <C>
Class A-1........ June 2008
Class A-2........ April 2009
Class IO......... February 2029
Class B.......... April 2009
Class C.......... May 2009
Class D.......... May 2009
Class E.......... June 2009
Class F.......... September 2009
</TABLE>
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 in this Prospectus Supplement)
(except that it is assumed that the ARD Loans pay their respective principal
balances on their related Anticipated Repayment Dates) 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 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.
Finally, the Assumed Final Distribution Dates were calculated assuming there
would not be an early termination of the Trust Fund. See
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"YIELD AND MATURITY CONSIDERATIONS" in this Prospectus Supplement and
"DESCRIPTION OF THE MORTGAGE POOL" in this Prospectus Supplement and in the
accompanying Prospectus.
The "Rated Final Distribution Date" with respect to each Class of Offered
Certificates is the Distribution Date in June 2031, 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" in this Prospectus
Supplement.
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 Certificates as follows: (i) 4% in the
case of the Class IO Certificates and (ii) in the case of any other Class of
Certificates, a percentage equal to the product of 96% and a fraction, the
numerator of which is equal to the aggregate Certificate Balance of such Class
of Certificates (as adjusted by treating any Appraisal Reduction Amount as a
Realized Loss solely for the purposes of adjusting Voting Rights) and the
denominator of which is equal to the aggregate Certificate Balances of all
Classes of Certificates, determined as of the Distribution Date immediately
preceding such time provided, however, that the treatment of any Appraisal
Reduction Amount as a Realized Loss shall not reduce the Certificate Balances of
any Class for the purpose of determining the Controlling Class. The Class R-I,
Class R-II and Class R-III Certificates will not be entitled to any 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 and Class A-2 Certificates will be treated as one Class for
determining the Controlling Class. 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,
will 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, if any, remaining in the Trust Fund by the Master Servicer, the
Special Servicer, the Depositor 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 or provision for 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 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 independent appraiser selected by the Master
Servicer and approved by the Trustee (which may be less than the Purchase Price
for the corresponding REO Loan), 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, the Majority
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Subordinate Certificateholder or the Depositor to effect such purchase is
subject to the requirement that the aggregate principal balance of the Mortgage
Loans is less than 1% of the Cut-Off Date 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 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 in this
Prospectus Supplement 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.
THE TRUSTEE
Norwest Bank Minnesota, National Association ("Norwest Bank") is acting as
Trustee pursuant to the Pooling and Servicing Agreement. Norwest Bank, a direct,
wholly owned subsidiary of Wells Fargo & Company, is a national banking
association originally chartered in 1872 and is engaged in a wide range of
activities typical of a national bank. Norwest Bank's principal office is
located at Norwest Center, Sixth and Marquette, Minneapolis, Minnesota
55479-0113. Certificate transfer services are conducted at Norwest Bank's
offices in Minneapolis. Norwest Bank otherwise conducts its trustee and
securities administration services at its offices in Columbia, Maryland. Its
address there is 11000 Broken Land Parkway, Columbia, Maryland 21044-3562. In
addition, Norwest Bank maintains a trust office in New York located at 3 New
York Plaza, New York, New York 10004. Certificateholders and other interested
parties should direct their inquiries to the New York office. The telephone
number is (212) 515-5240. See "DESCRIPTION OF THE POOLING AGREEMENTS--The
Trustee," "--Duties of the Trustee," "--Certain 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
equals one month's interest for the most recently ended calendar month
(calculated 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 is a per annum rate set forth in the
Pooling and Servicing Agreement. In addition, the Trustee will be entitled to
recover from the Trust Fund all reasonable unanticipated expenses and
disbursements incurred or made by the Trustee in accordance with any of the
provisions of the Pooling and Servicing Agreement, but not including expenses
incurred in the ordinary course of performing its duties as Trustee under the
Pooling and Servicing Agreement, and not including any such expense,
disbursement or advance as may arise from its willful misconduct, negligence or
bad faith.
The Trustee also has certain duties with respect to REMIC administration
(in such capacity the "REMIC Administrator"). See "MATERIAL FEDERAL INCOME TAX
CONSEQUENCES--REMICs--Reporting and Other Administrative Matters" in the
Prospectus.
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<PAGE>
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 IO Components 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 IO 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 IO 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 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 IO Component. As described in this
Prospectus Supplement, 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 B Certificates, the Class C Certificates, the Class D
Certificates, the Class E Certificates and the Class F Certificates and then the
Non-Offered 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 of the related IO Component.
Consequently, the rate and timing of principal payments that are distributed or
otherwise result in reduction of the Certificate Balance of any Class of Offered
Certificates or the notional amount of an IO Component, as the case may be, 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, any
extension of maturity dates by the Master Servicer or the Special Servicer, 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). In addition, although the borrowers under an ARD Loan may have
certain incentives to repay ARD Loans on their Anticipated Repayment Dates,
there can be no assurance that the related borrowers will be able to repay the
ARD Loans on their Anticipated Repayment Date. The failure of a borrower to
repay the ARD Loans on their Anticipated Repayment Dates will not be an event of
default under the terms of the ARD Loans, and pursuant to the terms of the
Pooling and Servicing Agreement, neither the Master Servicer nor the Special
Servicer will be permitted to take any enforcement action with respect to a
borrower's failure to pay Additional Interest or principal in excess of the
principal component of the constant Periodic Payment, other than requests for
collection, until the scheduled maturity of the ARD Loans; provided, that the
Master Servicer or the Special Servicer, as the case may be, may take action to
enforce the Trust Fund's right to apply Excess Cash Flow to principal in
accordance with the terms of the ARD Loans documents.
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 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 Offered Certificates that are Sequential Pay Certificates)
while work-outs are negotiated or foreclosures are completed. See "SERVICING OF
THE MORTGAGE LOANS--Modifications, Waivers and Amendments" in this Prospectus
Supplement and "DESCRIPTION OF THE POOLING AGREEMENTS--Realization Upon
Defaulted Mortgage Loans" and "CERTAIN LEGAL ASPECTS OF MORTGAGE
LOANS--Foreclosure" in the Prospectus.
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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 an IO 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 prepayments 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 such 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 in this Prospectus
Supplement, 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. In the event of a reduction of
the Certificate Balances of all such Classes of Certificates, such losses and
shortfalls will then be borne, pro rata, by the Class A-1 and Class A-2
Certificates (and the Class IO Certificates with respect to shortfalls of
interest). 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
IO Component. As more fully described in this Prospectus Supplement 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 (other than the Class IO
Certificates) on a pro rata basis.
Pass-Through Rates. The Pass-Through Rates applicable to each IO Component
will be variable and will be equal to the excess, if any, of the Weighted
Average Net Mortgage Rate for such Distribution Date over the Pass-Through Rate
applicable to the corresponding Class of Sequential Pay Certificates.
Accordingly, the Pass-Through Rate on the IO 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. The yield on the Class IO, Class C, Class D, Class E and Class F
Certificates could also be adversely affected if Mortgage Loans with higher
interest rates pay faster than the Mortgage Loans with lower interest rates,
since those classes bear interest at a rate limited by the Weighted Average Net
Mortgage Rate of the Mortgage Loans. The Pass-Through Rates on the Class E and
Class F Certificates may be limited by the Weighted Average Net Mortgage Rate
even if principal prepayments do not occur.
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, due-on-sale clauses, Lockout Periods,
provisions
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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, mobile home park pads 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--Certain Risk Factors
Associated with the Mortgage Loans" and "DESCRIPTION OF THE MORTGAGE POOL" in
this Prospectus Supplement and "Yield and Maturity Considerations--Principal
Prepayments" in the Prospectus.
The rate of prepayment on the Mortgage Pool is likely to be affected by
prevailing market interest rates for mortgage loans of a comparable type, term
and risk level. When the prevailing market interest rate is below a mortgage
interest rate, the related borrower may have 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 any 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 up to
14 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" in this Prospectus Supplement, 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) and interest rate reductions 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.
Any optional termination of the Trust Fund would result in prepayment in
full of the Certificates and would have an adverse effect on the yield of the
Class IO Certificates because a termination would have an effect similar to a
prepayment in full of the Mortgage Loans (without, however, the payment of any
Prepayment Premiums or Yield Maintenance Charges) and, as a result, investors in
the Class IO Certificates and any other
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Certificates purchased at a premium might not fully recoup their initial
investment. See " DESCRIPTION OF THE CERTIFICATES--Termination" in this
Prospectus Supplement.
PRICE/YIELD TABLES
The tables beginning on page B-17 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 IO 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 IO 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 May 1, 1999 to but excluding
May 24, 1999, and by converting such monthly rates to 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 in this Prospectus
Supplement 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, Class E and Class F 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 the pool of 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 or the Anticipated Repayment Date,
as the case may be. The columns headed "10% CPR", "20% CPR", "30% CPR" and "50%
CPR," respectively, assume that prepayments are made each month at those levels
of CPR on the Mortgage Loans that are eligible for prepayment under the Table
Assumptions (each such scenario, a "Scenario"). There is no assurance, however,
that prepayments on the Mortgage Loans will conform to any level of CPR, and no
representation is made that the Mortgage Loans will prepay at the levels of CPR
shown or at any other prepayment rate.
The Yield Tables were derived from calculations based on the following
assumptions (the "Table Assumptions"): (i) no Mortgage Loan prepays during any
applicable Lockout Period, any period during which Defeasance Collateral is
permitted or required to be pledged, 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
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to be received), (ii) the Pass-Through Rates and initial Certificate Balances of
the respective Classes of Sequential Pay Certificates are as described in this
Prospectus Supplement, (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) ARD Loans pay in full on their Anticipated Repayment Dates,
(vii) all Mortgage Loans have Due Dates on the first day or the tenth day of
each month, as applicable, and accrue interest on the respective basis described
in this Prospectus Supplement (i.e., a 30/360 basis or an actual/360 basis),
(viii) all prepayments are accompanied by a full month's interest and there are
no Prepayment Interest Shortfalls, (ix) there are no breaches of the applicable
Mortgage Loan Seller's representations and warranties regarding its Mortgage
Loans, (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 in this Prospectus Supplement, (xii) distributions on
the Certificates are made on the 15th day (each assumed to be a business day) of
each month, commencing in June 1999, and (xiii) the Closing Date for the sale of
the Offered Certificates is May 24, 1999.
The periods, if any, between consecutive Due Dates occurring prior to the
maturity date or Anticipated Repayment Date, as applicable, of a Mortgage Loan
during which the related borrower will have the right to prepay such Mortgage
Loan without being required to pay a Prepayment Premium or a Yield Maintenance
Charge (each such period, an "Open Period") with respect to one hundred
sixty-seven (167) of the Mortgage Loans, or approximately 55.13% of the Cut-Off
Date Pool Balance, have been calculated as those Open Periods occurring
immediately prior to the maturity date or Anticipated Repayment Date, as
applicable, of such Mortgage Loan as set forth in the related Mortgage Loan
documents. The Open Periods, if any, with respect to fifty-six (56) of the
Mortgage Loans, or approximately 44.87% of the Cut-Off Date Pool Balance, have
been calculated as those Open Periods occurring immediately prior to the Due
Date immediately preceding the related maturity date or Anticipated Repayment
Date, as applicable, as set forth in the related Mortgage Loan documents.
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 the designated Scenario 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) despite prepayment restrictions, that the actual
pre-tax yields on, or any other payment characteristics of, any Class of 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 B, Class C,
Class D, Class E or Class F Certificate refers to the average amount of time
that will elapse from the assumed Closing 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,
which may be in the form of scheduled amortization, voluntary prepayments,
insurance and condemnation proceeds and liquidation proceeds. As described in
this Prospectus Supplement, 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 B Certificates, the Class C Certificates, the
Class D Certificates, the Class E Certificates and the Class F Certificates, in
that order, in each case until the Certificate Balance of such Class of
Certificates is reduced to zero.
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The following tables indicate the percentage of the initial Certificate
Balance of each Class of Offered Certificates that would be outstanding after
each of the dates shown and the corresponding weighted average life of each such
Class of Offered Certificates. The tables have been prepared on the basis of the
Table Assumptions. 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 B, Class C, Class D, Class E and/or Class F
Certificates may mature earlier or later than indicated by the tables. In
particular, voluntary prepayments on the Mortgage Loans in fact are not
permitted. Accordingly, the Mortgage Loans will not prepay at any constant rate
nor will the Mortgage Loans prepay at the same rate, and it is highly unlikely
that the Mortgage Loans will prepay in a manner consistent with the assumptions
described above. In addition, variations in the actual prepayment experience and
in the balance of the Mortgage Loans that actually 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 and 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 in each
case assuming the indicated level of CPR. 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 Closing 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.
PERCENTAGES OF THE CLOSING DATE CERTIFICATE BALANCE OF THE CLASS A-1
CERTIFICATES
<TABLE>
<CAPTION>
0% CPR DURING LOCKOUT, DEFEASANCE, YIELD
MAINTENANCE OR PREPAYMENT PENALTY
OTHERWISE AT INDICATED CPR
--------------------------------------------------
DISTRIBUTION DATE 0% CPR 10% CPR 20% CPR 30% CPR 50% CPR
- --------------------- ------ ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Closing Date......... 100 100 100 100 100
May 2000............. 94 94 94 94 94
May 2001............. 87 87 87 87 87
May 2002............. 79 79 79 79 79
May 2003............. 71 71 71 71 71
May 2004............. 57 57 57 57 57
May 2005............. 47 47 47 47 47
May 2006............. 30 30 30 30 30
May 2007............. 19 19 19 19 19
May 2008............. 4 3 2 1 0
May 2009 and
thereafter......... 0 0 0 0 0
Weighted average life
(in years)......... 5.39 5.38 5.38 5.38 5.37
</TABLE>
PERCENTAGES OF THE CLOSING DATE CERTIFICATE BALANCE OF THE CLASS A-2
CERTIFICATES
<TABLE>
<CAPTION>
0% CPR DURING LOCKOUT, DEFEASANCE, YIELD
MAINTENANCE OR PREPAYMENT PENALTY
OTHERWISE AT INDICATED CPR
--------------------------------------------------
DISTRIBUTION DATE 0% CPR 10% CPR 20% CPR 30% CPR 50% CPR
- --------------------- ------ ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Closing Date......... 100 100 100 100 100
May 2000............. 100 100 100 100 100
May 2001............. 100 100 100 100 100
May 2002............. 100 100 100 100 100
May 2003............. 100 100 100 100 100
May 2004............. 100 100 100 100 100
May 2005............. 100 100 100 100 100
May 2006............. 100 100 100 100 100
May 2007............. 100 100 100 100 100
May 2008............. 100 100 100 100 99
May 2009 and
thereafter......... 0 0 0 0 0
Weighted average life
(in years)......... 9.58 9.57 9.57 9.56 9.54
</TABLE>
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<PAGE>
PERCENTAGES OF THE CLOSING DATE CERTIFICATE BALANCE OF THE CLASS B CERTIFICATES
<TABLE>
<CAPTION>
0% CPR DURING LOCKOUT, DEFEASANCE, YIELD
MAINTENANCE OR PREPAYMENT PENALTY
OTHERWISE AT INDICATED CPR
--------------------------------------------------
DISTRIBUTION DATE 0% CPR 10% CPR 20% CPR 30% CPR 50% CPR
- --------------------- ------ ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Closing Date......... 100 100 100 100 100
May 2000............. 100 100 100 100 100
May 2001............. 100 100 100 100 100
May 2002............. 100 100 100 100 100
May 2003............. 100 100 100 100 100
May 2004............. 100 100 100 100 100
May 2005............. 100 100 100 100 100
May 2006............. 100 100 100 100 100
May 2007............. 100 100 100 100 100
May 2008............. 100 100 100 100 100
May 2009 and
thereafter......... 0 0 0 0 0
Weighted average life
(in years)......... 9.89 9.89 9.89 9.89 9.89
</TABLE>
PERCENTAGES OF THE CLOSING DATE CERTIFICATE BALANCE OF THE CLASS C CERTIFICATES
<TABLE>
<CAPTION>
0% CPR DURING LOCKOUT, DEFEASANCE, YIELD
MAINTENANCE OR PREPAYMENT PENALTY
OTHERWISE AT INDICATED CPR
--------------------------------------------------
DISTRIBUTION DATE 0% CPR 10% CPR 20% CPR 30% CPR 50% CPR
- --------------------- ------ ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Closing Date......... 100 100 100 100 100
May 2000............. 100 100 100 100 100
May 2001............. 100 100 100 100 100
May 2002............. 100 100 100 100 100
May 2003............. 100 100 100 100 100
May 2004............. 100 100 100 100 100
May 2005............. 100 100 100 100 100
May 2006............. 100 100 100 100 100
May 2007............. 100 100 100 100 100
May 2008............. 100 100 100 100 100
May 2009 and
thereafter......... 0 0 0 0 0
Weighted average life
(in years)......... 9.89 9.89 9.89 9.89 9.89
</TABLE>
PERCENTAGES OF THE CLOSING DATE CERTIFICATE BALANCE OF THE CLASS D CERTIFICATES
<TABLE>
<CAPTION>
0% CPR DURING LOCKOUT, DEFEASANCE, YIELD
MAINTENANCE OR PREPAYMENT PENALTY
OTHERWISE AT INDICATED CPR
--------------------------------------------------
DISTRIBUTION DATE 0% CPR 10% CPR 20% CPR 30% CPR 50% CPR
- --------------------- ------ ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Closing Date......... 100 100 100 100 100
May 2000............. 100 100 100 100 100
May 2001............. 100 100 100 100 100
May 2002............. 100 100 100 100 100
May 2003............. 100 100 100 100 100
May 2004............. 100 100 100 100 100
May 2005............. 100 100 100 100 100
May 2006............. 100 100 100 100 100
May 2007............. 100 100 100 100 100
May 2008............. 100 100 100 100 100
May 2009 and
thereafter......... 0 0 0 0 0
Weighted average life
(in years)......... 9.98 9.98 9.97 9.96 9.94
</TABLE>
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<PAGE>
PERCENTAGES OF THE CLOSING DATE CERTIFICATE BALANCE OF THE CLASS E CERTIFICATES
<TABLE>
<CAPTION>
0% CPR DURING LOCKOUT, DEFEASANCE, YIELD
MAINTENANCE OR PREPAYMENT PENALTY
OTHERWISE AT INDICATED CPR
--------------------------------------------------
DISTRIBUTION DATE 0% CPR 10% CPR 20% CPR 30% CPR 50% CPR
- --------------------- ------ ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Closing Date......... 100 100 100 100 100
May 2000............. 100 100 100 100 100
May 2001............. 100 100 100 100 100
May 2002............. 100 100 100 100 100
May 2003............. 100 100 100 100 100
May 2004............. 100 100 100 100 100
May 2005............. 100 100 100 100 100
May 2006............. 100 100 100 100 100
May 2007............. 100 100 100 100 100
May 2008............. 100 100 100 100 100
May 2009............. 49 47 45 43 39
May 2010 and
thereafter......... 0 0 0 0 0
Weighted average life
(in years)......... 10.02 10.01 10.01 10.01 10.01
</TABLE>
PERCENTAGES OF THE CLOSING DATE CERTIFICATE BALANCE OF THE CLASS F CERTIFICATES
<TABLE>
<CAPTION>
0% CPR DURING LOCKOUT, DEFEASANCE, YIELD
MAINTENANCE OR PREPAYMENT PENALTY
OTHERWISE AT INDICATED CPR
--------------------------------------------------
DISTRIBUTION DATE 0% CPR 10% CPR 20% CPR 30% CPR 50% CPR
- --------------------- ------ ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Closing Date......... 100 100 100 100 100
May 2000............. 100 100 100 100 100
May 2001............. 100 100 100 100 100
May 2002............. 100 100 100 100 100
May 2003............. 100 100 100 100 100
May 2004............. 100 100 100 100 100
May 2005............. 100 100 100 100 100
May 2006............. 100 100 100 100 100
May 2007............. 100 100 100 100 100
May 2008............. 100 100 100 100 100
May 2009............. 100 100 100 100 100
May 2010 and
thereafter......... 0 0 0 0 0
Weighted average life
(in years)......... 10.21 10.21 10.21 10.21 10.21
</TABLE>
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 prepayments),
principal losses and interest rate reductions due to modifications on the
Mortgage Loans and to other factors set forth above. Investors should fully
consider the associated risks, including the risk that a rapid rate of principal
payments or principal losses on the Mortgage Pool could result in the failure by
investors in the Class IO Certificates to fully recoup their initial
investments.
ANY OPTIONAL TERMINATION BY THE SPECIAL SERVICER, THE MASTER SERVICER, THE
DEPOSITOR OR THE MAJORITY SUBORDINATE CERTIFICATEHOLDER WOULD RESULT IN
PREPAYMENT IN FULL OF THE CERTIFICATES AND WOULD HAVE AN ADVERSE EFFECT ON THE
YIELD OF THE CLASS IO CERTIFICATES BECAUSE A TERMINATION WOULD HAVE AN EFFECT
SIMILAR TO A PRINCIPAL PREPAYMENT IN FULL OF THE MORTGAGE LOANS (WITHOUT,
HOWEVER, THE PAYMENT OF ANY PREPAYMENT PREMIUMS OR YIELD MAINTENANCE CHARGES)
AND, AS A RESULT, INVESTORS IN THE CLASS IO CERTIFICATES AND ANY OTHER
CERTIFICATES PURCHASED AT PREMIUM MIGHT NOT FULLY RECOUP THEIR INITIAL
INVESTMENT. SEE "DESCRIPTION OF THE CERTIFICATES--TERMINATION" IN THIS
PROSPECTUS SUPPLEMENT.
The table below indicates the sensitivity of the pre-tax corporate bond
equivalent yields to maturity of the Class IO Certificates at various prices and
constant prepayment rates. The allocations and calculations do not take account
of any Prepayment Premiums or Yield Maintenance Charges. The yields set forth in
the table were calculated by determining the monthly discount rates that, when
applied to the assumed stream of cash flows to
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<PAGE>
be paid on the Class IO Certificates, would cause the discounted present value
of such assumed stream of cash flows to equal the assumed purchase prices plus
accrued interest of such Class of Certificates and converting such monthly rates
to corporate bond equivalent rates. Such calculations do not take into account
variations that may occur in the interest rates at which investors may be able
to reinvest funds received by them as distributions on the Class IO Certificates
and consequently do not purport to reflect the return on any investment in such
Class of Certificates when such reinvestment rates are considered.
The table below has been prepared based on the assumption that
distributions are made in accordance with "DESCRIPTION OF THE
CERTIFICATES--Distributions" in this Prospectus Supplement and on the Table
Assumptions and with the assumed respective purchase prices (as a percentage of
the aggregate of the notional amounts of the components of the Class IO
Certificates) of the Class IO Certificates set forth in the table, plus accrued
interest thereon from May 1, 1999 to the Closing Date and on the additional
assumption that the Pass-Through Rates for the Class A-1, Class A-2, Class B,
Class C, Class D, Class E and Class F Certificates are as stated on the cover of
this Prospectus Supplement and that the Class G, Class H, Class J, Class K,
Class L, Class M and Class N Pass-Through Rates are 5.95%.
SENSITIVITY TO PRINCIPAL PREPAYMENTS OF THE PRE-TAX YIELDS TO MATURITY
OF THE CLASS IO CERTIFICATES
<TABLE>
<CAPTION>
ASSUMED
PURCHASE PRICE 0% CPR 10% CPR 20% CPR 30% CPR 50% CPR
-------------- ------ ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
4.906250% 9.318% 9.312% 9.306% 9.300% 9.284%
4.921875% 9.242% 9.237% 9.231% 9.224% 9.209%
4.937500% 9.167% 9.162% 9.156% 9.149% 9.133%
4.953125% 9.093% 9.087% 9.081% 9.074% 9.059%
4.968750% 9.019% 9.013% 9.007% 9.000% 8.985%
4.984375% 8.945% 8.939% 8.933% 8.926% 8.911%
5.000000% 8.871% 8.866% 8.860% 8.853% 8.837%
5.015625% 8.798% 8.793% 8.787% 8.780% 8.764%
5.031250% 8.726% 8.720% 8.714% 8.707% 8.691%
5.046875% 8.653% 8.648% 8.641% 8.635% 8.619%
5.062500% 8.581% 8.576% 8.570% 8.563% 8.547%
5.078125% 8.510% 8.504% 8.498% 8.491% 8.475%
5.093750% 8.438% 8.433% 8.427% 8.420% 8.404%
</TABLE>
There can be no assurance that the Mortgage Loans will prepay at any of the
rates shown in the table or at any other particular rate, that the cash flows on
the Class IO Certificates will correspond to the cash flows assumed for purposes
of the above table or that the aggregate purchase price of the Class IO
Certificates will be as assumed. In addition, it is unlikely that the Mortgage
Loans will prepay at any of the specified percentages of CPR until maturity or
that all the Mortgage Loans will so prepay at the same rate. Timing of changes
in the rate of prepayments may significantly affect the actual yield to maturity
to investors, even if the average rate of principal prepayments is consistent
with the expectations of investors. Investors must make their own decisions as
to the appropriate prepayment assumption to be used in deciding whether to
purchase the Class IO Certificates.
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<PAGE>
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.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
The following summary of the anticipated material federal income tax
consequences of the purchase, ownership and disposition of Offered Certificates
is based on the advice of Brown & Wood LLP, counsel to the Depositor. This
summary is based on laws, regulations, including the REMIC regulations
promulgated by the Treasury Department (the "REMIC Regulations"), rulings and
decisions now in effect or (with respect to the regulations) proposed, all of
which are subject to change either prospectively or retroactively. This summary
does not address the federal income tax consequences of an investment in Offered
Certificates applicable to all categories of investors, some of which (for
example, banks and insurance companies) may be subject to special rules.
Prospective investors should consult their tax advisors regarding the federal,
state, local and other tax consequences to them of the purchase, ownership and
disposition of Offered Certificates.
Upon the issuance of the Offered Certificates, Brown & Wood LLP 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, each portion of the Trust Fund designated in the Pooling and Servicing
Agreement as a REMIC will qualify as a REMIC under the Code. For federal income
tax purposes, the REMIC Regular Certificates (or, in the case of the Class IO
Certificates, the respective Components thereof) will represent ownership of the
"regular interests" in one of such REMICs and generally will be treated as debt
instruments of such REMIC. See "MATERIAL FEDERAL INCOME TAX
CONSEQUENCES--REMICs" in the Prospectus. Such opinion will be filed with the
Commission.
Certificateholders' entitlement to a portion of the Additional Interest
will be treated as a Grantor Trust Strip Certificate (as defined in the
accompanying Prospectus) issued by an entity treated as a grantor trust for
United States federal income tax purposes. Certificateholders will be required
to allocate their basis between the portion of the Offered Certificates treated
as a REMIC regular interest (or in the case of the Class IO Certificate, the
components treated as REMIC regular interests) and their right to Additional
Interest based on the relative fair market value of such REMIC regular interest
and their right to Additional Interest as of the date of issuance. The accrual
of income with respect to Additional Interest is not entirely clear and
Certificateholders should consult their own tax advisor regarding the accrual of
income with respect to the Additional Interest. See "MATERIAL FEDERAL INCOME TAX
CONSEQUENCES--Grantor Trust Funds--Taxation of Owners of Grantor Trust Strip
Certificates" in the accompanying Prospectus.
Based on expected issue prices, the Class IO Certificates will, and certain
of the Sequential Pay Certificates, depending on their issue price, may, be
treated as having been issued with original issue discount for federal income
tax reporting purposes. In addition, although there is no clear authority, the
trust intends to treat the respective IO Components as instruments issued with
OID. The prepayment assumption that will be used in determining the rate of
accrual of original issue discount 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%, except that it is assumed that
the ARD Loans pay their respective outstanding principal balances on their
related Anticipated Repayment Dates. No representation is made that the Mortgage
Loans will prepay at that rate or at any other rate. See "MATERIAL 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 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
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<PAGE>
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 OID Regulations provide in general that original issue discount with
respect to debt instruments issued in connection with the same or related
transactions are treated as a single debt instrument for purposes of computing
the accrual of original issue discount with respect to such debt instruments.
This aggregation rule ordinarily is only to be applied when single debt
instruments are issued by a single issuer to a single holder. Although it is not
entirely clear that this aggregation rule applies to REMIC Regular Certificates
and other debt instruments subject to Section 1272(a)(6) of the Code,
information reports or returns sent to holders of the Class IO Certificates and
the IRS with respect to the Class IO Certificates will be based on such
aggregate method. However, a literal reading of the regulations addressing
integration would not allow the integration of the portion of the Trust Fund
treated as a Grantor Trust Strip Certificate and the portion treated as a REMIC
regular interest held by a Certificateholder. Prospective purchasers of the
Class IO Certificates are advised to consult their own tax advisers about the
use of this methodology and potential consequences of being required to report
original issue discount on the Class IO Certificates.
The Offered Certificates may be treated for federal income tax purposes as
having been issued at a premium. Whether any holder of such a class of
Certificates will be treated as holding a certificate with amortizable bond
premium will depend on such Certificateholder's purchase price and the
distributions remaining to be made on such Certificate at the time of its
acquisition by such Certificateholder. Holders of such class of Certificates
should consult their own tax advisors regarding the possibility of making an
election to amortize such premium. See "MATERIAL FEDERAL INCOME TAX
CONSEQUENCES--Taxation of Owners of REMIC Regular Certificates--Premium" in the
accompanying Prospectus.
The Offered Certificates will be treated as "real estate assets" within the
meaning of Section 856(c)(5)(B) 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 in this
Prospectus Supplement. It is not entirely clear under the Code when the amount
of a Prepayment Premium or Yield Maintenance Charge should be taxed to the
holder of 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. Despite an apparently contrary position by
the IRS, it nevertheless appears that Prepayment Premiums and Yield Maintenance
Charges, if any, might be treated as capital gain rather than ordinary income.
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 "MATERIAL 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.
The U.S. Department of Labor has issued individual exemptions to each of
the Underwriters (Prohibited Transaction Exemption 96-22 (April 3, 1996) to
First Union Capital Markets Corp.; Prohibited Transaction
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Exemption 90-31 (June 6, 1990) to Chase Manhattan Bank; and Prohibited
Transaction Exemption 90-23 (May 17, 1990) to J.P. Morgan Securities Inc. (each,
an "Exemption" and collectively, the "Exemptions"), each of 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) First Union Capital
Markets, (b) Chase Securities, (c) J.P. Morgan, (d) any person directly or
indirectly, through one or more intermediaries, controlling, controlled by or
under common control with First Union Capital Markets, Chase Securities or
J.P. Morgan and (e) any member of the underwriting syndicate or selling group of
which First Union Capital Markets, Chase Securities or J.P. Morgan or a person
described in (d) is a manager or co-manager with respect to the Offered
Certificates.
The Exemptions set forth six general conditions that must be satisfied for
a transaction involving the purchase, sale and holding of Class A-1, Class A-2
and Class IO Certificates to be eligible for exemptive relief 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 Rating Services, a division of The McGraw-Hill
Companies, Inc. ("Standard & Poor's"), Duff & Phelps Credit Rating Co. ("DCR"),
Moody's Investors Service, Inc. ("Moody's") or Fitch IBCA, Inc. ("Fitch").
Fourth, the Trustee cannot be an affiliate of any other member of the
"Restricted Group," which consists of each of the Underwriters, the Depositor,
the Master Servicer, the Special Servicer, the Trustee, any sub-servicer, and
any borrower with respect to Mortgage Loans constituting more than 5.0% 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 any 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 and Class IO Certificates are
subordinated with respect 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 their issuance that the Class A-1, Class A-2 and Class IO
Certificates be rated not lower than "AAA" by Fitch and "Aaa" by Moody's; 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
continues 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 Exemptions also require 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 Exemptions are satisfied, they 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, the Trustee, the Master Servicer,
the Special Servicer, a sub-servicer or a 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
S-123
<PAGE>
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 Exemptions are also satisfied, each
such 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 5.0% or less of the fair market value of the Mortgage Loans or
(b) an affiliate of such a person, (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 Exemptions are satisfied,
each such 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
Exemptions required for this purpose will be satisfied with respect to the
Senior Certificates.
The Exemptions 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 Exemptions and
the other requirements set forth in the Exemptions would be satisfied. In
addition to making its own determination as to the availability of the exemptive
relief provided in the Exemptions, the Plan fiduciary should consider the
availability of any other prohibited transaction exemptions. See "ERISA
CONSIDERATIONS" in the Prospectus.
THE CHARACTERISTICS OF THE CLASS B, CLASS C, CLASS D, CLASS E AND CLASS F
CERTIFICATES DO NOT MEET THE REQUIREMENTS OF THE EXEMPTIONS. 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, Class E and Class F
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,
Class E or Class F 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.
S-124
<PAGE>
LEGAL INVESTMENT
Any 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.
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 Chase Securities Inc.
("Chase Securities"), First Union Capital Markets Corp. ("First Union Capital
Markets") and J.P. Morgan Securities Inc. ("J.P. Morgan") (together, the
"Underwriters"), the Depositor has agreed to sell to each of Chase Securities
and First Union Capital Markets, and each of Chase Securities and First Union
Capital Markets has agreed to purchase, severally but not jointly, the
respective Certificate Balances, or notional amounts, as applicable, of each
Class of the Offered Certificates as set forth below subject in each case to a
variance of 5.0%;
<TABLE>
<CAPTION>
CLASS CHASE SECURITIES INC. FIRST UNION CAPITAL MARKETS CORP.
------- --------------------- ---------------------------------
<S> <C> <C>
Class A-1.... $ 91,310,901 $ 112,189,099
Class A-2.... $ 279,877,096 $ 343,870,871
Class IO..... $ 307,353,159 $ 377,629,322
Class B...... $ 21,205,709 $ 26,054,384
Class C...... $ 27,832,493 $ 34,196,381
Class D...... $ 6,626,784 $ 8,141,995
Class E...... $ 18,554,995 $ 22,797,587
Class F...... $ 7,952,141 $ 9,770,394
</TABLE>
It is expected that approximately $50 million of the initial Certificate
Balance of the Class A-2 Certificates and approximately 42.0% (by notional
amount) of the initial notional amount of the Class IO Certificates will be sold
by the Depositor in an arm's-length transaction to FUNB, an affiliate of the
Depositor, on the Closing Date.
Chase Securities and First Union Capital Markets are acting as co-lead
managers and co-bookrunners and J.P. Morgan is acting as co-manager of the
offering. J.P. Morgan is not required to sell any specific portion of the
Offered Certificates but will use their best efforts to sell the Offered
Certificates.
Proceeds to the Depositor from the sale of the Offered Certificates, before
deducting expenses payable by the Depositor, will be approximately
$1,130,955,245, 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 (other than the portion of the Class A-2 and
Class IO Certificates sold to FUNB) 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, Chase Securities and First Union Capital Markets may
be deemed to have received compensation from the Depositor in the form of
underwriting discounts. In connection with the purchase and sale of the Offered
Certificates, J.P. Morgan will receive an underwriting fee equal to 0.083601% of
the aggregate Certificate Balance of the Offered Certificates. Each Underwriter
and any dealers that participate with any Underwriter in the distribution of the
Offered Certificates may be deemed to be underwriters and any profit on
S-125
<PAGE>
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 secondary market for the Offered Certificates will develop. See
"RISK FACTORS--Limited Liquidity for Offered Certificates" in this Prospectus
Supplement and in the Prospectus.
This Prospectus Supplement and the Prospectus may be used by the Depositor,
First Union Capital Markets, 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 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.
This Prospectus Supplement and the Prospectus may be used by FUNB to resell
the portion of the Class A-2 and Class IO Certificates purchased by it from the
Depositor on the Closing Date publicly or privately to affiliated or
unaffiliated parties either directly or indirectly through an underwriter,
including First Union Capital Markets.
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.
Chase Securities, one of the Underwriters, is an affiliate of The Chase
Manhattan Bank, one of the Mortgage Loan Sellers. First Union Capital Markets,
one of the Underwriters, is an affiliate of the Depositor, FUNB and the Master
Servicer.
LEGAL MATTERS
Certain legal matters will be passed upon for the Depositor by Brown & Wood
LLP, New York, New York, and certain legal matters will be passed upon for the
Underwriters by Cadwalader, Wickersham & Taft, New York, New York.
RATINGS
The Offered Certificates are required as a condition of their issuance to
have received the following ratings from Fitch and Moody's (the "Rating
Agencies"):
<TABLE>
<CAPTION>
RATING FROM
CLASS FITCH/MOODY'S
------------ ----------------
<S> <C>
Class A-1.... AAA/Aaa
Class A-2.... AAA/Aaa
Class IO.... AAA/Aaa
Class B..... AA/Aa2
Class C..... A/A2
Class D..... A-/A3
Class E..... BBB/Baa2
Class F..... BBB-/Baa3
</TABLE>
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 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). In addition, a rating does not address the likelihood
or frequency of voluntary or mandatory prepayments of Mortgage Loans, payment of
Additional
S-126
<PAGE>
Interest or net default interest or whether and to what extent payments of
Prepayment Premiums or Yield Maintenance Charges will be received or the
corresponding effect on yield to investors. As described in this Prospectus
Supplement, 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 Class IO Certificates' notional amount upon which
interest is calculated is reduced by the allocation of Realized Losses,
Additional Trust Fund Expenses and prepayments, whether voluntary or
involuntary. The rating does not address the timing or magnitude of reductions
of the notional amounts of the IO Components, 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.
A downgrade, qualification or withdrawal of a rating with respect to the
Enhancement Insurer, a provider of a residual value insurance policy, a Tenant
or a Guarantor may adversely affect the ratings of the Offered Certificates.
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 on Certificates" in the Prospectus.
S-127
<PAGE>
INDEX OF PRINCIPAL DEFINITIONS
PAGE
-----------------
30/360 basis.................................................. S-48
Accrued Certificate Interest.................................. S-98
Actual/360 basis.............................................. S-48
Additional Interest........................................... S-49
Additional Rights............................................. S-55
Additional Trust Fund Expenses................................ S-15, S-102
Administrative Cost Rate...................................... S-58
Advance....................................................... S-103
Anticipated Repayment Date.................................... S-49
Appraisal Reduction Amount.................................... S-104
ARD Loans..................................................... S-49
Assumed Final Distribution Date............................... S-109
Assumed Scheduled Payment..................................... S-99
Available Distribution Amount................................. S-94
Balloon Loans................................................. S-38, S-49
BOMCM......................................................... S-82
Bond-Type Leases.............................................. S-55
Capital Imp. Reserve.......................................... S-59
Casualty or Condemnation Rights............................... S-55
CBE........................................................... S-115
Cedelbank Participants........................................ S-91
Certificate Balance........................................... S-12, S-92
Certificate Deferred Interest................................. S-92
Certificateholders............................................ S-93
Certificates.................................................. S-89
Chase Manhattan............................................... S-9
Chase Securities.............................................. S-10, S-125
Class......................................................... S-89
Class A Certificates.......................................... S-89
Closing Date.................................................. Cover, S-9, S-74
Collection Period............................................. S-93
Comparative Financial Status Report........................... S-107
Compensating Interest Payment................................. S-84
Constant Prepayment Rate...................................... S-115
Controlling Class............................................. S-82
Controlling Class Representative.............................. S-82
Cooperative................................................... S-91
Corrected Mortgage Loan....................................... S-83
CPR........................................................... S-115
Credit Lease.................................................. S-52
Credit Lease Assignment....................................... S-55
Credit Lease Default.......................................... S-55
Credit Lease Loans............................................ S-52
Cross-Collateralized Loans.................................... S-43
S-128
<PAGE>
PAGE
-----------------
CSSA Loan File................................................ S-106
CSSA Property File............................................ S-106
Custodian..................................................... S-76
Cut-Off Date Balance.......................................... S-46
Cut-Off Date DSC Ratio........................................ S-57
Cut-Off Date DSCR............................................. S-57
Cut-Off Date LTV.............................................. S-58
Cut-Off Date LTV Ratio........................................ S-58
Cut-Off Date Pool Balance..................................... S-8
D............................................................. S-59
DCR........................................................... S-49, S-123
Defeasance.................................................... S-59
Defeasance Collateral......................................... S-26, S-50
Delinquent Loan Status Report................................. S-106
Depositaries.................................................. S-89
Depositor..................................................... S-3
Determination Date............................................ S-93
Discount Rate................................................. S-17, S-100
Distributable Certificate Interest............................ S-13, S-98
Distribution Date............................................. S-93
Distribution Date Statement................................... S-104
Double Net Leases............................................. S-55
DSC Ratio..................................................... S-56
DSCR.......................................................... S-56
DTC........................................................... S-18, S-89
DTC Services.................................................. S-33
Enhancement Insurer........................................... S-56
ERISA......................................................... S-122
Euroclear..................................................... S-18
Euroclear Operator............................................ S-91
Euroclear Participants........................................ S-91
Excess Cash Flow.............................................. S-49
Excluded Plan................................................. S-124
Exemption..................................................... S-123
Final Recovery Determination.................................. S-105
First Principal Payment Date.................................. S-115
First Union Capital Markets................................... S-10, S-125
Fitch......................................................... S-123
Form 8-K...................................................... S-80
Fully Amortizing Loans........................................ S-49
FUNB.......................................................... S-9
Guarantor..................................................... S-36, S-52
Historical Loan Modification Report........................... S-106
Historical Loss Estimate Report............................... S-106
Indirect Participants......................................... S-90
S-129
<PAGE>
PAGE
-----------------
Industry...................................................... S-33
Insured Balloon Payment....................................... S-49
Interest Accrual Period....................................... S-93
Interest Reserve Account...................................... S-94
Interest Reserve Amount....................................... S-94
Interest Reserve Loans........................................ S-94
IO Component.................................................. S-14, S-92
IRS........................................................... S-121
J.P. Morgan................................................... S-10, S-125
Last Principal Payment Date................................... S-115
Lease Enhancement Policies.................................... S-52
Loan Payoff Notification Report............................... S-107
Loan per Sq Ft, Unit, Bed, Pad or Room........................ S-58
Lockout....................................................... S-58
Lockout Period................................................ S-58
Loss of Rents................................................. S-56
LTV at ARD or Maturity........................................ S-58
Maintenance Rights............................................ S-55
Majority Subordinate Certificateholder........................ S-110
Master Servicer............................................... S-81
Master Servicing Fee.......................................... S-83
Master Servicing Fee Rate..................................... S-83
Maturity Date LTV Ratio....................................... S-58
Monthly Rental Payments....................................... S-52
Moody's....................................................... S-123
Mortgage...................................................... S-46
Mortgage Deferred Interest.................................... S-92
Mortgage File................................................. S-76
Mortgage Loan................................................. S-100
Mortgage Loan Purchase Agreement.............................. S-74
Mortgage Loans................................................ S-100
Mortgage Note................................................. S-46
Mortgage Rate................................................. S-48
Mortgaged Property............................................ S-46
NAP........................................................... S-59
NAV........................................................... S-59
Net Aggregate Prepayment Interest Shortfall................... S-98
Net Cash Flow................................................. S-56
Net Mortgage Rate............................................. S-14, S-93
NOI Adjustment Worksheet...................................... S-107
Non-Offered Certificates...................................... S-89
Non-SMMEA Certificates........................................ S-125
Nonrecoverable P&I Advance.................................... S-103
Norwest Bank.................................................. S-111
Occupancy Percentage.......................................... S-59
S-130
<PAGE>
PAGE
-----------------
Offered Certificates.......................................... S-89
OID Regulations............................................... S-121
Operating Statement Analysis.................................. S-107
Original Term to Maturity..................................... S-59
P&I Advance................................................... S-18, S-103
Party in Interest............................................. S-123
Periodic Payments............................................. S-48
Plan.......................................................... S-122
Pooling and Servicing Agreement............................... S-9, S-89
Prepayment Interest Excess.................................... S-84
Prepayment Interest Shortfall................................. S-84
Prepayment Premiums........................................... S-100
Primary Term.................................................. S-52
Principal Distribution Amount................................. S-13, S-98, S-100
Principal Recovery Fee........................................ S-84
Privileged Persons............................................ S-108
PTE 95-60..................................................... S-124
Purchase Price................................................ S-77
Qualified Appraiser........................................... S-104
Qualified Substitute Mortgage Loan............................ S-77
Rated Final Distribution Date................................. S-4, S-110
Rating Agencies............................................... S-19, S-126
Realized Losses............................................... S-15, S-102
Reimbursement Rate............................................ S-104
Related Proceeds.............................................. S-103
Remaining Amortization Term................................... S-58
Remaining Term to Maturity.................................... S-58
REMIC......................................................... S-18
REMIC Administrator........................................... S-111
REMIC Regular Certificates.................................... S-89
REMIC Regulations............................................. S-121
REMIC Residual Certificates................................... S-89
Rental Property............................................... S-57
REO Extension................................................. S-87
REO Mortgage Loan............................................. S-100
REO Property.................................................. S-83
REO Status Report............................................. S-106
REO Tax....................................................... S-88
Replacement Reserve........................................... S-59
Required Appraisal Date....................................... S-104
Required Appraisal Loan....................................... S-104
Required Defeasance Period.................................... S-114
Residual Value Insurance Policy............................... S-49
Residual Value Insurers....................................... S-49
Restricted Group.............................................. S-123
S-131
<PAGE>
PAGE
-----------------
Restricted Servicer Reports................................... S-107
Rules......................................................... S-90
Scenario...................................................... S-115
Scheduled Payment............................................. S-99
Semi-Annual Loans............................................. S-48
Sequential Pay Certificates................................... S-12, S-89
Servicing Fees................................................ S-84
Servicing Transfer Event...................................... S-83
SMMEA......................................................... S-19, S-125
Special Servicing Fee......................................... S-84
Special Servicing Fee Rate.................................... S-84
Specially Serviced Mortgage Loans............................. S-83
Specially Serviced Trust Fund Assets.......................... S-83
SSILP......................................................... S-27, S-73
Standard & Poor's............................................. S-123
Stated Principal Balance...................................... S-15, S-93
Subordinate Certificates...................................... S-31, S-89
Substitution Shortfall Amount................................. S-77
Systems....................................................... S-33
Table Assumptions............................................. S-109, S-115
Tenant........................................................ S-52
Tenant Balloon Payment........................................ S-49
Terms and Conditions.......................................... S-91
TI/LC Reserve................................................. S-59
Triple Net Leases............................................. S-55
Trust Fund.................................................... S-89
Trustee Fee................................................... S-111
Underwriter................................................... S-123
Underwriters.................................................. S-125
Underwriting Agreement........................................ S-125
Underwritten Replacement Reserves............................. S-58
Unrestricted Servicer Reports................................. S-107
Voting Rights................................................. S-110
Watch List Report............................................. S-107
Weighted Average Net Mortgage Rate............................ S-14, S-93, S-100
Year 2000 Problem............................................. S-32
Year Built.................................................... S-58
Yield Maintenance Charges..................................... S-100
Yield Tables.................................................. S-115
Zoning Laws................................................... S-42
S-132
<PAGE>
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<PAGE>
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<PAGE>
ANNEX A-1
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS AND MORTGAGED PROPERTIES
<TABLE>
<CAPTION>
Control
Number Property Name Address City State
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 Sheraton Suites Portfolio Various Various Multiple
1.01 Sheraton Suites Wilmington 422 Delaware Avenue Wilmington DE
1.02 Sheraton Suites Dallas 2101 North Stemmons Freeway Dallas TX
1.03 Sheraton Suites Elk Grove 121 Northwest Point Blvd. Elk Grove Village IL
2 Olen Portfolio Various Various CA
- ------------------------------------------------------------------------------------------------------------------------------------
2.01 Jamboree Corporate Park 2801 - 2823 McGaw Avenue Irvine CA
2.02 Newport Mesa Centre 729 West 16th Street and 1599 Superior Avenue Costa Mesa CA
2.03 Olen Corporate Center 20 Corporate Park Irvine CA
2.04 Orange Freeway Business Park 151-193 Orangethorpe Avenue Placentia CA
2.05 Spectrum Pointe Various Lake Forest CA
- ------------------------------------------------------------------------------------------------------------------------------------
2.06 Von Karman Research Center 2302 Barranca Parkway Irvine CA
3 Lakeside Apartments 10 Lakeside Way Newnan GA
4 Wynfrey Hotel at Riverchase Galleria 1000 Riverchase Galleria Hoover AL
5 Wilshire Portfolio 8942,9090,9150 Wilshire Blvd. Beverly Hills CA
5.01 Wilshire Doheny Bldg 9090 Wilshire Boulevard Los Angeles CA
- ------------------------------------------------------------------------------------------------------------------------------------
5.02 ICM Building 8942 Wilshire Boulevard Los Angeles CA
5.03 Wilshire Palm Bldg 9150 Wilshire Boulevard Los Angeles CA
6 Hickory Lake 490 Windy Hill Road Smyrna GA
7 Westgate Village 2510-2912 Soncy Road Amarillo TX
8 1055 Washington Blvd. 1055 Washington Blvd. Stamford CT
- ------------------------------------------------------------------------------------------------------------------------------------
9 Oak Park Commons NEC Oak Tree Road and Park Avenue South Plainfield NJ
10 Vista Ridge Plaza I, II & Shops East Round Grove Road Lewisville TX
11 Alexis Hotel 1007 First Avenue Seattle WA
12 East Thunderbird Square 13802 North Scottsdale Road Phoenix AZ
13 Sherwood Apartments 14500 McNab Avenue Bellflower CA
- ------------------------------------------------------------------------------------------------------------------------------------
14 Villa Serena Apartments 325 North Gibson Road Henderson NV
15 194 East Second Street Apartments 194 East Second Street New York NY
16 Executive House 6100 City Ave. Philadelphia PA
17 Village West Shopping Center 3100 Tilghman Street Allentown PA
18 Marlboro Office/Warehouse Park County Route 520 and Hartman Road Marlboro NJ
- ------------------------------------------------------------------------------------------------------------------------------------
19 Windsor Falls Apartments 1500 Sunbow Falls Lane Raleigh NC
20 Sheraton Hotel - Charleston, SC 170 Lockwood Drive Charleston SC
21 High Pointe Shopping Center 21051-21071 Haggerty Road Novi MI
22 United Healthcare 13655 Riverport Drive Maryland Heights MO
23 Academy Plaza 3200-3280 Red Lion Road Philadelphia PA
- ------------------------------------------------------------------------------------------------------------------------------------
24 Kings Bridge 1450 Raintree Way Roswell GA
25 Walden Village 1500 Post Oak Drive Clarkston GA
26 Garnet Lake Portfolio Various Various CA
26.01 7510 Hollywood Boulevard 7510 Hollywood Boulevard Hollywood CA
26.02 1349 N. Detroit Street 1349 N. Detroit Street Los Angeles CA
- ------------------------------------------------------------------------------------------------------------------------------------
26.03 7140 De Longpre Avenue 7140 De Longpre Avenue Los Angeles CA
26.04 219 S. Mariposa 219 S. Mariposa Avenue Los Angeles CA
26.05 1030 N. Orange Grove Avenue 1030 N. Orange Grove Avenue W. Hollywood CA
26.06 7364 Hollywood Boulevard 7364 Hollywood Boulevard Hollywood CA
26.07 1750 El Cerrito Place 1750 El Cerrito Place Hollywood CA
- ------------------------------------------------------------------------------------------------------------------------------------
26.08 7278 Hollywood Boulevard 7278 Hollywood Boulevard Hollywood CA
26.09 3824 Motor Avenue 3824 Motor Avenue Culver City CA
26.10 1010 Raleigh Street 1010 Raleigh Street Glendale CA
27 Orange Derby Shopping Center 500 New Haven Avenue Derby CT
28 Long Brook Sutton Place and Sutton Drive Matawan NJ
- ------------------------------------------------------------------------------------------------------------------------------------
29 Somerset Apartments 12800 Vonn Road Largo FL
30 353 Lexington Avenue 353 Lexington Avenue New York NY
31 Whitehall Estates 2400 Whitehall Estates Drive Charlotte NC
32 Vista Shopping Center 6402-6580 NW 186th Street Miami FL
33 Morgan Place Apartments 1680 Chantilly Drive Atlanta GA
- ------------------------------------------------------------------------------------------------------------------------------------
34 Ridgedale Festival Shopping Center 14200 Wayzata Boulevard Minnetonka MN
35 Lantana/Park Trace Apartments 501/530 Fairwood Avenue Clearwater FL
35.01 Lantana 530 Fairwood Avenue Clearwater FL
35.02 Park Trace Apartments 501 Fairwood Avenue Clearwater FL
36 Las Palomas Apartments 4040 Boulder Highway Las Vegas NV
- ------------------------------------------------------------------------------------------------------------------------------------
37 Mercy Wellness Centers Portfolio Various Various PA
37.01 Eastwick Wellness Center 2821 Island Ave. Eastwick PA
37.02 Upper Darby Wellness Center 6800 Market St. Upper Darby PA
38 Wildwood Village Apartments 3491 Timbersedge Drive Indianapolis IN
39 Hampton Inn Maingate 3104 Parkway Blvd. Kissimmee FL
- ------------------------------------------------------------------------------------------------------------------------------------
40 Circuit City Norwalk 444 444 Connecticut Avenue Norwalk CT
41 Target Center 2505 Vineyard Avenue Oxnard CA
42 Westgate Shopping Center 6700-6910 West Kellogg Drive (U.S. Route 54) Wichita KS
43 Gardens at Annen Woods 1 Harness Court Pikesville MD
44 Auburn - Southbridge Center 436-440 Southbridge St. Auburn MA
- ------------------------------------------------------------------------------------------------------------------------------------
45 Cornerstone Shopping Center NEC Bloomfield Ave and Artesia Blvd. Cerritos CA
46 Gabes Place Apartments Portfolio Various Champaign - Urbana IL
46.01 202 E. John 202 East John Street Champaign IL
46.02 102 E. Gregory 102 East Gregory Drive Champaign IL
46.03 810 Iowa 810 West Iowa Street Urbana IL
- ------------------------------------------------------------------------------------------------------------------------------------
46.04 807 W. Oregon 807 W. Oregon Street Urbana IL
46.05 811 W. Oregon 811 W. Oregon Street Urbana IL
47 Briarwood Apartments 29 Briar Circle Fayetteville NC
48 3 - 7 West 35th Street 3 - 7 West 35th St. New York NY
49 Radio Wave Building 49 West 27th Street New York NY
- ------------------------------------------------------------------------------------------------------------------------------------
50 Market Square Shopping Center 2200 Elmwood Avenue Lafayette IN
51 Palm Villas Apartments 91 - 1049 Paumae'ole Street Ewa HI
52 Kohl's Department Store 14425 Andersohn Drive Manchester MO
53 467 West Avenue 467 West Avenue Norwalk CT
54 Motel 6 1115 Raleigh 1401 Buck Jones Road Raleigh NC
- ------------------------------------------------------------------------------------------------------------------------------------
55 Crown Valley Retail Center 27620 Marguerite Parkway Mission Viejo CA
56 Residence Inn - Tampa 13420 Telecom Parkway Tampa FL
57 Comfort Suites - Gastonia 1874 Remount Road Gastonia NC
58 Cityplace Market 2405-2415 N. Haskell Avenue Dallas TX
59 Belmont Crossing 1940 Atlanta Road Smyrna GA
- ------------------------------------------------------------------------------------------------------------------------------------
60 Timber Creek Apartments 1881 W. Airport Freeway Euless TX
61 Windgate Place 220 Branchview Drive Charlotte NC
62 Winn Dixie Chesapeake Cedar Cedar Road and Las Gavitos Boulevard Chesapeake VA
63 Residence Inn - Sarasota 1040 University Parkway Sarasota FL
64 Rockwood Gardens Fortune Road West Wallkill NY
- ------------------------------------------------------------------------------------------------------------------------------------
65 New Rochelle Nursing Home 31 Lockwood Avenue New Rochelle NY
66 Kjellburg Mobile Home Park 1000 Kjellberg's Park Monticello MN
67 Autumn Park Apartments 3720 West State Street Grand Island NE
68 111 Devonshire Street Building 111 Devonshire Street Boston MA
<CAPTION>
Cross-
Collateralized % of Cumulative %
and Cross- Aggregate of Aggregate
Control Defaulted Original Cut-Off Date Cut-Off Date Cut-Off Date Mortgage
Number Property Name Zip Code Groups Balance ($) Balance ($) Balance Balance Rate (%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 Sheraton Suites Portfolio Various 50,850,000 50,443,313 4.27% 4.27% 6.7500%
1.01 Sheraton Suites Wilmington 19801
1.02 Sheraton Suites Dallas 75207
1.03 Sheraton Suites Elk Grove 60007-1019
2 Olen Portfolio Various 37,500,000 37,472,777 3.17% 7.44% 7.6100%
- ------------------------------------------------------------------------------------------------------------------------------------
2.01 Jamboree Corporate Park 92714
2.02 Newport Mesa Centre 92627
2.03 Olen Corporate Center 92606
2.04 Orange Freeway Business Park 92870
2.05 Spectrum Pointe 92630
- ------------------------------------------------------------------------------------------------------------------------------------
2.06 Von Karman Research Center 92606
3 Lakeside Apartments 30265 29,750,000 29,750,000 2.52% 9.96% 7.0500%
4 Wynfrey Hotel at Riverchase Galleria 35244 25,600,000 25,263,571 2.14% 12.10% 7.4000%
5 Wilshire Portfolio 90211 25,000,000 24,502,544 2.07% 14.17% 8.2500%
5.01 Wilshire Doheny Bldg 90211
- ------------------------------------------------------------------------------------------------------------------------------------
5.02 ICM Building 90211
5.03 Wilshire Palm Bldg 90211
6 Hickory Lake 30082 22,520,000 22,492,277 1.90% 16.08% 7.6500%
7 Westgate Village 79121 22,100,000 21,984,235 1.86% 17.94% 6.5700%
8 1055 Washington Blvd. 06901 20,000,000 19,932,471 1.69% 19.62% 7.7200%
- ------------------------------------------------------------------------------------------------------------------------------------
9 Oak Park Commons 07080 19,237,500 19,154,363 1.62% 21.24% 6.5700%
10 Vista Ridge Plaza I, II & Shops 75067 19,000,000 18,917,890 1.60% 22.85% 6.5700%
11 Alexis Hotel 98104 18,944,554 18,779,010 1.59% 24.43% 7.2130%
12 East Thunderbird Square 85254 17,000,000 16,978,212 1.44% 25.87% 7.5000%
13 Sherwood Apartments 90706 15,800,000 15,788,274 1.34% 27.21% 7.5000%
- ------------------------------------------------------------------------------------------------------------------------------------
14 Villa Serena Apartments 89014 15,680,000 15,668,057 1.33% 28.53% 7.3700%
15 194 East Second Street Apartments 10009 15,250,000 15,231,468 1.29% 29.82% 7.7000%
16 Executive House 19131 14,600,000 14,582,212 1.23% 31.06% 7.6900%
17 Village West Shopping Center 18104 14,500,000 14,398,114 1.22% 32.28% 6.9500%
18 Marlboro Office/Warehouse Park 07751 14,080,000 14,018,261 1.19% 33.46% 6.5000%
- ------------------------------------------------------------------------------------------------------------------------------------
19 Windsor Falls Apartments 27609 13,500,000 13,500,000 1.14% 34.61% 7.3750%
20 Sheraton Hotel - Charleston, SC 29403 13,000,000 12,939,276 1.10% 35.70% 8.5000%
21 High Pointe Shopping Center 48333 12,525,000 12,525,000 1.06% 36.76% 7.6000%
22 United Healthcare 63043 12,000,000 12,000,000 1.02% 37.78% 6.8600%
23 Academy Plaza 19116 11,080,000 10,966,031 0.93% 38.70% 7.2750%
- ------------------------------------------------------------------------------------------------------------------------------------
24 Kings Bridge 30076 10,730,000 10,716,791 0.91% 39.61% 7.6500%
25 Walden Village 30021 10,700,000 10,700,000 0.91% 40.52% 7.5500%
26 Garnet Lake Portfolio Various 10,667,000 10,659,280 0.90% 41.42% 7.6250%
26.01 7510 Hollywood Boulevard 90046
26.02 1349 N. Detroit Street 90046
- ------------------------------------------------------------------------------------------------------------------------------------
26.03 7140 De Longpre Avenue 90046
26.04 219 S. Mariposa 90046
26.05 1030 N. Orange Grove Avenue 90046
26.06 7364 Hollywood Boulevard 90046
26.07 1750 El Cerrito Place 90028
- ------------------------------------------------------------------------------------------------------------------------------------
26.08 7278 Hollywood Boulevard 90046
26.09 3824 Motor Avenue 90232
26.10 1010 Raleigh Street 91205
27 Orange Derby Shopping Center 06418 10,600,000 10,570,531 0.90% 42.31% 7.8750%
28 Long Brook 07747 10,510,000 10,476,840 0.89% 43.20% 7.2400%
- ------------------------------------------------------------------------------------------------------------------------------------
29 Somerset Apartments 33774 10,240,000 10,227,394 0.87% 44.07% 7.6500%
30 353 Lexington Avenue 10016 10,225,000 10,225,000 0.87% 44.93% 7.7000%
31 Whitehall Estates 28273 10,000,000 9,824,768 0.83% 45.76% 6.8000%
32 Vista Shopping Center 33126 9,700,000 9,627,049 0.82% 46.58% 7.0500%
33 Morgan Place Apartments 30324 9,300,000 9,300,000 0.79% 47.37% 7.3750%
- ------------------------------------------------------------------------------------------------------------------------------------
34 Ridgedale Festival Shopping Center 55305 9,150,000 9,110,457 0.77% 48.14% 6.5700%
35 Lantana/Park Trace Apartments 33759 9,070,000 9,058,835 0.77% 48.90% 7.6500%
35.01 Lantana 33759
35.02 Park Trace Apartments 33759
36 Las Palomas Apartments 89121 9,000,000 8,989,205 0.76% 49.66% 7.7500%
- ------------------------------------------------------------------------------------------------------------------------------------
37 Mercy Wellness Centers Portfolio Various 9,000,000 8,962,055 0.76% 50.42% 7.0000%
37.01 Eastwick Wellness Center 19153
37.02 Upper Darby Wellness Center 19082
38 Wildwood Village Apartments 46222 8,960,000 8,937,414 0.76% 51.18% 7.3400%
39 Hampton Inn Maingate 34747 8,175,000 8,115,184 0.69% 51.87% 7.0000%
- ------------------------------------------------------------------------------------------------------------------------------------
40 Circuit City Norwalk 444 06854 7,928,313 7,898,702 0.67% 52.53% 7.7500%
41 Target Center 93033 7,850,000 7,816,076 0.66% 53.20% 6.5700%
42 Westgate Shopping Center 67209 7,850,000 7,816,076 0.66% 53.86% 6.5700%
43 Gardens at Annen Woods 21208 7,690,000 7,690,000 0.65% 54.51% 7.3750%
44 Auburn - Southbridge Center 01501 7,250,000 7,244,831 0.61% 55.12% 7.7000%
- ------------------------------------------------------------------------------------------------------------------------------------
45 Cornerstone Shopping Center 90703 6,942,000 6,937,130 0.59% 55.71% 7.7800%
46 Gabes Place Apartments Portfolio 61820 6,700,000 6,675,415 0.57% 56.27% 7.4700%
46.01 202 E. John 61820
46.02 102 E. Gregory 61820
46.03 810 Iowa 61820
- ------------------------------------------------------------------------------------------------------------------------------------
46.04 807 W. Oregon 61820
46.05 811 W. Oregon 61820
47 Briarwood Apartments 28306 6,650,000 6,650,000 0.56% 56.84% 7.5500%
48 3 - 7 West 35th Street 10001 6,675,000 6,625,663 0.56% 57.40% 7.1250%
49 Radio Wave Building 10001 6,450,000 6,445,411 0.55% 57.94% 7.7100%
- ------------------------------------------------------------------------------------------------------------------------------------
50 Market Square Shopping Center 47901 6,425,000 6,353,653 0.54% 58.48% 7.3750%
51 Palm Villas Apartments 96706 6,300,000 6,290,673 0.53% 59.01% 6.9100%
52 Kohl's Department Store 63021 6,300,000 6,272,774 0.53% 59.54% 6.5700%
53 467 West Avenue 06851 6,289,000 6,255,724 0.53% 60.07% 7.1250%
54 Motel 6 1115 Raleigh 27606 6,509,982 6,235,064 0.53% 60.60% 7.2350%
- ------------------------------------------------------------------------------------------------------------------------------------
55 Crown Valley Retail Center 92692 6,250,000 6,231,732 0.53% 61.13% 7.6250%
56 Residence Inn - Tampa 33617 6,068,000 6,010,240 0.51% 61.64% 7.1000%
57 Comfort Suites - Gastonia 28054 5,800,000 5,725,887 0.49% 62.12% 7.6250%
58 Cityplace Market 75204 5,750,000 5,725,151 0.49% 62.61% 6.5700%
59 Belmont Crossing 30080 5,720,000 5,712,959 0.48% 63.09% 7.6500%
- ------------------------------------------------------------------------------------------------------------------------------------
60 Timber Creek Apartments 76040 5,500,000 5,500,000 0.47% 63.56% 7.2000%
61 Windgate Place 28217 5,490,000 5,490,000 0.47% 64.02% 7.5500%
62 Winn Dixie Chesapeake Cedar 23322 5,501,754 5,445,132 0.46% 64.48% 6.7500%
63 Residence Inn - Sarasota 34234 5,441,000 5,389,208 0.46% 64.94% 7.1000%
64 Rockwood Gardens 10941 5,400,000 5,383,818 0.46% 65.39% 7.5000%
- ------------------------------------------------------------------------------------------------------------------------------------
65 New Rochelle Nursing Home 10801 5,440,000 5,383,759 0.46% 65.85% 9.3750%
66 Kjellburg Mobile Home Park 55362 5,250,000 5,206,861 0.44% 66.29% 7.1250%
67 Autumn Park Apartments 68803 5,200,000 5,196,149 0.44% 66.73% 7.5100%
68 111 Devonshire Street Building 02109 5,200,000 5,194,470 0.44% 67.17% 7.9300%
<CAPTION>
Original
Interest
Interest Only
Control Administrative Accrual Period
Number Property Name Cost Rate (%) Method Amortization Type (1) (Mos.)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 Sheraton Suites Portfolio 0.05225% Actual/360 Amortizing Balloon
1.01 Sheraton Suites Wilmington
1.02 Sheraton Suites Dallas
1.03 Sheraton Suites Elk Grove
2 Olen Portfolio 0.06225% Actual/360 Amortizing Balloon
- ----------------------------------------------------------------------------------------------------------------------------------
2.01 Jamboree Corporate Park
2.02 Newport Mesa Centre
2.03 Olen Corporate Center
2.04 Orange Freeway Business Park
2.05 Spectrum Pointe
- ----------------------------------------------------------------------------------------------------------------------------------
2.06 Von Karman Research Center
3 Lakeside Apartments 0.06225% Actual/360 Interest Only, then Amortizing Balloon 48
4 Wynfrey Hotel at Riverchase Galleria 0.08725% 30/360 Amortizing Balloon
5 Wilshire Portfolio 0.08725% 30/360 Amortizing Balloon
5.01 Wilshire Doheny Bldg
- ----------------------------------------------------------------------------------------------------------------------------------
5.02 ICM Building
5.03 Wilshire Palm Bldg
6 Hickory Lake 0.08725% Actual/360 Amortizing Balloon
7 Westgate Village 0.08725% Actual/360 Amortizing Balloon
8 1055 Washington Blvd. 0.08725% Actual/360 Amortizing Balloon
- ----------------------------------------------------------------------------------------------------------------------------------
9 Oak Park Commons 0.08725% Actual/360 Amortizing Balloon
10 Vista Ridge Plaza I, II & Shops 0.08725% Actual/360 Amortizing Balloon
11 Alexis Hotel 0.08725% Actual/360 Amortizing Balloon
12 East Thunderbird Square 0.06225% Actual/360 Amortizing Balloon
13 Sherwood Apartments 0.06225% Actual/360 Amortizing Balloon
- ----------------------------------------------------------------------------------------------------------------------------------
14 Villa Serena Apartments 0.06225% Actual/360 Amortizing Balloon
15 194 East Second Street Apartments 0.06225% Actual/360 Amortizing Balloon
16 Executive House 0.06225% Actual/360 Amortizing Balloon
17 Village West Shopping Center 0.08725% Actual/360 Amortizing Balloon
18 Marlboro Office/Warehouse Park 0.08725% Actual/360 Amortizing Balloon
- ----------------------------------------------------------------------------------------------------------------------------------
19 Windsor Falls Apartments 0.08725% Actual/360 Interest Only, then Amortizing Balloon 12
20 Sheraton Hotel - Charleston, SC 0.06225% Actual/360 Amortizing Balloon
21 High Pointe Shopping Center 0.08725% Actual/360 Amortizing Balloon
22 United Healthcare 0.06225% Actual/360 Interest Only, then Amortizing Balloon 60
23 Academy Plaza 0.08725% Actual/360 Amortizing Balloon
- ----------------------------------------------------------------------------------------------------------------------------------
24 Kings Bridge 0.08725% Actual/360 Amortizing Balloon
25 Walden Village 0.08725% Actual/360 Amortizing Balloon
26 Garnet Lake Portfolio 0.06225% Actual/360 Amortizing Balloon
26.01 7510 Hollywood Boulevard
26.02 1349 N. Detroit Street
- ----------------------------------------------------------------------------------------------------------------------------------
26.03 7140 De Longpre Avenue
26.04 219 S. Mariposa
26.05 1030 N. Orange Grove Avenue
26.06 7364 Hollywood Boulevard
26.07 1750 El Cerrito Place
- ----------------------------------------------------------------------------------------------------------------------------------
26.08 7278 Hollywood Boulevard
26.09 3824 Motor Avenue
26.10 1010 Raleigh Street
27 Orange Derby Shopping Center 0.08725% Actual/360 Amortizing Balloon
28 Long Brook 0.06225% Actual/360 Amortizing Balloon
- ----------------------------------------------------------------------------------------------------------------------------------
29 Somerset Apartments 0.08725% Actual/360 Amortizing Balloon
30 353 Lexington Avenue 0.08725% Actual/360 Amortizing Balloon
31 Whitehall Estates 0.06225% Actual/360 Fully Amortizing
32 Vista Shopping Center 0.08725% Actual/360 Amortizing Balloon
33 Morgan Place Apartments 0.08725% Actual/360 Interest Only, then Amortizing Balloon 12
- ----------------------------------------------------------------------------------------------------------------------------------
34 Ridgedale Festival Shopping Center 0.08725% Actual/360 Amortizing Balloon
35 Lantana/Park Trace Apartments 0.08725% Actual/360 Amortizing Balloon
35.01 Lantana
35.02 Park Trace Apartments
36 Las Palomas Apartments 0.06250% Actual/360 Amortizing Balloon
- ----------------------------------------------------------------------------------------------------------------------------------
37 Mercy Wellness Centers Portfolio 0.06225% Actual/360 Interest Only, then Amortizing Balloon 6
37.01 Eastwick Wellness Center
37.02 Upper Darby Wellness Center
38 Wildwood Village Apartments 0.06225% Actual/360 Amortizing Balloon
39 Hampton Inn Maingate 0.08725% Actual/360 Amortizing Balloon
- ----------------------------------------------------------------------------------------------------------------------------------
40 Circuit City Norwalk 444 0.06225% 30/360 Fully Amortizing
41 Target Center 0.08725% Actual/360 Amortizing Balloon
42 Westgate Shopping Center 0.08725% Actual/360 Amortizing Balloon
43 Gardens at Annen Woods 0.08725% Actual/360 Interest Only, then Amortizing Balloon 12
44 Auburn - Southbridge Center 0.06225% Actual/360 Amortizing Balloon
- ----------------------------------------------------------------------------------------------------------------------------------
45 Cornerstone Shopping Center 0.06225% Actual/360 Amortizing Balloon
46 Gabes Place Apartments Portfolio 0.06225% Actual/360 Amortizing Balloon
46.01 202 E. John
46.02 102 E. Gregory
46.03 810 Iowa
- ----------------------------------------------------------------------------------------------------------------------------------
46.04 807 W. Oregon
46.05 811 W. Oregon
47 Briarwood Apartments 0.08725% Actual/360 Amortizing Balloon
48 3 - 7 West 35th Street 0.08725% Actual/360 Amortizing Balloon
49 Radio Wave Building 0.06225% Actual/360 Amortizing Balloon
- ----------------------------------------------------------------------------------------------------------------------------------
50 Market Square Shopping Center 0.06225% Actual/360 Amortizing Balloon
51 Palm Villas Apartments 0.06225% Actual/360 Amortizing Balloon
52 Kohl's Department Store 0.08725% Actual/360 Amortizing Balloon
53 467 West Avenue 0.06225% Actual/360 Amortizing Balloon
54 Motel 6 1115 Raleigh 0.19725% 30/360 Amortizing Balloon
- ----------------------------------------------------------------------------------------------------------------------------------
55 Crown Valley Retail Center 0.06225% Actual/360 Amortizing Balloon
56 Residence Inn - Tampa 0.06225% Actual/360 Amortizing Balloon
57 Comfort Suites - Gastonia 0.06225% Actual/360 Amortizing Balloon
58 Cityplace Market 0.08725% Actual/360 Amortizing Balloon
59 Belmont Crossing 0.08725% Actual/360 Amortizing Balloon
- ----------------------------------------------------------------------------------------------------------------------------------
60 Timber Creek Apartments 0.06225% Actual/360 Amortizing Balloon
61 Windgate Place 0.08725% Actual/360 Amortizing Balloon
62 Winn Dixie Chesapeake Cedar 0.06225% 30/360 Amortizing Balloon
63 Residence Inn - Sarasota 0.06225% Actual/360 Amortizing Balloon
64 Rockwood Gardens 0.06225% Actual/360 Amortizing Balloon
- ----------------------------------------------------------------------------------------------------------------------------------
65 New Rochelle Nursing Home 0.06225% Actual/360 Fully Amortizing
66 Kjellburg Mobile Home Park 0.06225% Actual/360 Amortizing Balloon
67 Autumn Park Apartments 0.06225% Actual/360 Amortizing Balloon
68 111 Devonshire Street Building 0.06225% Actual/360 Amortizing Balloon
<CAPTION>
Remaining
Original Term to
Remaining Term to Maturity or
Interest Maturity or Anticipated
Only Anticipated Repayment Original Remaining
Control Period Repayment Date Amortization Amortization Origination
Number Property Name (Mos.) Date (Mos.) (Mos.) Term (Mos.) Term (Mos.) Date
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 Sheraton Suites Portfolio 120 114 300 294 10/19/98
1.01 Sheraton Suites Wilmington
1.02 Sheraton Suites Dallas
1.03 Sheraton Suites Elk Grove
2 Olen Portfolio 120 119 360 359 03/31/99
- ------------------------------------------------------------------------------------------------------------------------------
2.01 Jamboree Corporate Park
2.02 Newport Mesa Centre
2.03 Olen Corporate Center
2.04 Orange Freeway Business Park
2.05 Spectrum Pointe
- ------------------------------------------------------------------------------------------------------------------------------
2.06 Von Karman Research Center
3 Lakeside Apartments 44 120 116 360 360 12/14/98
4 Wynfrey Hotel at Riverchase Galleria 120 109 300 289 05/21/98
5 Wilshire Portfolio 132 113 360 341 09/18/97
5.01 Wilshire Doheny Bldg
- ------------------------------------------------------------------------------------------------------------------------------
5.02 ICM Building
5.03 Wilshire Palm Bldg
6 Hickory Lake 120 118 360 358 03/01/99
7 Westgate Village 120 114 360 354 11/05/98
8 1055 Washington Blvd. 120 115 360 355 11/30/98
- ------------------------------------------------------------------------------------------------------------------------------
9 Oak Park Commons 120 115 360 355 11/16/98
10 Vista Ridge Plaza I, II & Shops 120 115 360 355 11/30/98
11 Alexis Hotel 117 110 300 293 10/08/98
12 East Thunderbird Square 120 118 360 358 02/10/99
13 Sherwood Apartments 120 119 360 359 03/02/99
- ------------------------------------------------------------------------------------------------------------------------------
14 Villa Serena Apartments 120 119 360 359 03/25/99
15 194 East Second Street Apartments 120 118 360 358 02/25/99
16 Executive House 120 118 360 358 02/25/99
17 Village West Shopping Center 120 111 360 351 08/04/98
18 Marlboro Office/Warehouse Park 84 79 360 355 11/30/98
- ------------------------------------------------------------------------------------------------------------------------------
19 Windsor Falls Apartments 11 120 119 336 336 03/31/99
20 Sheraton Hotel - Charleston, SC 120 115 300 295 11/03/98
21 High Pointe Shopping Center 120 120 360 360 05/03/99
22 United Healthcare 52 132 124 300 300 08/12/98
23 Academy Plaza 180 166 360 346 02/12/98
- ------------------------------------------------------------------------------------------------------------------------------
24 Kings Bridge 120 118 360 358 03/01/99
25 Walden Village 120 120 360 360 05/11/99
26 Garnet Lake Portfolio 120 119 360 359 03/04/99
26.01 7510 Hollywood Boulevard
26.02 1349 N. Detroit Street
- ------------------------------------------------------------------------------------------------------------------------------
26.03 7140 De Longpre Avenue
26.04 219 S. Mariposa
26.05 1030 N. Orange Grove Avenue
26.06 7364 Hollywood Boulevard
26.07 1750 El Cerrito Place
- ------------------------------------------------------------------------------------------------------------------------------
26.08 7278 Hollywood Boulevard
26.09 3824 Motor Avenue
26.10 1010 Raleigh Street
27 Orange Derby Shopping Center 60 56 360 356 12/21/98
28 Long Brook 120 116 360 356 12/31/98
- ------------------------------------------------------------------------------------------------------------------------------
29 Somerset Apartments 120 118 360 358 03/01/99
30 353 Lexington Avenue 120 120 360 360 04/20/99
31 Whitehall Estates 240 231 240 231 07/27/98
32 Vista Shopping Center 120 110 360 350 07/10/98
33 Morgan Place Apartments 11 120 119 336 336 03/31/99
- ------------------------------------------------------------------------------------------------------------------------------
34 Ridgedale Festival Shopping Center 120 115 360 355 11/16/98
35 Lantana/Park Trace Apartments 120 118 360 358 03/01/99
35.01 Lantana
35.02 Park Trace Apartments
36 Las Palomas Apartments 120 118 360 358 02/26/99
- ------------------------------------------------------------------------------------------------------------------------------
37 Mercy Wellness Centers Portfolio 0 120 110 324 320 06/26/98
37.01 Eastwick Wellness Center
37.02 Upper Darby Wellness Center
38 Wildwood Village Apartments 120 117 360 357 02/01/99
39 Hampton Inn Maingate 120 114 300 294 10/15/98
- ------------------------------------------------------------------------------------------------------------------------------
40 Circuit City Norwalk 444 240 236 240 236 12/28/98
41 Target Center 120 115 360 355 11/16/98
42 Westgate Shopping Center 120 115 360 355 11/16/98
43 Gardens at Annen Woods 11 120 119 336 336 03/31/99
44 Auburn - Southbridge Center 120 119 360 359 04/01/99
- ------------------------------------------------------------------------------------------------------------------------------
45 Cornerstone Shopping Center 120 119 360 359 03/09/99
46 Gabes Place Apartments Portfolio 120 117 300 297 01/08/99
46.01 202 E. John
46.02 102 E. Gregory
46.03 810 Iowa
- ------------------------------------------------------------------------------------------------------------------------------
46.04 807 W. Oregon
46.05 811 W. Oregon
47 Briarwood Apartments 120 120 360 360 05/11/99
48 3 - 7 West 35th Street 120 110 360 350 07/09/98
49 Radio Wave Building 120 119 360 359 03/17/99
- ------------------------------------------------------------------------------------------------------------------------------
50 Market Square Shopping Center 120 110 300 290 06/26/98
51 Palm Villas Apartments 120 118 360 358 02/22/99
52 Kohl's Department Store 120 115 360 355 11/16/98
53 467 West Avenue 120 113 360 353 10/01/98
54 Motel 6 1115 Raleigh 216 205 270 259 05/29/98
- ------------------------------------------------------------------------------------------------------------------------------
55 Crown Valley Retail Center 120 116 360 356 12/30/98
56 Residence Inn - Tampa 120 112 300 292 08/31/98
57 Comfort Suites - Gastonia 121 109 300 288 04/23/98
58 Cityplace Market 120 115 360 355 11/16/98
59 Belmont Crossing 120 118 360 358 03/01/99
- ------------------------------------------------------------------------------------------------------------------------------
60 Timber Creek Apartments 120 120 360 360 04/15/99
61 Windgate Place 120 120 360 360 05/11/99
62 Winn Dixie Chesapeake Cedar 240 233 283 276 09/15/98
63 Residence Inn - Sarasota 120 112 300 292 08/31/98
64 Rockwood Gardens 120 116 360 356 12/08/98
- ------------------------------------------------------------------------------------------------------------------------------
65 New Rochelle Nursing Home 180 176 180 176 12/23/98
66 Kjellburg Mobile Home Park 120 113 300 293 09/23/98
67 Autumn Park Apartments 120 119 360 359 03/24/99
68 111 Devonshire Street Building 120 119 300 299 03/31/99
<CAPTION>
Control Maturity or Balloon General CTL
Number Property Name ARD Date Balance ($) Property Type Specific Property Type Flag
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 Sheraton Suites Portfolio 11/10/08 39,940,110 Hospitality Full Service
1.01 Sheraton Suites Wilmington Hospitality Full Service
1.02 Sheraton Suites Dallas Hospitality Full Service
1.03 Sheraton Suites Elk Grove Hospitality Full Service
2 Olen Portfolio 04/01/09 33,231,882 Mixed Use Office/Flex
- ------------------------------------------------------------------------------------------------------------------------
2.01 Jamboree Corporate Park Mixed Use Office/Flex
2.02 Newport Mesa Centre Mixed Use Office/Flex
2.03 Olen Corporate Center Office
2.04 Orange Freeway Business Park Mixed Use Office/Flex
2.05 Spectrum Pointe Mixed Use Office/Flex
- ------------------------------------------------------------------------------------------------------------------------
2.06 Von Karman Research Center Mixed Use Office/Warehouse
3 Lakeside Apartments 01/01/09 27,815,691 Multifamily Conventional
4 Wynfrey Hotel at Riverchase Galleria 06/10/08 20,414,586 Hospitality Full Service
5 Wilshire Portfolio 10/01/08 21,860,005 Office
5.01 Wilshire Doheny Bldg Office
- ------------------------------------------------------------------------------------------------------------------------
5.02 ICM Building Office
5.03 Wilshire Palm Bldg Office
6 Hickory Lake 03/10/09 20,020,756 Multifamily Conventional
7 Westgate Village 11/10/08 19,083,068 Retail Anchored
8 1055 Washington Blvd. 12/10/08 17,796,216 Office
- ------------------------------------------------------------------------------------------------------------------------
9 Oak Park Commons 12/10/08 16,616,004 Retail Anchored
10 Vista Ridge Plaza I, II & Shops 12/10/08 16,410,870 Retail Anchored
11 Alexis Hotel 07/10/08 15,002,725 Hospitality Full Service
12 East Thunderbird Square 03/01/09 15,022,503 Retail Anchored
13 Sherwood Apartments 04/01/09 13,963,146 Multifamily Conventional
- ------------------------------------------------------------------------------------------------------------------------
14 Villa Serena Apartments 04/01/09 13,811,443 Multifamily Conventional
15 194 East Second Street Apartments 03/01/09 13,546,823 Multifamily Conventional
16 Executive House 03/01/09 12,966,210 Multifamily Conventional
17 Village West Shopping Center 08/10/08 12,651,261 Retail Anchored
18 Marlboro Office/Warehouse Park 12/10/05 12,864,048 Office
- ------------------------------------------------------------------------------------------------------------------------
19 Windsor Falls Apartments 04/10/09 11,842,454 Multifamily Conventional
20 Sheraton Hotel - Charleston, SC 12/01/08 10,869,134 Hospitality Full Service
21 High Pointe Shopping Center 05/10/09 11,116,210 Retail Anchored
22 United Healthcare 09/01/09 10,741,434 Office
23 Academy Plaza 03/10/13 8,589,826 Retail Anchored
- ------------------------------------------------------------------------------------------------------------------------
24 Kings Bridge 03/10/09 9,539,198 Multifamily Conventional
25 Walden Village 06/10/09 9,481,188 Multifamily Conventional
26 Garnet Lake Portfolio 04/01/09 9,456,451 Multifamily Conventional
26.01 7510 Hollywood Boulevard Multifamily Conventional
26.02 1349 N. Detroit Street Multifamily Conventional
- ------------------------------------------------------------------------------------------------------------------------
26.03 7140 De Longpre Avenue Multifamily Conventional
26.04 219 S. Mariposa Multifamily Conventional
26.05 1030 N. Orange Grove Avenue Multifamily Conventional
26.06 7364 Hollywood Boulevard Multifamily Conventional
26.07 1750 El Cerrito Place Multifamily Conventional
- ------------------------------------------------------------------------------------------------------------------------
26.08 7278 Hollywood Boulevard Multifamily Conventional
26.09 3824 Motor Avenue Multifamily Conventional
26.10 1010 Raleigh Street Multifamily Conventional
27 Orange Derby Shopping Center 01/10/04 10,145,365 Retail Anchored
28 Long Brook 01/01/09 9,223,275 Multifamily Conventional
- ------------------------------------------------------------------------------------------------------------------------
29 Somerset Apartments 03/10/09 9,103,577 Multifamily Conventional
30 353 Lexington Avenue 05/10/09 9,097,260 Office
31 Whitehall Estates 08/01/18 306,269 Multifamily Conventional
32 Vista Shopping Center 07/10/08 8,488,372 Retail Anchored
33 Morgan Place Apartments 04/10/09 8,158,136 Multifamily Conventional
- ------------------------------------------------------------------------------------------------------------------------
34 Ridgedale Festival Shopping Center 12/10/08 7,903,129 Retail Anchored
35 Lantana/Park Trace Apartments 03/10/09 8,063,421 Multifamily Conventional
35.01 Lantana Multifamily Conventional
35.02 Park Trace Apartments Multifamily Conventional
36 Las Palomas Apartments 03/01/09 8,004,714 Multifamily Conventional
- ------------------------------------------------------------------------------------------------------------------------
37 Mercy Wellness Centers Portfolio 07/01/08 7,597,096 Office
37.01 Eastwick Wellness Center Office
37.02 Upper Darby Wellness Center Office
38 Wildwood Village Apartments 02/01/09 7,881,996 Multifamily Conventional
39 Hampton Inn Maingate 11/10/08 6,557,448 Hospitality Limited Service
- ------------------------------------------------------------------------------------------------------------------------
40 Circuit City Norwalk 444 01/01/19 0 Retail Electronics Store CTL
41 Target Center 12/10/08 6,780,280 Retail Anchored
42 Westgate Shopping Center 12/10/08 6,780,280 Retail Anchored
43 Gardens at Annen Woods 04/10/09 6,745,813 Multifamily Conventional
44 Auburn - Southbridge Center 04/01/09 6,439,190 Retail Anchored
- ------------------------------------------------------------------------------------------------------------------------
45 Cornerstone Shopping Center 04/01/09 6,177,774 Retail Anchored
46 Gabes Place Apartments Portfolio 02/01/09 5,435,673 Multifamily Conventional
46.01 202 E. John Multifamily Conventional
46.02 102 E. Gregory Multifamily Conventional
46.03 810 Iowa Multifamily Conventional
- ------------------------------------------------------------------------------------------------------------------------
46.04 807 W. Oregon Multifamily Conventional
46.05 811 W. Oregon Multifamily Conventional
47 Briarwood Apartments 06/10/09 5,892,514 Multifamily Conventional
48 3 - 7 West 35th Street 07/10/08 5,852,657 Office
49 Radio Wave Building 04/01/09 5,730,072 Office
- ------------------------------------------------------------------------------------------------------------------------
50 Market Square Shopping Center 07/01/08 5,200,981 Retail Anchored
51 Palm Villas Apartments 03/01/09 5,483,560 Multifamily Conventional
52 Kohl's Department Store 12/10/08 5,441,499 Retail Anchored
53 467 West Avenue 10/01/08 5,503,588 Retail Anchored
54 Motel 6 1115 Raleigh 06/01/16 2,059,732 Hospitality Limited Service CTL
- ------------------------------------------------------------------------------------------------------------------------
55 Crown Valley Retail Center 01/01/09 5,538,489 Retail Anchored
56 Residence Inn - Tampa 09/01/08 4,869,070 Hospitality Limited Service
57 Comfort Suites - Gastonia 06/01/08 4,718,361 Hospitality Limited Service
58 Cityplace Market 12/10/08 4,966,447 Retail Anchored
59 Belmont Crossing 03/10/09 5,085,201 Multifamily Conventional
- ------------------------------------------------------------------------------------------------------------------------
60 Timber Creek Apartments 05/01/09 4,823,969 Multifamily Conventional
61 Windgate Place 06/10/09 4,864,647 Multifamily Conventional
62 Winn Dixie Chesapeake Cedar 10/01/18 1,482,125 Retail Grocery Store CTL
63 Residence Inn - Sarasota 09/01/08 4,365,954 Hospitality Limited Service
64 Rockwood Gardens 01/01/09 4,770,358 Multifamily Conventional
- ------------------------------------------------------------------------------------------------------------------------
65 New Rochelle Nursing Home 01/01/14 174,209 Healthcare Skilled Nursing
66 Kjellburg Mobile Home Park 10/01/08 4,216,516 MHC
67 Autumn Park Apartments 04/01/09 4,596,624 Multifamily Conventional
68 111 Devonshire Street Building 04/01/09 4,279,228 Office
<CAPTION>
Control Annual Debt Net Cash Appraised Appraisal
Number Property Name Prepayment Provisions Service ($)(2) Flow ($) DSCR (x) Value ($) Date
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 Sheraton Suites Portfolio L(2.5),D(7.5) 4,253,580 6,606,834 1.55 76,200,000 09/01/98
1.01 Sheraton Suites Wilmington 2,942,519 34,000,000 09/01/98
1.02 Sheraton Suites Dallas 1,618,789 18,200,000 09/01/98
1.03 Sheraton Suites Elk Grove 2,045,527 24,000,000 09/01/98
2 Olen Portfolio L(4),D(5.75),O(.25) 3,180,430 4,136,825 1.30 55,490,000 Various
- -------------------------------------------------------------------------------------------------------------------------------
2.01 Jamboree Corporate Park 715,620 8,840,000 03/12/99
2.02 Newport Mesa Centre 417,898 5,100,000 03/10/99
2.03 Olen Corporate Center 607,785 10,250,000 03/15/99
2.04 Orange Freeway Business Park 857,817 10,500,000 03/09/99
2.05 Spectrum Pointe 1,347,918 18,000,000 03/12/99
- -------------------------------------------------------------------------------------------------------------------------------
2.06 Von Karman Research Center 189,017 2,800,000 03/08/99
3 Lakeside Apartments L(3),D(6.5),O(.5) 2,387,130 2,901,884 1.22 37,200,000 11/04/98
4 Wynfrey Hotel at Riverchase Galleria L(3),YM1%(6.75),O(.25) 2,250,237 3,141,730 1.40 36,500,000 01/01/98
5 Wilshire Portfolio L(4),YM1%(6.75),O(.25) 2,210,363 2,727,645 1.23 35,100,000 05/12/97
5.01 Wilshire Doheny Bldg 1,404,766 13,600,000 05/12/97
- -------------------------------------------------------------------------------------------------------------------------------
5.02 ICM Building 1,058,558 14,500,000 05/12/97
5.03 Wilshire Palm Bldg 264,320 7,000,000 05/12/97
6 Hickory Lake L(2.08),D(7.42),O(.5) 1,917,391 2,300,624 1.20 28,350,000 01/01/98
7 Westgate Village L(2.33),D(7.42),O(.25) 1,688,472 2,407,992 1.43 30,000,000 09/01/98
8 1055 Washington Blvd. L(3),YM1%(6.5),O(.5) 1,714,416 2,244,711 1.31 33,800,000 09/15/98
- -------------------------------------------------------------------------------------------------------------------------------
9 Oak Park Commons L(2.33),D(7.42),O(.25) 1,469,773 2,179,170 1.48 25,650,000 09/16/98
10 Vista Ridge Plaza I, II & Shops L(2.33),D(7.42),O(.25) 1,451,627 2,096,437 1.44 36,600,000 09/09/98
11 Alexis Hotel L(2.5),D(6.75),O(.5) 1,658,334 2,589,661 1.56 29,200,000 03/01/98
12 East Thunderbird Square L(4),D(5.66),O(.34) 1,426,638 1,778,515 1.25 23,200,000 10/28/98
13 Sherwood Apartments L(4),D(5.75),O(.25) 1,325,711 1,652,804 1.25 24,400,000 02/10/99
- -------------------------------------------------------------------------------------------------------------------------------
14 Villa Serena Apartments L(4),D(5.75),O(.25) 1,298,933 1,558,357 1.20 19,600,000 09/01/98
15 194 East Second Street Apartments L(4),D(5.75),O(.25) 1,304,717 1,569,118 1.20 20,000,000 12/11/98
16 Executive House L(4),D(5.75),O(.25) 1,247,898 1,738,756 1.39 20,100,000 02/09/99
17 Village West Shopping Center L(2.67),D(6.83),O(.5) 1,151,789 1,580,383 1.37 18,125,000 03/18/98
18 Marlboro Office/Warehouse Park L(2.33),D(4.42),O(.25) 1,067,942 1,532,893 1.44 19,150,000 06/29/98
- -------------------------------------------------------------------------------------------------------------------------------
19 Windsor Falls Apartments L(2),D(7.75),O(.25) 1,141,277 1,413,775 1.24 18,360,000 01/19/99
20 Sheraton Hotel - Charleston, SC L(4),D(5.75),O(.25) 1,256,154 1,834,951 1.46 22,000,000 08/25/98
21 High Pointe Shopping Center L(1.92),D(7.83),O(.25) 1,061,230 1,327,776 1.25 16,000,000 09/10/98
22 United Healthcare L(2.8),D(1.2),YM1%(7) 1,004,938 1,612,036 1.60 23,200,000 07/06/98
23 Academy Plaza L(3),YM1%(11.75),O(.25) 910,026 1,274,456 1.40 13,900,000 11/07/97
- -------------------------------------------------------------------------------------------------------------------------------
24 Kings Bridge L(2.08),D(7.42),O(.5) 913,571 1,096,298 1.20 15,700,000 01/15/99
25 Walden Village L(1.83),D(7.92),O(.25) 902,192 1,094,809 1.21 14,500,000 03/09/99
26 Garnet Lake Portfolio L(4),D(5.75),O(.25) 906,004 1,110,973 1.23 13,930,000 Various
26.01 7510 Hollywood Boulevard 46,799 715,000 09/01/98
26.02 1349 N. Detroit Street 77,598 1,000,000 08/26/98
- -------------------------------------------------------------------------------------------------------------------------------
26.03 7140 De Longpre Avenue 38,797 475,000 08/26/98
26.04 219 S. Mariposa 69,261 750,000 09/01/98
26.05 1030 N. Orange Grove Avenue 118,128 1,600,000 09/11/98
26.06 7364 Hollywood Boulevard 125,512 1,565,000 09/01/98
26.07 1750 El Cerrito Place 88,903 1,000,000 08/26/98
- -------------------------------------------------------------------------------------------------------------------------------
26.08 7278 Hollywood Boulevard 143,358 1,625,000 08/26/98
26.09 3824 Motor Avenue 229,884 3,000,000 09/18/98
26.10 1010 Raleigh Street 172,734 2,200,000 09/17/98
27 Orange Derby Shopping Center L(2.25),D(2.5),O(.25) 922,288 1,220,213 1.32 14,500,000 09/25/98
28 Long Brook L(4),D(5.75),O(.25) 859,505 1,095,984 1.28 13,000,000 02/02/98
- -------------------------------------------------------------------------------------------------------------------------------
29 Somerset Apartments L(2.08),D(7.42),O(.5) 871,851 1,109,716 1.27 12,650,000 01/20/99
30 353 Lexington Avenue L(1.92),D(7.83),O(.25) 874,802 1,155,083 1.32 13,800,000 01/13/99
31 Whitehall Estates L(2.75),D(16.75),O(.5) 916,007 1,088,146 1.19 14,474,000 01/22/98
32 Vista Shopping Center L(2.75),D(7),O(.25) 778,325 1,065,166 1.37 13,100,000 04/01/98
33 Morgan Place Apartments L(2),D(7.75),O(.25) 786,213 944,033 1.20 12,800,000 01/19/99
- -------------------------------------------------------------------------------------------------------------------------------
34 Ridgedale Festival Shopping Center L(2.33),D(7.42),O(.25) 699,073 996,608 1.43 12,200,000 09/21/98
35 Lantana/Park Trace Apartments L(2.33),D(7.17),O(.5) 772,235 927,251 1.20 12,050,000 01/19/99
35.01 Lantana 402,616 5,450,000 01/19/99
35.02 Park Trace Apartments 524,635 6,600,000 01/19/99
36 Las Palomas Apartments L(4),D(5.75),O(.25) 773,725 959,032 1.24 12,510,000 02/06/99
- -------------------------------------------------------------------------------------------------------------------------------
37 Mercy Wellness Centers Portfolio L(2.83),D(6.92),O(.25) 742,839 902,333 1.22 13,300,000 04/01/98
37.01 Eastwick Wellness Center 442,957 6,400,000 04/01/98
37.02 Upper Darby Wellness Center 459,374 6,900,000 04/01/98
38 Wildwood Village Apartments L(4),D(5.75),O(.25) 740,051 927,535 1.25 11,200,000 01/05/99
39 Hampton Inn Maingate L(2.42),D(7.33),O(.25) 693,350 1,061,816 1.53 10,900,000 06/11/98
- -------------------------------------------------------------------------------------------------------------------------------
40 Circuit City Norwalk 444 L(4),D(16) Steps 807,784 1.15 8,950,000 12/07/98
41 Target Center L(2.33),D(7.42),O(.25) 599,751 856,993 1.43 11,000,000 09/18/98
42 Westgate Shopping Center L(2.33),D(7.42),O(.25) 599,751 855,331 1.43 10,800,000 08/31/98
43 Gardens at Annen Woods L(2),D(7.75),O(.25) 650,105 786,277 1.21 9,700,000 01/22/99
44 Auburn - Southbridge Center L(4),D(5.75),O(.25) 620,275 789,349 1.27 9,600,000 03/01/99
- -------------------------------------------------------------------------------------------------------------------------------
45 Cornerstone Shopping Center L(4),D(5.75),O(.25) 598,528 748,160 1.25 9,800,000 01/07/99
46 Gabes Place Apartments Portfolio L(4),D(5.75),O(.25) 592,581 756,747 1.28 9,075,000 08/13/98
46.01 202 E. John 336,438 4,050,000 08/13/98
46.02 102 E. Gregory 219,127 2,550,000 08/13/98
46.03 810 Iowa 64,181 760,000 08/13/98
- -------------------------------------------------------------------------------------------------------------------------------
46.04 807 W. Oregon 74,058 900,000 08/13/98
46.05 811 W. Oregon 62,943 815,000 08/13/98
47 Briarwood Apartments L(1.83),D(7.92),O(.25) 560,708 679,761 1.21 8,930,000 03/01/99
48 3 - 7 West 35th Street L(2.75),D(7),O(.25) 539,649 735,928 1.36 8,900,000 08/19/97
49 Radio Wave Building L(3),D(6.75),O(.25) 552,365 743,651 1.35 11,200,000 02/23/99
- -------------------------------------------------------------------------------------------------------------------------------
50 Market Square Shopping Center L(3),D(7) 563,508 748,403 1.33 8,700,000 03/31/98
51 Palm Villas Apartments L(4),D(5.5),O(.5) 498,408 602,851 1.21 8,450,000 10/21/98
52 Kohl's Department Store L(2.33),D(7.42),O(.25) 481,329 736,766 1.53 8,400,000 11/12/98
53 467 West Avenue L(5),D(4.75),O(.25) 508,442 716,496 1.41 8,950,000 06/09/98
54 Motel 6 1115 Raleigh L(2),YM(16) Steps 513,033 1.00 6,600,000 03/24/98
- -------------------------------------------------------------------------------------------------------------------------------
55 Crown Valley Retail Center L(4),D(5.75),O(.25) 530,845 672,939 1.27 8,925,000 09/14/98
56 Residence Inn - Tampa L(4),D(5.75),O(.25) 519,303 785,292 1.51 8,200,000 06/11/98
57 Comfort Suites - Gastonia L(4),D(6.08) 520,010 737,048 1.42 7,900,000 02/19/98
58 Cityplace Market L(2.33),D(7.42),O(.25) 439,308 629,940 1.43 8,100,000 09/14/98
59 Belmont Crossing L(2.08),D(7.42),O(.5) 487,011 583,943 1.20 7,200,000 01/15/99
- -------------------------------------------------------------------------------------------------------------------------------
60 Timber Creek Apartments L(2),D(7.75),O(.25) 448,000 536,559 1.20 7,000,000 03/10/99
61 Windgate Place L(1.83),D(7.92),O(.25) 462,900 561,442 1.21 7,170,000 03/01/99
62 Winn Dixie Chesapeake Cedar L(4),D(16) 466,809 468,210 1.00 5,600,000 09/15/98
63 Residence Inn - Sarasota L(4),D(5.75),O(.25) 465,644 658,851 1.41 7,300,000 06/12/98
64 Rockwood Gardens L(4),D(5.5),O(.5) 453,091 576,529 1.27 7,240,000 10/13/98
- -------------------------------------------------------------------------------------------------------------------------------
65 New Rochelle Nursing Home L(7),D(7.75),O(.25) 676,755 1,305,934 1.93 12,360,000 10/08/98
66 Kjellburg Mobile Home Park L(4),D(5.75),O(.25) 450,307 630,399 1.40 7,000,000 08/18/98
67 Autumn Park Apartments L(4),D(5.75),O(.25) 436,737 571,037 1.31 6,500,000 11/18/98
68 111 Devonshire Street Building L(4),D(5.75),O(.25) 478,723 640,561 1.34 9,700,000 12/17/98
<CAPTION>
Scheduled
Maturity
Date or
Anticipated Underwritten
Cutoff Repayment Hospitality
Control Date Date LTV Average Daily Year No. of Unit of
Number Property Name LTV (%) (%)(3) Rate ($)(5) Year Built Renovated (Units) Measure
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 Sheraton Suites Portfolio 66.2% 52.4% 117.44 1990 732 Rooms
1.01 Sheraton Suites Wilmington 128.75 1989 228 Rooms
1.02 Sheraton Suites Dallas 115.71 1990 1996 251 Rooms
1.03 Sheraton Suites Elk Grove 108.27 1990 1998 253 Rooms
2 Olen Portfolio 67.5% 59.9% Various 608,644 Sq. Ft.
- -----------------------------------------------------------------------------------------------------------------------------------
2.01 Jamboree Corporate Park 1980 101,770 Sq. Ft.
2.02 Newport Mesa Centre 1972 68,100 Sq. Ft.
2.03 Olen Corporate Center 1988 57,194 Sq. Ft.
2.04 Orange Freeway Business Park 1974 186,500 Sq. Ft.
2.05 Spectrum Pointe 1997 165,080 Sq. Ft.
- -----------------------------------------------------------------------------------------------------------------------------------
2.06 Von Karman Research Center 1973 30,000 Sq. Ft.
3 Lakeside Apartments 80.0% 74.8% 1991 461 Units
4 Wynfrey Hotel at Riverchase Galleria 69.2% 55.9% 113.44 1986 1997 329 Rooms
5 Wilshire Portfolio 69.9% 62.3% Various 207,682 Sq. Ft.
5.01 Wilshire Doheny Bldg 1985 47,052 Sq. Ft.
- -----------------------------------------------------------------------------------------------------------------------------------
5.02 ICM Building 1992 76,229 Sq. Ft.
5.03 Wilshire Palm Bldg 1990 84,401 Sq. Ft.
6 Hickory Lake 79.3% 70.6% 1969 1994 726 Units
7 Westgate Village 73.3% 63.6% 1995 342,853 Sq. Ft.
8 1055 Washington Blvd. 59.0% 52.7% 1987 181,360 Sq. Ft.
- -----------------------------------------------------------------------------------------------------------------------------------
9 Oak Park Commons 74.7% 64.8% 1998 136,939 Sq. Ft.
10 Vista Ridge Plaza I, II & Shops 51.7% 44.8% 1996 290,227 Sq. Ft.
11 Alexis Hotel 64.3% 51.4% 174.02 1901 1996 109 Rooms
12 East Thunderbird Square 73.2% 64.8% 1986 164,346 Sq. Ft.
13 Sherwood Apartments 64.7% 57.2% 1973 1998 296 Units
- -----------------------------------------------------------------------------------------------------------------------------------
14 Villa Serena Apartments 79.9% 70.5% 1997 288 Units
15 194 East Second Street Apartments 76.2% 67.7% 1998 61 Units
16 Executive House 72.5% 64.5% 1984 302 Units
17 Village West Shopping Center 79.4% 69.8% 1982 133,611 Sq. Ft.
18 Marlboro Office/Warehouse Park 73.2% 67.2% 1985 249,483 Sq. Ft.
- -----------------------------------------------------------------------------------------------------------------------------------
19 Windsor Falls Apartments 73.5% 64.5% 1994 276 Units
20 Sheraton Hotel - Charleston, SC 58.8% 49.4% 75.00 1980 1998 333 Rooms
21 High Pointe Shopping Center 78.3% 69.5% 1997 117,157 Sq. Ft.
22 United Healthcare 51.7% 46.3% 1998 188,500 Sq. Ft.
23 Academy Plaza 78.9% 61.8% 1966 1998 156,022 Sq. Ft.
- -----------------------------------------------------------------------------------------------------------------------------------
24 Kings Bridge 68.3% 60.8% 1973 1990 312 Units
25 Walden Village 73.8% 65.4% 1973 380 Units
26 Garnet Lake Portfolio 76.5% 67.9% Various 267 Units
26.01 7510 Hollywood Boulevard 1940 16 Units
26.02 1349 N. Detroit Street 1964 20 Units
- -----------------------------------------------------------------------------------------------------------------------------------
26.03 7140 De Longpre Avenue 1964 10 Units
26.04 219 S. Mariposa 1986 16 Units
26.05 1030 N. Orange Grove Avenue 1962 27 Units
26.06 7364 Hollywood Boulevard 1959 30 Units
26.07 1750 El Cerrito Place 1960 24 Units
- -----------------------------------------------------------------------------------------------------------------------------------
26.08 7278 Hollywood Boulevard 1958 33 Units
26.09 3824 Motor Avenue 1971 55 Units
26.10 1010 Raleigh Street 1988 36 Units
27 Orange Derby Shopping Center 72.9% 70.0% 1972 148,304 Sq. Ft.
28 Long Brook 80.6% 70.9% 1970 1998 240 Units
- -----------------------------------------------------------------------------------------------------------------------------------
29 Somerset Apartments 80.8% 72.0% 1974 1990 384 Units
30 353 Lexington Avenue 74.1% 65.9% 1926 1991 73,034 Sq. Ft.
31 Whitehall Estates 67.9% 2.1% 1997 252 Units
32 Vista Shopping Center 73.5% 64.8% 1988 79,155 Sq. Ft.
33 Morgan Place Apartments 72.7% 63.7% 1989 186 Units
- -----------------------------------------------------------------------------------------------------------------------------------
34 Ridgedale Festival Shopping Center 74.7% 64.8% 1990 120,220 Sq. Ft.
35 Lantana/Park Trace Apartments 75.2% 66.9% 1974 372 Units
35.01 Lantana 1974 1990 184 Units
35.02 Park Trace Apartments 1974 1996 188 Units
36 Las Palomas Apartments 71.9% 64.0% 1986 1998 272 Units
- -----------------------------------------------------------------------------------------------------------------------------------
37 Mercy Wellness Centers Portfolio 67.4% 57.1% 1929; 1996 1989 87,929 Sq. Ft.
37.01 Eastwick Wellness Center 1996 38,753 Sq. Ft.
37.02 Upper Darby Wellness Center 1929 1989 49,176 Sq. Ft.
38 Wildwood Village Apartments 79.8% 70.4% 1986 324 Units
39 Hampton Inn Maingate 74.5% 60.2% 61.83 1990 164 Rooms
- -----------------------------------------------------------------------------------------------------------------------------------
40 Circuit City Norwalk 444 88.3% 0.0% 1998 33,790 Sq. Ft.
41 Target Center 71.1% 61.6% 1990 171,580 Sq. Ft.
42 Westgate Shopping Center 72.4% 62.8% 1995 133,800 Sq. Ft.
43 Gardens at Annen Woods 79.3% 69.5% 1987 132 Units
44 Auburn - Southbridge Center 75.5% 67.1% 1999 41,932 Sq. Ft.
- -----------------------------------------------------------------------------------------------------------------------------------
45 Cornerstone Shopping Center 70.8% 63.0% 1998 40,502 Sq. Ft.
46 Gabes Place Apartments Portfolio 73.6% 59.9% Various 127 Units
46.01 202 E. John 1972 60 Units
46.02 102 E. Gregory 1975 34 Units
46.03 810 Iowa 1989 12 Units
- -----------------------------------------------------------------------------------------------------------------------------------
46.04 807 W. Oregon 1989 12 Units
46.05 811 W. Oregon 1980 9 Units
47 Briarwood Apartments 74.5% 66.0% 1968 274 Units
48 3 - 7 West 35th Street 74.4% 65.8% 1912 1992-1997 89,000 Sq. Ft.
49 Radio Wave Building 57.5% 51.2% 1890 1982 93,034 Sq. Ft.
- -----------------------------------------------------------------------------------------------------------------------------------
50 Market Square Shopping Center 73.0% 59.8% 1957 1996 240,159 Sq. Ft.
51 Palm Villas Apartments 74.4% 64.9% 1989 114 Units
52 Kohl's Department Store 74.7% 64.8% 1987 91,110 Sq. Ft.
53 467 West Avenue 69.9% 61.5% 1950; 1989 1996 45,426 Sq. Ft.
54 Motel 6 1115 Raleigh 94.5% 31.2% 1971 54,293 Sq. Ft.
- -----------------------------------------------------------------------------------------------------------------------------------
55 Crown Valley Retail Center 69.8% 62.1% 1990 42,328 Sq. Ft.
56 Residence Inn - Tampa 73.3% 59.4% 95.00 1997 78 Rooms
57 Comfort Suites - Gastonia 72.5% 59.7% 72.50 1996 109 Rooms
58 Cityplace Market 70.7% 61.3% 1994 83,867 Sq. Ft.
59 Belmont Crossing 79.3% 70.6% 1969 1990 192 Units
- -----------------------------------------------------------------------------------------------------------------------------------
60 Timber Creek Apartments 78.6% 68.9% 1984 164 Units
61 Windgate Place 76.6% 67.9% 1974 196 Units
62 Winn Dixie Chesapeake Cedar 97.2% 26.5% 1998 51,282 Sq. Ft.
63 Residence Inn - Sarasota 73.8% 59.8% 87.75 1997 78 Rooms
64 Rockwood Gardens 74.4% 65.9% 1973 223 Units
- -----------------------------------------------------------------------------------------------------------------------------------
65 New Rochelle Nursing Home 43.6% 1.4% 1971 160 Beds
66 Kjellburg Mobile Home Park 74.4% 60.2% 1969 316 Pads
67 Autumn Park Apartments 79.9% 70.7% 1998 144 Units
68 111 Devonshire Street Building 53.6% 44.1% 1911 1989 58,335 Sq. Ft.
<CAPTION>
Original Underwriting
Loan Occupancy Replacement
Control Amount Percentage Rent Roll Reserves Per
Number Property Name Per (Unit) (%) Date (Unit) Per Year
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 Sheraton Suites Portfolio 69,467 68.8%
1.01 Sheraton Suites Wilmington 99,513 71.6% 12/30/98
1.02 Sheraton Suites Dallas 48,388 62.1% 12/30/98
1.03 Sheraton Suites Elk Grove 63,303 68.4% 12/30/98 1,851.10
2 Olen Portfolio 62 99.3% 03/16/99 0.15
- --------------------------------------------------------------------------------------------------------------------------
2.01 Jamboree Corporate Park 100.0% 03/16/99 0.10
2.02 Newport Mesa Centre 97.4% 03/16/99 0.52
2.03 Olen Corporate Center 100.0% 03/16/99 0.18
2.04 Orange Freeway Business Park 98.5% 03/16/99 0.10
2.05 Spectrum Pointe 100.0% 03/16/99 0.10
- --------------------------------------------------------------------------------------------------------------------------
2.06 Von Karman Research Center 100.0% 03/16/99 0.10
3 Lakeside Apartments 64,534 93.5% 03/04/99 250.00
4 Wynfrey Hotel at Riverchase Galleria 77,812 67.5% 12/31/98 2,370.48
5 Wilshire Portfolio 120 95.5% 03/23/99 0.21
5.01 Wilshire Doheny Bldg 274 89.6% 03/23/99 0.23
- --------------------------------------------------------------------------------------------------------------------------
5.02 ICM Building 127 100.0% 03/23/99 0.20
5.03 Wilshire Palm Bldg 29 94.7% 03/23/99 0.20
6 Hickory Lake 31,019 90.9% 06/25/98 276.00
7 Westgate Village 64 96.0% 02/21/99 0.15
8 1055 Washington Blvd. 110 92.2% 09/23/98 0.20
- --------------------------------------------------------------------------------------------------------------------------
9 Oak Park Commons 140 100.0% 10/09/98 0.15
10 Vista Ridge Plaza I, II & Shops 65 100.0% 09/18/98 0.15
11 Alexis Hotel 173,803 85.4% 12/31/98 4,055.46
12 East Thunderbird Square 103 94.6% 01/22/99 0.10
13 Sherwood Apartments 53,378 95.9% 02/25/99 250.00
- --------------------------------------------------------------------------------------------------------------------------
14 Villa Serena Apartments 54,444 96.9% 02/19/99 250.00
15 194 East Second Street Apartments 250,000 100.0% 02/23/99 250.00
16 Executive House 48,344 100.0% 01/31/99 312.00
17 Village West Shopping Center 109 98.9% 07/31/98 0.20
18 Marlboro Office/Warehouse Park 56 97.7% 07/17/98 0.17
- --------------------------------------------------------------------------------------------------------------------------
19 Windsor Falls Apartments 48,913 84.4% 03/22/99 250.00
20 Sheraton Hotel - Charleston, SC 39,039 61.4% 855.60
21 High Pointe Shopping Center 107 100.0% 09/29/98 0.15
22 United Healthcare 64 100.0% 12/15/98 0.10
23 Academy Plaza 71 87.8% 03/01/99 0.15
- --------------------------------------------------------------------------------------------------------------------------
24 Kings Bridge 34,391 91.4% 07/01/98 258.00
25 Walden Village 28,158 92.4% 01/26/99
26 Garnet Lake Portfolio 39,951 98.9% 02/26/99 281.69
26.01 7510 Hollywood Boulevard 100.0% 02/26/99 292.00
26.02 1349 N. Detroit Street 100.0% 02/26/99 289.00
- --------------------------------------------------------------------------------------------------------------------------
26.03 7140 De Longpre Avenue 100.0% 02/26/99 250.00
26.04 219 S. Mariposa 100.0% 02/26/99 250.00
26.05 1030 N. Orange Grove Avenue 96.3% 02/26/99 250.00
26.06 7364 Hollywood Boulevard 96.7% 02/26/99 282.00
26.07 1750 El Cerrito Place 100.0% 02/26/99 264.00
- --------------------------------------------------------------------------------------------------------------------------
26.08 7278 Hollywood Boulevard 100.0% 02/26/99 263.00
26.09 3824 Motor Avenue 96.4% 02/26/99 426.90
26.10 1010 Raleigh Street 100.0% 02/26/99 250.00
27 Orange Derby Shopping Center 71 90.2% 08/15/98 0.15
28 Long Brook 43,792 98.8% 02/18/99 267.00
- --------------------------------------------------------------------------------------------------------------------------
29 Somerset Apartments 26,667 94.3% 06/25/98 255.73
30 353 Lexington Avenue 140 95.2% 0.25
31 Whitehall Estates 39,683 86.9% 02/28/99 250.00
32 Vista Shopping Center 123 96.0% 01/22/99 0.18
33 Morgan Place Apartments 50,000 97.9% 03/22/99 270.00
- --------------------------------------------------------------------------------------------------------------------------
34 Ridgedale Festival Shopping Center 76 97.9% 07/01/98 0.15
35 Lantana/Park Trace Apartments 24,382 86.8% 258.50
35.01 Lantana 22,295 94.0% 06/25/98 258.00
35.02 Park Trace Apartments 26,424 85.6% 03/25/99 258.97
36 Las Palomas Apartments 33,088 88.8% 02/08/99 250.00
- --------------------------------------------------------------------------------------------------------------------------
37 Mercy Wellness Centers Portfolio 102 77.3% 02/19/99 0.12
37.01 Eastwick Wellness Center 89.5% 02/19/99 0.14
37.02 Upper Darby Wellness Center 67.8% 02/19/99 0.10
38 Wildwood Village Apartments 27,654 92.3% 03/08/99 258.00
39 Hampton Inn Maingate 49,848 85.7% 06/11/98
- --------------------------------------------------------------------------------------------------------------------------
40 Circuit City Norwalk 444 235 100.0% Not Available - Single Tenant 0.25
41 Target Center 46 100.0% 07/01/98 0.26
42 Westgate Shopping Center 59 97.3% 10/09/98 0.15
43 Gardens at Annen Woods 58,258 93.9% 01/13/99
44 Auburn - Southbridge Center 173 100.0% 12/10/98 0.10
- --------------------------------------------------------------------------------------------------------------------------
45 Cornerstone Shopping Center 171 100.0% 09/01/98 0.10
46 Gabes Place Apartments Portfolio 52,756 100.0% 01/01/99 500.00
46.01 202 E. John 100.0% 01/01/99 500.00
46.02 102 E. Gregory 100.0% 01/01/99 500.00
46.03 810 Iowa 100.0% 01/01/99 500.00
- --------------------------------------------------------------------------------------------------------------------------
46.04 807 W. Oregon 100.0% 01/01/99 500.00
46.05 811 W. Oregon 100.0% 01/01/99 500.00
47 Briarwood Apartments 24,270 93.0% 01/28/99 250.00
48 3 - 7 West 35th Street 75 100.0% 10/01/98 0.20
49 Radio Wave Building 69 93.7% 01/01/99 0.10
- --------------------------------------------------------------------------------------------------------------------------
50 Market Square Shopping Center 27 90.6% 12/31/98 0.17
51 Palm Villas Apartments 55,263 91.1% 02/11/99 250.00
52 Kohl's Department Store 69 100.0% 10/30/98 0.18
53 467 West Avenue 138 100.0% 02/26/99 0.15
54 Motel 6 1115 Raleigh 120 100.0% Not Available - Single Tenant 0.00
- --------------------------------------------------------------------------------------------------------------------------
55 Crown Valley Retail Center 148 100.0% 02/01/99 0.14
56 Residence Inn - Tampa 77,795 81.9% 1,112.57
57 Comfort Suites - Gastonia 53,211 76.0% 785.74
58 Cityplace Market 69 90.5% 06/01/98 0.15
59 Belmont Crossing 29,792 95.8% 12/25/98 250.00
- --------------------------------------------------------------------------------------------------------------------------
60 Timber Creek Apartments 33,537 88.4% 04/12/99 250.00
61 Windgate Place 28,010 96.0% 01/26/99
62 Winn Dixie Chesapeake Cedar 107 100.0% Not Available - Single Tenant 0.00
63 Residence Inn - Sarasota 69,756 78.6% 1,064.50
64 Rockwood Gardens 24,215 99.1% 03/09/99 291.00
- --------------------------------------------------------------------------------------------------------------------------
65 New Rochelle Nursing Home 34,000 95.6% 11/30/98 300.00
66 Kjellburg Mobile Home Park 16,614 99.4% 02/10/99 67.00
67 Autumn Park Apartments 36,111 91.7% 02/01/99 250.00
68 111 Devonshire Street Building 89 86.8% 02/12/99 0.65
<CAPTION>
Largest
Tenant Area
Control Leased (Sq. Largest Tenant
Number Property Name Largest Tenant Name Ft.) Expiration Date
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 Sheraton Suites Portfolio
1.01 Sheraton Suites Wilmington
1.02 Sheraton Suites Dallas
1.03 Sheraton Suites Elk Grove
2 Olen Portfolio Aviation Distributers, Inc. 36,079 01/31/05
- ----------------------------------------------------------------------------------------------------------------------------------
2.01 Jamboree Corporate Park Continuing Medical Education, Inc. 31,750 03/14/03
2.02 Newport Mesa Centre Monobind, Inc. 12,600 Multiple Spaces
2.03 Olen Corporate Center Full Gospel Business Men's Fellowship International 9,613 02/28/01
2.04 Orange Freeway Business Park Quality Sports, Inc. 29,054 09/02/00
2.05 Spectrum Pointe Aviation Distributers, Inc. 36,079 01/31/05
- ----------------------------------------------------------------------------------------------------------------------------------
2.06 Von Karman Research Center Grantree Corporation 30,000 12/31/01
3 Lakeside Apartments
4 Wynfrey Hotel at Riverchase Galleria
5 Wilshire Portfolio
5.01 Wilshire Doheny Bldg Casden Company 20,374 12/31/03
- ----------------------------------------------------------------------------------------------------------------------------------
5.02 ICM Building International Creative Management ("ICM") 76,229 01/31/08
5.03 Wilshire Palm Bldg Brillstein/Grey 22,900 07/31/99
6 Hickory Lake
7 Westgate Village Builder's Square 109,800 10/31/19
8 1055 Washington Blvd. Hastings, Paul 42,550 07/31/00
- ----------------------------------------------------------------------------------------------------------------------------------
9 Oak Park Commons A&P 60,025 04/14/18
10 Vista Ridge Plaza I, II & Shops HomePlace 53,985 05/31/12
11 Alexis Hotel
12 East Thunderbird Square Abco Markets 43,063 04/30/07
13 Sherwood Apartments
- ----------------------------------------------------------------------------------------------------------------------------------
14 Villa Serena Apartments
15 194 East Second Street Apartments
16 Executive House
17 Village West Shopping Center Giant Food Market 58,259 11/30/18
18 Marlboro Office/Warehouse Park Handex 36,600 06/30/03
- ----------------------------------------------------------------------------------------------------------------------------------
19 Windsor Falls Apartments
20 Sheraton Hotel - Charleston, SC
21 High Pointe Shopping Center Best Buy 45,055 01/31/18
22 United Healthcare United Healthcare 188,500 06/30/08
23 Academy Plaza Acme 50,000 09/30/18
- ----------------------------------------------------------------------------------------------------------------------------------
24 Kings Bridge
25 Walden Village
26 Garnet Lake Portfolio
26.01 7510 Hollywood Boulevard
26.02 1349 N. Detroit Street
- ----------------------------------------------------------------------------------------------------------------------------------
26.03 7140 De Longpre Avenue
26.04 219 S. Mariposa
26.05 1030 N. Orange Grove Avenue
26.06 7364 Hollywood Boulevard
26.07 1750 El Cerrito Place
- ----------------------------------------------------------------------------------------------------------------------------------
26.08 7278 Hollywood Boulevard
26.09 3824 Motor Avenue
26.10 1010 Raleigh Street
27 Orange Derby Shopping Center K-Mart 82,000 10/31/11
28 Long Brook
- ----------------------------------------------------------------------------------------------------------------------------------
29 Somerset Apartments
30 353 Lexington Avenue Advertising Info Svcs 12,964 04/30/02
31 Whitehall Estates
32 Vista Shopping Center Sedano's 30,000 10/25/08
33 Morgan Place Apartments
- ----------------------------------------------------------------------------------------------------------------------------------
34 Ridgedale Festival Shopping Center ToysRUs 36,100 01/31/16
35 Lantana/Park Trace Apartments
35.01 Lantana
35.02 Park Trace Apartments
36 Las Palomas Apartments
- ----------------------------------------------------------------------------------------------------------------------------------
37 Mercy Wellness Centers Portfolio
37.01 Eastwick Wellness Center Mercy Health Systems 33,000 06/30/12
37.02 Upper Darby Wellness Center Mercy Health Systems 27,400 10/31/12
38 Wildwood Village Apartments
39 Hampton Inn Maingate
- ----------------------------------------------------------------------------------------------------------------------------------
40 Circuit City Norwalk 444 Circuit City Stores, Inc 33,790 01/31/19
41 Target Center Target 113,148 05/30/03
42 Westgate Shopping Center Best Buy 45,300 01/31/10
43 Gardens at Annen Woods
44 Auburn - Southbridge Center Staples 24,000 01/01/14
- ----------------------------------------------------------------------------------------------------------------------------------
45 Cornerstone Shopping Center Borders Books 25,000 06/01/18
46 Gabes Place Apartments Portfolio
46.01 202 E. John
46.02 102 E. Gregory
46.03 810 Iowa
- ----------------------------------------------------------------------------------------------------------------------------------
46.04 807 W. Oregon
46.05 811 W. Oregon
47 Briarwood Apartments
48 3 - 7 West 35th Street Careplus 20,000 12/31/02
49 Radio Wave Building Drury Enterprises, Inc. 16,000 11/01/08
- ----------------------------------------------------------------------------------------------------------------------------------
50 Market Square Shopping Center Stein Mart 49,375 03/31/06
51 Palm Villas Apartments
52 Kohl's Department Store Kohl's 91,110 04/30/18
53 467 West Avenue Loehmann's 20,714 12/03/99
54 Motel 6 1115 Raleigh Motel 6 54,293 05/31/16
- ----------------------------------------------------------------------------------------------------------------------------------
55 Crown Valley Retail Center Mission Music 8,934 11/01/00
56 Residence Inn - Tampa
57 Comfort Suites - Gastonia
58 Cityplace Market Ross Stores 28,160 01/31/07
59 Belmont Crossing
- ----------------------------------------------------------------------------------------------------------------------------------
60 Timber Creek Apartments
61 Windgate Place
62 Winn Dixie Chesapeake Cedar Winn-Dixie Raleigh, Inc. 51,282 11/19/18
63 Residence Inn - Sarasota
64 Rockwood Gardens
- ----------------------------------------------------------------------------------------------------------------------------------
65 New Rochelle Nursing Home
66 Kjellburg Mobile Home Park
67 Autumn Park Apartments
68 111 Devonshire Street Building Moors & Cabot 24,900 12/01/13
<CAPTION>
2nd Largest
Tenant Area 2nd Largest
Control Leased (Sq. Tenant
Number Property Name 2nd Largest Tenant Name Ft.) Expiration Date
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 Sheraton Suites Portfolio
1.01 Sheraton Suites Wilmington
1.02 Sheraton Suites Dallas
1.03 Sheraton Suites Elk Grove
2 Olen Portfolio Laughlin-Wilt Group, Inc. 32,724 07/10/03
- --------------------------------------------------------------------------------------------------------------
2.01 Jamboree Corporate Park Forbes Computer Group 15,998 07/31/00
2.02 Newport Mesa Centre Town & Country Surf Shop 6,100 Multiple Spaces
2.03 Olen Corporate Center Frank Peters & Associates 7,854 07/31/99
2.04 Orange Freeway Business Park BI Technologies Corp. 20,720 11/07/00
2.05 Spectrum Pointe Laughlin-Wilt Group, Inc. 32,724 07/10/03
- --------------------------------------------------------------------------------------------------------------
2.06 Von Karman Research Center
3 Lakeside Apartments
4 Wynfrey Hotel at Riverchase Galleria
5 Wilshire Portfolio
5.01 Wilshire Doheny Bldg NAPICO 14,597 06/30/01
- --------------------------------------------------------------------------------------------------------------
5.02 ICM Building
5.03 Wilshire Palm Bldg Hochman-Salkin 12,731 02/28/02
6 Hickory Lake
7 Westgate Village K-Mart 103,589 01/31/21
8 1055 Washington Blvd. Watson Wyatt 30,660 11/01/99
- --------------------------------------------------------------------------------------------------------------
9 Oak Park Commons Sears 21,382 01/15/08
10 Vista Ridge Plaza I, II & Shops BabiesRUs 40,000 07/31/09
11 Alexis Hotel
12 East Thunderbird Square Office Depot 27,780 12/31/08
13 Sherwood Apartments
- --------------------------------------------------------------------------------------------------------------
14 Villa Serena Apartments
15 194 East Second Street Apartments
16 Executive House
17 Village West Shopping Center CVS 10,000 01/31/19
18 Marlboro Office/Warehouse Park Prudential Property 33,700 07/31/99
- --------------------------------------------------------------------------------------------------------------
19 Windsor Falls Apartments
20 Sheraton Hotel - Charleston, SC
21 High Pointe Shopping Center Dick's Sporting Goods 42,092 01/31/19
22 United Healthcare
23 Academy Plaza Rite Aid 11,860 07/29/07
- --------------------------------------------------------------------------------------------------------------
24 Kings Bridge
25 Walden Village
26 Garnet Lake Portfolio
26.01 7510 Hollywood Boulevard
26.02 1349 N. Detroit Street
- --------------------------------------------------------------------------------------------------------------
26.03 7140 De Longpre Avenue
26.04 219 S. Mariposa
26.05 1030 N. Orange Grove Avenue
26.06 7364 Hollywood Boulevard
26.07 1750 El Cerrito Place
- --------------------------------------------------------------------------------------------------------------
26.08 7278 Hollywood Boulevard
26.09 3824 Motor Avenue
26.10 1010 Raleigh Street
27 Orange Derby Shopping Center Marshalls 22,689 01/31/00
28 Long Brook
- --------------------------------------------------------------------------------------------------------------
29 Somerset Apartments
30 353 Lexington Avenue Kobrand Corp. 7,635 04/30/03
31 Whitehall Estates
32 Vista Shopping Center Firestone 6,571 11/01/08
33 Morgan Place Apartments
- --------------------------------------------------------------------------------------------------------------
34 Ridgedale Festival Shopping Center Golfsmith 25,775 03/31/08
35 Lantana/Park Trace Apartments
35.01 Lantana
35.02 Park Trace Apartments
36 Las Palomas Apartments
- --------------------------------------------------------------------------------------------------------------
37 Mercy Wellness Centers Portfolio
37.01 Eastwick Wellness Center Maria's Cafe 891 09/30/02
37.02 Upper Darby Wellness Center Windell KA Murphy 2,753 05/31/08
38 Wildwood Village Apartments
39 Hampton Inn Maingate
- --------------------------------------------------------------------------------------------------------------
40 Circuit City Norwalk 444
41 Target Center Food4Less 40,000 03/30/03
42 Westgate Shopping Center T.J. Maxx 30,000 11/30/04
43 Gardens at Annen Woods
44 Auburn - Southbridge Center Petco 15,000 01/01/14
- --------------------------------------------------------------------------------------------------------------
45 Cornerstone Shopping Center Gateway 2000 7,002 06/01/03
46 Gabes Place Apartments Portfolio
46.01 202 E. John
46.02 102 E. Gregory
46.03 810 Iowa
- --------------------------------------------------------------------------------------------------------------
46.04 807 W. Oregon
46.05 811 W. Oregon
47 Briarwood Apartments
48 3 - 7 West 35th Street Guideline Research 15,000 04/30/06
49 Radio Wave Building Chroma Vision Corp. 11,154 02/28/01
- --------------------------------------------------------------------------------------------------------------
50 Market Square Shopping Center Fashion Outlet 30,110 09/30/01
51 Palm Villas Apartments
52 Kohl's Department Store
53 467 West Avenue The Gap 8,462 04/30/07
54 Motel 6 1115 Raleigh
- --------------------------------------------------------------------------------------------------------------
55 Crown Valley Retail Center American Drugstore(Sav-on) 7,500 11/01/00
56 Residence Inn - Tampa
57 Comfort Suites - Gastonia
58 Cityplace Market OfficeMax 23,500 11/30/09
59 Belmont Crossing
- --------------------------------------------------------------------------------------------------------------
60 Timber Creek Apartments
61 Windgate Place
62 Winn Dixie Chesapeake Cedar
63 Residence Inn - Sarasota
64 Rockwood Gardens
- --------------------------------------------------------------------------------------------------------------
65 New Rochelle Nursing Home
66 Kjellburg Mobile Home Park
67 Autumn Park Apartments
68 111 Devonshire Street Building Taylor, Duane, Barton & Gilman LLP 11,094 08/30/04
<CAPTION>
3rd Largest 3rd Largest
Control Tenant Area Tenant
Number Property Name 3rd Largest Tenant Name Leased (Sq. Ft.) Expiration Date
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1 Sheraton Suites Portfolio
1.01 Sheraton Suites Wilmington
1.02 Sheraton Suites Dallas
1.03 Sheraton Suites Elk Grove
2 Olen Portfolio Continuing Medical Education, Inc. 31,750 04/14/03
- -----------------------------------------------------------------------------------------------------------------
2.01 Jamboree Corporate Park TVMax Telecommunications 12,316 05/01/03
2.02 Newport Mesa Centre Thomas N. Smith III 3,600 03/31/00
2.03 Olen Corporate Center M P, Inc. 6,379 Multiple Spaces
2.04 Orange Freeway Business Park A. J. Gerrard & Company 14,880 01/31/02
2.05 Spectrum Pointe Who? Vision Systems, Inc. 21,000 05/17/03
- -----------------------------------------------------------------------------------------------------------------
2.06 Von Karman Research Center
3 Lakeside Apartments
4 Wynfrey Hotel at Riverchase Galleria
5 Wilshire Portfolio
5.01 Wilshire Doheny Bldg American Savings 7,164 04/30/01
- -----------------------------------------------------------------------------------------------------------------
5.02 ICM Building
5.03 Wilshire Palm Bldg Baker & Hostetler 6,355 12/31/99
6 Hickory Lake
7 Westgate Village Circuit City 33,005 12/31/99
8 1055 Washington Blvd. Advantage, Inc. 11,050 11/30/00
- -----------------------------------------------------------------------------------------------------------------
9 Oak Park Commons CVS 10,125 03/06/18
10 Vista Ridge Plaza I, II & Shops Drug Emporium 24,974 12/31/12
11 Alexis Hotel
12 East Thunderbird Square Hacienda Lighting 8,058 02/29/00
13 Sherwood Apartments
- -----------------------------------------------------------------------------------------------------------------
14 Villa Serena Apartments
15 194 East Second Street Apartments
16 Executive House
17 Village West Shopping Center Encore Books 9,265 12/31/99
18 Marlboro Office/Warehouse Park Vytran 20,000 06/30/08
- -----------------------------------------------------------------------------------------------------------------
19 Windsor Falls Apartments
20 Sheraton Hotel - Charleston, SC
21 High Pointe Shopping Center OfficeMax, Inc. 30,010 02/28/13
22 United Healthcare
23 Academy Plaza A Formal Celebration 7,000 12/31/06
- -----------------------------------------------------------------------------------------------------------------
24 Kings Bridge
25 Walden Village
26 Garnet Lake Portfolio
26.01 7510 Hollywood Boulevard
26.02 1349 N. Detroit Street
- -----------------------------------------------------------------------------------------------------------------
26.03 7140 De Longpre Avenue
26.04 219 S. Mariposa
26.05 1030 N. Orange Grove Avenue
26.06 7364 Hollywood Boulevard
26.07 1750 El Cerrito Place
- -----------------------------------------------------------------------------------------------------------------
26.08 7278 Hollywood Boulevard
26.09 3824 Motor Avenue
26.10 1010 Raleigh Street
27 Orange Derby Shopping Center Fashion Bug 10,560 01/31/04
28 Long Brook
- -----------------------------------------------------------------------------------------------------------------
29 Somerset Apartments
30 353 Lexington Avenue Roslein Industries 7,100 05/31/02
31 Whitehall Estates
32 Vista Shopping Center C.A.C. Ramsey 4,550 11/30/02
33 Morgan Place Apartments
- -----------------------------------------------------------------------------------------------------------------
34 Ridgedale Festival Shopping Center OfficeMax, Inc. 25,269 02/28/01
35 Lantana/Park Trace Apartments
35.01 Lantana
35.02 Park Trace Apartments
36 Las Palomas Apartments
- -----------------------------------------------------------------------------------------------------------------
37 Mercy Wellness Centers Portfolio
37.01 Eastwick Wellness Center Eastwick Project 800 09/30/02
37.02 Upper Darby Wellness Center Miky's Wellness Cafe 1,352 08/31/08
38 Wildwood Village Apartments
39 Hampton Inn Maingate
- -----------------------------------------------------------------------------------------------------------------
40 Circuit City Norwalk 444
41 Target Center 24 Hour Fitness 18,432 02/28/10
42 Westgate Shopping Center Michael's 18,040 02/28/05
43 Gardens at Annen Woods
44 Auburn - Southbridge Center Monro Muffler (Ground Lease) 2,932 09/01/03
- -----------------------------------------------------------------------------------------------------------------
45 Cornerstone Shopping Center Hollywood Video 6,500 06/01/13
46 Gabes Place Apartments Portfolio
46.01 202 E. John
46.02 102 E. Gregory
46.03 810 Iowa
- -----------------------------------------------------------------------------------------------------------------
46.04 807 W. Oregon
46.05 811 W. Oregon
47 Briarwood Apartments
48 3 - 7 West 35th Street Jackie Robinson 9,000 04/30/06
49 Radio Wave Building Chinnici & Associates 10,855 10/01/02
- -----------------------------------------------------------------------------------------------------------------
50 Market Square Shopping Center Home Works 28,158 10/31/06
51 Palm Villas Apartments
52 Kohl's Department Store
53 467 West Avenue Porch & Patio 6,500 03/01/07
54 Motel 6 1115 Raleigh
- -----------------------------------------------------------------------------------------------------------------
55 Crown Valley Retail Center Wherehouse Records 6,000 01/01/06
56 Residence Inn - Tampa
57 Comfort Suites - Gastonia
58 Cityplace Market MacFrugals 18,007 01/31/12
59 Belmont Crossing
- -----------------------------------------------------------------------------------------------------------------
60 Timber Creek Apartments
61 Windgate Place
62 Winn Dixie Chesapeake Cedar
63 Residence Inn - Sarasota
64 Rockwood Gardens
- -----------------------------------------------------------------------------------------------------------------
65 New Rochelle Nursing Home
66 Kjellburg Mobile Home Park
67 Autumn Park Apartments
68 111 Devonshire Street Building Ashcraft & Gerel 5,747 02/01/00
<CAPTION>
Affiliated
Borrowers In
Control Excess of 5% of ARD Mortgage
Number Property Name Pool Loans Loan Seller
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 Sheraton Suites Portfolio ARD CMB
1.01 Sheraton Suites Wilmington CMB
1.02 Sheraton Suites Dallas CMB
1.03 Sheraton Suites Elk Grove CMB
2 Olen Portfolio FUNB
- -------------------------------------------------------------------------------------------
2.01 Jamboree Corporate Park FUNB
2.02 Newport Mesa Centre FUNB
2.03 Olen Corporate Center FUNB
2.04 Orange Freeway Business Park FUNB
2.05 Spectrum Pointe FUNB
- -------------------------------------------------------------------------------------------
2.06 Von Karman Research Center FUNB
3 Lakeside Apartments FUNB
4 Wynfrey Hotel at Riverchase Galleria CMB
5 Wilshire Portfolio CMB
5.01 Wilshire Doheny Bldg CMB
- -------------------------------------------------------------------------------------------
5.02 ICM Building CMB
5.03 Wilshire Palm Bldg CMB
6 Hickory Lake Pinnacle Companies CMB
7 Westgate Village Kimco Realty Corp. ARD CMB
8 1055 Washington Blvd. CMB
- -------------------------------------------------------------------------------------------
9 Oak Park Commons Kimco Realty Corp. ARD CMB
10 Vista Ridge Plaza I, II & Shops Kimco Realty Corp. ARD CMB
11 Alexis Hotel ARD CMB
12 East Thunderbird Square FUNB
13 Sherwood Apartments FUNB
- -------------------------------------------------------------------------------------------
14 Villa Serena Apartments FUNB
15 194 East Second Street Apartments FUNB
16 Executive House FUNB
17 Village West Shopping Center ARD CMB
18 Marlboro Office/Warehouse Park CMB
- -------------------------------------------------------------------------------------------
19 Windsor Falls Apartments CMB
20 Sheraton Hotel - Charleston, SC FUNB
21 High Pointe Shopping Center CMB
22 United Healthcare FUNB
23 Academy Plaza CMB
- -------------------------------------------------------------------------------------------
24 Kings Bridge Pinnacle Companies CMB
25 Walden Village CMB
26 Garnet Lake Portfolio FUNB
26.01 7510 Hollywood Boulevard FUNB
26.02 1349 N. Detroit Street FUNB
- -------------------------------------------------------------------------------------------
26.03 7140 De Longpre Avenue FUNB
26.04 219 S. Mariposa FUNB
26.05 1030 N. Orange Grove Avenue FUNB
26.06 7364 Hollywood Boulevard FUNB
26.07 1750 El Cerrito Place FUNB
- ------------------------------------------------------------------------------------------
26.08 7278 Hollywood Boulevard FUNB
26.09 3824 Motor Avenue FUNB
26.10 1010 Raleigh Street FUNB
27 Orange Derby Shopping Center CMB
28 Long Brook ARD FUNB
- -------------------------------------------------------------------------------------------
29 Somerset Apartments Pinnacle Companies CMB
30 353 Lexington Avenue CMB
31 Whitehall Estates FUNB
32 Vista Shopping Center CMB
33 Morgan Place Apartments CMB
- -------------------------------------------------------------------------------------------
34 Ridgedale Festival Shopping Center Kimco Realty Corp. ARD CMB
35 Lantana/Park Trace Apartments Pinnacle Companies CMB
35.01 Lantana CMB
35.02 Park Trace Apartments CMB
36 Las Palomas Apartments FUNB
- -------------------------------------------------------------------------------------------
37 Mercy Wellness Centers Portfolio Kimco Realty Corp. FUNB
37.01 Eastwick Wellness Center FUNB
37.02 Upper Darby Wellness Center FUNB
38 Wildwood Village Apartments FUNB
39 Hampton Inn Maingate CMB
- -------------------------------------------------------------------------------------------
40 Circuit City Norwalk 444 FUNB
41 Target Center Kimco Realty Corp. ARD CMB
42 Westgate Shopping Center Kimco Realty Corp. ARD CMB
43 Gardens at Annen Woods CMB
44 Auburn - Southbridge Center FUNB
- -------------------------------------------------------------------------------------------
45 Cornerstone Shopping Center FUNB
46 Gabes Place Apartments Portfolio FUNB
46.01 202 E. John FUNB
46.02 102 E. Gregory FUNB
46.03 810 Iowa FUNB
- -------------------------------------------------------------------------------------------
46.04 807 W. Oregon FUNB
46.05 811 W. Oregon FUNB
47 Briarwood Apartments CMB
48 3 - 7 West 35th Street CMB
49 Radio Wave Building FUNB
- -------------------------------------------------------------------------------------------
50 Market Square Shopping Center FUNB
51 Palm Villas Apartments FUNB
52 Kohl's Department Store Kimco Realty Corp. ARD CMB
53 467 West Avenue FUNB
54 Motel 6 1115 Raleigh FUNB
- -------------------------------------------------------------------------------------------
55 Crown Valley Retail Center FUNB
56 Residence Inn - Tampa FUNB
57 Comfort Suites - Gastonia FUNB
58 Cityplace Market Kimco Realty Corp. ARD CMB
59 Belmont Crossing Pinnacle Companies CMB
- -------------------------------------------------------------------------------------------
60 Timber Creek Apartments FUNB
61 Windgate Place CMB
62 Winn Dixie Chesapeake Cedar FUNB
63 Residence Inn - Sarasota FUNB
64 Rockwood Gardens FUNB
- -------------------------------------------------------------------------------------------
65 New Rochelle Nursing Home FUNB
66 Kjellburg Mobile Home Park FUNB
67 Autumn Park Apartments FUNB
68 111 Devonshire Street Building FUNB
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Control
Number Property Name Address
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
69 Shopko - Site 814 2057 N. Rock Road
- ------------------------------------------------------------------------------------------------------------
70 Tuscany Village Phase II 235 Ocala Road
71 Marsh Creek Corporate Center II 15 & 35 East Uwchlan Ave.
72 Shopko - Site 815 350 South Tracey Street
73 Beechwood Villa Apartments 4702 Beechwood Road
74 Comfort Inn Alexandria 6254 Duke Street
- ------------------------------------------------------------------------------------------------------------
75 Grande Apartments 220-250 West Sumner Avenue
76 Residence Inn/Knoxville 215 Langley Place
77 Clocktower Square Center 477-481 Main Street
78 The Villas at College Hill 684 Arlington Place
79 Livingston Place 15215 Livingston Avenue
- ------------------------------------------------------------------------------------------------------------
80 Taylor & Bird Portfolio Various
80.01 Claxton 700 East Long Street
80.02 Metter 300 Cedar Street
80.03 Statesboro 405 South College St.
81 One Hollis Street One Hollis Street
- ------------------------------------------------------------------------------------------------------------
82 Warehousing of Wisconsin - Century 2275 Century Road
83 Marsh Creek Corporate Center I 55 & 75 East Uwchlan Ave.
84 Shopko - Site 889/ The Joplin Mall 101 North Rangeline Road
85 Tustin & Katella Retail Center 1267-73 East Katella
86 Triangle Building 1775 The Exchange
- ------------------------------------------------------------------------------------------------------------
87 Motel 6 1129 Hilton Head 830 William Hilton Parkway
88 Intertech Building 1855 & 1859 Bowles Avenue
89 Days Inn - Alexandria 110 S. Bragg Street
90 Village Square Shopping Center 953 East Sahara Avenue
91 Raymond Building 77-91 N. Raymond Avenue & 54-56 E. Holly Street
- ------------------------------------------------------------------------------------------------------------
92 Eagle Davenport Locust 405 East Locust Street
93 Sabre Springs Marketplace 12602-12668 Sabre Springs Parkway
94 Somerpoint (Woodvalley) 1788 Austell Road
95 Motel 6 1081 Little Rock (W) 10524 W. Markham Street
96 Astor Avenue Office Building 1500 Astor Avenue
- ------------------------------------------------------------------------------------------------------------
97 K&K Warehousing 201 South Pearl Street
98 Towne View Plaza Retail Center 1900 Long Prairie Rd.
99 456-458 Sackett Point Road 456-458 Sackett Point Road
100 SDJ Enterprises 2201-2263 E. Vernon Avenue
101 Ramada Plaza West 435 Smokey Park Highway
- ------------------------------------------------------------------------------------------------------------
102 Polk Street 2101 - 2107 Polk Street
103 Delmont Village Shopping Center 5151 Plank Road
104 Golden Horseshoe Shopping Center Wilmot Road
105 Cottman Plaza 2118 Cottman Avenue
106 Town Square Office & Retail Plaza 392 East 12300 South
- ------------------------------------------------------------------------------------------------------------
107 Steeplechase Apartments Portfolio Various
107.01 143 Pine Street 143 Pine Street
107.02 190 Wood Circle 190 Wood Circle
107.03 311 Hardin Street 311 Hardin Street
107.04 784 Howard Street 784 Howard Street
- ------------------------------------------------------------------------------------------------------------
108 Statesville Place 2806 Peachtree Road
109 Motel 6 740 Reno Sparks 2405 Victorian Avenue
110 Deerfoot Office Park 257 Turnpike Road
111 Motel 6 608 Mobile 5488 Inn Road
112 Burlington Manor 3615 South Mebane Street
- ------------------------------------------------------------------------------------------------------------
113 Rite Aid - Commerce Township 2425 East Haggerty
114 Old City Market 200-300 W. Saint Julian Street
115 Paseo Financial Center 2500 West Sahara
116 1160-1180 Eugenia Place 1160-1180 Eugenia Place
117 Village East Apartments 1700 Village East Drive
- ------------------------------------------------------------------------------------------------------------
118 Rhodes Furniture - Fort Meyers, FL 5370 South Cleveland Avenue
119 Walgreen Colleyville 3880 Glade Road
120 The Trails Apartments 3301 West Normandale
121 Woodfield Gardens 7713-B Village Green Dr
122 Rite Aid - Holland 40th & Washington
- ------------------------------------------------------------------------------------------------------------
123 Days Inn Fredericksburg South 5316 Jefferson Davis Highway
124 Shrine Apartments 3030-3040 Shrine Place
125 Walgreens at Silver Lakes SEC of 184th St. and Pines Blvd.
126 Best Western Governors Inn 9826 Midlothian Tnpk
127 Staples York Loucks Road 965 Loucks Rd
- ------------------------------------------------------------------------------------------------------------
128 OfficeMax Retail Center 1341 Center Drive
129 Highland Terrace 400 & 422 Highland Avenue
130 Fairfield Inn - Mobile 950 A South Beltline Highway
131 Coquina Lakes Apartments 650 W. Pope Road
132 Walgreen Franklin Fieldstone 2045 Fieldstone Parkway
- ------------------------------------------------------------------------------------------------------------
133 Riverside Parkway 1980 & 2000 Riverside Parkway
134 CVS Yarmouth Main 976 Main Street
135 Walgreen Duncanville Wheatland 8120 South Cockrell Hill Road
136 Cosmopolitan Apartments 225 Hyde Street
137 Rite Aid - Claremont 45-99 Washington Street
- ------------------------------------------------------------------------------------------------------------
138 Sandridge Apartments 901 South Bryan Street
139 Rancho Palms 39360 Peterson Road
140 Tree Top Apartments 1933 West Freeway
141 Tri-Star Building 3832 East Watkins Street
142 Days Inn Shreveport 4935 W. Monkhouse Drive
- ------------------------------------------------------------------------------------------------------------
143 Warehousing of Wisconsin - Larsen 2330 Larsen Road
144 Sun Shadow Apartments 2828 W. Camelback Road
145 Eckerd Oveido Red Bug Lake 8315 Red Bug Lake Road
146 Cascade Apartments 3441 Burlingame Road
147 Rite Aid - Ironton 715 Park Avenue
- ------------------------------------------------------------------------------------------------------------
148 Centre Financial Portfolio Various
148.01 Starbuck's Uniondale 1228 Hempstead Tpke.
148.02 Starbuck's Long Beach 101 W. Park Ave.
148.03 Birch Hill Square 184 Birch Hill Road
149 Taylor Apartments 1660-1670 North 21st Road
- ------------------------------------------------------------------------------------------------------------
150 Days Inn - Charlotte 1408 West Sugar Creek Road
151 Roosevelt Plaza 2 West Northfield Rd.
152 The Coral Tree Apartments 4225 Inglewood Blvd.
153 Commack Commons 193-225 Commack Rd.
154 Shafer Plaza VIII 2730 East Highway 190
- ------------------------------------------------------------------------------------------------------------
155 Rhodes Furniture - Montgomery, AL 2525 Eastern Blvd.
156 Union Savings Bank 83-85 Colorado Blvd. & 10-20 North Raymond Ave.
157 Hewitt Square Shopping Center 9 Hewitt Square
158 Pine Brook Apartments 1005 Hickory Hill Lane
159 Mayfair House - Woodstock 935 Ox Road
<CAPTION>
Control
Number Property Name City State
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
69 Shopko - Site 814 Wichita KS
- --------------------------------------------------------------------------------------------------------
70 Tuscany Village Phase II Tallahassee FL
71 Marsh Creek Corporate Center II Exton PA
72 Shopko - Site 815 Wichita KS
73 Beechwood Villa Apartments Cincinnati OH
74 Comfort Inn Alexandria Alexandria VA
- --------------------------------------------------------------------------------------------------------
75 Grande Apartments Roselle Park NJ
76 Residence Inn/Knoxville Knoxville TN
77 Clocktower Square Center Monroe CT
78 The Villas at College Hill Macon GA
79 Livingston Place Lutz FL
- --------------------------------------------------------------------------------------------------------
80 Taylor & Bird Portfolio Various GA
80.01 Claxton Claxton GA
80.02 Metter Metter GA
80.03 Statesboro Stateboro GA
81 One Hollis Street Wellesley MA
- --------------------------------------------------------------------------------------------------------
82 Warehousing of Wisconsin - Century Green Bay WI
83 Marsh Creek Corporate Center I Exton PA
84 Shopko - Site 889/ The Joplin Mall Joplin MO
85 Tustin & Katella Retail Center Orange CA
86 Triangle Building Atlanta GA
- --------------------------------------------------------------------------------------------------------
87 Motel 6 1129 Hilton Head Hilton Head SC
88 Intertech Building Fenton MO
89 Days Inn - Alexandria Alexandria VA
90 Village Square Shopping Center Las Vegas NV
91 Raymond Building Pasadena CA
- --------------------------------------------------------------------------------------------------------
92 Eagle Davenport Locust Davenport IA
93 Sabre Springs Marketplace San Diego CA
94 Somerpoint (Woodvalley) Marietta GA
95 Motel 6 1081 Little Rock (W) Little Rock AR
96 Astor Avenue Office Building Bronx NY
- --------------------------------------------------------------------------------------------------------
97 K&K Warehousing Green Bay WI
98 Towne View Plaza Retail Center Flower Mound TX
99 456-458 Sackett Point Road North Haven CT
100 SDJ Enterprises Vernon CA
101 Ramada Plaza West Asheville NC
- --------------------------------------------------------------------------------------------------------
102 Polk Street San Francisco CA
103 Delmont Village Shopping Center Baton Rouge LA
104 Golden Horseshoe Shopping Center Scarsdale & New Rochelle NY
105 Cottman Plaza Philadelphia PA
106 Town Square Office & Retail Plaza Draper UT
- --------------------------------------------------------------------------------------------------------
107 Steeplechase Apartments Portfolio Boone NC
107.01 143 Pine Street Boone NC
107.02 190 Wood Circle Boone NC
107.03 311 Hardin Street Boone NC
107.04 784 Howard Street Boone NC
- --------------------------------------------------------------------------------------------------------
108 Statesville Place Statesville NC
109 Motel 6 740 Reno Sparks Sparks NV
110 Deerfoot Office Park Southborough MA
111 Motel 6 608 Mobile Mobile AL
112 Burlington Manor Burlington NC
- --------------------------------------------------------------------------------------------------------
113 Rite Aid - Commerce Township Commerce Township MI
114 Old City Market Savannah GA
115 Paseo Financial Center Las Vegas NV
116 1160-1180 Eugenia Place Carpinteria CA
117 Village East Apartments Denton TX
- --------------------------------------------------------------------------------------------------------
118 Rhodes Furniture - Fort Meyers, FL Ft. Meyers FL
119 Walgreen Colleyville Colleyville TX
120 The Trails Apartments Fort Worth TX
121 Woodfield Gardens Charlotte NC
122 Rite Aid - Holland Holland MI
- --------------------------------------------------------------------------------------------------------
123 Days Inn Fredericksburg South Fredericksburg VA
124 Shrine Apartments Los Angeles CA
125 Walgreens at Silver Lakes Pembroke Pines FL
126 Best Western Governors Inn Richmond VA
127 Staples York Loucks Road York PA
- --------------------------------------------------------------------------------------------------------
128 OfficeMax Retail Center Medford OR
129 Highland Terrace Orange NJ
130 Fairfield Inn - Mobile Mobile AL
131 Coquina Lakes Apartments St. Augustine Beach FL
132 Walgreen Franklin Fieldstone Franklin TN
- --------------------------------------------------------------------------------------------------------
133 Riverside Parkway Lawrenceville GA
134 CVS Yarmouth Main Yarmouth MA
135 Walgreen Duncanville Wheatland Dallas TX
136 Cosmopolitan Apartments San Francisco CA
137 Rite Aid - Claremont Claremont NH
- --------------------------------------------------------------------------------------------------------
138 Sandridge Apartments North Platte NE
139 Rancho Palms Ranch Mirage CA
140 Tree Top Apartments Grand Prairie TX
141 Tri-Star Building Phoenix AZ
142 Days Inn Shreveport Shreveport LA
- --------------------------------------------------------------------------------------------------------
143 Warehousing of Wisconsin - Larsen Green Bay WI
144 Sun Shadow Apartments Phoenix AZ
145 Eckerd Oveido Red Bug Lake Oviedo FL
146 Cascade Apartments Topeka KS
147 Rite Aid - Ironton Ironton OH
- --------------------------------------------------------------------------------------------------------
148 Centre Financial Portfolio Locust Valley, Long Beach, Uniondale NY
148.01 Starbuck's Uniondale Uniondale NY
148.02 Starbuck's Long Beach Long Beach NY
148.03 Birch Hill Square Locust Valley NY
149 Taylor Apartments Arlington VA
- --------------------------------------------------------------------------------------------------------
150 Days Inn - Charlotte Charlotte NC
151 Roosevelt Plaza Livingston NJ
152 The Coral Tree Apartments Los Angeles CA
153 Commack Commons Commack NY
154 Shafer Plaza VIII Copperas Cove TX
- --------------------------------------------------------------------------------------------------------
155 Rhodes Furniture - Montgomery, AL Montgomery AL
156 Union Savings Bank Pasadena CA
157 Hewitt Square Shopping Center East Northport NY
158 Pine Brook Apartments Nashville TN
159 Mayfair House - Woodstock Woodstock VA
- --------------------------------------------------------------------------------------------------------
<CAPTION>
Cross-
Collateralized % of Cumulative %
and Cross- Aggregate of Aggregate
Control Defaulted Original Cut-Off Date Cut-Off Date Cut-Off Date Mortgage
Number Property Name Zip Code Groups Balance ($) Balance ($) Balance Balance Rate (%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
69 Shopko - Site 814 67209 5,175,000 5,152,636 0.44% 67.61% 6.5700%
- ------------------------------------------------------------------------------------------------------------------------------------
70 Tuscany Village Phase II 32304 5,120,000 5,120,000 0.43% 68.04% 6.8750%
71 Marsh Creek Corporate Center II 19341 5,100,000 5,080,691 0.43% 68.47% 7.2500%
72 Shopko - Site 815 67209 5,100,000 5,077,960 0.43% 68.90% 6.5700%
73 Beechwood Villa Apartments 45244 5,040,000 5,024,014 0.43% 69.32% 8.0000%
74 Comfort Inn Alexandria 22312 BMI 5,127,000 5,019,952 0.43% 69.75% 7.3750%
- ------------------------------------------------------------------------------------------------------------------------------------
75 Grande Apartments 07204 5,000,000 4,971,334 0.42% 70.17% 6.1250%
76 Residence Inn/Knoxville 37922 4,988,000 4,940,520 0.42% 70.59% 7.1000%
77 Clocktower Square Center 06468 4,950,000 4,931,973 0.42% 71.00% 7.3750%
78 The Villas at College Hill 31201 4,800,000 4,756,173 0.40% 71.41% 6.5000%
79 Livingston Place 33549 4,440,000 4,434,534 0.38% 71.78% 7.6500%
- ------------------------------------------------------------------------------------------------------------------------------------
80 Taylor & Bird Portfolio Various 4,500,000 4,421,610 0.37% 72.16% 7.6250%
80.01 Claxton 30417
80.02 Metter 30439
80.03 Statesboro 30458
81 One Hollis Street 02482 4,400,000 4,400,000 0.37% 72.53% 7.8000%
- ------------------------------------------------------------------------------------------------------------------------------------
82 Warehousing of Wisconsin - Century 54303 4,375,000 4,369,922 0.37% 72.90% 7.8750%
83 Marsh Creek Corporate Center I 19341 4,350,000 4,333,530 0.37% 73.27% 7.2500%
84 Shopko - Site 889/ The Joplin Mall 64801 4,350,000 4,331,201 0.37% 73.63% 6.5700%
85 Tustin & Katella Retail Center 92867 4,300,000 4,300,000 0.36% 74.00% 7.5000%
86 Triangle Building 30060 4,275,000 4,261,133 0.36% 74.36% 7.9000%
- ------------------------------------------------------------------------------------------------------------------------------------
87 Motel 6 1129 Hilton Head 29928 4,418,896 4,232,286 0.36% 74.72% 7.2350%
88 Intertech Building 63026 4,160,000 4,155,430 0.35% 75.07% 7.7300%
89 Days Inn - Alexandria 22312 BMI 4,200,000 4,112,307 0.35% 75.42% 7.3750%
90 Village Square Shopping Center 89104 4,115,000 4,107,613 0.35% 75.76% 8.2500%
91 Raymond Building 91103 4,100,000 4,088,704 0.35% 76.11% 7.9200%
- ------------------------------------------------------------------------------------------------------------------------------------
92 Eagle Davenport Locust 52803 4,126,000 4,085,191 0.35% 76.45% 8.1100%
93 Sabre Springs Marketplace 92128 4,100,000 4,081,362 0.35% 76.80% 7.2500%
94 Somerpoint (Woodvalley) 30008 4,080,000 4,074,977 0.35% 77.14% 7.6500%
95 Motel 6 1081 Little Rock (W) 72205 4,221,624 4,043,344 0.34% 77.49% 7.2350%
96 Astor Avenue Office Building 10469 3,950,000 3,947,212 0.33% 77.82% 7.7500%
- ------------------------------------------------------------------------------------------------------------------------------------
97 K&K Warehousing 54305 3,825,000 3,818,368 0.32% 78.14% 7.8300%
98 Towne View Plaza Retail Center 75028 3,750,000 3,747,359 0.32% 78.46% 7.7600%
99 456-458 Sackett Point Road 06473 3,675,000 3,660,510 0.31% 78.77% 7.9100%
100 SDJ Enterprises 90058 3,650,000 3,650,000 0.31% 79.08% 8.0200%
101 Ramada Plaza West 28806 3,675,000 3,599,706 0.31% 79.39% 7.8100%
- ------------------------------------------------------------------------------------------------------------------------------------
102 Polk Street 94109 3,600,000 3,597,628 0.31% 79.69% 8.0900%
103 Delmont Village Shopping Center 70805 3,500,000 3,500,000 0.30% 79.99% 8.2000%
104 Golden Horseshoe Shopping Center 10583 3,500,000 3,480,963 0.30% 80.28% 7.0000%
105 Cottman Plaza 19149 3,450,000 3,432,586 0.29% 80.57% 6.7500%
106 Town Square Office & Retail Plaza 84020 3,295,000 3,295,000 0.28% 80.85% 7.8500%
- ------------------------------------------------------------------------------------------------------------------------------------
107 Steeplechase Apartments Portfolio 28607 3,300,000 3,276,831 0.28% 81.13% 7.2500%
107.01 143 Pine Street 28607
107.02 190 Wood Circle 28607
107.03 311 Hardin Street 28607
107.04 784 Howard Street 28607
- ------------------------------------------------------------------------------------------------------------------------------------
108 Statesville Place 28677 3,225,000 3,196,352 0.27% 81.40% 7.1250%
109 Motel 6 740 Reno Sparks 89431 3,304,309 3,164,767 0.27% 81.67% 7.2350%
110 Deerfoot Office Park 01772 3,200,000 3,108,177 0.26% 81.93% 7.1250%
111 Motel 6 608 Mobile 36619 3,215,536 3,079,744 0.26% 82.19% 7.2350%
112 Burlington Manor 27215 3,100,000 3,078,459 0.26% 82.45% 7.0000%
- ------------------------------------------------------------------------------------------------------------------------------------
113 Rite Aid - Commerce Township 48382 3,085,174 3,046,015 0.26% 82.71% 6.9420%
114 Old City Market 31401 3,000,000 2,997,211 0.25% 82.96% 8.7500%
115 Paseo Financial Center 89102 3,000,000 2,993,240 0.25% 83.21% 8.0000%
116 1160-1180 Eugenia Place 93013 2,940,000 2,933,089 0.25% 83.46% 7.7500%
117 Village East Apartments 76201 2,940,000 2,928,635 0.25% 83.71% 8.0000%
- ------------------------------------------------------------------------------------------------------------------------------------
118 Rhodes Furniture - Fort Meyers, FL 33907 2,860,000 2,811,140 0.24% 83.95% 7.0000%
119 Walgreen Colleyville 76034 2,840,000 2,805,603 0.24% 84.19% 6.7000%
120 The Trails Apartments 76116 2,800,000 2,797,909 0.24% 84.42% 7.4700%
121 Woodfield Gardens 28215 2,780,000 2,780,000 0.24% 84.66% 7.2050%
122 Rite Aid - Holland 49423 2,800,238 2,764,695 0.23% 84.89% 6.9420%
- ------------------------------------------------------------------------------------------------------------------------------------
123 Days Inn Fredericksburg South 22312 BMI 2,762,000 2,704,332 0.23% 85.12% 7.3750%
124 Shrine Apartments 90007 2,700,000 2,700,000 0.23% 85.35% 7.7500%
125 Walgreens at Silver Lakes 33029 2,710,910 2,672,432 0.23% 85.58% 6.7500%
126 Best Western Governors Inn 23235 2,700,000 2,668,497 0.23% 85.80% 6.8750%
127 Staples York Loucks Road 17404 2,670,305 2,647,603 0.22% 86.03% 7.0200%
- ------------------------------------------------------------------------------------------------------------------------------------
128 OfficeMax Retail Center 97504 2,650,000 2,640,656 0.22% 86.25% 7.7500%
129 Highland Terrace 07050 2,621,000 2,612,209 0.22% 86.47% 7.7500%
130 Fairfield Inn - Mobile 36609 2,625,000 2,600,013 0.22% 86.69% 7.1000%
131 Coquina Lakes Apartments 32084 2,600,000 2,593,401 0.22% 86.91% 7.3000%
132 Walgreen Franklin Fieldstone 37064 2,593,500 2,563,871 0.22% 87.13% 7.1250%
- ------------------------------------------------------------------------------------------------------------------------------------
133 Riverside Parkway 30246 2,560,000 2,558,282 0.22% 87.34% 8.0000%
134 CVS Yarmouth Main 02664 2,582,632 2,556,250 0.22% 87.56% 7.3750%
135 Walgreen Duncanville Wheatland 75236 2,581,625 2,550,305 0.22% 87.78% 6.7500%
136 Cosmopolitan Apartments 94102 2,550,000 2,540,683 0.22% 87.99% 7.5000%
137 Rite Aid - Claremont 03743 2,558,118 2,527,844 0.21% 88.20% 6.9420%
- ------------------------------------------------------------------------------------------------------------------------------------
138 Sandridge Apartments 69101 2,523,000 2,521,131 0.21% 88.42% 7.5100%
139 Rancho Palms 92270 2,520,000 2,518,221 0.21% 88.63% 7.7500%
140 Tree Top Apartments 75051 2,520,000 2,516,673 0.21% 88.84% 7.3750%
141 Tri-Star Building 85034 2,500,000 2,496,914 0.21% 89.06% 7.6400%
142 Days Inn Shreveport 71109 BMI 2,511,000 2,458,572 0.21% 89.26% 7.3750%
- ------------------------------------------------------------------------------------------------------------------------------------
143 Warehousing of Wisconsin - Larsen 54303 2,450,000 2,447,156 0.21% 89.47% 7.8750%
144 Sun Shadow Apartments 85015 2,453,000 2,446,854 0.21% 89.68% 7.3750%
145 Eckerd Oveido Red Bug Lake 32765 2,450,306 2,418,557 0.21% 89.88% 6.6875%
146 Cascade Apartments 66611 2,400,000 2,395,798 0.20% 90.09% 8.3750%
147 Rite Aid - Ironton 45638 2,414,068 2,385,499 0.20% 90.29% 6.9420%
- ------------------------------------------------------------------------------------------------------------------------------------
148 Centre Financial Portfolio Various 2,309,000 2,307,411 0.20% 90.48% 7.8750%
148.01 Starbuck's Uniondale 11553
148.02 Starbuck's Long Beach 11561
148.03 Birch Hill Square 11560
149 Taylor Apartments 22209 2,275,000 2,267,370 0.19% 90.67% 7.7500%
- ------------------------------------------------------------------------------------------------------------------------------------
150 Days Inn - Charlotte 28213 BMI 2,310,000 2,261,769 0.19% 90.87% 7.3750%
151 Roosevelt Plaza 07039 2,250,000 2,233,645 0.19% 91.06% 7.0400%
152 The Coral Tree Apartments 90066 2,200,000 2,193,242 0.19% 91.24% 7.3750%
153 Commack Commons 11725 2,175,000 2,167,652 0.18% 91.42% 8.0500%
154 Shafer Plaza VIII 76522 2,150,000 2,148,546 0.18% 91.61% 7.9600%
- ------------------------------------------------------------------------------------------------------------------------------------
155 Rhodes Furniture - Montgomery, AL 36117 2,150,000 2,113,270 0.18% 91.78% 7.0000%
156 Union Savings Bank 91103 2,100,000 2,097,761 0.18% 91.96% 8.1900%
157 Hewitt Square Shopping Center 11731 2,100,000 2,091,487 0.18% 92.14% 6.8750%
158 Pine Brook Apartments 37076 2,080,000 2,077,180 0.18% 92.32% 7.2700%
159 Mayfair House - Woodstock 22664 2,000,000 1,994,698 0.17% 92.48% 8.2500%
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Original
Interest
Interest Only
Control Administrative Accrual Period
Number Property Name Cost Rate (%) Method Amortization Type (1) (Mos.)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
69 Shopko - Site 814 0.08725% Actual/360 Amortizing Balloon
- ----------------------------------------------------------------------------------------------------------------------------------
70 Tuscany Village Phase II 0.06225% Actual/360 Interest Only, then Amortizing Balloon 12
71 Marsh Creek Corporate Center II 0.08725% Actual/360 Amortizing Balloon
72 Shopko - Site 815 0.08725% Actual/360 Amortizing Balloon
73 Beechwood Villa Apartments 0.08725% Actual/360 Amortizing Balloon
74 Comfort Inn Alexandria 0.06225% Actual/360 Fully Amortizing
- ----------------------------------------------------------------------------------------------------------------------------------
75 Grande Apartments 0.06225% Actual/360 Amortizing Balloon
76 Residence Inn/Knoxville 0.06225% Actual/360 Amortizing Balloon
77 Clocktower Square Center 0.06225% Actual/360 Amortizing Balloon
78 The Villas at College Hill 0.06225% Actual/360 Amortizing Balloon
79 Livingston Place 0.08725% Actual/360 Amortizing Balloon
- ----------------------------------------------------------------------------------------------------------------------------------
80 Taylor & Bird Portfolio 0.06225% Actual/360 Amortizing Balloon
80.01 Claxton
80.02 Metter
80.03 Statesboro
81 One Hollis Street 0.08725% Actual/360 Amortizing Balloon
- ----------------------------------------------------------------------------------------------------------------------------------
82 Warehousing of Wisconsin - Century 0.06225% Actual/360 Amortizing Balloon
83 Marsh Creek Corporate Center I 0.08725% Actual/360 Amortizing Balloon
84 Shopko - Site 889/ The Joplin Mall 0.08725% Actual/360 Amortizing Balloon
85 Tustin & Katella Retail Center 0.06225% Actual/360 Interest Only, then Amortizing Balloon 24
86 Triangle Building 0.08725% Actual/360 Amortizing Balloon
- ----------------------------------------------------------------------------------------------------------------------------------
87 Motel 6 1129 Hilton Head 0.19725% 30/360 Amortizing Balloon
88 Intertech Building 0.06225% Actual/360 Amortizing Balloon
89 Days Inn - Alexandria 0.06225% Actual/360 Fully Amortizing
90 Village Square Shopping Center 0.06225% Actual/360 Amortizing Balloon
91 Raymond Building 0.08725% Actual/360 Amortizing Balloon
- ----------------------------------------------------------------------------------------------------------------------------------
92 Eagle Davenport Locust 0.06225% 30/360 Amortizing Balloon
93 Sabre Springs Marketplace 0.06225% Actual/360 Amortizing Balloon
94 Somerpoint (Woodvalley) 0.08725% Actual/360 Amortizing Balloon
95 Motel 6 1081 Little Rock (W) 0.19725% 30/360 Amortizing Balloon
96 Astor Avenue Office Building 0.06225% Actual/360 Amortizing Balloon
- ----------------------------------------------------------------------------------------------------------------------------------
97 K&K Warehousing 0.06225% Actual/360 Amortizing Balloon
98 Towne View Plaza Retail Center 0.06225% Actual/360 Amortizing Balloon
99 456-458 Sackett Point Road 0.08725% Actual/360 Amortizing Balloon
100 SDJ Enterprises 0.08725% Actual/360 Amortizing Balloon
101 Ramada Plaza West 0.06225% Actual/360 Amortizing Balloon
- ----------------------------------------------------------------------------------------------------------------------------------
102 Polk Street 0.06225% Actual/360 Amortizing Balloon
103 Delmont Village Shopping Center 0.08725% Actual/360 Amortizing Balloon
104 Golden Horseshoe Shopping Center 0.06225% Actual/360 Amortizing Balloon
105 Cottman Plaza 0.08725% Actual/360 Amortizing Balloon
106 Town Square Office & Retail Plaza 0.08725% Actual/360 Amortizing Balloon
- ----------------------------------------------------------------------------------------------------------------------------------
107 Steeplechase Apartments Portfolio 0.06225% Actual/360 Fully Amortizing
107.01 143 Pine Street
107.02 190 Wood Circle
107.03 311 Hardin Street
107.04 784 Howard Street
- ----------------------------------------------------------------------------------------------------------------------------------
108 Statesville Place 0.06225% Actual/360 Amortizing Balloon
109 Motel 6 740 Reno Sparks 0.19725% 30/360 Amortizing Balloon
110 Deerfoot Office Park 0.08725% Actual/360 Fully Amortizing
111 Motel 6 608 Mobile 0.19725% 30/360 Amortizing Balloon
112 Burlington Manor 0.06225% Actual/360 Amortizing Balloon
- ----------------------------------------------------------------------------------------------------------------------------------
113 Rite Aid - Commerce Township 0.06225% 30/360 Amortizing Balloon
114 Old City Market 0.06225% Actual/360 Amortizing Balloon
115 Paseo Financial Center 0.08725% Actual/360 Amortizing Balloon
116 1160-1180 Eugenia Place 0.08725% Actual/360 Amortizing Balloon
117 Village East Apartments 0.06225% Actual/360 Amortizing Balloon
- ----------------------------------------------------------------------------------------------------------------------------------
118 Rhodes Furniture - Fort Meyers, FL 0.06225% Actual/360 Amortizing Balloon
119 Walgreen Colleyville 0.06225% 30/360 Fully Amortizing
120 The Trails Apartments 0.06225% Actual/360 Amortizing Balloon
121 Woodfield Gardens 0.08725% Actual/360 Amortizing Balloon
122 Rite Aid - Holland 0.06225% 30/360 Amortizing Balloon
- ----------------------------------------------------------------------------------------------------------------------------------
123 Days Inn Fredericksburg South 0.06225% Actual/360 Fully Amortizing
124 Shrine Apartments 0.06225% Actual/360 Amortizing Balloon
125 Walgreens at Silver Lakes 0.06225% 30/360 Fully Amortizing
126 Best Western Governors Inn 0.06225% Actual/360 Amortizing Balloon
127 Staples York Loucks Road 0.06225% 30/360 Amortizing Balloon
- ----------------------------------------------------------------------------------------------------------------------------------
128 OfficeMax Retail Center 0.06225% Actual/360 Amortizing Balloon
129 Highland Terrace 0.06225% Actual/360 Amortizing Balloon
130 Fairfield Inn - Mobile 0.06225% Actual/360 Amortizing Balloon
131 Coquina Lakes Apartments 0.06225% Actual/360 Amortizing Balloon
132 Walgreen Franklin Fieldstone 0.06225% 30/360 Fully Amortizing
- ----------------------------------------------------------------------------------------------------------------------------------
133 Riverside Parkway 0.06225% Actual/360 Amortizing Balloon
134 CVS Yarmouth Main 0.06225% 30/360 Fully Amortizing
135 Walgreen Duncanville Wheatland 0.06225% 30/360 Fully Amortizing
136 Cosmopolitan Apartments 0.06225% Actual/360 Amortizing Balloon
137 Rite Aid - Claremont 0.06225% 30/360 Amortizing Balloon
- ----------------------------------------------------------------------------------------------------------------------------------
138 Sandridge Apartments 0.06225% Actual/360 Amortizing Balloon
139 Rancho Palms 0.06225% Actual/360 Amortizing Balloon
140 Tree Top Apartments 0.06225% Actual/360 Amortizing Balloon
141 Tri-Star Building 0.06225% Actual/360 Amortizing Balloon
142 Days Inn Shreveport 0.06225% Actual/360 Fully Amortizing
- ----------------------------------------------------------------------------------------------------------------------------------
143 Warehousing of Wisconsin - Larsen 0.06225% Actual/360 Amortizing Balloon
144 Sun Shadow Apartments 0.06225% Actual/360 Amortizing Balloon
145 Eckerd Oveido Red Bug Lake 0.06225% 30/360 Fully Amortizing
146 Cascade Apartments 0.06225% Actual/360 Amortizing Balloon
147 Rite Aid - Ironton 0.06225% 30/360 Amortizing Balloon
- ----------------------------------------------------------------------------------------------------------------------------------
148 Centre Financial Portfolio 0.08725% Actual/360 Amortizing Balloon
148.01 Starbuck's Uniondale
148.02 Starbuck's Long Beach
148.03 Birch Hill Square
149 Taylor Apartments 0.06225% Actual/360 Amortizing Balloon
- ----------------------------------------------------------------------------------------------------------------------------------
150 Days Inn - Charlotte 0.06225% Actual/360 Fully Amortizing
151 Roosevelt Plaza 0.06225% Actual/360 Amortizing Balloon
152 The Coral Tree Apartments 0.06225% Actual/360 Amortizing Balloon
153 Commack Commons 0.06225% Actual/360 Amortizing Balloon
154 Shafer Plaza VIII 0.06225% Actual/360 Amortizing Balloon
- ----------------------------------------------------------------------------------------------------------------------------------
155 Rhodes Furniture - Montgomery, AL 0.06225% Actual/360 Amortizing Balloon
156 Union Savings Bank 0.08725% Actual/360 Amortizing Balloon
157 Hewitt Square Shopping Center 0.06225% Actual/360 Amortizing Balloon
158 Pine Brook Apartments 0.06225% Actual/360 Amortizing Balloon
159 Mayfair House - Woodstock 0.06225% Actual/360 Amortizing Balloon
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Remaining
Original Term to
Remaining Term to Maturity or
Interest Maturity or Anticipated
Only Anticipated Repayment Original Remaining
Control Period Repayment Date Amortization Amortization Origination
Number Property Name (Mos.) Date (Mos.) (Mos.) Term (Mos.) Term (Mos.) Date
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
69 Shopko - Site 814 120 115 360 355 11/16/98
- -----------------------------------------------------------------------------------------------------------------------------
70 Tuscany Village Phase II 5 120 113 360 360 09/30/98
71 Marsh Creek Corporate Center II 120 117 300 297 01/29/99
72 Shopko - Site 815 120 115 360 355 11/16/98
73 Beechwood Villa Apartments 120 115 360 355 11/23/98
74 Comfort Inn Alexandria 264 250 264 250 02/04/98
- -----------------------------------------------------------------------------------------------------------------------------
75 Grande Apartments 120 114 360 354 10/13/98
76 Residence Inn/Knoxville 120 112 300 292 08/31/98
77 Clocktower Square Center 120 115 360 355 11/04/98
78 The Villas at College Hill 120 113 300 293 09/30/98
79 Livingston Place 120 118 360 358 03/01/99
- -----------------------------------------------------------------------------------------------------------------------------
80 Taylor & Bird Portfolio 120 110 240 230 06/23/98
80.01 Claxton
80.02 Metter
80.03 Statesboro
81 One Hollis Street 120 120 360 360 04/22/99
- -----------------------------------------------------------------------------------------------------------------------------
82 Warehousing of Wisconsin - Century 120 118 360 358 02/19/99
83 Marsh Creek Corporate Center I 120 117 300 297 01/29/99
84 Shopko - Site 889/ The Joplin Mall 120 115 360 355 11/16/98
85 Tustin & Katella Retail Center 19 120 115 360 360 12/01/98
86 Triangle Building 120 115 360 355 11/30/98
- -----------------------------------------------------------------------------------------------------------------------------
87 Motel 6 1129 Hilton Head 216 205 270 259 05/29/98
88 Intertech Building 120 119 300 299 03/12/99
89 Days Inn - Alexandria 264 250 264 250 02/04/98
90 Village Square Shopping Center 120 118 300 298 03/01/99
91 Raymond Building 120 116 360 356 12/22/98
- -----------------------------------------------------------------------------------------------------------------------------
92 Eagle Davenport Locust 264 255 296 287 07/14/98
93 Sabre Springs Marketplace 120 114 360 354 10/09/98
94 Somerpoint (Woodvalley) 120 118 360 358 03/01/99
95 Motel 6 1081 Little Rock (W) 216 205 270 259 05/29/98
96 Astor Avenue Office Building 120 119 360 359 03/04/99
- -----------------------------------------------------------------------------------------------------------------------------
97 K&K Warehousing 120 119 240 239 03/15/99
98 Towne View Plaza Retail Center 120 119 360 359 03/08/99
99 456-458 Sackett Point Road 120 114 360 354 11/03/98
100 SDJ Enterprises 120 120 360 360 04/23/99
101 Ramada Plaza West 120 108 240 228 04/08/98
- -----------------------------------------------------------------------------------------------------------------------------
102 Polk Street 120 119 360 359 03/09/99
103 Delmont Village Shopping Center 120 120 360 360 05/11/99
104 Golden Horseshoe Shopping Center 120 113 360 353 09/29/98
105 Cottman Plaza 120 114 360 354 10/15/98
106 Town Square Office & Retail Plaza 120 120 360 360 04/28/99
- -----------------------------------------------------------------------------------------------------------------------------
107 Steeplechase Apartments Portfolio 300 294 300 294 10/29/98
107.01 143 Pine Street
107.02 190 Wood Circle
107.03 311 Hardin Street
107.04 784 Howard Street
- -----------------------------------------------------------------------------------------------------------------------------
108 Statesville Place 120 108 360 348 04/14/98
109 Motel 6 740 Reno Sparks 216 205 270 259 05/29/98
110 Deerfoot Office Park 180 171 180 171 07/17/98
111 Motel 6 608 Mobile 216 205 270 259 05/29/98
112 Burlington Manor 120 111 360 351 07/28/98
- -----------------------------------------------------------------------------------------------------------------------------
113 Rite Aid - Commerce Township 264 253 315 304 05/21/98
114 Old City Market 120 119 300 299 03/31/99
115 Paseo Financial Center 120 117 360 357 01/15/99
116 1160-1180 Eugenia Place 120 117 360 357 01/12/99
117 Village East Apartments 120 114 360 354 10/29/98
- -----------------------------------------------------------------------------------------------------------------------------
118 Rhodes Furniture - Fort Meyers, FL 180 171 240 231 07/23/98
119 Walgreen Colleyville 240 234 240 234 10/07/98
120 The Trails Apartments 120 119 360 359 03/31/99
121 Woodfield Gardens 120 120 360 360 05/11/99
122 Rite Aid - Holland 264 253 315 304 05/21/98
- -----------------------------------------------------------------------------------------------------------------------------
123 Days Inn Fredericksburg South 264 250 264 250 02/04/98
124 Shrine Apartments 120 120 324 324 04/05/99
125 Walgreens at Silver Lakes 239 232 239 232 09/18/98
126 Best Western Governors Inn 120 114 240 234 10/21/98
127 Staples York Loucks Road 179 175 228 224 12/23/98
- -----------------------------------------------------------------------------------------------------------------------------
128 OfficeMax Retail Center 120 117 300 297 01/05/99
129 Highland Terrace 120 115 360 355 11/24/98
130 Fairfield Inn - Mobile 120 112 300 292 08/31/98
131 Coquina Lakes Apartments 120 117 360 357 01/14/99
132 Walgreen Franklin Fieldstone 241 235 241 235 10/29/98
- -----------------------------------------------------------------------------------------------------------------------------
133 Riverside Parkway 120 119 360 359 03/15/99
134 CVS Yarmouth Main 246 236 246 236 06/23/98
135 Walgreen Duncanville Wheatland 239 233 239 233 10/19/98
136 Cosmopolitan Apartments 120 117 300 297 02/01/99
137 Rite Aid - Claremont 264 253 325 314 05/21/98
- -----------------------------------------------------------------------------------------------------------------------------
138 Sandridge Apartments 120 119 360 359 03/24/99
139 Rancho Palms 120 119 360 359 03/11/99
140 Tree Top Apartments 120 118 360 358 02/10/99
141 Tri-Star Building 120 118 360 358 02/26/99
142 Days Inn Shreveport 264 250 264 250 02/04/98
- -----------------------------------------------------------------------------------------------------------------------------
143 Warehousing of Wisconsin - Larsen 120 118 360 358 02/19/99
144 Sun Shadow Apartments 120 117 360 357 02/01/99
145 Eckerd Oveido Red Bug Lake 238 231 238 231 10/01/98
146 Cascade Apartments 120 118 300 298 02/26/99
147 Rite Aid - Ironton 264 253 325 314 05/21/98
- -----------------------------------------------------------------------------------------------------------------------------
148 Centre Financial Portfolio 120 119 360 359 03/16/99
148.01 Starbuck's Uniondale
148.02 Starbuck's Long Beach
148.03 Birch Hill Square
149 Taylor Apartments 120 115 360 355 11/23/98
- -----------------------------------------------------------------------------------------------------------------------------
150 Days Inn - Charlotte 264 250 264 250 02/04/98
151 Roosevelt Plaza 120 114 300 294 10/22/98
152 The Coral Tree Apartments 120 116 360 356 12/21/98
153 Commack Commons 120 117 300 297 01/28/99
154 Shafer Plaza VIII 120 119 360 359 03/08/99
- -----------------------------------------------------------------------------------------------------------------------------
155 Rhodes Furniture - Montgomery, AL 180 171 240 231 07/23/98
156 Union Savings Bank 120 118 360 358 02/04/99
157 Hewitt Square Shopping Center 120 115 360 355 11/16/98
158 Pine Brook Apartments 120 118 360 358 02/09/99
159 Mayfair House - Woodstock 120 117 330 327 01/12/99
- -----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Control Maturity or Balloon General CTL
Number Property Name ARD Date Balance ($) Property Type Specific Property Type Flag
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
69 Shopko - Site 814 12/10/08 4,469,802 Retail Anchored
- --------------------------------------------------------------------------------------------------------------------
70 Tuscany Village Phase II 10/01/08 4,541,213 Multifamily Conventional
71 Marsh Creek Corporate Center II 02/10/09 4,121,317 Industrial Warehouse/Distribution
72 Shopko - Site 815 12/10/08 4,405,023 Retail Anchored
73 Beechwood Villa Apartments 12/10/08 4,514,840 Multifamily Conventional
74 Comfort Inn Alexandria 03/01/20 235,760 Hospitality Limited Service
- --------------------------------------------------------------------------------------------------------------------
75 Grande Apartments 11/01/08 4,255,929 Multifamily Conventional
76 Residence Inn/Knoxville 09/01/08 4,002,459 Hospitality Limited Service
77 Clocktower Square Center 12/01/08 4,359,730 Mixed Use Retail/Office
78 The Villas at College Hill 10/01/08 3,779,549 Healthcare Assisted Living
79 Livingston Place 03/10/09 3,947,255 Multifamily Conventional
- --------------------------------------------------------------------------------------------------------------------
80 Taylor & Bird Portfolio 07/01/08 3,133,867 Healthcare Skilled Nursing
80.01 Claxton Healthcare Skilled Nursing
80.02 Metter Healthcare Skilled Nursing
80.03 Statesboro Healthcare Skilled Nursing
81 One Hollis Street 05/10/09 3,924,254 Office
- --------------------------------------------------------------------------------------------------------------------
82 Warehousing of Wisconsin - Century 03/01/09 3,903,087 Industrial Warehouse/Distribution
83 Marsh Creek Corporate Center I 02/10/09 3,515,241 Industrial Warehouse/Distribution
84 Shopko - Site 889/ The Joplin Mall 12/10/08 3,757,225 Retail Anchored
85 Tustin & Katella Retail Center 12/01/08 3,931,140 Retail Anchored
86 Triangle Building 12/10/08 3,820,473 Office
- --------------------------------------------------------------------------------------------------------------------
87 Motel 6 1129 Hilton Head 06/01/16 1,398,121 Hospitality Limited Service CTL
88 Intertech Building 04/01/09 3,403,399 Office
89 Days Inn - Alexandria 03/01/20 193,134 Hospitality Limited Service
90 Village Square Shopping Center 03/01/09 3,418,339 Retail Unanchored
91 Raymond Building 01/10/09 3,664,355 Office
- --------------------------------------------------------------------------------------------------------------------
92 Eagle Davenport Locust 08/01/20 913,830 Retail Grocery Store CTL
93 Sabre Springs Marketplace 11/01/08 3,599,092 Retail Unanchored
94 Somerpoint (Woodvalley) 03/10/09 3,627,207 Multifamily Conventional
95 Motel 6 1081 Little Rock (W) 06/01/16 1,335,705 Hospitality Limited Service CTL
96 Astor Avenue Office Building 04/01/09 3,512,571 Office Medical
- --------------------------------------------------------------------------------------------------------------------
97 K&K Warehousing 04/01/09 2,683,013 Industrial Warehouse/Distribution
98 Towne View Plaza Retail Center 04/01/09 3,335,537 Retail Unanchored
99 456-458 Sackett Point Road 11/10/08 3,283,864 Industrial Warehouse/Distribution
100 SDJ Enterprises 05/10/09 3,272,537 Industrial Warehouse/Distribution
101 Ramada Plaza West 05/01/08 2,576,175 Hospitality Full Service
- --------------------------------------------------------------------------------------------------------------------
102 Polk Street 04/01/09 3,227,699 Retail Unanchored
103 Delmont Village Shopping Center 06/10/09 3,149,998 Retail Anchored
104 Golden Horseshoe Shopping Center 10/01/08 3,052,824 Retail Unanchored
105 Cottman Plaza 11/10/08 2,993,632 Retail Anchored
106 Town Square Office & Retail Plaza 05/10/09 2,942,283 Office
- --------------------------------------------------------------------------------------------------------------------
107 Steeplechase Apartments Portfolio 11/01/23 191,168 Multifamily Conventional
107.01 143 Pine Street Multifamily Conventional
107.02 190 Wood Circle Multifamily Conventional
107.03 311 Hardin Street Multifamily Conventional
107.04 784 Howard Street Multifamily Conventional
- --------------------------------------------------------------------------------------------------------------------
108 Statesville Place 05/01/08 2,822,835 Healthcare Assisted Living
109 Motel 6 740 Reno Sparks 06/01/16 1,045,470 Hospitality Limited Service CTL
110 Deerfoot Office Park 08/10/13 28,996 Office
111 Motel 6 608 Mobile 06/01/16 1,017,383 Hospitality Limited Service CTL
112 Burlington Manor 08/01/08 2,704,013 Healthcare Assisted Living
- --------------------------------------------------------------------------------------------------------------------
113 Rite Aid - Commerce Township 06/01/20 941,997 Retail Drug Store CTL
114 Old City Market 04/01/09 2,526,393 Mixed Use Retail/Office
115 Paseo Financial Center 02/10/09 2,685,806 Office
116 1160-1180 Eugenia Place 02/10/09 2,616,471 Office
117 Village East Apartments 11/01/08 2,629,256 Multifamily Conventional
- --------------------------------------------------------------------------------------------------------------------
118 Rhodes Furniture - Fort Meyers, FL 08/01/13 1,182,459 Retail Anchored
119 Walgreen Colleyville 11/01/18 0 Retail Drug Store CTL
120 The Trails Apartments 04/01/09 2,472,608 Multifamily Conventional
121 Woodfield Gardens 06/10/09 2,463,337 Multifamily Conventional
122 Rite Aid - Holland 06/01/20 854,998 Retail Drug Store CTL
- --------------------------------------------------------------------------------------------------------------------
123 Days Inn Fredericksburg South 03/01/20 127,009 Hospitality Limited Service
124 Shrine Apartments 05/01/09 2,298,319 Multifamily Conventional
125 Walgreens at Silver Lakes 09/01/18 0 Retail Drug Store CTL
126 Best Western Governors Inn 11/01/08 1,829,274 Hospitality Full Service
127 Staples York Loucks Road 12/01/13 900,000 Retail Office Supplies CTL
- --------------------------------------------------------------------------------------------------------------------
128 OfficeMax Retail Center 02/01/09 2,167,837 Retail Anchored
129 Highland Terrace 12/01/08 2,330,188 Multifamily Conventional
130 Fairfield Inn - Mobile 09/01/08 2,106,345 Hospitality Limited Service
131 Coquina Lakes Apartments 02/01/09 2,284,851 Multifamily Conventional
132 Walgreen Franklin Fieldstone 12/01/18 0 Retail Drug Store CTL
- --------------------------------------------------------------------------------------------------------------------
133 Riverside Parkway 04/01/09 2,290,340 Mixed Use Office/Retail
134 CVS Yarmouth Main 01/01/19 0 Retail Drug Store CTL
135 Walgreen Duncanville Wheatland 10/01/18 0 Retail Drug Store CTL
136 Cosmopolitan Apartments 02/01/09 2,070,658 Multifamily Conventional
137 Rite Aid - Claremont 06/01/20 901,249 Retail Drug Store CTL
- --------------------------------------------------------------------------------------------------------------------
138 Sandridge Apartments 04/01/09 2,230,247 Multifamily Conventional
139 Rancho Palms 04/01/09 2,240,931 MHC
140 Tree Top Apartments 03/01/09 2,220,330 Multifamily Conventional
141 Tri-Star Building 03/01/09 2,217,487 Industrial Warehouse/Distribution
142 Days Inn Shreveport 03/01/20 115,470 Hospitality Limited Service
- --------------------------------------------------------------------------------------------------------------------
143 Warehousing of Wisconsin - Larsen 03/01/09 2,185,729 Industrial Warehouse/Distribution
144 Sun Shadow Apartments 02/01/09 2,159,796 Multifamily Conventional
145 Eckerd Oveido Red Bug Lake 08/01/18 0 Retail Drug Store CTL
146 Cascade Apartments 03/01/09 2,000,735 Multifamily Conventional
147 Rite Aid - Ironton 06/01/20 850,496 Retail Drug Store CTL
- --------------------------------------------------------------------------------------------------------------------
148 Centre Financial Portfolio 04/10/09 2,062,326 Retail Unanchored
148.01 Starbuck's Uniondale Retail Unanchored
148.02 Starbuck's Long Beach Retail Unanchored
148.03 Birch Hill Square Retail Unanchored
149 Taylor Apartments 12/01/08 2,022,579 Multifamily Conventional
- --------------------------------------------------------------------------------------------------------------------
150 Days Inn - Charlotte 03/01/20 106,224 Hospitality Limited Service
151 Roosevelt Plaza 11/01/08 1,802,020 Mixed Use Office/Retail
152 The Coral Tree Apartments 01/01/09 1,937,349 Multifamily Conventional
153 Commack Commons 02/01/09 1,794,778 Retail Unanchored
154 Shafer Plaza VIII 04/01/09 1,921,683 Retail Unanchored
- --------------------------------------------------------------------------------------------------------------------
155 Rhodes Furniture - Montgomery, AL 08/01/13 888,910 Retail Anchored
156 Union Savings Bank 03/10/09 1,891,276 Office
157 Hewitt Square Shopping Center 12/01/08 1,825,535 Retail Unanchored
158 Pine Brook Apartments 03/01/09 1,827,710 Multifamily Conventional
159 Mayfair House - Woodstock 02/01/09 1,738,009 Healthcare Assisted Living
- --------------------------------------------------------------------------------------------------------------------
<CAPTION>
Control Annual Debt Net Cash Appraised Appraisal
Number Property Name Prepayment Provisions Service ($)(2) Flow ($) DSCR (x) Value ($) Date
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
69 Shopko - Site 814 L(2.33),D(7.42),O(.25) 395,377 593,362 1.50 6,900,000 08/31/98
- -----------------------------------------------------------------------------------------------------------------------------------
70 Tuscany Village Phase II L(4),D(5.75),O(.25) 403,617 504,551 1.25 6,400,000 09/10/98
71 Marsh Creek Corporate Center II L(2.17),D(7.58),O(.25) 442,358 566,860 1.28 6,900,000 09/22/98
72 Shopko - Site 815 L(2.33),D(7.42),O(.25) 389,647 583,959 1.50 6,800,000 08/31/98
73 Beechwood Villa Apartments L(2.33),D(7.42),O(.25) 443,781 535,517 1.21 6,300,000 10/01/98
74 Comfort Inn Alexandria L(5),D(10),1.5%(6),O(1) 471,694 824,663 1.75 7,540,000 01/14/99
- -----------------------------------------------------------------------------------------------------------------------------------
75 Grande Apartments L(2.5),D(7.25),O(.25) 364,566 483,805 1.33 6,300,000 05/15/98
76 Residence Inn/Knoxville L(4),D(5.75),O(.25) 426,876 596,805 1.40 6,775,000 06/24/98
77 Clocktower Square Center L(5),D(4.75),O(.25) 410,261 567,813 1.38 6,800,000 07/20/98
78 The Villas at College Hill L(2.58),D(7.17),O(.25) 388,919 541,921 1.39 7,100,000 08/06/98
79 Livingston Place L(2.33),D(7.17),O(.5) 378,029 461,341 1.22 5,550,000 01/21/99
- -----------------------------------------------------------------------------------------------------------------------------------
80 Taylor & Bird Portfolio L(3),D(6.5),O(.5) 439,157 784,066 1.79 6,760,000 04/14/98
80.01 Claxton 190,422 2,030,000 04/14/98
80.02 Metter 287,926 2,560,000 04/14/98
80.03 Statesboro 305,718 2,170,000 04/14/98
81 One Hollis Street L(2),D(7.75),O(.25) 380,092 501,999 1.32 6,650,000 02/10/99
- -----------------------------------------------------------------------------------------------------------------------------------
82 Warehousing of Wisconsin - Century L(4),D(5.75),O(.25) 380,661 503,948 1.32 5,600,000 01/28/99
83 Marsh Creek Corporate Center I L(2.17),D(7.58),O(.25) 377,305 480,878 1.27 6,000,000 09/22/98
84 Shopko - Site 889/ The Joplin Mall L(2.33),D(7.42),O(.25) 332,346 490,135 1.47 5,800,000 09/28/98
85 Tustin & Katella Retail Center L(4),D(5.75),O(.25) 360,795 593,642 1.65 7,250,000 09/07/98
86 Triangle Building L(2.33),D(7.42),O(.25) 372,851 475,000 1.27 7,820,000 09/10/98
- -----------------------------------------------------------------------------------------------------------------------------------
87 Motel 6 1129 Hilton Head L(2),YM(16) Steps 348,241 1.00 4,480,000 03/20/98
88 Intertech Building L(3.75),D(6),O(.25) 376,405 526,620 1.40 5,550,000 07/02/98
89 Days Inn - Alexandria L(5),D(10),1.5%(6),O(1) 386,409 948,066 2.45 8,920,000 01/14/99
90 Village Square Shopping Center L(4),D(5.75),O(.25) 389,337 506,702 1.30 5,575,000 12/28/98
91 Raymond Building L(2.25),D(7.5),O(.25) 358,272 478,722 1.34 6,100,000 09/17/98
- -----------------------------------------------------------------------------------------------------------------------------------
92 Eagle Davenport Locust L(4),D(18) 387,576 399,524 1.03 4,350,000 06/21/98
93 Sabre Springs Marketplace L(4),D(5.75),O(.25) 335,631 447,463 1.33 5,400,000 08/28/98
94 Somerpoint (Woodvalley) L(2.08),D(7.42),O(.5) 347,378 416,629 1.20 5,100,000 01/15/99
95 Motel 6 1081 Little Rock (W) L(2),YM(16) Steps 332,694 1.00 4,280,000 03/31/98
96 Astor Avenue Office Building L(5),D(5) 339,579 424,523 1.25 5,500,000 09/01/98
- -----------------------------------------------------------------------------------------------------------------------------------
97 K&K Warehousing L(4),D(5.75),O(.25) 379,084 497,987 1.31 5,100,000 06/16/98
98 Towne View Plaza Retail Center L(4),D(5.75),O(.25) 322,697 420,165 1.30 5,150,000 01/26/99
99 456-458 Sackett Point Road L(2.42),D(7.33),O(.25) 320,828 407,784 1.27 4,600,000 08/25/98
100 SDJ Enterprises L(1.92),D(7.83),O(.25) 322,000 403,595 1.25 4,900,000 11/19/98
101 Ramada Plaza West L(4),D(5.75),O(.25) 363,672 513,286 1.41 5,251,000 06/01/97
- -----------------------------------------------------------------------------------------------------------------------------------
102 Polk Street L(4),D(5.75),O(.25) 319,701 412,941 1.29 5,340,000 12/21/98
103 Delmont Village Shopping Center L(1.83),D(7.92),O(.25) 314,057 412,986 1.32 4,700,000 07/01/98
104 Golden Horseshoe Shopping Center L(5),D(4.75),O(.25) 279,427 1,234,102 4.42 14,700,000 06/25/98
105 Cottman Plaza L(3),YM(6.75),O(.25) 268,520 378,011 1.41 4,350,000 05/29/98
106 Town Square Office & Retail Plaza L(1.92),D(7.83),O(.25) 286,007 371,527 1.30 4,400,000 03/23/99
- -----------------------------------------------------------------------------------------------------------------------------------
107 Steeplechase Apartments Portfolio L(3),D(21.75),O(.25) 286,232 409,803 1.43 4,250,000 08/06/98
107.01 143 Pine Street 303,571 08/06/98
107.02 190 Wood Circle 2,732,143 08/06/98
107.03 311 Hardin Street 758,929 08/06/98
107.04 784 Howard Street 455,357 08/06/98
- -----------------------------------------------------------------------------------------------------------------------------------
108 Statesville Place L(5),D(4.75),O(.25) 260,729 474,172 1.82 4,750,000 03/17/98
109 Motel 6 740 Reno Sparks L(2),YM(16) Steps 259,075 1.00 3,350,000 03/31/98
110 Deerfoot Office Park L(2.67),D(12.08),O(.25) 350,099 436,952 1.25 4,700,000 03/05/98
111 Motel 6 608 Mobile L(2),YM(16) Steps 252,408 1.00 3,260,000 03/22/98
112 Burlington Manor L(5),D(4.75),O(.25) 247,493 401,557 1.62 3,965,000 06/24/98
- -----------------------------------------------------------------------------------------------------------------------------------
113 Rite Aid - Commerce Township L(4),D(18) 255,671 255,671 1.00 3,140,000 06/01/98
114 Old City Market L(4),D(5.75),O(.25) 295,972 387,946 1.31 4,650,000 09/09/98
115 Paseo Financial Center L(2.17),D(7.58),O(.25) 264,155 341,226 1.29 4,000,000 09/14/98
116 1160-1180 Eugenia Place L(2.17),D(7.58),O(.25) 252,750 339,814 1.34 4,100,000 06/22/98
117 Village East Apartments L(4),D(5.75),O(.25) 258,872 327,583 1.27 4,150,000 10/05/98
- -----------------------------------------------------------------------------------------------------------------------------------
118 Rhodes Furniture - Fort Meyers, FL L(4),D(10.75),O(.25) 266,083 333,112 1.25 4,000,000 04/07/98
119 Walgreen Colleyville L(8),D(12) 258,120 291,249 1.13 3,550,000 10/01/98
120 The Trails Apartments L(4),D(5.75),O(.25) 234,246 297,179 1.27 3,650,000 03/09/99
121 Woodfield Gardens L(1.83),D(7.92),O(.25) 234,401 285,050 1.22 3,800,000 03/08/99
122 Rite Aid - Holland L(4),D(18) 232,058 232,058 1.00 2,850,000 06/01/98
- -----------------------------------------------------------------------------------------------------------------------------------
123 Days Inn Fredericksburg South L(5),D(10),1.5%(6),O(1) 254,110 298,817 1.18 2,700,000 01/14/99
124 Shrine Apartments L(4),D(5.75),O(.25) 238,927 313,144 1.31 3,600,000 02/22/99
125 Walgreens at Silver Lakes L(8),D(11.92) 247,844 248,587 1.00 2,970,000 05/07/98
126 Best Western Governors Inn L(5),D(4.75),O(.25) 248,772 408,868 1.64 4,100,000 06/16/98
127 Staples York Loucks Road L(4),D(10.92) 254,966 255,731 1.00 2,820,000 10/28/98
- -----------------------------------------------------------------------------------------------------------------------------------
128 OfficeMax Retail Center L(3),D(6.75),O(.25) 240,195 311,075 1.30 4,000,000 09/10/98
129 Highland Terrace L(3),D(6.75),O(.25) 225,326 323,938 1.44 3,475,000 07/14/98
130 Fairfield Inn - Mobile L(4),D(5.75),O(.25) 224,649 317,872 1.41 3,600,000 05/20/98
131 Coquina Lakes Apartments L(4),D(5.75),O(.25) 213,898 291,885 1.36 3,250,000 08/18/98
132 Walgreen Franklin Fieldstone L(4),D(16.08) 243,172 255,331 1.05 2,975,000 01/02/98
- -----------------------------------------------------------------------------------------------------------------------------------
133 Riverside Parkway L(4),D(5.75),O(.25) 225,412 293,104 1.30 4,050,000 02/04/99
134 CVS Yarmouth Main L(4),D(16.5) Steps 224,138 1.01 2,700,000 05/27/98
135 Walgreen Duncanville Wheatland L(4),D(15.92) 236,024 236,732 1.00 2,800,000 09/08/98
136 Cosmopolitan Apartments L(4),D(5.75),O(.25) 226,131 304,593 1.35 4,400,000 07/17/98
137 Rite Aid - Claremont L(4),D(18) 209,666 209,666 1.00 2,600,000 04/23/98
- -----------------------------------------------------------------------------------------------------------------------------------
138 Sandridge Apartments L(4),D(5.75),O(.25) 211,902 254,236 1.20 3,200,000 11/19/98
139 Rancho Palms L(4),D(5.75),O(.25) 216,643 263,843 1.22 3,150,000 02/05/99
140 Tree Top Apartments L(3),D(6.75),O(.25) 208,860 292,014 1.40 3,150,000 12/17/98
141 Tri-Star Building L(4),D(5.75),O(.25) 212,648 374,637 1.76 5,100,000 02/12/99
142 Days Inn Shreveport L(5),D(10),1.5%(6),O(1) 231,017 347,175 1.50 3,790,000 01/07/99
- -----------------------------------------------------------------------------------------------------------------------------------
143 Warehousing of Wisconsin - Larsen L(4),D(5.75),O(.25) 213,170 273,269 1.28 3,700,000 01/28/99
144 Sun Shadow Apartments L(4),D(5.75),O(.25) 203,307 317,541 1.56 3,270,000 07/14/98
145 Eckerd Oveido Red Bug Lake L(4),D(15.83) Steps 218,040 1.00 2,600,000 08/26/98
146 Cascade Apartments L(4),D(5.75),O(.25) 229,484 286,221 1.25 3,050,000 01/21/99
147 Rite Aid - Ironton L(4),D(18) 197,860 197,860 1.00 2,430,000 04/23/98
- -----------------------------------------------------------------------------------------------------------------------------------
148 Centre Financial Portfolio L(2),D(7.75),O(.25) 200,902 261,131 1.30 3,750,000 10/01/98
148.01 Starbuck's Uniondale 41,882 400,000 10/01/98
148.02 Starbuck's Long Beach 36,246 350,000 10/01/98
148.03 Birch Hill Square 183,003 3,000,000 10/01/98
149 Taylor Apartments L(4),D(5.75),O(.25) 195,581 244,248 1.25 2,900,000 09/14/98
- -----------------------------------------------------------------------------------------------------------------------------------
150 Days Inn - Charlotte L(5),D(10),1.5%(6),O(1) 212,525 267,273 1.26 2,900,000 01/22/99
151 Roosevelt Plaza L(3),D(6.75),O(.25) 191,520 303,786 1.59 3,400,000 07/01/98
152 The Coral Tree Apartments L(4),D(5.75),O(.25) 182,338 234,677 1.29 2,840,000 10/14/98
153 Commack Commons L(4),D(5.75),O(.25) 202,309 273,110 1.35 2,900,000 12/28/98
154 Shafer Plaza VIII L(4),D(5.75),O(.25) 188,592 246,243 1.31 2,700,000 01/27/99
- -----------------------------------------------------------------------------------------------------------------------------------
155 Rhodes Furniture - Montgomery, AL L(4),D(10.75),O(.25) 200,027 253,613 1.27 2,925,000 04/02/98
156 Union Savings Bank L(2.08),D(7.67),O(.25) 188,257 235,452 1.25 3,000,000 09/17/98
157 Hewitt Square Shopping Center L(5),D(4.75),O(.25) 165,546 234,327 1.42 3,700,000 07/21/98
158 Pine Brook Apartments L(4),D(5.75),O(.25) 170,610 220,570 1.29 2,750,000 01/27/99
159 Mayfair House - Woodstock L(3),D(6.75),O(.25) 184,203 254,348 1.38 2,700,000 10/07/98
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Scheduled
Maturity
Date or
Anticipated Underwritten
Cutoff Repayment Hospitality
Control Date Date LTV Average Daily Year No. of Unit of
Number Property Name LTV (%) (%)(3) Rate ($)(5) Year Built Renovated (Units) Measure
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
69 Shopko - Site 814 74.7% 64.8% 1992 97,992 Sq. Ft.
- -----------------------------------------------------------------------------------------------------------------------------------
70 Tuscany Village Phase II 80.0% 71.0% 1998 48 Units
71 Marsh Creek Corporate Center II 73.6% 59.7% 1985 92,074 Sq. Ft.
72 Shopko - Site 815 74.7% 64.8% 1993 96,319 Sq. Ft.
73 Beechwood Villa Apartments 79.7% 71.7% 1973 184 Units
74 Comfort Inn Alexandria 66.6% 3.1% 58.28 1986 148 Rooms
- -----------------------------------------------------------------------------------------------------------------------------------
75 Grande Apartments 78.9% 67.6% 1967 119 Units
76 Residence Inn/Knoxville 72.9% 59.1% 83.00 1997 78 Rooms
77 Clocktower Square Center 72.5% 64.1% 1989 69,164 Sq. Ft.
78 The Villas at College Hill 67.0% 53.2% 1965 1996 111 Beds
79 Livingston Place 79.9% 71.1% 1975 1988 172 Units
- -----------------------------------------------------------------------------------------------------------------------------------
80 Taylor & Bird Portfolio 65.4% 46.4% Various Various 275 Beds
80.01 Claxton 1970 87 Beds
80.02 Metter 1974 89 Beds
80.03 Statesboro 1965 1987 99 Beds
81 One Hollis Street 66.2% 59.0% 1982 36,056 Sq. Ft.
- -----------------------------------------------------------------------------------------------------------------------------------
82 Warehousing of Wisconsin - Century 78.0% 69.7% 1982 230,000 Sq. Ft.
83 Marsh Creek Corporate Center I 72.2% 58.6% 1985 92,360 Sq. Ft.
84 Shopko - Site 889/ The Joplin Mall 74.7% 64.8% 1987 81,374 Sq. Ft.
85 Tustin & Katella Retail Center 59.3% 54.2% 1960 1995 48,162 Sq. Ft.
86 Triangle Building 54.5% 48.9% 1974 95,809 Sq. Ft.
- -----------------------------------------------------------------------------------------------------------------------------------
87 Motel 6 1129 Hilton Head 94.5% 31.2% 1987 37,775 Sq. Ft.
88 Intertech Building 74.9% 61.3% 1985 62,893 Sq. Ft.
89 Days Inn - Alexandria 46.1% 2.2% 44.95 1979 1997 200 Rooms
90 Village Square Shopping Center 73.7% 61.3% 1972 55,437 Sq. Ft.
91 Raymond Building 67.0% 60.1% 1909 1992 56,896 Sq. Ft.
- -----------------------------------------------------------------------------------------------------------------------------------
92 Eagle Davenport Locust 93.9% 21.0% 1990 35,370 Sq. Ft.
93 Sabre Springs Marketplace 75.6% 66.6% 1991 33,857 Sq. Ft.
94 Somerpoint (Woodvalley) 79.9% 71.1% 1971 1996 143 Units
95 Motel 6 1081 Little Rock (W) 94.5% 31.2% 1984 1997 47,507 Sq. Ft.
96 Astor Avenue Office Building 71.8% 63.9% 1930 1991 19,900 Sq. Ft.
- -----------------------------------------------------------------------------------------------------------------------------------
97 K&K Warehousing 74.9% 52.6% 1928 1993 274,643 Sq. Ft.
98 Towne View Plaza Retail Center 72.8% 64.8% 1998 31,938 Sq. Ft.
99 456-458 Sackett Point Road 79.6% 71.4% 1960 120,000 Sq. Ft.
100 SDJ Enterprises 74.5% 66.8% 1977 119,196 Sq. Ft.
101 Ramada Plaza West 68.6% 49.1% 53.70 1982 156 Rooms
- -----------------------------------------------------------------------------------------------------------------------------------
102 Polk Street 67.4% 60.4% 1904 1997 13,710 Sq. Ft.
103 Delmont Village Shopping Center 74.5% 67.0% 1958 155,519 Sq. Ft.
104 Golden Horseshoe Shopping Center 23.7% 20.8% 1956 1998 53,695 Sq. Ft.
105 Cottman Plaza 78.9% 68.8% 1978 31,987 Sq. Ft.
106 Town Square Office & Retail Plaza 74.9% 66.9% 1998 39,142 Sq. Ft.
- -----------------------------------------------------------------------------------------------------------------------------------
107 Steeplechase Apartments Portfolio 77.1% 4.5% Various 56 Units
107.01 143 Pine Street 1993 4 Units
107.02 190 Wood Circle 1995 36 Units
107.03 311 Hardin Street 1992 10 Units
107.04 784 Howard Street 1994 6 Units
- -----------------------------------------------------------------------------------------------------------------------------------
108 Statesville Place 67.3% 59.4% 1996 74 Beds
109 Motel 6 740 Reno Sparks 94.5% 31.2% 1982 27,946 Sq. Ft.
110 Deerfoot Office Park 66.1% 0.6% 1997 38,914 Sq. Ft.
111 Motel 6 608 Mobile 94.5% 31.2% 1985 27,135 Sq. Ft.
112 Burlington Manor 77.6% 68.2% 1997 70 Beds
- -----------------------------------------------------------------------------------------------------------------------------------
113 Rite Aid - Commerce Township 97.0% 30.0% 1997 11,060 Sq. Ft.
114 Old City Market 64.5% 54.3% 1884 1989 87,262 Sq. Ft.
115 Paseo Financial Center 74.8% 67.1% 1996 22,382 Sq. Ft.
116 1160-1180 Eugenia Place 71.5% 63.8% 1986 27,182 Sq. Ft.
117 Village East Apartments 70.6% 63.4% 1973 1997 132 Units
- -----------------------------------------------------------------------------------------------------------------------------------
118 Rhodes Furniture - Fort Meyers, FL 70.3% 29.6% 1979 66,499 Sq. Ft.
119 Walgreen Colleyville 79.0% 0.0% 1998 13,905 Sq. Ft.
120 The Trails Apartments 76.7% 67.7% 1980 1998 152 Units
121 Woodfield Gardens 73.2% 64.8% 1974 132 Units
122 Rite Aid - Holland 97.0% 30.0% 1998 10,752 Sq. Ft.
- -----------------------------------------------------------------------------------------------------------------------------------
123 Days Inn Fredericksburg South 100.2% 4.7% 31.89 1966; 1973 1998 156 Rooms
124 Shrine Apartments 75.0% 63.8% 1923; 1986 1995 42 Units
125 Walgreens at Silver Lakes 90.0% 0.0% 1998 13,905 Sq. Ft.
126 Best Western Governors Inn 65.1% 44.6% 53.80 1984; 1986 80 Rooms
127 Staples York Loucks Road 93.9% 31.9% 1972 1998 35,549 Sq. Ft.
- -----------------------------------------------------------------------------------------------------------------------------------
128 OfficeMax Retail Center 66.0% 54.2% 1994 50,114 Sq. Ft.
129 Highland Terrace 75.2% 67.1% 1925 84 Units
130 Fairfield Inn - Mobile 72.2% 58.5% 55.00 1996 80 Rooms
131 Coquina Lakes Apartments 79.8% 70.3% 1985 80 Units
132 Walgreen Franklin Fieldstone 86.2% 0.0% 1998 13,905 Sq. Ft.
- -----------------------------------------------------------------------------------------------------------------------------------
133 Riverside Parkway 63.2% 56.6% 1995; 1998 33,198 Sq. Ft.
134 CVS Yarmouth Main 94.7% 0.0% 1998 9,975 Sq. Ft.
135 Walgreen Duncanville Wheatland 91.1% 0.0% 1998 13,905 Sq. Ft.
136 Cosmopolitan Apartments 57.7% 47.1% 1928 1996 117 Units
137 Rite Aid - Claremont 97.2% 34.7% 1998 11,180 Sq. Ft.
- -----------------------------------------------------------------------------------------------------------------------------------
138 Sandridge Apartments 78.8% 69.7% 1998 72 Units
139 Rancho Palms 79.9% 71.1% 1965 130 Pads
140 Tree Top Apartments 79.9% 70.5% 1970 1998 128 Units
141 Tri-Star Building 49.0% 43.5% 1997 50,000 Sq. Ft.
142 Days Inn Shreveport 64.9% 3.0% 37.78 1974 1998 148 Rooms
- -----------------------------------------------------------------------------------------------------------------------------------
143 Warehousing of Wisconsin - Larsen 66.1% 59.1% 1985 157,500 Sq. Ft.
144 Sun Shadow Apartments 74.8% 66.0% 1973 124 Units
145 Eckerd Oveido Red Bug Lake 93.0% 0.0% 1998 10,908 Sq. Ft.
146 Cascade Apartments 78.6% 65.6% 1973 86 Units
147 Rite Aid - Ironton 98.2% 35.0% 1998 10,752 Sq. Ft.
- -----------------------------------------------------------------------------------------------------------------------------------
148 Centre Financial Portfolio 61.5% 55.0% 29,960 Sq. Ft.
148.01 Starbuck's Uniondale 1980 1996 1,500 Sq. Ft.
148.02 Starbuck's Long Beach 1938 1998 2,800 Sq. Ft.
148.03 Birch Hill Square 1971 25,660 Sq. Ft.
149 Taylor Apartments 78.2% 69.7% 1953 1998 28 Units
- -----------------------------------------------------------------------------------------------------------------------------------
150 Days Inn - Charlotte 78.0% 3.7% 36.98 1974 1996 151 Rooms
151 Roosevelt Plaza 65.7% 53.0% 1926 1977 30,057 Sq. Ft.
152 The Coral Tree Apartments 77.2% 68.2% 1987 30 Units
153 Commack Commons 74.7% 61.9% 1955 15,650 Sq. Ft.
154 Shafer Plaza VIII 79.6% 71.2% 1998 18,500 Sq. Ft.
- -----------------------------------------------------------------------------------------------------------------------------------
155 Rhodes Furniture - Montgomery, AL 72.2% 30.4% 1977 63,563 Sq. Ft.
156 Union Savings Bank 69.9% 63.0% 1920 1997 18,614 Sq. Ft.
157 Hewitt Square Shopping Center 56.5% 49.3% 1955 35,874 Sq. Ft.
158 Pine Brook Apartments 75.5% 66.5% 1966 1992 134 Units
159 Mayfair House - Woodstock 73.9% 64.4% 1996 45 Beds
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Original Underwriting
Loan Occupancy Replacement
Control Amount Percentage Rent Roll Reserves Per
Number Property Name Per (Unit) (%) Date (Unit) Per Year
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
69 Shopko - Site 814 53 100.0% 10/16/98 0.15
- ---------------------------------------------------------------------------------------------------------------------------
70 Tuscany Village Phase II 106,667 100.0% 09/28/98 250.00
71 Marsh Creek Corporate Center II 55 100.0% 08/01/98 0.23
72 Shopko - Site 815 53 100.0% 10/16/98 0.15
73 Beechwood Villa Apartments 27,391 96.2% 12/01/98
74 Comfort Inn Alexandria 34,642 63.5% 590.59
- ---------------------------------------------------------------------------------------------------------------------------
75 Grande Apartments 42,017 99.2% 03/16/99 259.00
76 Residence Inn/Knoxville 63,949 79.7% 937.21
77 Clocktower Square Center 72 93.9% 12/31/98 0.14
78 The Villas at College Hill 43,243 92.8% 12/28/98 254.00
79 Livingston Place 25,814 95.9% 06/25/98 253.98
- ---------------------------------------------------------------------------------------------------------------------------
80 Taylor & Bird Portfolio 16,364 95.7% 02/15/99 250.00
80.01 Claxton 97.7% 02/15/99 250.00
80.02 Metter 96.6% 02/15/99 250.00
80.03 Statesboro 92.9% 02/15/99 250.00
81 One Hollis Street 122 100.0% 09/29/98 0.20
- ---------------------------------------------------------------------------------------------------------------------------
82 Warehousing of Wisconsin - Century 19 100.0% 02/19/99 0.10
83 Marsh Creek Corporate Center I 47 94.0% 04/01/99 0.44
84 Shopko - Site 889/ The Joplin Mall 53 100.0% 08/19/98 0.20
85 Tustin & Katella Retail Center 89 100.0% 12/01/98 0.12
86 Triangle Building 45 96.0% 08/01/98 0.20
- ---------------------------------------------------------------------------------------------------------------------------
87 Motel 6 1129 Hilton Head 117 100.0% Not Available - Single Tenant 0.00
88 Intertech Building 66 100.0% 03/10/99 0.40
89 Days Inn - Alexandria 21,000 75.5% 506.82
90 Village Square Shopping Center 74 95.4% 12/01/98 0.10
91 Raymond Building 72 88.9% 12/01/98 0.19
- ---------------------------------------------------------------------------------------------------------------------------
92 Eagle Davenport Locust 117 100.0% Not Available - Single Tenant 0.00
93 Sabre Springs Marketplace 121 100.0% 01/01/99 0.10
94 Somerpoint (Woodvalley) 28,531 93.7% 12/30/98 251.75
95 Motel 6 1081 Little Rock (W) 89 100.0% Not Available - Single Tenant 0.00
96 Astor Avenue Office Building 198 100.0% 09/28/98 0.10
- ---------------------------------------------------------------------------------------------------------------------------
97 K&K Warehousing 14 100.0% 02/02/99 0.10
98 Towne View Plaza Retail Center 117 93.4% 12/31/98 0.10
99 456-458 Sackett Point Road 31 100.0% 08/04/98 0.35
100 SDJ Enterprises 31 100.0% 0.13
101 Ramada Plaza West 23,558 60.0% 596.44
- ---------------------------------------------------------------------------------------------------------------------------
102 Polk Street 263 100.0% 12/28/98 0.10
103 Delmont Village Shopping Center 23 81.2% 01/07/99 0.30
104 Golden Horseshoe Shopping Center 65 98.3% 12/31/98 0.21
105 Cottman Plaza 108 100.0% 05/01/98 0.26
106 Town Square Office & Retail Plaza 84 94.9% 03/18/99 0.20
- ---------------------------------------------------------------------------------------------------------------------------
107 Steeplechase Apartments Portfolio 58,929 100.0% 02/12/99 300.00
107.01 143 Pine Street 100.0% 02/12/99 532.78
107.02 190 Wood Circle 100.0% 02/12/99 250.00
107.03 311 Hardin Street 100.0% 02/12/99 387.19
107.04 784 Howard Street 100.0% 02/12/99 447.14
- ---------------------------------------------------------------------------------------------------------------------------
108 Statesville Place 43,581 98.6% 01/01/99 250.00
109 Motel 6 740 Reno Sparks 118 100.0% Not Available - Single Tenant 0.00
110 Deerfoot Office Park 82 100.0% 12/31/98 0.20
111 Motel 6 608 Mobile 119 100.0% Not Available - Single Tenant 0.00
112 Burlington Manor 44,286 100.0% 01/01/99 225.00
- ---------------------------------------------------------------------------------------------------------------------------
113 Rite Aid - Commerce Township 279 100.0% Not Available - Single Tenant 0.00
114 Old City Market 34 93.8% 03/01/99 0.10
115 Paseo Financial Center 134 100.0% 01/01/99 0.20
116 1160-1180 Eugenia Place 108 93.9% 12/07/98 0.20
117 Village East Apartments 22,273 99.2% 10/28/98 281.00
- ---------------------------------------------------------------------------------------------------------------------------
118 Rhodes Furniture - Fort Meyers, FL 43 100.0% Not Available - Single Tenant 0.30
119 Walgreen Colleyville 204 100.0% Not Available - Single Tenant 0.20
120 The Trails Apartments 18,421 97.0% 01/27/99 250.00
121 Woodfield Gardens 21,061 87.1% 01/28/99
122 Rite Aid - Holland 260 100.0% Not Available - Single Tenant 0.00
- ---------------------------------------------------------------------------------------------------------------------------
123 Days Inn Fredericksburg South 17,705 73.3% 322.38
124 Shrine Apartments 64,286 89.4% 03/12/99 350.00
125 Walgreens at Silver Lakes 195 100.0% Not Available - Single Tenant 0.30
126 Best Western Governors Inn 33,750 68.1% 536.32
127 Staples York Loucks Road 75 100.0% Not Available - Single Tenant 0.25
- ---------------------------------------------------------------------------------------------------------------------------
128 OfficeMax Retail Center 53 82.8% 01/01/99 0.10
129 Highland Terrace 31,202 95.2% 10/01/98 250.00
130 Fairfield Inn - Mobile 32,813 73.1% 602.61
131 Coquina Lakes Apartments 32,500 91.3% 01/05/99 250.00
132 Walgreen Franklin Fieldstone 187 100.0% Not Available - Single Tenant 0.20
- ---------------------------------------------------------------------------------------------------------------------------
133 Riverside Parkway 77 94.7% 03/01/99 0.10
134 CVS Yarmouth Main 259 100.0% Not Available - Single Tenant 0.30
135 Walgreen Duncanville Wheatland 186 100.0% Not Available - Single Tenant 0.30
136 Cosmopolitan Apartments 21,795 96.6% 12/31/98 250.00
137 Rite Aid - Claremont 229 100.0% Not Available - Single Tenant 0.00
- ---------------------------------------------------------------------------------------------------------------------------
138 Sandridge Apartments 35,042 94.4% 03/10/99 251.00
139 Rancho Palms 19,385 100.0% 02/18/99 53.00
140 Tree Top Apartments 19,688 93.0% 01/01/99 339.00
141 Tri-Star Building 50 100.0% 02/04/99 0.10
142 Days Inn Shreveport 16,966 79.3% 411.86
- ---------------------------------------------------------------------------------------------------------------------------
143 Warehousing of Wisconsin - Larsen 16 100.0% 02/19/99 0.10
144 Sun Shadow Apartments 19,782 97.6% 12/31/98 250.00
145 Eckerd Oveido Red Bug Lake 225 100.0% Not Available - Single Tenant 0.00
146 Cascade Apartments 27,907 96.9% 02/22/99 296.00
147 Rite Aid - Ironton 225 100.0% Not Available - Single Tenant 0.00
- ---------------------------------------------------------------------------------------------------------------------------
148 Centre Financial Portfolio 77 97.0% 0.18
148.01 Starbuck's Uniondale 164 100.0% 0.32
148.02 Starbuck's Long Beach 77 100.0% 0.15
148.03 Birch Hill Square 72 96.1% 12/15/98 0.18
149 Taylor Apartments 81,250 100.0% 10/28/98 250.00
- ---------------------------------------------------------------------------------------------------------------------------
150 Days Inn - Charlotte 15,298 69.6% 385.11
151 Roosevelt Plaza 75 100.0% 01/01/99 0.10
152 The Coral Tree Apartments 73,333 100.0% 10/13/98 303.00
153 Commack Commons 139 86.9% 01/01/99 0.50
154 Shafer Plaza VIII 116 100.0% 02/18/99 0.10
- ---------------------------------------------------------------------------------------------------------------------------
155 Rhodes Furniture - Montgomery, AL 34 100.0% Not Available - Single Tenant 0.10
156 Union Savings Bank 113 81.0% 02/01/99 0.15
157 Hewitt Square Shopping Center 59 84.1% 10/29/98 0.38
158 Pine Brook Apartments 15,522 91.8% 01/29/99 250.00
159 Mayfair House - Woodstock 44,444 100.0% 09/01/98 331.00
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Largest
Tenant Area
Control Leased (Sq. Largest Tenant
Number Property Name Largest Tenant Name Ft.) Expiration Date
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
69 Shopko - Site 814 Shopko 96,100 08/31/18
- -----------------------------------------------------------------------------------------------------------------------
70 Tuscany Village Phase II
71 Marsh Creek Corporate Center II Specialty Resources, Inc. 12,167 06/30/99
72 Shopko - Site 815 Shopko 97,000 08/31/18
73 Beechwood Villa Apartments
74 Comfort Inn Alexandria
- -----------------------------------------------------------------------------------------------------------------------
75 Grande Apartments
76 Residence Inn/Knoxville
77 Clocktower Square Center Tutor Time 9,290 07/01/05
78 The Villas at College Hill
79 Livingston Place
- -----------------------------------------------------------------------------------------------------------------------
80 Taylor & Bird Portfolio
80.01 Claxton
80.02 Metter
80.03 Statesboro
81 One Hollis Street ZZK 4,095 06/30/06
- -----------------------------------------------------------------------------------------------------------------------
82 Warehousing of Wisconsin - Century Warehousing of Wisconsin 230,000 12/31/01
83 Marsh Creek Corporate Center I Kensey-Nash Corp. 47,192 11/30/02
84 Shopko - Site 889/ The Joplin Mall Shopko 81,374 08/31/18
85 Tustin & Katella Retail Center Michaels 18,000 02/28/07
86 Triangle Building Blimpie Capital Corporation 18,710 02/28/03
- -----------------------------------------------------------------------------------------------------------------------
87 Motel 6 1129 Hilton Head Motel 6 37,775 05/31/16
88 Intertech Building Rawlings Sporting Goods 26,115 11/30/00
89 Days Inn - Alexandria
90 Village Square Shopping Center Marisqueria La Barca 14,495 Multiple Spaces
91 Raymond Building Ponzu Inc. 6,794 02/29/04
- -----------------------------------------------------------------------------------------------------------------------
92 Eagle Davenport Locust Eagle Food Centers, Inc. 35,370 07/31/20
93 Sabre Springs Marketplace Power House Gym 7,503 05/04/02
94 Somerpoint (Woodvalley)
95 Motel 6 1081 Little Rock (W) Motel 6 47,507 05/31/16
96 Astor Avenue Office Building Montefiore Medical Center (Pediatrics) 7,400 01/31/11
- -----------------------------------------------------------------------------------------------------------------------
97 K&K Warehousing K&K Warehousing 255,823 01/01/19
98 Towne View Plaza Retail Center Lady of America 4,850 11/30/04
99 456-458 Sackett Point Road Tenneco 62,720 01/31/02
100 SDJ Enterprises Banner's Inc., dba Central Electric 119,196 02/28/03
101 Ramada Plaza West
- -----------------------------------------------------------------------------------------------------------------------
102 Polk Street Pasha 4,901 12/31/06
103 Delmont Village Shopping Center Piggly Wiggly 21,797 08/31/99
104 Golden Horseshoe Shopping Center Gristede's Operating Corp. (Kosher Supermarket) 14,400 04/30/15
105 Cottman Plaza American Appliance 16,944 01/31/06
106 Town Square Office & Retail Plaza Debry Health and Fitness 9,600 06/01/03
- -----------------------------------------------------------------------------------------------------------------------
107 Steeplechase Apartments Portfolio
107.01 143 Pine Street
107.02 190 Wood Circle
107.03 311 Hardin Street
107.04 784 Howard Street
- -----------------------------------------------------------------------------------------------------------------------
108 Statesville Place
109 Motel 6 740 Reno Sparks Motel 6 27,946 05/31/16
110 Deerfoot Office Park Nexar 16,378 10/31/02
111 Motel 6 608 Mobile Motel 6 27,135 05/31/16
112 Burlington Manor
- -----------------------------------------------------------------------------------------------------------------------
113 Rite Aid - Commerce Township Rite Aid of Michigan 11,060 05/31/20
114 Old City Market Art Center 12,610 12/31/02
115 Paseo Financial Center Astoria Homes 5,783 07/31/11
116 1160-1180 Eugenia Place Plan Member Services 12,502 12/31/02
117 Village East Apartments
- -----------------------------------------------------------------------------------------------------------------------
118 Rhodes Furniture - Fort Meyers, FL Rhodes Furniture 66,499 03/13/13
119 Walgreen Colleyville Walgreen Company 13,905 11/30/18
120 The Trails Apartments
121 Woodfield Gardens
122 Rite Aid - Holland Rite Aid of Michigan 10,752 05/31/20
- -----------------------------------------------------------------------------------------------------------------------
123 Days Inn Fredericksburg South
124 Shrine Apartments
125 Walgreens at Silver Lakes Walgreen Company 13,905 09/30/18
126 Best Western Governors Inn
127 Staples York Loucks Road Staples, Inc. 35,549 12/31/13
- -----------------------------------------------------------------------------------------------------------------------
128 OfficeMax Retail Center OfficeMax 23,500 01/31/11
129 Highland Terrace
130 Fairfield Inn - Mobile
131 Coquina Lakes Apartments
132 Walgreen Franklin Fieldstone Walgreen Company 13,905 12/31/18
- -----------------------------------------------------------------------------------------------------------------------
133 Riverside Parkway Nanston, Inc. (Dental) 7,771 06/30/02
134 CVS Yarmouth Main South Yarmouth CVS, Inc. 9,975 01/31/19
135 Walgreen Duncanville Wheatland Walgreen Company 13,905 10/31/18
136 Cosmopolitan Apartments
137 Rite Aid - Claremont Rite Aid of New Hampshire 11,180 05/31/20
- -----------------------------------------------------------------------------------------------------------------------
138 Sandridge Apartments
139 Rancho Palms
140 Tree Top Apartments
141 Tri-Star Building Tri-Star Computer 50,000 10/31/02
142 Days Inn Shreveport
- -----------------------------------------------------------------------------------------------------------------------
143 Warehousing of Wisconsin - Larsen Warehousing of Wisconsin 157,500 04/30/01
144 Sun Shadow Apartments
145 Eckerd Oveido Red Bug Lake Eckerd Corporation 10,908 09/01/18
146 Cascade Apartments
147 Rite Aid - Ironton Rite Aid of Ohio 10,752 05/31/20
- -----------------------------------------------------------------------------------------------------------------------
148 Centre Financial Portfolio
148.01 Starbuck's Uniondale Starbucks 1,500 01/31/12
148.02 Starbuck's Long Beach Starbucks 2,800
148.03 Birch Hill Square Gristede 8,000 06/30/16
149 Taylor Apartments
- -----------------------------------------------------------------------------------------------------------------------
150 Days Inn - Charlotte
151 Roosevelt Plaza Gebroe-Hammer Associates 3,257 06/01/02
152 The Coral Tree Apartments
153 Commack Commons Healthcare of Commack 2,250 09/30/00
154 Shafer Plaza VIII Hollywood Video 7,475 09/30/08
- -----------------------------------------------------------------------------------------------------------------------
155 Rhodes Furniture - Montgomery, AL Rhodes Furniture 63,563 03/13/13
156 Union Savings Bank Law Office Ball Fisher 2,353 12/31/03
157 Hewitt Square Shopping Center Pat's Meat Market 10,000 12/31/04
158 Pine Brook Apartments
159 Mayfair House - Woodstock
- -----------------------------------------------------------------------------------------------------------------------
<CAPTION>
2nd Largest
Tenant Area 2nd Largest
Control Leased (Sq. Tenant
Number Property Name 2nd Largest Tenant Name Ft.) Expiration Date
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
69 Shopko - Site 814
- ---------------------------------------------------------------------------------------------------------------------------------
70 Tuscany Village Phase II
71 Marsh Creek Corporate Center II Bender Incorporated 9,142 02/28/02
72 Shopko - Site 815
73 Beechwood Villa Apartments
74 Comfort Inn Alexandria
- ---------------------------------------------------------------------------------------------------------------------------------
75 Grande Apartments
76 Residence Inn/Knoxville
77 Clocktower Square Center Brooks Pharmacy 7,696 11/01/99
78 The Villas at College Hill
79 Livingston Place
- ---------------------------------------------------------------------------------------------------------------------------------
80 Taylor & Bird Portfolio
80.01 Claxton
80.02 Metter
80.03 Statesboro
81 One Hollis Street Danforth 3,012 07/30/02
- ---------------------------------------------------------------------------------------------------------------------------------
82 Warehousing of Wisconsin - Century
83 Marsh Creek Corporate Center I Lionville Beverages 6,117 06/30/99
84 Shopko - Site 889/ The Joplin Mall
85 Tustin & Katella Retail Center Petco Animal Supplies DBA Super Pets 18,000 03/14/07
86 Triangle Building March of Dimes 7,119 10/31/02
- ---------------------------------------------------------------------------------------------------------------------------------
87 Motel 6 1129 Hilton Head
88 Intertech Building Atlas / Soundolier 24,975 01/31/01
89 Days Inn - Alexandria
90 Village Square Shopping Center Tokyo Restaurant 4,151 Multiple Spaces
91 Raymond Building Vertical Management 4,936 09/30/02
- ---------------------------------------------------------------------------------------------------------------------------------
92 Eagle Davenport Locust
93 Sabre Springs Marketplace La Petite Academy 6,900 09/30/07
94 Somerpoint (Woodvalley)
95 Motel 6 1081 Little Rock (W)
96 Astor Avenue Office Building New York Total Care 3,000 03/31/06
- ---------------------------------------------------------------------------------------------------------------------------------
97 K&K Warehousing C.A. Lawton Company 18,820 07/18/03
98 Towne View Plaza Retail Center Anamia's 3,500 11/30/08
99 456-458 Sackett Point Road United Parcel Service 57,280 04/30/08
100 SDJ Enterprises
101 Ramada Plaza West
- ---------------------------------------------------------------------------------------------------------------------------------
102 Polk Street Johnny Loves 4,638 08/18/08
103 Delmont Village Shopping Center BrandsMart 12,000 10/31/02
104 Golden Horseshoe Shopping Center US Postal Service 5,625 07/31/07
105 Cottman Plaza West Coast Video 6,240 07/31/02
106 Town Square Office & Retail Plaza Homestead Day Care 4,800 11/30/04
- ---------------------------------------------------------------------------------------------------------------------------------
107 Steeplechase Apartments Portfolio
107.01 143 Pine Street
107.02 190 Wood Circle
107.03 311 Hardin Street
107.04 784 Howard Street
- ---------------------------------------------------------------------------------------------------------------------------------
108 Statesville Place
109 Motel 6 740 Reno Sparks
110 Deerfoot Office Park Wiesner 7,056 02/28/05
111 Motel 6 608 Mobile
112 Burlington Manor
- ---------------------------------------------------------------------------------------------------------------------------------
113 Rite Aid - Commerce Township
114 Old City Market Malones 11,116 Multiple Spaces
115 Paseo Financial Center Distinctive Homes 3,963 07/31/11
116 1160-1180 Eugenia Place Stetson 6,258 05/31/01
117 Village East Apartments
- ---------------------------------------------------------------------------------------------------------------------------------
118 Rhodes Furniture - Fort Meyers, FL
119 Walgreen Colleyville
120 The Trails Apartments
121 Woodfield Gardens
122 Rite Aid - Holland
- ---------------------------------------------------------------------------------------------------------------------------------
123 Days Inn Fredericksburg South
124 Shrine Apartments
125 Walgreens at Silver Lakes
126 Best Western Governors Inn
127 Staples York Loucks Road
- ---------------------------------------------------------------------------------------------------------------------------------
128 OfficeMax Retail Center United Furniture Warehouse 18,000 01/31/07
129 Highland Terrace
130 Fairfield Inn - Mobile
131 Coquina Lakes Apartments
132 Walgreen Franklin Fieldstone
- ---------------------------------------------------------------------------------------------------------------------------------
133 Riverside Parkway Pasta Restaurants of NFL & GA, Inc. (Semolina's) 4,000 09/30/00
134 CVS Yarmouth Main
135 Walgreen Duncanville Wheatland
136 Cosmopolitan Apartments
137 Rite Aid - Claremont
- ---------------------------------------------------------------------------------------------------------------------------------
138 Sandridge Apartments
139 Rancho Palms
140 Tree Top Apartments
141 Tri-Star Building
142 Days Inn Shreveport
- ---------------------------------------------------------------------------------------------------------------------------------
143 Warehousing of Wisconsin - Larsen
144 Sun Shadow Apartments
145 Eckerd Oveido Red Bug Lake
146 Cascade Apartments
147 Rite Aid - Ironton
- ---------------------------------------------------------------------------------------------------------------------------------
148 Centre Financial Portfolio
148.01 Starbuck's Uniondale
148.02 Starbuck's Long Beach
148.03 Birch Hill Square Emigrant Savings Bank 3,000 02/28/08
149 Taylor Apartments
- ---------------------------------------------------------------------------------------------------------------------------------
150 Days Inn - Charlotte
151 Roosevelt Plaza Development Corp. of Israel 2,418 06/01/99
152 The Coral Tree Apartments
153 Commack Commons Scott's Florist 1,250 07/31/03
154 Shafer Plaza VIII Radio Shack 3,500 12/31/08
- ---------------------------------------------------------------------------------------------------------------------------------
155 Rhodes Furniture - Montgomery, AL
156 Union Savings Bank Robert G. Lyon 2,190 12/14/02
157 Hewitt Square Shopping Center Knight of Columbus 4,054 03/01/02
158 Pine Brook Apartments
159 Mayfair House - Woodstock
- ---------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
3rd Largest 3rd Largest
Control Tenant Area Tenant
Number Property Name 3rd Largest Tenant Name Leased (Sq. Ft.) Expiration Date
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
69 Shopko - Site 814
- --------------------------------------------------------------------------------------------------------------------------------
70 Tuscany Village Phase II
71 Marsh Creek Corporate Center II Instrumentation Tech. Assoc., Inc. 7,855 12/31/00
72 Shopko - Site 815
73 Beechwood Villa Apartments
74 Comfort Inn Alexandria
- --------------------------------------------------------------------------------------------------------------------------------
75 Grande Apartments
76 Residence Inn/Knoxville
77 Clocktower Square Center Lanigan Golf 5,150 04/01/99
78 The Villas at College Hill
79 Livingston Place
- --------------------------------------------------------------------------------------------------------------------------------
80 Taylor & Bird Portfolio
80.01 Claxton
80.02 Metter
80.03 Statesboro
81 One Hollis Street Henley 2,531 10/31/01
- --------------------------------------------------------------------------------------------------------------------------------
82 Warehousing of Wisconsin - Century
83 Marsh Creek Corporate Center I Springas Computer School Inc. 5,586 09/30/03
84 Shopko - Site 889/ The Joplin Mall
85 Tustin & Katella Retail Center 3-Day Blinds 7,676 02/28/03
86 Triangle Building Atlas Roofing Corporation 5,885 04/30/99
- --------------------------------------------------------------------------------------------------------------------------------
87 Motel 6 1129 Hilton Head
88 Intertech Building The Hartford Steam Boil 5,754 04/30/01
89 Days Inn - Alexandria
90 Village Square Shopping Center Oriental Foods 3,038 12/01/99
91 Raymond Building Valencia, Perez et. al. 4,732 08/31/99
- --------------------------------------------------------------------------------------------------------------------------------
92 Eagle Davenport Locust
93 Sabre Springs Marketplace Visual Photography 2,435 05/01/05
94 Somerpoint (Woodvalley)
95 Motel 6 1081 Little Rock (W)
96 Astor Avenue Office Building Frank Sandor, M.D. 2,500 08/01/99
- --------------------------------------------------------------------------------------------------------------------------------
97 K&K Warehousing
98 Towne View Plaza Retail Center Art & Frame 2,500 11/30/03
99 456-458 Sackett Point Road
100 SDJ Enterprises
101 Ramada Plaza West
- --------------------------------------------------------------------------------------------------------------------------------
102 Polk Street San Francisco Cleaners 2,223 12/31/01
103 Delmont Village Shopping Center Picadilly Cafeteria 10,200 08/31/00
104 Golden Horseshoe Shopping Center LSW Corp. (Chinese Restaurant) 3,060 06/30/04
105 Cottman Plaza Payless Shoes 3,663 12/31/03
106 Town Square Office & Retail Plaza Word Cruncher 3,994 03/31/02
- --------------------------------------------------------------------------------------------------------------------------------
107 Steeplechase Apartments Portfolio
107.01 143 Pine Street
107.02 190 Wood Circle
107.03 311 Hardin Street
107.04 784 Howard Street
- --------------------------------------------------------------------------------------------------------------------------------
108 Statesville Place
109 Motel 6 740 Reno Sparks
110 Deerfoot Office Park Senko 4,554 02/28/03
111 Motel 6 608 Mobile
112 Burlington Manor
- --------------------------------------------------------------------------------------------------------------------------------
113 Rite Aid - Commerce Township
114 Old City Market Seasons 5,504 06/30/08
115 Paseo Financial Center Gray Wilson 3,481 06/30/11
116 1160-1180 Eugenia Place Clean Seas 2,828 03/31/02
117 Village East Apartments
- --------------------------------------------------------------------------------------------------------------------------------
118 Rhodes Furniture - Fort Meyers, FL
119 Walgreen Colleyville
120 The Trails Apartments
121 Woodfield Gardens
122 Rite Aid - Holland
- --------------------------------------------------------------------------------------------------------------------------------
123 Days Inn Fredericksburg South
124 Shrine Apartments
125 Walgreens at Silver Lakes
126 Best Western Governors Inn
127 Staples York Loucks Road
- --------------------------------------------------------------------------------------------------------------------------------
128 OfficeMax Retail Center
129 Highland Terrace
130 Fairfield Inn - Mobile
131 Coquina Lakes Apartments
132 Walgreen Franklin Fieldstone
- --------------------------------------------------------------------------------------------------------------------------------
133 Riverside Parkway Richard Williams Inc. d/b/a Century 21 Realty 3,333 09/30/00
134 CVS Yarmouth Main
135 Walgreen Duncanville Wheatland
136 Cosmopolitan Apartments
137 Rite Aid - Claremont
- --------------------------------------------------------------------------------------------------------------------------------
138 Sandridge Apartments
139 Rancho Palms
140 Tree Top Apartments
141 Tri-Star Building
142 Days Inn Shreveport
- --------------------------------------------------------------------------------------------------------------------------------
143 Warehousing of Wisconsin - Larsen
144 Sun Shadow Apartments
145 Eckerd Oveido Red Bug Lake
146 Cascade Apartments
147 Rite Aid - Ironton
- --------------------------------------------------------------------------------------------------------------------------------
148 Centre Financial Portfolio
148.01 Starbuck's Uniondale
148.02 Starbuck's Long Beach
148.03 Birch Hill Square Shields & Co. 3,000 11/30/01
149 Taylor Apartments
- --------------------------------------------------------------------------------------------------------------------------------
150 Days Inn - Charlotte
151 Roosevelt Plaza Precious Cargo 2,305 10/31/03
152 The Coral Tree Apartments
153 Commack Commons A&R Kitchen & Bath 1,250 01/31/03
154 Shafer Plaza VIII Amco Insurance Agency, Inc. 1,495 05/31/05
- --------------------------------------------------------------------------------------------------------------------------------
155 Rhodes Furniture - Montgomery, AL
156 Union Savings Bank KCB Management 1,939 03/31/02
157 Hewitt Square Shopping Center Fourstar Variety 3,680 02/29/04
158 Pine Brook Apartments
159 Mayfair House - Woodstock
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Affiliated
Borrowers In
Control Excess of 5% of ARD Mortgage
Number Property Name Pool Loans Loan Seller
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
69 Shopko - Site 814 Kimco Realty Corp. ARD CMB
- ----------------------------------------------------------------------------------------------
70 Tuscany Village Phase II FUNB
71 Marsh Creek Corporate Center II CMB
72 Shopko - Site 815 Kimco Realty Corp. ARD CMB
73 Beechwood Villa Apartments CMB
74 Comfort Inn Alexandria FUNB
- ----------------------------------------------------------------------------------------------
75 Grande Apartments FUNB
76 Residence Inn/Knoxville FUNB
77 Clocktower Square Center FUNB
78 The Villas at College Hill FUNB
79 Livingston Place Pinnacle Companies CMB
- ----------------------------------------------------------------------------------------------
80 Taylor & Bird Portfolio FUNB
80.01 Claxton FUNB
80.02 Metter FUNB
80.03 Statesboro FUNB
81 One Hollis Street CMB
- ----------------------------------------------------------------------------------------------
82 Warehousing of Wisconsin - Century FUNB
83 Marsh Creek Corporate Center I CMB
84 Shopko - Site 889/ The Joplin Mall Kimco Realty Corp. ARD CMB
85 Tustin & Katella Retail Center FUNB
86 Triangle Building CMB
- ----------------------------------------------------------------------------------------------
87 Motel 6 1129 Hilton Head FUNB
88 Intertech Building FUNB
89 Days Inn - Alexandria FUNB
90 Village Square Shopping Center FUNB
91 Raymond Building CMB
- ----------------------------------------------------------------------------------------------
92 Eagle Davenport Locust FUNB
93 Sabre Springs Marketplace FUNB
94 Somerpoint (Woodvalley) Pinnacle Companies CNB
95 Motel 6 1081 Little Rock (W) FUNB
96 Astor Avenue Office Building FUNB
- ----------------------------------------------------------------------------------------------
97 K&K Warehousing FUNB
98 Towne View Plaza Retail Center FUNB
99 456-458 Sackett Point Road CMB
100 SDJ Enterprises CMB
101 Ramada Plaza West FUNB
- ----------------------------------------------------------------------------------------------
102 Polk Street FUNB
103 Delmont Village Shopping Center CMB
104 Golden Horseshoe Shopping Center FUNB
105 Cottman Plaza CMB
106 Town Square Office & Retail Plaza CMB
- ----------------------------------------------------------------------------------------------
107 Steeplechase Apartments Portfolio FUNB
107.01 143 Pine Street FUNB
107.02 190 Wood Circle FUNB
107.03 311 Hardin Street FUNB
107.04 784 Howard Street FUNB
- ----------------------------------------------------------------------------------------------
108 Statesville Place FUNB
109 Motel 6 740 Reno Sparks FUNB
110 Deerfoot Office Park CMB
111 Motel 6 608 Mobile FUNB
112 Burlington Manor FUNB
- ----------------------------------------------------------------------------------------------
113 Rite Aid - Commerce Township FUNB
114 Old City Market FUNB
115 Paseo Financial Center CMB
116 1160-1180 Eugenia Place CMB
117 Village East Apartments FUNB
- ----------------------------------------------------------------------------------------------
118 Rhodes Furniture - Fort Meyers, FL FUNB
119 Walgreen Colleyville FUNB
120 The Trails Apartments FUNB
121 Woodfield Gardens CMB
122 Rite Aid - Holland FUNB
- ----------------------------------------------------------------------------------------------
123 Days Inn Fredericksburg South FUNB
124 Shrine Apartments FUNB
125 Walgreens at Silver Lakes FUNB
126 Best Western Governors Inn FUNB
127 Staples York Loucks Road FUNB
- ----------------------------------------------------------------------------------------------
128 OfficeMax Retail Center FUNB
129 Highland Terrace FUNB
130 Fairfield Inn - Mobile FUNB
131 Coquina Lakes Apartments FUNB
132 Walgreen Franklin Fieldstone FUNB
- ----------------------------------------------------------------------------------------------
133 Riverside Parkway FUNB
134 CVS Yarmouth Main FUNB
135 Walgreen Duncanville Wheatland FUNB
136 Cosmopolitan Apartments FUNB
137 Rite Aid - Claremont FUNB
- ----------------------------------------------------------------------------------------------
138 Sandridge Apartments FUNB
139 Rancho Palms FUNB
140 Tree Top Apartments FUNB
141 Tri-Star Building FUNB
142 Days Inn Shreveport FUNB
- ----------------------------------------------------------------------------------------------
143 Warehousing of Wisconsin - Larsen FUNB
144 Sun Shadow Apartments FUNB
145 Eckerd Oveido Red Bug Lake FUNB
146 Cascade Apartments FUNB
147 Rite Aid - Ironton FUNB
- ----------------------------------------------------------------------------------------------
148 Centre Financial Portfolio CMB
148.01 Starbuck's Uniondale CMB
148.02 Starbuck's Long Beach CMB
148.03 Birch Hill Square CMB
149 Taylor Apartments FUNB
- ----------------------------------------------------------------------------------------------
150 Days Inn - Charlotte FUNB
151 Roosevelt Plaza FUNB
152 The Coral Tree Apartments FUNB
153 Commack Commons FUNB
154 Shafer Plaza VIII FUNB
- ----------------------------------------------------------------------------------------------
155 Rhodes Furniture - Montgomery, AL FUNB
156 Union Savings Bank CMB
157 Hewitt Square Shopping Center FUNB
158 Pine Brook Apartments FUNB
159 Mayfair House - Woodstock FUNB
- ----------------------------------------------------------------------------------------------
<PAGE>
</TABLE>
<TABLE>
<CAPTION>
Control
Number Property Name Address City State
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
160 Community Self Storage of Charlottesville 1525 Putt Putt Lane Charlottesville VA
161 Ocean Terrace (4) 752 Ocean Avenue Long Branch NJ
162 1105/1105/1105 Downey; 1114 Clement; 1106 Calhoun Various Radford VA
162.01 1104/1105/1108 Downey 1104/1105/1108 Downey Radford VA
162.02 1114 Clement 1114 Clement Radford VA
- ------------------------------------------------------------------------------------------------------------------------------------
162.03 1106 Calhoun 1106 Calhoun Radford VA
163 Harvard Apartments 2600 Harvard Drive Chesapeake VA
164 Interama Warehouses 1895-1929 NE 150th St. & 1890-1928 NE 151st St. North Miami FL
165 Lakeview Warehouse 1401-1485 Banks Road Margate FL
166 Goldome Portfolio Various Omaha NE
- ------------------------------------------------------------------------------------------------------------------------------------
166.01 Arlington Apartments 4907-4909 Davenport Street Omaha NE
166.02 Genoa & Sagamore Apartments 3828 & 3830 Cass Street Omaha NE
166.03 Glendale Apartments 406 N. 49th Street Omaha NE
166.04 Norton Apartments 5019-5021 Underwood Omaha NE
166.05 Roycroft Apartments 5017 Underwood Omaha NE
- ------------------------------------------------------------------------------------------------------------------------------------
167 Sargent House 1264 Branchlands Dr. Charlottesville VA
168 Eckerd Ferber Tallahassee NEC North Monroe & Crowder St. Tallahassee FL
169 CVS Lansdowne Hollins Ferry 3915 Hollins Ferry Road Lansdowne MD
170 Garden Gate 220-234 Park Ave North Winter Park FL
171 Super 8 Motel 8 Croswell Road Asheville NC
- ------------------------------------------------------------------------------------------------------------------------------------
172 Island Lake Mobile Park 2401 Oxford Millville Rd. Hamilton OH
173 Robert Arms Apartments 3204 Route 9W New Windsor NY
174 Heilig-Meyers - Wilson, NC 1951 Westwood Avenue Wilson NC
175 Eckerd, Tarboro 1600 Main Street Tarboro NC
176 3950-3970 Laconia Avenue 3950-3970 Laconia Avenue New York NY
- ------------------------------------------------------------------------------------------------------------------------------------
177 Amberwood Apartments 1302 Amberwood Drive Norfolk NE
178 The Palms of Sarasota 4900-5176 Old Bradenton Road Sarasota FL
179 Heilig-Meyers - Santa Rosa, CA 2908 Santa Rosa Avenue Santa Rosa CA
180 CVS Rocky Mount Franklin St & Dent Street Rocky Mount VA
181 Madison Ridge Apartments 355 Lake Drive Marietta GA
- ------------------------------------------------------------------------------------------------------------------------------------
182 Days Inn Mt.Sterling 705 Maysville Road Mount Sterling KY
183 Heilig-Meyers - Riverside, CA 9185 Magnolia Avenue Riverside CA
184 Gates Place Apartments 3425 Gates Place Bronx NY
185 Heilig-Meyers - Richmond, VA 8820 Park Central Drive Richmond VA
186 506-508 Fairfax Street 506-508 Fairfax Street Radford VA
- ------------------------------------------------------------------------------------------------------------------------------------
187 Heilig-Meyers - Garner, NC 1540 Mechanical Blvd. Garner NC
188 Hamilton Park Apartments 1861-1867 Middlesex Street Lowell MA
189 Information Management Systems Building 3826 East Watkins Street Phoenix AZ
190 IHOP Rock Hill North Cherry North Cherry Road Rock Hill SC
191 Heilig-Meyers - Fresno-Blackstone, CA 6375 North Blackstone Fresno CA
- ------------------------------------------------------------------------------------------------------------------------------------
192 Mears Warehouse 4401-4496 NW 15th Street Margate FL
193 CVS Greenville Old Buncombe 4102 Old Buncombe Road Greenville SC
194 Heilig-Meyers - Forsyth, IL 1360 Koester Blvd Forsyth IL
195 Heilig-Meyers - Owensboro, KY 2916 West Parrish Avenue Owensboro KY
196 Heilig-Meyers - Peru, IL 4391 Venture Drive Peru IL
- ------------------------------------------------------------------------------------------------------------------------------------
197 Heilig-Meyers - Dothan, AL 2390 Ross Clark Circle Dothan AL
198 Heilig-Meyers - Evansville, IN 301 North Royal Avenue Evansville IN
199 Heilig-Meyers - Hopkinsville, KY 4537 Fort Campbell Blvd Hopkinsville KY
200 Heilig-Meyers - Talllahassee, FL 3213 Appalachee Parkway Tallahassee FL
201 Heilig-Meyers - Visalia, CA 2700 South Mooney Boulevard Visalia CA
- ------------------------------------------------------------------------------------------------------------------------------------
202 Heilig-Meyers - Pikeville, KY 299 New Cassidy Boulevard Pikeville KY
203 Heilig-Meyers - Albany, GA 2311 Lake Park Drive Albany GA
204 Heilig-Meyers - Heath, OH 1175 Hebron Road Heath OH
205 Heilig-Meyers - Marion, IL 2800 East Outer Drive Marion IL
206 Heilig-Meyers - Temple, TX 2626 South 37th Street Temple TX
- ------------------------------------------------------------------------------------------------------------------------------------
207 Heilig-Meyers - Zanesville, OH 2650 Mayesville Pike Zanesville OH
208 Heilig-Meyers - Fresno-Kings Canyon, CA 4949 East Kings Canyon Road Fresno CA
209 Heilig-Meyers - Jackson, MS 1600 Terry Road Jackson MS
210 Heilig-Meyers - Modesto, CA 2412 McHenery Avenue Modesto CA
211 Heilig-Meyers - Champaign, IL 2212 N. Market Street Champaign IL
- ------------------------------------------------------------------------------------------------------------------------------------
212 Heilig-Meyers - Sanford, NC 521 East Main Street Sanford NC
213 Heilig-Meyers - Moberly, MO 1720 Crete Street Moberly MO
214 Flenniken Square 3935 Martin Mill Pike Knoxville TN
215 300 Barton Street 300 Barton Street Pawtucket RI
216 Southland Ormond Beach Nova 690 South Nova Road Ormond Beach FL
- ------------------------------------------------------------------------------------------------------------------------------------
217 606-610 Clement Street 606-610 Clement Street Radford VA
218 Motel 6 202 Lumberton 2361 Lackey Road Lumberton NC
219 Bulova Technologies Building 3820 East Watkins Street Phoenix AZ
220 605-607 Downey Street 605-607 Downey Street Radford VA
221 Carroll Lane Apartments 5623 Carroll Lane Corpus Christi TX
- ------------------------------------------------------------------------------------------------------------------------------------
222 1208 Clement Street 1208 Clement Street Radford VA
223 Spring Market Shopping Center 6405 Fairburn Rd. Douglasville GA
<CAPTION>
Cross-
Collateralized % of
and Cross- Aggregate
Control Defaulted Original Cut-Off Date Cut-Off Date
Number Property Name Zip Code Groups Balance ($) Balance ($) Balance
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
160 Community Self Storage of Charlottesville 22901 2,000,000 1,993,054 0.17%
161 Ocean Terrace (4) 07740 2,000,000 1,980,845 0.17%
162 1105/1105/1105 Downey; 1114 Clement; 1106 Calhoun 24141 Summit 1,968,560 1,958,878 0.17%
162.01 1104/1105/1108 Downey 24141
162.02 1114 Clement 24141
- ------------------------------------------------------------------------------------------------------------------------------
162.03 1106 Calhoun 24141
163 Harvard Apartments 23324 1,920,000 1,916,639 0.16%
164 Interama Warehouses 33161 1,913,000 1,908,797 0.16%
165 Lakeview Warehouse 33063 1,885,000 1,882,330 0.16%
166 Goldome Portfolio 68132 1,868,000 1,861,357 0.16%
- ------------------------------------------------------------------------------------------------------------------------------
166.01 Arlington Apartments 68132
166.02 Genoa & Sagamore Apartments 68132
166.03 Glendale Apartments 68132
166.04 Norton Apartments 68132
166.05 Roycroft Apartments 68132
- ------------------------------------------------------------------------------------------------------------------------------
167 Sargent House 22901 1,850,000 1,848,059 0.16%
168 Eckerd Ferber Tallahassee 32301 1,861,865 1,836,154 0.16%
169 CVS Lansdowne Hollins Ferry 21227 1,846,392 1,831,525 0.16%
170 Garden Gate 32790 1,800,000 1,790,687 0.15%
171 Super 8 Motel 28806 1,800,000 1,767,561 0.15%
- ------------------------------------------------------------------------------------------------------------------------------
172 Island Lake Mobile Park 45013 1,737,000 1,735,351 0.15%
173 Robert Arms Apartments 12553 1,710,000 1,701,444 0.14%
174 Heilig-Meyers - Wilson, NC 27893 1,708,984 1,693,551 0.14%
175 Eckerd, Tarboro 27886 1,707,770 1,690,369 0.14%
176 3950-3970 Laconia Avenue 10466 1,687,000 1,678,574 0.14%
- ------------------------------------------------------------------------------------------------------------------------------
177 Amberwood Apartments 68701 1,600,000 1,598,815 0.14%
178 The Palms of Sarasota 34230 1,600,000 1,598,339 0.14%
179 Heilig-Meyers - Santa Rosa, CA 95407 1,572,266 1,558,067 0.13%
180 CVS Rocky Mount 24151 1,534,946 1,520,209 0.13%
181 Madison Ridge Apartments 30064 1,520,000 1,518,970 0.13%
- ------------------------------------------------------------------------------------------------------------------------------
182 Days Inn Mt.Sterling 40353 BMI 1,540,000 1,507,846 0.13%
183 Heilig-Meyers - Riverside, CA 92503 1,520,996 1,507,260 0.13%
184 Gates Place Apartments 10467 1,500,000 1,494,969 0.13%
185 Heilig-Meyers - Richmond, VA 23227 1,503,906 1,490,325 0.13%
186 506-508 Fairfax Street 24141 Summit 1,431,680 1,424,638 0.12%
- ------------------------------------------------------------------------------------------------------------------------------
187 Heilig-Meyers - Garner, NC 27529 1,435,547 1,422,583 0.12%
188 Hamilton Park Apartments 01851 1,400,000 1,398,923 0.12%
189 Information Management Systems Building 85034 1,400,000 1,398,272 0.12%
190 IHOP Rock Hill North Cherry 29730 1,397,827 1,389,770 0.12%
191 Heilig-Meyers - Fresno-Blackstone, CA 93710 1,350,098 1,337,905 0.11%
- ------------------------------------------------------------------------------------------------------------------------------
192 Mears Warehouse 33063 1,325,000 1,322,090 0.11%
193 CVS Greenville Old Buncombe 27258 1,347,794 1,306,853 0.11%
194 Heilig-Meyers - Forsyth, IL 62535 1,298,828 1,287,099 0.11%
195 Heilig-Meyers - Owensboro, KY 42301 1,298,828 1,287,099 0.11%
196 Heilig-Meyers - Peru, IL 61354 1,298,828 1,287,099 0.11%
- ------------------------------------------------------------------------------------------------------------------------------
197 Heilig-Meyers - Dothan, AL 36301 1,281,738 1,270,163 0.11%
198 Heilig-Meyers - Evansville, IN 47715 1,281,738 1,270,163 0.11%
199 Heilig-Meyers - Hopkinsville, KY 42240 1,264,648 1,253,228 0.11%
200 Heilig-Meyers - Talllahassee, FL 32311 1,264,648 1,253,228 0.11%
201 Heilig-Meyers - Visalia, CA 93277 1,264,648 1,253,228 0.11%
- ------------------------------------------------------------------------------------------------------------------------------
202 Heilig-Meyers - Pikeville, KY 41501 1,247,559 1,236,292 0.11%
203 Heilig-Meyers - Albany, GA 31707 1,230,469 1,219,357 0.10%
204 Heilig-Meyers - Heath, OH 43056 1,230,469 1,219,357 0.10%
205 Heilig-Meyers - Marion, IL 62959 1,230,469 1,219,357 0.10%
206 Heilig-Meyers - Temple, TX 76504 1,213,379 1,202,421 0.10%
- ------------------------------------------------------------------------------------------------------------------------------
207 Heilig-Meyers - Zanesville, OH 43701 1,196,289 1,185,486 0.10%
208 Heilig-Meyers - Fresno-Kings Canyon, CA 93727 1,179,199 1,168,550 0.10%
209 Heilig-Meyers - Jackson, MS 39204 1,179,199 1,168,550 0.10%
210 Heilig-Meyers - Modesto, CA 95350 1,162,109 1,151,615 0.10%
211 Heilig-Meyers - Champaign, IL 61821 1,127,930 1,117,744 0.10%
- ------------------------------------------------------------------------------------------------------------------------------
212 Heilig-Meyers - Sanford, NC 27331 1,110,840 1,100,808 0.09%
213 Heilig-Meyers - Moberly, MO 65270 1,110,840 1,100,808 0.09%
214 Flenniken Square 37920 1,082,000 1,080,177 0.09%
215 300 Barton Street 02860 1,075,000 1,071,814 0.09%
216 Southland Ormond Beach Nova 32174 1,085,792 1,068,620 0.09%
- ------------------------------------------------------------------------------------------------------------------------------
217 606-610 Clement Street 24141 Summit 1,073,760 1,068,479 0.09%
218 Motel 6 202 Lumberton 28358 1,084,997 1,039,177 0.09%
219 Bulova Technologies Building 85034 900,000 898,889 0.08%
220 605-607 Downey Street 24141 Highland 774,000 770,193 0.07%
221 Carroll Lane Apartments 78415 750,000 749,041 0.06%
- ------------------------------------------------------------------------------------------------------------------------------
222 1208 Clement Street 24141 Highland 516,000 513,462 0.04%
223 Spring Market Shopping Center 30133 414,000 412,861 0.04%
<CAPTION>
Cumulative %
of Aggregate
Control Cut-Off Date Mortgage
Number Property Name Balance Rate (%)
- -----------------------------------------------------------------------------------------
<S> <C> <C>
160 Community Self Storage of Charlottesville 92.65% 7.3750%
161 Ocean Terrace (4) 92.82% 7.4700%
162 1105/1105/1105 Downey; 1114 Clement; 1106 Calhoun 92.99% 6.8750%
162.01 1104/1105/1108 Downey
162.02 1114 Clement
- -----------------------------------------------------------------------------------------
162.03 1106 Calhoun
163 Harvard Apartments 93.15% 8.3750%
164 Interama Warehouses 93.31% 7.7500%
165 Lakeview Warehouse 93.47% 7.7500%
166 Goldome Portfolio 93.63% 8.3750%
- -----------------------------------------------------------------------------------------
166.01 Arlington Apartments
166.02 Genoa & Sagamore Apartments
166.03 Glendale Apartments
166.04 Norton Apartments
166.05 Roycroft Apartments
- -----------------------------------------------------------------------------------------
167 Sargent House 93.78% 8.2500%
168 Eckerd Ferber Tallahassee 93.94% 7.2500%
169 CVS Lansdowne Hollins Ferry 94.09% 6.7400%
170 Garden Gate 94.24% 6.6300%
171 Super 8 Motel 94.40% 8.1500%
- -----------------------------------------------------------------------------------------
172 Island Lake Mobile Park 94.54% 8.6250%
173 Robert Arms Apartments 94.69% 7.3750%
174 Heilig-Meyers - Wilson, NC 94.83% 7.4100%
175 Eckerd, Tarboro 94.97% 7.1250%
176 3950-3970 Laconia Avenue 95.11% 8.1200%
- -----------------------------------------------------------------------------------------
177 Amberwood Apartments 95.25% 7.5100%
178 The Palms of Sarasota 95.39% 8.0800%
179 Heilig-Meyers - Santa Rosa, CA 95.52% 7.4100%
180 CVS Rocky Mount 95.65% 7.0000%
181 Madison Ridge Apartments 95.77% 7.9500%
- -----------------------------------------------------------------------------------------
182 Days Inn Mt.Sterling 95.90% 7.3750%
183 Heilig-Meyers - Riverside, CA 96.03% 7.4100%
184 Gates Place Apartments 96.16% 7.7500%
185 Heilig-Meyers - Richmond, VA 96.28% 7.4100%
186 506-508 Fairfax Street 96.40% 6.8750%
- -----------------------------------------------------------------------------------------
187 Heilig-Meyers - Garner, NC 96.52% 7.4100%
188 Hamilton Park Apartments 96.64% 7.3200%
189 Information Management Systems Building 96.76% 7.6400%
190 IHOP Rock Hill North Cherry 96.88% 7.7500%
191 Heilig-Meyers - Fresno-Blackstone, CA 96.99% 7.4100%
- -----------------------------------------------------------------------------------------
192 Mears Warehouse 97.10% 7.7500%
193 CVS Greenville Old Buncombe 97.21% 7.1250%
194 Heilig-Meyers - Forsyth, IL 97.32% 7.4100%
195 Heilig-Meyers - Owensboro, KY 97.43% 7.4100%
196 Heilig-Meyers - Peru, IL 97.54% 7.4100%
- -----------------------------------------------------------------------------------------
197 Heilig-Meyers - Dothan, AL 97.65% 7.4100%
198 Heilig-Meyers - Evansville, IN 97.76% 7.4100%
199 Heilig-Meyers - Hopkinsville, KY 97.86% 7.4100%
200 Heilig-Meyers - Talllahassee, FL 97.97% 7.4100%
201 Heilig-Meyers - Visalia, CA 98.07% 7.4100%
- -----------------------------------------------------------------------------------------
202 Heilig-Meyers - Pikeville, KY 98.18% 7.4100%
203 Heilig-Meyers - Albany, GA 98.28% 7.4100%
204 Heilig-Meyers - Heath, OH 98.38% 7.4100%
205 Heilig-Meyers - Marion, IL 98.49% 7.4100%
206 Heilig-Meyers - Temple, TX 98.59% 7.4100%
- -----------------------------------------------------------------------------------------
207 Heilig-Meyers - Zanesville, OH 98.69% 7.4100%
208 Heilig-Meyers - Fresno-Kings Canyon, CA 98.79% 7.4100%
209 Heilig-Meyers - Jackson, MS 98.89% 7.4100%
210 Heilig-Meyers - Modesto, CA 98.98% 7.4100%
211 Heilig-Meyers - Champaign, IL 99.08% 7.4100%
- -----------------------------------------------------------------------------------------
212 Heilig-Meyers - Sanford, NC 99.17% 7.4100%
213 Heilig-Meyers - Moberly, MO 99.27% 7.4100%
214 Flenniken Square 99.36% 8.9000%
215 300 Barton Street 99.45% 8.5000%
216 Southland Ormond Beach Nova 99.54% 9.1250%
- -----------------------------------------------------------------------------------------
217 606-610 Clement Street 99.63% 6.8750%
218 Motel 6 202 Lumberton 99.72% 7.2350%
219 Bulova Technologies Building 99.79% 7.6400%
220 605-607 Downey Street 99.86% 6.8750%
221 Carroll Lane Apartments 99.92% 7.5000%
- -----------------------------------------------------------------------------------------
222 1208 Clement Street 99.97% 6.8750%
223 Spring Market Shopping Center 100.00% 9.5000%
<CAPTION>
Original
Interest
Interest Only
Control Administrative Accrual Period
Number Property Name Cost Rate (%) Method Amortization Type (1) (Mos.)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
160 Community Self Storage of Charlottesville 0.06225% Actual/360 Amortizing Balloon
161 Ocean Terrace (4) 0.06225% Actual/360 Fully Amortizing
162 1105/1105/1105 Downey; 1114 Clement; 1106 Calhoun 0.06225% Actual/360 Amortizing Balloon
162.01 1104/1105/1108 Downey
162.02 1114 Clement
- --------------------------------------------------------------------------------------------------------------
162.03 1106 Calhoun
163 Harvard Apartments 0.06225% Actual/360 Amortizing Balloon
164 Interama Warehouses 0.06225% 30/360 Amortizing Balloon
165 Lakeview Warehouse 0.06225% 30/360 Amortizing Balloon
166 Goldome Portfolio 0.06225% Actual/360 Amortizing Balloon
- --------------------------------------------------------------------------------------------------------------
166.01 Arlington Apartments
166.02 Genoa & Sagamore Apartments
166.03 Glendale Apartments
166.04 Norton Apartments
166.05 Roycroft Apartments
- --------------------------------------------------------------------------------------------------------------
167 Sargent House 0.06225% Actual/360 Amortizing Balloon
168 Eckerd Ferber Tallahassee 0.06225% 30/360 Fully Amortizing
169 CVS Lansdowne Hollins Ferry 0.06225% 30/360 Fully Amortizing
170 Garden Gate 0.11475% Actual/360 Amortizing Balloon
171 Super 8 Motel 0.06225% Actual/360 Amortizing Balloon
- --------------------------------------------------------------------------------------------------------------
172 Island Lake Mobile Park 0.06225% Actual/360 Amortizing Balloon
173 Robert Arms Apartments 0.06225% Actual/360 Amortizing Balloon
174 Heilig-Meyers - Wilson, NC 0.06225% Actual/360 Amortizing Balloon
175 Eckerd, Tarboro 0.06225% 30/360 Fully Amortizing
176 3950-3970 Laconia Avenue 0.06225% Actual/360 Amortizing Balloon
- --------------------------------------------------------------------------------------------------------------
177 Amberwood Apartments 0.06225% Actual/360 Amortizing Balloon
178 The Palms of Sarasota 0.06225% Actual/360 Amortizing Balloon
179 Heilig-Meyers - Santa Rosa, CA 0.06225% Actual/360 Amortizing Balloon
180 CVS Rocky Mount 0.06225% 30/360 Fully Amortizing
181 Madison Ridge Apartments 0.06225% Actual/360 Amortizing Balloon
- --------------------------------------------------------------------------------------------------------------
182 Days Inn Mt.Sterling 0.06225% Actual/360 Fully Amortizing
183 Heilig-Meyers - Riverside, CA 0.06225% Actual/360 Amortizing Balloon
184 Gates Place Apartments 0.06225% Actual/360 Amortizing Balloon
185 Heilig-Meyers - Richmond, VA 0.06225% Actual/360 Amortizing Balloon
186 506-508 Fairfax Street 0.06225% Actual/360 Amortizing Balloon
- --------------------------------------------------------------------------------------------------------------
187 Heilig-Meyers - Garner, NC 0.06225% Actual/360 Amortizing Balloon
188 Hamilton Park Apartments 0.06225% Actual/360 Amortizing Balloon
189 Information Management Systems Building 0.06225% Actual/360 Amortizing Balloon
190 IHOP Rock Hill North Cherry 0.06225% 30/360 Fully Amortizing
191 Heilig-Meyers - Fresno-Blackstone, CA 0.06225% Actual/360 Amortizing Balloon
- --------------------------------------------------------------------------------------------------------------
192 Mears Warehouse 0.06225% 30/360 Amortizing Balloon
193 CVS Greenville Old Buncombe 0.06225% 30/360 Fully Amortizing
194 Heilig-Meyers - Forsyth, IL 0.06225% Actual/360 Amortizing Balloon
195 Heilig-Meyers - Owensboro, KY 0.06225% Actual/360 Amortizing Balloon
196 Heilig-Meyers - Peru, IL 0.06225% Actual/360 Amortizing Balloon
- --------------------------------------------------------------------------------------------------------------
197 Heilig-Meyers - Dothan, AL 0.06225% Actual/360 Amortizing Balloon
198 Heilig-Meyers - Evansville, IN 0.06225% Actual/360 Amortizing Balloon
199 Heilig-Meyers - Hopkinsville, KY 0.06225% Actual/360 Amortizing Balloon
200 Heilig-Meyers - Talllahassee, FL 0.06225% Actual/360 Amortizing Balloon
201 Heilig-Meyers - Visalia, CA 0.06225% Actual/360 Amortizing Balloon
- --------------------------------------------------------------------------------------------------------------
202 Heilig-Meyers - Pikeville, KY 0.06225% Actual/360 Amortizing Balloon
203 Heilig-Meyers - Albany, GA 0.06225% Actual/360 Amortizing Balloon
204 Heilig-Meyers - Heath, OH 0.06225% Actual/360 Amortizing Balloon
205 Heilig-Meyers - Marion, IL 0.06225% Actual/360 Amortizing Balloon
206 Heilig-Meyers - Temple, TX 0.06225% Actual/360 Amortizing Balloon
- --------------------------------------------------------------------------------------------------------------
207 Heilig-Meyers - Zanesville, OH 0.06225% Actual/360 Amortizing Balloon
208 Heilig-Meyers - Fresno-Kings Canyon, CA 0.06225% Actual/360 Amortizing Balloon
209 Heilig-Meyers - Jackson, MS 0.06225% Actual/360 Amortizing Balloon
210 Heilig-Meyers - Modesto, CA 0.06225% Actual/360 Amortizing Balloon
211 Heilig-Meyers - Champaign, IL 0.06225% Actual/360 Amortizing Balloon
- --------------------------------------------------------------------------------------------------------------
212 Heilig-Meyers - Sanford, NC 0.06225% Actual/360 Amortizing Balloon
213 Heilig-Meyers - Moberly, MO 0.06225% Actual/360 Amortizing Balloon
214 Flenniken Square 0.06225% 30/360 Fully Amortizing
215 300 Barton Street 0.06225% Actual/360 Amortizing Balloon
216 Southland Ormond Beach Nova 0.06225% 30/360 Fully Amortizing
- --------------------------------------------------------------------------------------------------------------
217 606-610 Clement Street 0.06225% Actual/360 Amortizing Balloon
218 Motel 6 202 Lumberton 0.19725% 30/360 Amortizing Balloon
219 Bulova Technologies Building 0.06225% Actual/360 Amortizing Balloon
220 605-607 Downey Street 0.06225% Actual/360 Amortizing Balloon
221 Carroll Lane Apartments 0.06225% Actual/360 Amortizing Balloon
- --------------------------------------------------------------------------------------------------------------
222 1208 Clement Street 0.06225% Actual/360 Amortizing Balloon
223 Spring Market Shopping Center 0.06225% Actual/360 Amortizing Balloon
<CAPTION>
Remaining
Original Term to
Remaining Term to Maturity or
Interest Maturity or Anticipated
Only Anticipated Repayment Original Remaining
Control Period Repayment Date Amortization Amortization Origination
Number Property Name (Mos.) Date (Mos.) (Mos.) Term (Mos.) Term (Mos.) Date
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
160 Community Self Storage of Charlottesville 120 118 240 238 02/04/99
161 Ocean Terrace (4) 360 346 360 346 02/27/98
162 1105/1105/1105 Downey; 1114 Clement; 1106 Calhoun 120 114 360 354 10/30/98
162.01 1104/1105/1108 Downey
162.02 1114 Clement
- ----------------------------------------------------------------------------------------------------------------------------------
162.03 1106 Calhoun
163 Harvard Apartments 120 118 300 298 03/01/99
164 Interama Warehouses 120 118 300 298 02/22/99
165 Lakeview Warehouse 120 118 360 358 02/26/99
166 Goldome Portfolio 120 114 360 354 10/23/98
- ----------------------------------------------------------------------------------------------------------------------------------
166.01 Arlington Apartments
166.02 Genoa & Sagamore Apartments
166.03 Glendale Apartments
166.04 Norton Apartments
166.05 Roycroft Apartments
- ----------------------------------------------------------------------------------------------------------------------------------
167 Sargent House 120 118 360 358 02/12/99
168 Eckerd Ferber Tallahassee 235 228 235 228 09/04/98
169 CVS Lansdowne Hollins Ferry 239 235 239 235 12/23/98
170 Garden Gate 120 114 360 354 10/14/98
171 Super 8 Motel 120 109 240 229 05/19/98
- ----------------------------------------------------------------------------------------------------------------------------------
172 Island Lake Mobile Park 120 119 300 299 03/02/99
173 Robert Arms Apartments 84 77 360 353 09/28/98
174 Heilig-Meyers - Wilson, NC 156 148 300 292 08/05/98
175 Eckerd, Tarboro 236 230 236 230 10/29/98
176 3950-3970 Laconia Avenue 120 115 300 295 11/18/98
- ----------------------------------------------------------------------------------------------------------------------------------
177 Amberwood Apartments 120 119 360 359 03/24/99
178 The Palms of Sarasota 120 119 300 299 03/04/99
179 Heilig-Meyers - Santa Rosa, CA 156 148 300 292 08/05/98
180 CVS Rocky Mount 235 228 235 228 10/02/98
181 Madison Ridge Apartments 120 119 360 359 03/31/99
- ----------------------------------------------------------------------------------------------------------------------------------
182 Days Inn Mt.Sterling 264 250 264 250 02/04/98
183 Heilig-Meyers - Riverside, CA 156 148 300 292 08/05/98
184 Gates Place Apartments 120 115 360 355 11/09/98
185 Heilig-Meyers - Richmond, VA 156 148 300 292 08/05/98
186 506-508 Fairfax Street 120 114 360 354 10/30/98
- ----------------------------------------------------------------------------------------------------------------------------------
187 Heilig-Meyers - Garner, NC 156 148 300 292 08/05/98
188 Hamilton Park Apartments 120 119 360 359 03/31/99
189 Information Management Systems Building 120 118 360 358 02/26/99
190 IHOP Rock Hill North Cherry 297 288 297 288 07/31/98
191 Heilig-Meyers - Fresno-Blackstone, CA 156 148 300 292 08/05/98
- ----------------------------------------------------------------------------------------------------------------------------------
192 Mears Warehouse 120 118 300 298 02/22/99
193 CVS Greenville Old Buncombe 175 164 175 164 05/21/98
194 Heilig-Meyers - Forsyth, IL 156 148 300 292 08/05/98
195 Heilig-Meyers - Owensboro, KY 156 148 300 292 08/05/98
196 Heilig-Meyers - Peru, IL 156 148 300 292 08/05/98
- ----------------------------------------------------------------------------------------------------------------------------------
197 Heilig-Meyers - Dothan, AL 156 148 300 292 08/05/98
198 Heilig-Meyers - Evansville, IN 156 148 300 292 08/05/98
199 Heilig-Meyers - Hopkinsville, KY 156 148 300 292 08/05/98
200 Heilig-Meyers - Talllahassee, FL 156 148 300 292 08/05/98
201 Heilig-Meyers - Visalia, CA 156 148 300 292 08/05/98
- ----------------------------------------------------------------------------------------------------------------------------------
202 Heilig-Meyers - Pikeville, KY 156 148 300 292 08/05/98
203 Heilig-Meyers - Albany, GA 156 148 300 292 08/05/98
204 Heilig-Meyers - Heath, OH 156 148 300 292 08/05/98
205 Heilig-Meyers - Marion, IL 156 148 300 292 08/05/98
206 Heilig-Meyers - Temple, TX 156 148 300 292 08/05/98
- ----------------------------------------------------------------------------------------------------------------------------------
207 Heilig-Meyers - Zanesville, OH 156 148 300 292 08/05/98
208 Heilig-Meyers - Fresno-Kings Canyon, CA 156 148 300 292 08/05/98
209 Heilig-Meyers - Jackson, MS 156 148 300 292 08/05/98
210 Heilig-Meyers - Modesto, CA 156 148 300 292 08/05/98
211 Heilig-Meyers - Champaign, IL 156 148 300 292 08/05/98
- ----------------------------------------------------------------------------------------------------------------------------------
212 Heilig-Meyers - Sanford, NC 156 148 300 292 08/05/98
213 Heilig-Meyers - Moberly, MO 156 148 300 292 08/05/98
214 Flenniken Square 360 357 360 357 02/01/99
215 300 Barton Street 120 118 240 238 02/10/99
216 Southland Ormond Beach Nova 171 163 171 163 08/07/98
- ----------------------------------------------------------------------------------------------------------------------------------
217 606-610 Clement Street 120 114 360 354 10/30/98
218 Motel 6 202 Lumberton 216 205 270 259 05/29/98
219 Bulova Technologies Building 120 118 360 358 02/26/99
220 605-607 Downey Street 120 114 360 354 10/30/98
221 Carroll Lane Apartments 120 118 360 358 02/18/99
- ----------------------------------------------------------------------------------------------------------------------------------
222 1208 Clement Street 120 114 360 354 10/30/98
223 Spring Market Shopping Center 120 117 300 297 01/15/99
<CAPTION>
Control Maturity or Balloon General CTL
Number Property Name ARD Date Balance ($) Property Type Specific Property Type Flag
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
160 Community Self Storage of Charlottesville 03/01/09 1,380,788 Self Storage
161 Ocean Terrace (4) 03/01/28 208,450 Multifamily Conventional
162 1105/1105/1105 Downey; 1114 Clement; 1106 Calhoun 11/01/08 1,711,087 Multifamily Conventional
162.01 1104/1105/1108 Downey Multifamily Conventional
162.02 1114 Clement Multifamily Conventional
- ----------------------------------------------------------------------------------------------------------------------------------
162.03 1106 Calhoun Multifamily Conventional
163 Harvard Apartments 03/01/09 1,600,588 Multifamily Conventional
164 Interama Warehouses 03/01/09 1,535,091 Industrial Warehouse/Distribution
165 Lakeview Warehouse 03/01/09 1,644,972 Industrial Warehouse/Distribution
166 Goldome Portfolio 11/01/08 1,685,260 Multifamily Conventional
- ----------------------------------------------------------------------------------------------------------------------------------
166.01 Arlington Apartments Multifamily Conventional
166.02 Genoa & Sagamore Apartments Multifamily Conventional
166.03 Glendale Apartments Multifamily Conventional
166.04 Norton Apartments Multifamily Conventional
166.05 Roycroft Apartments Multifamily Conventional
- ----------------------------------------------------------------------------------------------------------------------------------
167 Sargent House 03/01/09 1,665,257 Healthcare Congregate Care
168 Eckerd Ferber Tallahassee 05/01/18 0 Retail Drug Store CTL
169 CVS Lansdowne Hollins Ferry 12/01/18 0 Retail Drug Store CTL
170 Garden Gate 11/10/08 1,556,828 Retail Unanchored
171 Super 8 Motel 06/01/08 1,276,426 Hospitality Limited Service
- ----------------------------------------------------------------------------------------------------------------------------------
172 Island Lake Mobile Park 04/01/09 1,457,785 MHC
173 Robert Arms Apartments 10/01/05 1,583,884 Multifamily Conventional
174 Heilig-Meyers - Wilson, NC 09/01/11 1,228,905 Retail Anchored
175 Eckerd, Tarboro 07/01/18 0 Retail Drug Store CTL
176 3950-3970 Laconia Avenue 12/01/08 1,395,488 Retail Unanchored
- ----------------------------------------------------------------------------------------------------------------------------------
177 Amberwood Apartments 04/01/09 1,414,346 Multifamily Conventional
178 The Palms of Sarasota 04/01/09 1,322,401 Multifamily Conventional
179 Heilig-Meyers - Santa Rosa, CA 09/01/11 1,130,593 Retail Anchored
180 CVS Rocky Mount 05/01/18 0 Retail Drug Store CTL
181 Madison Ridge Apartments 04/01/09 1,358,258 Multifamily Conventional
- ----------------------------------------------------------------------------------------------------------------------------------
182 Days Inn Mt.Sterling 03/01/20 70,814 Hospitality Limited Service
183 Heilig-Meyers - Riverside, CA 09/01/11 1,093,725 Retail Anchored
184 Gates Place Apartments 12/01/08 1,333,570 Multifamily Conventional
185 Heilig-Meyers - Richmond, VA 09/01/11 1,081,438 Retail Anchored
186 506-508 Fairfax Street 11/01/08 1,244,427 Multifamily Conventional
- ----------------------------------------------------------------------------------------------------------------------------------
187 Heilig-Meyers - Garner, NC 09/01/11 1,032,280 Retail Anchored
188 Hamilton Park Apartments 04/01/09 1,231,585 Multifamily Conventional
189 Information Management Systems Building 03/01/09 1,241,793 Industrial Warehouse/Distribution
190 IHOP Rock Hill North Cherry 05/01/23 0 Special Purpose Restaurant CTL
191 Heilig-Meyers - Fresno-Blackstone, CA 09/01/11 970,835 Retail Anchored
- ----------------------------------------------------------------------------------------------------------------------------------
192 Mears Warehouse 03/01/09 1,063,250 Industrial Warehouse/Distribution
193 CVS Greenville Old Buncombe 01/01/13 0 Retail Drug Store CTL
194 Heilig-Meyers - Forsyth, IL 09/01/11 933,968 Retail Anchored
195 Heilig-Meyers - Owensboro, KY 09/01/11 933,968 Retail Anchored
196 Heilig-Meyers - Peru, IL 09/01/11 933,968 Retail Anchored
- ----------------------------------------------------------------------------------------------------------------------------------
197 Heilig-Meyers - Dothan, AL 09/01/11 921,678 Retail Anchored
198 Heilig-Meyers - Evansville, IN 09/01/11 921,678 Retail Anchored
199 Heilig-Meyers - Hopkinsville, KY 09/01/11 909,391 Retail Anchored
200 Heilig-Meyers - Talllahassee, FL 09/01/11 909,391 Retail Anchored
201 Heilig-Meyers - Visalia, CA 09/01/11 909,390 Retail Anchored
- ----------------------------------------------------------------------------------------------------------------------------------
202 Heilig-Meyers - Pikeville, KY 09/01/11 897,101 Retail Anchored
203 Heilig-Meyers - Albany, GA 09/01/11 884,813 Retail Anchored
204 Heilig-Meyers - Heath, OH 09/01/11 884,813 Retail Anchored
205 Heilig-Meyers - Marion, IL 09/01/11 884,813 Retail Anchored
206 Heilig-Meyers - Temple, TX 09/01/11 872,523 Retail Anchored
- ----------------------------------------------------------------------------------------------------------------------------------
207 Heilig-Meyers - Zanesville, OH 09/01/11 860,233 Retail Anchored
208 Heilig-Meyers - Fresno-Kings Canyon, CA 09/01/11 847,946 Retail Anchored
209 Heilig-Meyers - Jackson, MS 09/01/11 847,946 Retail Anchored
210 Heilig-Meyers - Modesto, CA 09/01/11 835,656 Retail Anchored
211 Heilig-Meyers - Champaign, IL 09/01/11 811,078 Retail Anchored
- ----------------------------------------------------------------------------------------------------------------------------------
212 Heilig-Meyers - Sanford, NC 09/01/11 798,788 Retail Anchored
213 Heilig-Meyers - Moberly, MO 09/01/11 798,788 Retail Anchored
214 Flenniken Square 02/01/29 0 Multifamily Sec. 42
215 300 Barton Street 03/01/09 771,839 Retail Anchored
216 Southland Ormond Beach Nova 12/01/12 0 Retail Convenience Store CTL
- ----------------------------------------------------------------------------------------------------------------------------------
217 606-610 Clement Street 11/01/08 933,320 Multifamily Conventional
218 Motel 6 202 Lumberton 06/01/16 343,289 Hospitality Limited Service CTL
219 Bulova Technologies Building 03/01/09 798,296 Industrial Warehouse/Distribution
220 605-607 Downey Street 11/01/08 672,767 Multifamily Conventional
221 Carroll Lane Apartments 03/01/09 662,915 Multifamily Conventional
- ----------------------------------------------------------------------------------------------------------------------------------
222 1208 Clement Street 11/01/08 448,512 Multifamily Conventional
223 Spring Market Shopping Center 02/01/09 355,272 Retail Unanchored
<CAPTION>
Control Annual Debt Net Cash
Number Property Name Prepayment Provisions Service ($)(2) Flow ($) DSCR (x)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
160 Community Self Storage of Charlottesville L(4),D(5.75),O(.25) 191,512 283,827 1.48
161 Ocean Terrace (4) L(4),YM1%(6),1% (19.75),O(.25) 167,319 185,102 1.23
162 1105/1105/1105 Downey; 1114 Clement; 1106 Calhoun L(4),D(5.75),O(.25) 155,184 280,786 1.81
162.01 1104/1105/1108 Downey
162.02 1114 Clement
- ----------------------------------------------------------------------------------------------------------------------------
162.03 1106 Calhoun
163 Harvard Apartments L(3),D(6.75),O(.25) 183,588 233,289 1.27
164 Interama Warehouses L(4),D(5.75),O(.25) 173,393 243,769 1.41
165 Lakeview Warehouse L(4),D(5.75),O(.25) 162,052 204,985 1.26
166 Goldome Portfolio L(3),D(6.75),O(.25) 170,378 228,437 1.34
- ----------------------------------------------------------------------------------------------------------------------------
166.01 Arlington Apartments 43,213
166.02 Genoa & Sagamore Apartments 36,960
166.03 Glendale Apartments 36,733
166.04 Norton Apartments 51,948
166.05 Roycroft Apartments 59,583
- ----------------------------------------------------------------------------------------------------------------------------
167 Sargent House L(4),D(5.75),O(.25) 166,781 208,642 1.25
168 Eckerd Ferber Tallahassee L(8),YM(11.58) Steps 182,987 1.06
169 CVS Lansdowne Hollins Ferry L(4),D(15.92) 168,674 169,180 1.00
170 Garden Gate L(2.42),D(7.33),O(.25) 138,379 229,646 1.66
171 Super 8 Motel L(4),D(6) 182,693 255,502 1.40
- ----------------------------------------------------------------------------------------------------------------------------
172 Island Lake Mobile Park L(4),D(5.75),O(.25) 169,601 215,544 1.27
173 Robert Arms Apartments L(4),D(2.75),O(.25) 141,727 187,661 1.32
174 Heilig-Meyers - Wilson, NC L(2.67),D(10.33) 150,352 196,251 1.31
175 Eckerd, Tarboro L(4),D(15.66) Steps 156,435 1.00
176 3950-3970 Laconia Avenue L(4),D(5.75),O(.25) 157,859 208,621 1.32
- ----------------------------------------------------------------------------------------------------------------------------
177 Amberwood Apartments L(4),D(5.75),O(.25) 134,381 173,227 1.29
178 The Palms of Sarasota L(4),D(5.75),O(.25) 149,208 193,829 1.30
179 Heilig-Meyers - Santa Rosa, CA L(2.67),D(10.33) 138,324 180,551 1.31
180 CVS Rocky Mount L(4),D(15.58) Steps 136,048 1.03
181 Madison Ridge Apartments L(4),D(5.75),O(.25) 133,203 169,266 1.27
- ----------------------------------------------------------------------------------------------------------------------------
182 Days Inn Mt.Sterling L(5),D(10),1.5%(6),O(1) 141,683 211,468 1.49
183 Heilig-Meyers - Riverside, CA L(2.67),D(10.33) 133,814 174,756 1.31
184 Gates Place Apartments L(5),D(4.75),O(.25) 128,954 196,970 1.53
185 Heilig-Meyers - Richmond, VA L(2.67),D(10.33) 132,310 172,937 1.31
186 506-508 Fairfax Street L(4),D(5.75),O(.25) 112,861 128,623 1.14
- ----------------------------------------------------------------------------------------------------------------------------
187 Heilig-Meyers - Garner, NC L(2.67),D(10.33) 126,296 164,851 1.31
188 Hamilton Park Apartments L(4),D(5),O(1) 115,404 151,119 1.31
189 Information Management Systems Building L(4),D(5.75),O(.25) 119,083 174,835 1.47
190 IHOP Rock Hill North Cherry L(4),D(20.75) Steps 130,680 1.10
191 Heilig-Meyers - Fresno-Blackstone, CA L(2.67),D(10.33) 118,778 155,064 1.31
- ----------------------------------------------------------------------------------------------------------------------------
192 Mears Warehouse L(4),D(5.75),O(.25) 120,097 150,086 1.25
193 CVS Greenville Old Buncombe L(4),D(10.58) Steps 139,801 1.00
194 Heilig-Meyers - Forsyth, IL L(2.67),D(10.33) 114,268 149,151 1.31
195 Heilig-Meyers - Owensboro, KY L(2.67),D(10.33) 114,268 149,151 1.31
196 Heilig-Meyers - Peru, IL L(2.67),D(10.33) 114,268 149,230 1.31
- ----------------------------------------------------------------------------------------------------------------------------
197 Heilig-Meyers - Dothan, AL L(2.67),D(10.33) 112,764 147,189 1.31
198 Heilig-Meyers - Evansville, IN L(2.67),D(10.33) 112,764 147,189 1.31
199 Heilig-Meyers - Hopkinsville, KY L(2.67),D(10.33) 111,261 145,226 1.31
200 Heilig-Meyers - Talllahassee, FL L(2.67),D(10.33) 111,261 145,416 1.31
201 Heilig-Meyers - Visalia, CA L(2.67),D(10.33) 111,261 145,226 1.31
- ----------------------------------------------------------------------------------------------------------------------------
202 Heilig-Meyers - Pikeville, KY L(2.67),D(10.33) 109,757 143,264 1.31
203 Heilig-Meyers - Albany, GA L(2.67),D(10.33) 108,254 141,301 1.31
204 Heilig-Meyers - Heath, OH L(2.67),D(10.33) 108,254 141,301 1.31
205 Heilig-Meyers - Marion, IL L(2.67),D(10.33) 108,254 141,301 1.31
206 Heilig-Meyers - Temple, TX L(2.67),D(10.33) 106,750 139,338 1.31
- ----------------------------------------------------------------------------------------------------------------------------
207 Heilig-Meyers - Zanesville, OH L(2.67),D(10.33) 105,247 137,376 1.31
208 Heilig-Meyers - Fresno-Kings Canyon, CA L(2.67),D(10.33) 103,743 135,414 1.31
209 Heilig-Meyers - Jackson, MS L(2.67),D(10.33) 103,743 135,414 1.31
210 Heilig-Meyers - Modesto, CA L(2.67),D(10.33) 102,240 133,451 1.31
211 Heilig-Meyers - Champaign, IL L(2.67),D(10.33) 99,233 129,526 1.31
- ----------------------------------------------------------------------------------------------------------------------------
212 Heilig-Meyers - Sanford, NC L(2.67),D(10.33) 97,729 127,563 1.31
213 Heilig-Meyers - Moberly, MO L(2.67),D(10.33) 97,729 127,564 1.31
214 Flenniken Square L(10),1%(20) 103,539 121,683 1.18
215 300 Barton Street L(3),D(7) 111,949 147,615 1.32
216 Southland Ormond Beach Nova L(8),YM1%(6.25) Steps 130,366 1.05
- ----------------------------------------------------------------------------------------------------------------------------
217 606-610 Clement Street L(4),D(5.75),O(.25) 84,646 116,925 1.38
218 Motel 6 202 Lumberton L(2),YM(16) Steps 85,506 1.00
219 Bulova Technologies Building L(4),D(5.75),O(.25) 76,553 116,666 1.52
220 605-607 Downey Street L(4),D(5.75),O(.25) 61,016 81,651 1.34
221 Carroll Lane Apartments L(4),D(5.75),O(.25) 62,929 78,651 1.25
- ----------------------------------------------------------------------------------------------------------------------------
222 1208 Clement Street L(4),D(5.75),O(.25) 40,677 66,282 1.63
223 Spring Market Shopping Center L(4),D(5.75),O(.25) 43,405 54,288 1.25
<CAPTION>
Cutoff
Control Appraised Appraisal Date
Number Property Name Value ($) Date LTV (%)
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
160 Community Self Storage of Charlottesville 2,800,000 12/21/98 71.2%
161 Ocean Terrace (4) 2,400,000 12/31/97 74.2%
162 1105/1105/1105 Downey; 1114 Clement; 1106 Calhoun 2,860,000 07/10/98 68.5%
162.01 1104/1105/1108 Downey 1,300,000 07/10/98
162.02 1114 Clement 780,000 07/10/98
- ---------------------------------------------------------------------------------------------
162.03 1106 Calhoun 780,000 07/10/98
163 Harvard Apartments 2,480,000 10/21/98 77.3%
164 Interama Warehouses 2,550,000 08/29/98 74.9%
165 Lakeview Warehouse 3,100,000 08/29/98 60.7%
166 Goldome Portfolio 2,700,000 07/24/98 68.9%
- ---------------------------------------------------------------------------------------------
166.01 Arlington Apartments 653,226 07/24/98
166.02 Genoa & Sagamore Apartments 566,129 07/24/98
166.03 Glendale Apartments 435,484 07/24/98
166.04 Norton Apartments 479,032 07/24/98
166.05 Roycroft Apartments 566,129 07/24/98
- ---------------------------------------------------------------------------------------------
167 Sargent House 2,380,000 12/01/98 77.6%
168 Eckerd Ferber Tallahassee 2,100,000 10/28/97 87.6%
169 CVS Lansdowne Hollins Ferry 1,950,000 10/29/98 93.9%
170 Garden Gate 2,850,000 06/03/98 62.8%
171 Super 8 Motel 2,600,000 10/22/97 68.0%
- ---------------------------------------------------------------------------------------------
172 Island Lake Mobile Park 2,400,000 08/18/98 72.3%
173 Robert Arms Apartments 2,450,000 08/11/98 69.4%
174 Heilig-Meyers - Wilson, NC 2,500,000 07/01/98 67.7%
175 Eckerd, Tarboro 1,860,000 07/01/98 90.9%
176 3950-3970 Laconia Avenue 2,550,000 05/15/98 65.8%
- ---------------------------------------------------------------------------------------------
177 Amberwood Apartments 2,000,000 11/16/98 79.9%
178 The Palms of Sarasota 2,200,000 01/06/99 72.7%
179 Heilig-Meyers - Santa Rosa, CA 2,300,000 07/10/98 67.7%
180 CVS Rocky Mount 1,550,000 03/11/98 98.1%
181 Madison Ridge Apartments 1,900,000 03/02/99 79.9%
- ---------------------------------------------------------------------------------------------
182 Days Inn Mt.Sterling 2,300,000 01/05/99 65.6%
183 Heilig-Meyers - Riverside, CA 2,225,000 07/08/98 67.7%
184 Gates Place Apartments 2,050,000 07/29/98 72.9%
185 Heilig-Meyers - Richmond, VA 2,200,000 07/20/98 67.7%
186 506-508 Fairfax Street 2,080,000 07/10/98 68.5%
- ---------------------------------------------------------------------------------------------
187 Heilig-Meyers - Garner, NC 2,100,000 07/01/98 67.7%
188 Hamilton Park Apartments 1,800,000 01/26/99 77.7%
189 Information Management Systems Building 2,630,000 02/12/99 53.2%
190 IHOP Rock Hill North Cherry 1,400,000 12/06/97 99.3%
191 Heilig-Meyers - Fresno-Blackstone, CA 1,975,000 07/09/98 67.7%
- ---------------------------------------------------------------------------------------------
192 Mears Warehouse 1,855,000 08/29/98 71.3%
193 CVS Greenville Old Buncombe 1,600,000 01/27/98 81.7%
194 Heilig-Meyers - Forsyth, IL 1,900,000 07/12/98 67.7%
195 Heilig-Meyers - Owensboro, KY 1,900,000 07/10/98 67.7%
196 Heilig-Meyers - Peru, IL 1,900,000 07/12/98 67.7%
- ---------------------------------------------------------------------------------------------
197 Heilig-Meyers - Dothan, AL 1,875,000 07/30/98 67.7%
198 Heilig-Meyers - Evansville, IN 1,875,000 07/10/98 67.7%
199 Heilig-Meyers - Hopkinsville, KY 1,850,000 07/10/98 67.7%
200 Heilig-Meyers - Talllahassee, FL 1,850,000 07/30/98 67.7%
201 Heilig-Meyers - Visalia, CA 1,850,000 07/08/98 67.7%
- ---------------------------------------------------------------------------------------------
202 Heilig-Meyers - Pikeville, KY 1,850,000 07/19/98 66.8%
203 Heilig-Meyers - Albany, GA 1,800,000 07/01/98 67.7%
204 Heilig-Meyers - Heath, OH 1,800,000 07/08/98 67.7%
205 Heilig-Meyers - Marion, IL 1,800,000 07/11/98 67.7%
206 Heilig-Meyers - Temple, TX 1,775,000 07/17/98 67.7%
- ---------------------------------------------------------------------------------------------
207 Heilig-Meyers - Zanesville, OH 1,750,000 07/08/98 67.7%
208 Heilig-Meyers - Fresno-Kings Canyon, CA 1,725,000 07/08/98 67.7%
209 Heilig-Meyers - Jackson, MS 1,725,000 07/18/98 67.7%
210 Heilig-Meyers - Modesto, CA 1,700,000 07/09/98 67.7%
211 Heilig-Meyers - Champaign, IL 1,650,000 07/12/98 67.7%
- ---------------------------------------------------------------------------------------------
212 Heilig-Meyers - Sanford, NC 1,625,000 07/01/98 67.7%
213 Heilig-Meyers - Moberly, MO 1,625,000 07/11/98 67.7%
214 Flenniken Square 1,360,000 06/22/98 79.4%
215 300 Barton Street 1,700,000 06/16/98 63.0%
216 Southland Ormond Beach Nova 1,250,000 07/20/97 85.5%
- ---------------------------------------------------------------------------------------------
217 606-610 Clement Street 1,560,000 07/10/98 68.5%
218 Motel 6 202 Lumberton 1,100,000 03/24/98 94.5%
219 Bulova Technologies Building 1,690,000 02/12/99 53.2%
220 605-607 Downey Street 1,230,000 06/10/98 62.6%
221 Carroll Lane Apartments 1,000,000 10/20/98 74.9%
- ---------------------------------------------------------------------------------------------
222 1208 Clement Street 820,000 06/10/98 62.6%
223 Spring Market Shopping Center 750,000 07/23/98 55.0%
<CAPTION>
Scheduled
Maturity
Date or
Anticipated Underwritten
Repayment Hospitality
Control Date LTV Average Daily Year No. of Unit of
Number Property Name (%)(3) Rate ($)(5) Year Built Renovated (Units) Measure
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
160 Community Self Storage of Charlottesville 49.3% 1997 405 Units
161 Ocean Terrace (4) 8.7% 1968 1997 44 Units
162 1105/1105/1105 Downey; 1114 Clement; 1106 Calhoun 59.8% Various 33 Units
162.01 1104/1105/1108 Downey 1989 15 Units
162.02 1114 Clement 1991 9 Units
- -----------------------------------------------------------------------------------------------------------------------------------
162.03 1106 Calhoun 1991 9 Units
163 Harvard Apartments 64.5% 1964 144 Units
164 Interama Warehouses 60.2% 1963 60,000 Sq. Ft.
165 Lakeview Warehouse 53.1% 1986 56,775 Sq. Ft.
166 Goldome Portfolio 62.4% Various 62 Units
- -----------------------------------------------------------------------------------------------------------------------------------
166.01 Arlington Apartments 1902 15 Units
166.02 Genoa & Sagamore Apartments 1909 13 Units
166.03 Glendale Apartments 1940 10 Units
166.04 Norton Apartments 1914 11 Units
166.05 Roycroft Apartments 1927 13 Units
- -----------------------------------------------------------------------------------------------------------------------------------
167 Sargent House 70.0% 1997 26 Units
168 Eckerd Ferber Tallahassee 0.0% 1998 10,908 Sq. Ft.
169 CVS Lansdowne Hollins Ferry 0.0% 1998 10,125 Sq. Ft.
170 Garden Gate 54.6% 1959 13,501 Sq. Ft.
171 Super 8 Motel 49.1% 43.15 1985 1996 62 Rooms
- -----------------------------------------------------------------------------------------------------------------------------------
172 Island Lake Mobile Park 60.7% 1970 123 Pads
173 Robert Arms Apartments 64.6% 1971 1998 68 Units
174 Heilig-Meyers - Wilson, NC 49.2% 1996 33,919 Sq. Ft.
175 Eckerd, Tarboro 0.0% 1998 10,908 Sq. Ft.
176 3950-3970 Laconia Avenue 54.7% 1951 1996 21,600 Sq. Ft.
- -----------------------------------------------------------------------------------------------------------------------------------
177 Amberwood Apartments 70.7% 1998 48 Units
178 The Palms of Sarasota 60.1% 1983 1998 48 Units
179 Heilig-Meyers - Santa Rosa, CA 49.2% 1993 24,452 Sq. Ft.
180 CVS Rocky Mount 0.0% 1998 10,125 Sq. Ft.
181 Madison Ridge Apartments 71.5% 1971 1998 48 Units
- -----------------------------------------------------------------------------------------------------------------------------------
182 Days Inn Mt.Sterling 3.1% 35.50 1974 1995 94 Rooms
183 Heilig-Meyers - Riverside, CA 49.2% 1955 1992 31,842 Sq. Ft.
184 Gates Place Apartments 65.1% 1931 1985 60 Units
185 Heilig-Meyers - Richmond, VA 49.2% 1994 40,335 Sq. Ft.
186 506-508 Fairfax Street 59.8% 1990 24 Units
- -----------------------------------------------------------------------------------------------------------------------------------
187 Heilig-Meyers - Garner, NC 49.2% 1995 26,568 Sq. Ft.
188 Hamilton Park Apartments 68.4% 1968 1998 60 Units
189 Information Management Systems Building 47.2% 1998 31,050 Sq. Ft.
190 IHOP Rock Hill North Cherry 0.0% 1998 4,958 Sq. Ft.
191 Heilig-Meyers - Fresno-Blackstone, CA 49.2% 1981 26,710 Sq. Ft.
- -----------------------------------------------------------------------------------------------------------------------------------
192 Mears Warehouse 57.3% 1975 44,000 Sq. Ft.
193 CVS Greenville Old Buncombe 0.0% 1997 10,125 Sq. Ft.
194 Heilig-Meyers - Forsyth, IL 49.2% 1996 27,483 Sq. Ft.
195 Heilig-Meyers - Owensboro, KY 49.2% 1993 25,627 Sq. Ft.
196 Heilig-Meyers - Peru, IL 49.2% 1994 27,390 Sq. Ft.
- -----------------------------------------------------------------------------------------------------------------------------------
197 Heilig-Meyers - Dothan, AL 49.2% 1995 27,013 Sq. Ft.
198 Heilig-Meyers - Evansville, IN 49.2% 1994 27,161 Sq. Ft.
199 Heilig-Meyers - Hopkinsville, KY 49.2% 1996 28,880 Sq. Ft.
200 Heilig-Meyers - Talllahassee, FL 49.2% 1995 26,883 Sq. Ft.
201 Heilig-Meyers - Visalia, CA 49.2% 1973 24,912 Sq. Ft.
- -----------------------------------------------------------------------------------------------------------------------------------
202 Heilig-Meyers - Pikeville, KY 48.5% 1994 27,000 Sq. Ft.
203 Heilig-Meyers - Albany, GA 49.2% 1993 26,100 Sq. Ft.
204 Heilig-Meyers - Heath, OH 49.2% 1994 26,000 Sq. Ft.
205 Heilig-Meyers - Marion, IL 49.2% 1995 26,000 Sq. Ft.
206 Heilig-Meyers - Temple, TX 49.2% 1997 27,628 Sq. Ft.
- -----------------------------------------------------------------------------------------------------------------------------------
207 Heilig-Meyers - Zanesville, OH 49.2% 1993 25,434 Sq. Ft.
208 Heilig-Meyers - Fresno-Kings Canyon, CA 49.2% 1988 24,818 Sq. Ft.
209 Heilig-Meyers - Jackson, MS 49.2% 1995 27,000 Sq. Ft.
210 Heilig-Meyers - Modesto, CA 49.2% 1970 22,826 Sq. Ft.
211 Heilig-Meyers - Champaign, IL 49.2% 1995 27,000 Sq. Ft.
- -----------------------------------------------------------------------------------------------------------------------------------
212 Heilig-Meyers - Sanford, NC 49.2% 1993 23,497 Sq. Ft.
213 Heilig-Meyers - Moberly, MO 49.2% 1995 25,451 Sq. Ft.
214 Flenniken Square 0.0% 1997 51 Units
215 300 Barton Street 45.4% 1975 49,714 Sq. Ft.
216 Southland Ormond Beach Nova 0.0% 1997 3,174 Sq. Ft.
- -----------------------------------------------------------------------------------------------------------------------------------
217 606-610 Clement Street 59.8% 1990 18 Units
218 Motel 6 202 Lumberton 31.2% 1974 22,472 Sq. Ft.
219 Bulova Technologies Building 47.2% 1996 20,432 Sq. Ft.
220 605-607 Downey Street 54.7% 1992 18 Units
221 Carroll Lane Apartments 66.3% 1984 1998 40 Units
- -----------------------------------------------------------------------------------------------------------------------------------
222 1208 Clement Street 54.7% 1989 12 Units
223 Spring Market Shopping Center 47.4% 1986 11,000 Sq. Ft.
<CAPTION>
Original Underwriting
Loan Occupancy Replacement
Control Amount Percentage Rent Roll Reserves Per
Number Property Name Per (Unit) (%) Date (Unit) Per Year
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
160 Community Self Storage of Charlottesville 4,938 87.0% 02/03/99 20.94
161 Ocean Terrace (4) 45,455 88.6% 11/13/98 250.00
162 1105/1105/1105 Downey; 1114 Clement; 1106 Calhoun 59,653 100.0% 02/01/99 250.00
162.01 1104/1105/1108 Downey 100.0% 02/01/99 0.00
162.02 1114 Clement 100.0% 02/01/99 0.00
- --------------------------------------------------------------------------------------------------------------------------------
162.03 1106 Calhoun 100.0% 02/01/99 0.00
163 Harvard Apartments 13,333 88.9% 02/18/99 251.00
164 Interama Warehouses 32 100.0% 01/26/99 0.10
165 Lakeview Warehouse 33 90.2% 02/22/99 0.23
166 Goldome Portfolio 30,129 100.0% 12/31/98 360.63
- --------------------------------------------------------------------------------------------------------------------------------
166.01 Arlington Apartments 100.0% 12/31/98 356.77
166.02 Genoa & Sagamore Apartments 100.0% 12/31/98 334.70
166.03 Glendale Apartments 100.0% 12/31/98 301.61
166.04 Norton Apartments 100.0% 12/31/98 413.34
166.05 Roycroft Apartments 100.0% 12/31/98 336.33
- --------------------------------------------------------------------------------------------------------------------------------
167 Sargent House 71,154 100.0% 02/01/99 250.00
168 Eckerd Ferber Tallahassee 171 100.0% Not Available - Single Tenant 0.20
169 CVS Lansdowne Hollins Ferry 182 100.0% Not Available - Single Tenant 0.30
170 Garden Gate 133 86.8% 02/08/99 0.25
171 Super 8 Motel 29,032 76.2% 480.08
- --------------------------------------------------------------------------------------------------------------------------------
172 Island Lake Mobile Park 14,122 96.8% 02/16/99 50.00
173 Robert Arms Apartments 25,147 94.1% 09/01/98 250.00
174 Heilig-Meyers - Wilson, NC 50 100.0% 09/01/98 0.00
175 Eckerd, Tarboro 157 100.0% Not Available - Single Tenant 0.30
176 3950-3970 Laconia Avenue 78 100.0% 01/21/99 0.15
- --------------------------------------------------------------------------------------------------------------------------------
177 Amberwood Apartments 33,333 97.9% 03/01/99 250.00
178 The Palms of Sarasota 33,333 100.0% 01/11/99 335.00
179 Heilig-Meyers - Santa Rosa, CA 64 100.0% 09/01/98 0.00
180 CVS Rocky Mount 152 100.0% Not Available - Single Tenant 0.30
181 Madison Ridge Apartments 31,667 100.0% 04/01/99 250.00
- --------------------------------------------------------------------------------------------------------------------------------
182 Days Inn Mt.Sterling 16,383 68.3% 374.59
183 Heilig-Meyers - Riverside, CA 48 100.0% 09/01/98 0.00
184 Gates Place Apartments 25,000 100.0% 02/05/99 250.00
185 Heilig-Meyers - Richmond, VA 37 100.0% 09/01/98 0.00
186 506-508 Fairfax Street 59,653 100.0% 02/01/99 250.00
- --------------------------------------------------------------------------------------------------------------------------------
187 Heilig-Meyers - Garner, NC 54 100.0% 09/01/98 0.00
188 Hamilton Park Apartments 23,333 98.3% 01/11/99 251.00
189 Information Management Systems Building 45 100.0% 02/04/99 0.10
190 IHOP Rock Hill North Cherry 282 100.0% Not Available - Single Tenant 0.00
191 Heilig-Meyers - Fresno-Blackstone, CA 51 100.0% 09/01/98 0.00
- --------------------------------------------------------------------------------------------------------------------------------
192 Mears Warehouse 30 93.9% 01/25/99 0.11
193 CVS Greenville Old Buncombe 133 100.0% Not Available - Single Tenant 0.30
194 Heilig-Meyers - Forsyth, IL 47 100.0% 09/01/98 0.00
195 Heilig-Meyers - Owensboro, KY 51 100.0% 09/01/98 0.00
196 Heilig-Meyers - Peru, IL 47 100.0% 09/01/98 0.00
- --------------------------------------------------------------------------------------------------------------------------------
197 Heilig-Meyers - Dothan, AL 47 100.0% 09/01/98 0.00
198 Heilig-Meyers - Evansville, IN 47 100.0% 09/01/98 0.00
199 Heilig-Meyers - Hopkinsville, KY 44 100.0% 09/01/98 0.00
200 Heilig-Meyers - Talllahassee, FL 47 100.0% 09/01/98 0.00
201 Heilig-Meyers - Visalia, CA 51 100.0% 09/01/98 0.00
- --------------------------------------------------------------------------------------------------------------------------------
202 Heilig-Meyers - Pikeville, KY 46 100.0% 09/01/98 0.00
203 Heilig-Meyers - Albany, GA 47 100.0% 09/01/98 0.00
204 Heilig-Meyers - Heath, OH 47 100.0% 09/01/98 0.00
205 Heilig-Meyers - Marion, IL 47 100.0% 09/01/98 0.00
206 Heilig-Meyers - Temple, TX 44 100.0% 09/01/98 0.00
- --------------------------------------------------------------------------------------------------------------------------------
207 Heilig-Meyers - Zanesville, OH 47 100.0% 09/01/98 0.00
208 Heilig-Meyers - Fresno-Kings Canyon, CA 48 100.0% 09/01/98 0.00
209 Heilig-Meyers - Jackson, MS 44 100.0% 09/01/98 0.00
210 Heilig-Meyers - Modesto, CA 51 100.0% 09/01/98 0.00
211 Heilig-Meyers - Champaign, IL 42 100.0% 09/01/98 0.00
- --------------------------------------------------------------------------------------------------------------------------------
212 Heilig-Meyers - Sanford, NC 47 100.0% 09/01/98 0.00
213 Heilig-Meyers - Moberly, MO 44 100.0% 09/01/98 0.00
214 Flenniken Square 21,216 98.0% 10/15/98 250.00
215 300 Barton Street 22 100.0% 01/31/99 0.36
216 Southland Ormond Beach Nova 342 100.0% Not Available - Single Tenant 0.21
- --------------------------------------------------------------------------------------------------------------------------------
217 606-610 Clement Street 59,653 100.0% 02/01/99 250.00
218 Motel 6 202 Lumberton 48 100.0% Not Available - Single Tenant 0.00
219 Bulova Technologies Building 44 100.0% 02/04/99 0.10
220 605-607 Downey Street 43,000 100.0% 02/01/99 250.00
221 Carroll Lane Apartments 18,750 100.0% 01/25/99 254.00
- --------------------------------------------------------------------------------------------------------------------------------
222 1208 Clement Street 43,000 100.0% 02/01/99 250.00
223 Spring Market Shopping Center 38 100.0% 12/31/98 0.21
<CAPTION>
Largest
Tenant Area
Control Leased (Sq. Largest Tenant
Number Property Name Largest Tenant Name Ft.) Expiration Date
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
160 Community Self Storage of Charlottesville
161 Ocean Terrace (4)
162 1105/1105/1105 Downey; 1114 Clement; 1106 Calhoun
162.01 1104/1105/1108 Downey
162.02 1114 Clement
- ------------------------------------------------------------------------------------------------------------------------------------
162.03 1106 Calhoun
163 Harvard Apartments
164 Interama Warehouses Vantage Motor Works, Inc. 30,000 04/30/06
165 Lakeview Warehouse Classic Ventures Diversified dba Rapid Wireless 5,164 Multiple Spaces
166 Goldome Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
166.01 Arlington Apartments
166.02 Genoa & Sagamore Apartments
166.03 Glendale Apartments
166.04 Norton Apartments
166.05 Roycroft Apartments
- ------------------------------------------------------------------------------------------------------------------------------------
167 Sargent House
168 Eckerd Ferber Tallahassee Eckerd Corporation 10,908 06/25/18
169 CVS Lansdowne Hollins Ferry Revco Discount Drug Centers, Inc 10,125 12/31/18
170 Garden Gate Gap Kids 3,405 04/30/01
171 Super 8 Motel
- ------------------------------------------------------------------------------------------------------------------------------------
172 Island Lake Mobile Park
173 Robert Arms Apartments
174 Heilig-Meyers - Wilson, NC Heilig-Meyers 33,919 09/01/15
175 Eckerd, Tarboro Eckerd Corporation 10,908 08/03/18
176 3950-3970 Laconia Avenue SUNY 10,000 09/30/06
- ------------------------------------------------------------------------------------------------------------------------------------
177 Amberwood Apartments
178 The Palms of Sarasota
179 Heilig-Meyers - Santa Rosa, CA Heilig-Meyers 24,452 09/01/15
180 CVS Rocky Mount Revco Discount Drug Stores, Inc. 10,125 05/31/18
181 Madison Ridge Apartments
- ------------------------------------------------------------------------------------------------------------------------------------
182 Days Inn Mt.Sterling
183 Heilig-Meyers - Riverside, CA Heilig-Meyers 31,842 09/01/15
184 Gates Place Apartments
185 Heilig-Meyers - Richmond, VA Heilig-Meyers 40,355 09/01/15
186 506-508 Fairfax Street
- ------------------------------------------------------------------------------------------------------------------------------------
187 Heilig-Meyers - Garner, NC Heilig-Meyers 26,568 09/01/15
188 Hamilton Park Apartments
189 Information Management Systems Building Information Management Systems 31,050 04/30/05
190 IHOP Rock Hill North Cherry IHOP Properties, Inc. 4,958 05/31/23
191 Heilig-Meyers - Fresno-Blackstone, CA Heilig-Meyers 26,710 09/01/15
- ------------------------------------------------------------------------------------------------------------------------------------
192 Mears Warehouse Nelson's Landscape Maintenance 4,200 05/01/00
193 CVS Greenville Old Buncombe Old Buncombe Road CVS, Inc. 10,125 01/31/13
194 Heilig-Meyers - Forsyth, IL Heilig-Meyers 27,483 09/01/15
195 Heilig-Meyers - Owensboro, KY Heilig-Meyers 25,627 09/01/15
196 Heilig-Meyers - Peru, IL Heilig-Meyers 27,390 09/01/15
- ------------------------------------------------------------------------------------------------------------------------------------
197 Heilig-Meyers - Dothan, AL Heilig-Meyers 27,013 09/01/15
198 Heilig-Meyers - Evansville, IN Heilig-Meyers 27,161 09/01/15
199 Heilig-Meyers - Hopkinsville, KY Heilig-Meyers 28,880 09/01/15
200 Heilig-Meyers - Talllahassee, FL Heilig-Meyers 26,883 09/01/15
201 Heilig-Meyers - Visalia, CA Heilig-Meyers 24,912 09/01/15
- ------------------------------------------------------------------------------------------------------------------------------------
202 Heilig-Meyers - Pikeville, KY Heilig-Meyers 26,515 09/01/15
203 Heilig-Meyers - Albany, GA Heilig-Meyers 26,100 09/01/15
204 Heilig-Meyers - Heath, OH Heilig-Meyers 26,000 09/01/15
205 Heilig-Meyers - Marion, IL Heilig-Meyers 26,000 09/01/15
206 Heilig-Meyers - Temple, TX Heilig-Meyers 27,628 09/01/15
- ------------------------------------------------------------------------------------------------------------------------------------
207 Heilig-Meyers - Zanesville, OH Heilig-Meyers 25,434 09/01/15
208 Heilig-Meyers - Fresno-Kings Canyon, CA Heilig-Meyers 24,818 09/01/15
209 Heilig-Meyers - Jackson, MS Heilig-Meyers 27,000 09/01/15
210 Heilig-Meyers - Modesto, CA Heilig-Meyers 22,826 09/01/15
211 Heilig-Meyers - Champaign, IL Heilig-Meyers 27,000 09/01/15
- ------------------------------------------------------------------------------------------------------------------------------------
212 Heilig-Meyers - Sanford, NC Heilig-Meyers 23,497 09/01/15
213 Heilig-Meyers - Moberly, MO Heilig-Meyers 25,451 09/01/15
214 Flenniken Square
215 300 Barton Street Family Marketplace 33,410 02/01/02
216 Southland Ormond Beach Nova The Southland Corporation 3,174 12/31/12
- ------------------------------------------------------------------------------------------------------------------------------------
217 606-610 Clement Street
218 Motel 6 202 Lumberton Motel 6 22,472 05/31/16
219 Bulova Technologies Building Bulova Technologies 20,432 02/28/02
220 605-607 Downey Street
221 Carroll Lane Apartments
- ------------------------------------------------------------------------------------------------------------------------------------
222 1208 Clement Street
223 Spring Market Shopping Center Douglas Sentinal 4,300 06/01/03
<CAPTION>
2nd Largest
Tenant Area 2nd Largest
Control Leased (Sq. Tenant
Number Property Name 2nd Largest Tenant Name Ft.) Expiration Date
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
160 Community Self Storage of Charlottesville
161 Ocean Terrace (4)
162 1105/1105/1105 Downey; 1114 Clement; 1106 Calhoun
162.01 1104/1105/1108 Downey
162.02 1114 Clement
- -----------------------------------------------------------------------------------------------------------------------------------
162.03 1106 Calhoun
163 Harvard Apartments
164 Interama Warehouses Reinman, Inc. 15,000 04/30/00
165 Lakeview Warehouse Wyo-Fla, Inc. 4,269 09/30/99
166 Goldome Portfolio
- -----------------------------------------------------------------------------------------------------------------------------------
166.01 Arlington Apartments
166.02 Genoa & Sagamore Apartments
166.03 Glendale Apartments
166.04 Norton Apartments
166.05 Roycroft Apartments
- -----------------------------------------------------------------------------------------------------------------------------------
167 Sargent House
168 Eckerd Ferber Tallahassee
169 CVS Lansdowne Hollins Ferry
170 Garden Gate Technologies Mgmt 2,376 06/30/02
171 Super 8 Motel
- -----------------------------------------------------------------------------------------------------------------------------------
172 Island Lake Mobile Park
173 Robert Arms Apartments
174 Heilig-Meyers - Wilson, NC
175 Eckerd, Tarboro
176 3950-3970 Laconia Avenue Laconia Foods Supermarket 3,700 03/31/11
- -----------------------------------------------------------------------------------------------------------------------------------
177 Amberwood Apartments
178 The Palms of Sarasota
179 Heilig-Meyers - Santa Rosa, CA
180 CVS Rocky Mount
181 Madison Ridge Apartments
- -----------------------------------------------------------------------------------------------------------------------------------
182 Days Inn Mt.Sterling
183 Heilig-Meyers - Riverside, CA
184 Gates Place Apartments
185 Heilig-Meyers - Richmond, VA
186 506-508 Fairfax Street
- -----------------------------------------------------------------------------------------------------------------------------------
187 Heilig-Meyers - Garner, NC
188 Hamilton Park Apartments
189 Information Management Systems Building
190 IHOP Rock Hill North Cherry
191 Heilig-Meyers - Fresno-Blackstone, CA
- -----------------------------------------------------------------------------------------------------------------------------------
192 Mears Warehouse A&J Body Shop 3,000 02/28/01
193 CVS Greenville Old Buncombe
194 Heilig-Meyers - Forsyth, IL
195 Heilig-Meyers - Owensboro, KY
196 Heilig-Meyers - Peru, IL
- -----------------------------------------------------------------------------------------------------------------------------------
197 Heilig-Meyers - Dothan, AL
198 Heilig-Meyers - Evansville, IN
199 Heilig-Meyers - Hopkinsville, KY
200 Heilig-Meyers - Talllahassee, FL
201 Heilig-Meyers - Visalia, CA
- -----------------------------------------------------------------------------------------------------------------------------------
202 Heilig-Meyers - Pikeville, KY
203 Heilig-Meyers - Albany, GA
204 Heilig-Meyers - Heath, OH
205 Heilig-Meyers - Marion, IL
206 Heilig-Meyers - Temple, TX
- -----------------------------------------------------------------------------------------------------------------------------------
207 Heilig-Meyers - Zanesville, OH
208 Heilig-Meyers - Fresno-Kings Canyon, CA
209 Heilig-Meyers - Jackson, MS
210 Heilig-Meyers - Modesto, CA
211 Heilig-Meyers - Champaign, IL
- -----------------------------------------------------------------------------------------------------------------------------------
212 Heilig-Meyers - Sanford, NC
213 Heilig-Meyers - Moberly, MO
214 Flenniken Square
215 300 Barton Street Intercity Paper 4,926 08/01/01
216 Southland Ormond Beach Nova
- -----------------------------------------------------------------------------------------------------------------------------------
217 606-610 Clement Street
218 Motel 6 202 Lumberton
219 Bulova Technologies Building
220 605-607 Downey Street
221 Carroll Lane Apartments
- -----------------------------------------------------------------------------------------------------------------------------------
222 1208 Clement Street
223 Spring Market Shopping Center KD's Caf, 2,930 05/31/01
<CAPTION>
3rd Largest 3rd Largest
Control Tenant Area Tenant
Number Property Name 3rd Largest Tenant Name Leased (Sq. Ft.) Expiration Date
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
160 Community Self Storage of Charlottesville
161 Ocean Terrace (4)
162 1105/1105/1105 Downey; 1114 Clement; 1106 Calhoun
162.01 1104/1105/1108 Downey
162.02 1114 Clement
- ----------------------------------------------------------------------------------------------------------------------------------
162.03 1106 Calhoun
163 Harvard Apartments
164 Interama Warehouses Polytone Entertainment 6,000 10/31/01
165 Lakeview Warehouse Spring Sign Supply, Inc. 4,269 Multiple Spaces
166 Goldome Portfolio
- ----------------------------------------------------------------------------------------------------------------------------------
166.01 Arlington Apartments
166.02 Genoa & Sagamore Apartments
166.03 Glendale Apartments
166.04 Norton Apartments
166.05 Roycroft Apartments
- ----------------------------------------------------------------------------------------------------------------------------------
167 Sargent House
168 Eckerd Ferber Tallahassee
169 CVS Lansdowne Hollins Ferry
170 Garden Gate Bangz 1,912 04/30/99
171 Super 8 Motel
- ----------------------------------------------------------------------------------------------------------------------------------
172 Island Lake Mobile Park
173 Robert Arms Apartments
174 Heilig-Meyers - Wilson, NC
175 Eckerd, Tarboro
176 3950-3970 Laconia Avenue Beauty Mart, Inc. 3,200 12/31/08
- ----------------------------------------------------------------------------------------------------------------------------------
177 Amberwood Apartments
178 The Palms of Sarasota
179 Heilig-Meyers - Santa Rosa, CA
180 CVS Rocky Mount
181 Madison Ridge Apartments
- ----------------------------------------------------------------------------------------------------------------------------------
182 Days Inn Mt.Sterling
183 Heilig-Meyers - Riverside, CA
184 Gates Place Apartments
185 Heilig-Meyers - Richmond, VA
186 506-508 Fairfax Street
- ----------------------------------------------------------------------------------------------------------------------------------
187 Heilig-Meyers - Garner, NC
188 Hamilton Park Apartments
189 Information Management Systems Building
190 IHOP Rock Hill North Cherry
191 Heilig-Meyers - Fresno-Blackstone, CA
- ----------------------------------------------------------------------------------------------------------------------------------
192 Mears Warehouse The Cutting Edge of Graphic Design 2,900 09/30/99
193 CVS Greenville Old Buncombe
194 Heilig-Meyers - Forsyth, IL
195 Heilig-Meyers - Owensboro, KY
196 Heilig-Meyers - Peru, IL
- ----------------------------------------------------------------------------------------------------------------------------------
197 Heilig-Meyers - Dothan, AL
198 Heilig-Meyers - Evansville, IN
199 Heilig-Meyers - Hopkinsville, KY
200 Heilig-Meyers - Talllahassee, FL
201 Heilig-Meyers - Visalia, CA
- ----------------------------------------------------------------------------------------------------------------------------------
202 Heilig-Meyers - Pikeville, KY
203 Heilig-Meyers - Albany, GA
204 Heilig-Meyers - Heath, OH
205 Heilig-Meyers - Marion, IL
206 Heilig-Meyers - Temple, TX
- ----------------------------------------------------------------------------------------------------------------------------------
207 Heilig-Meyers - Zanesville, OH
208 Heilig-Meyers - Fresno-Kings Canyon, CA
209 Heilig-Meyers - Jackson, MS
210 Heilig-Meyers - Modesto, CA
211 Heilig-Meyers - Champaign, IL
- ----------------------------------------------------------------------------------------------------------------------------------
212 Heilig-Meyers - Sanford, NC
213 Heilig-Meyers - Moberly, MO
214 Flenniken Square
215 300 Barton Street Luzitania Bakery 3,211 09/01/03
216 Southland Ormond Beach Nova
- ----------------------------------------------------------------------------------------------------------------------------------
217 606-610 Clement Street
218 Motel 6 202 Lumberton
219 Bulova Technologies Building
220 605-607 Downey Street
221 Carroll Lane Apartments
- ----------------------------------------------------------------------------------------------------------------------------------
222 1208 Clement Street
223 Spring Market Shopping Center Kayron, Hudson, Warren Agency 1,200 02/01/02
<CAPTION>
Affiliated
Borrowers In
Control Excess of 5% of ARD Mortgage
Number Property Name Pool Loans Loan Seller
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
160 Community Self Storage of Charlottesville FUNB
161 Ocean Terrace (4) FUNB
162 1105/1105/1105 Downey; 1114 Clement; 1106 Calhoun FUNB
162.01 1104/1105/1108 Downey FUNB
162.02 1114 Clement FUNB
- -------------------------------------------------------------------------------------------------------------
162.03 1106 Calhoun FUNB
163 Harvard Apartments FUNB
164 Interama Warehouses FUNB
165 Lakeview Warehouse FUNB
166 Goldome Portfolio FUNB
- -------------------------------------------------------------------------------------------------------------
166.01 Arlington Apartments FUNB
166.02 Genoa & Sagamore Apartments FUNB
166.03 Glendale Apartments FUNB
166.04 Norton Apartments FUNB
166.05 Roycroft Apartments FUNB
- -------------------------------------------------------------------------------------------------------------
167 Sargent House FUNB
168 Eckerd Ferber Tallahassee FUNB
169 CVS Lansdowne Hollins Ferry FUNB
170 Garden Gate CMB
171 Super 8 Motel FUNB
- -------------------------------------------------------------------------------------------------------------
172 Island Lake Mobile Park FUNB
173 Robert Arms Apartments FUNB
174 Heilig-Meyers - Wilson, NC FUNB
175 Eckerd, Tarboro FUNB
176 3950-3970 Laconia Avenue FUNB
- -------------------------------------------------------------------------------------------------------------
177 Amberwood Apartments FUNB
178 The Palms of Sarasota FUNB
179 Heilig-Meyers - Santa Rosa, CA FUNB
180 CVS Rocky Mount FUNB
181 Madison Ridge Apartments FUNB
- -------------------------------------------------------------------------------------------------------------
182 Days Inn Mt.Sterling FUNB
183 Heilig-Meyers - Riverside, CA FUNB
184 Gates Place Apartments FUNB
185 Heilig-Meyers - Richmond, VA FUNB
186 506-508 Fairfax Street FUNB
- -------------------------------------------------------------------------------------------------------------
187 Heilig-Meyers - Garner, NC FUNB
188 Hamilton Park Apartments FUNB
189 Information Management Systems Building FUNB
190 IHOP Rock Hill North Cherry FUNB
191 Heilig-Meyers - Fresno-Blackstone, CA FUNB
- -------------------------------------------------------------------------------------------------------------
192 Mears Warehouse FUNB
193 CVS Greenville Old Buncombe FUNB
194 Heilig-Meyers - Forsyth, IL FUNB
195 Heilig-Meyers - Owensboro, KY FUNB
196 Heilig-Meyers - Peru, IL FUNB
- -------------------------------------------------------------------------------------------------------------
197 Heilig-Meyers - Dothan, AL FUNB
198 Heilig-Meyers - Evansville, IN FUNB
FUNB
FUNB
FUNB
199 Heilig-Meyers - Hopkinsville, KY FUNB
200 Heilig-Meyers - Talllahassee, FL FUNB
201 Heilig-Meyers - Visalia, CA FUNB
- -------------------------------------------------------------------------------------------------------------
202 Heilig-Meyers - Pikeville, KY FUNB
203 Heilig-Meyers - Albany, GA FUNB
204 Heilig-Meyers - Heath, OH FUNB
205 Heilig-Meyers - Marion, IL FUNB
206 Heilig-Meyers - Temple, TX FUNB
- -------------------------------------------------------------------------------------------------------------
207 Heilig-Meyers - Zanesville, OH FUNB
208 Heilig-Meyers - Fresno-Kings Canyon, CA FUNB
209 Heilig-Meyers - Jackson, MS FUNB
210 Heilig-Meyers - Modesto, CA FUNB
211 Heilig-Meyers - Champaign, IL FUNB
- -------------------------------------------------------------------------------------------------------------
212 Heilig-Meyers - Sanford, NC FUNB
213 Heilig-Meyers - Moberly, MO FUNB
214 Flenniken Square FUNB
215 300 Barton Street FUNB
216 Southland Ormond Beach Nova FUNB
- -------------------------------------------------------------------------------------------------------------
217 606-610 Clement Street FUNB
218 Motel 6 202 Lumberton FUNB
219 Bulova Technologies Building FUNB
220 605-607 Downey Street FUNB
221 Carroll Lane Apartments FUNB
- -------------------------------------------------------------------------------------------------------------
222 1208 Clement Street FUNB
223 Spring Market Shopping Center FUNB
</TABLE>
Footnotes
(1) Fully Amortizing Loans which accrue interest on an Actual/360 basis will
have a final balloon payment due as indicated by the Balloon Balance. For
the 11 such loans in this pool, this balloon payment represents no more
than 9% of the property's Appraised Value.
(2) Each Mortgage Loan described by "Steps" under Annual Debt Service is
subject to specified periodic changes in the amount of debt payments at
specified times in the future. Refer to Annex A-2 for these step schedules.
(3) With respect to Credit Lease Loans which are also Balloon Loans, each such
loan has benefit of a residual value insurance policy. The related Balloon
Payments may be repaid from the amount paid by the related insurer pursuant
to such policies.
(4) Cut-Off LTV and DSCR for this loan assumes application of a $200,000 letter
of credit which is being held as additional collateral for the loan.
(5) Underwritten ADR is not applicable to Credit Lease Loans.
<PAGE>
[This page intentionally left blank]
<PAGE>
First Union National Bank - Chase Manhattan Bank Commercial Mortgage Trust
Series 1999-C2
ANNEX A-2 DEBT SERVICE PAYMENT SCHEDULES FOR CERTAIN CREDIT LEASE LOANS
Note: Except for each Motel 6 loan, Pay Period 1 is equal to the first pay date
of the loan. For each of the Motel 6 loans, given their semi-annual pay
structure, Pay Period 1 is equal to 7/1/98 and the first payment of debt service
is 12/1/98, which is listed as Pay Period 6 for the Motel 6 loans.
<TABLE>
<CAPTION>
Motel 6 1081 Motel 6 1115 Motel 6 1129 Motel 6 202 Motel 6 608
Little Rock (W) Raleigh Hilton Head Lumberton Mobile
95 54 87 218 111
Loan Pay Loan Pay Loan Pay Loan Pay Loan Pay
Period Payment Period Payment Period Payment Period Payment Period Payment
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 0.00 1 0.00 1 0.00 1 0.00 1 0.00
6 330,997.57 6 510,416.81 6 346,464.74 6 85,069.47 6 252,114.97
7 0.00 7 0.00 7 0.00 7 0.00 7 0.00
12 265,736.99 12 409,781.35 12 278,154.61 12 68,296.89 12 202,407.15
13 0.00 13 0.00 13 0.00 13 0.00 13 0.00
18 206,943.18 18 319,117.99 18 216,613.42 18 53,186.33 18 157,624.94
19 0.00 19 0.00 19 0.00 19 0.00 19 0.00
24 190,967.26 24 294,482.22 24 199,890.96 24 49,080.37 24 145,456.37
25 0.00 25 0.00 25 0.00 25 0.00 25 0.00
30 209,535.49 30 323,115.47 30 219,326.87 30 53,852.58 30 159,599.46
31 0.00 31 0.00 31 0.00 31 0.00 31 0.00
36 188,947.41 36 291,367.50 36 197,776.73 36 48,561.25 36 143,917.89
37 0.00 37 0.00 37 0.00 37 0.00 37 0.00
42 208,693.01 42 321,816.32 42 218,445.02 42 53,636.05 42 158,957.76
43 0.00 43 0.00 43 0.00 43 0.00 43 0.00
48 188,576.11 48 290,794.93 48 197,388.08 48 48,465.82 48 143,635.07
49 0.00 49 0.00 49 0.00 49 0.00 49 0.00
54 215,133.23 54 331,747.50 54 225,186.18 54 55,291.25 54 163,863.16
55 0.00 55 0.00 55 0.00 55 0.00 55 0.00
60 183,662.57 60 283,217.98 60 192,244.93 60 47,203.00 60 139,892.52
61 0.00 61 0.00 61 0.00 61 0.00 61 0.00
66 212,413.40 66 327,553.37 66 222,339.26 66 54,592.23 66 161,791.51
67 0.00 67 0.00 67 0.00 67 0.00 67 0.00
72 188,398.05 72 290,520.36 72 197,201.70 72 48,420.06 72 143,499.45
73 0.00 73 0.00 73 0.00 73 0.00 73 0.00
78 197,599.63 78 304,709.71 78 206,833.26 78 50,784.95 78 150,508.13
79 0.00 79 0.00 79 0.00 79 0.00 79 0.00
84 206,050.81 84 317,741.91 84 215,679.36 84 52,956.98 84 156,945.25
85 0.00 85 0.00 85 0.00 85 0.00 85 0.00
90 165,751.89 90 255,598.71 90 173,497.31 90 42,599.78 90 126,250.27
91 0.00 91 0.00 91 0.00 91 0.00 91 0.00
96 234,981.70 96 362,354.95 96 245,962.15 96 60,392.49 96 178,981.39
97 0.00 97 0.00 97 0.00 97 0.00 97 0.00
102 151,405.28 102 233,475.43 102 158,480.29 102 38,912.57 102 115,322.71
103 0.00 103 0.00 103 0.00 103 0.00 103 0.00
108 206,516.36 108 318,459.80 108 216,166.65 108 53,076.63 108 157,299.84
109 0.00 109 0.00 109 0.00 109 0.00 109 0.00
114 139,232.61 114 214,704.50 114 145,738.81 114 35,784.08 114 106,051.01
115 0.00 115 0.00 115 0.00 115 0.00 115 0.00
120 186,261.50 120 287,225.68 120 194,965.31 120 47,870.95 120 141,872.08
121 0.00 121 0.00 121 0.00 121 0.00 121 0.00
126 141,767.41 126 218,613.29 126 148,392.05 126 36,435.55 126 107,981.72
127 0.00 127 0.00 127 0.00 127 0.00 127 0.00
132 183,591.58 132 283,108.51 132 192,170.62 132 47,184.75 132 139,838.45
133 0.00 133 0.00 133 0.00 133 0.00 133 0.00
138 145,112.97 138 223,772.33 138 151,893.95 138 37,295.39 138 110,529.97
139 0.00 139 0.00 139 0.00 139 0.00 139 0.00
144 181,323.45 144 279,610.92 144 189,796.51 144 46,601.82 144 138,110.85
145 0.00 145 0.00 145 0.00 145 0.00 145 0.00
150 141,993.95 150 218,962.63 150 148,629.18 150 36,493.77 150 108,154.27
151 0.00 151 0.00 151 0.00 151 0.00 151 0.00
156 185,114.32 156 285,456.66 156 193,764.52 156 47,576.11 156 140,998.29
157 0.00 157 0.00 157 0.00 157 0.00 157 0.00
162 134,843.81 162 207,936.71 162 141,144.92 162 34,656.12 162 102,708.13
163 0.00 163 0.00 163 0.00 163 0.00 163 0.00
168 192,021.07 168 296,107.26 168 200,994.02 168 49,351.21 168 146,259.04
169 0.00 169 0.00 169 0.00 169 0.00 169 0.00
174 129,154.01 174 199,162.72 174 135,189.24 174 33,193.79 174 98,374.31
175 0.00 175 0.00 175 0.00 175 0.00 175 0.00
180 185,599.50 180 286,204.84 180 194,272.38 180 47,700.81 180 141,367.85
181 0.00 181 0.00 181 0.00 181 0.00 181 0.00
186 196,132.42 186 302,447.19 186 205,297.49 186 50,407.87 186 149,390.58
187 0.00 187 0.00 187 0.00 187 0.00 187 0.00
192 112,860.20 192 174,036.75 192 118,134.04 192 29,006.13 192 85,963.61
193 0.00 193 0.00 193 0.00 193 0.00 193 0.00
198 297,676.18 198 459,033.36 198 311,586.28 198 76,505.56 198 226,734.66
199 0.00 199 0.00 199 0.00 199 0.00 199 0.00
204 50,693.38 204 78,172.04 204 53,062.23 204 13,028.67 204 38,612.25
205 0.00 205 0.00 205 0.00 205 0.00 205 0.00
210 162,958.29 210 251,290.82 210 170,573.16 210 41,881.80 210 124,122.44
211 0.00 211 0.00 211 0.00 211 0.00 211 0.00
216 1,335,704.69 216 2,059,731.53 216 1,398,120.80 216 343,288.59 216 1,017,382.54
<CAPTION>
Motel 6 740 Southland CVS Greenville CVS Rocky CVS
Reno Sparks Ormond Beach Old Buncombe Mount Yarmouth
109 Nova 216 193 180 Main 134
Loan Pay Loan Pay Loan Pay Loan Pay Loan Pay
Period Payment Period Payment Period Payment Period Payment Period Payment
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 0.00 1 10,346.53 1 11,615.23 1 11,022.58 1 18,438.49
6 259,075.20 52 11,613.20 56 12,572.97 61 11,921.13 59 20,120.09
7 0.00 112 13,031.29 116 13,613.99 121 12,891.56 119 21,953.08
12 207,995.08 160 13,240.00 181 13,939.62 179 23,951.00
13 0.00
18 161,976.55
19 0.00
24 149,472.03
25 0.00
30 164,005.58
31 0.00
36 147,891.08
37 0.00
42 163,346.16
43 0.00
48 147,600.46
49 0.00
54 168,386.99
55 0.00
60 143,754.58
61 0.00
66 166,258.15
67 0.00
72 147,461.09
73 0.00
78 154,663.26
79 0.00
84 161,278.09
85 0.00
90 129,735.71
91 0.00
96 183,922.59
97 0.00
102 118,506.47
103 0.00
108 161,642.47
109 0.00
114 108,978.80
115 0.00
120 145,788.79
121 0.00
126 110,962.81
127 0.00
132 143,699.02
133 0.00
138 113,581.41
139 0.00
144 141,923.73
145 0.00
150 111,140.12
151 0.00
156 144,890.88
157 0.00
162 105,543.63
163 0.00
168 150,296.87
169 0.00
174 101,090.17
175 0.00
180 145,270.64
181 0.00
186 153,514.86
187 0.00
192 88,336.84
193 0.00
198 232,994.21
199 0.00
204 39,678.23
205 0.00
210 127,549.13
211 0.00
216 1,045,469.79
<CAPTION>
Eckerd Ferber Eckerd Circuit City IHOP Rock Hill Eckerd Oveido
Tallahassee Tarboro Norwalk 444 North Cherry Red Bug Lake
168 175 40 190 145
Loan Pay Loan Pay Loan Pay Loan Pay Loan Pay
Period Payment Period Payment Period Payment Period Payment Period Payment
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 14,385.77 1 12,997.29 1 58,535.05 1 9,900.00 1 18,115.67
56 14,810.26 61 13,446.56 60 64,449.77 58 10,372.50 59 18,564.28
116 15,234.74 121 13,895.17 120 70,955.96 118 10,915.88 119 19,012.89
176 15,659.23 181 14,343.78 180 78,112.77 178 11,540.78 179 19,461.50
238 12,259.35
</TABLE>
<PAGE>
FIRST UNION NATIONAL BANK - CHASE MANHATTAN BANK COMMERCIAL MORTGAGE TRUST
SERIES 1999-C2
ANNEX A-3 CERTAIN INFORMATION REGARDING MULTIFAMILY MORTGAGED PROPERTIES
<TABLE>
<CAPTION>
Control Number Property Name Address City State Zip Code
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
3 Lakeside Apartments 10 Lakeside Way Newnan GA 30265
6 Hickory Lake 490 Windy Hill Road Smyrna GA 30082
13 Sherwood Apartments 14500 McNab Avenue Bellflower CA 90706
14 Villa Serena Apartments 325 North Gibson Road Henderson NV 89014
15 194 East Second Street Apartments 194 East Second Street New York NY 10009
16 Executive House 6100 City Ave. Philadelphia PA 19131
19 Windsor Falls Apartments 1500 Sunbow Falls Lane Raleigh NC 27609
24 Kings Bridge 1450 Raintree Way Roswell GA 30076
25 Walden Village 1500 Post Oak Drive Clarkston GA 30021
26 Garnet Lake Portfolio Various Various CA Various
26.01 7510 Hollywood Boulevard 7510 Hollywood Boulevard Hollywood CA 90046
26.02 1349 N. Detroit Street 1349 N. Detroit Street Los Angeles CA 90046
26.03 7140 De Longpre Avenue 7140 De Longpre Avenue Los Angeles CA 90046
26.04 219 S. Mariposa 219 S. Mariposa Avenue Los Angeles CA 90046
26.05 1030 N. Orange Grove Avenue 1030 N. Orange Grove Avenue W. Hollywood CA 90046
26.06 7364 Hollywood Boulevard 7364 Hollywood Boulevard Hollywood CA 90046
26.07 1750 El Cerrito Place 1750 El Cerrito Place Hollywood CA 90028
26.08 7278 Hollywood Boulevard 7278 Hollywood Boulevard Hollywood CA 90046
26.09 3824 Motor Avenue 3824 Motor Avenue Culver City CA 90232
26.10 1010 Raleigh Street 1010 Raleigh Street Glendale CA 91205
28 Long Brook Sutton Place and Sutton Drive Matawan NJ 07747
29 Somerset Apartments 12800 Vonn Road Largo FL 33774
31 Whitehall Estates 2400 Whitehall Estates Drive Charlotte NC 28273
33 Morgan Place Apartments 1680 Chantilly Drive Atlanta GA 30324
35 Lantana/Park Trace Apartments 501/530 Fairwood Avenue Clearwater FL 33759
35.01 Lantana 530 Fairwood Avenue Clearwater FL 33759
35.02 Park Trace Apartments 501 Fairwood Avenue Clearwater FL 33759
36 Las Palomas Apartments 4040 Boulder Highway Las Vegas NV 89121
38 Wildwood Village Apartments 3491 Timbersedge Drive Indianapolis IN 46222
43 Gardens at Annen Woods 1 Harness Court Pikesville MD 21208
46 Gabes Place Apartments Portfolio Various Champaign - Urbana IL 61820
46.01 202 E. John 202 East John Street Champaign IL 61820
46.02 102 E. Gregory 102 East Gregory Drive Champaign IL 61820
46.03 810 Iowa 810 West Iowa Street Urbana IL 61820
46.04 807 W. Oregon 807 W. Oregon Street Urbana IL 61820
46.05 811 W. Oregon 811 W. Oregon Street Urbana IL 61820
47 Briarwood Apartments 29 Briar Circle Fayetteville NC 28306
51 Palm Villas Apartments 91 - 1049 Paumae'ole Street Ewa HI 96706
59 Belmont Crossing 1940 Atlanta Road Smyrna GA 30080
60 Timber Creek Apartments 1881 W. Airport Freeway Euless TX 76040
61 Windgate Place 220 Branchview Drive Charlotte NC 28217
64 Rockwood Gardens Fortune Road West Wallkill NY 10941
67 Autumn Park Apartments 3720 West State Street Grand Island NE 68803
70 Tuscany Village Phase II 235 Ocala Road Tallahassee FL 32304
73 Beechwood Villa Apartments 4702 Beechwood Road Cincinnati OH 45244
75 Grande Apartments 220-250 West Sumner Avenue Roselle Park NJ 07204
79 Livingston Place 15215 Livingston Avenue Lutz FL 33549
94 Somerpoint (Woodvalley) 1788 Austell Road Marietta GA 30008
107 Steeplechase Apartments Portfolio Various Boone NC 28607
107.01 143 Pine Street 143 Pine Street Boone NC 28607
107.02 190 Wood Circle 190 Wood Circle Boone NC 28607
107.03 311 Hardin Street 311 Hardin Street Boone NC 28607
107.04 784 Howard Street 784 Howard Street Boone NC 28607
117 Village East Apartments 1700 Village East Drive Denton TX 76201
120 The Trails Apartments 3301 West Normandale Fort Worth TX 76116
121 Woodfield Gardens 7713-B Village Green Dr Charlotte NC 28215
124 Shrine Apartments 3030-3040 Shrine Place Los Angeles CA 90007
129 Highland Terrace 400 & 422 Highland Avenue Orange NJ 07050
131 Coquina Lakes Apartments 650 W. Pope Road St. Augustine Beach FL 32084
136 Cosmopolitan Apartments 225 Hyde Street San Francisco CA 94102
138 Sandridge Apartments 901 South Bryan Street North Platte NE 69101
140 Tree Top Apartments 1933 West Freeway Grand Prairie TX 75051
144 Sun Shadow Apartments 2828 W. Camelback Road Phoenix AZ 85015
146 Cascade Apartments 3441 Burlingame Road Topeka KS 66611
149 Taylor Apartments 1660-1670 North 21st Road Arlington VA 22209
152 The Coral Tree Apartments 4225 Inglewood Blvd. Los Angeles CA 90066
158 Pine Brook Apartments 1005 Hickory Hill Lane Nashville TN 37076
161 Ocean Terrace 752 Ocean Avenue Long Branch NJ 07740
162 1105/1105/1105 Downey; 1114 Clement;
1106/Calhoun; Various Radford VA 24141
162.01 1104/1105/1108 Downey 1104/1105/1108 Downey Radford VA 24141
162.02 1114 Clement 1114 Clement Radford VA 24141
162.03 1106 Calhoun 1106 Calhoun Radford VA 24141
163 Harvard Apartments 2600 Harvard Drive Chesapeake VA 23324
166 Goldome Portfolio Various Omaha NE 68132
166.01 Arlington Apartments 4907-4909 Davenport Street Omaha NE 68132
166.02 Genoa & Sagamore Apartments 3828 & 3830 Cass Street Omaha NE 68132
166.03 Glendale Apartments 406 N. 49th Street Omaha NE 68132
166.04 Norton Apartments 5019-5021 Underwood Omaha NE 68132
166.05 Roycroft Apartments 5017 Underwood Omaha NE 68132
173 Robert Arms Apartments 3204 Route 9W New Windsor NY 12553
177 Amberwood Apartments 1302 Amberwood Drive Norfolk NE 68701
178 The Palms of Sarasota 4900-5176 Old Bradenton Road Sarasota FL 34230
181 Madison Ridge Apartments 355 Lake Drive Marietta GA 30064
184 Gates Place Apartments 3425 Gates Place Bronx NY 10467
186 506-508 Fairfax Street 506-508 Fairfax Street Radford VA 24141
188 Hamilton Park Apartments 1861-1867 Middlesex Street Lowell MA 01851
214 Flenniken Square 3935 Martin Mill Pike Knoxville TN 37920
217 606-610 Clement Street 606-610 Clement Street Radford VA 24141
220 605-607 Downey Street 605-607 Downey Street Radford VA 24141
221 Carroll Lane Apartments 5623 Carroll Lane Corpus Christi TX 78415
222 1208 Clement Street 1208 Clement Street Radford VA 24141
<CAPTION>
General Specific Utilities
Control Number Property Name County Property Type Property Type Elevator(s) Tenant Pays
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
3 Lakeside Apartments Coweta Multifamily Conventional N E,P,T,C
6 Hickory Lake Multifamily Conventional N E,W
13 Sherwood Apartments Los Angeles Multifamily Conventional N E,P,C
14 Villa Serena Apartments Clark Multifamily Conventional N P,C
15 194 East Second Street Apartments New York Multifamily Conventional Y E,G,P,C
16 Executive House Philadelphia Multifamily Conventional Y E,G,P,C
19 Windsor Falls Apartments Multifamily Conventional N E,G
24 Kings Bridge Multifamily Conventional N E,W
25 Walden Village Multifamily Conventional
26 Garnet Lake Portfolio Los Angeles Multifamily Conventional Varies E,G,P,C
26.01 7510 Hollywood Boulevard Los Angeles Multifamily Conventional N E,G,P,C
26.02 1349 N. Detroit Street Los Angeles Multifamily Conventional N E,G,P,C
26.03 7140 De Longpre Avenue Los Angeles Multifamily Conventional N E,G,P,C
26.04 219 S. Mariposa Los Angeles Multifamily Conventional N E,G,P,C
26.05 1030 N. Orange Grove Avenue Los Angeles Multifamily Conventional Y E,G,P,C
26.06 7364 Hollywood Boulevard Los Angeles Multifamily Conventional Y E,G,P,C
26.07 1750 El Cerrito Place Los Angeles Multifamily Conventional N E,G,P,C
26.08 7278 Hollywood Boulevard Los Angeles Multifamily Conventional Y E,G,P,C
26.09 3824 Motor Avenue Los Angeles Multifamily Conventional N E,G,P,C
26.10 1010 Raleigh Street Los Angeles Multifamily Conventional Y E,G,P,C
28 Long Brook Monmouth Multifamily Conventional N E,P,C,T
29 Somerset Apartments Multifamily Conventional N E,W
31 Whitehall Estates Mecklenberg Multifamily Conventional N G, P, C
33 Morgan Place Apartments Multifamily Conventional E,G
35 Lantana /Park Trace Apartments Multifamily Conventional N E,W
35.01 Lantana Multifamily Conventional N E,W
35.02 Park Trace Apartments Multifamily Conventional E,W
36 Las Palomas Apartments Clark Multifamily Conventional N E,G,P,C
38 Wildwood Village Apartments Marion Multifamily Conventional N E,C,P
43 Gardens at Annen Woods Multifamily Conventional N E
46 Gabes Place Apartments Portfolio Champaign Multifamily Conventional N P,C
46.01 202 E. John Champaign Multifamily Conventional N P,C
46.02 102 E. Gregory Champaign Multifamily Conventional N P,C
46.03 810 Iowa Champaign Multifamily Conventional N P,C
46.04 807 W. Oregon Champaign Multifamily Conventional N P,C
46.05 811 W. Oregon Champaign Multifamily Conventional N P,C
47 Briarwood Apartments Multifamily Conventional N E
51 Palm Villas Apartments Honolulu Multifamily Conventional N E,P,C
59 Belmont Crossing Multifamily Conventional N E,W
60 Timber Creek Apartments Tarrant Multifamily Conventional N E,C,P,T
61 Windgate Place Multifamily Conventional
64 Rockwood Gardens Orange Multifamily Conventional N E,P,C
67 Autumn Park Apartments Hall County Multifamily Conventional N E,P,C
70 Tuscany Village Phase II Leon Multifamily Conventional N E,P,C
73 Beechwood Villa Apartments Multifamily Conventional N E
75 Grande Apartments Union Multifamily Conventional N P,C
79 Livingston Place Multifamily Conventional N E,W
94 Somerpoint (Woodvalley) Multifamily Conventional N E
107 Steeplechase Apartments Portfolio Watouga Multifamily Conventional N E,G,W,P,C
107.01 143 Pine Street Watouga Multifamily Conventional N E,G,W,P,C
107.02 190 Wood Circle Watouga Multifamily Conventional N E,G,W,P,C
107.03 311 Hardin Street Watouga Multifamily Conventional N E,G,W,P,C
107.04 784 Howard Street Watouga Multifamily Conventional N E,G,W,P,C
117 Village East Apartments Denton Multifamily Conventional N P,C
120 The Trails Apartments Tarrant Multifamily Conventional N E,C,P,T
121 Woodfield Gardens Multifamily Conventional
124 Shrine Apartments Los Angeles County Multifamily Conventional N G,E,P
129 Highland Terrace Essex Multifamily Conventional Y E,G,P,C
131 Coquina Lakes Apartments St. Johns County Multifamily Conventional N E,P,C
136 Cosmopolitan Apartments San Francisco Multifamily Conventional Y P,C
138 Sandridge Apartments Lincoln County Multifamily Conventional N E,P
140 Tree Top Apartments Dallas Multifamily Conventional N E,G,P,C
144 Sun Shadow Apartments Maricopa Multifamily Conventional N E,P,T,C
146 Cascade Apartments Shawnee Multifamily Conventional N P,G,C
149 Taylor Apartments Arlington Multifamily Conventional N E,G,P,C
152 The Coral Tree Apartments Los Angeles Multifamily Conventional Y P,E,C
158 Pine Brook Apartments Davidson Multifamily Conventional N 0
161 Ocean Terrace Monmouth Multifamily Conventional N E,P,T,C
162 1105/1105/1105 Downey; 1114 Clement;
1106/Calhoun; Montgomery Multifamily Conventional N W,E,G,P,C
162.01 1104/1105/1108 Downey Montgomery Multifamily Conventional N W,E,G,P,C
162.02 1114 Clement Montgomery Multifamily Conventional N W,E,G,P,C
162.03 1106 Calhoun Montgomery Multifamily Conventional N W,E,G,P,C
163 Harvard Apartments Norfolk Multifamily Conventional N E,G,P,C
166 Goldome Portfolio Douglas Multifamily Conventional N E,P,C
166.01 Arlington Apartments Douglas Multifamily Conventional N E,P,C
166.02 Genoa & Sagamore Apartments Douglas Multifamily Conventional N E,P,C
166.03 Glendale Apartments Douglas Multifamily Conventional N E,P,C
166.04 Norton Apartments Douglas Multifamily Conventional N E,P,C
166.05 Roycroft Apartments Douglas Multifamily Conventional N E,P,C
173 Robert Arms Apartments Orange Multifamily Conventional N E,P,C
177 Amberwood Apartments Madison County Multifamily Conventional N E,P,C
178 The Palms of Sarasota Sarasota Multifamily Conventional N G,C,P
181 Madison Ridge Apartments Cobb Multifamily Conventional N E,P,C
184 Gates Place Apartments Bronx Multifamily Conventional Y E,P,C
186 506-508 Fairfax Street Montgomery Multifamily Conventional N W,E,G,P,C
188 Hamilton Park Apartments Middlesex Multifamily Conventional N E,G,P,C
214 Flenniken Square Knox Multifamily Sec. 42 N E,G,P,C
217 606-610 Clement Street Montgomery Multifamily Conventional N W,E,G,P,C
220 605-607 Downey Street Montgomery Multifamily Conventional N W,E,G,P,C
221 Carroll Lane Apartments Nueces Multifamily Conventional N E,G,P,C
222 1208 Clement Street Montgomery Multifamily Conventional N W,E,G,P,C
<CAPTION>
Number of Number of 1 Number of Number of Number of 4
Control Number Property Name Studio Units BR Units 2 BR Units 3 BR Units BR+ Units
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
3 Lakeside Apartments 142 230 89
6 Hickory Lake 193 495 38
13 Sherwood Apartments 156 140
14 Villa Serena Apartments 128 144 16
15 194 East Second Street Apartments 4 51 1 5
16 Executive House 125 165 12
19 Windsor Falls Apartments 120 120 36
24 Kings Bridge 48 142 113 9
25 Walden Village 48 224 100
26 Garnet Lake Portfolio 38 152 76 1
26.01 7510 Hollywood Boulevard 16
26.02 1349 N. Detroit Street 4 10 5 1
26.03 7140 De Longpre Avenue 3 7
26.04 219 S. Mariposa 8 8
26.05 1030 N. Orange Grove Avenue 15 12
26.06 7364 Hollywood Boulevard 3 20 7
26.07 1750 El Cerrito Place 15 8 1
26.08 7278 Hollywood Boulevard 9 17 7
26.09 3824 Motor Avenue 4 51
26.10 1010 Raleigh Street 36
28 Long Brook 164 76
29 Somerset Apartments 272 112
31 Whitehall Estates 108 116 28
33 Morgan Place Apartments 56 130
35 Lantana /Park Trace Apartments 96 192 84
35.01 Lantana 96 88
35.02 Park Trace Apartments 104 84
36 Las Palomas Apartments 96 144 32
38 Wildwood Village Apartments 160 164
43 Gardens at Annen Woods 18 100 14
46 Gabes Place Apartments Portfolio 2 21 73 9 22
46.01 202 E. John 1 17 37 4 1
46.02 102 E. Gregory 4 18 12
46.03 810 Iowa 12
46.04 807 W. Oregon 1 6 5
46.05 811 W. Oregon 9
47 Briarwood Apartments 98 176
51 Palm Villas Apartments 8 16 88
59 Belmont Crossing 128 64
60 Timber Creek Apartments 108 56
61 Windgate Place 102 94
64 Rockwood Gardens 154 69
67 Autumn Park Apartments 96 48
70 Tuscany Village Phase II 48
73 Beechwood Villa Apartments 76 84 24
75 Grande Apartments 13 73 33
79 Livingston Place 172
94 Somerpoint (Woodvalley) 44 100
107 Steeplechase Apartments Portfolio 3 4 49
107.01 143 Pine Street 4
107.02 190 Wood Circle 3 4 29
107.03 311 Hardin Street 10
107.04 784 Howard Street 6
117 Village East Apartments 4 24 36 40 28
120 The Trails Apartments 96 56
121 Woodfield Gardens 60 72
124 Shrine Apartments 10 32
129 Highland Terrace 10 64 10
131 Coquina Lakes Apartments 80
136 Cosmopolitan Apartments 117
138 Sandridge Apartments 48 24
140 Tree Top Apartments 40 74 14
144 Sun Shadow Apartments 40 24 36 24
146 Cascade Apartments 23 51 12
149 Taylor Apartments 12 12 4
152 The Coral Tree Apartments 21 9
158 Pine Brook Apartments 50 84
161 Ocean Terrace 44
162 1105/1105/1105 Downey; 1114 Clement;
1106/Calhoun; 33
162.01 1104/1105/1108 Downey 15
162.02 1114 Clement 9
162.03 1106 Calhoun 9
163 Harvard Apartments 144
166 Goldome Portfolio 5 22 31 2
166.01 Arlington Apartments
166.02 Genoa & Sagamore Apartments
166.03 Glendale Apartments
166.04 Norton Apartments
166.05 Roycroft Apartments
173 Robert Arms Apartments 34 34
177 Amberwood Apartments 32 16
178 The Palms of Sarasota 1 47
181 Madison Ridge Apartments 24 24
184 Gates Place Apartments 2 45 13
186 506-508 Fairfax Street 24
188 Hamilton Park Apartments 8 24 28
214 Flenniken Square 35 16
217 606-610 Clement Street 18
220 605-607 Downey Street 12 6
221 Carroll Lane Apartments 15 25
222 1208 Clement Street 12
<CAPTION>
Average Rent, Rent Average Rent, Rent Average Rent, Rent
Control Number Property Name Ranges - Studio Ranges - 1 BR Ranges - 2 BR
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
3 Lakeside Apartments 700; 630 - 735 810; 750 - 865
6 Hickory Lake 483 540
13 Sherwood Apartments 840; 813 - 863
14 Villa Serena Apartments 675; 675 - 675 812; 785 - 825
15 194 East Second Street Apartments 1825; 1750 - 1900 2563; 2100 - 3200
16 Executive House 838; 813 - 864 1034; 1025 - 1044
19 Windsor Falls Apartments 649 810
24 Kings Bridge 585 741
25 Walden Village 540 627
26 Garnet Lake Portfolio
26.01 7510 Hollywood Boulevard 585; 575 - 634
26.02 1349 N. Detroit Street 475; 450 - 505 625; 545 - 660 790; 785 - 796
26.03 7140 De Longpre Avenue 494; 475 - 510 600; 555 - 620
26.04 219 S. Mariposa 500; 475 - 550 750; 725 - 765
26.05 1030 N. Orange Grove Avenue 625; 506 - 681 753; 618 - 870
26.06 7364 Hollywood Boulevard 500; 495 - 509 625; 613 - 700 850; 782 - 849
26.07 1750 El Cerrito Place 500; 440 - 520 595; 585 - 620 850; 850 - 850
26.08 7278 Hollywood Boulevard 510; 500 - 525 625; 620 - 648 800; 782 - 850
26.09 3824 Motor Avenue 550; 495 - 565 650; 595 - 680
26.10 1010 Raleigh Street 700; 660 - 725
28 Long Brook 672; 625 - 765 792; 670 - 895
29 Somerset Apartments 459 629
31 Whitehall Estates 655; 630 - 680 835; 810 - 860
33 Morgan Place Apartments 722 884
35 Lantana /Park Trace Apartments
35.01 Lantana 470 597
35.02 Park Trace Apartments 588
36 Las Palomas Apartments 579; 565 - 620 709; 660 - 726
38 Wildwood Village Apartments 512; 490 - 545 658; 590 - 730
43 Gardens at Annen Woods 800 949
46 Gabes Place Apartments Portfolio
46.01 202 E. John 475; 475 - 475 559; 550 - 630 697; 680 - 705
46.02 102 E. Gregory 375; 375 - 375 547; 480 - 680
46.03 810 Iowa 670; 670 - 670
46.04 807 W. Oregon 600; 600 - 600 700; 700 - 700
46.05 811 W. Oregon
47 Briarwood Apartments 489 542
51 Palm Villas Apartments 595; 595 - 595 685; 685 - 685 820; 795 - 845
59 Belmont Crossing 475 575
60 Timber Creek Apartments 554; 510 - 590 715; 705 - 725
61 Windgate Place 512 589
64 Rockwood Gardens 611; 595 - 725 702; 695 - 745
67 Autumn Park Apartments 510; 495 - 560
70 Tuscany Village Phase II
73 Beechwood Villa Apartments 437 485
75 Grande Apartments 587; 575 - 625 720; 690 - 850 858; 850 - 950
79 Livingston Place 472
94 Somerpoint (Woodvalley) 497 563
107 Steeplechase Apartments Portfolio
107.01 143 Pine Street
107.02 190 Wood Circle 550; 550 - 550
107.03 311 Hardin Street
107.04 784 Howard Street
117 Village East Apartments 290; 275 - 300 450; 405 - 475 554; 472 - 595
120 The Trails Apartments 368; 360 - 379 495; 460 - 529
121 Woodfield Gardens 510 605
124 Shrine Apartments 650; 650 - 650 1450; 1450 - 1450
129 Highland Terrace 597; 575 - 630 679; 645 - 745
131 Coquina Lakes Apartments 607; 590 - 620
136 Cosmopolitan Apartments 565; 393 - 650
138 Sandridge Apartments 499; 495 - 510
140 Tree Top Apartments 390; 350 - 425 500; 425 - 650
144 Sun Shadow Apartments 355; 355 - 355 415; 415 - 415 542; 530 - 565
146 Cascade Apartments 450; 450 - 450 588; 554 - 693
149 Taylor Apartments 854; 850 - 875 1102; 1075 - 1150
152 The Coral Tree Apartments 1073; 925 - 1240
158 Pine Brook Apartments 403; 245 - 445 476; 465 - 505
161 Ocean Terrace 716; 594 - 800
162 1105/1105/1105 Downey; 1114 Clement;
1106/Calhoun;
162.01 1104/1105/1108 Downey
162.02 1114 Clement
162.03 1106 Calhoun
163 Harvard Apartments 360; 350 - 370
166 Goldome Portfolio
166.01 Arlington Apartments
166.02 Genoa & Sagamore Apartments
166.03 Glendale Apartments
166.04 Norton Apartments
166.05 Roycroft Apartments
173 Robert Arms Apartments 475; 430 - 525 592; 570 - 635
177 Amberwood Apartments 508; 495 - 545
178 The Palms of Sarasota 500; 500 - 500 655; 625 - 725
181 Madison Ridge Apartments 496; 495 - 525 596; 595 - 625
184 Gates Place Apartments 563; 500 - 625 598; 431 - 683 680; 325 - 851
186 506-508 Fairfax Street
188 Hamilton Park Apartments 417; 365 - 450 555; 480 - 620 641; 508 - 735
214 Flenniken Square 452; 419 - 465
217 606-610 Clement Street
220 605-607 Downey Street 506; 500 - 510
221 Carroll Lane Apartments 394; 363 - 420 464; 408 - 490
222 1208 Clement Street
<CAPTION>
Average Rent, Rent Average Rent, Rent
Control Number Property Name Ranges - 3 BR Ranges - 4 BR
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
3 Lakeside Apartments 927; 915 - 940
6 Hickory Lake 675
13 Sherwood Apartments 985; 985 - 985
14 Villa Serena Apartments 995; 995 - 995
15 194 East Second Street Apartments 3700; 3700 - 3700 5280; 4800 - 5900
16 Executive House 1342; 1342 - 1342
19 Windsor Falls Apartments 895
24 Kings Bridge 844 1100
25 Walden Village 743
26 Garnet Lake Portfolio
26.01 7510 Hollywood Boulevard
26.02 1349 N. Detroit Street 900; 900 - 900
26.03 7140 De Longpre Avenue
26.04 219 S. Mariposa
26.05 1030 N. Orange Grove Avenue
26.06 7364 Hollywood Boulevard
26.07 1750 El Cerrito Place
26.08 7278 Hollywood Boulevard
26.09 3824 Motor Avenue
26.10 1010 Raleigh Street
28 Long Brook
29 Somerset Apartments
31 Whitehall Estates 990; 980 - 1000
33 Morgan Place Apartments
35 Lantana /Park Trace Apartments
35.01 Lantana
35.02 Park Trace Apartments 708
36 Las Palomas Apartments 805; 760 - 820
38 Wildwood Village Apartments
43 Gardens at Annen Woods 1050
46 Gabes Place Apartments Portfolio
46.01 202 E. John 965; 950 - 980 1050; 1050 - 1050
46.02 102 E. Gregory 1325; 1000 - 1500
46.03 810 Iowa
46.04 807 W. Oregon 925; 925 - 925
46.05 811 W. Oregon 1033; 998 - 1033
47 Briarwood Apartments
51 Palm Villas Apartments
59 Belmont Crossing
60 Timber Creek Apartments
61 Windgate Place
64 Rockwood Gardens
67 Autumn Park Apartments 610; 595 - 650
70 Tuscany Village Phase II 1342; 1342 - 1342
73 Beechwood Villa Apartments 637
75 Grande Apartments
79 Livingston Place
94 Somerpoint (Woodvalley)
107 Steeplechase Apartments Portfolio
107.01 143 Pine Street 980; 940 - 1000
107.02 190 Wood Circle 800; 800 - 800 960; 940 - 1000
107.03 311 Hardin Street 960; 940 - 1000
107.04 784 Howard Street 980; 940 - 1000
117 Village East Apartments 675; 514 - 750 794; 725 - 900
120 The Trails Apartments
121 Woodfield Gardens
124 Shrine Apartments
129 Highland Terrace 911; 900 - 925
131 Coquina Lakes Apartments
136 Cosmopolitan Apartments
138 Sandridge Apartments 608; 595 - 620
140 Tree Top Apartments 635; 535 - 650
144 Sun Shadow Apartments 675; 675 - 675
146 Cascade Apartments 742; 742 - 742
149 Taylor Apartments 1543; 1350 - 1775
152 The Coral Tree Apartments 1470; 1395 - 1500
158 Pine Brook Apartments
161 Ocean Terrace
162 1105/1105/1105 Downey; 1114 Clement;
1106/Calhoun;
162.01 1104/1105/1108 Downey 966; 860 - 1100
162.02 1114 Clement 975; 880 - 1125
162.03 1106 Calhoun 913; 905 - 920
163 Harvard Apartments
166 Goldome Portfolio
166.01 Arlington Apartments
166.02 Genoa & Sagamore Apartments
166.03 Glendale Apartments
166.04 Norton Apartments
166.05 Roycroft Apartments
173 Robert Arms Apartments
177 Amberwood Apartments 610; 595 - 725
178 The Palms of Sarasota
181 Madison Ridge Apartments
184 Gates Place Apartments
186 506-508 Fairfax Street 630; 630 - 630
188 Hamilton Park Apartments
214 Flenniken Square 564; 564 - 564
217 606-610 Clement Street 880; 880 - 880
220 605-607 Downey Street 840; 780 - 900
221 Carroll Lane Apartments
222 1208 Clement Street 703; 690 - 705
</TABLE>
<PAGE>
FIRST UNION NATIONAL BANK - CHASE MANHATTAN BANK COMMERCIAL MORTGAGE TRUST
SERIES 1999-C2
ANNEX A-4
<TABLE>
<CAPTION>
RESERVE ACCOUNT
General
Control Number Property Name Property Type Specific Property Type
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1 Sheraton Suites Portfolio Hospitality Full Service
1.01 Sheraton Suites Wilmington Hospitality Full Service
1.02 Sheraton Suites Dallas Hospitality Full Service
1.03 Sheraton Suites Elk Grove Hospitality Full Service
2 Olen Portfolio Mixed Use Office/Flex
2.01 Jamboree Corporate Park Mixed Use Office/Flex
2.02 Newport Mesa Centre Mixed Use Office/Flex
2.03 Olen Corporate Center Office
2.04 Orange Freeway Business Park Mixed Use Office/Flex
2.05 Spectrum Pointe Mixed Use Office/Flex
2.06 Von Karman Research Center Mixed Use Office/Warehouse
3 Lakeside Apartments Multifamily Conventional
4 Wynfrey Hotel at Riverchase Galleria Hospitality Full Service
5 Wilshire Portfolio Office
5.01 Wilshire Doheny Bldg Office
5.02 ICM Building Office
5.03 Wilshire Palm Bldg Office
6 Hickory Lake Multifamily Conventional
7 Westgate Village Retail Anchored
8 1055 Washington Blvd. Office
9 Oak Park Commons Retail Anchored
10 Vista Ridge Plaza I, II & Shops Retail Anchored
11 Alexis Hotel Hospitality Full Service
12 East Thunderbird Square Retail Anchored
13 Sherwood Apartments Multifamily Conventional
14 Villa Serena Apartments Multifamily Conventional
15 194 East Second Street Apartments Multifamily Conventional
16 Executive House Multifamily Conventional
17 Village West Shopping Center Retail Anchored
18 Marlboro Office/Warehouse Park Office
19 Windsor Falls Apartments Multifamily Conventional
20 Sheraton Hotel - Charleston, SC Hospitality Full Service
21 High Pointe Shopping Center Retail Anchored
22 United Healthcare Office
23 Academy Plaza Retail Anchored
24 Kings Bridge Multifamily Conventional
25 Walden Village Multifamily Conventional
26 Garnet Lake Portfolio Multifamily Conventional
26.01 7510 Hollywood Boulevard Multifamily Conventional
26.02 1349 N. Detroit Street Multifamily Conventional
26.03 7140 De Longpre Avenue Multifamily Conventional
26.04 219 S. Mariposa Multifamily Conventional
26.05 1030 N. Orange Grove Avenue Multifamily Conventional
26.06 7364 Hollywood Boulevard Multifamily Conventional
26.07 1750 El Cerrito Place Multifamily Conventional
26.08 7278 Hollywood Boulevard Multifamily Conventional
26.09 3824 Motor Avenue Multifamily Conventional
26.10 1010 Raleigh Street Multifamily Conventional
27 Orange Derby Shopping Center Retail Anchored
28 Long Brook Multifamily Conventional
29 Somerset Apartments Multifamily Conventional
30 353 Lexington Avenue Office
31 Whitehall Estates Multifamily Conventional
32 Vista Shopping Center Retail Anchored
33 Morgan Place Apartments Multifamily Conventional
34 Ridgedale Festival Shopping Center Retail Anchored
35 Lantana /Park Trace Apartments Multifamily Conventional
35.01 Lantana Multifamily Conventional
35.02 Park Trace Apartments Multifamily Conventional
36 Las Palomas Apartments Multifamily Conventional
37 Mercy Wellness Centers Portfolio Office
37.01 Eastwick Wellness Center Office
37.02 Upper Darby Wellness Center Office
38 Wildwood Village Apartments Multifamily Conventional
39 Hampton Inn Maingate Hospitality Limited Service
40 Circuit City Norwalk 444 Retail Electronics Store
41 Target Center Retail Anchored
42 Westgate Shopping Center Retail Anchored
43 Gardens at Annen Woods Multifamily Conventional
44 Auburn - Southbridge Center Retail Anchored
45 Cornerstone Shopping Center Retail Anchored
46 Gabes Place Apartments Portfolio Multifamily Conventional
46.01 202 E. John Multifamily Conventional
46.02 102 E. Gregory Multifamily Conventional
46.03 810 Iowa Multifamily Conventional
46.04 807 W. Oregon Multifamily Conventional
46.05 811 W. Oregon Multifamily Conventional
47 Briarwood Apartments Multifamily Conventional
48 3 - 7 West 35th Street Office
49 Radio Wave Building Office
50 Market Square Shopping Center Retail Anchored
51 Palm Villas Apartments Multifamily Conventional
52 Kohl's Department Store Retail Anchored
53 467 West Avenue Retail Anchored
54 Motel 6 1115 Raleigh Hospitality Limited Service
55 Crown Valley Retail Center Retail Anchored
56 Residence Inn - Tampa Hospitality Limited Service
57 Comfort Suites - Gastonia Hospitality Limited Service
58 Cityplace Market Retail Anchored
59 Belmont Crossing Multifamily Conventional
60 Timber Creek Apartments Multifamily Conventional
<CAPTION>
Monthly Monthly
CTL Tax Insurance
Control Number Property Name Flag Escrow Escrow
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1 Sheraton Suites Portfolio 102,242
1.01 Sheraton Suites Wilmington
1.02 Sheraton Suites Dallas
1.03 Sheraton Suites Elk Grove
2 Olen Portfolio 29,175
2.01 Jamboree Corporate Park 3,866
2.02 Newport Mesa Centre 3,491
2.03 Olen Corporate Center 3,763
2.04 Orange Freeway Business Park 2,897
2.05 Spectrum Pointe 14,312
2.06 Von Karman Research Center 846
3 Lakeside Apartments 19,496 3,500
4 Wynfrey Hotel at Riverchase Galleria 17,692
5 Wilshire Portfolio 30,003
5.01 Wilshire Doheny Bldg
5.02 ICM Building
5.03 Wilshire Palm Bldg
6 Hickory Lake 15,769
7 Westgate Village 17,517
8 1055 Washington Blvd. 31,920
9 Oak Park Commons 28,747
10 Vista Ridge Plaza I, II & Shops 69,384
11 Alexis Hotel 17,435
12 East Thunderbird Square 29,141 2,036
13 Sherwood Apartments 13,658 2,378
14 Villa Serena Apartments 12,932
15 194 East Second Street Apartments 1,539 2,236
16 Executive House 21,933 3,892
17 Village West Shopping Center 16,131
18 Marlboro Office/Warehouse Park 32,985
19 Windsor Falls Apartments 10,795
20 Sheraton Hotel - Charleston, SC 16,224 8,971
21 High Pointe Shopping Center 19,298
22 United Healthcare
23 Academy Plaza 15,717
24 Kings Bridge 13,226
25 Walden Village 14,214
26 Garnet Lake Portfolio 13,968 5,736
26.01 7510 Hollywood Boulevard 829 1,502
26.02 1349 N. Detroit Street 989 205
26.03 7140 De Longpre Avenue 564 104
26.04 219 S. Mariposa 675 183
26.05 1030 N. Orange Grove Avenue 1,900 625
26.06 7364 Hollywood Boulevard 1,908 552
26.07 1750 El Cerrito Place 1,154 227
26.08 7278 Hollywood Boulevard 1,388 583
26.09 3824 Motor Avenue 2,087 1,241
26.10 1010 Raleigh Street 2,475 513
27 Orange Derby Shopping Center 11,272
28 Long Brook 23,209
29 Somerset Apartments 15,440
30 353 Lexington Avenue 28,217
31 Whitehall Estates 9,810 1,581
32 Vista Shopping Center 12,291
33 Morgan Place Apartments 14,029
34 Ridgedale Festival Shopping Center 39,200
35 Lantana /Park Trace Apartments 15,769
35.01 Lantana
35.02 Park Trace Apartments
36 Las Palomas Apartments 7,271 1,685
37 Mercy Wellness Centers Portfolio 9,325 868
37.01 Eastwick Wellness Center 7,713 340
37.02 Upper Darby Wellness Center 1,612 527
38 Wildwood Village Apartments 23,198 3,632
39 Hampton Inn Maingate 5,671
40 Circuit City Norwalk 444 CTL
41 Target Center 10,749
42 Westgate Shopping Center 22,147
43 Gardens at Annen Woods 8,747
44 Auburn - Southbridge Center 3,168 256
45 Cornerstone Shopping Center 2,609 760
46 Gabes Place Apartments Portfolio 9,680 1,115
46.01 202 E. John
46.02 102 E. Gregory
46.03 810 Iowa
46.04 807 W. Oregon
46.05 811 W. Oregon
47 Briarwood Apartments 11,247
48 3 - 7 West 35th Street 17,364
49 Radio Wave Building 22,524 789
50 Market Square Shopping Center 11,050 2,456
51 Palm Villas Apartments 142
52 Kohl's Department Store 7,159
53 467 West Avenue 7,937 514
54 Motel 6 1115 Raleigh CTL
55 Crown Valley Retail Center 9,337
56 Residence Inn - Tampa 8,333 1,248
57 Comfort Suites - Gastonia 1,950 689
58 Cityplace Market 14,891
59 Belmont Crossing 3,165
60 Timber Creek Apartments 11,975 1,273
<CAPTION>
Initial Deposit
Annual Deposit to Capital
to Replacement Improvements Initial TI/LC TI/LC
Control Number Property Name Reserve Reserve Escrow Footnotes
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 Sheraton Suites Portfolio 1,084,005 29,375
1.01 Sheraton Suites Wilmington
1.02 Sheraton Suites Dallas
1.03 Sheraton Suites Elk Grove
2 Olen Portfolio 91,297 125,450 750,000
2.01 Jamboree Corporate Park 10,177 65,063 123,750
2.02 Newport Mesa Centre 35,412 28,006 74,250
2.03 Olen Corporate Center 10,295 7,875 114,750
2.04 Orange Freeway Business Park 18,650 10,819 142,500
2.05 Spectrum Pointe 16,508 255,000
2.06 Von Karman Research Center 3,000 13,688 39,750
3 Lakeside Apartments 115,250
4 Wynfrey Hotel at Riverchase Galleria 625,035 35,313
5 Wilshire Portfolio 35,137 327,712
5.01 Wilshire Doheny Bldg
5.02 ICM Building
5.03 Wilshire Palm Bldg
6 Hickory Lake 40,625
7 Westgate Village 13,656 48,656
8 1055 Washington Blvd. 25,925 17,125 a
9 Oak Park Commons a
10 Vista Ridge Plaza I, II & Shops 23,412 3,125
11 Alexis Hotel 353,640
12 East Thunderbird Square 16,435 a
13 Sherwood Apartments 74,000 47,750
14 Villa Serena Apartments
15 194 East Second Street Apartments 15,250 5,750
16 Executive House 94,224
17 Village West Shopping Center 26,758
18 Marlboro Office/Warehouse Park 43,200 3,667
19 Windsor Falls Apartments 34,272 6,595
20 Sheraton Hotel - Charleston, SC 284,913 159,775
21 High Pointe Shopping Center 8,100
22 United Healthcare
23 Academy Plaza 8,004 17,888 a
24 Kings Bridge 41,406
25 Walden Village 101,424 4,875
26 Garnet Lake Portfolio 75,211 124,364
26.01 7510 Hollywood Boulevard 4,672 16,389
26.02 1349 N. Detroit Street 5,780 4,943
26.03 7140 De Longpre Avenue 2,500 12,440
26.04 219 S. Mariposa 4,000 4,459
26.05 1030 N. Orange Grove Avenue 6,750 5,676
26.06 7364 Hollywood Boulevard 8,460 6,438
26.07 1750 El Cerrito Place 6,336 7,768
26.08 7278 Hollywood Boulevard 8,679 9,020
26.09 3824 Motor Avenue 23,480 52,486
26.10 1010 Raleigh Street 9,000 4,746
27 Orange Derby Shopping Center 22,248 96,938 50,000
28 Long Brook 48,000 175,500
29 Somerset Apartments 111,113
30 353 Lexington Avenue 8,500 10,500
31 Whitehall Estates
32 Vista Shopping Center 14,256 400,000 a
33 Morgan Place Apartments 41,710 29,610
34 Ridgedale Festival Shopping Center 9,618 1,938 21,984 a
35 Lantana /Park Trace Apartments 80,184
35.01 Lantana
35.02 Park Trace Apartments
36 Las Palomas Apartments 68,000 2,188
37 Mercy Wellness Centers Portfolio 10,164 236,181
37.01 Eastwick Wellness Center 5,425 3,125
37.02 Upper Darby Wellness Center 4,739 233,056
38 Wildwood Village Apartments 83,592 14,981
39 Hampton Inn Maingate 122,497 21,400
40 Circuit City Norwalk 444 8,448
41 Target Center 34,316 3,000 a
42 Westgate Shopping Center 14,700 2,500 a
43 Gardens at Annen Woods 36,432 261,574
44 Auburn - Southbridge Center 4,193 438
45 Cornerstone Shopping Center 4,050
46 Gabes Place Apartments Portfolio 63,500 49,750
46.01 202 E. John 30,000 8,625
46.02 102 E. Gregory 17,000 20,688
46.03 810 Iowa 6,000 2,688
46.04 807 W. Oregon 6,000 3,438
46.05 811 W. Oregon 4,500 3,750
47 Briarwood Apartments 65,916
48 3 - 7 West 35th Street 13,003 118,320 118,320
49 Radio Wave Building 9,303 5,625 1,033,731
50 Market Square Shopping Center 40,827 41,875 a
51 Palm Villas Apartments 25,200 750
52 Kohl's Department Store 16,368
53 467 West Avenue 6,814 86,706 450,000
54 Motel 6 1115 Raleigh
55 Crown Valley Retail Center 5,926 1,563
56 Residence Inn - Tampa 86,781
57 Comfort Suites - Gastonia 85,646
58 Cityplace Market 4,193 a
59 Belmont Crossing 3,750
60 Timber Creek Apartments 41,000 250
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
General
Control Number Property Name Property Type Specific Property Type
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
61 Windgate Place Multifamily Conventional
62 Winn Dixie Chesapeake Cedar Retail Grocery Store
63 Residence Inn - Sarasota Hospitality Limited Service
64 Rockwood Gardens Multifamily Conventional
65 New Rochelle Nursing Home Healthcare Skilled Nursing
66 Kjellburg Mobile Home Park MHC
67 Autumn Park Apartments Multifamily Conventional
68 111 Devonshire Street Building Office
69 Shopko - Site 814 Retail Anchored
70 Tuscany Village Phase II Multifamily Conventional
71 Marsh Creek Corporate Center II Industrial Warehouse/Distribution
72 Shopko - Site 815 Retail Anchored
73 Beechwood Villa Apartments Multifamily Conventional
74 Comfort Inn Alexandria Hospitality Limited Service
75 Grande Apartments Multifamily Conventional
76 Residence Inn/Knoxville Hospitality Limited Service
77 Clocktower Square Center Mixed Use Retail/Office
78 The Villas at College Hill Healthcare Assisted Living
79 Livingston Place Multifamily Conventional
80 Taylor & Bird Portfolio Healthcare Skilled Nursing
80.01 Claxton Healthcare Skilled Nursing
80.02 Metter Healthcare Skilled Nursing
80.03 Statesboro Healthcare Skilled Nursing
81 One Hollis Street Office
82 Warehousing of Wisconsin - Century Industrial Warehouse/Distribution
83 Marsh Creek Corporate Center I Industrial Warehouse/Distribution
84 Shopko - Site 889/ The Joplin Mall Retail Anchored
85 Tustin & Katella Retail Center Retail Anchored
86 Triangle Building Office
87 Motel 6 1129 Hilton Head Hospitality Limited Service
88 Intertech Building Office
89 Days Inn - Alexandria Hospitality Limited Service
90 Village Square Shopping Center Retail Unanchored
91 Raymond Building Office
92 Eagle Davenport Locust Retail Grocery Store
93 Sabre Springs Marketplace Retail Unanchored
94 Somerpoint (Woodvalley) Multifamily Conventional
95 Motel 6 1081 Little Rock (W) Hospitality Limited Service
96 Astor Avenue Office Building Office Medical
97 K&K Warehousing Industrial Warehouse/Distribution
98 Towne View Plaza Retail Center Retail Unanchored
99 456-458 Sackett Point Road Industrial Warehouse/Distribution
100 SDJ Enterprises Industrial Warehouse/Distribution
101 Ramada Plaza West Hospitality Full Service
102 Polk Street Retail Unanchored
103 Delmont Village Shopping Center Retail Anchored
104 Golden Horseshoe Shopping Center Retail Unanchored
105 Cottman Plaza Retail Anchored
106 Town Square Office & Retail Plaza Office
107 Steeplechase Apartments Portfolio Multifamily Conventional
107.01 143 Pine Street Multifamily Conventional
107.02 190 Wood Circle Multifamily Conventional
107.03 311 Hardin Street Multifamily Conventional
107.04 784 Howard Street Multifamily Conventional
108 Statesville Place Healthcare Assisted Living
109 Motel 6 740 Reno Sparks Hospitality Limited Service
110 Deerfoot Office Park Office
111 Motel 6 608 Mobile Hospitality Limited Service
112 Burlington Manor Healthcare Assisted Living
113 Rite Aid - Commerce Township Retail Drug Store
114 Old City Market Mixed Use Retail/Office
115 Paseo Financial Center Office
116 1160-1180 Eugenia Place Office
117 Village East Apartments Multifamily Conventional
118 Rhodes Furniture - Fort Meyers, FL Retail Anchored
119 Walgreen Colleyville Retail Drug Store
120 The Trails Apartments Multifamily Conventional
121 Woodfield Gardens Multifamily Conventional
122 Rite Aid - Holland Retail Drug Store
123 Days Inn Fredericksburg South Hospitality Limited Service
124 Shrine Apartments Multifamily Conventional
125 Walgreens at Silver Lakes Retail Drug Store
126 Best Western Governors Inn Hospitality Full Service
127 Staples York Loucks Road Retail Office Supplies
128 OfficeMax Retail Center Retail Anchored
129 Highland Terrace Multifamily Conventional
130 Fairfield Inn - Mobile Hospitality Limited Service
131 Coquina Lakes Apartments Multifamily Conventional
132 Walgreen Franklin Fieldstone Retail Drug Store
133 Riverside Parkway Mixed Use Office/Retail
134 CVS Yarmouth Main Retail Drug Store
135 Walgreen Duncanville Wheatland Retail Drug Store
136 Cosmopolitan Apartments Multifamily Conventional
137 Rite Aid - Claremont Retail Drug Store
138 Sandridge Apartments Multifamily Conventional
139 Rancho Palms MHC
140 Tree Top Apartments Multifamily Conventional
141 Tri-Star Building Industrial Warehouse/Distribution
142 Days Inn Shreveport Hospitality Limited Service
143 Warehousing of Wisconsin - Larsen Industrial Warehouse/Distribution
144 Sun Shadow Apartments Multifamily Conventional
145 Eckerd Oveido Red Bug Lake Retail Drug Store
146 Cascade Apartments Multifamily Conventional
147 Rite Aid - Ironton Retail Drug Store
148 Centre Financial Portfolio Retail Unanchored
<CAPTION>
Monthly Monthly
CTL Tax Insurance
Control Number Property Name Flag Escrow Escrow
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
61 Windgate Place 4,573
62 Winn Dixie Chesapeake Cedar CTL
63 Residence Inn - Sarasota 7,500 1,252
64 Rockwood Gardens 17,688 4,355
65 New Rochelle Nursing Home 8,972 3,213
66 Kjellburg Mobile Home Park 5,279 547
67 Autumn Park Apartments 4,695 500
68 111 Devonshire Street Building 13,859 519
69 Shopko - Site 814 10,452
70 Tuscany Village Phase II 1,820 1,645
71 Marsh Creek Corporate Center II 6,306 482
72 Shopko - Site 815 8,179
73 Beechwood Villa Apartments 7,563
74 Comfort Inn Alexandria 4,458 1,034
75 Grande Apartments 12,445
76 Residence Inn/Knoxville 6,667 1,139
77 Clocktower Square Center 9,664 681
78 The Villas at College Hill 2,600 1,994
79 Livingston Place 5,570
80 Taylor & Bird Portfolio 3,030
80.01 Claxton 1,109
80.02 Metter 1,078
80.03 Statesboro 843
81 One Hollis Street 4,461 532
82 Warehousing of Wisconsin - Century
83 Marsh Creek Corporate Center I 6,021 447
84 Shopko - Site 889/ The Joplin Mall 1,490
85 Tustin & Katella Retail Center 6,012 709
86 Triangle Building 8,720
87 Motel 6 1129 Hilton Head CTL
88 Intertech Building 11,296 509
89 Days Inn - Alexandria 5,083 1,565
90 Village Square Shopping Center 1,947 1,032
91 Raymond Building 1,036
92 Eagle Davenport Locust CTL
93 Sabre Springs Marketplace 4,391 505
94 Somerpoint (Woodvalley) 3,065
95 Motel 6 1081 Little Rock (W) CTL
96 Astor Avenue Office Building 2,918 541
97 K&K Warehousing 3,210 1,673
98 Towne View Plaza Retail Center 2,050 809
99 456-458 Sackett Point Road 4,816 672
100 SDJ Enterprises 2,827
101 Ramada Plaza West 5,813 1,524
102 Polk Street 514 622
103 Delmont Village Shopping Center 1,679
104 Golden Horseshoe Shopping Center 34,481 4,388
105 Cottman Plaza 3,619
106 Town Square Office & Retail Plaza 3,294 322
107 Steeplechase Apartments Portfolio 2,198 1,198
107.01 143 Pine Street 162 86
107.02 190 Wood Circle 1,392 770
107.03 311 Hardin Street 392 214
107.04 784 Howard Street 253 128
108 Statesville Place 1,277 195
109 Motel 6 740 Reno Sparks CTL
110 Deerfoot Office Park 3,176 251
111 Motel 6 608 Mobile CTL
112 Burlington Manor 1,723 871
113 Rite Aid - Commerce Township CTL
114 Old City Market 4,774 1,999
115 Paseo Financial Center 1,734
116 1160-1180 Eugenia Place 3,188
117 Village East Apartments 3,585 1,457
118 Rhodes Furniture - Fort Meyers, FL
119 Walgreen Colleyville CTL
120 The Trails Apartments 5,158 1,380
121 Woodfield Gardens 2,834
122 Rite Aid - Holland CTL
123 Days Inn Fredericksburg South 2,119 1,871
124 Shrine Apartments 2,282 586
125 Walgreens at Silver Lakes CTL
126 Best Western Governors Inn 1,935 535
127 Staples York Loucks Road CTL
128 OfficeMax Retail Center 2,467 429
129 Highland Terrace 6,568 854
130 Fairfield Inn - Mobile 2,375 905
131 Coquina Lakes Apartments 2,562 1,545
132 Walgreen Franklin Fieldstone CTL
133 Riverside Parkway 2,209 497
134 CVS Yarmouth Main CTL
135 Walgreen Duncanville Wheatland CTL
136 Cosmopolitan Apartments 2,465 2,454
137 Rite Aid - Claremont CTL
138 Sandridge Apartments 2,261 387
139 Rancho Palms 2,148 463
140 Tree Top Apartments 4,962 1,057
141 Tri-Star Building 2,585 1,756
142 Days Inn Shreveport 5,010 1,456
143 Warehousing of Wisconsin - Larsen
144 Sun Shadow Apartments 3,080 743
145 Eckerd Oveido Red Bug Lake CTL
146 Cascade Apartments 3,354 844
147 Rite Aid - Ironton CTL
148 Centre Financial Portfolio 7,318 1,237
<CAPTION>
Initial Deposit
Annual Deposit to Capital
to Replacement Improvements Initial TI/LC TI/LC
Control Number Property Name Reserve Reserve Escrow Footnotes
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
61 Windgate Place 51,192 3,500
62 Winn Dixie Chesapeake Cedar
63 Residence Inn - Sarasota 83,031
64 Rockwood Gardens 64,893 1,125
65 New Rochelle Nursing Home 48,000 66,026
66 Kjellburg Mobile Home Park 21,172 28,813
67 Autumn Park Apartments 36,000 5,000
68 111 Devonshire Street Building 37,918 27,265
69 Shopko - Site 814 4,274 8,000
70 Tuscany Village Phase II 12,000
71 Marsh Creek Corporate Center II 38,012 53,833 a
72 Shopko - Site 815 4,938 8,000
73 Beechwood Villa Apartments 38,640 12,500
74 Comfort Inn Alexandria 87,407 8,906
75 Grande Apartments 30,821 9,074
76 Residence Inn/Knoxville 73,102
77 Clocktower Square Center 9,683 4,875 105,000
78 The Villas at College Hill 28,194 14,031
79 Livingston Place 4,169
80 Taylor & Bird Portfolio
80.01 Claxton
80.02 Metter
80.03 Statesboro
81 One Hollis Street 2,800
82 Warehousing of Wisconsin - Century 9,200 200,000 a
83 Marsh Creek Corporate Center I 36,000 3,967 a
84 Shopko - Site 889/ The Joplin Mall 16,155 1,625
85 Tustin & Katella Retail Center a
86 Triangle Building 17,616 28,000
87 Motel 6 1129 Hilton Head
88 Intertech Building 25,157 158,416 500,000
89 Days Inn - Alexandria 101,363 14,063
90 Village Square Shopping Center 5,544
91 Raymond Building 10,752 1,875
92 Eagle Davenport Locust
93 Sabre Springs Marketplace 3,460 100,000
94 Somerpoint (Woodvalley) 2,000
95 Motel 6 1081 Little Rock (W)
96 Astor Avenue Office Building 1,990
97 K&K Warehousing 27,464 23,500
98 Towne View Plaza Retail Center 3,194
99 456-458 Sackett Point Road 1,750 53,480 a
100 SDJ Enterprises 81,672 125,000 a
101 Ramada Plaza West 92,810 21,125
102 Polk Street 1,371
103 Delmont Village Shopping Center 7,611 19,375
104 Golden Horseshoe Shopping Center 11,276 47,594
105 Cottman Plaza 13,752 5,094
106 Town Square Office & Retail Plaza 3,900
107 Steeplechase Apartments Portfolio 16,800 2,500
107.01 143 Pine Street 2,131 1,188
107.02 190 Wood Circle 9,000
107.03 311 Hardin Street 3,872 1,188
107.04 784 Howard Street 2,683 125
108 Statesville Place 18,500
109 Motel 6 740 Reno Sparks
110 Deerfoot Office Park 34,620 262,000 23,080 a
111 Motel 6 608 Mobile
112 Burlington Manor 15,750
113 Rite Aid - Commerce Township
114 Old City Market 8,726
115 Paseo Financial Center 4,476 373
116 1160-1180 Eugenia Place 4,896
117 Village East Apartments 37,092 29,000
118 Rhodes Furniture - Fort Meyers, FL 21,875
119 Walgreen Colleyville 2,781
120 The Trails Apartments 33,896 2,438
121 Woodfield Gardens 32,604 1,000
122 Rite Aid - Holland
123 Days Inn Fredericksburg South 50,291
124 Shrine Apartments 14,700 22,000
125 Walgreens at Silver Lakes 4,172
126 Best Western Governors Inn 42,905 4,500
127 Staples York Loucks Road 8,887 1,875
128 OfficeMax Retail Center 5,011 750
129 Highland Terrace 21,000 8,750
130 Fairfield Inn - Mobile 48,208
131 Coquina Lakes Apartments 20,000 18,750
132 Walgreen Franklin Fieldstone 2,781
133 Riverside Parkway 3,320 4,063 80,000
134 CVS Yarmouth Main 2,993
135 Walgreen Duncanville Wheatland 4,172 4,375
136 Cosmopolitan Apartments 29,250 375
137 Rite Aid - Claremont
138 Sandridge Apartments 18,072
139 Rancho Palms 6,890 14,250
140 Tree Top Apartments 32,000 47,750
141 Tri-Star Building 2,500
142 Days Inn Shreveport 60,956 17,125
143 Warehousing of Wisconsin - Larsen 6,300 75,000 a
144 Sun Shadow Apartments 31,000
145 Eckerd Oveido Red Bug Lake
146 Cascade Apartments 25,456 9,494
147 Rite Aid - Ironton
148 Centre Financial Portfolio 6,650 10,188 a
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
General
Control Number Property Name Property Type Specific Property Type
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
148.01 Starbuck's Uniondale Retail Unanchored
148.02 Starbuck's Long Beach Retail Unanchored
148.03 Birch Hill Square Retail Unanchored
149 Taylor Apartments Multifamily Conventional
150 Days Inn - Charlotte Hospitality Limited Service
151 Roosevelt Plaza Mixed Use Office/Retail
152 The Coral Tree Apartments Multifamily Conventional
153 Commack Commons Retail Unanchored
154 Shafer Plaza VIII Retail Unanchored
155 Rhodes Furniture - Montgomery, AL Retail Anchored
156 Union Savings Bank Office
157 Hewitt Square Shopping Center Retail Unanchored
158 Pine Brook Apartments Multifamily Conventional
159 Mayfair House - Woodstock Healthcare Assisted Living
160 Community Self Storage of Charlottesville Self Storage
161 Ocean Terrace Multifamily Conventional
162 1105/1105/1105 Downey; 1114 Clement; 1106 Calhoun Multifamily Conventional
162.01 1104/1105/1108 Downey Multifamily Conventional
162.02 1114 Clement Multifamily Conventional
162.03 1106 Calhoun Multifamily Conventional
163 Harvard Apartments Multifamily Conventional
164 Interama Warehouses Industrial Warehouse/Distribution
165 Lakeview Warehouse Industrial Warehouse/Distribution
166 Goldome Portfolio Multifamily Conventional
166.01 Arlington Apartments Multifamily Conventional
166.02 Genoa & Sagamore Apartments Multifamily Conventional
166.03 Glendale Apartments Multifamily Conventional
166.04 Norton Apartments Multifamily Conventional
166.05 Roycroft Apartments Multifamily Conventional
167 Sargent House Healthcare Congregate Care
168 Eckerd Ferber Tallahassee Retail Drug Store
169 CVS Lansdowne Hollins Ferry Retail Drug Store
170 Garden Gate Retail Unanchored
171 Super 8 Motel Hospitality Limited Service
172 Island Lake Mobile Park MHC
173 Robert Arms Apartments Multifamily Conventional
174 Heilig-Meyers - Wilson, NC Retail Anchored
175 Eckerd, Tarboro Retail Drug Store
176 3950-3970 Laconia Avenue Retail Unanchored
177 Amberwood Apartments Multifamily Conventional
178 The Palms of Sarasota Multifamily Conventional
179 Heilig-Meyers - Santa Rosa, CA Retail Anchored
180 CVS Rocky Mount Retail Drug Store
181 Madison Ridge Apartments Multifamily Conventional
182 Days Inn Mt.Sterling Hospitality Limited Service
183 Heilig-Meyers - Riverside, CA Retail Anchored
184 Gates Place Apartments Multifamily Conventional
185 Heilig-Meyers - Richmond, VA Retail Anchored
186 506-508 Fairfax Street Multifamily Conventional
187 Heilig-Meyers - Garner, NC Retail Anchored
188 Hamilton Park Apartments Multifamily Conventional
189 Information Management Systems Building Industrial Warehouse/Distribution
190 IHOP Rock Hill North Cherry Special Purpose Restaurant
191 Heilig-Meyers - Fresno-Blackstone, CA Retail Anchored
192 Mears Warehouse Industrial Warehouse/Distribution
193 CVS Greenville Old Buncombe Retail Drug Store
194 Heilig-Meyers - Forsyth, IL Retail Anchored
195 Heilig-Meyers - Owensboro, KY Retail Anchored
196 Heilig-Meyers - Peru, IL Retail Anchored
197 Heilig-Meyers - Dothan, AL Retail Anchored
198 Heilig-Meyers - Evansville, IN Retail Anchored
199 Heilig-Meyers - Hopkinsville, KY Retail Anchored
200 Heilig-Meyers - Talllahassee, FL Retail Anchored
201 Heilig-Meyers - Visalia, CA Retail Anchored
202 Heilig-Meyers - Pikeville, KY Retail Anchored
203 Heilig-Meyers - Albany, GA Retail Anchored
204 Heilig-Meyers - Heath, OH Retail Anchored
205 Heilig-Meyers - Marion, IL Retail Anchored
206 Heilig-Meyers - Temple, TX Retail Anchored
207 Heilig-Meyers - Zanesville, OH Retail Anchored
208 Heilig-Meyers - Fresno-Kings Canyon, CA Retail Anchored
209 Heilig-Meyers - Jackson, MS Retail Anchored
210 Heilig-Meyers - Modesto, CA Retail Anchored
211 Heilig-Meyers - Champaign, IL Retail Anchored
212 Heilig-Meyers - Sanford, NC Retail Anchored
213 Heilig-Meyers - Moberly, MO Retail Anchored
214 Flenniken Square Multifamily Sec. 42
215 300 Barton Street Retail Anchored
216 Southland Ormond Beach Nova Retail Convenience Store
217 606-610 Clement Street Multifamily Conventional
218 Motel 6 202 Lumberton Hospitality Limited Service
219 Bulova Technologies Building Industrial Warehouse/Distribution
220 605-607 Downey Street Multifamily Conventional
221 Carroll Lane Apartments Multifamily Conventional
222 1208 Clement Street Multifamily Conventional
223 Spring Market Shopping Center Retail Unanchored
<CAPTION>
Monthly Monthly
CTL Tax Insurance
Control Number Property Name Flag Escrow Escrow
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
148.01 Starbuck's Uniondale
148.02 Starbuck's Long Beach
148.03 Birch Hill Square
149 Taylor Apartments 944 429
150 Days Inn - Charlotte 1,621 846
151 Roosevelt Plaza 7,470 258
152 The Coral Tree Apartments 1,733 672
153 Commack Commons 5,078 432
154 Shafer Plaza VIII 4,333 360
155 Rhodes Furniture - Montgomery, AL
156 Union Savings Bank 2,715
157 Hewitt Square Shopping Center 6,444 1,506
158 Pine Brook Apartments 2,486 693
159 Mayfair House - Woodstock 1,097 297
160 Community Self Storage of Charlottesville 973 350
161 Ocean Terrace 3,708
162 1105/1105/1105 Downey; 1114 Clement; 1106 Calhoun 1,138 47
162.01 1104/1105/1108 Downey
162.02 1114 Clement
162.03 1106 Calhoun
163 Harvard Apartments 2,270 1,590
164 Interama Warehouses 3,521 996
165 Lakeview Warehouse 4,260 1,157
166 Goldome Portfolio 2,323 634
166.01 Arlington Apartments 574 153
166.02 Genoa & Sagamore Apartments 410 133
166.03 Glendale Apartments 438 102
166.04 Norton Apartments 356 113
166.05 Roycroft Apartments 545 133
167 Sargent House 803 264
168 Eckerd Ferber Tallahassee CTL
169 CVS Lansdowne Hollins Ferry CTL
170 Garden Gate 2,746 Included in taxes
171 Super 8 Motel 1,384 508
172 Island Lake Mobile Park 766 191
173 Robert Arms Apartments 4,025 257
174 Heilig-Meyers - Wilson, NC
175 Eckerd, Tarboro CTL
176 3950-3970 Laconia Avenue 2,607 1,057
177 Amberwood Apartments 213 182
178 The Palms of Sarasota 3,684 977
179 Heilig-Meyers - Santa Rosa, CA
180 CVS Rocky Mount CTL 354
181 Madison Ridge Apartments 745 433
182 Days Inn Mt.Sterling 1,136 1,529
183 Heilig-Meyers - Riverside, CA
184 Gates Place Apartments 3,863 1,458
185 Heilig-Meyers - Richmond, VA
186 506-508 Fairfax Street 635 195
187 Heilig-Meyers - Garner, NC
188 Hamilton Park Apartments 2,638 363
189 Information Management Systems Building 2,493 1,117
190 IHOP Rock Hill North Cherry CTL
191 Heilig-Meyers - Fresno-Blackstone, CA
192 Mears Warehouse 1,741 749
193 CVS Greenville Old Buncombe CTL
194 Heilig-Meyers - Forsyth, IL
195 Heilig-Meyers - Owensboro, KY
196 Heilig-Meyers - Peru, IL
197 Heilig-Meyers - Dothan, AL
198 Heilig-Meyers - Evansville, IN
199 Heilig-Meyers - Hopkinsville, KY
200 Heilig-Meyers - Talllahassee, FL
201 Heilig-Meyers - Visalia, CA
202 Heilig-Meyers - Pikeville, KY
203 Heilig-Meyers - Albany, GA
204 Heilig-Meyers - Heath, OH
205 Heilig-Meyers - Marion, IL
206 Heilig-Meyers - Temple, TX
207 Heilig-Meyers - Zanesville, OH
208 Heilig-Meyers - Fresno-Kings Canyon, CA
209 Heilig-Meyers - Jackson, MS
210 Heilig-Meyers - Modesto, CA
211 Heilig-Meyers - Champaign, IL
212 Heilig-Meyers - Sanford, NC
213 Heilig-Meyers - Moberly, MO
214 Flenniken Square 2,797.64 600.66
215 300 Barton Street 4,014.52 697.75
216 Southland Ormond Beach Nova CTL
217 606-610 Clement Street 591.26 62.48
218 Motel 6 202 Lumberton CTL
219 Bulova Technologies Building 2,373.45 718.83
220 605-607 Downey Street 447.64 79.00
221 Carroll Lane Apartments 1,556.87 558.24
222 1208 Clement Street 316.17 52.00
223 Spring Market Shopping Center 827.21 171.00
<CAPTION>
Initial Deposit
Annual Deposit to Capital
to Replacement Improvements Initial TI/LC TI/LC
Control Number Property Name Reserve Reserve Escrow Footnotes
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
148.01 Starbuck's Uniondale
148.02 Starbuck's Long Beach
148.03 Birch Hill Square
149 Taylor Apartments 7,000
150 Days Inn - Charlotte 58,152
151 Roosevelt Plaza 3,006 4,976
152 The Coral Tree Apartments 9,090 10,188
153 Commack Commons 7,825 375 a
154 Shafer Plaza VIII 1,850
155 Rhodes Furniture - Montgomery, AL 2,306
156 Union Savings Bank 1,980 1,250
157 Hewitt Square Shopping Center 13,632 34,450 a
158 Pine Brook Apartments 33,500 67,688
159 Mayfair House - Woodstock 14,895
160 Community Self Storage of Charlottesville 8,480
161 Ocean Terrace 9,460 10,163
162 1105/1105/1105 Downey; 1114 Clement; 1106 Calhoun 8,250 941
162.01 1104/1105/1108 Downey
162.02 1114 Clement
162.03 1106 Calhoun
163 Harvard Apartments 36,144 33,942
164 Interama Warehouses 6,000 28,663 80,000 (LOC)
165 Lakeview Warehouse 13,058 2,904 70,000 (LOC)
166 Goldome Portfolio 23,064 45,188
166.01 Arlington Apartments 5,352 10,000
166.02 Genoa & Sagamore Apartments 4,351 8,750
166.03 Glendale Apartments 3,016 7,750
166.04 Norton Apartments 4,547 4,938
166.05 Roycroft Apartments 4,372 13,750
167 Sargent House 6,500 1,000
168 Eckerd Ferber Tallahassee 2,182
169 CVS Lansdowne Hollins Ferry 3,038
170 Garden Gate 3,350 39,813
171 Super 8 Motel 29,765 10,500
172 Island Lake Mobile Park 6,150 2,500
173 Robert Arms Apartments 13,600 502,000
174 Heilig-Meyers - Wilson, NC
175 Eckerd, Tarboro 3,272
176 3950-3970 Laconia Avenue 3,240 a
177 Amberwood Apartments 12,000
178 The Palms of Sarasota 16,080 72,563
179 Heilig-Meyers - Santa Rosa, CA
180 CVS Rocky Mount 3,038
181 Madison Ridge Apartments 12,000
182 Days Inn Mt.Sterling 35,211 11,344
183 Heilig-Meyers - Riverside, CA
184 Gates Place Apartments 15,000 13,875
185 Heilig-Meyers - Richmond, VA
186 506-508 Fairfax Street 6,000 684
187 Heilig-Meyers - Garner, NC
188 Hamilton Park Apartments 15,060 11,875
189 Information Management Systems Building 1,553
190 IHOP Rock Hill North Cherry
191 Heilig-Meyers - Fresno-Blackstone, CA
192 Mears Warehouse 4,840 7,375 80,000 (LOC)
193 CVS Greenville Old Buncombe 3,038 875
194 Heilig-Meyers - Forsyth, IL
195 Heilig-Meyers - Owensboro, KY
196 Heilig-Meyers - Peru, IL
197 Heilig-Meyers - Dothan, AL
198 Heilig-Meyers - Evansville, IN
199 Heilig-Meyers - Hopkinsville, KY
200 Heilig-Meyers - Talllahassee, FL
201 Heilig-Meyers - Visalia, CA
202 Heilig-Meyers - Pikeville, KY
203 Heilig-Meyers - Albany, GA
204 Heilig-Meyers - Heath, OH
205 Heilig-Meyers - Marion, IL
206 Heilig-Meyers - Temple, TX
207 Heilig-Meyers - Zanesville, OH
208 Heilig-Meyers - Fresno-Kings Canyon, CA
209 Heilig-Meyers - Jackson, MS
210 Heilig-Meyers - Modesto, CA
211 Heilig-Meyers - Champaign, IL
212 Heilig-Meyers - Sanford, NC
213 Heilig-Meyers - Moberly, MO
214 Flenniken Square 8,925
215 300 Barton Street 17,912 19,313 a
216 Southland Ormond Beach Nova 672
217 606-610 Clement Street 4,500 513
218 Motel 6 202 Lumberton
219 Bulova Technologies Building 1,022
220 605-607 Downey Street 4,500 394
221 Carroll Lane Apartments 10,160
222 1208 Clement Street 3,000 263
223 Spring Market Shopping Center 2,269 14,000
</TABLE>
Explanation of Footnotes
a) In addition to any such funds escrowed at loan closing for TI/LC expenses,
these loans require funds to be escrowed for TI/LC expenses during some or
all of the loan term, in some instances subject to certain contingencies.
<PAGE>
ANNEX B
[LOGO] CHASE [LOGO] FIRST UNION(REGISTERED)
New CMBS Issue
Preliminary Term Sheet
--------------------
$1,060,380,830
(Approximate)
Offered Certificates
First Union National Bank - Chase Manhattan Bank
Commercial Mortgage Trust
Commercial Mortgage Pass-Through Certificates
Series 1999-C2
First Union Commercial Mortgage Securities, Inc., as Depositor
First Union National Bank, as Master Servicer
--------------------
First Union National Bank, Mortgage Loan Seller
The Chase Manhattan Bank, Mortgage Loan Seller
CHASE SECURITIES INC. FIRST UNION CAPITAL MARKETS CORP
J.P. Morgan & Co.
This information does not constitute either an offer to sell or a solicitation
of an offer to buy any of the securities referred to herein. Offers to sell and
solicitations of offers to buy securities are made only by, and this information
must be read in conjunction with, the final prospectus supplement and the
related prospectus or, if not registered under the securities laws, the final
offering memorandum (the "Offering Document"), and any such decision to invest
in such securities should be made solely in reliance upon such Offering
Document. Information contained herein does not purport to be complete and is
subject to the same qualifications and assumptions, and should be considered by
investors only in the light of the same warnings, lack of assurances and
representations and other precautionary matters, as disclosed in the Offering
Document. Information regarding the underlying assets has been provided by the
issuer of the securities or an affiliate thereof and has not been independently
verified by the underwriters or their respective affiliates. This information
was prepared on the basis of certain assumptions (including in certain case
assumptions specified by the recipient hereof) regarding payments, interest
rates, weighted average lives and weighted average loan age, loss and other
matters including but not limited to, the assumptions described in the Offering
Document, the underwriters, and any of their respective affiliates make no
representation or warranty as to the actual rate or timing of payments on any of
the underlying assets or the payments or yield on the securities. This
information supercedes any prior versions hereof, will be deemed to be
superseded by any subsequent versions (including with respect to any description
of the securities or the underlying assets, the information contained in the
Offering Document), and will deemed superseded, amended and supplemented in
their entirety by such final Offering Document.
<PAGE>
[LOGO] CHASE [LOGO] FIRST UNION(REGISTERED)
Structural and Collateral Term Sheet
------------------------------------
First Union National Bank - Chase Manhattan Bank
Commercial Mortgage Pass-Through Certificates
Series 1999-C2
$1,060,380,830
(Approximate)
Offered Certificates
[OBJECT OMITTED-USA MAP]
% of Mortgage Pool
State by Cut Off Date Balance
- ----- -----------------------
AL 2.9%
AR 0.3%
AZ 2.0%
CA 12.9%
CT 4.5%
DE 1.9%
FL 6.9%
GA 9.7%
HI 0.5%
IA 0.3%
IL 2.3%
IN 1.4%
KS 1.7%
KY 0.4%
LA 0.5%
MA 2.0%
MD 0.8%
MI 1.6%
MN 1.2%
MO 2.4%
MS 0.1%
NC 6.3%
NE 0.9%
NH 0.2%
NV 3.0%
NJ 4.7%
NY 5.8%
OH 1.0%
OR 0.2%
PA 5.5%
RI 0.1%
SC 1.7%
UT 0.3%
TN 0.9%
TX 7.2%
VA 3.3%
WA 1.6%
WI 0.9%
% of Mortgage Pool by Cut-off Date Balance
CHASE SECURITIES INC. FIRST UNION CAPITAL MARKETS CORP
J.P. Morgan & Co.
This information does not constitute either an offer to sell or a solicitation
of an offer to buy any of the securities referred to herein. Offers to sell and
solicitations of offers to buy securities are made only by, and this information
must be read in conjunction with, the final prospectus supplement and the
related prospectus or, if not registered under the securities laws, the final
offering memorandum (the "Offering Document"), and any such decision to invest
in such securities should be made solely in reliance upon such Offering
Document. Information contained herein does not purport to be complete and is
subject to the same qualifications and assumptions, and should be considered by
investors only in the light of the same warnings, lack of assurances and
representations and other precautionary matters, as disclosed in the Offering
Document. Information regarding the underlying assets has been provided by the
issuer of the securities or an affiliate thereof and has not been independently
verified by the underwriters or their respective affiliates. This information
was prepared on the basis of certain assumptions (including in certain case
assumptions specified by the recipient hereof) regarding payments, interest
rates, weighted average lives and weighted average loan age, loss and other
matters including but not limited to, the assumptions described in the Offering
Document, the underwriters, and any of their respective affiliates make no
representation or warranty as to the actual rate or timing of payments on any of
the underlying assets or the payments or yield on the securities. This
information supercedes any prior versions hereof, will be deemed to be
superseded by any subsequent versions (including with respect to any description
of the securities or the underlying assets, the information contained in the
Offering Document), and will deemed superseded, amended and supplemented in
their entirety by such final Offering Document.
<PAGE>
[LOGO] CHASE [LOGO] FIRST UNION(REGISTERED)
First Union National Bank - Chase Manhattan Bank
Commercial Mortgage Trust
Commercial Mortgage Pass-Through Certificates
Series 1999-C2
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Cut-off Date Cut-off Date
Certificate Subordination Rating Average Principal Pass-Through
Class Balance(1) Level (Moody's/Fitch) Life(yrs.)(3) Window(3)(4) Rate(5)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
A-1 203,500,000 25.75% Aaa/AAA 5.39 Jun99-Jun08 Fixed Rate
A-2 673,747,967 25.75% Aaa/AAA 9.58 Jun08-Apr09 Fixed Rate
IO 1,181,484,821(2) --- Aaa/AAA N/A Jun99-Feb29 Variable Rate
B 47,260,093 21.75% Aa2/AA 9.89 Apr09-Apr09 Fixed Rate
C 62,028,874 16.50% A2/A 9.89 Apr09-May09 Fixed Rate(6)
D 14,768,779 15.25% A3/A- 9.98 May09-May09 Fixed Rate(6)
E 41,352,582 11.75% Baa2/BBB 10.02 May09-Jun09 Variable Rate
F 17,722,535 10.25% Baa3/BBB- 10.21 Jun09-Sep09 Variable Rate
G(7) --- --- --- --- --- Fixed Rate
H(7) --- --- --- --- --- Fixed Rate
J(7) --- --- --- --- --- Fixed Rate
K(7) --- --- --- --- --- Fixed Rate
L(7) --- --- --- --- --- Fixed Rate
M(7) --- --- --- --- --- Fixed Rate
N(7) --- --- --- --- --- Fixed Rate
- -----------------------------------------------------------------------------------------------------------------------------------
(1) In the case of each such Class, subject to a permitted variance of plus or minus 5%.
(2) Represents the notional amount.
(3) Based on Assumptions described in the Prospectus Supplement.
(4) Principal Window is the period during which distributions of principal are expected to be made to the holders of each
designated Class in accordance with the Assumptions.
(5) Other than the Class E, F and IO Certificates, each Class of Certificates will accrue interest generally at a fixed rate of
interest as described in the Prospectus Supplement. The Class E, F and IO Certificates will accrue interest at variable rates
as described in the Prospectus Supplement. The pass-through rates shown are only for indicative purposes. The final
pass-through rates will be determined at pricing.
(6) Capped at the Weighted Average Net Mortgage Rate.
(7) Not offered hereby.
</TABLE>
CHASE SECURITIES INC. FIRST UNION CAPITAL MARKETS CORP
J.P. Morgan & Co.
This information does not constitute either an offer to sell or a solicitation
of an offer to buy any of the securities referred to herein. Offers to sell and
solicitations of offers to buy securities are made only by, and this information
must be read in conjunction with, the final prospectus supplement and the
related prospectus or, if not registered under the securities laws, the final
offering memorandum (the "Offering Document"), and any such decision to invest
in such securities should be made solely in reliance upon such Offering
Document. Information contained herein does not purport to be complete and is
subject to the same qualifications and assumptions, and should be considered by
investors only in the light of the same warnings, lack of assurances and
representations and other precautionary matters, as disclosed in the Offering
Document. Information regarding the underlying assets has been provided by the
issuer of the securities or an affiliate thereof and has not been independently
verified by the underwriters or their respective affiliates. This information
was prepared on the basis of certain assumptions (including in certain case
assumptions specified by the recipient hereof) regarding payments, interest
rates, weighted average lives and weighted average loan age, loss and other
matters including but not limited to, the assumptions described in the Offering
Document, the underwriters, and any of their respective affiliates make no
representation or warranty as to the actual rate or timing of payments on any of
the underlying assets or the payments or yield on the securities. This
information supercedes any prior versions hereof, will be deemed to be
superseded by any subsequent versions (including with respect to any description
of the securities or the underlying assets, the information contained in the
Offering Document), and will deemed superseded, amended and supplemented in
their entirety by such final Offering Document.
<PAGE>
[LOGO] CHASE [LOGO] FIRST UNION(REGISTERED)
Issue Characteristics:
- ----------------------
Issue Type: The Class A-1, A-2, IO, B, C, D, E and F Certificates
(the "Offered Certificates") will be offered pursuant to
the Prospectus Supplement dated May 11, 1999 and
accompanying Prospectus dated May 11, 1999, and the
Class G, H, J, K, L, M and N Certificates are not
offered hereby.
Securities Offered: $1,060,380,830 monthly pay, multi-class commercial
mortgage REMIC Pass-Through Certificates, including five
fixed-rate principal and interest Classes (Classes A-1,
A-2, B, C, and D), two variable rate principal and
interest Classes (Classes E and F) and one variable rate
interest only Class (Class IO). Classes C and D will be
capped at the Weighted Average Net Mortgage Rate. The
Offered Certificates have not been previously offered to
the public.
Collateral: The collateral consists of a $1,181,484,821 pool of 223
fixed-rate commercial and multifamily Mortgage Loans, of
which 196 are conduit loans consisting of $1,102,675,889
or 93.33% of the pool of mortgage loans as of the
Cut-Off Date and 27 are CTL loans consisting of
$78,808,932 or 6.67% of the pool of mortgage loans as of
the Cut-Off Date.
Loan Sellers: First Union National Bank and The Chase Manhattan Bank.
Co-Lead Managers: Chase Securities Inc. and First Union Capital Markets.
Co-Manager: J.P. Morgan Securities Inc.
Master Servicer: First Union National Bank.
Special Servicer: Banc One Mortgage Capital Markets, LLC.
Trustee: Norwest Bank Minnesota, National Association.
Expected Settle Date: May 24 1999.
Distribution Dates: The 15th of each month. The first Distribution Date on
which investors will be entitled to distributions will
be in June, 1999.
Minimum Denominations: $10,000 for the Class A-1 and Class A-2, Class B, Class
C, Class D, Class E and Class F Certificates. $1,000,000
for the Class IO.
ERISA Considerations: Class A-1, A-2 and IO Certificates are expected to be
ERISA eligible.
SMMEA Eligibility: Class A-1, A-2, IO and B Certificates are expected to be
SMMEA eligible.
Risk Factors: THE CERTIFICATES INVOLVE A DEGREE OF RISK AND MAY NOT BE
SUITABLE FOR ALL INVESTORS. SEE THE "RISK FACTORS"
SECTION OF PROSPECTUS SUPPLEMENT AND THE "RISK FACTORS"
SECTION OF THE PROSPECTUS.
Rating Agencies: Fitch IBCA, Inc. and Moody's Investors Service, Inc.
CHASE SECURITIES INC. FIRST UNION CAPITAL MARKETS CORP
J.P. Morgan & Co.
This information does not constitute either an offer to sell or a solicitation
of an offer to buy any of the securities referred to herein. Offers to sell and
solicitations of offers to buy securities are made only by, and this information
must be read in conjunction with, the final prospectus supplement and the
related prospectus or, if not registered under the securities laws, the final
offering memorandum (the "Offering Document"), and any such decision to invest
in such securities should be made solely in reliance upon such Offering
Document. Information contained herein does not purport to be complete and is
subject to the same qualifications and assumptions, and should be considered by
investors only in the light of the same warnings, lack of assurances and
representations and other precautionary matters, as disclosed in the Offering
Document. Information regarding the underlying assets has been provided by the
issuer of the securities or an affiliate thereof and has not been independently
verified by the underwriters or their respective affiliates. This information
was prepared on the basis of certain assumptions (including in certain case
assumptions specified by the recipient hereof) regarding payments, interest
rates, weighted average lives and weighted average loan age, loss and other
matters including but not limited to, the assumptions described in the Offering
Document, the underwriters, and any of their respective affiliates make no
representation or warranty as to the actual rate or timing of payments on any of
the underlying assets or the payments or yield on the securities. This
information supercedes any prior versions hereof, will be deemed to be
superseded by any subsequent versions (including with respect to any description
of the securities or the underlying assets, the information contained in the
Offering Document), and will deemed superseded, amended and supplemented in
their entirety by such final Offering Document.
<PAGE>
[LOGO] CHASE [LOGO] FIRST UNION(REGISTERED)
Structural Characteristics:
- ---------------------------
The Offered Certificates (other than the Class E, F and IO Certificates) are
fixed-rate, monthly pay, multi-class, sequential pay REMIC Pass-Through
Certificates. The Class C and D Certificates are capped at the Weighted Average
Net Mortgage Rate. The Class E, F and IO Certificates will accrue interest at
variable rates as discussed in the Prospectus Supplement. All Classes of
Certificates derive their cash flows from the entire pool of Mortgage Loans.
Priority of Cash Flows:
[OBJECT OMITTED]
Notes: (1) The Class A-1, A-2 and IO Certificates will be paid interest
on a pro rata basis.
(2) The above analysis is based on Assumptions described in the
Prospectus Supplement.
CHASE SECURITIES INC. FIRST UNION CAPITAL MARKETS CORP
J.P. Morgan & Co.
This information does not constitute either an offer to sell or a solicitation
of an offer to buy any of the securities referred to herein. Offers to sell and
solicitations of offers to buy securities are made only by, and this information
must be read in conjunction with, the final prospectus supplement and the
related prospectus or, if not registered under the securities laws, the final
offering memorandum (the "Offering Document"), and any such decision to invest
in such securities should be made solely in reliance upon such Offering
Document. Information contained herein does not purport to be complete and is
subject to the same qualifications and assumptions, and should be considered by
investors only in the light of the same warnings, lack of assurances and
representations and other precautionary matters, as disclosed in the Offering
Document. Information regarding the underlying assets has been provided by the
issuer of the securities or an affiliate thereof and has not been independently
verified by the underwriters or their respective affiliates. This information
was prepared on the basis of certain assumptions (including in certain case
assumptions specified by the recipient hereof) regarding payments, interest
rates, weighted average lives and weighted average loan age, loss and other
matters including but not limited to, the assumptions described in the Offering
Document, the underwriters, and any of their respective affiliates make no
representation or warranty as to the actual rate or timing of payments on any of
the underlying assets or the payments or yield on the securities. This
information supercedes any prior versions hereof, will be deemed to be
superseded by any subsequent versions (including with respect to any description
of the securities or the underlying assets, the information contained in the
Offering Document), and will deemed superseded, amended and supplemented in
their entirety by such final Offering Document.
<PAGE>
[LOGO] CHASE [LOGO] FIRST UNION(REGISTERED)
Structural Characteristics (continued):
- ---------------------------------------
Interest Distributions: Each Class of Certificates (other than the Class IO
Certificates) will be entitled on each Distribution
Date to interest accrued at its Pass-Through Rate on
the outstanding Certificate Balance of such Class
during the prior calendar month. The Class IO
Certificates will be entitled on each Distribution
Date to the aggregate interest accrued on each of
its components during the prior calendar month.
Pass-Through Rates: Class A-1: 6.36%
Class A-2: 6.65%
Class IO: Variable interest rate as described in
the Prospectus Supplement.
Class B: 6.80%
Class C*: 6.94%
Class D*: 7.06%
Class E: Net WAC - 10bps
Class F: Net WAC - 10bps
Class G: 5.95%
Class H: 5.95%
Class J: 5.95%
Class K: 5.95%
Class L: 5.95%
Class M: 5.95%
Class N: 5.95%
* Subject to a Net WAC Cap
Principal Distributions: Principal will be distributed on each Distribution
Date to the Class of Principal Balance Certificates
outstanding, with the earliest
alphabetical/numerical Class designation, until its
Certificate Balance is reduced to zero. If, due to
losses, the Certificate Balances of the Class B
through Class N Certificates are reduced to zero
payments of principal to the Class A-1 and A-2
Certificates will be made on a pro rata basis.
Prepayment Premium
Allocation: All Prepayment Premiums are distributed to
Certificateholders on the Distribution Date
following the collection period in which the
prepayment occurred. On each Distribution Date, a
percentage of all Prepayment Premiums will be
allocated to each class of certificates then
entitled to principal distributions, which
percentage will be equal to the product of (a) the
percentage of the total principal distribution such
Class receives out of the entire Principal
Distribution amount for such distribution date, and
(b) 25%. The remaining percentage of all prepayment
premiums will be allocated to the Class IO
Certificates.
Yield Maintenance
Charges Allocation: All Yield Maintenance Charges are distributed to
Certificateholders on the Distribution Date
following the collection period in which the
prepayment occurred. On each Distribution Date, the
holders of each class then entitled to principal
distributions will be entitled to an amount of Yield
Maintenance Charges equal to the product of (a) the
amount of such Yield Maintenance Charges, multiplied
by (b) a fraction, the numerator of which is equal
to the excess, if any, of
CHASE SECURITIES INC. FIRST UNION CAPITAL MARKETS CORP
J.P. Morgan & Co.
This information does not constitute either an offer to sell or a solicitation
of an offer to buy any of the securities referred to herein. Offers to sell and
solicitations of offers to buy securities are made only by, and this information
must be read in conjunction with, the final prospectus supplement and the
related prospectus or, if not registered under the securities laws, the final
offering memorandum (the "Offering Document"), and any such decision to invest
in such securities should be made solely in reliance upon such Offering
Document. Information contained herein does not purport to be complete and is
subject to the same qualifications and assumptions, and should be considered by
investors only in the light of the same warnings, lack of assurances and
representations and other precautionary matters, as disclosed in the Offering
Document. Information regarding the underlying assets has been provided by the
issuer of the securities or an affiliate thereof and has not been independently
verified by the underwriters or their respective affiliates. This information
was prepared on the basis of certain assumptions (including in certain case
assumptions specified by the recipient hereof) regarding payments, interest
rates, weighted average lives and weighted average loan age, loss and other
matters including but not limited to, the assumptions described in the Offering
Document, the underwriters, and any of their respective affiliates make no
representation or warranty as to the actual rate or timing of payments on any of
the underlying assets or the payments or yield on the securities. This
information supercedes any prior versions hereof, will be deemed to be
superseded by any subsequent versions (including with respect to any description
of the securities or the underlying assets, the information contained in the
Offering Document), and will deemed superseded, amended and supplemented in
their entirety by such final Offering Document.
<PAGE>
[LOGO] CHASE [LOGO] FIRST UNION(REGISTERED)
the Pass-Through Rate of such Class of Offered
Certificates over the relevant Discount Rate, and
the denominator of which is equal to the excess, if
any, of the Mortgage Rate of the prepaid Mortgage
Loan over the relevant Discount Rate, multiplied by
(c) a fraction, the numerator of which is equal to
the amount of principal distributable on such class
on such Distribution Date, and the denominator of
which is the Principal Distribution Amount for such
Distribution Date.
Yield Maintenance
Charge Allocation
Example: A Yield Maintenance Charge 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). The following reflects that method:
General Yield Maintenance Charge Allocation Example:
----------------------------------------------------
Assuming the structure presented in this Term Sheet
and the following assumptions:
Assume prepayment occurs on April 1, 2001.
Assume only Class A-1 will be receiving principal at
the time of this prepayment.
Mortgage Loan characteristics of hypothetical loan
being prepaid:
Balance: $10,000.000
Coupon: 8.00%
Scheduled Maturity: 8 years (April 1, 2007)
Yield Maintenance Charge Payable: $500,000
Treasury Yield (monthly): 5.00%
Certificate Characteristics: Class A-1 Coupon: 6.00%
Discount Rate Fraction Calculation:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------
Class A-1 Class IO
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
(Class A-1 Coupon -
Discount Rate) / (Gross 6.00% - 5.00%
------------- =33.33%
Mortgage Rate - 8.00% - 5.00%
Reinvestment Yield)
--------------------------------------------------------------------------------------------------------
Percent of Premium
allocated to Class 33.33% 100.00% - 33.33% =
66.67%
--------------------------------------------------------------------------------------------------------
YM Allocated $166,667 $333,333
--------------------------------------------------------------------------------------------------------
</TABLE>
Credit Enhancement: Each Class of Certificates, other than Classes A-1,
A-2 and IO (the "Senior Certificates"), will be
subordinate to: (i) the Senior Certificates and (ii)
each other Class with an earlier alphabetical Class
designation.
Advancing: The Master Servicer and the Trustee will each be
obligated to make P&I Advances and Servicing
Advances, including delinquent property taxes and
insurance, but only to the extent that such Advances
are deemed recoverable.
CHASE SECURITIES INC. FIRST UNION CAPITAL MARKETS CORP
J.P. Morgan & Co.
This information does not constitute either an offer to sell or a solicitation
of an offer to buy any of the securities referred to herein. Offers to sell and
solicitations of offers to buy securities are made only by, and this information
must be read in conjunction with, the final prospectus supplement and the
related prospectus or, if not registered under the securities laws, the final
offering memorandum (the "Offering Document"), and any such decision to invest
in such securities should be made solely in reliance upon such Offering
Document. Information contained herein does not purport to be complete and is
subject to the same qualifications and assumptions, and should be considered by
investors only in the light of the same warnings, lack of assurances and
representations and other precautionary matters, as disclosed in the Offering
Document. Information regarding the underlying assets has been provided by the
issuer of the securities or an affiliate thereof and has not been independently
verified by the underwriters or their respective affiliates. This information
was prepared on the basis of certain assumptions (including in certain case
assumptions specified by the recipient hereof) regarding payments, interest
rates, weighted average lives and weighted average loan age, loss and other
matters including but not limited to, the assumptions described in the Offering
Document, the underwriters, and any of their respective affiliates make no
representation or warranty as to the actual rate or timing of payments on any of
the underlying assets or the payments or yield on the securities. This
information supercedes any prior versions hereof, will be deemed to be
superseded by any subsequent versions (including with respect to any description
of the securities or the underlying assets, the information contained in the
Offering Document), and will deemed superseded, amended and supplemented in
their entirety by such final Offering Document.
<PAGE>
[LOGO] CHASE [LOGO] FIRST UNION(REGISTERED)
Realized Losses and
Expense Losses: Realized Losses and Additional Trust Fund Expenses,
if any, will be allocated to the Class N, Class M,
Class L, Class K, Class J, Class H, Class G, Class
F, Class E, Class D, Class C, and Class B
Certificates, in that order, and then, pro rata, to
Classes A-1 and A-2.
Prepayment Interest
Shortfalls: For any Distribution Date, any Net Aggregate
Prepayment Interest Shortfall for such Distribution
Date will generally be allocated on a pro rata basis
to each Class of Certificates (other than Class IO)
in proportion to its entitlement to interest. The
Master Servicer's fee up to a Master Servicing Fee
Rate of 0.03% per annum and all accrued income
earned by the Master Servicer on any voluntary
principal prepayment in the applicable collection
period shall be offset against any Prepayment
Interest Shortfall.
Appraisal Reductions: An appraisal reduction generally will be created in
the amount, if any, by which the Principal Balance
of a Specially Serviced Mortgage Loan (plus other
amounts overdue in connection with such loan)
exceeds 90% of the appraised value of the related
Mortgaged Property. The Appraisal Reduction Amount
will reduce proportionately the amount of P&I
Advances for such loan, which reduction will result,
in general, in a reduction of interest distributable
to the most subordinate Class of Principal Balance
Certificates outstanding.
An Appraisal Reduction will be reduced to zero as of
the date the related Mortgage Loan has been brought
current for at least three consecutive months, paid
in full, liquidated, repurchased, or otherwise
disposed.
Controlling Class: The Controlling Class will generally be the most
subordinate Class of Certificates outstanding at any
time or, if the Certificate Balance of such Class is
less than 25% of the initial Certificate Balance of
such Class, the next most subordinate Class of
Principal Balance Certificates.
Controlling Class: The Pooling and Servicing Agreement permits the
Special Servicer to modify, waive or amend any term
of any Mortgage Loan if it determines, in accordance
with the servicing standard, that it is appropriate
to do so subject to certain limitations.
Optional Termination: The Depositor, the Master Servicer, the Special
Servicer, and certain Certificateholders will have
the option to purchase, in whole but not in part,
the remaining assets of the Trust on or after the
Distribution Date on which the Stated Principal
Balance of the Mortgage Loans then outstanding is
less than or equal to 1% of the Cut-Off Date Pool
Balance. Such purchase price will generally be at a
price equal to the unpaid aggregate principal
balance of the Mortgage Loans (or fair market value
in the case of REO Properties), plus accrued and
unpaid interest and certain other additional trust
fund expenses.
Reports to
Certificateholders: The Trustee will prepare and deliver monthly
Certificateholder Reports. The Special Servicer will
prepare and deliver to the Trustee a monthly Special
Servicer Report summarizing the status of each
Specially Serviced Mortgage Loan. The Master
Servicer and the Special Servicer will prepare and
deliver to the Trustee an annual report setting
forth, among other things, the debt service coverage
ratios for each Mortgage Loan, as available. Each of
the reports will be available to the
Certificateholders. A Report containing information
regarding the Mortgage Loans will be available
electronically.
CHASE SECURITIES INC. FIRST UNION CAPITAL MARKETS CORP
J.P. Morgan & Co.
This information does not constitute either an offer to sell or a solicitation
of an offer to buy any of the securities referred to herein. Offers to sell and
solicitations of offers to buy securities are made only by, and this information
must be read in conjunction with, the final prospectus supplement and the
related prospectus or, if not registered under the securities laws, the final
offering memorandum (the "Offering Document"), and any such decision to invest
in such securities should be made solely in reliance upon such Offering
Document. Information contained herein does not purport to be complete and is
subject to the same qualifications and assumptions, and should be considered by
investors only in the light of the same warnings, lack of assurances and
representations and other precautionary matters, as disclosed in the Offering
Document. Information regarding the underlying assets has been provided by the
issuer of the securities or an affiliate thereof and has not been independently
verified by the underwriters or their respective affiliates. This information
was prepared on the basis of certain assumptions (including in certain case
assumptions specified by the recipient hereof) regarding payments, interest
rates, weighted average lives and weighted average loan age, loss and other
matters including but not limited to, the assumptions described in the Offering
Document, the underwriters, and any of their respective affiliates make no
representation or warranty as to the actual rate or timing of payments on any of
the underlying assets or the payments or yield on the securities. This
information supercedes any prior versions hereof, will be deemed to be
superseded by any subsequent versions (including with respect to any description
of the securities or the underlying assets, the information contained in the
Offering Document), and will deemed superseded, amended and supplemented in
their entirety by such final Offering Document.
<PAGE>
[LOGO] CHASE [LOGO] FIRST UNION(REGISTERED)
Collateral Characteristics:
- ---------------------------
Summary: As of the Cut-Off Date, the Mortgage Pool consists
of a $1,181,484,821 pool of 223 fixed-rate, first
lien, mortgage loans secured by liens on commercial
and multifamily properties located throughout 38
states, with a weighted average Mortgage Rate of
7.36% and a weighted average remaining term to
maturity of 128 months. See the Prospectus
Supplement for more detailed collateral information.
------------------------------------------------
Initial Pool Balance: $1,181,484,821
Number of Loans: 223
Gross WAC: 7.36%
Original WAM: 134
Remaining WAM: 128
Average Loan Balance: $5,298,138
WA DSCR*: 1.36x
WA Cut-off Date LTV Ratio*: 71.07%
------------------------------------------------
*Excluding CTL Loans
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Percent of Wtd. Ave. Wtd. Ave.
Number of Cut-off Balance Cut-off Mortgage Remaining Wtd. Ave. Wtd. Ave.
Property Type Loans ($) Balance (%) Rate (%) Term (Mos) DSCR(x)** LTV(%)**
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Multifamily 62 365,399,773 30.93 7.45 124 1.25 75.71
Retail - Anchored 55 272,577,634 23.07 7.07 120 1.38 71.52
Hospitality 19 166,306,763 14.08 7.23 127 1.52 67.54
Office 19 143,185,621 12.12 7.57 114 1.33 66.08
Credit Tenant Lease* 27 78,808,932 6.67 7.20 226 0.00 0.00
Mixed Use 5 50,193,888 4.25 7.65 118 1.32 67.53
Industrial 13 37,267,470 3.15 7.68 118 1.33 70.70
Retail - Unanchored 12 31,612,142 2.68 7.67 117 1.68 64.77
Healthcare 7 24,679,110 2.09 7.74 126 1.65 64.32
Mobile Home Comm. 3 9,460,434 0.80 7.57 116 1.33 75.48
Self Storage 1 1,993,054 0.17 7.38 118 1.48 71.18
- ------------------------------------------------------------------------------------------------------------------------------------
Totals/Weighted Average 223 1,181,484,821 100.00 7.36 128 1.36 71.07
- ------------------------------------------------------------------------------------------------------------------------------------
* See page 14 of this Term Sheet and the Prospectus Supplement for a more detailed discussion of credit tenant lease loans.
** CTL Loans are excluded from these calculations.
</TABLE>
CHASE SECURITIES INC. FIRST UNION CAPITAL MARKETS CORP
J.P. Morgan & Co.
This information does not constitute either an offer to sell or a solicitation
of an offer to buy any of the securities referred to herein. Offers to sell and
solicitations of offers to buy securities are made only by, and this information
must be read in conjunction with, the final prospectus supplement and the
related prospectus or, if not registered under the securities laws, the final
offering memorandum (the "Offering Document"), and any such decision to invest
in such securities should be made solely in reliance upon such Offering
Document. Information contained herein does not purport to be complete and is
subject to the same qualifications and assumptions, and should be considered by
investors only in the light of the same warnings, lack of assurances and
representations and other precautionary matters, as disclosed in the Offering
Document. Information regarding the underlying assets has been provided by the
issuer of the securities or an affiliate thereof and has not been independently
verified by the underwriters or their respective affiliates. This information
was prepared on the basis of certain assumptions (including in certain case
assumptions specified by the recipient hereof) regarding payments, interest
rates, weighted average lives and weighted average loan age, loss and other
matters including but not limited to, the assumptions described in the Offering
Document, the underwriters, and any of their respective affiliates make no
representation or warranty as to the actual rate or timing of payments on any of
the underlying assets or the payments or yield on the securities. This
information supercedes any prior versions hereof, will be deemed to be
superseded by any subsequent versions (including with respect to any description
of the securities or the underlying assets, the information contained in the
Offering Document), and will deemed superseded, amended and supplemented in
their entirety by such final Offering Document.
<PAGE>
[LOGO] CHASE [LOGO] FIRST UNION(REGISTERED)
Collateral Characteristics (continued):
- ---------------------------------------
Ten Largest Mortgage Loans
The following tables and summaries describe the ten largest Mortgages Loans in
the Mortgage Pool by Cut-Off Date Balance:
<TABLE>
<CAPTION>
Ten Largest Mortgage Loans by Cut-Off Balance
- ---------------------------------------------------------------------------------------------------------------------------------
Percentage of
Cut-Off
Number of Cut-Off Date Date Pool Mortgage Current DSC
Property Name Properties Balance Balance Property Type Rate Current LTV Ratio
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Sheraton Suites Portfolio 3 $50,443,313 4.27% Hospitality 6.75% 66.2% 1.55x
Olen Portfolio 6 37,472,777 3.17 Mixed Use 7.61% 67.5% 1.30x
Lakeside Apartments 1 29,750,000 2.52 Multifamily 7.05% 80.0% 1.22x
Wynfrey Hotel 1 25,263,571 2.14 Hospitality 7.40% 69.2% 1.40x
Wilshire Portfolio 3 24,502,544 2.07 Office 8.25% 69.8% 1.23x
Hickory Lake 1 22,492,277 1.90 Multifamily 7.65% 79.3% 1.20x
Westgate Village 1 21,984,235 1.86 Retail 6.57% 73.3% 1.43x
1055 Washington Blvd 1 19,932,471 1.69 Office 7.72% 59.0% 1.31x
Oak Park Commons 1 19,154,363 1.62 Retail 6.57% 74.7% 1.48x
Vista Ridge Plaza I, II, &
Shops 1 18,917,890 1.60 Retail 6.57% 51.7% 1.44x
- ---------------------------------------------------------------------------------------------------------------------------------
Total/Weighted Average 19 $269,913,441 22.85% 7.21% 69.2% 1.37x
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Sheraton Suites Portfolio. The Sheraton Suites Portfolio loan is secured by 3
luxury, all suite, full service hotels, two of which are fee interests and one
of which is a leasehold interest. The combined hotels contain approximately 732
suites which are generally larger than traditional hotel rooms with two
physically separated rooms in the suite. The properties are located in
Wilmington, Delaware (approximately 228 suites), Elk Grove, Illinois
(approximately 253 suites), and Dallas, Texas (approximately 251 suites). The
sponsor of the borrower is Sheraton Suites Investment Limited Partnership
("SSILP"). ITT Sheraton Corporation directly or indirectly owns 24% of the
limited partnership interests and the 1% general partnership interest in SSILP.
ITT Sheraton Corporation is ultimately a wholly-owned subsidiary of Starwood
Hotels & Resorts Worldwide, Inc.
Olen Portfolio. The Olen Portfolio loan is secured by 5 office/industrial flex
properties and 1 office building, each located in Orange County, California. The
properties contain a total of 608,644 rentable square feet, ranging in size from
30,000 square feet to 186,500 square feet. As of March 1999, the properties had
an aggregate occupancy of 99.3%, ranging from 97.4% to 100%. The borrower is a
newly formed special purpose Nevada corporation. The sponsor of the borrower is
The Olen Companies, a real estate management and development company founded in
1973. The Olen Companies currently own commercial and multifamily real estate
throughout the United States, including, as of April 1999, 47 office and
industrial properties located in Southern California containing in excess of
three million square feet.
Lakeside Apartments. The Lakeside Apartments loan is secured by a 461-unit
luxury apartment complex located in Newnan, Georgia, which is part of the
metropolitan Atlanta, Georgia area. The first phase of the complex was built in
1991 and the third and final phase, containing 200 units, was completed in March
1998. As of March 1999, Lakeside Apartments had an occupancy rate of 93.5%. The
borrower is a newly formed special purpose Illinois limited partnership.
CHASE SECURITIES INC. FIRST UNION CAPITAL MARKETS CORP
J.P. Morgan & Co.
This information does not constitute either an offer to sell or a solicitation
of an offer to buy any of the securities referred to herein. Offers to sell and
solicitations of offers to buy securities are made only by, and this information
must be read in conjunction with, the final prospectus supplement and the
related prospectus or, if not registered under the securities laws, the final
offering memorandum (the "Offering Document"), and any such decision to invest
in such securities should be made solely in reliance upon such Offering
Document. Information contained herein does not purport to be complete and is
subject to the same qualifications and assumptions, and should be considered by
investors only in the light of the same warnings, lack of assurances and
representations and other precautionary matters, as disclosed in the Offering
Document. Information regarding the underlying assets has been provided by the
issuer of the securities or an affiliate thereof and has not been independently
verified by the underwriters or their respective affiliates. This information
was prepared on the basis of certain assumptions (including in certain case
assumptions specified by the recipient hereof) regarding payments, interest
rates, weighted average lives and weighted average loan age, loss and other
matters including but not limited to, the assumptions described in the Offering
Document, the underwriters, and any of their respective affiliates make no
representation or warranty as to the actual rate or timing of payments on any of
the underlying assets or the payments or yield on the securities. This
information supercedes any prior versions hereof, will be deemed to be
superseded by any subsequent versions (including with respect to any description
of the securities or the underlying assets, the information contained in the
Offering Document), and will deemed superseded, amended and supplemented in
their entirety by such final Offering Document.
<PAGE>
[LOGO] CHASE [LOGO] FIRST UNION(REGISTERED)
The sponsor of the borrower is an executive officer of Executive Affiliates,
Inc., a real estate management and development company founded in 1966. As of
April 1999, the sponsor, through various entities, owned 18 multifamily
properties and 3 hotels throughout the United States.
Wynfrey Hotel. The Wynfrey Hotel loan is secured by the Wynfrey Hotel, a
full-service luxury hotel in the metropolitan Birmingham, Alabama area. In
addition to the hotel's 329 guest rooms on 14 floors and approximately 27,716
square feet of meeting and banquet space, the hotel also has a 224 seat formal
dining restaurant, a 221 seat casual dining restaurant, a piano bar and lounge,
an outdoor swimming pool, a fitness room and a gift shop. The sponsors of the
borrower are James W. Wilson, III and William B. Wilson.
Wilshire Portfolio. The Wilshire Portfolio loan is secured by 3 properties (one
fee and two leasehold interests): the Wilshire Doheny, the Wilshire Lapeer and
the Wilshire Palm. Each property is a Class "A" office building located on
Wilshire Boulevard in Beverly Hills, California. The properties contain a total
of 207,682 rentable square feet and were 95.5% occupied as of March 1999. The
sponsor of the borrowers (3 co-obligors) is Casden Properties Inc., a newly
organized Maryland corporation, and a real estate investment trust sponsor.
Hickory Lake. The Hickory Lake loan is secured by a 726 unit apartment complex
built in 1969; was renovated between 1994 and 1996 and was 90.9% occupied as of
June 1998. The complex is located in Atlanta, Georgia and consists of three
separate phases: The Arbors at Hickory Lake, The Meadows at Hickory Lake and The
Gardens at Hickory Lake. The sponsor of the borrower is The Pinnacle Companies
which was formed in 1976 and owns 14 multifamily properties containing 3,994
units in Georgia, South Carolina and Florida.
Westgate Village. The Westgate Village loan is secured by a 342,853 square foot
retail center comprised of two single-story, free-standing buildings, located in
Amarillo, Texas. The north building contains 142,808 square feet and 100% leased
to Builders Square and Circuit City. The south building contains 200,045 square
feet, is 93.4% leased as of February 1999 to seven tenants, and is anchored by
K-Mart, PetsMart and Office Max. The sponsor of the borrower is the Kimco Realty
Corporation, a publicly traded owner and operator of neighborhood and community
shopping centers. As of April 1999, Kimco Realty Corporation's portfolio was
comprised of 445 property interests totaling approximately 58.0 million square
feet of gross leasable area located in 40 states.
1055 Washington Blvd. The 1055 Washington Boulevard loan is secured by a
leasehold interest in a ten-story, class "A" office building containing 181,360
rentable square feet, located in Stamford, Connecticut. The property was 92.2%
occupied as of September 1998. The sponsors of the borrowers are Robert C. Elder
and Raymond W. Miller.
Oak Park Commons. The Oak Park Commons loan is secured by a 136,939 square foot,
one-story neighborhood shopping center located in South Plainfield, New Jersey.
The center was completed in April 1998 and is anchored by A&P, Sears and CVS. As
of October 1998, the center was 100% occupied. The sponsor of the borrower is
the Kimco Realty Corporation, which is described above under the summary of the
Westgate Village loan.
Vista Ridge Plaza I, II & Shops. The Vista Ridge Plaza I, II and Shops loan is
secured by 290,227 square feet of community shopping center space located in
Lewisville, Texas. The center was developed in three phases between 1996 and
1998. The center is anchored by Homeplace, Babies "R" Us and Drug Emporium and
was 100% occupied as of September 1998. The sponsor of the borrower is the Kimco
Realty Corporation, which is described above under the summary of the Westgate
Village loan.
CHASE SECURITIES INC. FIRST UNION CAPITAL MARKETS CORP
J.P. Morgan & Co.
This information does not constitute either an offer to sell or a solicitation
of an offer to buy any of the securities referred to herein. Offers to sell and
solicitations of offers to buy securities are made only by, and this information
must be read in conjunction with, the final prospectus supplement and the
related prospectus or, if not registered under the securities laws, the final
offering memorandum (the "Offering Document"), and any such decision to invest
in such securities should be made solely in reliance upon such Offering
Document. Information contained herein does not purport to be complete and is
subject to the same qualifications and assumptions, and should be considered by
investors only in the light of the same warnings, lack of assurances and
representations and other precautionary matters, as disclosed in the Offering
Document. Information regarding the underlying assets has been provided by the
issuer of the securities or an affiliate thereof and has not been independently
verified by the underwriters or their respective affiliates. This information
was prepared on the basis of certain assumptions (including in certain case
assumptions specified by the recipient hereof) regarding payments, interest
rates, weighted average lives and weighted average loan age, loss and other
matters including but not limited to, the assumptions described in the Offering
Document, the underwriters, and any of their respective affiliates make no
representation or warranty as to the actual rate or timing of payments on any of
the underlying assets or the payments or yield on the securities. This
information supercedes any prior versions hereof, will be deemed to be
superseded by any subsequent versions (including with respect to any description
of the securities or the underlying assets, the information contained in the
Offering Document), and will deemed superseded, amended and supplemented in
their entirety by such final Offering Document.
<PAGE>
[LOGO] CHASE [LOGO] FIRST UNION(REGISTERED)
Call Protection: 100% of the Mortgage Loans contain call protection
provisions. The weighted average lockout and
defeasance period for all loans is 9.75 years. The
Mortgage Loans are generally prepayable without
penalty between zero to six months from Mortgage
Loan maturity. 208 of the Mortgage Loans, or
approximately 90.53% of the Cut-Off Date Pool
Balance, require defeasance.
Prepayment Premiums:
<TABLE>
<CAPTION>
Percent of Remaining Balance Analysis*
- --------------------------------------------------------------------------------------------------------------------------------
Prepayment
Premium May-99 May-00 May-01 May-02 May-03 May-04 May-05 May-06 May-07 May-08
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Lock-
out/Defeasance 100.00 100.00 95.21 90.99 89.96 89.89 89.92 89.81 89.65 83.85
YM 0.00 0.00 4.79 9.01 10.04 10.11 10.08 10.19 10.35 6.31
- --------------------------------------------------------------------------------------------------------------------------------
Sub Total 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 90.16
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
5.0% 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
4.0% 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
3.0% 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
2.0% 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
1.5% 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
1.0% 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.18
Open 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 9.67
- --------------------------------------------------------------------------------------------------------------------------------
Total 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Numbers represent percentage of outstanding balance as of the date
indicated
CHASE SECURITIES INC. FIRST UNION CAPITAL MARKETS CORP
J.P. Morgan & Co.
This information does not constitute either an offer to sell or a solicitation
of an offer to buy any of the securities referred to herein. Offers to sell and
solicitations of offers to buy securities are made only by, and this information
must be read in conjunction with, the final prospectus supplement and the
related prospectus or, if not registered under the securities laws, the final
offering memorandum (the "Offering Document"), and any such decision to invest
in such securities should be made solely in reliance upon such Offering
Document. Information contained herein does not purport to be complete and is
subject to the same qualifications and assumptions, and should be considered by
investors only in the light of the same warnings, lack of assurances and
representations and other precautionary matters, as disclosed in the Offering
Document. Information regarding the underlying assets has been provided by the
issuer of the securities or an affiliate thereof and has not been independently
verified by the underwriters or their respective affiliates. This information
was prepared on the basis of certain assumptions (including in certain case
assumptions specified by the recipient hereof) regarding payments, interest
rates, weighted average lives and weighted average loan age, loss and other
matters including but not limited to, the assumptions described in the Offering
Document, the underwriters, and any of their respective affiliates make no
representation or warranty as to the actual rate or timing of payments on any of
the underlying assets or the payments or yield on the securities. This
information supercedes any prior versions hereof, will be deemed to be
superseded by any subsequent versions (including with respect to any description
of the securities or the underlying assets, the information contained in the
Offering Document), and will deemed superseded, amended and supplemented in
their entirety by such final Offering Document.
<PAGE>
[LOGO] CHASE [LOGO] FIRST UNION(REGISTERED)
Collateral Characteristics (continued):
- ---------------------------------------
Cut-Off Date Balances
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
Number Cut-off Date Percent of
of Loans Balance ($) Balance
- ------------------------------------------------------------------------
<S> <C> <C> <C>
less than = 2,000,000 65 90,793,422 7.68
2,000,001 - 4,000,000 63 175,192,285 14.83
4,000,001 - 6,000,000 39 187,261,792 15.85
6,000,001 - 8,000,000 17 115,449,163 9.77
8,000,001 - 10,000,000 9 81,924,968 6.93
10,000,001 - 15,000,000 15 178,504,729 15.11
15,000,001 - 20,000,000 8 140,449,746 11.89
20,000,001 - 25,000,000 3 68,979,057 5.84
25,000,001 - 30,000,000 2 55,013,571 4.66
35,000,001 - 40,000,000 1 37,472,777 3.17
more than 40,000,000 1 50,443,313 4.27
- ------------------------------------------------------------------------
Total: 223 1,181,484,821 100.00
- ------------------------------------------------------------------------
Min: 412,861 Average: 5,298,138 Max: 50,443,313
- ------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Mortgage Rates (%)
- ------------------------------------------------------------------------
Number Cut-off Date Percent of
of Loans Balance Balance
- ------------------------------------------------------------------------
<S> <C> <C> <C>
less than 7.000 39 277,347,969 23.47
7.000 - 7.499 90 383,263,588 32.44
7.500 - 7.999 66 417,910,609 35.37
8.000 - 8.499 20 76,273,585 6.46
8.500 - 8.999 5 19,823,829 1.68
more than 8.999 3 6,865,241 0.58
- ------------------------------------------------------------------------
Total: 223 1,181,484,821 100.00
- ------------------------------------------------------------------------
Min: 6.125 Average: 7.360 Max: 9.500
- ------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Property Types States
- ------------------------------------------------------------------------ -----------------------------------------------
Number Cut-off Date Percent of Number of Cut-off Date Percent of
of Loans Balance Balance Properties Balance Balance
- ------------------------------------------------------------------------ -----------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Multifamily 62 365,399,773 30.93 CA 40 152,085,127 12.87
Retail - Anchored 55 272,577,634 23.07 GA 17 114,892,601 9.72
Hospitality 19 166,306,763 14.08 TX 14 85,621,908 7.25
Office 19 143,185,620 12.12 FL 21 81,141,569 6.87
CTL 27 78,808,932 6.67 NC 21 74,332,885 6.29
Mixed Use 5 50,193,888 4.25 NY 16 68,164,832 5.77
Industrial 13 37,267,470 3.15 PA 9 64,402,823 5.45
Retail - Unanchored 12 31,612,142 2.68 NJ 7 55,447,497 4.69
Healthcare 7 24,679,110 2.09 CT 6 53,249,911 4.51
MHC 3 9,460,434 0.80 VA 19 38,716,224 3.28
Self Storage 1 1,993,054 0.17 Other 90 393,429,444 33.30
- ------------------------------------------------------------------------ -----------------------------------------------
Total: 223 1,181,484,821 100.00 Total: 260 1,181,484,821 100.00
- ------------------------------------------------------------------------ -----------------------------------------------
</TABLE>
CHASE SECURITIES INC. FIRST UNION CAPITAL MARKETS CORP
J.P. Morgan & Co.
This information does not constitute either an offer to sell or a solicitation
of an offer to buy any of the securities referred to herein. Offers to sell and
solicitations of offers to buy securities are made only by, and this information
must be read in conjunction with, the final prospectus supplement and the
related prospectus or, if not registered under the securities laws, the final
offering memorandum (the "Offering Document"), and any such decision to invest
in such securities should be made solely in reliance upon such Offering
Document. Information contained herein does not purport to be complete and is
subject to the same qualifications and assumptions, and should be considered by
investors only in the light of the same warnings, lack of assurances and
representations and other precautionary matters, as disclosed in the Offering
Document. Information regarding the underlying assets has been provided by the
issuer of the securities or an affiliate thereof and has not been independently
verified by the underwriters or their respective affiliates. This information
was prepared on the basis of certain assumptions (including in certain case
assumptions specified by the recipient hereof) regarding payments, interest
rates, weighted average lives and weighted average loan age, loss and other
matters including but not limited to, the assumptions described in the Offering
Document, the underwriters, and any of their respective affiliates make no
representation or warranty as to the actual rate or timing of payments on any of
the underlying assets or the payments or yield on the securities. This
information supercedes any prior versions hereof, will be deemed to be
superseded by any subsequent versions (including with respect to any description
of the securities or the underlying assets, the information contained in the
Offering Document), and will deemed superseded, amended and supplemented in
their entirety by such final Offering Document.
<PAGE>
[LOGO] CHASE [LOGO] FIRST UNION(REGISTERED)
Collateral Characteristics (continued):
- ---------------------------------------
<TABLE>
<CAPTION>
DSCRs (x) (Excluding CTLs) Cut-off Date LTVs (Excluding CTLs)
- ------------------------------------------------------ ------------------------------------------------------
Number Cut-off Date Percent of Number Cut-off Date Percent of
of Loans Balance ($) Balance of Loans Balance ($) Balance
- ------------------------------------------------------ ------------------------------------------------------
<S> <C> <C> <C> <S> <C> <C> <C>
less than 1.20 4 15,033,915 1.36 less than 40.01 1 3,480,963 0.32
1.20 - 1.29 67 436,731,434 39.61 40.01 - 50.00 3 11,992,981 1.09
1.30 - 1.39 69 268,683,401 24.37 50.01 - 60.00 13 91,332,843 8.28
1.40 - 1.49 30 218,421,253 19.81 60.01 - 70.00 68 325,096,658 29.48
1.50 - 1.59 12 109,384,045 9.92 70.01 - 80.00 108 647,363,879 58.71
1.60 - 1.69 6 24,351,105 2.21 80.01 - 85.00 2 20,704,234 1.88
more than 1.69 8 30,070,736 2.73 more than or equal
to 85.01 1 2,704,332 0.25
- ------------------------------------------------------ ------------------------------------------------------
Total: 196 1,102,675,889 100.00 Total: 196 1,102,675,889 100.00
- ------------------------------------------------------ ------------------------------------------------------
Min: 1.14 Average: 1.36 Max: 4.42 Min: 23.70 Average: 0 Max: 100.20
- -------------------------------------- --------------- ------------------------------------------------------
*The Loan with a DSC Ratio of 1.14x is part of a group *The Loan with a 100.2% LTV Ratio is part of a group of
of cross-collateralized Mortgage Loans with a weighted cross-collateralized Mortgage Loans with a weighted
average Cut-Off Date DSC Ratio of 1.49x. average Cut-Off Date LTV Ratio of 68.1%.
</TABLE>
<TABLE>
<CAPTION>
Original Terms to Stated Maturity or ARD (Mos) Remaining Terms to Stated Maturity or ARD (Mos)
- ------------------------------------------------------ ------------------------------------------------------
Number Cut-off Date Percent of Number Cut-off Date Percent of
of Loans Balance ($) Balance of Loans Balance ($) Balance
- ------------------------------------------------------ ------------------------------------------------------
<S> <C> <C> <C> <S> <C> <C> <C>
less than 84 3 26,290,235 2.23 less than 84 3 26,290,235 2.23
85 - 132 152 984,514,535 83.33 85 - 120 151 972,514,535 82.31
133 - 156 26 33,261,342 2.82 121 - 156 27 45,261,342 3.83
157 - 180 8 29,405,454 2.49 157 - 180 8 29,405,454 2.49
181 - 216 6 21,794,383 1.84 181 - 228 8 25,154,095 2.13
217 - 240 11 40,497,106 3.43 241 - 252 17 60,322,292 5.11
241 - 264 13 37,994,143 3.22 253 - 300 7 19,475,845 1.65
more than 264 4 7,727,623 0.65 more than 300 2 3,061,022 0.26
- ------------------------------------------------------ -----------------------------------------------------
Total: 223 1,181,484,821 100.00 Total: 223 1,181,484,821 100.00
- ------------------------------------------------------ -----------------------------------------------------
Min: 60 Average: 134 Max: 360 Min: 56 Average: 128 Max: 357
- ------------------------------------------------------ -----------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Original Amortization Terms (Mos) Remaining Amortization Terms (Mos)
- ------------------------------------------------------ ------------------------------------------------------
Number Cut-off Date Percent of Number Cut-off Date Percent of
of Loans Balance ($) Balance of Loans Balance ($) Balance
- ------------------------------------------------------ ------------------------------------------------------
<S> <C> <C> <C> <S> <C> <C> <C>
less than 180 4 10,867,410 0.92 less than 180 4 10,867,410 0.92
181 - 240 20 61,964,598 5.24 181 - 240 22 67,084,719 5.68
241 - 252 2 5,120,121 0.43 241 - 252 6 18,064,778 1.53
253 - 264 6 18,064,778 1.53 253 - 264 6 21,794,383 1.84
265 - 288 7 27,239,514 2.31 265 - 276 1 5,445,132 0.46
289 - 300 62 265,631,488 22.48 277 - 288 3 11,200,848 0.95
301 - 324 4 17,472,765 1.48 289 - 324 65 276,816,748 23.43
more than 324 118 775,124,147 65.61 more than 324 116 770,210,803 65.19
- ------------------------------------------------------ ------------------------------------------------------
Total: 223 1,181,484,821 100.00 Total: 223 1,181,484,821 100.00
- ------------------------------------------------------ ------------------------------------------------------
Min: 171 Average: 333 Max: 360 Min: 163 Average: 328 Max: 360
- ------------------------------------------------------ ------------------------------------------------------
</TABLE>
CHASE SECURITIES INC. FIRST UNION CAPITAL MARKETS CORP
J.P. Morgan & Co.
This information does not constitute either an offer to sell or a solicitation
of an offer to buy any of the securities referred to herein. Offers to sell and
solicitations of offers to buy securities are made only by, and this information
must be read in conjunction with, the final prospectus supplement and the
related prospectus or, if not registered under the securities laws, the final
offering memorandum (the "Offering Document"), and any such decision to invest
in such securities should be made solely in reliance upon such Offering
Document. Information contained herein does not purport to be complete and is
subject to the same qualifications and assumptions, and should be considered by
investors only in the light of the same warnings, lack of assurances and
representations and other precautionary matters, as disclosed in the Offering
Document. Information regarding the underlying assets has been provided by the
issuer of the securities or an affiliate thereof and has not been independently
verified by the underwriters or their respective affiliates. This information
was prepared on the basis of certain assumptions (including in certain case
assumptions specified by the recipient hereof) regarding payments, interest
rates, weighted average lives and weighted average loan age, loss and other
matters including but not limited to, the assumptions described in the Offering
Document, the underwriters, and any of their respective affiliates make no
representation or warranty as to the actual rate or timing of payments on any of
the underlying assets or the payments or yield on the securities. This
information supercedes any prior versions hereof, will be deemed to be
superseded by any subsequent versions (including with respect to any description
of the securities or the underlying assets, the information contained in the
Offering Document), and will deemed superseded, amended and supplemented in
their entirety by such final Offering Document.
<PAGE>
[LOGO] CHASE [LOGO] FIRST UNION(REGISTERED)
Collateral Characteristics (continued):
- ---------------------------------------
Credit Tenant Lease Loans: Credit Tenant Lease Loans are secured by mortgages
on properties which are leased (each a "Credit
Tenant Lease"), to a tenant which possesses (or
whose parent or other affiliate which guarantees the
lease obligation possesses) the rating indicated in
the following table. Scheduled monthly rent payments
under the Credit Tenant Leases are generally
sufficient to pay in full and on a timely basis all
interest and principal scheduled to be paid with
respect to the related Credit Tenant Lease Loans.
The Credit Tenant Lease Loans generally provide that
the Tenant is responsible for all costs and expenses
incurred in connection with the maintenance and
operation of the related Credit Tenant Lease
property and that, in the event of a casualty or
condemnation of a material portion of the related
Mortgaged Property:
(i) the Tenant is obligated to continue making
payments;
(ii) the Tenant must make an offer to purchase the
applicable property subject to the Credit
Tenant Lease for an amount not less than the
unpaid principal balance plus accrued interest
on related Credit Tenant Lease Loan; or
(iii) the Trustee on behalf of the
Certificateholders will have the benefit of
certain non-cancelable credit lease enhancement
insurance policies obtained to cover certain
casualty and/or condemnation risks.
Approximately 6.67% of the Mortgage Loans are Credit
Tenant Lease Loans.
CHASE SECURITIES INC. FIRST UNION CAPITAL MARKETS CORP
J.P. Morgan & Co.
This information does not constitute either an offer to sell or a solicitation
of an offer to buy any of the securities referred to herein. Offers to sell and
solicitations of offers to buy securities are made only by, and this information
must be read in conjunction with, the final prospectus supplement and the
related prospectus or, if not registered under the securities laws, the final
offering memorandum (the "Offering Document"), and any such decision to invest
in such securities should be made solely in reliance upon such Offering
Document. Information contained herein does not purport to be complete and is
subject to the same qualifications and assumptions, and should be considered by
investors only in the light of the same warnings, lack of assurances and
representations and other precautionary matters, as disclosed in the Offering
Document. Information regarding the underlying assets has been provided by the
issuer of the securities or an affiliate thereof and has not been independently
verified by the underwriters or their respective affiliates. This information
was prepared on the basis of certain assumptions (including in certain case
assumptions specified by the recipient hereof) regarding payments, interest
rates, weighted average lives and weighted average loan age, loss and other
matters including but not limited to, the assumptions described in the Offering
Document, the underwriters, and any of their respective affiliates make no
representation or warranty as to the actual rate or timing of payments on any of
the underlying assets or the payments or yield on the securities. This
information supercedes any prior versions hereof, will be deemed to be
superseded by any subsequent versions (including with respect to any description
of the securities or the underlying assets, the information contained in the
Offering Document), and will deemed superseded, amended and supplemented in
their entirety by such final Offering Document.
<PAGE>
[LOGO] CHASE [LOGO] FIRST UNION(REGISTERED)
Collateral Characteristics (continued):
- ---------------------------------------
Unless otherwise indicated, such ratings were the highest assigned to the
applicable Tenant or Guarantor, as applicable,by Moody's and Standard & Poor's
respectively.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Cut-Off Date S&P Moody's Lease Type
Property Name Guarantor / Tenant Property Type Balances Rating Rating Code(1)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Circuit City Norwalk 444 Circuit City Stores Inc. Electronics Store $7,898,702 (2) (2) NN
CVS Greenville Old Buncombe CVS Corporation Drug Store 1,306,853 A A3 NN
CVS Lansdowne Hollins Ferry CVS Corporation Drug Store 1,831,525 A A3 NN
CVS Yarmouth Main CVS Corporation Drug Store 2,556,250 A A3 NN
CVS Rocky Mount CVS Corporation Drug Store 1,520,209 A A3 NN
----------
Total CVS $7,214,837
Eagle Davenport Locust Eagle Food Centers, Inc. Grocery Store $4,085,191 B+ B2 NNN
Eckerd Oveido Red Bug Lake Eckerd Corporation Drug Store 2,418,557 N/A Baa2 NNN
Eckerd Ferber Tallahassee Eckerd Corporation Drug Store 1,839,504 N/A Baa2 NNN
Eckerd, Tarboro Eckerd Corporation Drug Store 1,690,369 N/A Baa2 NN
----------
Total Eckerd $5,948,430
IHOP Rock Hill North Cherry IHOP Corporation Restaurant $1,389,770 (2) (2) NNN
Motel 6 1081 Little Rock (W) Accor SA Limited Service 4,043,344 BBB -- B
Motel 6 1115 Raleigh Accor SA Limited Service 6,235,064 BBB -- B
Motel 6 1129 Hilton Head Accor SA Limited Service 4,232,286 BBB -- B
Motel 6 202 Lumberton Accor SA Limited Service 1,039,177 BBB -- B
Motel 6 608 Mobile Accor SA Limited Service 3,079,744 BBB -- B
Motel 6 740 Reno Sparks Accor SA Limited Service 3,164,767 BBB -- B
----------
Total Motel 6 $21,794,383
Rite Aid - Holland Rite Aid Corporation Drug Store 2,764,695 BBB+ Baa1 B
Rite Aid - Ironton Rite Aid Corporation Drug Store 2,385,499 BBB+ Baa1 B
Rite Aid - Commerce Turnpike Rite Aid Corporation Drug Store 3,046,015 BBB+ Baa1 B
Rite Aid - Claremont Rite Aid Corporation Drug Store 2,527,844 BBB+ Baa1 B
----------
Total Rite Aid $10,724,053
Southland Ormond Beach Nova The Southland Corporation Convenience Store $1,068,620 BB+ Ba1 NN
Staples York Loucks Road Staples, Inc. Office Supplies $2,647,603 BBB- Baa2 NN
Walgreen Franklin Fieldstone Walgreen Company Drug Store 2,563,871 A+ Aa3 NN
Walgreen Duncanville Wheatland Walgreen Company Drug Store 2,550,305 A+ Aa3 NN
Walgreens at Silver Lakes Walgreen Company Drug Store 2,672,432 A+ Aa3 NN
Walgreen Colleyville Walgreen Company Drug Store 2,805,603 A+ Aa3 NN
----------
Total Walgreens $10,592,211
Winn Dixie Chesapeake Cedar Winn-Dixie Stores, Inc. Grocery Store $5,445,132 A2(3) P2(3) NNN
- ------------------------------------------------------------------------------------------------------------------------------------
Total: $78,808,932
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Notes: (1) "NNN" means triple net lease; "NN" means double net lease, "B"
means bond-type lease.
(2) Not publicly rated
(3) Such ratings are short-term ratings. Long term ratings have not
been assigned by either Moody's or Standard & Poors.
CHASE SECURITIES INC. FIRST UNION CAPITAL MARKETS CORP
J.P. Morgan & Co.
This information does not constitute either an offer to sell or a solicitation
of an offer to buy any of the securities referred to herein. Offers to sell and
solicitations of offers to buy securities are made only by, and this information
must be read in conjunction with, the final prospectus supplement and the
related prospectus or, if not registered under the securities laws, the final
offering memorandum (the "Offering Document"), and any such decision to invest
in such securities should be made solely in reliance upon such Offering
Document. Information contained herein does not purport to be complete and is
subject to the same qualifications and assumptions, and should be considered by
investors only in the light of the same warnings, lack of assurances and
representations and other precautionary matters, as disclosed in the Offering
Document. Information regarding the underlying assets has been provided by the
issuer of the securities or an affiliate thereof and has not been independently
verified by the underwriters or their respective affiliates. This information
was prepared on the basis of certain assumptions (including in certain case
assumptions specified by the recipient hereof) regarding payments, interest
rates, weighted average lives and weighted average loan age, loss and other
matters including but not limited to, the assumptions described in the Offering
Document, the underwriters, and any of their respective affiliates make no
representation or warranty as to the actual rate or timing of payments on any of
the underlying assets or the payments or yield on the securities. This
information supercedes any prior versions hereof, will be deemed to be
superseded by any subsequent versions (including with respect to any description
of the securities or the underlying assets, the information contained in the
Offering Document), and will deemed superseded, amended and supplemented in
their entirety by such final Offering Document.
<PAGE>
WEIGHTED AVERAGE LIFE, PRINCIPAL WINDOW,
PRE-TAX YIELD TO MATURITY AND MODIFIED DURATION OF THE A1 CERTIFICATES
0% CPR DURING LOCKOUT, DEFEASANCE, YIELD MAINTENANCE OR PENALTY - OTHERWISE AT
INDICATED CPR
<TABLE>
<CAPTION>
PRICE (32NDS) 0% CPR 10% CPR 20% CPR 30% CPR 50% CPR
- ----------------- --------- --------- --------- --------- ---------
CBE YIELD CBE YIELD CBE YIELD CBE YIELD CBE YIELD
<S> <C> <C> <C> <C> <C>
100/16 6.274% 6.274% 6.274% 6.274% 6.274%
100/18 6.260% 6.260% 6.260% 6.260% 6.260%
100/20 6.246% 6.246% 6.245% 6.245% 6.245%
100/22 6.231% 6.231% 6.231% 6.231% 6.231%
100/24 6.217% 6.217% 6.217% 6.217% 6.216%
100/26 6.202% 6.202% 6.202% 6.202% 6.202%
100/28 6.188% 6.188% 6.188% 6.188% 6.188%
100/30 6.174% 6.174% 6.174% 6.173% 6.173%
101/00 6.159% 6.159% 6.159% 6.159% 6.159%
101/02 6.145% 6.145% 6.145% 6.145% 6.145%
101/04 6.131% 6.131% 6.131% 6.130% 6.130%
101/06 6.117% 6.116% 6.116% 6.116% 6.116%
101/08 6.102% 6.102% 6.102% 6.102% 6.102%
WEIGHTED AVERAGE
LIFE (YRS.) 5.39 5.38 5.38 5.38 5.37
FIRST PRINCIPAL
PAYMENT DATE 15-JUN-99 15-JUN-99 15-JUN-99 15-JUN-99 15-JUN-99
LAST PRINCIPAL
PAYMENT DATE 15-JUN-08 15-JUN-08 15-JUN-08 15-JUN-08 15-MAY-08
MODIFIED DURATION
@ 100/28 4.30 4.30 4.30 4.30 4.29
</TABLE>
B-17
<PAGE>
WEIGHTED AVERAGE LIFE, PRINCIPAL WINDOW,
PRE-TAX YIELD TO MATURITY AND MODIFIED DURATION OF THE A2 CERTIFICATES
0% CPR DURING LOCKOUT, DEFEASANCE, YIELD MAINTENANCE OR PENALTY - OTHERWISE AT
INDICATED CPR
<TABLE>
<CAPTION>
PRICE (32NDS) 0% CPR 10% CPR 20% CPR 30% CPR 50% CPR
- ----------------- ---------- ---------- ---------- ---------- ----------
CBE YIELD CBE YIELD CBE YIELD CBE YIELD CBE YIELD
<S> <C> <C> <C> <C> <C>
101/04 6.538% 6.538% 6.538% 6.538% 6.538%
101/06 6.529% 6.529% 6.529% 6.529% 6.529%
101/08 6.520% 6.520% 6.520% 6.520% 6.520%
101/10 6.511% 6.511% 6.511% 6.511% 6.511%
101/12 6.503% 6.502% 6.502% 6.502% 6.502%
101/14 6.494% 6.494% 6.493% 6.493% 6.493%
101/16 6.485% 6.485% 6.485% 6.484% 6.484%
101/18 6.476% 6.476% 6.476% 6.476% 6.475%
101/20 6.467% 6.467% 6.467% 6.467% 6.466%
101/22 6.458% 6.458% 6.458% 6.458% 6.457%
101/24 6.449% 6.449% 6.449% 6.449% 6.449%
101/26 6.440% 6.440% 6.440% 6.440% 6.440%
101/28 6.432% 6.431% 6.431% 6.431% 6.431%
WEIGHTED AVERAGE 9.58 9.57 9.57 9.56 9.54
LIFE (YRS.)
FIRST PRINCIPAL 15-JUN-08 15-JUN-08 15-JUN-08 15-JUN-08 15-MAY-08
PAYMENT DATE
LAST PRINCIPAL 15-APR-09 15-APR-09 15-APR-09 15-APR-09 15-APR-09
PAYMENT DATE
MODIFIED DURATION 6.90 6.90 6.89 6.89 6.88
@ 101-16
</TABLE>
B-18
<PAGE>
WEIGHTED AVERAGE LIFE, PRINCIPAL WINDOW,
PRE-TAX YIELD TO MATURITY AND MODIFIED DURATION OF THE B CERTIFICATES
0% CPR DURING LOCKOUT, DEFEASANCE, YIELD MAINTENANCE OR PENALTY - OTHERWISE AT
INDICATED CPR
<TABLE>
<CAPTION>
PRICE (32NDS) 0% CPR 10% CPR 20% CPR 30% CPR 50% CPR
- ----------------- ---------- ---------- ---------- ---------- ----------
CBE YIELD CBE YIELD CBE YIELD CBE YIELD CBE YIELD
<S> <C> <C> <C> <C> <C>
101/04 6.695% 6.695% 6.695% 6.695% 6.695%
101/06 6.686% 6.686% 6.686% 6.686% 6.686%
101/08 6.677% 6.677% 6.677% 6.677% 6.677%
101/10 6.668% 6.668% 6.668% 6.668% 6.668%
101/12 6.660% 6.660% 6.660% 6.660% 6.660%
101/14 6.651% 6.651% 6.651% 6.651% 6.651%
101/16 6.642% 6.642% 6.642% 6.642% 6.642%
101/18 6.633% 6.633% 6.633% 6.633% 6.633%
101/20 6.625% 6.625% 6.625% 6.625% 6.625%
101/22 6.616% 6.616% 6.616% 6.616% 6.616%
101/24 6.607% 6.607% 6.607% 6.607% 6.607%
101/26 6.599% 6.599% 6.599% 6.599% 6.599%
101/28 6.590% 6.590% 6.590% 6.590% 6.590%
WEIGHTED AVERAGE 9.89 9.89 9.89 9.89 9.89
LIFE (YRS.)
FIRST PRINCIPAL 15-APR-09 15-APR-09 15-APR-09 15-APR-09 15-APR-09
PAYMENT DATE
LAST PRINCIPAL 15-APR-09 15-APR-09 15-APR-09 15-APR-09 15-APR-09
PAYMENT DATE
MODIFIED DURATION 7.01 7.01 7.01 7.01 7.01
@ 101-16
</TABLE>
B-19
<PAGE>
WEIGHTED AVERAGE LIFE, PRINCIPAL WINDOW,
PRE-TAX YIELD TO MATURITY AND MODIFIED DURATION OF THE C CERTIFICATES
0% CPR DURING LOCKOUT, DEFEASANCE, YIELD MAINTENANCE OR PENALTY - OTHERWISE AT
INDICATED CPR
<TABLE>
<CAPTION>
PRICE (32NDS) 0% CPR 10% CPR 20% CPR 30% CPR 50% CPR
- ----------------- ---------- ---------- ---------- ---------- ----------
CBE YIELD CBE YIELD CBE YIELD CBE YIELD CBE YIELD
<S> <C> <C> <C> <C> <C>
101/04 6.846% 6.846% 6.846% 6.846% 6.846%
101/06 6.837% 6.837% 6.837% 6.837% 6.837%
101/08 6.828% 6.828% 6.828% 6.828% 6.828%
101/10 6.819% 6.819% 6.819% 6.819% 6.819%
101/12 6.811% 6.811% 6.811% 6.811% 6.811%
101/14 6.802% 6.802% 6.802% 6.802% 6.802%
101/16 6.793% 6.793% 6.793% 6.793% 6.793%
101/18 6.784% 6.784% 6.784% 6.784% 6.784%
101/20 6.775% 6.775% 6.775% 6.775% 6.775%
101/22 6.767% 6.767% 6.767% 6.767% 6.767%
101/24 6.758% 6.758% 6.758% 6.758% 6.758%
101/26 6.749% 6.749% 6.749% 6.749% 6.749%
101/28 6.740% 6.740% 6.740% 6.740% 6.740%
WEIGHTED AVERAGE 9.89 9.89 9.89 9.89 9.89
LIFE (YRS.)
FIRST PRINCIPAL 15-APR-09 15-APR-09 15-APR-09 15-APR-09 15-APR-09
PAYMENT DATE
LAST PRINCIPAL 15-MAY-09 15-MAY-09 15-APR-09 15-APR-09 15-APR-09
PAYMENT DATE
MODIFIED DURATION 6.96 6.96 6.96 6.96 6.96
@ 101-16
</TABLE>
B-20
<PAGE>
WEIGHTED AVERAGE LIFE, PRINCIPAL WINDOW,
PRE-TAX YIELD TO MATURITY AND MODIFIED DURATION OF THE D CERTIFICATES
0% CPR DURING LOCKOUT, DEFEASANCE, YIELD MAINTENANCE OR PENALTY - OTHERWISE AT
INDICATED CPR
<TABLE>
<CAPTION>
PRICE (32NDS) 0% CPR 10% CPR 20% CPR 30% CPR 50% CPR
- ----------------- ---------- ---------- ---------- ---------- ----------
CBE YIELD CBE YIELD CBE YIELD CBE YIELD CBE YIELD
<S> <C> <C> <C> <C> <C>
101/04 6.967% 6.967% 6.967% 6.967% 6.966%
101/06 6.958% 6.958% 6.958% 6.958% 6.957%
101/08 6.949% 6.949% 6.949% 6.949% 6.949%
101/10 6.940% 6.940% 6.940% 6.940% 6.940%
101/12 6.931% 6.931% 6.931% 6.931% 6.931%
101/14 6.923% 6.923% 6.923% 6.922% 6.922%
101/16 6.914% 6.914% 6.914% 6.914% 6.913%
101/18 6.905% 6.905% 6.905% 6.905% 6.904%
101/20 6.896% 6.896% 6.896% 6.896% 6.896%
101/22 6.887% 6.887% 6.887% 6.887% 6.887%
101/24 6.879% 6.879% 6.879% 6.878% 6.878%
101/26 6.870% 6.870% 6.870% 6.870% 6.869%
101/28 6.861% 6.861% 6.861% 6.861% 6.860%
WEIGHTED AVERAGE 9.98 9.98 9.97 9.96 9.94
LIFE (YRS.)
FIRST PRINCIPAL 15-MAY-09 15-MAY-09 15-APR-09 15-APR-09 15-APR-09
PAYMENT DATE
LAST PRINCIPAL 15-MAY-09 15-MAY-09 15-MAY-09 15-MAY-09 15-MAY-09
PAYMENT DATE
MODIFIED DURATION 6.96 6.96 6.96 6.96 6.95
@ 101-16
</TABLE>
B-21
<PAGE>
WEIGHTED AVERAGE LIFE, PRINCIPAL WINDOW,
PRE-TAX YIELD TO MATURITY AND MODIFIED DURATION OF THE E CERTIFICATES
0% CPR DURING LOCKOUT, DEFEASANCE, YIELD MAINTENANCE OR PENALTY - OTHERWISE AT
INDICATED CPR
<TABLE>
<CAPTION>
PRICE (32NDS) 0% CPR 10% CPR 20% CPR 30% CPR 50% CPR
- ----------------- ---------- ---------- ---------- ---------- ----------
CBE YIELD CBE YIELD CBE YIELD CBE YIELD CBE YIELD
<S> <C> <C> <C> <C> <C>
99/20 7.414% 7.414% 7.414% 7.414% 7.414%
99/22 7.405% 7.405% 7.405% 7.405% 7.405%
99/24 7.396% 7.396% 7.396% 7.396% 7.396%
99/26 7.387% 7.387% 7.387% 7.387% 7.387%
99/28 7.378% 7.378% 7.378% 7.378% 7.378%
99/30 7.369% 7.369% 7.369% 7.369% 7.369%
100/00 7.360% 7.360% 7.360% 7.360% 7.360%
100/02 7.351% 7.351% 7.351% 7.351% 7.351%
100/04 7.342% 7.342% 7.342% 7.342% 7.342%
100/06 7.333% 7.333% 7.333% 7.333% 7.333%
100/08 7.324% 7.324% 7.324% 7.324% 7.324%
100/10 7.315% 7.315% 7.315% 7.315% 7.315%
100/12 7.306% 7.306% 7.306% 7.306% 7.306%
WEIGHTED AVERAGE 10.02 10.01 10.01 10.01 10.01
LIFE (YRS.)
FIRST PRINCIPAL 15-MAY-09 15-MAY-09 15-MAY-09 15-MAY-09 15-MAY-09
PAYMENT DATE
LAST PRINCIPAL 15-JUN-09 15-JUN-09 15-JUN-09 15-JUN-09 15-JUN-09
PAYMENT DATE
MODIFIED DURATION 6.88 6.88 6.88 6.87 6.87
@ 100
</TABLE>
B-22
<PAGE>
WEIGHTED AVERAGE LIFE, PRINCIPAL WINDOW,
PRE-TAX YIELD TO MATURITY AND MODIFIED DURATION OF THE F CERTIFICATES
0% CPR DURING LOCKOUT, DEFEASANCE, YIELD MAINTENANCE OR PENALTY - OTHERWISE AT
INDICATED CPR
<TABLE>
<CAPTION>
PRICE (32NDS) 0% CPR 10% CPR 20% CPR 30% CPR 50% CPR
- ----------------- ---------- ---------- ---------- ---------- ----------
CBE YIELD CBE YIELD CBE YIELD CBE YIELD CBE YIELD
<S> <C> <C> <C> <C> <C>
93/20 8.310% 8.310% 8.310% 8.310% 8.310%
93/22 8.300% 8.300% 8.301% 8.301% 8.301%
93/24 8.291% 8.291% 8.291% 8.291% 8.291%
93/26 8.281% 8.281% 8.281% 8.281% 8.281%
93/28 8.271% 8.271% 8.271% 8.271% 8.271%
93/30 8.262% 8.262% 8.262% 8.262% 8.262%
94/00 8.252% 8.252% 8.252% 8.252% 8.252%
94/02 8.242% 8.242% 8.242% 8.242% 8.242%
94/04 8.233% 8.233% 8.233% 8.233% 8.233%
94/06 8.223% 8.223% 8.223% 8.223% 8.223%
94/08 8.213% 8.213% 8.213% 8.213% 8.213%
94/10 8.204% 8.204% 8.204% 8.204% 8.204%
94/12 8.194% 8.194% 8.194% 8.194% 8.194%
WEIGHTED AVERAGE 10.21 10.21 10.21 10.21 10.21
LIFE (YRS.)
FIRST PRINCIPAL 15-JUN-99 15-JUN-99 15-JUN-99 15-JUN-99 15-JUN-99
PAYMENT DATE
LAST PRINCIPAL 15-SEP-09 15-SEP-09 15-SEP-09 15-SEP-09 15-SEP-09
PAYMENT DATE
MODIFIED DURATION 6.83 6.83 6.83 6.83 6.83
@ 94
</TABLE>
B-23
<PAGE>
[This page intentionally left blank]
<PAGE>
ANNEX C
<TABLE>
<S> <C> <C>
[LOGO] First Union National Bank-Chase Manhattan Bank For Additional Information, please contact
Norwest Bank Minnesota, N.A. Commercial Mortgage Trust Leslie Gaskill
Corporate Trust Services Commercial Mortgage Pass-Through Certificates (212) 515-5254
3 New York Plaza, 15th Floor Series 1999-C2 Reports Available on the World Wide Web
New York, NY 10004 @ www.ctslink.com/cmbs
Payment Date: 06/15/1999
Record Date: 05/28/1998
</TABLE>
DISTRIBUTION DATE STATEMENT
Table of Contents
STATEMENT SECTIONS PAGE(s)
- ------------------ -------
Certificate Distribution Detail 2
Certificate Factor Detail 3
Reconciliation Detail 4
Other Required Information 5
Ratings Detail 6
Current Mortgage Loan and Property Stratification Tables 7 - 9
Mortgage Loan Detail 10
Principal Prepayment Detail 11
Historical Detail 12
Delinquency Loan Detail 13
Specially Serviced Loan Detail 14 - 15
Modified Loan Detail 16
Liquidated Loan Detail 17
<TABLE>
<CAPTION>
Underwriter Underwriter Master Servicer
<S> <C> <C>
First Union Capital Markets Chase Securities Inc. First Union National Bank
One First Union Center 270 Park Avenue, 6th Floor Charlotte Plaza, Floor 23 NC-1075
301 South College Street New York, NY 10017 201 South College Street
Charlotte, NC 28288 Charlotte, NC 28288
Contact: Craig M. Lieberman Contact: Steven Schwartz Contact: Timothy S. Ryan
Phone Number: (704) 383-7407 Phone Number: (212) 834-5612 Phone Number: (704) 374-2217
</TABLE>
Special Servicer
Banc One Mortgage Capital Markets, LLC
1717 Main Street, 14th Floor
Dallas, TX 75201
Contact: Paul G. Smyth
Phone Number: (214) 290-2505
This report has been compiled from information provided to Norwest by
various third parties, which may include the Servicer, Master Servicer,
Special Servicer and others. Norwest has not independently confirmed the
accuracy of information received from these third parties and assumes no
duty to do so. Norwest expressly disclaims any responsibility for the
accuracy or completeness of information furnished by third parties.
Copyright 1997, Norwest Bank Minnesota, N.A. Page 1 of 17
<PAGE>
<TABLE>
<S> <C> <C>
[LOGO] For Additional Information, please contact
Norwest Bank Minnesota, N.A. First Union National Bank-Chase Manhattan Bank Leslie Gaskill
Corporate Trust Services Commercial Mortgage Trust (212) 515-5254
3 New York Plaza, 15th Floor Commercial Mortgage Pass-Through Certificates Reports Available on the World Wide Web
New York, NY 10004 Series 1999-C2 @ www.ctslink.com/cmbs
Payment Date: 06/15/1999
Record Date: 05/28/1999
</TABLE>
Certificate Distribution Detail
<TABLE>
<CAPTION>
Realized
Loss/
Additional
Trust Total Current
Pass-Through Original Beginning Principal Interest Prepayment Fund Distri- Ending Subordination
Class CUSIP Rate Balance Balance Distribution Distribution Penalties Expenses bution Balance Level(1)
- ----- ----- ---- ------- ------- ------------ ------------ --------- -------- ------ ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
A-1 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00%
A-2 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00%
B 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00%
C 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00%
D 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00%
E 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00%
F 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00%
G 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00%
H 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00%
J 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00%
K 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00%
L 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00%
M 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00%
N 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00%
R-I 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00%
R-II 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00%
R-III 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00%
Totals 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
</TABLE>
<TABLE>
<CAPTION>
Original Beginning Ending
Pass-Through Notional Notional Interest Prepayment Total Notional
Class CUSIP Rate Amount Amount Distribution Penalties Distribution Amount
----- ----- ---- ------ ------ ------------ --------- ------------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
IO 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
</TABLE>
(1) Calculated by taking (A) the sum of the ending certificate balance of
all classes less (B) the sum of (i) the ending certificate balance of the
designated class and (ii) the ending certificate balance of all classes
which are not subordinate to the designated class and dividing the result by
(A).
Copyright 1997, Norwest Bank Minnesota, N.A. Page 2 of 17
<PAGE>
<TABLE>
<S> <C> <C>
[LOGO] For Additional Information, please contact
Norwest Bank Minnesota, N.A. First Union National Bank-Chase Manhattan Bank Leslie Gaskill
Corporate Trust Services Commerical Mortgage Trust (212) 515-5254
3 New York Plaza, 15th Floor Commercial Mortgage Pass-Through Certificates Reports Available on the World Wide Web
New York, NY 10004 Series 1999-C2 @ www.ctslink.com/cmbs
Payment Date: 06/15/1999
Record Date: 05/28/1999
</TABLE>
Certificate Factor Detail
<TABLE>
<CAPTION>
Realized Loss/
Beginning Principal Interest Prepayment Additional Trust Ending
Class CUSIP Balance Distribution Distribution Penalties Fund Expenses Balance
----- ----- ------- ------------ ------------ ----------- --------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
A-1 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
A-2 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
B 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
C 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
D 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
E 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
F 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
G 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
H 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
J 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
K 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
L 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
M 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
N 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
R-I 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
R-II 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
R-III 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
</TABLE>
<TABLE>
<CAPTION>
Beginning Ending
Notional Interest Prepayment Notional
Class CUSIP Amount Distribution Penalties Amount
----- ----- ------ ------------ --------- ------
<S> <C> <C> <C> <C> <C>
IO 0.00000000 0.00000000 0.00000000 0.00000000
</TABLE>
Copyright 1997, Norwest Bank Minnesota, N.A. Page 3 of 17
<PAGE>
<TABLE>
<S> <C> <C>
[LOGO] For Additional Information, please contact
Norwest Bank Minnesota, N.A. First Union National Bank-Chase Manhattan Bank Leslie Gaskill
Corporate Trust Services Commercial Mortgage Trust (212) 515-5254
3 New York Plaza, 15th Floor Commercial Mortgage Pass-Through Certificates Reports Available on the World Wide Web
New York, NY 10004 Series 1999-C2 @ www.ctslink.com/cmbs
Payment Date: 06/15/1999
Record Date: 05/28/1999
</TABLE>
Reconciliation Detail
<TABLE>
<CAPTION>
Advance Summary Servicing Fee Breakdowns
<S> <C> <C> <C>
P & I Advances Outstanding 0.00 Current Period Accrued Servicing Fees 0.00
Servicing Advances Outstanding 0.00 Less Delinquent Servicing Fees 0.00
Less Reductions to Servicing Fees 0.00
Reimbursement for Interest on Advances 0.00 Plus Servicing Fees for Delinquent Payments Received 0.00
paid from general collections Plus Adjustments for Prior Servicing Calculation 0.00
Total Servicing Fees Collected 0.00
Reimbursements for Interest on Servicing 0.00
Advances paid from general collections
Aggregate amount of Nonrecoverable
Advances 0.00
</TABLE>
Certificate Interest Reconciliation
<TABLE>
<CAPTION>
Net
Aggregate Distributable Remaining Unpaid
Accrued Prepayment Distributable Certificate Additional Distributable
Certificate Interest Certificate Interest Trust Fund Interest Certificate
Class Interest Shortfall Interest Adjustment Expenses Distribution Interest
- ----- -------- --------- -------- ---------- -------- ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
A-1 0.00 0.00 0.00 0.00 0.00 0.00 0.00
A-2 0.00 0.00 0.00 0.00 0.00 0.00 0.00
IO 0.00 0.00 0.00 0.00 0.00 0.00 0.00
B 0.00 0.00 0.00 0.00 0.00 0.00 0.00
C 0.00 0.00 0.00 0.00 0.00 0.00 0.00
D 0.00 0.00 0.00 0.00 0.00 0.00 0.00
E 0.00 0.00 0.00 0.00 0.00 0.00 0.00
F 0.00 0.00 0.00 0.00 0.00 0.00 0.00
G 0.00 0.00 0.00 0.00 0.00 0.00 0.00
H 0.00 0.00 0.00 0.00 0.00 0.00 0.00
J 0.00 0.00 0.00 0.00 0.00 0.00 0.00
K 0.00 0.00 0.00 0.00 0.00 0.00 0.00
L 0.00 0.00 0.00 0.00 0.00 0.00 0.00
M 0.00 0.00 0.00 0.00 0.00 0.00 0.00
N 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Total 0.00 0.00 0.00 0.00 0.00 0.00 0.00
</TABLE>
Copyright 1997, Norwest Bank Minnesota, N.A. Page 4 of 17
<PAGE>
<TABLE>
<S> <C> <C>
[LOGO] For Additional Information, please contact
Norwest Bank Minnesota, N.A. First Union National Bank-Chase Manhattan Bank Leslie Gaskill
Corporate Trust Services Commercial Mortgage Trust (212) 515-5254
3 New York Plaza, 15th Floor Commercial Mortgage Pass-Through Certificates Reports Available on the World Wide Web
New York, NY 10004 Series 1999-C2 @ www.ctslink.com/cmbs
Payment Date: 06/15/1999
Record Date: 05/28/1999
</TABLE>
Other Required Information
Available Distribution Amount 0.00
Aggregate Number of Outstanding Loans 0
Aggregate Unpaid Principal Balance of Loans 0.00
Aggregate Stated Principal Balance of Loans 0.00
Aggregate Amount of Servicing Fee 0.00
Aggregate Amount of Special Servicing Fee 0.00
Aggregate Amount of Trustee Fee 0.00
Aggregate Trust Fund Expenses 0.00
Interest Reserve Deposit 0.00
Specially Serviced Loans not Delinquent
Number of Outstanding Loans 0
Aggregate Unpaid Principal Balance 0.00
- -------------------------------------------------------------------------
Original Subordination Level
Class A-1 0.000000% Class G 0.000000%
Class A-2 0.000000% Class H 0.000000%
Class B 0.000000% Class J 0.000000%
Class C 0.000000% Class K 0.000000%
Class D 0.000000% Class L 0.000000%
Class E 0.000000% Class M 0.000000%
Class F 0.000000% Class N 0.000000%
Appraisal Reduction Amount
Appraisal Date Appraisal
Loan Reduction Reduction
Number Amount Effected
------ ------ --------
None
Total
Copyright 1997, Norwest Bank Minnesota, N.A. Page 5 of 17
<PAGE>
<TABLE>
<S> <C> <C>
[LOGO] For Additional Information, please contact
Norwest Bank Minnesota, N.A. First Union National Bank-Chase Manhattan Bank Leslie Gaskill
Corporate Trust Services Commercial Mortgage Trust (212) 515-5254
3 New York Plaza, 15th Floor Commercial Mortgage Pass-Through Certificates Reports Available on the World Wide Web
New York, NY 10004 Series 1999-C2 @ www.ctslink.com/cmbs
Payment Date: 06/15/1999
Record Date: 05/28/1999
</TABLE>
Ratings Detail
<TABLE>
<CAPTION>
Original Ratings Current Ratings (1)
----------------------------------- -----------------------------------
Class CUSIP DCR FITCH MOODY'S S&P DCR FITCH MOODY'S S&P
----- ----- --- ----- ------- --- --- ----- -------- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
A-1
A-2
IO
B
C
D
E
F
G
H
J
K
L
M
N
</TABLE>
NR - Designates that the class was not rated by the above agency at the
time of original issuance.
X - Designates that the above rating agency did not rate any classes in
this transaction at the time of original issuance.
N/A - Data not available this period.
1) For any class not rated at the time of original issuance by any
particular rating agency, no request has been made subsequent to issuance to
obtain rating information, if any, from such rating agency. The current
ratings were obtained directly from the applicable rating agency within 30
days of the payment date listed above. The ratings may have changed since
they were obtained. Because the ratings may have changed, you may want to
obtain current ratings directly from the rating agencies.
Duff & Phelps Credit Rating Co.
55 East Monroe Street
Chicago, Illinois 60603
(312) 368-3100
Fitch IBCA, Inc.
One State Street Plaza
New York, New York 10004
(212) 908-0500
Moody's Investors Service
99 Church Street
New York, New York 10007
(212) 553-0300
Standard & Poor's Rating Services
26 Broadway
New York, New York 10004
(212) 208-8000
Copyright 1997, Norwest Bank Minnesota, N.A. Page 6 of 17
<PAGE>
<TABLE>
<S> <C> <C>
[LOGO] First Union National Bank-Chase Manhattan Bank For Additional Information, please contact
Norwest Bank Minnesota, N.A. Commercial Mortgage Trust Leslie Gaskill
Corporate Trust Services Commercial Mortgage Pass-Through Certificates (212) 515-5254
3 New York Plaza, 15th Floor Series 1999-C2 Reports Available on the World Wide Web
New York, NY 10004 @ www.ctslink.com/cmbs
Payment Date: 06/15/1999
Record Date: 05/28/1998
</TABLE>
Current Mortgage Loan and Property Stratification Tables
Scheduled Balance
<TABLE>
<CAPTION>
Scheduled # of Scheduled % of Weighted
Balance Loans Balance Agg. Bal WAM(2) WAC Avg DSCR(1)
------- ----- ------- -------- ------ --- -----------
<S> <C> <C> <C> <C> <C> <C>
Totals
</TABLE>
State (3)
<TABLE>
<CAPTION>
# of Scheduled % of Weighted
State Props. Balance Agg. Bal WAM(2) WAC Avg DSCR(1)
----- ----- ------- -------- ------ --- -----------
<S> <C> <C> <C> <C> <C> <C>
Totals
</TABLE>
See footnotes on last page of this section.
Page 7 of 17
<PAGE>
<TABLE>
<S> <C> <C>
[LOGO] For Additional Information, please contact
Norwest Bank Minnesota, N.A. First Union National Bank-Chase Manhattan Bank Leslie Gaskill
Corporate Trust Services Commercial Mortgage Trust (212) 515-5254
3 New York Plaza, 15th Floor Commercial Mortgage Pass-Through Certificates Reports Available on the World Wide Web
New York, NY 10004 Series 1999-C2 @ www.ctslink.com/cmbs
Payment Date: 06/15/1999
Record Date: 05/28/1999
</TABLE>
Current Mortgage Loan and Property Stratification Tables
Debt Service Coverage Ratio
<TABLE>
<CAPTION>
Debt Servcice # of Scheduled % of Weighted
Coverage Ratio Loans Balance Agg. Bal WAM(2) WAC Avg DSCR(1)
-------------- ----- ------- -------- ------ --- -----------
<S> <C> <C> <C> <C> <C> <C>
Totals
</TABLE>
Property Type
<TABLE>
<CAPTION>
Property # of Scheduled % of Weighted
Type Props. Balance Agg. Bal WAM(2) WAC Avg DSCR(1)
---- ----- ------- -------- ------ --- -----------
<S> <C> <C> <C> <C> <C> <C>
Totals
</TABLE>
Note Rate
<TABLE>
<CAPTION>
Note # of Scheduled % of Weighted
Rate Loans Balance Agg. Bal WAM(2) WAC Avg DSCR(1)
---- ----- ------- -------- ------ --- -----------
<S> <C> <C> <C> <C> <C> <C>
Totals
</TABLE>
Seasoning
<TABLE>
<CAPTION>
# of Scheduled % of Weighted
Seasoning Loans Balance Agg. Bal WAM(2) WAC Avg DSCR(1)
--------- ----- ------- -------- ------ --- -----------
<S> <C> <C> <C> <C> <C> <C>
Totals
</TABLE>
See footnotes on last page of this section.
Copyright 1997, Norwest Bank Minnesota, N.A. Page 8 of 17
<PAGE>
<TABLE>
<S> <C> <C>
[LOGO] For Additional Information, please contact
Norwest Bank Minnesota, N.A. First Union National Bank-Chase Manhattan Bank Leslie Gaskill
Corporate Trust Services Commercial Mortgage Trust (212) 515-5254
3 New York Plaza, 15th Floor Commercial Mortgage Pass-Through Certificates Reports Available on the World Wide Web
New York, NY 10004 Series 1999-C2 @ www.ctslink.com/cmbs
Payment Date: 06/15/1999
Record Date: 05/28/1999
</TABLE>
Current Mortgage Loan and Property Stratification Tables
Anticipated Remaining Term (ARD and Balloon Loans)
<TABLE>
<CAPTION>
Anticipated # of Scheduled % of Weighted
Remaining Term(2) Loans Balance Agg. Bal WAM(2) WAC Avg DSCR(1)
----------------- ----- ------- -------- ------ --- -----------
<S> <C> <C> <C> <C> <C> <C>
Totals
</TABLE>
Remaining Stated Term (Fully Amortizing Loans)
<TABLE>
<CAPTION>
Remaining Stated # of Scheduled % of Weighted
Term Loans Balance Agg. Bal WAM(2) WAC Avg DSCR(1)
---- ----- ------- -------- ------ --- -----------
<S> <C> <C> <C> <C> <C> <C>
Totals
</TABLE>
Remaining Amortization Term (ARD and Balloon Loans)
<TABLE>
<CAPTION>
Remaining # of Scheduled % of Weighted
Amortization Term Loans Balance Agg. Bal WAM(2) WAC Avg DSCR(1)
----------------- ----- ------- -------- ------ --- -----------
<S> <C> <C> <C> <C> <C> <C>
Totals
</TABLE>
Age of Most Recent NOI
<TABLE>
<CAPTION>
Age of Most # of Scheduled % of Weighted
Recent NOI Loans Balance Agg. Bal WAM(2) WAC Avg DSCR(1)
---------- ----- ------- -------- ------ --- -----------
<S> <C> <C> <C> <C> <C> <C>
Totals
</TABLE>
(1) Debt Service Coverage Ratios are updated periodically as new NOI figures
become available from borrowers on an asset level. In all cases the most current
DSCR provided by the Servicer is used. To the extent that no DSCR is provided
by the Servicer, information from the offering document is used. The Trustee
makes no representations as to the accuracy of the data provided by the borrower
for this calculation.
(2) Anticipated Remaining Term and WAM are each calculated based upon the term
from the current month to the earlier of the Anticipated Repayment Date, if
applicable, and the maturity date.
(3) Data in this table was calculated by allocating pro-rata the current loan
information to the properties based upon the Cut-off Date Balance of the related
mortgage loan as disclosed in the offering document.
Note: (i) "Scheduled Balance" has the meaning assigned thereto in the CSSA
Standard Information Package.
Copyright 1997, Norwest Bank Minnesota, N.A. Page 9 of 17
<PAGE>
<TABLE>
<S> <C> <C>
[LOGO] First Union National Bank-Chase Manhattan Bank For Additional Information, please contact
Norwest Bank Minnesota, N.A. Commercial Mortgage Trust Leslie Gaskill
Corporate Trust Services Commercial Mortgage Pass-Through Certificates (212) 515-5254
3 New York Plaza, 15th Floor Series 1999-C2 Reports Available on the World Wide Web
New York, NY 10004 @ www.ctslink.com/cmbs
Payment Date: 06/15/1999
Record Date: 05/28/1999
</TABLE>
MORTGAGE LOAN DETAIL
<TABLE>
<CAPTION>
Anticipated Neg.
Loan Property Interest Principal Gross Repayment Maturity Amort
Number ODCR Type (1) City State Payment Payment Coupon Date Date (Y/N)
- ------ ---- --------- ---- ----- -------- ---------- ------- ---------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Totals
Beginning Ending Paid Appraisal Appraisal Res. Mod.
Loan Scheduled Scheduled Thru Reduction Reduction Strat. Code
Number Balance Balance Date Date Amount (2) (3)
- ------ ---------- ---------- ----- ---------- ---------- ------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Totals
</TABLE>
<TABLE>
<CAPTION>
(1) Property Type Code (2) Resolution Strategy Code (3) Modification Code
---------------------- --------------------------- --------------------
<S> <C> <C>
MF - Multi-Family OF - Office 1 - Modification 7 - REO 1 - Maturity Date Extension
RT - Retail MU - Mixed Use 2 - Foreclosure 8 - Resolved 2 - Amortization Change
HC - Health Care LO - Lodging 3 - Bankruptcy 9 - Pending Return 3 - Principal Write-Off
IN - Industrial SS - Self Storage 4 - Extension to Master Servicer 4 - Combination
WH - Warehouse OT - Other 5 - Note Sale 10 - Deed in Lieu Of
MH - Mobile Home Park 6 - DPO Foreclosure
</TABLE>
Copyright 1997, Norwest Bank Minnesota, N.A. Page 10 of 17
<PAGE>
<TABLE>
<S> <C> <C>
[LOGO] For Additional Information, please contact
Norwest Bank Minnesota, N.A. First Union National Bank-Chase Manhattan Bank Leslie Gaskill
Corporate Trust Services Commercial Mortgage Trust (212) 515-5254
3 New York Plaza, 15th Floor Commercial Mortgage Pass-Through Certificates Reports Available on the World Wide Web
New York, NY 10004 Series 1999-C2 @ www.ctslink.com/cmbs
Payment Date: 06/15/1999
Record Date: 05/28/1999
</TABLE>
Principal Prepayment Detail
<TABLE>
<CAPTION>
Principal Prepayment Amount Prepayment Penalties
--------------------------- --------------------
Loan Number Offering Document
Cross-Reference Payoff Amount Curtailment Amount Prepayment Premium Yield Maintenance Premium
- ------------ ------------------ ---------------- ------------------- ------------------- -------------------------
<S> <C> <C> <C> <C> <C>
Totals
</TABLE>
Copyright 1997, Norwest Bank Minnesota, N.A. Page 11 of 17
<PAGE>
<TABLE>
<S> <C> <C>
[LOGO] First Union National Bank-Chase Manhattan Bank For Additional Information, please contact
Norwest Bank Minnesota, N.A. Commercial Mortgage Trust Leslie Gaskill
Corporate Trust Services Commercial Mortgage Pass-Through Certificates (212) 515-5254
3 New York Plaza, 15th Floor Series 1999-C2 Reports Available on the World Wide Web
New York, NY 10004 @ www.ctslink.com/cmbs
Payment Date: 06/15/1999
Record Date: 05/28/1999
</TABLE>
Historical Detail
<TABLE>
<CAPTION>
Delinquencies Prepayments Rate and Maturities
- ------------------------------------------------------------------------------------------------------------------------------------
Distribution 30-59 Days 60-89 Days 90 Days or More Foreclosure REO Modifications Curtailments Payoff Next Weighted Avg. WAM
Date # Balance # Balance # Balance # Balance # Balance # Balance # Amount # Amount Coupon Remit
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
Note: Foreclosure and REO Totals are excluded from the delinquencies aging
categories.
Copyright 1997, Norwest Bank Minnesota, N.A. Page 12 of 17
<PAGE>
<TABLE>
<S> <C> <C>
[LOGO] For Additional Information, please contact
Norwest Bank Minnesota, N.A. First Union National Bank-Chase Manhattan Bank Leslie Gaskill
Corporate Trust Services Commercial Mortgage Trust (212) 515-5254
3 New York Plaza, 15th Floor Commercial Mortgage Pass-Through Certificates Reports Available on the World Wide Web
New York, NY 10004 Series 1999-C2 @ www.ctslink.com/cmbs
Payment Date: 06/15/1999
Record Date: 05/28/1999
</TABLE>
Delinquency Loan Detail
<TABLE>
<CAPTION>
Offering #of Current Outstanding Status of Resolution
Document Months Paid Through P&I P&I Mortgage Strategy Servicing Foreclosure
Loan Number Cross-Reference Delinq. Date Advances Advances** Loan (1) Code (2) Transfer Date Date
- ----------- --------------- ------- ------------ -------- ----------- -------- ---------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Totals
</TABLE>
<TABLE>
<CAPTION>
Current Outstanding
Servicing Servicing REO
Loan Number Advances Advances Bankruptcy Date Date
- ----------- --------- ----------- --------------- ------
<S> <C> <C> <C> <C>
Totals
</TABLE>
(1) Status of Mortgage Loan
---------------------------
A - Payment Not Received 2 - Two Months Delinquent
But Still in Grace Period 3 - Three Or More Months Delinquent
B - Late Payment But Less 4 - Assumed Scheduled Payment
Than 1 Month Delinquent (Performing Matured Balloon)
0 - Current 7 - Foreclosure
1 - One Month Delinquent 9 - REO
(2) Resolution Strategy Code
----------------------------
1 - Modification 7 - REO
2 - Foreclosure 8 - Resolved
3 - Bankruptcy 9 - Pending Return
4 - Extension to Master Servicer
5 - Note Sale 10 - Deed in Lieu Of
6 - DPO Foreclosure
** Outstanding P & I Advances include the current period advance
Copyright 1997, Norwest Bank Minnesota, N.A. Page 13 of 17
<PAGE>
<TABLE>
<S> <C> <C>
[LOGO] First Union National Bank-Chase Manhattan Bank For Additional Information, please contact
Norwest Bank Minnesota, N.A. Commercial Mortgage Trust Leslie Gaskill
Corporate Trust Services Commercial Mortgage Pass-Through Certificates (212) 515-5254
3 New York Plaza, 15th Floor Series 1999-C2 Reports Available on the World Wide Web
New York, NY 10004 @ www.ctslink.com/cmbs
Payment Date: 06/15/1999
Record Date: 05/28/1999
</TABLE>
Specially Serviced Loan Detail - Part 1
<TABLE>
<CAPTION>
Offering Servicing Resolution
Distribution Loan Document Transfer Strategy Scheduled Property Interest
Date Number Cross-Reference Date Code (1) Balance Type (2) State Rate
- ------------ ------ --------------- ---------- ---------- ---------- -------- ------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
<TABLE>
<CAPTION>
Net Remaining
Distribution Actual Operating NOI Note Maturity Amortization
Date Balance Income Date DSCR Date Date Term
- ------------ ------- ---------- ---- ----- ------ --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
<TABLE>
<CAPTION>
(1) Resolution Strategy Code (2) Property Type Code
---------------------------- ----------------------
<S> <C>
1 - Modification 7 - REO MF - Multi-Family OF - Office
2 - Foreclosure 8 - Resolved RT - Retail MU - Mixed Use
3 - Bankruptcy 9 - Pending Return HC - Health Care LO - Lodging
4 - Extension to Master Servicer IN - Industrial SS - Self Storage
5 - Note Sale 10 - Deed in Lieu Of WH - Warehouse OT - Other
6 - DPO Foreclosure MH - Mobile Home Park
</TABLE>
Copyright 1997, Norwest Bank Minnesota, N.A. Page 14 of 17
<PAGE>
<TABLE>
<S> <C> <C>
[LOGO] First Union National Bank-Chase Manhattan Bank For Additional Information, please contact
Norwest Bank Minnesota, N.A. Commercial Mortgage Trust Leslie Gaskill
Corporate Trust Services Commercial Mortgage Pass-Through Certificates (212) 515-5254
3 New York Plaza, 15th Floor Series 1999-C2 Reports Available on the World Wide Web
New York, NY 10004 @ www.ctslink.com/cmbs
Payment Date: 06/15/1999
Record Date: 05/28/1999
</TABLE>
Specially Serviced Loan Detail-Part 2
<TABLE>
<CAPTION>
Offering Resolution Site
Distribution Loan Document Strategy Inspection Appraisal Appraisal Other REO
Date Number Cross-Reference Code (1) Date Phase 1 Date Date Value Property Revenue Comment
----------- ------ --------------- --------- ---------- ------------ ------ ------- --------------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
<TABLE>
<CAPTION>
(1) Resolution Strategy Code
<S> <C> <C> <C> <C> <C>
1 - Modification 7 - REO
2 - Foreclosure 8 - Resolved
3 - Bankruptcy 9 - Pending Return
4 - Extension to Master Servicer
5 - Note Sale 10 - Deed in Lieu Of
6 - DPO Foreclosure
</TABLE>
Copyright 1997, Norwest Bank Minnesota, N.A. Page 15 of 17
<PAGE>
<TABLE>
<S> <C> <C>
[LOGO] First Union National Bank-Chase Manhattan Bank For Additional Information, please contact
Norwest Bank Minnesota, N.A. Commercial Mortgage Trust Leslie Gaskill
Corporate Trust Services Commercial Mortgage Pass-Through Certificates (212) 515-5254
3 New York Plaza, 15th Floor Series 1999-C2 Reports Available on the World Wide Web
New York, NY 10004 @ www.ctslink.com/cmbs
Payment Date: 06/15/1999
Record Date: 05/28/1999
</TABLE>
Modified Loan Detail
<TABLE>
<CAPTION>
Offering
Loan Document Pre-Modification Modification Date Modification Description
Number Cross-Reference Balance
<S> <C> <C> <C> <C>
Total
</TABLE>
Copyright 1997, Norwest Bank Minnesota, N.A. Page 16 of 17
<PAGE>
<TABLE>
<S> <C> <C>
[LOGO] For Additional Information, please contact
Norwest Bank Minnesota, N.A. First Union National Bank-Chase Manhattan Bank Leslie Gaskill
Corporate Trust Services Commercial Mortgage Trust (212) 515-5254
3 New York Plaza, 15th Floor Commercial Mortgage Pass-Through Certificates Reports Available on the World Wide Web
New York, NY 10004 Series 1999-C2 @ www.ctslink.com/cmbs
Payment Date: 06/15/1999
Record Date: 05/28/1999
</TABLE>
Liquidated Loan Detail
<TABLE>
<CAPTION>
Final Recovery Offering Gross Proceeds
Loan Determination Document Appraisal Appraisal Actual Gross as a % of
Number Date Cross-Reference Date Value Balance Proceeds Actual Balance
<S> <C> <C> <C> <C> <C> <C> <C>
Current Total
Cumulative Total
</TABLE>
<TABLE>
<CAPTION>
Aggregate Net Net Proceeds Repurchased
Loan Liquidation Liquidation as a % of Realized by Seller
Number Expenses* Proceeds Actual Balance Loss (Y/N)
<S> <C> <C> <C> <C> <C>
Current Total
Cumulative Total
</TABLE>
* Aggregate liquidation expenses also include outstanding P & I advances and
unpaid fees (servicing, trustee, etc.).
Copyright 1997, Norwest Bank Minnesota, N.A. Page 17 of 17
<PAGE>
[This page intentionally left blank]
<PAGE>
ANNEX D
First Union National Bank
Chase Manhattan Bank 1999-C2
DELINQUENT LOAN STATUS REPORT
as of: _________________________
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Total Total Other
Short Name Scheduled P&I Expenses Advances
Prospectus (When Property City State Sq Ft or Paid Thru Loan Advances To (Taxes &
ID Appropriate) Type Units Date Balance To Date Date Escrow)
- --------------------------------------------------------------------------------------------------------------------------------
90 + DAYS DELINQUENT
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
60 DAYS DELINQUENT
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
30 DAYS DELINQUENT
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Current & at Special Servicer
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Appraisal Loss using
Current Current LTM BPO or 92%
Prospectus Total Monthly Interest Maturity NOI LTM LTM Value Valuation Internal Appr. or
ID Exposure P&I Rate Date Date NOI DSCR Date Value** BPO (F)
- --------------------------------------------------------------------------------------------------------------------------------
90 + DAYS DELINQUENT
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
60 DAYS DELINQUENT
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
30 DAYS DELINQUENT
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Current & at Special Servicer
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Estimated Date Expected
Prospectus Recovery Transfer Closing NOI FCL Workout
ID % Date Date Filed Date Strategy Comments
- --------------------------------------------------------------------------------------------------------------------------------
90 + DAYS DELINQUENT
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
60 DAYS DELINQUENT
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
30 DAYS DELINQUENT
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Current & at Special Servicer
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
FCL - Foreclosure
LTM - Latest 12 Months either Last Annual or Trailing 12 months
* Workout Strategy should match the CSSA Loan file using abreviated words in
place of a code number such as (FCL - In Foreclosure, MOD - Modification, DPO
- Discount Payoff, NS - Note Sale, BK - Bankrupcy, PP - Payment Plan, 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)
**App - Appraisal, BPO - Broker opinion, Int. - Internal Value
<PAGE>
[This page intentionally left blank]
<PAGE>
ANNEX E
First Union National Bank
Chase Manhattan Bank 1999-C2
HISTORICAL LOAN MODIFICATION REPORT
<TABLE>
<CAPTION>
Balance # Mths
Mod/ When Send to Balance of the for
Prospectus Extention Effect Special Effective Date of Old Rate New Old
ID City State Flag Date Servicer Rehabilitation Rate Change Rate P&I
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Total For All Loans:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
Total For Loans in current Month:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
# of Loans $ Balance
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Modifications:
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Maturity Date Extentions:
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Total:
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
(2) Est.
Total # Future
Mths Interest Loss
for (1) Realized to Trust $
New Old New Change of Loss to Trust (Rate
P&I Maturity Maturity Mod $ Reduction) COMMENT
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
<CAPTION>
Total For All Loans:
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
Total For Loans in current Month:
<S> <C> <C> <C> <C> <C> <C>
# of Loans $ Balance
- --------------------------------------------------------------------------------------------------------------
<CAPTION>
Modifications:
- --------------------------------------------------------------------------------------------------------------
<CAPTION>
Maturity Date Extentions:
- --------------------------------------------------------------------------------------------------------------
<CAPTION>
Total:
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
</TABLE>
* The information in these columns is from a particular point in time and
should not change on this report once assigned.
(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>
ANNEX F
First Union National Bank
Chase Manhattan 1999-C2
HISTORICAL LOSS ESTIMATE REPORT
as of: ____________________
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Short % Latest Net
Name Received Appraisal or Effect Amt
Prospectus (When Property From Brokers Date of Sale Received Schedule
ID Appropriate) Type City State Sale Opinion Sale Price from Sale Balance
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Total all Loans:
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Current Month Only:
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Date
Actual Date Minor Total Loss
Total Servicing Losses Loss Minor Adj Loss % of
Prospectus P&I Total Fees Net Passed Passed Adj to Passed with Scheduled
ID Advanced Expenses Expense Proceeds thru Thru Trust thru Adjustment Balance
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Total all Loans:
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Current Month Only:
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
[This page intentionally left blank]
<PAGE>
ANNEX G
First Union National Bank
Chase Manhattan Bank 1999-C2
REO STATUS REPORT
as of: ________________
<TABLE>
<CAPTION>
Total
Sq Ft Paid Scheduled P&I
Prospectus Property Property or Thru Loan Advances
ID Name Type City State Units Date Balance To Date
-- ---- ---- ---- ----- ----- ---- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
(1) USE THE FOLLOWING CODES; App. - Appraisal, BPO - Brokers Opinion, Int - Internal Value
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Other
Total Advances Curent LTM LTM
Prospectus Expenses (Taxes & Total Monthly Maturity NOI NOI/
ID To Date Escrow) Exposure P&I Date Date DSC
------- ------- -------- --- ---- ---- --- ---
<S> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Loss
Cap Value Appraisal using Total
Rate using BPO or 92% Estimated Appraisal
Prospectus Asign Valuation NOI & Internal Appr. Or Recovery Reduction
ID *** Date Cap Rate Value** BPO % Realized
--- ---- -------- ------- --- --- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
REO Pending
Prospectus Transfer Acquisition Resolution
ID Date Date Date Comments
---- ---- ---- ---- --------
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
[This page intentionally left blank]
<PAGE>
ANNEX H
First Union National Bank
Chase Manhattan Bank 1999-C
Servicer Watch List
as of: ____________________
</TABLE>
<TABLE>
<CAPTION>
PROSUP PROPERTY CURRENT
LOAN SHORT PROPERTY SCHEDULED
NUMBER NAME TYPE CITY STATE BALANCE
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
TOTAL: $0.00
- ----------------------------------------------------------------------------------------------
<CAPTION>
* LTM - Last 12 months either trailing or last annual
- ----------------------------------------------------------------------------------------------
<CAPTION>
PAID LTM*
THRU MATURITY CURRENT
DATE DATE DSCR COMMENT / REASON ON WATCH LIST
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
[This page intentionally left blank]
<PAGE>
ANNEX I
FUNB
CMB 1999-C2
Form of OPERATING STATEMENT ANALYSIS REPORT
as of: __________________
<TABLE>
<CAPTION>
Property Overview
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 1994 1995 1996 Trailing
------------ ---- ---- ---- --------
<S> <C> <C> <C> <C> <C>
Occupancy Rate *
Average Rental Rate
</TABLE>
* Occupancy rates are year end or
the ending date of the financial
statement for the period.
<TABLE>
<CAPTION>
Income: No. of Mos.
-----------
Number of Mos. Prior Yr Curr Yr
Period ended Underwriting 1996 1997 1998 98 Trailing** 1997-Base 1997-1996
Statement Classification Base Line Normalized Normalized Normalized as of 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 $ - $ - $ - $ - $ - % %
</TABLE>
Normalized - Full year Financial
statements have been reviewed by
the underwriter or servicer
** Servicer will not be expected
to Normalize these YTD numbers
<TABLE>
<CAPTION>
Operating Expenses:
Real Estate Taxes
Property Insurance
Utilities
Genereal & Admin
Repairs & Maintenance
Management Fees
Payroll and Benefits Expense
Advertising & Marketing
Professional Fees
Other Expenses
Ground Rent
<S> <C> <C> <C> <C> <C> <C> <C>
Total Operating Expenses $ - $ - $ - $ - $ - % %
Operating Expense Ratio
Net Operating Income $ - $ - $ - $ - $ -
Leasing Commisions
Tenant Improvements
Replacement Reserve
Total Capital Items $ - $ - $ - $ - $ -
NOI After Capital Items $ - $ - $ - $ - $ -
Debt Service (per servicer) $ - $ - $ - $ - $ -
Cash Flow after Debt Service $ - $ - $ - $ - $ -
</TABLE>
(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.
This report may vary depending on the property type and because of the way
information may vary in each borrower's statement.
Rental Income needs to be broken down, differently whenever possible for each
property type as follows, Retail: 1) Base Rent 2) percentage rents on cashflow
Hotel: 1) Room Revenue 2) Food/Beverage A34Nursing Home: 1) Private 2) Medicaid
3) Medicare
Income: Comments
Expense: Comments
Capital Items: Comments
(1) Used in the comparative Financial Status Report
<PAGE>
[This page intentionally left blank]
<PAGE>
ANNEX J
FUNB
CMB 1999-C2
Form of NOI ADJUSTMENT WORKSHEET for "year"
as of: ____________________
Property Overview
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
Occupancy Rate *
Average Rental Rate
* Occupancy rates are year end or the
ending date of the financial statement
for the period.
Income:
Number of Mos. "Year"
Period ended Borrower Adjustment Normalized
Statement Classification Actual
Rental Income (Category 1)
Rental Income (Category 2)
Rental Income (Category 3)
Pass Through/Escalations
Other Income
Effective Gross Income $ - $ - $ -
Normalized - Full year Financial
statements have been reviewed by the
servicer
Operating Expenses:
Real Estate Taxes
Property Insurance
Utilities
Genereal & Admin
Repairs & Maintenance
Management Fees
Payroll and Benefits Expense
Advertising & Marketing
Professional Fees
Other Expenses
Ground Rent
Total Operating Expenses $ - $ - $ -
Operating Expense Ratio
Net Operating Income $ - $ - $ -
Leasing Commisions
Tenant Improvements
Replacement Reserve
Total Capital Items $ - $ - $ -
NOI After Capital Items $ - $ - $ -
Debt Service (per servicer) $ - $ - $ -
Cash Flow after Debt Service $ - $ - $ -
(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
Borrower's 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 borrower's statement.
Income: Comments
Expense: Comments
Capital Items: Comments
(1) Used in the comparative Financial Status Report
<PAGE>
[This page intentionally left blank]
<PAGE>
ANNEX K
First Union National Bank
Chase Manhattan Bank 1999-C2
COMPARATIVE FINANCIAL STATUS REPORT
as of: ____________________________
<TABLE>
<CAPTION>
Original Underwriting Information
Information
Basis Year
----------
Pro Last
Sup Property Scheduled Paid Annual Financial
Loan Inspect Loan Thru Debt Info as of % Total (1)
# City ST Date Balance Date Service Date Occ Revenue $ NOI DSCR
- ---- -- ---- ------- ---- ------- ---- --- ------- ----- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
<CAPTION>
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
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
<CAPTION>
RECEIVED
- -------------------------------------------------------------------------------------------------------------
Financial Information: Loans Balance
- -------------------------------------------------------------------------------------------------------------
# % $ %
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
<CAPTION>
Current Full Year:
- -------------------------------------------------------------------------------------------------------------
<CAPTION>
Current Full Yr. Received with DSC (less than) 1:
- -------------------------------------------------------------------------------------------------------------
<CAPTION>
Prior full Year:
- -------------------------------------------------------------------------------------------------------------
<CAPTION>
Prior Full Yr. Received with DSC (less than) 1:
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
<CAPTION>
(1) DSCR should match to Operating Statement and is normally calculated using NOI/Debt Service
- -------------------------------------------------------------------------------------------------------------
<CAPTION>
(2) Net change should compare the latest year to the underwriting year
- -------------------------------------------------------------------------------------------------------------
<CAPTION>
2nd Preceding Annual Operating Preceding Annual Operating
Information Information
As of Normalized As of Normalized
----- ---------- ----- ----------
Pro Last Last
Sup Property Financial Property Financial
Loan Inspect Info as of % Total Normalized (1) Inspect Info as of % Total Normalized (1)
# Date Date Occ Revenue $ NOI DSCR Date Date Occ Revenue $ NOI DSCR
- ---- ---- --- ------- ----- ---- ---- ---- --- ------- ----- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
WA $ $ WA WA $ $ WA
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Financial Information:
REQUIRED
- ------------------------------------------------------------------------------------------------------------------------------------
Loans Balance
- ------------------------------------------------------------------------------------------------------------------------------------
# % $ %
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Trailing Financial
Information (2) Net Change
Month Reported - Normalized Preceding & Basis
---------------- ---------- -----------------
Pro
Sup Financial % %
Loan Info as of % Total % % Total (1)
# Date Occ Revenue $ NOI DSCR Occ Rev DSCR
- ---- --- ------- ----- ---- --- --- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
WA $ $ WA WA $ WA
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
[This page intentionally left blank]
<PAGE>
ANNEX L
FUNB
CMB 1999-C2
PAYOFF NOTIFICATION REPORT
as of: _______________
<TABLE>
<CAPTION>
S4 S55 S61 S58 P7 P8 P10 P11 P54
Short Name (When Property Scheduled Paid Thru Current Maturity
Prospectus ID Appropriate) Type State Loan Balance Date Interest Rate Date LTM DSCR
------------- ------------ ---- ----- ------------- ---- ------------- ---- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Scheduled Payments
Unscheduled Payments
Total:
<CAPTION>
Servicer Estimated Information
S4 Expected Expected
Yield Payment Distribution
Prospectus ID Maintenance Date Date
------------- ---------- ---- ----
<S> <C> <C> <C>
Scheduled Payments
Unscheduled Payments
Total:
</TABLE>
<PAGE>
[This page intentionally left blank]
<PAGE>
PROSPECTUS
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
(ISSUABLE IN SERIES)
FIRST UNION COMMERCIAL 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."
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."
------------------------
PROSPECTIVE INVESTORS SHOULD REVIEW THE INFORMATION APPEARING ON PAGE 19 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. 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.
MAY 11, 1999
<PAGE>
(cover continued)
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. ("First Union Capital Markets"), 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.
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 may be secured by
interests in the following property types residential properties consisting of
five or more rental or cooperatively-owned dwelling units, shopping centers,
retail stores, hotels or motels, office buildings, nursing homes, hospitals or
other health-care related facilities, warehouse facilities, mixed use
properties, mini-warehouse or self-storage facilities, mobile home parks or
other types of income producing properties. See "Description of the Trust
Funds." Mortgage Loans (or mortgage loans underlying a CMBS) may be secured by
first or junior, recourse or non-recourse liens and may be delinquent 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 Certificate may include amounts on deposit in a
separate account (the "Pre-Funding Account") which may be used by the Trust Fund
to acquire additional assets as more fully described herein and 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 "Risk Factors--Effects of Pre-Funding and
Acquisition of Additional Mortgage Assets," "Description of the Trust Funds,"
"Description of the Certificates" and "Description of Credit Support."
Distributions in respect of the Certificates will be made on a monthly,
quarterly or other periodic basis as 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, 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 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 payments as described herein and in the related
Prospectus Supplement. See "Yield and Maturity Considerations." A Trust Fund may
be subject to early termination under the circumstances described herein and in
the related Prospectus Supplement. See "Description of the 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 "Material 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.
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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)
(the "Registration Statement") 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
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statutory or regulatory requirements as may be in effect from time to time. See
"Description of the Certificates--Reports to 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
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TABLE OF CONTENTS
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PROSPECTUS SUPPLEMENT................................................... 3
AVAILABLE INFORMATION................................................... 3
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE....................... 4
SUMMARY OF PROSPECTUS................................................... 9
RISK FACTORS............................................................ 19
Limited Liquidity for Offered Certificates.............................. 19
Limited Assets to Support Payment on Certificates....................... 19
Prepayments on Mortgage Loans; Effects on Average Life of Certificates;
Effects on Yields on Certificates..................................... 19
Optional Early Termination.............................................. 21
Limited Nature of Ratings on Certificates............................... 21
Effects of Pre-Funding and Acquisition of Additional Mortgage Assets.... 21
Risks to Lenders Associated with Certain Income Producing Loans and
Mortgaged Properties.................................................. 22
Risks Associated with Mortgage Loans Secured by Multifamily
Properties......................................................... 22
Risks Associated with Mortgage Loans Secured by Retail Properties..... 23
Risks Associated with Mortgage Loans Secured by Hospitality
Properties......................................................... 23
Risks Associated with Mortgage Loans Secured by Office Buildings...... 24
Risks Associated with Mortgage Loans Secured by Residential Healthcare
Facilities......................................................... 24
Risks Associated with Mortgage Loans Secured by Warehouse and Self
Storage Facilities................................................. 24
Risks Associated with Mortgage Loans Secured by Health-Care Related
Properties......................................................... 25
Risks Associated with Mortgage Loans Secured by Industrial & Mixed-Use
Facilities......................................................... 26
Management Risks........................................................ 26
Risks Associated with Certain Mortgage Loans and Related Leases......... 27
Balloon Payments on Mortgage Loans; Heightened Risk of Borrower
Default............................................................... 27
Junior Mortgage Loans................................................... 28
Credit Support Limitations--May Not Cover All Risks or Full Payment on
Certificates.......................................................... 28
Enforceability.......................................................... 29
Leases and Rents Serving as Security for Mortgage Loans Pose Special
Risks................................................................. 29
Delinquent Mortgage Loans............................................... 29
Environmental Liability May Affect Lien on Mortgaged Property and Expose
Lender to Costs....................................................... 29
Credit Support Limitations--May Not Cover All Risks or Full Payment on
Certificates.......................................................... 30
ERISA Considerations--Covered Investors May Experience Liability........ 30
Certain Federal Tax Considerations Regarding REMIC Residual
Certificates.......................................................... 30
Book-Entry Registration of Certificates Affects Ownership of
Certificates and Receipt of Payments.................................. 31
Delinquent Mortgage Loans............................................... 31
DESCRIPTION OF THE TRUST FUNDS.......................................... 32
General................................................................. 32
Mortgage Loans-Leases................................................... 32
General............................................................... 32
Leases................................................................ 32
Default and Loss Considerations with Respect to the Mortgage Loans.... 33
Payment Provisions of the Mortgage Loans.............................. 35
Mortgage Loan Information in Prospectus Supplements................... 35
CMBS.................................................................... 36
Certificate Accounts.................................................... 36
Credit Support.......................................................... 37
Cash Flow Agreements.................................................... 37
Pre-Funding............................................................. 37
YIELD AND MATURITY CONSIDERATIONS....................................... 38
General................................................................. 38
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Pass-Through Rate....................................................... 38
Payment Delays.......................................................... 38
Certain Shortfalls in Collections of Interest........................... 38
Yield and Prepayment Considerations..................................... 38
Weighted Average Life and Maturity...................................... 40
Controlled Amortization Classes and Companion Classes................... 40
Other Factors Affecting Yield, Weighted Average Life and Maturity....... 41
Balloon Payments; Extensions of Maturity.............................. 41
Negative Amortization................................................. 41
Foreclosures and Payment Plans........................................ 42
Losses and Shortfalls on the Mortgage Assets.......................... 42
Additional Certificate Amortization................................... 42
THE DEPOSITOR........................................................... 42
USE OF PROCEEDS......................................................... 43
DESCRIPTION OF THE CERTIFICATES......................................... 43
General................................................................. 43
Distributions........................................................... 43
Distributions of Interest on the Certificates........................... 44
Distributions of Certificate Principal.................................. 45
Distributions on the Certificates in Respect of Prepayment Premiums or
in Respect of Equity Participations................................... 45
Allocation of Losses and Shortfalls..................................... 46
Advances in Respect of Delinquencies.................................... 46
Reports to Certificateholders........................................... 47
Voting Rights........................................................... 48
Termination............................................................. 49
Book-Entry Registration and Definitive Certificates..................... 49
DESCRIPTION OF THE POOLING AGREEMENTS................................... 51
General................................................................. 51
Assignment of Mortgage Assets; Repurchases.............................. 51
Representations and Warranties; Repurchases............................. 52
Certificate Account..................................................... 53
General............................................................... 53
Deposits.............................................................. 53
Withdrawals........................................................... 54
Collection and Other Servicing Procedures............................... 55
Modifications, Waivers and Amendments of Mortgage Loans................. 55
Sub-Servicers........................................................... 56
Special Servicers....................................................... 56
Realization Upon Defaulted Mortgage Loans............................... 56
Hazard Insurance Policies............................................... 58
Due-on-Sale and Due-on-Encumbrance Provisions........................... 58
Servicing Compensation and Payment of Expenses.......................... 58
Evidence as to Compliance............................................... 59
Certain Matters Regarding the Master Servicer and the Depositor......... 59
Events of Default....................................................... 60
Rights Upon Event of Default............................................ 60
Amendment............................................................... 61
List of Certificateholders.............................................. 61
The Trustee............................................................. 62
Duties of the Trustee................................................... 62
Certain Matters Regarding the Trustee................................... 62
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Resignation and Removal of the Trustee.................................. 62
DESCRIPTION OF CREDIT SUPPORT........................................... 63
General................................................................. 63
Subordinate Certificates................................................ 63
Cross-Support Provisions................................................ 63
Insurance or Guarantees with Respect to Mortgage Loans.................. 64
Letter of Credit........................................................ 64
Certificate Insurance and Surety Bonds.................................. 64
Reserve Funds........................................................... 64
Credit Support with Respect to CMBS..................................... 65
CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS AND LEASES...................... 65
General................................................................. 65
Types of Mortgage Instruments........................................... 65
Leases and Rents........................................................ 66
Personalty.............................................................. 66
Cooperative Loans....................................................... 66
Junior Mortgages; Rights of Senior Lenders.............................. 67
Foreclosure............................................................. 68
General............................................................... 68
Foreclosure Procedures Vary From State to State....................... 68
Judicial Foreclosure.................................................. 68
Non-Judicial Foreclosure/Power of Sale................................ 68
Equitable Limitations on Enforceability of Certain Provisions......... 69
Public Sale........................................................... 69
Rights of Redemption.................................................. 70
Anti-Deficiency Legislation........................................... 70
Leasehold Risks....................................................... 70
Regulated Healthcare Facilities....................................... 71
Cross-Collateralization............................................... 71
Cooperative Loans..................................................... 71
Bankruptcy Laws......................................................... 72
Environmental Considerations............................................ 73
General............................................................... 73
Superlien Laws........................................................ 73
CERCLA................................................................ 73
Certain Other State Laws.............................................. 73
Additional Considerations............................................. 74
Due-on-Sale and Due-on-Encumbrance...................................... 74
Subordinate Financing................................................... 74
Default Interest and Limitations on Prepayments......................... 74
Applicability of Usury Laws............................................. 75
Soldiers' and Sailors' Civil Relief Act of 1940......................... 75
Americans with Disabilities Act......................................... 75
Forfeitures in Drug and RICO Proceedings................................ 76
MATERIAL FEDERAL INCOME TAX CONSEQUENCES................................ 76
General................................................................. 76
REMICs.................................................................. 77
Classification of REMICs.............................................. 77
Characterization of Investments in REMIC Certificates................. 77
Tiered REMIC Structures............................................... 77
Taxation of Owners of REMIC Regular Certificates........................ 78
General............................................................... 78
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Original Issue Discount............................................... 78
Market Discount....................................................... 80
Premium............................................................... 81
Realized Losses....................................................... 81
Taxation of Owners of REMIC Residual Certificates....................... 82
General............................................................... 82
Taxable Income of the REMIC........................................... 82
Basis Rules, Net Losses and Distributions............................. 84
Excess Inclusions..................................................... 84
Noneconomic REMIC Residual Certificates............................... 85
Mark-to-Market Rules.................................................. 85
Possible Pass-Through of Miscellaneous Itemized Deductions............ 86
Sales of REMIC Certificates........................................... 86
Prohibited Transactions Tax and Other Taxes........................... 87
Tax and Restrictions on Transfers of REMIC Residual Certificates to
Certain Organizations.............................................. 88
Termination........................................................... 88
Reporting and Other Administrative Matters............................ 88
Backup Withholding with Respect to REMIC Certificates................. 89
Foreign Investors in REMIC Certificates............................... 89
Grantor Trust Funds..................................................... 90
Classification of Grantor Trust Funds................................. 90
Characterization of Investments in Grantor Trust Certificates........... 91
Grantor Trust Fractional Interest Certificates........................ 91
Grantor Trust Strip Certificates...................................... 91
Taxation of Owners of Grantor Trust Fractional Interest Certificates.... 91
General............................................................... 91
If Stripped Bond Rules Apply.......................................... 92
If Stripped Bond Rules Do Not Apply................................... 93
Market Discount....................................................... 94
Premium............................................................... 96
Taxation of Owners of Grantor Trust Strip Certificates................ 96
Possible Application of Contingent Payment Rules...................... 97
Sales of Grantor Trust Certificates................................... 97
Grantor Trust Reporting............................................... 98
Backup Withholding.................................................... 98
Foreign Investor...................................................... 98
New Withholding Regulations........................................... 98
STATE AND OTHER TAX CONSEQUENCES........................................ 98
ERISA CONSIDERATIONS.................................................... 98
General................................................................. 98
Plan Asset Regulations................................................ 99
Prohibited Transaction Exemptions....................................... 99
LEGAL INVESTMENT........................................................ 103
METHOD OF DISTRIBUTION.................................................. 104
LEGAL MATTERS........................................................... 105
FINANCIAL INFORMATION................................................... 106
RATING.................................................................. 106
INDEX OF PRINCIPAL DEFINITIONS.......................................... 107
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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 with the offering of Offered Certificates of such
series. An Index of Principal Definitions is included at the end of this
Prospectus.
<TABLE>
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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.
See "The Depositor."
Issuer.................. The Trust Fund established under a Pooling and
Servicing Agreement, as described below in this Summary
of Prospectus under "Description of Certificates."
Master Servicer......... The master servicer (the "Master Servicer"), if any,
for a series of Certificates will be named in the
related Prospectus Supplement and may be an affiliate
of the Depositor. See "Description of the Pooling
Agreements-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--Special Servicers."
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 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 (the "Multifamily
Properties") or (ii) shopping centers, retail stores,
hotels or motels, office buildings, nursing homes,
hospitals or other health-care related facilities,
warehouse facilities, mixed use properties, mini-
warehouse or self-storage facilities, mobile home parks
or other types of income producing properties ("the
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 as of the date of their deposit into the
related Trust Fund. A Mortgage Loan will be considered
"delinquent" if it is thirty (30) days or more past its
most recently contractual scheduled payment date in
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payment of all amounts due according to its terms. In
any event, at the time of its creation the Trust Fund
will not include delinquent loans which by principal
amount are more than 20% of the aggregate principal
amount of all Mortgage Loans in the 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.
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
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securities such as mortgage-backed securities that are
similar to a series of Certificates 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."
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, 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 over
collateralization, a letter of credit, insurance
policy, guarantee or reserve fund 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
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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
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."
E. Pre-Funding........ If so provided in the related Prospectus Supplement, a
Trust Fund may include amounts on deposit in a separate
account (the "Pre-Funding Account") which amounts will
not exceed 25% of the pool balance of the Trust Fund as
of the Cut-off Date. Amounts on deposit in the
Pre-Funding Account may be used by the Trust Fund to
acquire additional Mortgage Assets, which additional
Mortgage Assets will be selected using criteria that is
substantially similar to the criteria used to select
the Mortgage Assets included in the Trust Fund on the
Closing Date. The Trust Fund may acquire such
additional Mortgage Assets for a period of time of not
more than 120 days after the Closing Date (the
"Pre-Funding Period") as specified in the related
Prospectus Supplement. Amounts on deposit in the
Pre-Funding Account after the end of the Pre-Funding
Period, will be distributed to Certificateholders or
such other person as set forth in the related
Prospectus Supplement. If so provided in the related
Prospectus Supplement, the Trust Fund may include
amounts on deposit in a separate account (the
"Capitalized Interest Account"). Amounts on deposit in
the Capitalized Interest Account may be used to
supplement investment earnings, if any, of amounts on
deposit in the Pre-Funding Account, supplement interest
collections of the Trust Fund, or such other purpose as
specified in the related Prospectus Supplement. As set
forth in a related Prospectus Supplement, amounts on
deposit in the Capitalized
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Interest Account and Pre-Funding Account will be held
in cash or invested in short-term investment grade
obligations. Any amounts on deposit in the Capitalized
Interest Account will be released after the end of the
Pre-Funding Period as specified in the related
Prospectus Supplement. See "Risk Factors--Effects of
Pre-Funding and Acquisition of Additional Mortgage
Assets."
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
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 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
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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 for determining 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 (other
than certain classes of Stripped Principal Certificates
and Stripped Interest Interest on each class of Offered
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 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
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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
Certificate Principal."
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 party to the related
CMBS Agreement, will be described in the related
Prospectus 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 Supplement, 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."
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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."
Risk Factors............ There are material risks associated with an investment
in Certificates. See "Risk Factors" herein. Additional
risks pertaining to a particular series of Certificates
may be disclosed in the applicable Prospectus
Supplement.
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. If so indicated in the related
Prospectus Supplement, an electionalternatively may be
made to treat the Trust Fund as a financial asset
securitization investment trust ("FASIT").
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 issued with original
issue discount. See "Material Federal Income Tax
Consequences--REMICs--Taxation of Owners of REMIC
Regular Certificates."
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
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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 "Material
Income Tax Consequences--REMICs--Taxation of Owners of
REMIC Residual Certificates."
B. Grantor Trust...... If so 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 "Material 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 "Material Federal
Income Tax Consequences" herein and in the related
Prospectus Supplement.
ERISA Considerations.... Fiduciaries of employee benefit plans and certain other
retirement plans and arrangements, including individual
retirement accounts, annuities, Keogh plans, collective
investment funds, separate and general 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 4975 of the Code. See "ERISA Considerations"
herein and in the related Prospectus Supplement.
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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 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. Additional risk factors are set forth elsewhere in the
Prospectus under separate headings, and will be set forth in the related
Prospectus Supplement under separate headings, in connection with discussions
regarding particular aspects of Trust Fund Assets or the Certificates. 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 FOR OFFERED CERTIFICATES
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 TO SUPPORT PAYMENT ON CERTIFICATES
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.
See "Description of the Trust Funds." 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 ON MORTGAGE LOANS; EFFECTS ON AVERAGE LIFE OF CERTIFICATES; EFFECTS
ON YIELDS ON CERTIFICATES
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
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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, 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 (i) 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, (ii) a
disproportionately large share (which, in some cases, may be all) of such
prepayments, or (iii) 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. 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. A Companion Class 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. 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
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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.
OPTIONAL EARLY TERMINATION
If so specified in the related Prospectus Supplement, a series of
Certificates may 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 Supplement, 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.
In the event of a partial or complete termination of a Trust Fund, there can be
no assurance that the proceeds from a sale of the Mortgage Assets will be
sufficient to distribute the outstanding Certificate Balance plus accrued
interest and any undistributed shortfalls in interest accrued on the
Certificates subject to the termination. Accordingly the holders of such
Certificates may incur a loss. See "Description of the
Certificates--Termination." In the event that partial or complete early
termination of a series of Certificates is authorized and does occur in this
manner, the holders of the series of Certificates or one or more classes of a
series of Certificates that are terminated early may experience repayment of
their investment outside their control at an unpredictable and inopportune time.
Moreover, such early termination could have an adverse impact on the overall
yield received by such holder, depending, among other factors, upon the amount
of the series of Certificates or class or classes of such series that is
outstanding at the time of early termination.
LIMITED NATURE OF RATINGS ON CERTIFICATES
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 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."
EFFECTS OF PRE-FUNDING AND ACQUISITION OF ADDITIONAL MORTGAGE ASSETS
Any amounts on deposit in a Pre-Funding Account as described in the
Prospectus Supplement for a series of Certificates that is not used to acquire
additional Mortgage Assets by the end of the Pre-Funding Period, may be
distributed to holders of Certificates as a prepayment of principal as set forth
in the related Prospectus Supplement. Such a prepayment of principal to the
holders of Certificates may materially and adversely affect the yield on the
Certificates. See "Yield and Maturity Considerations" herein and, if applicable,
in the related Prospectus Supplement.
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Any additional Mortgage Assets acquired by a Trust Fund during the
Pre-Funding Period, as described in the related Prospectus Supplement, may
possess substantially different characteristics than the Mortgage Assets in the
Trust Fund on the Closing Date. Therefore the aggregate characteristics of a
Trust Fund following the Pre-Funding Period may be substantially different than
the characteristics of a Trust Fund on the Closing Date.
RISKS TO LENDERS ASSOCIATED WITH CERTAIN INCOME PRODUCING 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.
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.
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 Mortgage Loans Secured by Multifamily Properties. If
so specified in the related Prospectus Supplement, Mortgage Loans secured by
multi-family properties will constitute a material concentration of the Mortgage
Loans in a Trust Fund. Adverse economic conditions, either local, regional or
national, may limit the amount of rent that can be charged for rental units, and
may result in a reduction in timely rent payments or a reduction in occupancy
levels. Occupancy and rent levels may also be affected by construction of
additional housing units, local military base closings, developments at local
colleges and universities and national, regional and local politics, including,
in the case of multifamily rental properties, current or future rent
stabilization and rent control laws and agreements. In addition, the level of
mortgage interest rates may encourage tenants in multifamily rental properties
to purchase housing. Furthermore, tax credit and city, state and federal housing
subsidy or similar programs may impose rent limitations and 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, such programs
may impose income restrictions on tenants, which may reduce the number of
eligible tenants in such Mortgaged Properties and result in a reduction in
occupancy rates applicable thereto. Furthermore, some eligible tenants may not
find any differences in rents between such subsidized or supported properties
and other multifamily rental properties in the same area to be a sufficient
economic incentive to reside at a subsidized or supported property,
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which may have fewer amenities or otherwise be less attractive as a residence.
All of these conditions and events may increase the possibility that a borrower
may be unable to meet its obligations under its Mortgage Loan.
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. Because
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.
Risks Associated with Mortgage Loans Secured by Retail Properties.
Mortgage Loans secured by retail properties may constitute a material
concentration of the Mortgage Loans in a Trust Fund. Significant factors
determining the value of retail properties are the quality of the tenants as
well as fundamental aspects of real estate such as location and market
demographics. The correlation between the success of tenant businesses and
property value is more direct with respect to retail properties than other types
of commercial property because a significant component of the total rent paid by
retail tenants is often tied to a percentage of gross sales. Significant tenants
at a retail property play an important part in generating customer traffic and
making a retail property a desirable location for other tenants at such
property. Accordingly, retail properties may be adversely affected if a
significant tenant ceases operations at such locations (which may occur on
account of a voluntary decision not to renew a lease, bankruptcy or insolvency
of such tenant, such tenant's general cessation of business activities or for
other reasons). In addition, certain tenants at retail properties may be
entitled to terminate their leases or pay reduced rent if an anchor tenant
ceases operations at such property. In such cases, there can be no assurance
that any such anchor tenants will continue to occupy space in the related
shopping centers.
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, the risk that an anchor tenant may
vacate notwithstanding such tenant's continuing obligation to pay rent, 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).
Unlike other income producing properties, retail properties also face
competition from sources outside a given real estate market. Catalogue
retailers, home shopping networks, the Internet, telemarketing and outlet
centers all compete with more traditional retail properties for consumer
dollars. Continued growth of these alternative retail outlets (which are often
characterized by lower operating costs) could adversely affect the rents
collectible at the retail properties which secure Mortgage Loans in a Trust
Fund.
Risks Associated with Mortgage Loans Secured by Hospitality Properties.
Mortgage Loans secured by hospitality properties may constitute a material
concentration of the Mortgage Loans in a Trust Fund. Various factors, including
location, quality and franchise affiliation (or lack thereof), affect the
economic viability of a hospitality property (i.e., a hotel). Adverse economic
conditions, either local, regional or national, may limit the amount that a
consumer is willing to pay for a room and may result in a reduction in occupancy
levels. The construction of competing hospitality properties or motels can have
similar effects. Because hotel rooms generally are rented for short periods of
time, hospitality properties tend to be more sensitive to adverse economic
conditions and competition than do other commercial properties. Furthermore, the
financial strength and capabilities of the owner and operator of a hospitality
property may have a substantial impact on such property's quality of service and
economic performance. Additionally, the hotel and lodging industry is generally
seasonal in nature and this seasonality can be expected to cause periodic
fluctuations in room and other revenues, occupancy levels, room rates and
operating expenses.
In addition, 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 any franchise license agreement. The transferability of a franchise license
agreement may be restricted, and a lender or other person that acquires title to
a hospitality 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 hospitality property's operating, liquor and other licenses
upon a transfer of the hospitality property, whether through purchase or
foreclosure, is subject to local law requirements and may not be transferable.
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Risks Associated with Mortgage Loans Secured by Office Buildings. Mortgage
Loans secured by office buildings may constitute a material concentration of the
Mortgage Loans in a Trust Fund. Significant factors determining the value of
office buildings are the quality of the tenants in the building, the physical
attributes of the building in relation to competing buildings and the strength
and stability of the market area as a desirable business location. Office
buildings may be adversely affected by an economic decline in the business
operated by the tenants. The risk of such an adverse effect is increased if
revenue is dependent on a single tenant or if there is a significant
concentration of tenants in a particular business or industry.
Office buildings are also subject to competition with other office
properties in the same market. Competition is affected by a property's age,
condition, design (e.g., floor sizes and layout), access to transportation and
ability or inability to offer certain amenities to its tenants, including
sophisticated building systems (such as fiberoptic cables, satellite
communications or other base building technological features).
The success of an office building also depends on the local economy. A
company's decision to locate office headquarters in a given area, for example,
may be affected by such factors as labor cost and quality, tax environment and
quality of life issues such as schools and cultural amenities. A central
business district may have an economy which is markedly different from that of a
suburb. The local economy and the financial condition of the owner will impact
on an office building's ability to attract stable tenants on a consistent basis.
In addition, the cost of refitting office space for a new tenant is often more
costly than for other property types.
Risks Associated with Mortgage Loans Secured by Residential Healthcare
Facilities. Mortgage Loans secured by residential healthcare facilities (i.e.,
nursing homes) may constitute a material concentration of the Mortgage Loans in
a Trust Fund. Mortgage Loans secured by liens on residential health care
facilities pose additional risks not associated with loans secured by liens on
other types of income-producing properties. 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 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 borrowers 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 Mortgaged
Property would be adaptable to other uses. To the extent any residential
healthcare facility receives a significant portion of its revenues from
government reimbursement programs, primarily Medicaid and Medicare, such
revenues 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.
Risks Associated with Mortgage Loans Secured by Warehouse and Self Storage
Facilities. Mortgage Loans secured by warehouse and storage facilities may
constitute a material concentration of the Mortgage Loans in a Trust Fund.
Storage facilities are part of a market that contains low barriers to entry.
Increased competition among self storage facilities may reduce income available
to repay Mortgage Loans secured by self storage
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facility. Furthermore, the privacy considerations applicable to self storage
facilities may increase environmental risks. See "Risk Factors--Environmental
Law Considerations" herein.
Risks Associated with Mortgage Loans Secured by Health-Care Related
Properties. The Mortgaged Properties may include Senior Housing, Assisted
Living Facilities, Skilled Nursing Facilities and Acute Care Facilities (any of
the foregoing, "Health Care-Related Facilities"). "Senior Housing" generally
consists of facilities with respect to which the residents are ambulatory,
handle their own affairs and typically are couples whose children have left the
home and at which the accommodations are usually apartment style. "Assisted
Living Facilities" are typically single or double room occupancy,
dormitory-style housing facilities which provide food service, cleaning and some
personal care and with respect to which the tenants are able to medicate
themselves but may require assistance with certain daily routines. "Skilled
Nursing Facilities" provide services to post trauma and frail residents with
limited mobility who require extensive medical treatment. "Acute Care
Facilities" generally consist of hospital and other facilities providing
short-term, acute medical care services.
Certain types of Health Care-Related Properties, particularly Acute Care
Facilities, Skilled Nursing Facilities and some Assisted Living Facilities,
typically receive a substantial portion of their revenues from government
reimbursement programs, primarily Medicaid and Medicare. Medicaid and Medicare
are 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 exist various proposals for national health care reform that could further
limit 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 such payments are
insufficient, net operating income of those Health Care-Related Facilities that
receive revenues from those sources, and consequently the ability of the related
borrowers to meet their obligations under any Mortgage Loans secured thereby,
could be adversely affected.
Moreover, Health Care-Related Facilities are generally 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. In addition, facilities where such care or
other medical services are provided are subject to periodic inspection by
governmental authorities to determine compliance with various standards
necessary to continued licensing under state law and continued participation in
the Medicaid and Medicare reimbursement programs. Providers of assisted living
services are also subject to state licensing requirements in certain states. The
failure of an operator to maintain or renew any required license or regulatory
approval could prevent it from continuing operations at a Health Care-Related
Facility or, if applicable, bar it from participation in government
reimbursement programs. Furthermore, under applicable federal and state laws and
regulations, Medicare and Medicaid reimbursements are generally not permitted to
be made to any person other than the provider who actually furnished the related
medical goods and services. Accordingly, in the event of foreclosure, none of
the Trustee, the Master Servicer, the Special Servicer or a subsequent lessee or
operator of any Health Care-Related Facility securing a defaulted Mortgage Loan
(a "Health Care-Related Mortgaged Property") would generally be entitled to
obtain from federal or state governments any outstanding reimbursement payments
relating to services furnished at such property prior to such foreclosure. Any
of the aforementioned events may adversely affect the ability of the related
borrowers to meet their Mortgage Loan obligations.
Government regulation applying specifically to Acute Care Facilities,
Skilled Nursing Facilities and certain types of Assisted Living Facilities
includes health planning legislation, enacted by most states, intended, at least
in part, to regulate the supply of nursing beds. The most common method of
control is the requirement that a state authority first make a determination of
need, evidenced by its issuance of a Certificate of Need ("CON"), before a
long-term care provider can establish a new facility, add beds to an existing
facility or, in some states, take certain other actions (for example, acquire
major medical equipment, make major capital expenditures, add services,
refinance long-term debt, or transfer ownership of a facility). States also
regulate nursing bed supply in other ways. For example, some states have imposed
moratoria on the licensing of new beds, or on the certification of new Medicaid
beds, or have discouraged the construction of new nursing facilities by limiting
Medicaid reimbursements allocable to the cost of new construction and equipment.
In general, a CON is site specific and operator specific; it cannot be
transferred from one site to another, or to another operator, without the
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approval of the appropriate state agency. Accordingly, if a Mortgage Loan
secured by a lien on such a Health Care-Related Mortgaged Property were
foreclosed upon, the purchaser at foreclosure might be required to obtain a new
CON or an appropriate exemption. In addition, compliance by a purchaser with
applicable regulations may in any case require the engagement of a new operator
and the issuance of a new operating license. Upon a foreclosure, a state
regulatory agency may be willing to expedite any necessary review and approval
process to avoid interruption of care to a facility's residents, but there can
be no assurance that any will do so or that any necessary licenses or approvals
will be issued.
Further government regulation applicable to Health Care-Related Facilities
is found in the form of federal and state "fraud and abuse" laws that generally
prohibit payment or fee-splitting arrangements between health care providers
that are designed to induce or encourage the referral of patients to, or the
recommendation of, a particular provider for medical products or services.
Violation of these restrictions can result in license revocation, civil and
criminal penalties, and exclusion from participation in Medicare or Medicaid
programs. The state law restrictions in this area vary considerably from state
to state. Moreover, the federal anti-kickback law includes broad language that
potentially could be applied to a wide range of referral arrangements, and
regulations designed to create "safe harbors" under the law provide only limited
guidance. Accordingly, there can be no assurance that such laws will be
interpreted in a manner consistent with the practices of the owners or operators
of the Health Care-Related Mortgaged Properties that are subject to such laws.
The operators of Health Care-Related Facilities are likely to compete on a
local and regional basis with others that operate similar facilities, some of
which competitors may be better capitalized, may offer services not offered by
such operators, or may be owned by non-profit organizations or government
agencies supported by endowments, charitable contributions, tax revenues and
other sources not available to such operators. The successful operation of a
Health Care-Related Facility will generally depend upon the number of competing
facilities in the local market, as well as upon other factors such as its age,
appearance, reputation and management, the types of services it provides and,
where applicable, the quality of care and the cost of that care. The inability
of a Health Care-Related Mortgaged Property to flourish in a competitive market
may increase the likelihood of foreclosure on the related Mortgage Loan,
possibly affecting the yield on one or more classes of the related series of
Offered Certificates.
Risks Associated with Mortgage Loans Secured by Industrial & Mixed-Use
Facilities. Mortgage Loans secured by industrial and mixed-use facilities may
constitute a material concentration of the Mortgage Loans in a Trust Fund.
Significant factors determining the value of industrial properties are the
quality of tenants, building design and adaptability and the location of the
property. Concerns about the quality of tenants, particularly major tenants, are
similar in both office properties and industrial properties, although industrial
properties are more frequently dependent on a single tenant. In addition,
properties used for many industrial purposes are more prone to environmental
concerns than other property types.
Aspects of building site design and adaptability affect the value of an
industrial property. Site characteristics which are valuable to an industrial
property include clear heights, column spacing, zoning restrictions, number of
bays and bay depths, divisibility, truck turning radius and overall
functionality and accessibility. Location is also important because an
industrial property requires the availability of labor sources, proximity to
supply sources and customers and accessibility to rail lines, major roadways and
other distribution channels.
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.
MANAGEMENT RISKS
Each Mortgaged Property is managed by a property manager (which generally
is an affiliate of the borrower) or by the borrower itself. The successful
operation of a real estate project is largely dependent on the performance and
viability of the management of such project. The property manager is responsible
for responding to changes in the local market, planning and implementing the
rental structure, including establishing levels of rent payments and advising
the borrowers so that maintenance and capital improvements can be carried out in
a timely fashion. There is no assurance regarding the performance of any
operators, leasing agents and/or
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managers or persons who may become operators and/or managers upon the expiration
or termination of management agreements or following any default or foreclosure
under a Mortgage Loan. In addition, generally the property managers are
operating companies and unlike limited purpose entities, may not be restricted
from incurring debt and other liabilities in the ordinary course of business or
otherwise. There can be no assurance that the property managers will at all
times be in a financial condition to continue to fulfill their management
responsibilities under the related management agreements throughout the terms
thereof.
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 releasing 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 ON MORTGAGE LOANS; HEIGHTENED RISK OF 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)
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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 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.
See "Yield and Maturity Considerations--Other Factors Affecting Yield, Weighted
Average Life and Maturity--Balloon Payments; Extension of Maturity."
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--MAY NOT COVER ALL RISKS OR FULL PAYMENT ON
CERTIFICATES
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.
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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 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 SERVING AS SECURITY FOR MORTGAGE LOANS POSE SPECIAL RISKS
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."
DELINQUENT MORTGAGE LOANS
If so provided in the related Prospectus Supplement, the Trust Fund for a
particular series of Certificates may include Mortgage Loans that are delinquent
as of the date they are deposited in the Trust Fund. A Mortgage Loan will be
considered "delinquent" if it is thirty (30) days or more past its most recently
contractual scheduled payment date in payment of all amounts due according to
its terms. In any event, at the time of its creation, the Trust Fund will not
include delinquent loans which by principal amount are more than 20% of the
aggregate principal amount of all Mortgage Loans 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 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-General."
ENVIRONMENTAL LIABILITY MAY AFFECT LIEN ON MORTGAGED PROPERTY AND EXPOSE LENDER
TO COSTS
Under certain laws, 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. 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 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." These provisions are designed to reduce substantially the risk of
liability for costs associated with remediation of hazardous substances, but
there can be no assurance in a given case that those risks can be eliminated
entirely.
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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.
CREDIT SUPPORT LIMITATIONS--MAY NOT COVER ALL RISKS OR FULL PAYMENT ON
CERTIFICATES
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 be, however, 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."
ERISA CONSIDERATIONS--COVERED INVESTORS MAY EXPERIENCE LIABILITY
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 "Material 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
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
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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 OF CERTIFICATES AFFECTS OWNERSHIP OF CERTIFICATES AND
RECEIPT OF PAYMENTS
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 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
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 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."
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DESCRIPTION OF THE TRUST FUNDS
GENERAL
The primary assets of each Trust Fund will consist of a pool of mortgage
loans collectively, the "Mortgage Loans" secured by liens on, or security
interests in (i) residential properties consisting of five or more rental or
cooperatively-owned dwelling units (the "Multifamily Properties") or
(ii) shopping centers, retail stores, hotels or motels, office buildings,
nursing homes, hospitals or other health-care related facilities, warehouse
facilities, mixed use properties, mini-warehouse or self-storage facilities,
mobile home parks or other types of income producing properties (the "Commercial
Properties"), (iii) mortgage participations, pass-through certificates or other
mortgage-backed securities such as mortgage-backed securities that are similar
to a series of Certificates ("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 (iv) 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.
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"). If
so 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, if so specified in
the related Prospectus Supplement, the term of any such leasehold will exceed
the term of the Mortgage Note by at least ten 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 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, 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
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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 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. As more fully set forth 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. As more fully set forth in the
related Prospectus Supplement, "Net Operating
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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 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. As
more fully set forth 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
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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. If so 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 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
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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 such as
mortgage-backed securities that are similar to a series of Certificates 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 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.
To the extent required under the securities laws, CMBS included among the
assets of a Trust Fund will (i) either have been registered under the Securities
Act of 1933, as amended, or be eligible for resale under Rule 144(k) thereunder
and (ii) have been acquired in a bona fide secondary market transaction and not
from the issuer or an affiliate.
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.
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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 over collateralization, a letter of credit, insurance policy, guarantee
or reserve fund, 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 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.
PRE-FUNDING
If so provided in the related Prospectus Supplement, a Trust Fund may
include amounts on deposit in a separate account (the "Pre-Funding Account")
which amounts will not exceed 25% of the pool balance of the Trust Fund as of
the Cut-off Date. Amounts on deposit in the Pre-Funding Account may be used by
the Trust Fund to acquire additional Mortgage Assets, which additional Mortgage
Assets will be selected using criteria that is substantially similar to the
criteria used to select the Mortgage Assets included in the Trust Fund on the
Closing Date. The Trust Fund may acquire such additional Mortgage Assets for a
period of time of not more than 120 days after the Closing Date (the
"Pre-Funding Period") as specified in the related Prospectus Supplement. Amounts
on deposit in the Pre-Funding Account after the end of the Pre-Funding Period
will be distributed to Certificateholders or such other person as set forth in
the related Prospectus Supplement. If so provided in the related Prospectus
Supplement, the Trust Fund may include amounts on deposit in a separate account
(the "Capitalized Interest Account"). Amounts on deposit in the Capitalized
Interest Account may be used to supplement investment earnings, if any, of
amounts on deposit in the Pre-Funding Account, supplement interest collections
of the Trust Fund, or such other purpose as specified in the related Prospectus
Supplement. As set forth in a related Prospectus Supplement, amounts on deposit
in the Capitalized Interest Account and Pre-Funding Account will be held in cash
or invested in short-term investment grade obligations. Any amounts on deposit
in the Capitalized Interest Account will be released after the end of the
Pre-Funding Period as specified in the related Prospectus Supplement. See "Risk
Factors--Effects of Pre-Funding and Acquisition of Additional Mortgage Assets."
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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 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
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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 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
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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. If so 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 long as one or more Companion Classes remain
to absorb excess cash flows and make up for shortfalls. For
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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
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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.
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. As specifically set forth 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, a national banking association with its main
office located in Charlotte, North Carolina. First Union National Bank 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's principal business is to acquire, hold and/or sell or
otherwise dispose of cash flow assets, usually in connection with the
securitization of that asset. 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.
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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.
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. If so 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
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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 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
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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."
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.
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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 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.
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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, 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
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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;
(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
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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 the
Pooling 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 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. In any event,
unless otherwise disclosed in the applicable Prospectus Supplement, any such
repurchase or purchase shall be at a price or prices that are generally based
upon the unpaid principal balance of, plus accrued interest on, all Mortgage
Loans (other than Mortgage Loans secured by REO Properties) then included in a
Trust Fund and the fair market value of all REO Properties then included in the
Trust Fund, which may or may not result in full payment of the aggregate
Certificate Balance plus accrued interest and any undistributed shortfall in
interest for the then outstanding Certificates. Any sale of Trust Fund assets
will be without recourse to the Trust and/or Certificateholders, provided,
however, that there can be no assurance that in all events a court would accept
such a contractual stipulation.
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.
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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.
As may be 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 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.
As may be 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.
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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
As set forth in the related Prospectus Supplement, generally 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 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 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. 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
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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
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.
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.
This repurchase or substitution obligation may 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.
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
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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"). 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;
(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;"
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(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 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;
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(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 "Material 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 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. Generally, 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 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. 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.
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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.
Generally, 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 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. Generally, 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
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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."
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 by the end of the third
calendar year following the year of acquisition or 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 three years after the
end of the calendar year in which it was acquired will not result in the
imposition of a tax on the Trust Fund or cause the Trust Fund to fail to qualify
as a REMIC under the Code at any time that any Certificate is outstanding.
Subject to the foregoing, the Master Servicer will 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.
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HAZARD INSURANCE POLICIES
Each Pooling Agreement may 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. 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
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.
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
Generally, 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
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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
Each Pooling Agreement may 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 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.
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. The related Pooling Agreement may 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.
Each Pooling Agreement may 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
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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 circumstances, 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.
EVENTS OF DEFAULT
The "Events of Default" for a Series of Certificates under the related
Pooling Agreement generally 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
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
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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. 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
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 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. 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 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 Pooling Agreement,
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.
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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
The Trustee for a series of Certificates may 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 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.
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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 over collateralization, 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.
The Credit Support generally 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."
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.
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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 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.
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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.
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
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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 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
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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 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,
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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
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
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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, 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
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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 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
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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 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.
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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.
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
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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 activities. 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 certain laws, 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 prior to foreclosure, holds indicia of ownership primarily to protect
his security interest in the facility. This secured creditor exemption is
intended to provide a lender protection from liability under CERCLA as an owner
or operator of contaminated property. However, 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 actually 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 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.
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. 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.
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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 result in the imposition of certain investigation or remediation
requirements and/or 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 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
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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.
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.
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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.
MATERIAL 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. If no REMIC election is
made, the Trust Fund may elect to be treated as a financial assets
securitization investment trust ("FASIT"). The Prospectus Supplement relating to
such an election will describe the requirements for the classification of the
Trust Fund as a FASIT and the consequences to a holder of owning certificates in
a FASIT. The Prospectus Supplement for each series of Certificates also will
indicate whether a REMIC election (or elections) will be made for the related
Trust Fund or applicable portion thereof and, if such an election is to be made,
will identify all "regular interests" and "residual interests" in each REMIC.
For purposes of this tax discussion, references to a "Certificateholder" or a
"holder" are to the beneficial owner of a Certificate.
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."
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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 Brown & Wood LLP, 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, the
REMIC Certificates will be "real estate assets" within the meaning of Section
856(c)(5)(B) 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)(B) 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 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)(B) 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 separate REMICs ("Tiered REMICs") for federal income tax purposes.
Upon the issuance of any such series of REMIC Certificates, counsel to the
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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)(B) 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.
It is not entirely clear under the Code that interest paid on debt
instruments (such as the REMIC Regular Certificates) that are subject to early
termination through prepayments and that have limited enforcement rights should
be considered "qualified stated interest". However, unless disclosed otherwise
in the Prospectus Supplement, the Trust Fund intends to treat stated interest as
"qualified stated interest" for purposes of determining if, and to what extent,
the REMIC Regular Certificates have been issued with original issue discount for
United States federal income tax purposes. Nevertheless, holders of the REMIC
Regular Certificates should consult their own tax advisors with respect to
whether interest in the REMIC Regular Certificates qualifies as "qualified
stated interest" under the Code.
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In the case of REMIC Regular Certificates bearing adjustable interest
rates, the determination of the total amount of original issue discount and the
timing of the inclusion thereof will vary according to the characteristics of
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").
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 case, 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, 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 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
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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 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
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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 a holder elects to amortize bond premium,
bond premium would be amortized on a constant yield method and would be applied
against qualified stated interest. 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 noncorporate holders
of the REMIC Regular Certificates that acquire such Certificates in connection
with a trade or business and corporate holders of the REMIC Regular Certificates
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. Losses sustained on the Mortgage Loans may be "events which have occured
before the close of the accrued period" that can be taken into account under
Code Section 1272(a)(6) for purposes of determining the amount of OID that
accrues on a Certificate.
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, but the
law is unclear with respect to the timing and character of such loss or
reduction in income.
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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.
It is uncertain how payments received by a holder of a REMIC Residual
interest in connection with the acquisition of such REMIC Residual interest
should be treated and 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.
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
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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-
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Through of Miscellaneous 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
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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.
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.
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 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. On December 24, 1996, the IRS released final
regulations (the "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
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the dealer has specifically identified a security as held for investment. The
Mark-to-Market Regulations provide that for purposes of this mark-to-market
requirement, a REMIC Residual Certificate issued after January 4, 1995 is not
treated as a security and thus may not be marked to market. Prospective
purchasers of a REMIC Residual Certificate should consult their tax advisors
regarding the possible application of the mark-to-market requirement to REMIC
Residual Certificates.
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
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.
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
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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.
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.
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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
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 exclude as instrumentalities entities not treated as
instrumentalities under 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. Such loss may be treated as a
capital loss and may be subject to the "wash sale" rules of Section 1091 of the
Code.
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
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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 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
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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 treated as a corporation or a
partnership for United States Federal income tax purposes created or organized
in, or under the laws of, the United States, any State thereof or the District
of Columbia (unless, in the case of a partnership, Treasury regulations are
enacted that provide otherwise), an estate whose income is includible in gross
income for United States federal income tax purposes regardless of its source or
a trust if (a) a court within the United States is able to exercise primary
supervision over the administration of the trust, and (b) one or more United
States persons have the authority to control all substantial decisions of the
trust. It is possible that the IRS may assert that the foregoing tax exemption
should not apply with respect to interest distributed on a REMIC Regular
Certificate that is held by (i) a REMIC Residual Certificateholder that owns
directly or indirectly a 10% or greater interest in the REMIC Residual
Certificates or (ii) to the extent of the amount of interest paid by the related
Mortgagor on a particular Mortgage Loan, (A) a REMIC Regular Certificateholder
that owns a 10% or greater ownership interest in such Mortgage or (B) a REMIC
Regular Certificateholder that is a controlled foreign corporation as to the
United States of which such Mortgagor is a "United States shareholder" within
the meaning of Section 951(b) of the Code. 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.
Transfers of REMIC Residual Certificates to investors that are not United
States persons will be prohibited under the related Pooling Agreement.
New Withholding Regulations. On October 6, 1997, the Treasury Department
issued new regulations (the "New Regulations") which make certain modifications
to the withholding, backup withholding and information reporting rules described
above. The New Regulations attempt to unify certification requirements and
modify reliance standards. The IRS recently issued notice 99-25 which generally
makes the New Regulations effective for payments made after December 31, 2000,
subject to certain transition rules. Prospective investors are urged to consult
their own tax advisors regarding the New Regulations.
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 Chapter 1 of Subtitle A 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.
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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)(B) 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)(B) 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. Although, 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 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
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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.
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
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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 income or loss, which under
amendments to the Code adopted in 1997 would be capital except to the extent of
any accrued market discount 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, although there is no guidance, logically 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 1.1286-1, 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
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.
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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 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.
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
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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 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.
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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 in so far as they describe the application of the
constant yield method, do not apply to instruments to which Section 1272(a)(6)
applies, which may include Grantor Trust Strip Certificates as well as Grantor
Trust Fractional Interest Certificates, 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.
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
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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. In addition,
any loss may be treated as a capital loss.
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.
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.
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Grantor Trust Reporting. As may be 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. However, to the
extent the Grantor Trust Certificate represents an interest in real property
(e.g. because of foreclosures), it would be treated as representing a United
States real property interest for United States federal income tax purposes.
This could result in withholding consequences to non-U.S. Certificateholders and
potential U.S. taxation.
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.
New Withholding Regulations. On October 6, 1997, the Treasury Department
issued new regulations (the "New Regulations") which make certain modifications
to the withholding, backup withholding and information reporting rules described
above. The New Regulations attempt to unify certification requirements and
modify reliance standards. The IRS recently issued notice 99-25 which generally
makes the New Regulations effective for payments made after December 31, 2000,
subject to certain transition rules. Prospective investors are urged to consult
their own tax advisors regarding the New Regulations.
STATE AND OTHER TAX CONSEQUENCES
In addition to the federal income tax consequences described in "Material
Federal Income Tax Consequences," potential investors should consider the state
and local tax consequences of the acquisition, ownership and disposition of the
Offered Certificates. State tax law may differ substantially from the
corresponding federal 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.
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, collective
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investment funds and separate and general 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."
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.
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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 Rating Services, a division of The McGraw-Hill Companies, Inc. ("Standard
& Poor's"), Moody's Investors Service, Inc. ("Moody's"), Duff & Phelps Credit
Rating Co. ("Duff & Phelps") or Fitch IBCA, 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.
Seventh, in the event the obligations used to fund the Trust Fund have not
all been transferred to the Trust Fund on the closing date, additional
obligations meeting certain requirements as specified in the Exemption shall be
transferred to the Trust Fund in exchange for the amounts credited to the
Pre-Funding Account during the period commencing on the closing date and ending
no later than the earliest to occur of: (i) the date the amount on deposit in
the Pre-Funding Account (as defined in the Exemption) is less than the minimum
dollar amount specified in the Pooling Agreement; (ii) the date on which an
event of default occurs under the Pooling Agreement; or (iii) the date which is
the later of three months or 90 days after the closing date. Certain conditions
of the Exemption relating to pre-funding accounts must also be met, to be
described in the Prospectus Supplement.
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, or (ii) Certificates evidencing an interest
in a Trust Fund including Cash Flow Agreements. Also, as noted, subordinated
Classes of Certificates are not covered by the Exemption.
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
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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.
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
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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 (including the District of Columbia
and Puerto Rico), the authorized investments of which are subject to state
regulation.
Under SMMEA, a number of states enacted legislation, on or before the
October 3, 1991 cutoff for such enactments, limiting to varying extents the
ability of certain entities (in particular, insurance companies) to invest in
"mortgage related securities" secured by liens on residential, or mixed
residential and commercial properties, in most cases by requiring the affected
investors to rely solely upon existing state law, and not SMMEA. Pursuant to
Section 347 of the Riegle Community Development and Regulatory Improvement Act
of 1994, which amended the definition of "mortgage related security" (effective
December 31, 1996) to include, in relevant part, Offered Certificates satisfying
the rating and qualified Originator requirements for "mortgage related
securities," but evidencing interests in a Trust Fund consisting, in whole or in
part, of first liens on one or more parcels of real estate upon which are
located one or more commercial structures, states were authorized to enact
legislation, on or before September 23, 2001, specifically referring to Section
347 and prohibiting or restricting the purchase, holding or investment by
state-regulated entities in such types of Offered Certificates. Section 347 also
provides that the enactment by a state of any such legislative restrictions
shall not affect the validity of any contractual commitment to purchase, hold or
invest in securities qualifying as "mortgage related securities" solely by
reason of Section 347 that was made, and shall not require the sale or
disposition of any securities acquired, prior to the enactment of such state
legislation. Accordingly, the investors affected by any such state legislation,
when and if enacted, will be authorized to invest in Offered Certificates
qualifying as "mortgage related securities" only to the extent provided in such
legislation.
SMMEA also amended the legal investment authority of federally chartered
depository institutions as follows: federal savings and loan associations and
federal savings banks may invest in, sell or otherwise deal 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, 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
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as "commercial mortgage-related securities," and thus as "Type IV securities,"
for investment by national banks. The National Credit Union Administration
("NCUA") has adopted rules, codified at 12 C.F.R. Part 703, which permit federal
credit unions to invest in "mortgage related securities" under certain limited
circumstances, other than stripped mortgage related securities, residual
interest in mortgage related securities, and commercial mortgage related
securities, unless the credit union has obtained written approval from the NCUA
to participate in the "investment pilot program" described in
12 C.F.R. Section 703.140. The Office of Thrift Supervision (the "OTS") has
issued Thrift Bulletin 13a (December 1, 1998). "Management of Interest Rate
Risk, Investment Securities, and Derivatives Activities," which thrift
institutions subject to the jurisdicition of the OTS should consider before
investing in any of the Offered Certificates.
All depository institutions considering an investment in the Offered
Certificates should review the "Supervisory Policy Statement oon Investment
Securities and End-User Derivatives" (the "1998 Policy Statement") of the
Federal Financial Institutions Examination Council, which has been adopted by
the Board of Governors of the Federal Reserve System, the Federal Deposit
Insurance Corporation, the OCC and the OTS effective May 26, 1998, and by the
NCUA effective October 1, 1998. The 1998 Policy Statement sets forth general
guidelines which depository institutions must follow in managing risks
(including market, credit, liquidity, operational (transaction), and legal
risks) applicable to all securities (including mortgage pass-through securities
and mortgage-derivative products) used for investment purposes.
Institutions whose investment activities are subject to regulation by
federal or state authorities should review rules, policies and guidelines
adopted from time to time by such authoritites before purchasing any Offered
Certificates, as certain series or classes may be deemed unsuitable investments,
or may otherwise be restricted under such rules, policies or guidelines (in
certain instances irrespective of SMMEA).
The foregoing does not take into consideration the applicability of
statutes, rules, regulations, orders, guidelines or agreements generally
governing investments made by a particular investor, including, but not limited
to, "prudent investor" provisions, percentage-of-assets limits and provisions
which may restrict or prohibit investment in securities which are not "interest
bearing" or "income paying" and, with regard to any Offered Certificates issued
in book-entry form.
Except as to the status of certain classes of Offered Certificates as
"mortgage related securities," no representations are made as to the proper
characterization of the Offered Certificates for legal investment purposes,
financial institutional regulatory purposes, or other purposes, or as to the
ability of particular investors to purchase Offered Certificates under
applicable legal investment restrictions. The uncertainties described above (and
any unfavorable future determinations concerning legal investment or financial
institution regulatory characteristics of the Offered Certificates) may
adversely affect the liquidity of the Offered Certificates.
Accordingly, all investors whose investment activities are subject to legal
investment laws and regulation, regulatory capital requirements or review by
regulatory authorities should consult with their legal advisors in determining
whether and to what extent the Offered Certificates of any class constitute
legal investments or are subject to investment, capital or other restrictions
and, if applicable, whether SMMEA has been overridden in any jurisdiction
relevant to such investor.
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, any
class or classes of Offered Certificates, or portions thereof, that will be sold
to affiliates of the Depositor, 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
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Union Capital Markets Corp. ("First Union Capital Markets"), 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 acting as agent. If First Union Capital Markets
acts as agent in the sale of Offered Certificates, First Union Capital Markets
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 elects to purchase Offered Certificates as principal, First
Union Capital Markets 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 or any affiliate of the Depositor and
purchasers of Offered Certificates of such series.
This Prospectus and related Prospectus Supplements also may be used by the
Depositor, First Union Capital Markets, 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 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.
If so specified in a Prospectus Supplement, all or a portion of one or more
classes of the Offered Certificates identified therein may be sold by the
Depositor either directly or indirectly through an underwriter, including First
Union Capital Markets, to one or more affiliates of the Depositor. This
Prospectus and related Prospectus Supplements may be used by any such affiliate
to resell Offered Certificates publicly or privately to affiliated or
unaffiliated parties either directly or indirectly through an underwriter,
including First Union Capital Markets.
The Depositor will agree to indemnify First Union Capital Markets 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 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 including affiliates of the Depositor.
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 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 Brown & Wood LLP, New York, New York, and for the underwriters by Cadwalader,
Wickersham & Taft, New York, New York.
105
<PAGE>
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.
106
<PAGE>
INDEX OF PRINCIPAL DEFINITIONS
PAGE
- --------------------------------------------------------------------------------
Accrual Certificates......................................................14, 44
Accrued Certificate Interest..................................................44
ADA...........................................................................75
ARM Loans.....................................................................35
Available Distribution Amount.................................................43
Bankruptcy Code...............................................................69
Book-Entry Certificates...................................................16, 43
Capitalized Interest Account..............................................12, 37
Cash Flow Agreements...........................................................2
CERCLA....................................................................29, 73
Certificate Account.......................................................11, 36
Certificate Balance........................................................3, 13
Certificate Owner.........................................................16, 50
Certificateholders.............................................................2
Certificates............................................................Cover, 9
Class Exemption..............................................................101
Closing Date..................................................................78
CMBS...................................................................2, 11, 32
CMBS Agreement................................................................36
CMBS Issuer...................................................................36
CMBS Servicer.................................................................36
CMBS Trustee..................................................................36
Code......................................................................16, 76
Commercial Properties.........................................................32
Commission.....................................................................3
Committee Report..............................................................78
Companion Class...........................................................15, 45
CON...........................................................................25
Contributions Tax.............................................................87
Controlled Amortization Class.............................................15, 45
Cooperative...................................................................66
Cooperative Loans.............................................................66
Cooperatives..................................................................32
CPR...........................................................................40
Credit Support.........................................................2, 11, 37
Cut-off Date..................................................................14
Debt Service Coverage Ratio...................................................33
Definitive Certificate........................................................16
Depositor.....................................................................32
Determination Date............................................................44
Direct Participants...........................................................49
Distribution Date.............................................................14
Distribution Date Statement...................................................47
DOL...........................................................................99
107
<PAGE>
PAGE
- --------------------------------------------------------------------------------
DTC............................................................................3
Due Period....................................................................46
Duff & Phelps................................................................100
Equity Participation..........................................................35
ERISA.....................................................................17, 98
Events of Default.............................................................60
Excess Funds..................................................................42
Exchange Act...................................................................4
Excluded Plan................................................................101
Exemption.....................................................................99
FAMC..........................................................................11
FASIT.....................................................................16, 76
FHLMC.........................................................................11
First Union...................................................................99
First Union Capital Markets...............................................2, 105
Fitch........................................................................100
FNMA..........................................................................11
Garn Act......................................................................74
GNMA..........................................................................11
Grantor Trust Certificates................................................16, 76
Grantor Trust Fractional Interest Certificates................................17
Grantor Trust Fund............................................................76
Grantor Trust Strip Certificate...............................................90
Health Care-Related Facilities................................................25
Health Care-Related Mortgaged Property........................................25
Indirect Participants.........................................................49
Insurance Proceeds............................................................53
IRS...........................................................................79
Issue Premium.................................................................83
L/C Bank......................................................................64
Lease......................................................................4, 10
Lease Assignment..............................................................10
Lender Liability Act..........................................................73
Lessee.....................................................................4, 10
Liquidation Proceeds..........................................................53
Loan-to-Value Ratio...........................................................34
Lockout Period................................................................35
Mark-to-Market Regulations....................................................85
Master Servicer.............................................................3, 9
Moody's......................................................................100
Mortgage Asset Seller.....................................................11, 32
Mortgage Assets............................................................2, 32
Mortgage Loan.................................................................65
Mortgage Loans..........................................................2, 9, 32
Mortgage Notes................................................................32
108
<PAGE>
PAGE
- --------------------------------------------------------------------------------
Mortgage Rate.............................................................10, 35
Mortgaged Properties..........................................................32
mortgages.................................................................32, 65
Multifamily Properties.....................................................9, 32
Net Operating Income..........................................................33
New Regulations...........................................................90, 98
Nonrecoverable Advance........................................................46
Notional Amount...........................................................13, 44
OCC..........................................................................103
Offered Certificates.......................................................Cover
OID Regulations...............................................................77
Originator....................................................................32
PAC...........................................................................40
Participants..................................................................31
Parties-in-Interest...........................................................99
Party in Interest............................................................100
Pass-Through Rate..........................................................3, 13
Permitted Investments.........................................................53
Plans.........................................................................99
Pooling Agreement.........................................................13, 51
Pre-Funding Account....................................................2, 12, 37
Pre-Funding Period........................................................12, 37
Prepayment Assumption.........................................................78
Prepayment Interest Shortfall.................................................38
Prepayment Period.............................................................47
Prepayment Premium............................................................35
Prohibited Transactions Tax...................................................87
Prospectus Supplement......................................................Cover
Rating Agency.................................................................18
RCRA..........................................................................73
Record Date...................................................................44
Registration Statement.........................................................3
Related Proceeds..............................................................46
Relief Act....................................................................75
REMIC......................................................................2, 76
REMIC Certificates............................................................76
REMIC Provisions..............................................................76
REMIC Regular Certificates................................................16, 77
REMIC Regulations.............................................................77
REMIC Residual Certificates...............................................16, 77
REO Property...............................................................9, 47
Restricted Group.............................................................100
RICO..........................................................................76
Securities Act.................................................................3
Senior Certificates.......................................................13, 43
109
<PAGE>
PAGE
- --------------------------------------------------------------------------------
Servicing Standard............................................................55
SMMEA........................................................................103
SPA...........................................................................40
Special Servicer........................................................3, 9, 56
Standard & Poor's............................................................100
Stripped Bond Prepayment Assumption...........................................93
Stripped Interest Certificates............................................13, 43
Stripped Principal Certificates...........................................13, 43
Sub-Servicer..................................................................56
Sub-Servicing Agreement.......................................................56
Subordinate Certificates..................................................13, 43
TAC...........................................................................40
Tiered REMICs.................................................................77
Title V.......................................................................75
Trust Assets...................................................................3
Trust Fund.....................................................................2
Trustee.....................................................................3, 9
UCC...........................................................................66
Underwriter...................................................................99
Value.........................................................................34
Warranting Party..............................................................52
110
<PAGE>
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<PAGE>
NOTE TO COME FROM CUSTOMER SERVICE
The file "FUNCM992.XLS" is a Microsoft Excel*, Version 5.0 spreadsheet that
provides in electronic format certain information shown in Annexes A-1, A-2, A-3
and A-4. In addition, the spreadsheet provides certain Mortgage Loan and
Mortgaged Property information contained in Annex A-1 in the CSSA format and
information detailing the changes in the amount of Monthly Payments with regard
to certain Mortgage Loans. As described under "Reports to Certificateholders;
Available Information" in the Prospectus Supplement, each month the Trustee will
make available through its bulletin board system an electronic file in CSSA
format updating and supplementing the information contained in the
"FUNCM992.XLS" file.
To open the file, insert the diskette into your floppy drive. Copy the file
"FUNCM992.XLS" to your hard drive or network drive. Open the file
"FUNCM99C2.XLS" 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 data, see the worksheets labeled "Disclaimer",
"A-1 Loans & Properties" or "A-2 Step" or "A-3 MultiFamily Data" or "A-4 Reserve
Account", respectively.
* Microsoft Excel is a registered trademark of Microsoft Corporation.
<PAGE>
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UNTIL AUGUST 25, 1999, ALL DEALERS THAT EFFECT TRANSACTIONS IN THE OFFERED
CERTIFICATES, WHETHER OR NOT PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO
DELIVER A PROSPECTUS SUPPLEMENT AND PROSPECTUS. THIS IS IN ADDITION TO THE
DEALERS' OBLIGATION TO DELIVER A PROSPECTUS SUPPLEMENT AND PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
PROSPECTUS SUPPLEMENT
Summary of Prospectus Supplement.................... S-8
Risk Factors........................................ S-30
Description of the Mortgage Pool.................... S-46
Servicing of the Mortgage Loans..................... S-81
Description of the Certificates..................... S-89
Yield and Maturity Considerations................... S-112
Use of Proceeds..................................... S-121
Material Federal Income Tax Consequences............ S-121
ERISA Considerations................................ S-122
Legal Investment.................................... S-125
Method of Distribution.............................. S-125
Legal Matters....................................... S-126
Ratings............................................. S-126
Index of Principal Definitions...................... S-128
Annex A-1........................................... A-1
Annex A-2........................................... A-2
Annex A-3........................................... A-3
Annex A-4........................................... A-4
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
Annex L............................................. L-1
PROSPECTUS
Prospectus Supplement............................... 3
Available Information............................... 3
Incorporation of Certain Information By Reference... 4
Summary of Prospectus............................... 9
Risk Factors........................................ 19
Description of the Trust Funds...................... 32
Yield and Maturity Considerations................... 38
The Depositor....................................... 42
Use Of Proceeds..................................... 43
Description of the Certificates..................... 43
Description of the Pooling Agreements............... 51
Description of Credit Support....................... 63
Certain Legal Aspects of Mortgage Loans And
Leases............................................ 65
Material Federal Income Tax Consequences............ 76
State and Other Tax Consequences.................... 98
ERISA Considerations................................ 98
Legal Investment.................................... 103
Method of Distribution.............................. 104
Legal Matters....................................... 105
Financial Information............................... 106
Rating.............................................. 106
Index of Principal Definitions...................... 107
</TABLE>
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FIRST UNION COMMERCIAL
MORTGAGE SECURITIES, INC.
(DEPOSITOR)
$1,060,380,830 (APPROXIMATE)
FIRST UNION NATIONAL BANK-
CHASE MANHATTAN BANK
COMMERCIAL MORTGAGE TRUST
COMMERCIAL MORTGAGE
PASS-THROUGH CERTIFICATES,
SERIES 1999-C2
------------------------------------------------
PROSPECTUS SUPPLEMENT
------------------------------------------------
CHASE SECURITIES INC.
FIRST UNION(Registered)
Capital Markets
J.P. MORGAN & CO.
MAY 11, 1999
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