<PAGE>
Filed pursuant to Rule 424(b)(3)
Registration No. 333-22133
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION. THESE SECURITIES MAY NOT
BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME A FINAL PROSPECTUS
IS DELIVERED. THIS PROSPECTUS SUPPLEMENT SHALL NOT CONSTITUTE AN OFFER TO SELL
OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY
SUCH STATE.
SUBJECT TO COMPLETION, DATED SEPTEMBER 2, 1998
PROSPECTUS SUPPLEMENT DATED SEPTEMBER , 1998
TO PROSPECTUS DATED SEPTEMBER 2, 1998)
[ Logo ]
$ (APPROXIMATE)
CAPCO AMERICA SECURITIZATION CORPORATION, THE DEPOSITOR
CASC COMMERCIAL MORTGAGE TRUST 1998-D7, THE TRUST FUND
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 1998-D7
YOU SHOULD CAREFULLY CONSIDER THE RISK FACTORS BEGINNING ON PAGE S-24 OF THIS
PROSPECTUS SUPPLEMENT.
Neither the Offered Certificates nor the underlying Mortgage Loans are insured
or guaranteed by any governmental agency or instrumentality.
The Offered Certificates will represent interests in the Trust Fund only and
will not represent interests in or obligations of any other party.
This prospectus supplement may be used to offer and sell the Offered
Certificates only if accompanied by the Depositor's prospectus dated September
2, 1998.
THE TRUST FUND WILL ISSUE--
o The seven Classes of Offered Certificates described in the table below.
o Thirteen additional Classes of Certificates, all of which are subordinated to,
and some of which provide credit enhancement for, the Offered Certificates,
will be issued and are not being offered by this prospectus supplement.
THE ASSETS OF THE TRUST FUND WILL INCLUDE--
o A pool of 194 fixed rate mortgage loans with original terms to maturity
of generally not more than thirty years secured by first liens on 366
commercial and multifamily residential properties. The characteristics of
such mortgage loans the related mortgaged properties are more fully
described in this prospectus supplement.
<TABLE>
<CAPTION>
APPROXIMATE EXPECTED RATED FINAL
INITIAL CERTIFICATE PASS-THROUGH RATINGS DISTRIBUTION
OFFERED CERTIFICATES BALANCE RATE DESCRIPTION (FITCH/MOODY'S) DATE
-------------------- ------------------- ------------ -------------- --------------- ------------
<S> <C> <C> <C> <C> <C>
Class A-1A(1)....................... $ % Fixed Rate September 16, 2030
Class A-1B(1)....................... % Fixed Rate September 16, 2030
Class A-1C(1)....................... % Fixed Rate September 16, 2030
Class A-2........................... (3) Variable Rate September 16, 2030
Class A-3........................... (3) Variable Rate September 16, 2030
Class A-4........................... (3) Variable Rate September 16, 2030
Class A-5........................... (3) Variable Rate September 16, 2030
</TABLE>
(footnotes to table on page S-2)
Neither the SEC nor any state securities commission has approved the
Offered Certificates or determined that this prospectus supplement or the
prospectus is accurate or complete. Any representation to the contrary is a
criminal offense.
Application has been made to the Luxembourg Stock Exchange to list thereon
the Class A-1A, Class A-1B, Class A-1C and Class A-2 Certificates.
Nomura Securities International, Inc. and Morgan Stanley & Co. Incorporated
will act as joint bookrunners and co-lead managers with respect to the Offered
Certificates.
------------------------------------
NOMURA SECURITIES INTERNATIONAL, INC. MORGAN STANLEY DEAN WITTER
MERRILL LYNCH & CO.
The following graphic material is included in the paper and electronic
versions of this Prospectus Supplement.
A. (1) The inside front cover contains a map of the contiguous United
States, Alaska and Hawaii showing the concentration of the Mortgaged Properties
in the pool by state as follows:
STATE NUMBER OF PERCENTAGE OF
PROPERTIES VALUE TOTAL
- ---------------------------- ---------- ------------ -------------
Alabama 5 $ 19,223,651 1%
Alaska 1 $ 9,765,179 1%
Arkansas 3 $ 1,515,293 0%
Arizona 11 $ 28,455,243 2%
California 69 $318,399,493 25%
Colorado 5 $ 12,267,706 1%
Connecticut 3 $ 11,588,734 1%
Florida 23 $ 64,066,757 5%
Georgia 12 $ 37,907,878 3%
Hawaii 1 $ 39,500,000 3%
Illinois 12 $ 50,960,024 4%
Indiana 8 $ 37,933,182 3%
Iowa 2 $ 3,718,434 0%
Kansas 3 $ 3,985,510 0%
Kentucky 6 $ 10,498,163 1%
Louisiana 4 $ 10,146,300 1%
Maine 1 $ 5,619,891 0%
Maryland 3 $ 10,131,737 1%
Massachusetts 3 $ 5,141,149 0%
Michigan 20 $ 71,152,583 6%
Minnesota 14 $ 33,679,887 3%
Mississippi 1 $ 794,075 0%
Missouri 2 $ 1,391,371 0%
Montana 2 $ 1,343,297 0%
Nevada 3 $ 2,473,489 0%
New Jersey 3 $ 4,926,806 0%
New Mexico 2 $ 1,606,206 0%
New York 20 $127,735,213 10%
North Carolina 11 $ 73,809,335 6%
Ohio 17 $ 37,278,435 3%
Oklahoma 4 $ 10,482,558 1%
Oregon 2 $ 1,694,263 0%
Pennsylvania 16 $ 44,020,667 3%
Rhode Island 1 $ 3,872,190 0%
South Carolina 2 $ 1,237,814 0%
Tennessee 7 $ 7,599,033 1%
Texas 42 $ 74,152,207 6%
Utah 3 $ 3,747,457 0%
Virginia 3 $ 17,481,396 1%
Washington 2 $ 3,079,183 0%
West Virginia 3 $ 59,092,777 5%
Wisconsin 11 $ 26,713,790 2%
(2) The map described above is color coded, indicating the areas of
concentration of the Initial Pool Balance. California is coded as containing the
greatest concentration of properties (25%); Michigan, New York, North Carolina
and Texas are coded as containing the second largest concentration of properties
(5.1%-10%); Arizona, Hawaii, Minnesota, Wisconsin, Illinois, Indiana, Ohio,
Pennsylvania, Georgia, Florida and West Virginia contain the third largest
concentration of properties (1.1%-5%); the remaining states are coded as
containing less than, or equal to 1%.
(3) The inside cover also contains a pie-chart indicating Allocated
Loan Amount by Property Type. The Loan Amounts are described to be allocated as
follows: Retail
<PAGE>
(29%), Office (23%), Multifamily (19%), Hotel (12%), Industrial
(12%), Mobile Home Park (5%) and Healthcare (1%).
B. There are photographs of certain of the Mortgaged Properties
contained on the inside front cover as follows:
Land Apartments: Holland, MI. The photograph shows some of the three- and four
story units fronting the entrance way leading up to the apartment complex.
Morgantown Mall: Morgantown, WV. The photograph shows one of the entrances to
the mall as seen from the main parking lot.
5670 Wilshire Building: Los Angeles, CA. The photograph shows the high-rise
office building with frontage on Wilshire Blvd. The trademark "E" of E -
Entertainment can be seen at the top of the facade.
Eastland Mall: Charlotte, NC. The photographs show the mall as seen from the
parking areas. Next to the entrance, visible in one of the photos, is a sign for
one of the Mall's tenants - Dillard's. The other photo depicts the entrance to
one of the anchor tenants - Harris Teeter.
Shidler Portfolio-15551 Red Hill Avenue: Tustin, CA. The photograph shows one of
the entrances as seen from a lawn abutting the building. The inviting glass-type
facade is clearly visible in the picture.
Banyan Pool-Southlake Corporate Center: Morrow, GA. The photograph shows the
main entrance as seen from the parking lot. Foliage serves to partly shade the
exclusive facade.
Soho Grand Hotel: New York, NY. The photograph depicts the entrance at night,
well-lit and outlined with a brick and stucco facade.
Burgundy Properties-Pebblebrook II: Bloomington, MN. The photograph shows the
property from a distance, depicting the parking lot in front of the three-story
complex.
Airport Industrial: Honolulu, HI. The photograph is an aerial depiction of the
complex, framed by a highway on one side and the tarmac of the Honolulu airport
on the other.
Prime Retail-Lighthouse Place: Michigan City, IN. The photograph shows an aerial
view of the retail complex. Surrounded by parking lots, the complex is located
in close proximity to the harbor and marina.
There are photographs of certain of the Mortgaged Properties contained
on the inside back cover as follows:
Friendly Village: Greenwood, IN. The photograph shows the driveway leading up to
the development. Lots with houses and adjacent parking spaces are visible.
Monte Sano Apartments: Huntsville, AL. The photograph depicts the two-story
apartment buildings, with balconies visible through the foliage. An parking lot,
visible in the picture, provides parking for the tenants.
Grove Gate Apartments: Miami, FL. The photograph shows the five-story apartment
complex as seen from across the street. Clearly visible is the outside
stairwell, attached to the corner of the building.
-2-
<PAGE>
Rancho San Marcos Shopping Center: San Marcos, CA. The photograph is an aerial
depiction of the shopping center, showing the complex to be surrounded by access
roads. Visible adjacent to the complex are a recreation area and a golf course.
Nordhoff Industrial Complex: Chatsworth, CA. The photograph shows a portion of
the two-story industrial complex with panorama windows.
Hidden Harbour Apartments: Melbourne, FL. The photograph shows one of the
sections of the apartment complex. Two characteristic, pillared entrances are
visible in the picture.
Palm Desert Country Club Shopping Center: Palm Desert, CA. The photograph shows
parts of the shopping center and the parking lot serving the customers.
Plaza De La Fiesta: Huntington Park, CA. The photograph depicts the buildings
from across an adjacent street. Visible in the picture is a 24-hour grocery
store, occupying the first floor.
Playa Vista Plaza: Los Angeles, CA. The photograph offers a good view of the
glass facade of the commercial building.
1567-1575 Lexington Avenue: New York, NY. The photograph shows the building seen
from across the street. Six stories high, the building houses several commercial
establishments on the street level.
118-40 Metropolitan Avenue: Kew Gardens, NY. The photograph shows the building
from across the street. Visible in the picture are several individual
air-conditioning units servicing the apartments.
239 S. La Cienega: Beverly Hills, CA. The photograph shows the exclusive street
frontage of the upscale commercial building. Visible in the picture are the
decorated, set-back windows.
Belleville Manor MHP: Belleville, MI. The photograph shows an access road
leading to the several lots.
Bowen's Wharf: Newport, RI. The photograph shows a section of the retail
complex. Visible in the picture is a characteristic square, surrounded by retail
establishments.
Brookside Apartments: Tacoma, WA. The photograph shows one of the buildings,
containing several apartment units. Lawns and shrubbery separate the buildings.
Burnhaven Atrium Building: Burnsville, MN. The photograph shows the commercial
building as seen from the parking lot.
Braeburn Colony Apartments: Houston, TX. The photograph shows the buildings
containing apartments on two levels. Trees and shrubbery line the walkways
leading to the several units.
Carytown Square: Richmond, VA. The photograph shows the commercial building from
across the street. Located at the corner of two streets, the building houses
several retail stores on the street level.
Chelmsford Crossing: Chelmsford, MA. The photograph shows the building with a
portage, also functioning as a terrace.
Citibank Office Plaza: Schaumburg, IL. The photograph shows the five-story
office building, slightly set back from the street.
Greenwich Portfolio - 45 East Putnam Avenue: Greenwich, CT. The photograph shows
the two-story commercial building adjacent to a walkway laid with bricks.
-3-
<PAGE>
FOOTNOTES TO TABLE ON COVER OF PROSPECTUS SUPPLEMENT
(1) In addition to distributions of principal and interest, holders of certain
Classes of the Offered Certificates will be entitled to receive a portion of
the Prepayment Premiums received from the borrowers. See 'Description of the
Offered Certificates--Distributions' in this Prospectus Supplement.
(2) The Pass-Through Rates shown on the table above for the Class A-2, A-3, A-4
and A-5 Certificates are the rates for the Distribution Date occurring in
October 1998. The Pass-Through Rates for such Classes for each subsequent
Distribution Date will be calculated as provided in this Prospectus
Supplement. See 'Summary of Prospectus Supplement--Overview of the
Certificates--The Offered Certificates--Certificate Balances and
Pass-Through Rates' in this Prospectus Supplement.
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
Information about the Offered Certificates is contained in two separate
documents that progressively provide more detail: (a) the accompanying
prospectus dated September 2, 1998 (the 'Prospectus'), which provides general
information, some of which may not apply to the Offered Certificates; and (b)
this prospectus supplement dated September , 1998 (the 'Prospectus
Supplement'), which describes the specific terms of the Offered Certificates.
IF THE DESCRIPTIONS OF THE OFFERED CERTIFICATES VARY BETWEEN THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS, YOU SHOULD RELY ON THE
INFORMATION IN THIS PROSPECTUS SUPPLEMENT. Further, you should rely only on the
information contained in this Prospectus Supplement and the accompanying
Prospectus. The Depositor has not authorized anyone to provide you with
information that is different.
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.
Capitalized terms used in this Prospectus Supplement are defined under the
caption 'Index of Significant Definitions' beginning on page S-140 in this
Prospectus Supplement. Capitalized terms used in the Prospectus are defined
under the caption 'Index of Principal Definitions' beginning on page 88 in the
Prospectus.
------------------------
The Depositor has filed with the Securities and Exchange Commission (the
'Commission') a registration statement (of which this Prospectus Supplement
forms a part) under the Securities Act of 1933, as amended, with respect to the
Offered Certificates. This Prospectus Supplement and Prospectus do not contain
all of the information set forth in the registration statement. For further
information regarding the documents referred to in this Prospectus Supplement
and the accompanying Prospectus, you should refer to the registration statement
and the exhibits thereto. The registration statement and exhibits can be
inspected and copied at prescribed rates at the public reference facilities
maintained by the Commission at its Public Reference Section, 450 Fifth Street,
N.W., Washington D.C. 20549, and at its Regional Offices located at: Chicago
Regional Office, Citicorp Center, 500 West Madison Street, Chicago, Illinois
60661; and New York Regional Office, Seven World Trade Center, New York, New
York 10048.
------------------------
UNTIL 90 DAYS AFTER THE DATE OF THE PROSPECTUS SUPPLEMENT, ALL DEALERS THAT
BUY, SELL OR TRADE THE OFFERED CERTIFICATES, WHETHER OR NOT PARTICIPATING IN
THIS OFFERING, MAY BE REQUIRED TO DELIVER A PROSPECTUS SUPPLEMENT AND THE
ACCOMPANYING PROSPECTUS. THIS IS IN ADDITION TO THE DEALERS' OBLIGATION TO
DELIVER A PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS WHEN ACTING AS
UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
------------------------
The distribution of this Prospectus Supplement dated September , 1998 and
the Prospectus dated September 2, 1998, and the offer or sale of the Offered
Certificates may be restricted by law in certain jurisdictions. Persons into
whose possession this Prospectus Supplement and the Prospectus or any Offered
Certificates come must inform themselves about, and observe, any such
restrictions. In particular, there are restrictions on the distribution of this
Prospectus Supplement and the Prospectus and the offer or sale of the Offered
Certificates in the United Kingdom and Luxembourg. See 'Method of Distribution'
in this Prospectus Supplement.
The Depositor does not intend to register the Offered Certificates under
the Securities and Exchange Law of Japan (the 'SEL'). Accordingly, the Offered
Certificates may not be offered or sold directly or indirectly in Japan, and
this Prospectus
S-2
<PAGE>
Supplement and the Prospectus may not be distributed or circulated in Japan,
except in circumstances that do not constitute an offer to the public within the
meaning of the SEL.
------------------------
The Offered Certificates will be purchased by Nomura Securities
International, Inc., Morgan Stanley & Co. Incorporated and Merrill Lynch,
Pierce, Fenner & Smith Incorporated (the 'Underwriters') from the Depositor and
will be offered by the Underwriters from time to time in negotiated transactions
or otherwise at varying prices to be determined at the time of sale. Proceeds to
the Depositor from the sale of the Offered Certificates will be approximately
% of the initial aggregate principal balance thereof as of the date on which
the Certificates are issued, plus accrued interest from such date as described
herein before deducting expenses payable by the Depositor.
There is currently no secondary market for the Offered Certificates. As
described herein, the Underwriters currently expect to make a secondary market
in the Offered Certificates, but have no obligation to do so. There can be no
assurance that such a market will develop or, if it does develop, that it will
continue. See 'Method of Distribution' in this Prospectus Supplement.
The Offered Certificates are offered by the Underwriters subject to prior
sale, when, as and if issued, delivered to and accepted by the Underwriters. It
is expected that delivery of the Offered Certificates will be made through the
facilities of The Depository Trust Company in the United States and Cedel Bank,
Societe Anonyme and The Euroclear System in Europe, on or about September 24,
1998.
------------------------
If and to the extent required by applicable law or regulation, this
Prospectus Supplement and the Prospectus will be used by Nomura Securities
International, Inc. in connection with offers and sales related to market-making
transactions in the Offered Certificates with respect to which Nomura Securities
International, Inc. ('NSI') is a principal. NSI may also act as agent in such
transactions. Such sales will be made at negotiated prices determined at the
time of sale.
------------------------
NSI has made available an electronic version of this Prospectus Supplement
on the World Wide Web at 'HTTP://WWW.NOMURANY.COM.' The password for access to
such Web site is 'cmbs.' Certain statistical information included in this
Prospectus Supplement can be downloaded from such Web site.
S-3
<PAGE>
PROSPECTUS SUPPLEMENT
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Important Notice About Information Presented In This
Prospectus Supplement And The Accompanying
Prospectus........................................... S-2
Index of Tables........................................ S-6
Index of Annexes....................................... S-6
Executive Summary...................................... S-7
Summary of Prospectus Supplement....................... S-9
Relevant Parties....................................... S-9
Important Dates and Periods............................ S-10
Overview of the Certificates........................... S-11
The Certificates: Structural Summary................... S-16
The Mortgage Loans--Collateral Overview................ S-17
Risk Factors and Other Special Considerations.......... S-24
Risks Related to the Mortgage Loans.................... S-24
Risks Related to the Certificates...................... S-40
Description of the Mortgage Pool....................... S-42
General.............................................. S-42
Security for the Mortgage Loans...................... S-42
The Mortgage Loan Program--Underwriting Standards.... S-43
Special Notes........................................ S-44
Premium Loans........................................ S-45
Credit Lease Loans................................... S-46
Certain Terms and Conditions of the Mortgage Loans... S-48
Significant Mortgage Loans........................... S-53
The Prime Retail Pool Loan and Properties......... S-53
The Soho Grand Hotel Loan and Property............ S-56
The Morgantown Mall and Commons Retail Loan and
Properties...................................... S-57
The 5760 Wilshire Loan and Property............... S-59
The Shidler Industrial Portfolio Loan and
Properties...................................... S-60
The Eastland Mall Loan and Property............... S-62
The Accor Credit Loans and Properties............. S-64
Additional Mortgage Loan Information................. S-66
Changes in Mortgage Pool Characteristics............. S-75
Description of the Offered Certificates................ S-77
General.............................................. S-77
Distributions........................................ S-78
Realized Losses...................................... S-87
<CAPTION>
PAGE
-----
<S> <C>
Delinquency Reduction Amounts and Appraisal Reduction
Amounts........................................... S-88
Prepayment Interest Shortfalls....................... S-88
Subordination........................................ S-89
Appraisal Reductions................................. S-89
Delivery, Form and Denomination...................... S-90
Book-Entry Registration.............................. S-90
Definitive Certificates.............................. S-92
Transfer Restrictions................................ S-93
Prepayment and Yield Considerations.................... S-93
Yield................................................ S-93
Rated Final Distribution Date........................ S-95
Weighted Average Life of Offered Certificates........ S-95
The Pooling and Servicing Agreement.................... S-100
General.............................................. S-100
Assignment of the Mortgage Loans..................... S-100
Representations and Warranties; Repurchase........... S-100
Servicing of the Mortgage Loans; Collection of
Payments.......................................... S-109
Advances............................................. S-110
Accounts............................................. S-112
Withdrawals from the Collection Account.............. S-113
Enforcement of 'Due-on-Sale' and 'Due-on-Encumbrance'
Clauses........................................... S-114
Inspections.......................................... S-114
Insurance Policies................................... S-114
Evidence as to Compliance............................ S-116
Certain Matters Regarding the Depositor, the Servicer
and the Special Servicer.......................... S-116
Events of Default.................................... S-117
Rights Upon Event of Default......................... S-117
Amendment............................................ S-118
Voting Rights........................................ S-119
Realization Upon Mortgage Loans...................... S-119
Modifications........................................ S-122
Optional Termination................................. S-123
The Trustee.......................................... S-124
Duties of the Trustee................................ S-125
The Fiscal Agent..................................... S-125
Duties of the Fiscal Agent........................... S-125
The Luxembourg Paying Agent.......................... S-126
The Servicer......................................... S-126
</TABLE>
S-4
<PAGE>
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Servicing Compensation and Payment of Expenses....... S-126
Special Servicing.................................... S-127
The Operating Advisor Agreement...................... S-128
Servicer and Special Servicer Permitted to Buy
Certificates...................................... S-128
Reports to Certificateholders; Available
Information....................................... S-128
Servicer Reports.................................. S-129
Other Information................................. S-131
Certain Legal Aspects of Mortgage Loans for Mortgaged
Properties Located in California, New York, Texas,
North Carolina and Michigan.......................... S-131
California........................................... S-132
New York............................................. S-132
<CAPTION>
PAGE
-----
<S> <C>
Texas................................................ S-132
North Carolina....................................... S-132
Michigan............................................. S-133
Use of Proceeds........................................ S-133
Certain Federal Income Tax Consequences................ S-134
General.............................................. S-134
Certain ERISA Considerations........................... S-135
Legal Investment....................................... S-137
Method of Distribution................................. S-137
Legal Matters.......................................... S-138
Rating................................................. S-138
General Information.................................... S-138
Index of Significant Definitions....................... S-140
</TABLE>
S-5
<PAGE>
INDEX OF TABLES
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Executive Summary.................................... S-7
The Mortgage Loan Sellers............................ S-10
The Originators...................................... S-10
The Offered Certificates-Certificate Balances and
Pass-Through Rates................................. S-11
The Private Certificates-Certificate Balances and
Pass-Through Rates................................. S-12
Ratings.............................................. S-14
Subordination........................................ S-16
General Characteristics of the Mortgage Loans........ S-18
Reserves............................................. S-18
Cut-off Date Principal Balances...................... S-20
State Concentration.................................. S-20
Debt Service Coverage Ratio.......................... S-20
LTV Ratios........................................... S-21
Loans by Property Type............................... S-21
Maturity Date or Anticipated Repayment Date by
Year............................................... S-21
Security for the Mortgage Loans...................... S-22
Amortization Characteristics of the Notes............ S-23
Overview of Lock-out Periods......................... S-23
Cut-off Date Principal Balances and Concentration of
Mortgage Loans..................................... S-26
Cross-Collateralized Mortgage Loans.................. S-32
Mezzanine Debt....................................... S-33
Preferred Equity Investments......................... S-33
Weighted Average Remaining Term to Maturity for
Mortgage Loans Secured by Various Property Types... S-34
Amortization Characteristics of the Notes............ S-36
The Equity Loans..................................... S-38
Security for the Mortgage Loans...................... S-43
Premium Loans........................................ S-46
Credit Lease Loans................................... S-47
Amortization Characteristics of the Notes............ S-49
General Mortgage Loan Characteristics................ S-66
<CAPTION>
PAGE
-----
<S> <C>
Range of Debt Service Coverage Ratios................ S-70
Range of Loan-to-Value Ratios........................ S-70
Range of Loan-to-Value Ratios at Earlier of
Anticipated Repayment Date and Maturity............ S-70
Mortgaged Properties By State........................ S-71
Range of Years Built................................. S-72
Cut-off Date Principal Balance By Property Type...... S-73
Range of Cut-off Date Principal Balances............. S-74
Range of Anticipated Remaining Terms in Months....... S-74
Range of Remaining Terms in Months................... S-74
Anticipated Repayment By Year........................ S-75
Range of Mortgage Rates.............................. S-75
Range of Remaining Lock-out Periods in Months........ S-75
Percentage of Initial Certificate Balance Outstanding
at the Respective CPRs for Class A-1A
Certificates....................................... S-96
Percentage of Initial Certificate Balance Outstanding
at the Respective CPRs for Class A-1B
Certificates....................................... S-96
Percentage of Initial Certificate Balance Outstanding
at the Respective CPRs for Class A-1C
Certificates....................................... S-97
Percentage of Initial Certificate Balance Outstanding
at the Respective CPRs for Class A-2
Certificates....................................... S-97
Percentage of Initial Certificate Balance Outstanding
at the Respective CPRs for Class A-3
Certificates....................................... S-98
Percentage of Initial Certificate Balance Outstanding
at the Respective CPRs for Class A-4
Certificates....................................... S-98
Percentage of Initial Certificate Balance Outstanding
at the Respective CPRs for Class A-5
Certificates....................................... S-99
Allocation Table..................................... S-137
</TABLE>
INDEX OF ANNEXES
PAGE
----
Characteristics of the Notes.......................................... Annex A
Characteristics of the Mortgaged Properties........................... Annex B
Characteristics of the Premium Loans.................................. Annex C
Global Clearance, Settlement and Tax Documentation Procedure.......... Annex D
Weighted Average Net Mortgage Pass-Through Rates...................... Annex E
S-6
<PAGE>
EXECUTIVE SUMMARY
This Executive Summary highlights selected information regarding the
Offered Certificates. It does not contain all of the information you need to
consider in making your investment decision. TO UNDERSTAND ALL OF THE TERMS OF
THE OFFERING OF THE OFFERED CERTIFICATES AND THE UNDERLYING MORTGAGE LOANS, YOU
SHOULD READ THIS ENTIRE PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
CAREFULLY.
<TABLE>
<CAPTION>
Approx. Approx.
Percent of Credit CERTIFICATE SUMMARY
Total Support
<S> <C> <C> <C> <C> <C>
% % CLASS PS-1 CLASS A-1A $ (AAA/Aaa)
% % $ CLASS A-1B $ ( / )
% % (approx.) CLASS A-1C $ ( / )
% % (Notional) CLASS A-2 $ ( / )
% % ( / ) CLASS A-3 $ ( / )
% % CLASS A-4 $ ( / )
% % CLASS A-5 $ ( / )
% % CLASS B-1 $ ( / )
% % CLASS B-2 $ ( / )
% % CLASS B-3 $ ( / )
% % CLASS B-4 $ ( / )
% % CLASS B-5 $ ( / )
% % CLASS B-6 $ ( / )
% % CLASS B-7 AND $ unrated
CLASS B-7H (approx.
</TABLE>
__________ Offered Certificates
__________ Certificates Not Offered Hereby
Rating Agencies: (Fitch/Moody's)
S-7
<PAGE>
<TABLE>
<CAPTION>
WEIGHTED
INITIAL AGGREGATE APPROX. PASS-THROUGH AVG.
PRINCIPAL OR % OF RATE AS LIFE* PRINCIPAL
CLASS RATINGS NOTIONAL AMOUNT TOTAL DESCRIPTION OF CUT-OFF DATE (YRS) WINDOW*
Offered Certificates
<S> <C> <C> <C> <C> <C> <C> <C>
A-1A (---/---) $ % Fixed Rate %
A-1B (---/---) $ % Fixed Rate %
A-1C (---/---) $ % Fixed Rate %
A-2 (---/---) $ % Variable Rate %
A-3 (---/---) $ % Variable Rate %
A-4 (---/---) $ % Variable Rate %
A-5 (---/---) $ % Variable Rate %
</TABLE>
Non-Offered Private Certificates***
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
PS-1 (---/---) $ na Variable Rate IO % ** na
B-1 (---/---) $ % Fixed Rate %
B-2 (---/---) $ % Fixed Rate %
B-3 (---/---) $ % Fixed Rate %
B-4 (---/---) $ % Fixed Rate %
B-5 (---/---) $ % Fixed Rate %
B-6 (---/---) $ % Fixed Rate %
B-7 and Unrated $ % Fixed Rate %
B-7H
</TABLE>
Rating Agencies: (Fitch, Moody's)
* Based on 0% CPR, with all Mortgage Loans that have anticipated repayment
dates (as defined herein under 'Summary of the Prospectus
Supplement--Payment Terms' in this Prospectus Supplement) assumed to prepay
on such anticipated repayment dates. See 'Prepayment and Yield
Considerations' in this Prospectus Supplement.
** Calculated on a cash flow basis. Average life data is for illustrative
purposes only, as the Class PS-1 Certificates are not entitled to any
distributions of principal and do not have an average life.
*** Not offered by this Prospectus Supplement.
S-8
<PAGE>
SUMMARY OF PROSPECTUS SUPPLEMENT
This summary highlights selected information from this Prospectus
Supplement. It does not contain all of the information you need to consider in
making your investment decision. TO UNDERSTAND ALL OF THE TERMS OF THE OFFERING
OF THE OFFERED CERTIFICATES, YOU SHOULD READ THIS ENTIRE PROSPECTUS SUPPLEMENT
AND THE ACCOMPANYING PROSPECTUS CAREFULLY. Capitalized terms used and not
otherwise defined herein have the respective meanings assigned to them in this
Prospectus Supplement and the Prospectus. See 'Index of Significant Definitions'
in this Prospectus Supplement and 'Index of Principal Definitions' in the
Prospectus.
RELEVANT PARTIES
<TABLE>
<S> <C>
DEPOSITOR................................. CAPCO America Securitization Corp., a Delaware corporation and a subsidiary of The
Capital Company of America LLC ('CCA'). The Depositor is also affiliated with Nomura
Securities International, Inc. ('NSI'), one of the Underwriters. See 'The Depositor' in
the Prospectus.
SERVICER.................................. The Capital Company of America Client Services LLC (the 'CCA Servicer'), a Delaware
limited liability company and a wholly-owned subsidiary of CCA. The CCA Servicer will
service the Mortgage Loans (other than as described below). In the event either Rating
Agency does not assign an approved status to the CCA Servicer as of February 1999,
CRIIMI MAE (as defined below) will service the Mortgage Loans. The Servicer is also
affiliated with NSI. The CCA Servicer will service all of the Mortgage Loans other than
the Cinemark Credit Lease Loan, the Eastland Mall Retail Loan and the Lenox Twin Pines
Healthcare Loan (the 'Equity Loans'). With respect to the Equity Loans for as long as
an affiliate of the CCA Servicer holds an equity interest in the related borrowers,
CRIIMI MAE (as defined below) will act as both the Servicer and Special Servicer. The
CCA Servicer will service Mortgage Loans with preferred equity held by affiliates of
the CCA Servicer for as long as such affiliate of the CCA Servicer holds a preferred
equity interest in the related borrowers only pursuant to directions, with respect to
certain matters, from CRIIMI MAE given pursuant to an operating advisor agreement. For
purposes of this Prospectus Supplement, references to the 'Servicer' will mean the CCA
Servicer for all of the Mortgage Loans other than the Equity Loans. With respect to the
Equity Loans, references to the 'Servicer' will mean CRIIMI MAE.
See 'Risk Factors and Other Special Considerations--Risks Related to the
Certificates--Servicer or Special Servicer May Purchase Certificates; Conflict of
Interest' and 'The Pooling and Servicing Agreement--The Servicer' and '--The Operating
Advisor Agreement' in this Prospectus Supplement and 'Description of the
Agreements--Subservicers' in the Prospectus.
SPECIAL SERVICER.......................... CRIIMI MAE Services Limited Partnership ('CRIIMI MAE'), a Maryland limited partnership.
See 'Risk Factors and Other Special Considerations--Risks Related to the
Certificates--Servicer or Special Servicer May Purchase Certificates' and 'The Pooling
and Servicing Agreement--Special Servicing' in this Prospectus Supplement and
'Description of the Agreements--Subservicers' in the Prospectus.
TRUSTEE................................... LaSalle National Bank, a nationally chartered bank. See 'The Pooling and Servicing
Agreement--The Trustee' in this Prospectus Supplement.
FISCAL AGENT.............................. ABN AMRO Bank N.V. See 'The Pooling and Servicing Agreement--The Fiscal Agent' in this
Prospectus Supplement.
UNDERWRITERS.............................. NSI, Morgan Stanley & Co. Incorporated ('Morgan Stanley') and Merrill Lynch, Pierce,
Fenner & Smith Incorporated ('Merrill Lynch' and, collectively with NSI and Morgan
Stanley, the 'Underwriters'). NSI and Morgan Stanley will act as joint bookrunners and
co-lead managers with respect to the Offered Certificates. See 'Method of Distribution'
in this Prospectus Supplement.
</TABLE>
S-9
<PAGE>
<TABLE>
<S> <C>
LUXEMBOURG PAYING AGENT................... Banque Generale du Luxembourg, a Luxembourg banking corporation (the 'Luxembourg Paying
Agent').
THE MORTGAGE LOAN SELLERS................. CCA and Nomura Holding Trust ST I, a single purpose Delaware business trust,
wholly-owned by CCA (the 'Holding Trust,' and together with CCA, the 'Mortgage Loan
Sellers'). All of the Mortgage Loans were sold or contributed to the Depositor as shown
on the following table:
<CAPTION>
MORTGAGE % OF INITIAL NUMBER OF
LOAN SELLER POOL BALANCE(1) MORTGAGE LOANS
----------- --------------- --------------
<S> <C> <C> <C>
CCA....................................... 91% 176
Holding Trust............................. 9% 18
<CAPTION>
<S> <C>
--------------
(1) Based on the Cut-off Date Principal Balances of the related Mortgage Loans.
ORIGINATORS............................... CCA and Bloomfield Acceptance Company, LLC, a Michigan limited liability company
('Bloomfield,' and together with CCA, the 'Originators').
As of June 26, 1998, Nomura Asset Capital Corporation ('NACC'), a Delaware corporation
and an affiliate of CCA and NSI, transferred, among other things, its commercial
mortgage loan origination business to CCA. As of June 26, 1998, CCA began to originate
mortgage loans using the same loan origination personnel, underwriting procedures and
other personnel and procedures as had been used by NACC prior to that date. For
purposes of this Prospectus Supplement, references to CCA mean 'NACC' prior to June 26,
1998 and 'CCA' on and after June 26, 1998.
All of the Mortgage Loans were originated by CCA or Bloomfield, as shown in the
following table:
<CAPTION>
% OF INITIAL NUMBER OF
ORIGINATOR POOL BALANCE(1) MORTGAGE LOANS
------------------------------------------------------ --------------- --------------
<S> <C> <C> <C>
CCA................................................... 96% 186
Bloomfield............................................ 4% 8
<CAPTION>
<S> <C>
-----------
(1) Based on the Cut-off Date Principal Balances of the
related Mortgage Loans.
IMPORTANT DATES AND PERIODS
CUT-OFF DATE.............................. September 11, 1998.
CLOSING DATE.............................. On or about September 24, 1998.
DISTRIBUTION DATE......................... If the 11th day of the month is a Business Day, the Distribution Date will be the
fourth Business Day following the 11th day of the month; if the 11th day of the month
is not a Business Day, the Distribution Date will be the fifth Business Day following
the 11th day of the month. The first Distribution Date will be October 16, 1998.
RECORD DATE............................... The close of business on the 10th day of the month in which the Distribution Date
occurs. If such 10th day is not a Business Day, the Record Date will be the preceding
Business Day.
INTEREST ACCRUAL PERIOD................... The 11th day of the month preceding the month in which the Distribution Date occurs
through the 10th day of the month in which the Distribution Date occurs. The Interest
Accrual Period for the Distribution Date occurring on October 16, 1998 is assumed to
consist of 30 days. Each other Interest Accrual Period is assumed to consist of 30
days.
</TABLE>
S-10
<PAGE>
<TABLE>
<S> <C>
SCHEDULED FINAL DISTRIBUTION DATE......... September 15, 2028.
RATED FINAL DISTRIBUTION DATE............. September 16, 2030.
COLLECTION PERIOD......................... With respect to a Distribution Date, the period beginning on the day after the
expiration of the preceding Collection Period (generally the 12th day of the month
preceding such Distribution Date), and ending at the close of business on the 11th day
in the month in which such Distribution Date occurs (or, if such day is not a Business
Day, the following Business Day). The first Collection Period begins the day after the
Cut-off Date.
DUE DATE.................................. Except with respect to the Accor Credit Lease Loans, each of which has a Due Date on
the 1st of the month, the Due Date is the 11th day of the month in which the
Distribution Date occurs (or in the case of certain of the Mortgage Loans, if such 1st
day or 11th day is not a Business Day, either the next Business Day or the first
preceding Business Day).
OVERVIEW OF THE CERTIFICATES
THE OFFERED CERTIFICATES;
CERTIFICATE BALANCES AND
PASS-THROUGH RATES...................... The Depositor is offering the following 7 Classes of Commercial Mortgage Pass-Through
Certificates (collectively, the 'Offered Certificates') to you as part of Series
1998-D7. Each Class of Offered Certificates will have the approximate aggregate initial
principal amount or notional amount as set forth below, subject to a variance of plus
or minus 5%, and will accrue interest at an annual rate (the 'Pass-Through Rate') as
set forth below:
<CAPTION>
APPROXIMATE INITIAL CERTIFICATE PASS-THROUGH
CLASS BALANCE RATE
----- ------------------------------- ------------
<S> <C> <C> <C>
Class A-1A.............................. $ %
Class A-1B.............................. $ %
Class A-1C.............................. $ %
Class A-2............................... $ %(1)
Class A-3............................... $ %(1)
Class A-4............................... $ %(1)
Class A-5............................... $ %(1)
<CAPTION>
<S> <C>
-----------
(1) The Pass-Through Rates shown for the Class A-2, Class A-3, Class A-4 and Class A-5
Certificates are the rates for the Distribution Date occurring in October 1998.
The Pass-Through Rates for such Classes for each subsequent Distribution Date will
be calculated as provided in this Prospectus Supplement under 'Description of the
Offered Certificates--Distributions.'
THE PRIVATE CERTIFICATES--
CERTIFICATE BALANCES AND
PASS-THROUGH RATES...................... In addition to the Offered Certificates, the Commercial Mortgage Pass-Through
Certificates Series 1998-D7 will also consist of the following 13 Classes of
Certificates (collectively, the 'Private Certificates'). None of the Private
Certificates is being offered to you by this Prospectus Supplement. The Private
Certificates will have the approximate aggregate initial principal or notional amounts
set forth below, subject to a variance of plus or minus 5%, and will accrue interest at
</TABLE>
S-11
<PAGE>
<TABLE>
<CAPTION>
the Pass-Through Rates as set forth below.
APPROXIMATE INITIAL CERTIFICATE PASS-THROUGH
CLASS OR NOTIONAL BALANCE RATE
----- ------------------------------- ------------
<S> <C> <C> <C>
Class PS-1........................... $ (1) %(2)
Class B-1............................ $ %
Class B-2............................ $ %
Class B-3............................ $ %
Class B-4............................ $ %
Class B-5............................ $ %
Class B-6............................ $ %
Class B-7............................ $ %
Class B-7H........................... $ %
Class V-1............................ (3) (3)
Class V2............................. (3) (3)
Class R.............................. (3) (3)
Class LR............................. (3) (3)
<CAPTION>
<S> <C>
-------------
(1) The notional balance of the Class PS-1 Certificates with respect to the initial
Distribution Date is equal to the aggregate Stated Principal Balance of the
Mortgage Loans as of the Cut-off Date. With respect to any subsequent Distribution
Date, the notional balance of the Class PS-1 Certificates will be equal to the
aggregate Stated Principal Balance of the Mortgage Loans as of the first day of the
related Interest Accrual Period.
(2) The Pass-Through Rate for the Class PS-1 Certificates is the rate for the
Distribution Date occurring in October 1998. The Pass-Through Rate for such
Class for each subsequent Distribution Date will be determined pursuant to
a formula described under 'Description of the Offered Certificates--
Distributions,' and will generally be a function of the excess of the weighted
average of the interest rates on the Mortgage Loans (net of certain fees and other
amounts as described herein) over the weighted average of the Pass-Through Rates
on the other Classes of Certificates that have Pass-Through Rates.
(3) The Class V-1, Class V-2, Class R and Class LR Certificates will not have a
certificate balance or a notional balance or a Pass-Through Rate.
DENOMINATIONS............................. The Offered Certificates will be issuable in registered form, in minimum denominations
of certificate balance of $50,000 and multiples of $1 in excess thereof.
CLEARANCE AND SETTLEMENT.................. You may elect to hold your Certificates through either The Depository Trust Company
('DTC') (in the United States) or Cedel Bank, Societe Anonyme ('Cedel') or The
Euroclear System ('Euroclear') (in Europe). Transfers within DTC, Cedel or Euroclear,
as the case may be, will be in accordance with the usual rules and operating procedures
of the relevant system. Crossmarket transfers between persons holding directly or
indirectly through DTC, on the one hand, and counterparties holding directly or
indirectly through Cedel or Euroclear, on the other, will be effected in DTC through
the relevant Depositaries of Cedel or Euroclear. The Depositor may elect to terminate
the book-entry system through DTC with respect to all or any portion of any Class of
the Offered Certificates.
See 'Description of the Offered Certificates--Delivery, Form and Denomination,'
'--Book-Entry Registration' and '--Definitive Certificates' in this Prospectus
Supplement and 'Description of the Certificates--Book-Entry Registration' and
'--Definitive Certificates' in the Prospectus.
LISTING................................... The Depositor has applied to list the Class A-1A, Class A-1B, Class A-1C and Class A-2
Certificates on the Luxembourg Stock Exchange. Such application may not be approved as
to one or more of such Classes.
</TABLE>
S-12
<PAGE>
<TABLE>
<S> <C>
OPTIONAL TERMINATION...................... The Trust Fund may be terminated when less than 1% of the Initial Pool Balance is
outstanding. See 'The Pooling and Servicing Agreement--Optional Termination' in this
Prospectus Supplement.
FEDERAL TAX STATUS........................ Elections will be made to treat designated portions of the Trust Fund, exclusive of the
Excess Interest (as defined herein) and the Default Interest (as defined herein), as
two separate 'real estate mortgage investment conduits' (each, a 'REMIC'). The REMICs
are referred to as the 'Lower-Tier REMIC,' which holds the Mortgage Loans and the
Mortgaged Properties, and the 'Upper-Tier REMIC,' which holds interests in the
Lower-Tier REMIC. The Offered Certificates will be 'regular interests' in the
Upper-Tier REMIC. The Class R Certificate will be the residual interest in the
Upper-Tier REMIC, and the Class LR Certificate will be treated the residual interest in
the Lower-Tier REMIC. The Offered Certificates will be treated as newly originated debt
instruments for federal income tax purposes. You will be required to report income
thereon in accordance with the accrual method of accounting even if you are otherwise
on the cash method. It is anticipated that the Class A-1A, Class A-1B, Class A-1C,
Class A-2, Class A-3, Class A-4 and Class A-5 Certificates will not be issued with
original issue discount for federal income tax purposes.
For a complete discussion of tax issues and consequences as they relate to the Offered
Certificates, see 'Certain Federal Income Tax Consequences' in this Prospectus
Supplement and 'Federal Income Tax Consequences--Federal Income Tax Consequences for
REMIC Certificates' in the Prospectus.
It is anticipated that any Prepayment Premiums allocable to the Offered Certificates
will be ordinary income to you, as a Certificateholder, as such amounts become due to
the Trust Fund. See 'Description of the Offered Certificates--Distributions' in this
Prospectus Supplement.
ERISA..................................... The Underwriters believe that the following Certificates will be ERISA Eligible:
o Class A-1A
o Class A-1B
o Class A-1C
o Class PS-1
See 'Certain ERISA Considerations' and 'Description of the Offered Certificates--
Transfer Restrictions' in this Prospectus Supplement and 'ERISA Considerations' in the
Prospectus.
SMMEA..................................... The Underwriters believe that the following Certificates will constitute 'mortgage
related securities' pursuant to the Secondary Mortgage Market Enhancement Act of 1984,
as amended ('SMMEA'):
o Class A-1A
o Class A-1B
o Class A-1C
o Class PS-1
o Class A-2
See 'Legal Investment' in this Prospectus Supplement.
</TABLE>
S-13
<PAGE>
<TABLE>
<S> <C>
REPORTS TO CERTIFICATEHOLDERS............. On each Distribution Date, the following reports will be available to you from the
Trustee upon request:
o Distribution Date Statement
o Comparative Financial Status Report
o Delinquent Loan Status Report
o Historical Loan Modification Report
o Historical Loss Estimate Report
o REO Status Report
o Watch List
The Distribution Date Statement is fully described in this Prospectus Supplement under
'The Pooling and Servicing Agreement--Reports to Certificateholders; Available
Information--Trustee Reports.' The other reports listed above are more fully described
in this Prospectus Supplement under 'The Pooling and Servicing Agreement--Reports to
Certificateholders; Available Information--Servicer Reports.' A form of each report
listed above will be included as an exhibit to the Pooling and Servicing Agreement, a
copy of which will be filed on Form 8-K ('Form 8-K') with the Securities and Exchange
Commission ('SEC') within 15 days after the initial issuance of the Offered
Certificates. Such Form 8-K is available to you from the SEC. In addition, in the event
Mortgage Loans are removed from the Mortgage Pool prior to the Closing Date, such
information will be contained in the Form 8-K.
You may review a loan-by-loan listing electronically in the form of the standard CSSA
loan file and CSSA property file or may request from the Trustee or the Luxembourg
Paying Agent a written copy of such report. The form of the standard CSSA loan and
property file is attached as an exhibit to the Pooling and Servicing Agreement.
Upon reasonable prior notice, you will also be permitted to review at the Trustee's
offices during normal business hours a variety of information concerning each Mortgaged
Property, including operating statements, rent rolls, retail sales information and
inspection reports, as well as all modifications, waivers and amendments of the terms
of any of the Mortgage Loans.
See 'The Pooling and Servicing Agreement--Reports to Certificateholders; Available
Information--Other Information' in this Prospectus Supplement.
DEAL INFORMATION/ANALYTICS................ Certain information concerning the Mortgage Loans and the Offered Certificates will be
available from the following services:
o Bloomberg, L.P.
o Intex Solutions, Inc.
o Charter Research Corporation (www.cmbs.com)
o Wall Street Analytics, Inc.
o the Trepp Group
o the Trustee's website at www.lnbabs.com.
RATINGS................................... It is a condition to the issuance of the Offered Certificates that the Offered
Certificates be rated as follows:
<CAPTION>
CLASS FITCH RATING/MOODY'S RATING
----- ---------------------------
<S> <C> <C>
A-1A......................................
A-1B......................................
A-1C......................................
A-2.......................................
A-3.......................................
A-4.......................................
A-5.......................................
</TABLE>
S-14
<PAGE>
<TABLE>
<S> <C>
The Rating Agencies' ratings of the Offered Certificates address the likelihood of the
timely payment of interest and the ultimate repayment of principal by the Rated Final
Distribution Date. A security rating does not address the frequency of prepayments
(either voluntary or involuntary) or the possibility that Certificateholders might
suffer a lower than anticipated yield, nor does a security rating address the
likelihood of receipt of Prepayment Premiums, Net Default Interest or Excess Interest.
For a description of the limitations of the ratings of the Offered Certificates, see
'Rating' in the Prospectus Supplement.
A security rating is not a recommendation to buy, sell or hold securities and may be
subject to revision or withdrawal at any time by the assigning rating organization. Any
such revision, if negative, or withdrawal of a rating could have a material adverse
effect on the affected Class of Certificates. See 'Risk Factors and Other Special
Considerations' and 'Rating' in this Prospectus Supplement and 'Yield Considerations'
in the Prospectus.
</TABLE>
S-15
<PAGE>
THE CERTIFICATES: STRUCTURAL SUMMARY
<TABLE>
<S> <C>
INTEREST PAYMENTS......................... A description of each Class's interest entitlement can be found in 'Description of the
Offered Certificates--Distributions' in this Prospectus Supplement. As described in
such section, there are circumstances relating to the timing of prepayments on the
Mortgage Loans in which your interest entitlement for a distribution date could be less
than one full month's interest at the Pass-Through Rate on your Certificate's principal
amount or notional amount.
PRINCIPAL PAYMENTS........................ The amount of principal required to be distributed to the Classes entitled to principal
on a particular distribution date also can be found in 'Description of the Offered
Certificates--Distributions' in this Prospectus Supplement.
SUBORDINATION.............................
A. GENERAL.............................. The chart below describes the general manner in which the rights of various Classes of
Certificates will be senior to the rights of other Classes of Certificates. The
priority of entitlement of the various Classes of Certificates to receive principal and
interest on any distribution date is depicted in descending order. The manner in which
Mortgage Loan losses are allocated to the various Classes of Certificates is depicted
in ascending order.
[INSERT G:\17489\CHART1.PPT]
NO OTHER FORM OF CREDIT ENHANCEMENT WILL BE AVAILABLE FOR THE BENEFIT OF THE HOLDERS OF
THE OFFERED CERTIFICATES.
See 'Description of the Offered Certificates' in this Prospectus Supplement.
</TABLE>
S-16
<PAGE>
<TABLE>
<S> <C>
B. SHORTFALLS IN AVAILABLE FUNDS........ The following types of shortfalls in available funds will be allocated in the same
fashion as Mortgage Loan losses:
(i) shortfalls resulting from special servicing compensation;
(ii) shortfalls resulting from interest on P&I Advances made by the Servicer, the
Trustee or the Fiscal Agent (to the extent not covered by default interest paid by
a borrower);
(iii) shortfalls resulting from extraordinary expenses of the Trust; and
(iv) shortfalls resulting from a reduction of a mortgage loan's interest rate by a
bankruptcy court; or
(v) from other unanticipated or default-related expenses of the Trust.
Shortfalls in Mortgage Loan interest as a result of the timing of prepayments (net of
the Servicer's servicing fee payable on the related Distribution Date) will be
allocated to each Class of Certificates, pro rata, based upon their respective interest
entitlements.
See 'Description of the Offered Certificates--Distributions--Payment Priorities' in
this Prospectus Supplement.
P&I ADVANCES.............................. In general, the Servicer is required to make advances (each such amount, a 'P&I
Advance') for delinquent Monthly Payments on the Mortgage Loans. If the Servicer fails
to make such advance, the Trustee will be required to make the advance. If both the
Servicer and the Trustee fail to make the advance, the Fiscal Agent will be required to
make the advance. In each case, the applicable entity will be required to make an
Advance only if it determines that such Advance will be recoverable from the proceeds
of the related Mortgage Loan.
See 'The Pooling and Servicing Agreement--Advances' in this Prospectus Supplement.
APPRAISAL REDUCTIONS...................... Certain adverse events affecting a Mortgage Loan, called 'Appraisal Reduction Events,'
will require the Special Servicer to obtain a new appraisal on the related Mortgaged
Property. Based on the new appraised value, it may be necessary to calculate an
'Appraisal Reduction Amount.' The amount otherwise required to be advanced in respect
of a Mortgage Loan that has been subject to an Appraisal Reduction Event will be
reduced in the same proportion that the Appraisal Reduction Amount bears to the
principal balance of such Mortgage Loan. Due to the payment priorities, this will
reduce the funds available to pay interest on the most subordinate Class or Classes
then outstanding. See 'Description of the Offered Certificates-- Appraisal Reductions'
in this Prospectus Supplement.
<CAPTION>
THE MORTGAGE LOANS--COLLATERAL OVERVIEW
<S> <C>
THE MORTGAGE POOL......................... For a more complete description of the Mortgage Loans and the Notes, see the following
sections in this Prospectus Supplement:
o Description of the Mortgage Pool;
o Annex A (characteristics of each Mortgage Loan);
o Annex B (characteristics of each Mortgage Loan on a property-by-property basis); and
o Annex C (characteristics of the Premium Loans).
</TABLE>
S-17
<PAGE>
<TABLE>
<S> <C> <C>
A. GENERAL CHARACTERISTICS(2)........... Initial Pool Balance(2)............................................. $1,290,188,356
Number of Mortgage Loans............................................ 194
% of Pool Balance for Largest Mortgage Loan......................... 6%
Number of Mortgaged Properties...................................... 366
Number of Notes..................................................... 202
Average Mortgage Loan Balance....................................... $6,650,455
Number of Premium Loans............................................. 44
% of Premium Loans.................................................. 43%
Number of Credit Lease Loans........................................ 24
% of Credit Lease Loans............................................. 11%
Weighted Average Mortgage Rate...................................... 7.775%
Weighted Average Remaining Term to the Earlier of Maturity or
Anticipated Repayment Date........................................ 119 Mos.
Weighted Average % of Premium Amount................................ 104%
Weighted Average DSCR (3) (6)....................................... 1.42
Weighted Average LTV at Cut-off Date (6)............................ 70%
Weighted Average PTV at Cut-off Date (4) (6)........................ 72%
Weighted Average LTV/PTV on Anticipated Repayment Date.............. 54%
Number of ARD Notes (5)............................................. 176
% of ARD Notes (5).................................................. 88%
Number of Fully Amortizing Notes (other than ARD Notes)............. 26
% of Fully Amortizing Notes (other than ARD Notes).................. 12%
<CAPTION>
<S> <C>
------------------------
(1) Based on the Cut-off Date Principal Balance of the related Mortgage Loan or Loans.
(2) Subject to a permitted variance of plus or minus 5%.
(3) Debt Service Coverage Ratio ('DSCR') for any Mortgage Loan is equal to the Net Cash
Flow from the related Mortgaged Property divided by the Annual Debt Service for such
Mortgaged Property (as such terms are defined under 'Description of the Mortgage
Pool--Additional Mortgage Loan Information').
(4) Proceeds-to-value ratio ('PTV') for any Mortgage Loan is equal to the total amount
of such Mortgage Loan as of the Cut-off Date, plus any remaining unamortized
Premium as of the Cut-off Date, divided by the Appraised Value of the related
Mortgaged Property. See 'Description of the Mortgage Pool-- The Mortgage Loan
Program--Underwriting Standards--Premium Loans' in this Prospectus Supplement.
(5) 'ARD Notes' are Notes issued under ARD Loans that substantially fully amortize by
their respective maturity dates but provide for an 'Anticipated Repayment Date' on
which a substantial amount of principal will be due if the borrower elects to
prepay the Mortgage Loan in full on such date. See 'Description of the Mortgage
Pool-Certain Terms and Conditions of the Mortgage Loans' in this Prospectus
Supplement.
(6) Credit Lease Loans are excluded from calculation.
B. RESERVES(1).......................... Capital Replacement and Furniture, Fixture and Equipment ('FF+E') Reserves. A licensed
engineer inspected each Mortgaged Property (other than certain of the Credit Lease
Properties) and such engineer estimated the annual amount that will be required to
maintain such Mortgaged Property on an on-going basis. Based on the engineer's
estimate, the Originators deducted from Underwritten NOI an amount equal to or greater
than the amount suggested by the engineer. In addition, to cover such costs, the
Originators generally required the related borrower to fund capital replacement or FF&E
reserves on a monthly basis. Such reserves can be drawn on by the respective borrowers
to reimburse themselves for the cost of such maintenance.
<CAPTION>
WEIGHTED
AVERAGE WEIGHTED WEIGHTED
ENGINEER AVERAGE AVERAGE
SUGGESTED UNDERWRITTEN REQUIRED ON-
PROPERTY TYPE RESERVE RESERVE GOING RESERVE
------------------- ------------ ------------- -------------
<S> <C> <C> <C> <C>
Retail............. $ 0.13/psf(2) $ 0.17/psf $ 0.17/psf
Industrial......... $ 0.09/psf $ 0.16/psf $ 0.16/psf
</TABLE>
S-18
<PAGE>
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE WEIGHTED WEIGHTED
ENGINEER AVERAGE AVERAGE
SUGGESTED UNDERWRITTEN REQUIRED ON-
PROPERTY TYPE RESERVE RESERVE GOING RESERVE
------------------- ------------ ------------- -------------
<S> <C> <C> <C> <C>
Office............. $ 0.17/psf $ 0.22/psf $ 0.22/psf
Hotel.............. NA(3) 5% of Rev. 5% of Rev.(4)
Healthcare......... $ 182/bed $ 329/bed $ 329/bed
Mobile Home Park... $ 21/pad $ 20/pad $ 20/pad
Multifamily........ $ 198/unit $ 252/unit $ 252/unit
<CAPTION>
<S> <C>
------------------------
(1) Discussions and calculations exclude Credit Lease Loans.
(2) psf = per square foot
(3) The reserves suggested by the engineers are not based on % of
revenues and are thus inapplicable here.
(4) Rev = Revenue
Deferred Maintenance Reserves. An engineer also estimated the amount required to
correct any deferred maintenance for each Mortgaged Property. The Originator required
the related borrower to post reserves of 100% to 125% of the engineer's recommended
amount. In total, the engineer recommended reserves of approximately $6,300,000 and the
Originators required approximately $7,800,000 to be reserved (approximately 123% of the
recommended amounts, on a weighted average basis).
Tenant Improvement and Leasing Commission Reserves. The Originator required reserves
for tenant improvement and leasing commissions on Retail Properties, Office Properties
and Industrial Properties. Such reserves were either reserved at closing, required on
an on-going basis or are required at some point in the future to help mitigate a
significant tenant rollover concentration. The reserves are in the form of cash or
letters of credit from investment grade entities.
Real Estate Tax Reserves. Approximately 99% of the Mortgage Loans (based on Initial
Pool Balance) require reserves for real estate taxes.
Insurance Reserves. Approximately 99% of the Mortgage Loans (based on Initial Pool
Balance) require reserves for insurance.
C. LOCK BOXES........................... 62% of the Mortgage Loans, based on Initial Pool Balance, have hard lock boxes. 8% of
the Mortgage Loans, based on Initial Pool Balance, have soft lock boxes. A 'hard lock
box' is one under which the tenants at a Mortgaged Property deposit rents directly into
a Lock Box Account. A 'soft lock box' is one under which the borrower or property
manager at a Mortgaged Property receives rents from tenants and then deposits such
rents into a Lock Box Account. See 'The Pooling and Servicing Agreement--Accounts--Lock
Box Accounts' in this Prospectus Supplement.
D. INFORMATION CONCERNING THE TABLES
BELOW................................... o All percentages of Initial Pool Balance are based upon the Cut-off Date Principal
Balances of the related Mortgage Loans or, with respect to Mortgage Loans secured by
more than one Mortgaged Property (each, a 'Pool Loan'), the Allocated Loan Amount of
the related Mortgaged Property.
o All weighted average information regarding the Mortgage Loans reflects weighting of
the Mortgage Loans by their Cut-off Date Principal Balances or, with respect to Pool
Loans, Allocated Loan Amounts.
o The 23 Credit Lease Loans and the 2 Special Notes (as defined in this Prospectus
Supplement under '--Description of the Mortgage Pool--The Mortgage Loan
Program--Underwriting Standards' in this Prospectus Supplement) were excluded from
the calculation of Weighted Average LTV and Weighted Average DSCR. The Credit Lease
Loans were excluded from the calculation of Weighted Average LTV.
</TABLE>
S-19
<PAGE>
<TABLE>
<S> <C>
o The 'Cut-off Date Principal Balance' of each Mortgage Loan is equal to the unpaid
principal balance thereof as of the Cut-off Date, after application of all payments
of principal due on or before such date, whether or not received.
o All numerical information provided herein with respect to the Mortgage Loans is
provided on an approximate basis.
o Certain statistical information set forth herein may change prior to the date of
issuance of the Certificates due to changes in the composition of the Mortgage Pool
prior to the Closing Date.
See 'Description of the Mortgage Pool--Changes in Mortgage Pool Characteristics' in
this Prospectus Supplement.
E. CUT-OFF DATE PRINCIPAL
BALANCES................................
<CAPTION>
NUMBER OF
RANGE OF CUT-OFF DATE % OF INITIAL MORTGAGE
PRINCIPAL BALANCES POOL BALANCE LOANS
----------------------------- ------------ ----------
<S> <C> <C> <C>
less than $2,500,000......... 8% 74
$2,500,000-4,999,999......... 14% 49
$5,000,000-7,499,999......... 12% 25
$7,500,000-9,999,999......... 15% 22
$10,000,000-19,999,999....... 16% 15
$20,000,000-39,999,999....... 8% 3
$45,000,000-59,999,999....... 16% 4
$60,000,000-82,500,000....... 11% 2
<CAPTION>
F. STATE CONCENTRATION..................
NUMBER OF
% OF INITIAL MORTGAGED
STATE POOL BALANCE PROPERTIES
----------------------------- ------------ ----------
<S> <C> <C> <C>
California................... 25% 69
New York..................... 10% 20
Texas........................ 6% 42
North Carolina............... 6% 11
Michigan..................... 6% 20
<CAPTION>
G. DEBT SERVICE COVERAGE RATIOS.........
CUT-OFF DATE NUMBER OF
DEBT SERVICE % OF INITIAL MORTGAGE
COVERAGE RATIO(1) POOL BALANCE LOANS
----------------------------- ------------ ----------
<S> <C> <C> <C>
1.0-1.099(2)................. 11% 24
1.1-1.199.................... 6% 4
1.2-1.299.................... 25% 45
1.3-1.399.................... 23% 32
1.4-1.499.................... 6% 25
1.5-1.599.................... 13% 23
1.6-1.699.................... 5% 16
1.7-1.799.................... 4% 10
1.8-1.899.................... 5% 5
1.9-1.999.................... 1% 4
2.0-2.099.................... 1% 4
2.1-2.199.................... less than 1% 1
greater than 2.2............. less than 1% 1
<CAPTION>
<S> <C>
------------------------
(1) The debt service coverage ratio ('DSCR') for any Mortgage
Loan is equal to the Net Cash Flow from the related Mortgaged
Property or Properties divided by the Annual Debt Service
for such Mortgage Loan (as such terms are defined in this
Prospectus Supplement under 'Description of the Mortgage
Pool-Additional Mortgage Loan Information').
(2) Comprising 24 Credit Lease Loans.
</TABLE>
S-20
<PAGE>
<TABLE>
<CAPTION>
H. LTV RATIOS.............................
NUMBER OF
RANGE OF LOAN-TO-VALUE % OF INITIAL MORTGAGE
RATIOS(1) POOL BALANCE LOANS
----------------------------- ------------ ----------
<S> <C> <C> <C>
less than 40%................ 0% 2
40%-49.99%................... 3% 10
50%-59.99%................... 17% 15
60%-69.99%................... 17% 47
70%-74.99%................... 47% 88
80%-89.99%................... 6% 10
90%-99.99%(2)................ 8% 20
100%-109.99%(2).............. 1% 1
greater than 110%(2)......... 1% 1
<CAPTION>
<S> <C>
------------------
(1) The 'Loan-to-Value Ratio' for any Mortgage Loan is
determined as set forth in 'Description of the Mortgage
Pool--Additional Mortgage Loan Information' in this
Prospectus Supplement.
(2) Comprising Credit Lease Loans.
<CAPTION>
I. MORTGAGE LOANS BY PROPERTY TYPE........
NUMBER OF
% OF INITIAL MORTGAGED
PROPERTY TYPE POOL BALANCE PROPERTIES
----------------------------- ------------ ----------
<S> <C> <C> <C>
Retail ..................... 29% 58
Office....................... 23% 61
Multifamily.................. 19% 68
Hotel........................ 12% 122
Industrial................... 12% 31
Mobile Home.................. 5% 23
Healthcare................... 1% 3
<CAPTION>
<S> <C>
(1) Credit Lease Loans are included within the appropriate
property type.
(2) Includes movie theaters and factory outlet center
properties.
<CAPTION>
J. MATURITY DATE OR ANTICIPATED REPAYMENT
DATE BY YEAR............................
% OF INITIAL NUMBER OF
YEAR(1) POOL BALANCE NOTES
----------------------------- ------------ ----------
<S> <C> <C> <C>
2001......................... 0% 1
2005......................... less than 1% 1
2007......................... 2% 5
2008......................... 97% 192
2009......................... 1% 3
<CAPTION>
<S> <C>
(1) For any Note, the year shown is the related Maturity Date
or, if the Note is an ARD Note, the year in which the related
Anticipated Repayment Date occurs.
K. DELINQUENCY STATUS AS OF THE
CUT-OFF DATE............................ There have been no delinquencies of 30 days or more as of the Cut-off Date.
</TABLE>
S-21
<PAGE>
<TABLE>
<S> <C>
SECURITY FOR THE MORTGAGE LOANS........... Each Mortgage Loan is secured by one or more first priority mortgages, deeds of trust
or other similar security instruments on the borrower's fee or leasehold interest (as
set forth below) in the Mortgaged Property.
<CAPTION>
% OF INITIAL NUMBER OF
POOL MORTGAGED
INTEREST OF BORROWER BALANCE(1) PROPERTIES
-------------------- ------------ ----------
<S> <C> <C> <C>
Fee Simple Estate(2)......... 95% 360
Leasehold Estate(3).......... 5% 6
<CAPTION>
<S> <C>
------------------
(1) Based on the Cut-off Date Principal Balance of the
Mortgage Loan or, for any Pool Loan, the Allocated Loan
Amount of the related Mortgaged Property as of the
Cut-off Date.
(2) For any Mortgaged Property that is subject to a ground
lease where the ground lessee and ground lessor are both
parties to the Mortgage, the Mortgaged Property is
categorized as a fee simple estate.
(3) Includes any Mortgaged Property where a material portion
of such property is subject to a ground lease and the ground
lessor is not a party to the Mortgage.
CREDIT LEASE LOANS........................ 24 of the Mortgage Loans, which represent 11% of the Initial Pool Balance, are Credit
Lease Loans. Each of the Credit Lease Loans is a portion of a larger loan (each such
larger loan, the 'Total Credit Lease Loan') consisting of two notes originated by CCA,
one of which is being deposited in this Trust Fund. The Total Credit Lease Loans have
been split to reduce exposure to a single Credit Tenant or guarantor in this
securitization. The Note deposited into the Mortgage Pool has an amortization schedule
that fully amortizes the principal balance of such Note within 120 months of the
Cut-off Date, while each of the pari passu Other Notes (not in this Mortgage Pool)
receives interest only for the first 120 months from the Cut-off Date followed by
amortization after the related Note in this Mortgage Pool is paid in full. See
'Description of the Mortgage Loans--Credit Lease Loans' in this Preopectus Supplement.
See also 'Risk Factors and Other Special Considerations--Risks Related to the Mortgage
Loans--Credit Lease Loans Have Special Risks,' '--Reliance on Credit Quality of Credit
Tenants and Guarantors Have Special Risks' and '--Servicing Split Notes' in this
Prospectus Supplement.
PREMIUM LOANS............................. 44 of the Mortgage Loans, which represent 43% of the Initial Pool Balance, are Premium
Loans. See 'Risk Factors and Other Special Considerations--Risks Relating to
Enforceability of Premium Loans,' 'Description of the Mortgage Loans-- Premium Loans'
and Annex C in this Prospectus Supplement.
PAYMENT TERMS............................. All of the Mortgage Loans provide for monthly scheduled payments of principal and
interest ('Monthly Payments'). Each Mortgage Loan accrues interest at the annual rate
set forth on Annex A (the 'Mortgage Rate'). The Mortgage Rate is fixed for the entire
term of each Mortgage Loan.
ARD Loans (as set forth on the table below) accrue interest at 200 basis points above
the original interest rate, during a specified period which begins on a specified date
(that is, the 'Anticipated Repayment Date') and ends at maturity. As used herein, the
term 'Mortgage Rate' does not include the portion of the interest rate of an ARD Loan
that is attributable to the rate increase; the excess of interest at such higher rate
over interest at the Mortgage Rate (together with interest thereon) is referred to
herein as 'Excess Interest.'
See 'Description of the Mortgage Pool--Certain Terms and Conditions of the Mortgage
Loans--Excess Interest' in this Prospectus Supplement.
</TABLE>
S-22
<PAGE>
<TABLE>
<CAPTION>
AMORTIZATION CHARACTERISTICS OF THE
NOTES...................................
% OF INITIAL NUMBER OF
TYPE OF NOTE POOL BALANCE NOTES
------------ ------------ ---------
<S> <C> <C> <C>
ARD Notes...................................... 88% 176
Fully Amortizing Notes (other than ARD
Notes)......................................... 12% 26
<CAPTION>
<S> <C>
LOCK-OUT CHARACTERISTICS OF THE MORTGAGE
LOANS................................... All of the Mortgage Loans prohibit voluntary prepayment during a period (each, a
'Lock-out Period') commencing on the date of origination and ending on the date that is
on, or one month to six months prior to, its Anticipated Repayment Date or maturity
date, as applicable.
See 'Description of the Mortgage Pool--Certain Terms and Conditions of the Mortgage
Loans--Prepayment Provisions' and '--Property Releases' in this Prospectus Supplement.
OVERVIEW OF LOCK-OUT PERIODS
Minimum Remaining Lock-out Period........................................... 27 months
Maximum Remaining Lock-out Period........................................... 127 months
Weighted Average Remaining Lock-out Period.................................. 116 months
No Mortgage Loan imposes a fee or premium ('Prepayment Premium') for voluntary
prepayments made after the expiration of the related Lock-out Period (except for the
Premium Loans which generally require the remaining unamortized premium to be repaid if
the loan is repaid prior to the maturity date or the Anticipated Repayment Date).
However, Prepayment Premiums may be due in connection with certain involuntary
prepayments.
See 'Risk Factors and Other Special Considerations--Risks Related to the
Certificates--Risks Related to Prepayments' and '--Risks Related to Yield' in this
Prospectus Supplement.
</TABLE>
S-23
<PAGE>
RISK FACTORS AND OTHER SPECIAL CONSIDERATIONS
You should consider the following factors in deciding whether to purchase
the Offered Certificates. In particular, distribution on your Certificates will
depend on payments received on and other recoveries with respect to the Mortgage
Loans. Therefore, you should carefully consider the risk factors relating to the
Mortgage Loans and the Mortgaged Properties. In addition, you should consider
risk factors discussed in the Prospectus under the heading 'Special
Considerations.'
RISKS RELATED TO THE MORTGAGE LOANS
MORTGAGE LOANS ARE NONRECOURSE AND ARE NOT INSURED OR GUARANTEED. The
Mortgage Loans are not insured or guaranteed by any person or entity. Each
Mortgage Loan is a nonrecourse loan. Therefore, if a default occurs, recourse
generally may be had only against the specific properties and other assets that
have been pledged to secure the loan and not against any other assets of the
borrower or its affiliates. Consequently, payment depends primarily on the
sufficiency of the net operating income of the Mortgaged Property and the market
value of the property or the borrower's ability to refinance such property.
All of the Mortgage Loans were originated within 18 months prior to the
Cut-off Date. Consequently, the Mortgage Loans do not have a long standing
payment history.
RISKS ASSOCIATED WITH COMMERCIAL AND MULTIFAMILY LENDING
GENERALLY. Commercial and multifamily lending is generally thought to expose a
lender to a greater risk of loss than one-to-four-family residential lending
because commercial and multifamily lending involves larger loans to single
borrowers. The Mortgage Loans are secured by the following income-producing
property types:
o anchored and unanchored retail properties;
o office buildings;
o full and limited service hotels;
o multifamily residential housing;
o nursing homes;
o industrial properties;
o mobile home parks; and
o healthcare facilities.
Therefore, the repayment of the Mortgage Loans depends upon the ability of
the applicable property to produce cash flow. Even the liquidation value of a
commercial property is determined, in substantial part, by the capitalization of
the property's cash flow.
COMMERCIAL LENDING DEPENDS UPON NET OPERATING INCOME. Net operating income
can be volatile and may be insufficient to cover debt service on a loan at any
given time. The net operating income and property value of the Mortgaged
Properties may be adversely affected by a large number of factors. Some of these
factors relate to the property itself, such as:
o the age, design and construction quality of the property;
o perceptions regarding the safety, convenience and attractiveness of
the property;
o the proximity and attractiveness of competing properties;
o the adequacy of the property's management and maintenance;
o an increase in operating expenses;
o an increase in the capital expenditures needed to maintain the
property or make improvements;
o a decline in the financial condition of a major tenant;
o an increase in vacancy rates; and
o a decline in rental rates as leases are renewed or entered into with
new tenants.
Other factors that may adversely affect the net operating income and
property value of the Mortgaged Properties are more general in nature, such as:
o national, regional or local economic conditions (including plant
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 retroactive changes in building codes.
S-24
<PAGE>
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 the rate at which new rentals occur;
o the percentage of total property expenses in relation to revenue;
o the ratio of fixed operating expenses to those that vary with
revenues; and
o the level of capital expenditures required to maintain the property
and to maintain or replace tenants.
Therefore, properties with short-term or less creditworthy sources of
revenue and/or relatively high operating costs, such as healthcare facilities,
hotels and motels, can be expected to have more volatile cash flows than
properties with medium to long-term leases from creditworthy tenants and/or
relatively low operating costs. 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 such properties with short-term revenue sources
and may lead to higher rates of delinquency or defaults. The value of any
Mortgaged Property during the term of the related Mortgage Loan could be less
than the appraised value determined in connection with the origination of such
Mortgage Loan. However, the Mortgage Loans generally provide for deferred
maintenance reserves in an amount sufficient to remediate any deficiencies
identified in the engineering report issued at the time of origination. In
addition, most of the Mortgage Loans contain ongoing capital expenditure reserve
requirements. However, such reserves will be funded by, and therefore are
dependent upon, available cash flow before any excess cash is released to the
related borrower.
PROPERTY VALUE MAY BE ADVERSELY AFFECTED EVEN WHEN CURRENT OPERATING INCOME
IS NOT. Various factors may adversely affect the value of the Mortgaged
Properties without affecting such properties' current net operating income,
including:
o changes in interest rates;
o the availability of refinancing;
o changes in governmental regulations;
o fiscal policy;
o zoning or tax laws; and
o potential environmental legislation or liabilities or other legal
liabilities.
PROPERTY MANAGEMENT MAY AFFECT PROPERTY VALUE. The successful operation of
a real estate project depends upon the property manager's performance and
viability. The property manager generally is responsible for the following:
o responding to changes in the local market;
o planning and implementing the rental structure;
o operating the property and providing building services;
o managing operating expenses; and
o assuring that maintenance and capital improvements are carried out in
a timely fashion.
Properties deriving revenues primarily from short-term sources are
generally more management intensive than properties leased to tenants under
long-term leases. There is no assurance regarding the skills of any present or
future managers. Additionally, there is no assurance that the property managers
will be in a financial condition to fulfill their management responsibilities
throughout the terms of their respective management agreements. 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. Moreover, a majority of the Mortgaged Properties are
managed by affiliates of the applicable borrower. Such relationships could raise
additional difficulties in connection with a Mortgage Loan in default or
undergoing special servicing. In addition, a dispute between the partners or
members of a borrower could disrupt the management of the underlying property
which may cause an adverse effect on cash flow. However, many of the Mortgage
Loans permit the lender to remove the manager upon the occurrence of an event of
default, a decline in cash flow below specified levels or other specified
triggers.
TENANT CONCENTRATION ENTAILS RISK. A deterioration in the financial
condition of a tenant can be particularly significant if a Mortgaged Property is
leased to a single tenant, or a small number of tenants. Mortgaged Properties
leased to a single tenant, or a small number of tenants, also are more
susceptible to interruptions of cash flow if a tenant fails to renew its lease.
This is so because the financial effect of the absence of rental income may be
severe, more time may be required to re-lease the space and substantial capital
costs may be incurred to make the space appropriate for replacement tenants.
Mortgage Loans secured by one or more retail, office or industrial
properties also may be adversely affected if there is a concentration of
particular tenants or of tenants in a particular business or industry at the
related property or properties.
S-25
<PAGE>
MORTGAGED PROPERTIES LEASED TO MULTIPLE TENANTS ALSO HAVE RISKS. If a
Mortgaged Property has multiple tenants, re-leasing expenditures may be more
frequent than in the case of Mortgaged Properties with fewer tenants, thereby
reducing the cash flow available for debt service payments.
CERTAIN ADDITIONAL RISKS RELATING TO TENANTS. The income from and the
market value of the Mortgaged Properties would be adversely affected if:
o space in the Mortgaged Properties could not be leased;
o tenants were unable to meet their lease obligations;
o a significant tenant were to become a debtor in a bankruptcy case; or
o rental payments could not be collected for any other reason.
Repayment of the Mortgage Loans secured by retail and office properties
will be affected by the expiration of leases and the ability of the respective
borrowers to renew the leases or relet the space on comparable terms. Even if
vacated space is successfully relet, the costs associated with reletting,
including tenant improvements and leasing commissions, could be substantial and
could reduce cash flow from the Mortgaged Properties. Moreover, if a tenant
defaults in its obligations to a borrower, the borrower may incur substantial
costs and experience significant delays associated with enforcing its rights and
protecting its investment, including costs incurred in renovating and reletting
the property.
TENANT BANKRUPTCY ENTAILS RISKS. The bankruptcy or insolvency of a major
tenant, or a number of smaller tenants, in retail 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). The claim would be limited to the unpaid rent reserved
under the lease for the periods prior to the bankruptcy petition (or earlier
surrender of the leased premises) which are unrelated to the rejection, plus the
greater of one year's rent or 15% of the remaining reserved rent (but not more
than three years' rent).
LOAN CONCENTRATION ENTAILS RISKS. In general, concentrations in a mortgage
pool in which one or more loans that have outstanding principal balances that
are substantially larger than the other mortgage loans in such pool 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 such pool were distributed more evenly
among the mortgage loans in such pool. Several of the Mortgage Loans have
Cut-off Date Principal Balances that are substantially higher than the average
Cut-off Date Principal Balance, which is $6,650,455. The following table sets
forth Cut-off Date Principal Balances for the seven largest Mortgage Loans
(which includes the nine Accor Credit Lease Loans as one loan). (See footnote 2
below). In total, the seven largest Mortgage Loans have Cut-off Date Principal
Balances that represent, in the aggregate, approximately 30% of the Initial Pool
Balance.
See 'Description of the Mortgage Pool--Significant Mortgage Loans' in this
Prospectus Supplement for a description of each of the Mortgage Loans listed on
the following table.
CUT-OFF DATE PRINCIPAL BALANCES AND CONCENTRATION OF MORTGAGE LOANS
<TABLE>
<CAPTION>
CUT-OFF DATE % OF INITIAL
MORTGAGE LOAN PRINCIPAL BALANCE POOL BALANCE
- ------------- ----------------- ------------
<S> <C> <C>
Prime III Retail Pool Loan.................................................. $ 81,857,269 (1) 6%
Soho Grand Hotel Loan....................................................... $ 60,041,752 5%
Morgantown Mall and Commons Retail Loan..................................... $ 58,350,000 5%
5670 Wilshire Office Loan................................................... $ 54,431,011 5%
Shidler Industrial Portfolio................................................ $ 53,000,000 4%
Eastland Mall Retail Loan................................................... $ 46,673,225 4%
Accor Credit Lease Loans(2)................................................. $ 88,217,800 7%
</TABLE>
- ------------------
(1) The Cut-off Date Principal Balance for the Total Prime Retail Loan is
$163,841,167. Only the Note in the amount of the Cut-off Date Principal
Balance listed above will be included in the Trust Fund. See 'Description of
the Mortgage Pool-Significant Mortgage Loans--The Prime Retail Pool Loan and
Properties' in this Prospectus Supplement.
(2) The Accor Credit Lease Loans comprise nine separate Mortgage Loans to nine
separate special purpose entity borrowers, each subject to a net lease
obligation from Accor Corporation, an entity with a senior unsecured debt
rating of 'BBB' by S&P. The combined Cut-off Date Principal Balance for all
of the Total Accor Credit Lease Loans is $460,536,659. Only the Notes whose
aggregate Cut-off Date Principal Balance is listed above will be included in
the Trust Fund. See 'Description of the Mortgage Pool--Significant Mortgage
Loans--The Accor Credit Lease Loans and Properties' in this Prospectus
Supplement.
S-26
<PAGE>
GEOGRAPHIC CONCENTRATION ENTAILS RISKS. Repayments by borrowers and the
market value of the Mortgaged Properties could be adversely affected by the
following:
o economic conditions generally or in regions where the borrowers and
the Mortgaged Properties are located;
o conditions in the real estate markets where the Mortgaged Properties
are located;
o changes in governmental rules and fiscal policies;
o acts of nature (which may result in uninsured losses); and
o other factors beyond the control of the borrowers.
The Mortgage Properties are located throughout 42 states. The following
states have concentrations of 5% or greater as listed below:
<TABLE>
<CAPTION>
TOTAL CUT-OFF DATE PRINCIPAL
BALANCE OF MORTGAGE LOANS % OF INITIAL
STATE SECURED BY PROPERTIES IN STATE(1) POOL BALANCE
- ----- --------------------------------- ------------
<S> <C> <C>
California....................................................... $ 318,399,493 25%
New York......................................................... $ 127,735,213 10%
Texas............................................................ $ 74,152,207 6%
North Carolina................................................... $ 73,809,335 6%
Michigan......................................................... $ 71,152,583 6%
</TABLE>
- ------------------
(1) With respect to Mortgage Loans secured by multiple Mortgaged Properties, the
Cut-off Date Principal Balance refers to the Allocated Loan Amount for such
property, as of the Cut-off Date.
For a discussion of legal aspects related to Mortgage Loans secured by Mortgaged
Properties located in California, New York, Texas, North Carolina and Michigan,
see 'Certain Legal Aspects of Mortgage Loans for Mortgaged Properties located in
California, New York, Texas, North Carolina and Michigan' in this Prospectus
Supplement.
RISKS RELATED TO PROPERTY INSPECTIONS. Licensed engineers inspected all of
the Mortgaged Properties (except for certain of the Mortgaged Properties
securing the Credit Lease Loans) to assess the structure, exterior walls,
roofing, interior construction, mechanical and electrical systems and general
condition of the site, buildings and other improvements. If conditions requiring
repair or replacement were identified, the related borrower was generally
required to fund reserves to cover such expenses. However, there is no assurance
that all conditions requiring repair or replacement were identified or that the
reserves will be adequate.
RESERVES MAY BE INSUFFICIENT. Most of the Mortgage Loans require that
reserves be funded on a monthly basis from cash flow to fund ongoing monthly,
semi-annual or annual expenses such as taxes and insurance. Most of the Mortgage
Loans also required reserves to be established upon the closing of the Mortgage
Loan to fund identified capital expenditure items, certain leasing costs,
identified environmental remediation costs or identified engineering remediation
costs when such needs were identified. The reserve amounts may not be sufficient
to offset the actual costs of the items for which the reserves were established.
In addition, cash flow from the Mortgaged Properties may not be sufficient to
fund fully the ongoing monthly reserve requirements.
SOME OF THE MORTGAGED PROPERTIES MAY NOT BE READILY CONVERTIBLE TO
ALTERNATIVE USES. Some of the Mortgaged Properties may not be easily converted
to alternative uses because, in general, converting certain types of commercial
properties (including Healthcare Properties and Mobile Home Park Properties) to
alternate uses requires substantial capital expenditures. If a Mortgaged
Property is not readily adaptable to other uses, the liquidation value of such
Mortgaged Property may be substantially less than would be the case if the
property were readily adaptable to other uses.
RETAIL PROPERTIES HAVE SPECIFIC RISKS. 29% of the Mortgage Loans, based on
Initial Pool Balance, are secured by Retail Properties, including movie theater
properties and Factory Outlet Center Properties. See '--Factory Outlet Center
Properties Have Specific Risks' and 'Description of the Mortgage
Pool--Additional Mortgage Loan Information--Cut-off Date Principal Balance by
Property Type' in this Prospectus Supplement.
The quality and success of a retail property's tenants significantly affect
the property's value. For example, if the sales of retail tenants were to
decline, rents tied to a percentage of gross sales may decline and those tenants
may be unable to pay their rent or other occupancy costs. The presence or
absence of an 'anchor tenant' in a shopping center also can be important,
because anchors play a key role in generating customer traffic and making a
center desirable for other tenants. An 'anchor tenant' is a retail tenant whose
space is proportionately large in size as compared to that of other tenants and
the total size of the retail center, and such retail tenant is vital in
attracting customers to the property. 62% of the Mortgage Loans secured by
Retail Properties, based on Initial Pool Balance, are 'anchored' Retail
Properties, 8% are secured by 'quasi-anchored' Retail Properties, 22% are
secured by Factory Outlet Center Properties and 8% are secured by 'unanchored'
Retail Properties.
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<PAGE>
Consequently, the economic performance of an 'anchored' Retail Property
will be adversely affected by the following factors:
o an anchor tenant's failure to renew its lease;
o termination of an anchor tenant's lease;
o the bankruptcy or economic decline of an anchor tenant or self-owned anchor;
or
o the cessation of the business of a self-owned anchor or of an anchor tenant
(notwithstanding its continued payment of rent).
Such risks may be increased if revenue is dependent on a single tenant. 2% of
the Mortgage Loans, based on Initial Pool Balance, secured by Retail Properties
are secured by single tenant properties. 72% of such single-tenant Retail Loans,
based on the Initial Pool Balance, are Credit Lease Loans. See 'Description of
the Mortgage Pool--Credit Lease Loans' in this Prospectus Supplement.
Retail Properties also face competition from sources outside a given real
estate market. For example, all of the following compete with more traditional
retail properties for consumer dollars:
o factory outlet centers;
o discount shopping centers and clubs;
o catalogue retailers;
o home shopping networks;
o internet web sites; and
o telemarketing.
Continued growth of these alternative retail outlets (which often have lower
operating costs) could adversely affect the rents collectible at the Retail
Properties included in the Mortgage Pool, as well as the income from, and market
value of, the Mortgaged Properties. Moreover, additional competing retail
properties may be built in the areas where the Retail Properties are located.
RISKS RELATING TO CO-TENANCY CLAUSES. Tenants at Retail Properties may
have co-tenancy clauses in their leases or operating agreements which permit
those tenants to cease operating their stores if certain other stores are not
operated at those locations.
FACTORY OUTLET CENTER PROPERTIES HAVE SPECIAL RISKS. 22% of the Retail
Properties, based on Initial Pool Balance, are secured by Factory Outlet Center
Properties. See 'Description of the Mortgage Pool--Additional Mortgage Loan
Information-- Cut-off Date Principal Balance by Property Type' in this
Prospectus Supplement. The success of a Factory Outlet Center Property depends
on the outlet center stores being able to offer lower prices for goods similar
or identical to goods sold in a traditional department or other retail store.
Generally, the outlet center stores are able to offer lower prices due to the
elimination of distribution costs and reduced rent and overhead. However,
traditional retailers are expected to compete aggressively to regain sales.
In general, factory outlet centers are typically located at least 25 miles
from suburban and center city shopping areas, allowing manufacturers to avoid
direct competition with their major customers, department stores and specialty
stores. The amount of travel time could create a disincentive to shopping at
outlet centers. However, newer outlet centers are being constructed closer to
metropolitan and suburban areas, thus decreasing the economic viability of older
centers that are located farther away. In addition, since numerous factory
outlet centers have been developed in recent years and continue to be developed,
there is a risk of overdevelopment and increased competition for tenants and
shoppers. The terms of store leases in factory outlet centers typically are
shorter than those in traditional malls or shopping centers, thereby increasing
the risks of tenants relocating to competing centers. Factory Outlet Center
Properties are also subject to the risks described above under '--Retail
Properties Have Specific Risks.'
OFFICE PROPERTIES HAVE SPECIAL RISKS. 23% of the Mortgage Loans, based on
Initial Pool Balance, are secured by Office Properties. See 'Description of the
Mortgage Pool--Additional Mortgage Loan Information--Cut-off Date Principal
Balance by Property Type' in this Prospectus Supplement. The following factors
may adversely affect the value of office properties, including:
o the quality of the tenants in the building;
o the physical attributes of the building in relation to competing
buildings;
o access to transportation;
o the strength and stability of the local economy;
o whether tax benefits are available;
S-28
<PAGE>
o the strength and stability of business for the particular type of tenant
or tenants currently in the building;
o the desirability of the location for business; and
o the cost of refitting office space for a new tenant (which is often
significantly higher than the cost of refitting other types of properties
for new tenants).
Such risks may be increased if revenue depends on a single tenant or if there is
a significant concentration of tenants in a particular business or industry. 21%
of the Mortgage Loans secured by Office Properties, based on Initial Pool
Balance, are secured by single tenant properties. 65% of such single tenant
Office Properties secure Credit Lease Loans. See 'Description of the Mortgage
Pool-- Credit Lease Loans' in this Prospectus Supplement.
MULTIFAMILY PROPERTIES HAVE SPECIAL RISKS. 19% of the Mortgage Loans,
based on Initial Pool Balance, are secured by multifamily apartment buildings.
See 'Description of the Mortgage Pool--Additional Mortgage Loan
Information--Cut-off Date Principal Balance by Property Type' in this Prospectus
Supplement. Significant factors that may adversely affect the value and
successful operation of a multifamily property include:
o the physical attributes of the apartment building (e.g., its age,
appearance and construction quality);
o the location of the property (e.g., a change in the neighborhood over
time);
o the ability of management to provide adequate maintenance and insurance;
o the types of amenities 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 (which may limit the amount
that may be charged and may result in a reduction in timely rent payments
or a reduction in occupancy levels); and
o state and local regulations (which may affect the building owner's
ability to increase rent to the market rent for an equivalent apartment).
GOVERNMENTAL REGULATION REGARDING MULTIFAMILY PROPERTIES. Certain states
regulate the relationship between owner and tenants and require a written lease,
good cause for eviction, disclosure of fees and notification to residents of
changed land use. Certain states also prohibit retaliatory evictions, limit the
reasons for which a landlord may terminate a tenancy, limit the reasons for
which a landlord may increase rent and prohibit a landlord from terminating a
tenancy solely because the building has been sold.
In addition, numerous counties and municipalities impose rent control
regulations on apartment buildings. These regulations may limit rent increases
to fixed percentages, to percentages of increases in the consumer price index,
to increases set or approved by a governmental agency, or to increases
determined through mediation or binding arbitration. In many cases, the rent
control laws do not permit vacancy decontrol. Any limitations on a borrower's
ability to raise property rents may impair such borrower's ability to repay its
Mortgage Loan from its net operating income or the proceeds of a sale or
refinancing of the related Mortgaged Property.
RISKS RELATED TO RENT STABILIZATION IN NYC. Certain of the Multifamily
Properties are subject to the rent stabilization guidelines of the Division of
Housing and Community Renewal ('DHCR'), an agency of the State of New York. The
DHCR guidelines in effect for New York City for the period from October 1, 1997
to September 30, 1998 limit rent increases for renewals to 2%, in the case of
one-year renewals, or 4%, in the case of two-year renewals. New leases are
subject to increases over the prior tenant's rent of a maximum of 18% in the
case of a one-year lease or a maximum of 20% in the case of a two-year lease for
rents exceeding $500 per month. Landlords may be eligible for certain
entitlements in connection with certain major capital improvements. Such
entitlements may include the right to raise tenant rents based on a percentage
of the capital improvement costs not to exceed 6% of the tenant's annual rent
and, in some circumstances, a right to certain real estate tax abatements.
However, as a result of rent stabilization restrictions, in the event operating
costs were to rise, an affected borrower would likely be restricted in its
ability to increase revenues in an amount sufficient to meet the higher costs.
HOTEL PROPERTIES HAVE SPECIAL RISKS. 12% of the Mortgage Loans, based on
Initial Pool Balance, are secured by full service hotels, limited service hotels
or motels. These Mortgaged Properties comprise hotels associated with national
franchise chains, hotels associated with regional franchise chains and hotels
that are not affiliated with any franchise chain but may have their own brand
identity. 56% of the Hotel Loans, based on Initial Pool Balance, are Credit
Lease Loans guaranteed by Accor, a French company, with a long term unsecured
debt rating of 'BBB' by S&P.
See 'Description of the Mortgage Pool--Additional Mortgage Loan
Information--Cut-off Date Principal Balance by Property Type' in this Prospectus
Supplement for certain statistical information on the Hotel Properties and Hotel
Loans.
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<PAGE>
Various factors may adversely affect the economic performance of a hotel,
including:
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 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 (to satisfy such costs, Hotel Loans generally require the borrowers
to fund reserves for furniture, fixtures and equipment);
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,
labor strikes, relocation of highways, the construction of additional
highways or other factors.
In addition, because hotel rooms generally are rented for short periods of time,
hotels tend to respond more quickly to adverse economic conditions and
competition than do other commercial properties. Moreover, the hotel and lodging
industry is generally seasonal in nature. This seasonality can be expected to
cause periodic fluctuations in a hotel property's revenues, occupancy levels,
room rates and operating expenses. In connection with such concerns, certain of
the Hotel Loan borrowers are required to fund seasonality reserves.
RISKS RELATING TO AFFILIATION WITH A FRANCHISE OR HOTEL MANAGEMENT
COMPANY. The performance of a Hotel Property affiliated with a franchise or
hotel management company depends in part on:
o the continued existence and financial strength of the franchisor or hotel
management company;
o the public perception of the franchise or hotel chain service mark; and
o the duration of the franchise licensing or management agreements.
Any provision in a franchise agreement or management agreement providing for
termination because of a bankruptcy of a franchisor or manager generally will
not be enforceable. Franchise agreements for certain of the Mortgaged Properties
may terminate prior to the effective maturity date of the related Mortgage Loan.
Replacement franchises may require significantly higher fees.
The transferability of franchise license agreements is restricted. In the
event of a foreclosure, the lender or its agent would not have the right to use
the franchise license without the franchisor's consent. Conversely, in the case
of certain Mortgage Loans, the lender may be unable to remove a franchisor or a
hotel management company that it desires to replace following a foreclosure.
Further, in the event of a foreclosure, the Trustee or a purchaser of such
Mortgaged Property probably would not be entitled to the rights under any liquor
license for the mortgaged property. Such party would be required to apply in its
own right for such a license, and it is possible that a new license would not be
obtained.
In addition, in some states, liquor licenses must be held by a natural
person and, consequently, liquor licenses for Hotel Properties in such
jurisdictions are held by an individual affiliated with the related borrower or
property manager, rather than the borrower itself. In addition, certain states
prohibit the transfer of liquor licenses to any person without the prior
approval of the relevant licensing authority. In the event of a foreclosure of a
Hotel Property, it is unlikely that the Trustee (or Servicer or Special
Servicer) or purchaser in any such sale would be entitled to the rights under
the liquor license for such Hotel Property and such party would be required to
apply in its own right for such a license. It is possible that a new liquor
license could not be obtained.
INDUSTRIAL PROPERTIES HAVE SPECIAL RISKS. 12% of the Mortgage Loans, based
on Initial Pool Balance, are secured by Industrial Properties. See 'Description
of the Mortgage Pool--Additional Mortgage Loan Information--Cut-off Date
Principal Balance by Property Type' in this Prospectus Supplement. Significant
factors that may affect the value of an Industrial Property include:
o the quality of tenants;
o building design (including ceiling heights, column spacing, number of
bays and bay depths);
o location (availability of labor sources, proximity to supply sources and
customers, accessibility to rail lines, major roadways and other
distribution channels); and
o adaptability of the property.
Concerns about the quality of tenants, particularly major tenants, are similar
in both office properties and Industrial Properties, although Industrial
Properties depend more frequently on a single tenant. 25% of the Mortgage Loans
secured by Industrial Properties that are single tenant properties.
CREDIT LEASE LOANS HAVE SPECIAL RISKS. 11% of the Mortgage Loans, based on
Initial Pool Balance, are Credit Lease Loans. Credit Lease Loans are loans
subject to net lease obligations (a 'Credit Lease') of a rated tenant or
guarantor. In reliance
S-30
<PAGE>
on the ratings, the Credit Lease Loans were generally underwritten to lower
DSCRs and/or higher LTVs than would have been acceptable had the related
Mortgaged Properties been leased to less creditworthy tenants. In the event that
a Credit Tenant defaults in its obligations under a Credit Lease, the Mortgaged
Property may not be relet for sufficiently high rent to support debt service on
the related Credit Lease Loan or funds received in liquidation of such Mortgaged
Property may not be sufficient to satisfy the borrower's obligations under such
Credit Lease Loan.
See 'Description of the Mortgage Pool--Credit Lease Loans' in this
Prospectus Supplement.
Any rating assigned to a Credit Tenant or Guarantor, as applicable, by a
Rating Agency will reflect only such Rating Agency's assessment of the long-term
unsecured debt obligations of such entity. Such rating is not an assessment of
the likelihood that the Credit Leases will not be terminated (pursuant to their
terms or otherwise), that the Credit Lease Loans will not be prepaid, that
Principal Prepayments on the Credit Lease Loans will be made by the related
borrowers, or that any Prepayment Premium will be paid or, if paid, will be
sufficient to provide the anticipated yield.
o Reliance on Credit Quality of Credit Tenants and Guarantors Has Special
Risks. With respect to each Credit Lease Loan, interest and principal payments
depend principally on the payment by the related Credit Tenant or Guarantor, if
any, of monthly rent and other payments due under the related Credit Lease by or
on behalf of such Credit Tenant. A downgrade in the credit rating of any of the
Credit Tenants and/or the Guarantors may have a related adverse effect on the
rating of your Certificates.
If a Credit Tenant or Guarantor defaults on its obligation to make Monthly
Rental Payments under a Credit Lease or the related guaranty, as the case may
be, the borrower under the related Credit Lease Loan may not have the ability to
make required payments on such Credit Lease Loan. If a payment default on a
Credit Lease Loan occurs, the Special Servicer may be entitled to foreclose upon
or otherwise realize upon the related Credit Lease Property to recover amounts
due under the Credit Lease Loan, and will also be entitled (as successor to the
borrower) to pursue any available remedies against the defaulting Credit Tenant
and any Guarantor, which may include rights to all future Monthly Rental
Payments. If the default occurs before significant amortization of a Credit
Lease Loan has occurred and no recovery is available from the related borrower
or the Credit Tenant or any Guarantor, it is unlikely that the Special Servicer
will be able to recover in full the amounts then due under such Credit Lease
Loan.
See 'Description of the Mortgage Pool--Credit Lease Loans' in this
Prospectus Supplement.
RISKS RELATING TO BORROWERS THAT ARE NOT SPECIAL-PURPOSE ENTITIES. 2 of
the borrowers, under Mortgage Loans representing less than 1% of the Initial
Pool Balance, are not special-purpose entities. Thus, the business activities of
these borrowers are not limited to owning their respective properties. Further,
the loan documents and organizational documents of those borrowers may not
contain the representations, warranties and covenants customarily employed to
ensure that a borrower is a special-purpose entity (such as limitations on
indebtedness and affiliate transactions and restrictions on the borrower's
ability to dissolve, liquidate, consolidate, merge, sell all of its assets or
amend its organizational documents). Additionally, none of such borrowers has an
independent director whose consent would be required to file a voluntary
bankruptcy petition on behalf of such borrower. One of the purposes of an
independent director is to avoid a bankruptcy petition filing which is intended
solely to benefit an affiliate and is not justified by the borrower's own
economic circumstances.
LOANS TO AFFILIATED BORROWERS ENTAIL RISKS. Concentrations of Mortgage
Loans with the same borrower or related borrowers can also pose increased risks.
For example, if a person that owns or controls several Mortgaged Properties
experiences financial difficulty at one Mortgaged Property, it could defer
maintenance at another Mortgaged Property in order to satisfy current expenses
with respect to the first Mortgaged Property, or it could attempt to avert
foreclosure by filing a bankruptcy petition that might have the effect of
interrupting Monthly Payments (subject to the Servicer's obligation to make
Advances) for an indefinite period on all of the related Mortgage Loans.
There are 13 pairs and 8 groups of 3 to 10 Mortgage Loans that were made to
affiliated borrowers which are not cross-collateralized or cross-defaulted. The
largest group of affiliated borrowers (the borrowers under the Eastland Mall
Loan and the Morgantown Mall and Commons Loan (the 'Glimcher Borrowers'))
collectively represent 8% of the Initial Pool Balance. Except for the Mortgage
Loans to the Accor Credit Lease Borrowers and the Glimcher Borrowers, none of
the pairs or groups of Mortgage Loans to affiliated borrowers represents more
than 4% of the Initial Pool Balance. 4% of the Mortgage Loans to affiliated
borrowers, based on Cut-off Date Principal Balance, are Credit Lease Loans.
RISKS OF LIMITATIONS ON ENFORCEABILITY OF CROSS-COLLATERALIZATION. 24 of
the Mortgage Loans, representing approximately 32% of the Initial Pool Balance,
are secured by more than one Mortgaged Property and are cross-collateralized.
These arrangements seek to reduce the risk that the inability of a Mortgaged
Property securing each such Mortgage Loan to generate net operating income
sufficient to pay debt service will result in defaults and ultimate losses.
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<PAGE>
Cross-collateralization arrangements involving more than one borrower could
be challenged as fraudulent conveyances by creditors of a borrower in an action
brought outside a bankruptcy case or, if such borrower were to become a debtor
in a bankruptcy case, by the borrower's representative. A lien granted by a
borrower under a cross-collateralized Loan could be avoided if a court were to
determine that: (i)) such borrower was insolvent when it granted the lien, was
rendered insolvent by the granting of the lien or was left with inadequate
capital, or was not able to pay its debts as they matured; and (ii) such
borrower did not receive fair consideration or reasonably equivalent value when
it allowed its Mortgaged Property or Properties to be encumbered by a lien
securing the entire indebtedness. Among other things, a legal challenge to the
granting of the liens may focus on the benefits realized by such borrower from
the respective Mortgage Loan proceeds, as well as the overall
cross-collateralization. If a court were to conclude that the granting of the
liens was an avoidable fraudulent conveyance, that court could subordinate all
or part of the pertinent Mortgage Loan to existing or future indebtedness of
that borrower. The court also could recover payments made under that Mortgage
Loan or take other actions detrimental to the holders of the Certificates,
including, under certain circumstances, invalidating such Mortgage Loan or the
Mortgages purporting to effect such cross-collateralization.
CROSS-COLLATERALIZED MORTGAGE LOANS
<TABLE>
<CAPTION>
NUMBER OF CROSS
CUT-OFF DATE COLLATERALIZED
MORTGAGE LOAN PRINCIPAL BALANCE PROPERTIES
- ------------------------------------------------------------------------------ ----------------- ---------------
<S> <C> <C>
Prime III Retail Pool......................................................... $81,857,269 5
Morgantown Mall and Commons................................................... $58,350,000 2
Shidler Industrial Portfolio.................................................. $53,000,000 16
Banyan Pool I................................................................. $34,763,291 16
Land Apartments............................................................... $26,614,195 3
Burgandy Properties........................................................... $17,709.939 5
Greenwich Portfolio........................................................... $11,588,734 3
Accor-M-Six V................................................................. $10,287,380 11
Accor-M-Six III............................................................... $10,103,716 11
Accor-M-Six VI................................................................ $ 9,861,548 14
Accor-M-Six Penvest II........................................................ $ 9,827,506 16
Accor-M-Six IV................................................................ $ 9,748,985 13
Accor-M-Six Creditvest I...................................................... $ 9,717,785 15
Accor-M-Six Limited Partnership............................................... $ 9,636,123 14
Accor-M-Six Creditvest II..................................................... $ 9,588,731 11
Accor-M-Six Penvest I......................................................... $ 9,446,025 15
Cinemark Pool B............................................................... $ 8,860,878 2
Banyan Pool 3................................................................. $ 6,947,966 5
Airport Atrium................................................................ $ 6,382,934 3
Seven Mobile Home Properties.................................................. $ 6,132,298 7
Muraco Portfolio.............................................................. $ 3,867,053 3
Bird Creek/Comfort Creek...................................................... $ 2,680,000 2
Bayshore/Rockport Oaks........................................................ $ 1,750,000 2
Parkside/Pleasant View MHP.................................................... $ 1,422,288 2
</TABLE>
AUTHORITY TO EFFECT OTHER BORROWINGS ENTAILS RISKS. Certain Mortgage Loans
permit the borrower to incur additional indebtedness other than in the ordinary
course of business. For instance, the Collins Nursing Home Loan (which has a
Cut-off Date Principal Balance of $3,047,348, which represents 2% of the Initial
Pool Balance) permits the related borrower to incur debt, in an amount up to
$350,000, to be secured by accounts receivable. The borrower will be required to
cause any accounts receivable lender to enter into an intercreditor agreement
with the Trustee. Substantially all of the Mortgage Loans also permit the
related borrower to incur limited indebtedness in the ordinary course of
business. When a borrower (or its constituent members) also has one or more
other outstanding loans (even if subordinated or mezzanine loans), the Trust
Fund may be subjected to additional risk. The borrower may have difficulty
servicing and repaying multiple loans. The existence of another loan generally
also will make it more difficult for the borrower to obtain refinancing of the
Mortgage Loan and may thereby jeopardize repayment of the Mortgage Loan.
Moreover, the need to service additional debt may reduce the cash flow available
to the borrower to operate and maintain the Mortgaged Property.
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<PAGE>
See '--Certain Additional Risks Relating to Mezzanine Financings' below and
'Certain Legal Aspects of the Mortgage Loans--Subordinate Financing' in the
Prospectus.
Additionally, if the borrower (or its constituent members) defaults on the
Mortgage Loan and/or any other loan, actions taken by other lenders could impair
the security available to the Trust Fund. If a junior lender files an
involuntary petition for bankruptcy against the borrower (or the borrower files
a voluntary petition to stay enforcement by a junior lender), the Trust Fund's
ability to foreclose would be automatically stayed, and principal and interest
payments might not be made during the course of the bankruptcy case. The
bankruptcy of another lender also may operate to stay foreclosure by the Trust
Fund.
CERTAIN ADDITIONAL RISKS RELATING TO MEZZANINE FINANCINGS. Certain lenders
unaffiliated with CCA have made loans in connection with certain Mortgage Loans
to the related borrowers or to the direct parents of such borrowers. Each such
mezzanine loan is subordinate to the related first Mortgage Loan, as set forth
in the table below, and no such mezzanine debt is secured by a lien on the
related Mortgaged Property. However, the existence of this other indebtedness
could adversely affect the financial viability of such borrower. There is a risk
that any holder of mezzanine debt may attempt to use its rights as owner of the
mezzanine loan to protect itself against an exercise of rights by the lender
under the Mortgage Loan.
The holder of mezzanine debt has rights similar to those of a Preferred
Interest Holder (as defined below under '--Certain Additional Risks Relating to
Preferred Equity Investments'). See 'Description of the Mortgage Pool--Certain
Terms and Conditions of the Mortgage Loans--Preferred Equity Investments' in
this Prospectus Supplement.
MEZZANINE DEBT
<TABLE>
<CAPTION>
MORTGAGE MEZZANINE HOLDER OF
LOAN DEBT DEBT IN PARENT MEZZANINE
MORTGAGE LOAN BALANCE(1) BALANCE (2) OR BORROWER DEBT (3) SECURED (4)
- ------------------------------------------- ----------- ------------- -------------- ------------- -----------
<S> <C> <C> <C> <C> <C>
Spring Hill Business Center................ $ 7,038,428 $ 2,800,000(6) Parent Other(7) Yes
Courtyard Apartments....................... $ 5,996,214 $ 100,000 Borrower Borrower No
<CAPTION>
COMBINED
MORTGAGE LOAN LTV (5)
- ------------------------------------------- --------
<S> <C>
Spring Hill Business Center................ 85%
Courtyard Apartments....................... 76%
</TABLE>
- ------------------
(1) As of the Cut-off Date.
(2) Initial principal balance.
(3) For purposes of this column, 'other' means the debt is owed to an entity
unrelated and unaffiliated with CCA or the borrower; 'borrower' means the
debt is owed to an affiliate of the borrower.
(4) As used above, 'secured' means secured by a pledge of a partnership or other
such interest, rather than an interest in the Mortgaged Property.
(5) 'Combined LTV' means 'LTV' as defined herein, but adding the original
principal balance of the mezzanine debt to the numerator.
(6) It is anticipated that an additional $200,000 will be funded.
(7) Subject to standstill agreement with CCA.
Additionally, the Depositor has been notified by the Shidler Industrial
Portfolio Borrower that the limited partner of such borrower will pledge its
equity in such borrower to secure approximately $8,000,000 of mezzanine debt to
be provided by another lender. See 'Description of the Mortgage
Pool--Significant Mortgage Loans--The Shidler Industrial Portfolio Loan and
Properties.
CERTAIN ADDITIONAL RISKS RELATING TO PREFERRED EQUITY INVESTMENTS. Certain
affiliates of CCA (each, a 'Preferred Interest Holder') have acquired a
preferred equity interest in 2 borrowers with respect to 2 Mortgage Loans, which
represent approximately 1% of the Initial Pool Balance, as set forth in the
following table:
PREFERRED EQUITY INVESTMENTS IN BORROWERS AND AFFILIATES
<TABLE>
<CAPTION>
CUT-OFF DATE APPROXIMATE AMOUNT
PRINCIPAL PREFERRED EQUITY
MORTGAGE LOAN BALANCE (1) INVESTMENT (2)
- ------------- ------------ ------------------
<S> <C> <C>
Monte Sano Apts.............................................. $ 11,184,830 $277,500
Hiawassee Oaks............................................... $ 2,790,502 $150,000
</TABLE>
- ------------------
(1) For Mortgage Loan.
(2) Initial amount of investment.
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<PAGE>
For so long as an affiliate of the CCA Servicer holds a preferred equity
interest in the borrower under a Mortgage Loan, such Mortgage Loans will be
serviced by the CCA Servicer pursuant to an operating advisor agreement with
CRIIMI MAE under which CRIIMI MAE will direct certain actions of the CCA
Servicer with respect to such Mortgage Loans. See 'The Pooling and Servicing
Agreement--The Operating Advisor Agreement' in this Prospectus Supplement.
The existence of preferred equity may adversely affect the financial
viability of the related borrower in that the Preferred Interest Holder receives
payments before other members or partners in the borrower. In addition, the
preferred equity investment may create a conflict between the Trust Fund and
affiliates of the Depositor.
See '--Risks Relating to Conflicts of Interest--Conflicts between the Trust
Fund and Affiliates of the Depositor' below. For a description of the Preferred
Equity Holder's rights with respect to the preferred equity investment, see
'Description of the Mortgage Pool--Certain Terms and Conditions of the Mortgage
Loans--Preferred Equity Investments' in this Prospectus Supplement.
TAX CONSIDERATIONS RELATED TO FORECLOSURE. If the Trust Fund were to
acquire a Mortgaged Property subsequent to a default on the related Mortgage
Loan pursuant to a foreclosure or deed in lieu of foreclosure, the Special
Servicer would be required to retain an independent contractor to operate and
manage the Mortgaged Property. Any net income from such operation and
management, other than qualifying 'rents from real property' (as defined in
Section 856(d) of the Code), or any rental income based on the net profits of a
tenant or sub-tenant or allocable to a service that is non-customary in the area
and for the type of building involved, will subject the Trust Fund to federal
(and possibly state or local) tax on such income at the highest marginal
corporate tax rate (currently 35%), thereby reducing net proceeds available for
distribution to Certificateholders.
See 'The Pooling and Servicing Agreement--Realization Upon Mortgage
Loans--Standards for Conduct Generally in Effecting the Foreclosure or Sale of
Defaulted Loans' in this Prospectus Supplement and 'Federal Income Tax
Consequences-- Federal Income Tax Consequences for REMIC Certificates--Taxes
That May Be Imposed on the REMIC Pool--Net Income From Foreclosure Property' in
the Prospectus.
DIFFERENT TIMING OF MORTGAGE LOAN AMORTIZATION POSES CERTAIN RISKS. If and
as principal payments or prepayments are made on a Mortgage Loan, the remaining
Mortgage Pool will be subject to more concentrated risk with respect to the
diversity of properties, types of properties, geographic concentration (see
'--Geographic Concentration Entails Risks' above) and with respect to the number
of borrowers. Because principal on the Certificates will be paid in sequential
order, and no holder of a Class of Certificates will be entitled to
distributions of principal until the Certificate Balance of the preceding Class
or Classes so entitled has been reduced to zero, Classes that have a later
sequential designation are more likely to be exposed to the risk of
concentration discussed in the preceding sentence than Classes with higher
sequential priority. The following table shows the weighted average terms to
maturity of the Mortgage Loans by types of Mortgaged Property.
WEIGHTED AVERAGE REMAINING TERM TO MATURITY
FOR MORTGAGE LOANS SECURED BY VARIOUS PROPERTY TYPES
<TABLE>
<CAPTION>
WEIGHTED AVERAGE
REMAINING TERM TO
EARLIER OF
MATURITY OR
ANTICIPATED
% OF REPAYMENT DATE
PROPERTY TYPE INITIAL POOL BALANCE (IF APPLICABLE)
- ------------- -------------------- -----------------
<S> <C> <C>
Office......................................................................... 23% 119
Retail......................................................................... 23% 120
Multifamily.................................................................... 19% 119
Hotel (1)...................................................................... 12% 120
Industrial..................................................................... 12% 119
Factory Outlet Center.......................................................... 6% 118
Mobile Home Park............................................................... 5% 119
Healthcare..................................................................... 1% 119
</TABLE>
- ------------------------
(1) 56% of the Hotel Loans are guaranteed by Accor which has a credit rating of
'BBB' by S&P.
RISKS UNDER ENVIRONMENTAL LAWS. Various environmental laws may make a
current or previous owner or operator of real property liable for the costs of
removal or remediation of hazardous or toxic substances on, under or adjacent to
such property. Those laws often impose liability whether or not the owner or
operator knew of, or was responsible for, the presence of such
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hazardous or toxic substances. For example, certain laws impose liability for
release of asbestos-containing materials ('ACMs' ) into the air or require the
removal or containment of ACMs. The owner's liability for any required
remediation generally is not limited by law and accordingly could exceed the
value of the property and/or the aggregate assets of the owner. In addition, the
presence of hazardous or toxic substances, or the failure to remediate such
property, may adversely affect the owner's or operator's ability to use such
property as collateral for a loan. In certain states, contamination of a
property may give rise to a lien on the property to ensure the costs of cleanup.
In some states this lien has priority over the lien of an existing mortgage. In
addition, third parties may seek recovery from owners or operators of real
property for personal injury associated with exposure to hazardous substances.
Persons who arrange for the disposal or treatment of hazardous or toxic
substances may also be liable for the costs of removal or remediation of such
substances at the disposal or treatment facility.
The federal Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended ('CERCLA'), as well as certain other federal
and state laws, provide that a secured lender (such as the Trust Fund) may be
liable, as an 'owner' or 'operator,' of the real property regardless of whether
the borrower or a previous owner caused the environmental damage, if (i) agents
or employees of a lender are deemed to have participated in the management of
the borrower or (ii) under certain conditions the Trust Fund actually takes
possession of a borrower's property or control of its day-to-day operations, as
for example, through the appointment of a receiver or foreclosure. Although
recently enacted legislation clarifies the activities in which a lender may
engage without becoming subject to liability under CERCLA and similar federal
laws, such legislation has no applicability to state environmental laws.
See 'Certain Legal Aspects of the Mortgage Loans--Environmental
Legislation' in the Prospectus.
ENVIRONMENTAL RISKS RELATED TO THE MORTGAGED PROPERTIES. All of the
Mortgaged Properties have been subject to environmental site assessments,
including Phase I site assessments or updates of previously performed Phase I
site assessments within the 18 months preceding the Cut-off Date. In several
cases, Phase II assessments also have been performed. Although those assessments
involved site visits and other types of review, all environmental conditions or
risks may not have been identified. Certain of the environmental assessments
identified environmental conditions which have affected, or may affect, certain
of the Mortgaged Properties. Those conditions include the presence of ACMs,
leaks from nearby off-site chemical storage tanks and off-site spills of
chemicals. In the case of certain of the Mortgaged Properties, landfills, waste
disposal areas, factories, oil wells, gasoline stations or dry cleaning
businesses are or were formerly located on or near the property. To the extent
issues have been identified by regulatory agencies or otherwise, corrective
action has been undertaken, and in some cases, the related borrowers have made
deposits into environmental reserve accounts. However, such reserve amounts may
not be sufficient to remediate such environmental conditions and all such
environmental conditions may not have been identified.
The environmental assessments have not revealed any environmental liability
that the Depositor believes would have a material adverse effect on the
borrowers' businesses, assets or results of operations taken as a whole.
Nevertheless, there may be material environmental liabilities of which the
Depositor is unaware. Moreover, (i) future laws, ordinances or regulations could
impose material environmental liability; or (ii) the current environmental
condition of the Mortgaged Properties could be advers ely affected by tenants or
by the condition of land or operations in the vicinity of the Mortgaged
Properties (such as underground storage tanks).
o Risks Related to Lead-Based Paint at Multifamily Properties. Federal law
requires owners of residential housing constructed prior to 1978 to disclose to
potential residents or purchasers any condition on the property that causes
exposure to lead-based paint and the potential hazards to pregnant women and
young children, including that the ingestion of lead-based paint chips and/or
the inhalation of dust particles from lead-based paint by children can cause
permanent injury, even at low levels of exposure . Property owners can be held
liable for injuries to their tenants resulting from exposure under various laws
that impose affirmative obligations on property owners of residential housing
containing lead-based paint. The environmental assessments revealed the
existence of lead-based paint at certain of the multifamily residential
properties. In these cases the borrowers have either implemented operations and
maintenance programs or are in the process of removing the lead-based paint.
Additionally, the environmental assessments revealed the existence of lead in
mini-blinds in certain of the multifamily residential properties. In these
cases, the borrowers have planned to replace the blinds during normal repair and
maintenance operations or at tenant turnover. However, there can be no assurance
the borrowers will replace the mini-blinds or that funds will be available to
replace such mini-blinds. Based on information received from the environmental
consultant, the Depositor believes that the presence of lead-based paint or
mini-blinds containing lead at the Mortgaged Properties will not have a material
adverse effect on the value of the related Mortgaged Property or ability of the
related borrowers to repay their loans.
o Risks Related to Off-Site LUSTs. Certain of the Mortgaged Properties are
in the vicinity of sites containing leaking underground storage tanks ('LUSTs')
or other potential sources of groundwater contamination. Although the owners of
those
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Mortgaged Properties and the Trust Fund may not have legal liability for
contamination of the Mortgaged Properties from such off-site sources, the
enforcement of rights against third parties may result in additional transaction
costs.
o Risks Related to ACMs. At several of the Mortgage Properties, ACMs have
been detected through sampling by environmental consultants. Although ACMs found
at these Mortgaged Properties are not expected to present a significant risk as
long as the related Mortgaged Property continues to be properly managed, the
related borrowers agreed to establish and maintain operations and maintenance or
abatement programs and/or funded environmental reserves. Nonetheless, there can
be no assurance that the value of a Mortgaged Property as collateral for the
Mortgage Loan will not be adversely affected by the presence of ACMs.
o Risks Related to the Servicer Obtaining an Environmental Assessment Prior
to Taking Remedial Action. Before the Special Servicer acquires title to a
Mortgaged Property on behalf of the Trust Fund or assumes operation of such
Mortgaged Property, the Pooling and Servicing Agreement requires it to obtain an
environmental assessment of the property. This requirement will decrease the
likelihood that the Trust Fund will become liable under any environmental law.
However, this requirement may effectively preclude foreclosure until a
satisfactory environmental assessment is obtained (or until any required
remedial action is thereafter taken or a determination is made that such action
need not be taken or need not be taken prior to foreclosure). There is,
accordingly, some risk that the Mortgaged Property will decline in value while
this assessment is being obtained. Moreover, there is no assurance this
requirement will effectively insulate the Trust Fund from potential liability
under environmental laws. See 'The Pooling and Servicing Agreement--Realization
Upon Mortgage Loans--Standards for Conduct Generally in Effecting Foreclosure or
the Sale of Defaulted Loans' in this Prospectus Supplement and 'Certain Legal
Aspects of Mortgage Loans--Environmental Legislation' in the Prospectus.
o Specific Environmental Risks at Certain of the Mortgaged Properties. With
respect to the Mortgage Property securing the Pride Center Retail Loan,
polychloroethylene ('PCE') was found in the groundwater and soil. A remediation
plan (including soil excavation, offsite disposal for the PCE impacted soil,
waste transportation, inspections and possibly rehabilitation of sewer lines)
was prepared by the environmental consultant and approved by the Los Angeles
Regional Quality Control Board. To cover such remediation, the environmental
consultant suggested reserves of $75,000-$400,000. The Originator required the
borrower to put up reserves in the amount of $400.000.
BORROWER MAY BE UNABLE TO PREPAY THE OUTSTANDING PRINCIPAL BALANCE ON THE
ANTICIPATED REPAYMENT DATE. 176 of the Notes ('ARD Notes') have Anticipated
Repayment Dates, on which date, if such loans are not prepaid, the interest rate
for such Mortgage Loan will increase by 2% and all excess cash flow remaining
after the payment of principal, interest and escrows, will be paid to lender
instead of returned to the borrower. For a more complete discussion of ARD
Loans, see 'Description of the Mortgage Pool--Certain Terms and Conditions of
the Mortgage Loans--Excess Interest' in this Prospectus Supplement.
The ability of a borrower to make a substantial prepayment of principal on
the Anticipated Repayment Date will typically depend upon its ability either to
refinance the ARD Notes or to sell the related Mortgaged Property at a price
sufficient to permit the borrower to make the payment, which, in turn, will be
affected by a number of factors, including:
o the availability of, and competition for, credit for commercial and
multifamily real estate projects;
o the prevailing interest rates;
o the fair market value of the related properties;
o the borrower's equity in the related properties;
o the borrower's financial condition;
o the operating history and occupancy level of the property;
o the tax laws; and
o the prevailing general and regional economic conditions.
AMORTIZATION CHARACTERISTICS OF THE NOTES
<TABLE>
<CAPTION>
% OF INITIAL NUMBER OF
TYPE OF NOTE POOL BALANCE MORTGAGE NOTES
- ------------ ------------ --------------
<S> <C> <C>
ARD Notes............................................................. 88% 190
Fully Amortizing Notes (other than the ARD Notes)..................... 12% 25
</TABLE>
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<PAGE>
BORROWER DEFAULT. In order to maximize recoveries on defaulted Mortgage
Loans, the Special Servicer may, under certain limited circumstances, modify
Mortgage Loans that are in default or as to which a payment default is
reasonably foreseeable. While the Special Servicer will have a duty to determine
that any such modification is likely to produce a greater recovery on a net
present value basis than liquidation, there can be no assurance that such
flexibility with respect to modifications will increase the net present value of
receipts from or proceeds of Mortgage Loans that are in default or as to which a
default is reasonably foreseeable.
RISKS RELATING TO ENFORCEABILITY. All of the Mortgage Loans contain
due-on-sale clauses, each of 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. All of the
Mortgage Loans also include debt-acceleration clauses, each of which permits the
lender to accelerate the debt upon specified monetary or non-monetary defaults
by the borrower. The courts of all states will enforce acceleration clauses in
the event of a material payment default. The equity courts of any state,
however, may refuse the foreclosure of a mortgage or deed of trust or refuse to
permit the acceleration of the indebtedness as a result of a default deemed to
be immaterial or if the exercise of such remedies would be inequitable or unjust
or the circumstances would render the acceleration unconscionable.
Each of the Mortgage Loans is secured by an assignment of leases and rents
pursuant to which the related borrower assigned 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 rents. In some cases, such assignments may not be
perfected as security interests prior to actual possession of the cash flow. In
some cases, state law 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 mortgagor, the lender's
ability to collect the rents may be adversely affected. See 'Certain Legal
Aspects of Mortgage Loans--Leases and Rents' in the Prospectus.
RISKS RELATING TO ENFORCEABILITY OF PREMIUM LOANS. 44 of the Mortgage
Loans, which represent 43% of the Initial Pool Balance, are Premium Loans.
Premium Loans, which are described in detail herein under 'Description of the
Mortgage Pool-- Premium Loans,' are Mortgage Loans under which the related
borrower received a 'Premium' in the form of proceeds in excess of the principal
balance of the Mortgage Loan in exchange for agreeing to pay a higher rate of
interest on the Mortgage Loan, with the excess interest generated by the higher
rate being sufficient to amortize the premium through the Anticipated Repayment
Date or maturity date, as applicable, of such Mortgage Loan. The borrowers
acknowledged the receipt of such premiums in the related loan documents. In the
event of a prepayment (including an involuntary prepayment resulting from a
casualty or condemnation event or a default) of a Premium Loan, the borrower is
required to repay the unamortized portion of the Premium (the 'Return of Premium
Amount'). The obligation to pay such amount upon prepayment is separate from any
obligation of the borrower to pay a traditional yield maintenance premium and is
expressly undertaken by the borrower in consideration for its receipt of the
Premium.
Recent legal treatises indicate that traditional yield maintenance premiums
are generally enforceable in most jurisdictions. However, the obligation to pay
a Return of Prepayment Amount is different from the obligation to pay a
traditional yield maintenance premium, and if a borrower believed that it could
default on its Premium Loan and avoid its obligation to repay the unamortized
portion of the related premium, such borrower may be more likely to default. Any
increase in defaults on the Mortgage Loans will have the effect of accelerating
the amortization of the Certificates, even in the event that the Special
Servicer recovers the full amounts due under such defaulted loans. See
'Prepayment and Yield Considerations--Weighted Average Life of Offered
Certificates.'
RISKS CONCERNING STATES WITH ONE ACTION RULES. Several states (including
California) have laws prohibiting more than one 'judicial action' to enforce a
mortgage obligation. Some courts have construed the term 'judicial action'
broadly. Accordingly, the Pooling and Servicing Agreement will require the
Special Servicer to obtain advice of counsel prior to enforcing any of the Trust
Fund's rights under any of the Mortgage Loans that include properties where the
rule could be applicable. In addition, in the case of a Pool Loan 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 states where judicial foreclosure is the
only permitted method of foreclosure. See 'Certain Legal Aspects of Mortgage
Loans--Foreclosure' in the Prospectus.
LIMITATIONS OF APPRAISALS. Appraisals were obtained for all of the
Mortgaged Properties. Appraisals represent the analysis and opinion of an
appraiser. They are not guaranties of, and may not be indicative of, present or
future value. There can be no assurance that another appraiser would not have
arrived at a different valuation, even if such appraiser used the same general
approach to and same method of appraising the property. Moreover, appraisals
seek to establish the amount a typically motivated buyer would pay a typically
motivated seller. Such amount could be significantly higher than the amount
obtained from the sale of
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<PAGE>
a Mortgaged Property under a distress or liquidation sale. Information regarding
the appraised values of the Mortgaged Properties as of the Cut-off Date is
presented under 'Description of the Mortgage Pool' herein for illustrative
purposes only.
RISKS RELATING TO CONFLICTS OF INTEREST.
o Conflicts Between Property Managers and Borrowers.Many of the property
managers are affiliated with the related borrower. Most of the property managers
(or their affiliates) also manage other properties and many property managers
may own other properties. Thus, a property manager may manage or own properties
that compete with the Mortgaged Property it manages. Accordingly, the manager of
the Mortgaged Properties may experience conflicts of interest in the management
of such properties.
o Conflicts Between the Trust Fund and Affiliates of the Depositor.
Additionally, a conflict between the Trust Fund and an affiliate of the
Depositor may exist when such affiliate is a member or partner in the borrower
or a parent of such borrower, or where such affiliate of the Depositor is a
lender to a borrower or its parent.
-- CCA or an affiliate has acquired a preferred equity interest in certain
of the borrowers or their affiliates, which are the borrowers (or
affiliates) with respect to 2 Mortgage Loans which represent
approximately 1% of the Initial Pool Balance; and
-- an affiliate of CCA has an equity interest in the borrower or an
affiliate of the borrower with respect to 3 Mortgage Loans which
represent approximately 4% of the Initial Pool Balance.
See '--Certain Additional Risks Relating to Preferred Equity Investments'
in this Prospectus Supplement.
o Conflicts May Arise Due to Equity Investments of CCA Affiliates. An
affiliate of CCA (the 'Equity Holder') owns a common equity ownership interest
in certain borrowers or their direct parents, as set forth below. Pursuant to
the terms of the related borrowers' or parents' limited partnership or operating
agreements, as applicable, payments to the Equity Holder will generally be made
prior to payments to nonaffiliated members or partners and the Equity Holder
will have certain other preferential rights that are substantially similar to
those of the Preferred Interest Holders. See 'Description of the Mortgage
Pool--Certain Terms and Conditions of the Mortgage Loans--Preferred Equity
Investments' in this Prospectus Supplement. Such equity investments may create a
conflict between the Trust Fund and the Equity Holder.
THE EQUITY LOANS
<TABLE>
<CAPTION>
CUT-OFF DATE
MORTGAGE LOAN PRINCIPAL BALANCE
- ------------- -----------------
<S> <C>
Cinemark Credit Lease Loan................................................................. $ 8,860,878
Eastland Mall Retail Loan.................................................................. $46,673,225
Lenox Twin Pines Healthcare Loan........................................................... $ 3,200,000
</TABLE>
The aggregate Cut-off Date Principal Balances for the three Mortgage Loans
described above (the 'Equity Loans') represent approximately 4% of the Initial
Pool Balance. For more detailed description of the Eastland Mall Loan and
Mortgaged Property see 'Description of the Mortgage Pool--Significant Mortgage
Loans--The Eastland Mall Loan and Property' in this Prospectus Supplement. With
respect the Equity Loans, CRIIMI MAE will act as Servicer and Special Servicer.
The CCA Servicer will not service such Mortgage Loans for so long as an
affiliate of the Servicer holds an equity interest in the related borrower. See
'The Pooling and Servicing Agreement--Servicing of the Mortgage Loans' in this
Prospectus Supplement.
In addition, an affiliate of the Depositor may have other financing
arrangements with affiliates of the borrowers and may enter into additional
financing relationships in the future. Certain officers and directors of the
Depositor and its affiliates may own equity interests in affiliates of the
borrowers. In such capacity, the Depositor's interests may conflict with those
of the Trust Fund.
o Conflicts Between the Servicer and the Trust Fund. The Depositor has been
advised by the Servicer and the Special Servicer that in the future it intends
to service existing and new loans for third parties, including portfolios of
loans similar to the Mortgage Loans, in the ordinary course of its business. The
properties securing these mortgage loans may be in the same markets or have
common owners, obligors and/or property managers as certain of the Mortgage
Loans and the related Mortgaged Properties. Consequently, certain personnel of
the Servicer or the Special Servicer, as applicable, may, on behalf of the
Servicer, perform services with respect to the Mortgage Loans at the same time
as they are performing services, on behalf of other persons, with respect to
other mortgage loans secured by properties in the same markets as the Mortgaged
Properties. In such a case, the interests of the Servicer or the Special
Servicer, as applicable, and their other clients may differ from and compete
with the interests of the Trust Fund and such activities may adversely affect
the amount and timing of collections on the Mortgage Loans. In addition, the
Servicer is an affiliate of the Depositor and the Mortgage Loan Sellers and, in
such capacity, the Servicer's interests may conflict with the interests of the
Trust Fund. However, Mortgage Loans with preferred equity or mezzanine debt held
by an affiliate of the
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<PAGE>
Depositor will be serviced by the Servicer pursuant to instructions from CRIIMI
MAE and the Equity will be serviced by CRIIMI MAE. In addition, the Pooling and
Servicing Agreement requires the Servicer to service the Mortgage Loans solely
in the best interests of and for the benefit of all holders of the Certificates
in accordance with the Servicing Standard (as defined herein).
RISKS ASSOCIATED WITH GROUND LEASES. 7 of the Mortgaged Properties,
representing security for approximately 6% of the Initial Pool Balance,
constitute, in whole or in part, the borrower's leasehold interest under a
material ground lease. A material ground lease is one which constitutes the
material portion of the Mortgaged Property and where the ground lessor is not a
party to the Mortgage (that is, has not mortgaged its fee simple interest as
security for the Mortgage Loan). Any Mortgaged Property where the ground lessee
and ground lessor are both parties to the Mortgage has been categorized as a fee
simple estate. Each of the Mortgage Loans secured by Mortgages on leasehold
estates were underwritten taking into account payment of the ground lease rent,
except in cases where the Mortgage is a lien on both the ground lessor's and
ground lessee's interest in the Mortgaged Property. See '--Description of the
Mortgage Pool--Security for the Mortgage Loans' and 'The Pooling and Servicing
Agreement--Representations and Warranties; Repurchase' in this Prospectus
Supplement.
Upon the bankruptcy of a lessor or a lessee under a ground lease, the
debtor entity has the right to assume (continue) or reject (terminate) the
ground lease. If a debtor lessor rejects the lease, the lessee has the right to
remain in possession of its leased premises under the rent reserved in the lease
for the term (including renewals). If a debtor lessee/borrower rejects any or
all of its leases, the borrower's lender could succeed to the lessee/borrower's
position under the lease only if the lessor has specifically granted the lender
such right. If both the lessor and the lessee/borrowers are involved in
bankruptcy proceedings, the Trustee may be unable to enforce the bankrupt
lessee/borrower's obligation to refuse to treat as terminated a ground lease
rejected by a bankrupt lessor. In such circumstances, a ground lease could be
terminated notwithstanding lender protection provisions contained therein or in
the mortgage. See 'Certain Legal Aspects of Mortgage Loans' in the Prospectus.
RISKS ASSOCIATED WITH ZONING COMPLIANCE. Due to changes in zoning
requirements after certain Mortgaged Properties were constructed, certain of the
Mortgaged Properties may not comply with current zoning laws, including density,
use, parking and set back requirements. The operation of these properties is
considered to be a 'permitted non-conforming use.' This means that the borrower
is not required to alter its structure to comply with the new law; however, the
borrower may be limited in its ability to rebuild the premises 'as is' in the
event of a substantial casualty loss. This may adversely affect the cash flow
available following such loss. If a substantial casualty were to occur,
insurance proceeds may not be sufficient to pay the Mortgage Loan in full. In
addition, if the Mortgaged Property were repaired or restored in conformity with
the current law, the value of the Mortgaged Property or the revenue-producing
potential of the Mortgaged Property may not be equal to that which existed
before the casualty.
Costs Associated With Compliance With ADA. Under the Americans with
Disabilities Act of 1990 (the 'ADA'), all public accommodations are required to
meet certain federal requirements related to access and use by disabled persons.
To the extent the Mortgaged Properties do not comply with the ADA, the borrowers
may incur costs to comply with the ADA. In addition, noncompliance could result
in the imposition of fines by the federal government or an award of damages to
private litigants.
Risks Relating to Litigation. There may be legal proceedings pending and,
from time to time, 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. Such litigation could have a material
adverse effect on the distributions to Certificateholders.
Servicing Split Notes. 26 of the Notes, which represent 21% of the Initial
Pool Balance, are portions of larger loans. Each such larger loan consists of
two notes originated by CCA, one of which is being deposited in this Trust Fund.
Each other note (each, the 'Other Note') is being held by CCA, and it is
anticipated that each such Other Note will be included in a commercial
mortgage-backed securitization of the Depositor or an affiliate of the Depositor
in the future. Each of the Notes for the Prime Retail Pool Loan and the Airport
Industrial Loan was split into two notes to reduce borrower and/or loan
concentration in this Mortgage Pool. See 'Description of the Mortgage
Pool--Significant Mortgage Loans--The Prime Retail Pool Loan and Properties' in
this Prospectus Supplement. The other 24 Notes that were split are notes under
Credit Lease Loans. Each Credit Lease Loan was split into two notes to reduce
Credit Tenant or Guarantor concentration in this Mortgage Pool and to produce
Credit Lease Loans for this Mortgage Pool that have amortization schedules that
fully amortize the principal balance of the related Notes within 120 months of
the Cut-off Date, while each of the pari passu Other Notes related to such
Credit Lease Loans receive interest only during the first 120 months after the
Cut-off Date followed by amortization after the related Note in this Mortgage
Pool is paid in full. See 'Description of the Mortgage Pool--Credit Lease Loans'
in this Prospectus Supplement. With respect to each Mortgage Loan having split
notes, in the event of a default under any such loan, the proceeds of the
related collateral will be applied pro rata between the Note contained in the
Trust Fund and the related Other Note. For a detailed description of nine such
Notes, see 'Description of the Mortgage Pool--Significant Mortgage Loans--The
Accor Credit Lease Loans and Properties' in this Prospectus Supplement. Except
with respect to the Note and the Other Note for each of the Prime Retail Pool
Loans and the Airport Industrial Loan, the Notes and the Other Notes initially
will be serviced by the Servicer and, if applicable, specially serviced by the
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<PAGE>
Special Servicer. Upon the sale of each of the Other Notes (other than the Other
Notes with respect to the Prime Retail Pool Loan and the Airport Industrial
Loan) into a future securitization, the servicing will be transferred to the
servicer for the future securitization. Thus, ultimately, certain of the
Mortgage Loans will not be serviced by the Servicer pursuant to the Pooling and
Servicing Agreement, but will be serviced pursuant to a substantially similar
pooling and servicing agreement. With respect to the Prime Retail Pool Loan and
the Airport Industrial Loan, the related Notes and the related Other Notes will
be serviced by the Servicer and, if applicable, specially serviced by the
Special Servicer. Upon the sale of the Other Notes for the Prime Retail Pool
Loan and Airport Industrial Loan into a future securitization, the Total Prime
Retail Pool Loan and Total Airport Industrial Loan will continue to be serviced
by the Servicer under the Pooling and Servicing Agreement under which the
Certificates are being issued.
RISKS RELATED TO THE CERTIFICATES
The Certificates Are Supported By Limited Assets. If the Trust Fund is
insufficient to make payments on your Certificates, no other assets will be
available to you for payment of the deficiency.
Risks Related to Prepayments. The yield to maturity on your Certificates
will depend, in significant part, upon the rate and timing of principal payments
on the Mortgage Loans. For this purpose, principal payments include voluntary
prepayments, if permitted, or involuntary prepayments resulting from (i)
casualty or condemnation, (ii) defaults and liquidations, (iii) repurchases upon
breaches of representations and warranties (as further described under 'The
Pooling and Servicing Agreement-- Representations and Warranties--Repurchase' in
this Prospectus Supplement) or (iv) the purchase of the Mortgage Loans by the
holders of the Class LR Certificates or the most subordinate Class of
Certificates then outstanding (as further described under 'The Pooling and
Servicing Agreement--Optional Termination' in this Prospectus Supplement). In
situations (iii) and (iv) listed above, the price paid in connection with such a
purchase or repurchase would be passed through to you, as holder of a
Certificate, with the same effect as if such Mortgage Loan or Loans had been
prepaid in full (except that no Prepayment Premium would be payable with respect
to any such repurchase). No representation is made as to the anticipated rate of
prepayments (voluntary or involuntary) on the Mortgage Loans. See 'Prepayment
and Yield Considerations' in this Prospectus Supplement.
Risks Related to Yield. In general, if you purchase your Certificates at a
premium and principal distributions thereon occur at a rate faster than you
anticipated at the time of your purchase, to the extent that the required
Prepayment Premiums are not received, your actual yield to maturity may be lower
than the yield you expected at the time of purchase. Conversely, if you purchase
your Certificate at a discount and principal distributions thereon occur at a
rate slower than you anticipated at the time of your purchase, your actual yield
to maturity also may be lower than you assumed at the time of purchase.
The investment performance of your Certificates may vary materially and
adversely from your expectations due to prepayments on the Mortgage Loans that
are higher or lower than you anticipated. The actual yield to you, as a the
holder of an Offered Certificate, may not be equal to the yield you anticipated
at the time of your purchase or, notwithstanding that the actual yield is equal
to the yield anticipated at that time, the total return on investment that you
expected or the expected weighted average life of your Certificate may not be
realized. In deciding whether to purchase any Offered Certificates, you should
make an independent decision as to the appropriate prepayment assumptions to be
used. See 'Prepayment and Yield Considerations' in this Prospectus Supplement.
Risks Associated With Mortgagor Defaults; Delinquencies and Defaults by the
Borrower May Delay Payments to You. The rate and timing of delinquencies and
defaults on the Mortgage Loans will affect the amount of distributions on your
Certificates, the yield to maturity of your Certificates, the rate of principal
payments on your Certificates and the weighted average life of your
Certificates. Delinquencies on the Mortgage Loans, unless covered by Advances,
may result in shortfalls in distributions of interest and/or principal on your
Certificates for the current month. See '--Right to Receive Interest on Advances
is Senior to Your Right to Receive Distributions' below. Although any such
shortfalls may be made upon future Distribution Dates, no interest would accrue
on any such shortfalls. Thus, any such shortfalls would adversely affect the
yield to maturity of your Certificates.
If you calculate the anticipated yield for any Class of Certificates based
on an assumed rate of default and amount of losses on the Mortgage Loans that is
lower than the default rate and amount of losses actually experienced and such
losses are allocable to such Class of Certificates, your actual yield to
maturity will be lower than you calculated and could, under certain scenarios,
be negative. The timing of any loss on a liquidated Mortgage Loan allocated to
your Certificates will also affect the actual yield to maturity of your
Certificates, even if the rate of defaults and severity of losses are consistent
with your expectations. In general, the earlier your loss occurs, the greater
the effect on your yield to maturity. Mortgage Loans with higher interest rates
may be more likely to default or result in borrower bankruptcies. See
'Prepayment and Yield Considerations' in this Prospectus Supplement.
S-40
<PAGE>
Losses Affect Weighted Average Life and Yield to Maturity. Even if losses
on the Mortgage Loans are not borne by an investor in a particular Class of
Offered Certificates, such losses may affect the weighted average life and yield
to maturity of such investor's Certificates. See '--Risks Related to the
Mortgage Loans--Different Timing of Mortgage Loan Amortization Poses Certain
Risks' above and 'Prepayment and Yield Considerations--Weighted Average Life of
Offered Certificates' in this Prospectus Supplement.
Right to Receive Interest on Advances is Senior to Your Right to Receive
Distributions. Under certain circumstances, as more fully described in this
Prospectus Supplement under 'The Pooling and Servicing Agreement--Advances,' the
Servicer, the Special Servicer, the Trustee or the Fiscal Agent, as applicable,
will be entitled to receive interest on unreimbursed Advances at the time such
Advances (a) are recovered out of amounts received on the Mortgage Loan as to
which such Advances were made or (b) are determined to be nonrecoverable
Advances. Such interest will accrue from (and including) the date on which the
related Advance is made or the related expense incurred up to (but excluding)
the date on which (x) in the case of clause (a) above, such amounts are
recovered and (y) in the case of clause (b) above, a determination of
non-recoverability is made to the extent that there are funds available in the
Collection Account for reimbursement of such Advance. The Servicer's, the
Special Servicer's, the Trustee's or the Fiscal Agent's right, as applicable, to
receive such payments of interest is prior to your right, as holder of
Certificates, to receive distributions on your Certificates and, consequently,
may result in losses being allocated to your Certificates that would not have
resulted absent the accrual of such interest.
Compensation to the Special Servicer May Be Senior to Your Right to Receive
Distributions. Certain circumstances, including delinquencies in the payment of
principal and interest, may result in a Mortgage Loan being specially serviced.
The Special Servicer is entitled to additional compensation for special
servicing activities which may result in losses being allocated to your
Certificates that would not otherwise have resulted absent such compensation.
See 'The Pooling and Servicing Agreement-- Special Servicing' in this Prospectus
Supplement.
SERVICER OR SPECIAL SERVICER MAY PURCHASE CERTIFICATES; CONFLICT OF
INTEREST. The Servicer or Special Servicer or an affiliate thereof will be
permitted to purchase any Certificates of any Class. It is anticipated that the
Special Servicer or an affiliate of the Special Servicer will purchase all or a
majority of the Class B-7 Certificates. Following any such purchase of
Certificates, the Servicer or Special Servicer will have rights as a holder of
Certificates, including certain Voting Rights and, in t he case of the Special
Servicer, the rights of the Directing Holder (if the Special Servicer is the
purchaser of the Class B-7 Certificates), which are in addition to such entity's
rights as Servicer or Special Servicer under the Pooling and Servicing
Agreement. Consequently, any purchase of Certificates by the Servicer or Special
Servicer, as the case may be, could cause a conflict between such entity's
duties pursuant to the Pooling and Servicing Agreement and its interest as a
holder of a Certificate, especially to the extent that certain actions or events
have a disproportionate effect on one or more Classes of Certificates.
CONSENTS. Under certain circumstances, the consent or approval of the
holders of a specified percentage of the aggregate Certificate Balance of the
outstanding Certificates will be required to direct, and will be sufficient to
bind all Certificateholders to, certain actions, including amending the Pooling
and Servicing Agreement in certain circumstances. See 'The Pooling and Servicing
Agreement--Amendment' in this Prospectus Supplement.
RISKS ASSOCIATED WITH LIQUIDITY AND MARKET VALUE. There is currently no
secondary market for the Offered Certificates. While the Underwriters have
advised that they currently intend to make a secondary market in the Offered
Certificates, they are under no obligation to do so. Accordingly, there can be
no assurance that a secondary market for the Offered Certificates will develop.
Moreover, even if a secondary market does develop, it may not provide you with
liquidity of investment and such market may not continue for the life of your
Certificates. The Offered Certificates will not be listed on any U.S. securities
exchange. Lack of liquidity could result in a precipitous drop in the market
value of your Certificates. In addition, the market value of your Certificates
at any time may be affected by many factors, including then prevailing interest
rates, and no representation is made by any person or entity as to the market
value of any Offered Certificate at any time.
PASS-THROUGH RATE CONSIDERATIONS. As described in this Prospectus
Supplement under 'Description of the Offered Certificates--Distributions,' the
Pass-Through Rates on the Class A-2, Class A-3, Class A-4 and Class A-5
Certificates are based on the Weighted Average Net Mortgage Pass-Through Rates
of the Mortgage Loans. Because the Mortgage Loans amortize principal at
different rates and may be prepaid at the expiration of their respective
Lock-out Periods, such rates will fluctuate over the lives of such Classes of
Certificates. See 'Prepayment and Yield Considerations--Yield' in this
Prospectus Supplement.
S-41
<PAGE>
DESCRIPTION OF THE MORTGAGE POOL
GENERAL
The assets of the Trust Fund (the 'Mortgage Pool') consist of 194
fixed-rate mortgage loans (the 'Mortgage Loans') secured by first liens on 366
multifamily and commercial properties (the 'Mortgaged Properties'). The Mortgage
Pool has an aggregate principal balance as of the Cut-off Date of approximately
$1,290,188,358 (the 'Initial Pool Balance'), subject to a variance of plus or
minus 5%. All numerical information provided herein with respect to the Mortgage
Loans is provided on an approximate basis. All percentages of the Mortgage Pool,
or of any specified sub-group thereof, referred to herein without further
description are approximate percentages by aggregate Cut-off Date Principal
Balance. Descriptions of the terms and provisions of the Mortgage Loans are
generalized descriptions of the terms and provisions of the Mortgage Loans in
the aggregate. Many of the individual Mortgage Loans have specific terms and
provisions that deviate from the general description.
Each Mortgaged Property consists of land improved by (i) a retail property
(a 'Retail Property,' and any Mortgage Loan secured thereby, a 'Retail Loan'),
(ii) a factory outlet center property (a 'Factory Outlet Center Property,' and
any Mortgage Loan secured thereby, a 'Factory Outlet Center Loan'), (iii) an
office building (an 'Office Property,' and any Mortgage Loan secured thereby, an
'Office Loan'), (iv) a full or limited service or extended stay hotel or motel
property (a 'Hotel Property,' and any Mortgage Loan secured thereby, a 'Hotel
Loan'), (v) an apartment building or complex consisting of five or more rental
units (a 'Multifamily Property,' and any Mortgage Loan secured thereby, a
'Multifamily Loan'), (vi) a hospital, a nursing home or a congregate care
facility (each, a 'Healthcare Property,' and any Mortgage Loan secured thereby,
a 'Healthcare Loan'), (vii) an industrial property (an 'Industrial Property,'
and any Mortgage Loan secured thereby, an 'Industrial Loan'), (viii) a mobile
home community (a 'Mobile Home Park Property,' and any Mortgage Loan secured
thereby, a 'Mobile Home Park Loan') and, (ix) a mixed-use property (a 'Mixed-use
Property' and any Mortgage Loan secured thereby, a 'Mixed-use Loan'). Certain
statistical information relating to the various types of Mortgaged Properties is
set forth under '--Additional Mortgage Information-Cut-off Date Principal
Balance by Property Type' in this Prospectus Supplement.
24 of the Mortgage Loans (the 'Pool Loans') are secured by two or more
Mortgaged Properties, either pursuant to cross-collateralization with other
Mortgage Loans in the Mortgage Pool or pursuant to a single Note by a single
borrower secured by multiple Mortgaged Properties. See 'Risk Factors and Other
Special Considerations--Risks Related to the Mortgage Loans-- Concentration
Entails Risks' in this Prospectus Supplement.
None of the Mortgage Loans is insured or guaranteed by the United States,
any governmental agency or instrumentality, any private mortgage insurer or by
the Depositor, the Mortgage Loan Sellers, the Originators, the Underwriters, the
Servicer, the Special Servicer, the Trustee or the Fiscal Agent or any of their
respective affiliates. All of the Mortgage Loans are non-recourse loans so that,
in the event of a borrower default on any Mortgage Loan, recourse may generally
be had only against the specific Mortgaged Property or Mortgaged Properties
securing such Mortgage Loan and such limited other assets as have been pledged
to secure such Mortgage Loan, and not against the borrower's other assets.
However, generally, the Mortgage Loans may become recourse upon the occurrence
of certain events of default under the Mortgage Loans, including, in most cases,
the transfer or voluntary encumbrance of the Mortgaged Property without the
consent of the lender.
SECURITY FOR THE MORTGAGE LOANS
Each Mortgage Loan is generally nonrecourse and is secured by one or more
Mortgages encumbering the related borrower's interest in the applicable
Mortgaged Property or Mortgaged Properties. Each Mortgage Loan is also secured
by an assignment of the related borrower's interest in the leases, rents, issues
and profits of the related Mortgaged Property. In certain instances, additional
collateral exists in the nature of partial indemnities or guaranties, or the
establishment and pledge of one or more reserve or escrow accounts for, among
other things, necessary repairs, replacements and environmental remediation,
real estate taxes and insurance premiums, deferred maintenance and/or scheduled
capital improvements, re-leasing reserves and seasonal working capital reserves
(such accounts, 'Reserve Accounts'). The Mortgage Loans generally provide for
the indemnification of the lender by the borrower for the presence of any
hazardous substances affecting the Mortgaged Property. Each Mortgage constitutes
a first lien on a Mortgaged Property, subject generally only to (i) liens for
real estate and other taxes and special assessments not yet due and payable,
(ii) covenants, conditions, restrictions, rights of way, easements and other
encumbrances whether or not of public record as of the date of recording of the
related Mortgage, such exceptions having been acceptable to the Mortgage Loan
Seller in connection with the purchase or origination of the related Mortgage
Loan, and (iii) such other exceptions and encumbrances on Mortgaged Properties
as are reflected in the related title insurance policies. See '--Certain Terms
and Conditions of the Mortgage Loans--Escrows' in this Prospectus Supplement.
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<PAGE>
Each Mortgage Loan is evidenced by one or more promissory notes (each, a
'Note') and secured by one or more mortgages, deeds of trust or other similar
security instruments (a 'Mortgage'). Each of the Mortgages creates a first lien
on the interests of the related borrower in the related Mortgaged Property, as
set forth on the following table:
SECURITY FOR THE MORTGAGE LOANS (1)
<TABLE>
<CAPTION>
% OF
INITIAL NUMBER OF
POOL MORTGAGED
INTEREST OF BORROWER ENCUMBERED BALANCE(2) PROPERTIES
------------------------------- ---------- ----------
<S> <C> <C>
Fee Simple Estate (3).................................................................. 95% 360
Leasehold Estate (4)................................................................... 5% 6
---- ---
Total.................................................................................. 100% 366
---- ---
---- ---
</TABLE>
- ------------------
(1) Leasehold estates are marked on Annex B with an '*'.
(2) Based on the Allocated Loan Amount of the related Mortgaged Property as of
the Cut-off Date.
(3) For any Mortgaged Property where the ground lessee and ground lessor are
both parties to the Mortgage, the Mortgaged Property was categorized as a
fee simple estate.
(4) Includes any Mortgaged Property where a material portion of such property is
subject to a ground lease and the ground lessor is not a party to the
Mortgage.
THE MORTGAGE LOAN PROGRAM--UNDERWRITING STANDARDS
Each Mortgage Loan was originated by CCA or Bloomfield (the 'Originators'),
as set forth above under 'Summary of Prospectus Supplement--Originators,' and is
generally consistent with the underwriting standards applied by CCA in
connection with the purchase or origination of each of the Mortgage Loans, as
described below.
CCA purchased the Mortgage Loans that it did not originate pursuant to a
purchase and sale agreement with Bloomfield.
CCA's underwriting process involves calculations of Net Cash Flow
reflecting certain adjustments. This Net Cash Flow calculation is used to
determine DSCR. 'Net Cash Flow' with respect to a given Mortgage Loan or
Mortgaged Property means cash flow available for debt service, as determined by
CCA based upon borrower supplied information for a recent period that is
generally the twelve months prior to the origination of such Mortgage Loan,
adjusted for stabilization. Net Cash Flow does not reflect debt service,
subordinated ground rent, or non-cash items such as depreciation or
amortization, and does not reflect actual capital expenditures, and may have
been adjusted by, among other things, (i) in the case of the Multifamily
Properties and Mobile Home Park Properties, annualizing rental revenue shown on
a recent rent roll before applying a vacancy factor without further regard to
the terms (including expiration dates) of the leases shown thereon, (ii) in the
case of certain Office Properties, Industrial Properties and Retail Properties,
determining current revenues from leases in place, (iii) assuming the occupancy
rate for the Mortgaged Property or pool of Mortgaged Properties was less than
the actual occupancy rate, including in the case of certain of the Hotel
Properties, to account for an above-market occupancy rate or to reflect new
construction in the market, (iv) in the case of the Retail Properties, excluding
certain percentage rent, (v) excluding certain non-recurring income and/or
expenses, (vi) assuming that a management fee of 3% to 5% of revenue and a
franchise fee of 3.5% to 6% of room revenue (for Hotel Properties only) was
payable with respect to the Mortgaged Property, (vii) taking into account new
tax assessments and utility savings from the installation of new energy
efficient equipment, (viii) in certain cases, assuming that operating and/or
capital expenses with respect to the Mortgaged Property were greater than actual
expenses, (ix) subtracting from net operating income replacement or capital
expenditure reserves and (x) in the case of the Retail Properties, Industrial
Properties and Office Properties (other than such properties securing a Credit
Lease Loan), subtracting from net operating income an assumed allowance for
tenant improvements, leasing commissions and (xi) in the case of the Credit
Lease Loans, assuming the Net Cash Flow is equal to the rental obligations of
the tenants under the Credit Leases for the term of the Credit Lease Loan.
'Net Cash Flow' reflects the calculations and adjustments used by CCA for
its underwriting process and may or may not reflect the amounts calculated and
adjusted by the Rating Agencies for their own analysis. In addition, 'Net Cash
Flow' and the DSCRs derived therefrom are not a substitute for cash flow as
determined in accordance with generally accepted accounting principles as a
measure of the results of the property's operations or a substitute for cash
flows from operating activities determined in accordance with generally accepted
accounting principles as a measure of liquidity.
Reletting costs and capital expenditures are crucial to the operation of
commercial and multifamily properties. Each investor should make its own
assessment of the level of reletting costs and capital expenditures of the
Mortgaged Properties, and the
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<PAGE>
consequent effect of such costs and expenditures on the actual net operating
income, Net Cash Flow and debt service coverage ratios of the Mortgage Loans.
If and when the words 'expects,' 'intends,' 'anticipates,' 'estimates,' and
analogous expressions are used herein, such statements are subject to a variety
of risks and uncertainties that could cause actual results to differ materially
from those projected. Such risks and uncertainties include, among others,
general economic and business conditions, competition, changes in political,
social and economic conditions, regulatory initiatives and compliance with
governmental regulations, and various other events, conditions and
circumstances, many of which are beyond the control of the Depositor and the
Underwriters, the Trustee, the Fiscal Agent, the Servicer, the Special Servicer
and the Originators. Any forward-looking statements speak only as of their date.
The Depositor expressly disclaims any obligation or undertaking to release
publicly any updates or revisions to any forward-looking statement contained
herein to reflect any change in events, conditions or circumstances on which any
such statement is based.
No representation is made as to the future net cash flow of the properties,
nor is 'Net Cash Flow' set forth in this Prospectus Supplement intended to
represent such future net cash flow.
In underwriting each Mortgage Loan in connection with the origination or
acquisition thereof, income information provided by the related borrower was
examined by CCA. In addition, the operating history of the property, industry
data regarding the local real estate market and the appraiser's analysis were
reviewed and, if conditions warranted, net operating income with respect to the
related Mortgaged Property was adjusted for purposes of determining whether the
Mortgaged Property satisfied the debt service coverage ratio required by CCA's
underwriting guidelines. In accordance with the underwriting guidelines, net
operating income of any Mortgaged Property may have been adjusted by, among
other things, the adjustments listed in the definition of 'Net Cash Flow'
described under '--Additional Loan Information,' below. In connection with the
underwriting, net operating income was based upon information provided by the
borrower and neither the Depositor nor CCA makes any representation as to the
accuracy of such information; provided, however, that, with respect to certain
of the Mortgage Loans, CCA or the borrower engaged independent accountants to
review or perform certain procedures to verify such information.
Each Originator was required to cause each Mortgaged Property to be
inspected to determine whether it was in acceptable physical condition. The
inspection included a review of ongoing maintenance programs, common area
upkeep, mechanical systems and grounds maintenance. In addition, an engineering
study and an environmental review were prepared by appropriate consultants. With
respect to environmental matters, a Phase I environmental assessment (and, where
appropriate, a Phase II environmental assessment) was conducted for each
Mortgaged Property. A credit investigation was completed for all prospective
borrowers, in connection with which a credit report generally not more than 30
days old as of the date of the loan application and current financial statements
were obtained. The borrowers with respect to 48 of the Mortgage Loans
representing, in the aggregate, 48% of the Initial Pool Balance, excluding the
portion of the Initial Pool Balance representing Credit Lease Loans, provided
audited financial statements, agreed upon procedures or statements certified by
an independent accountant. The cash flow and NOI information presented in Annex
B may not correspond to the comparable information included in the accountants'
reports because of adjustments made by CCA as part of its underwriting
procedures.
SPECIAL NOTES
The Mortgage Loans known as Bellemeade Plaza and Airport Industrial are
each evidenced by a Special Note and a Note. A 'Special Note' is a Note that
evidences a portion of the Mortgage Loan debt and is cross-defaulted and
cross-collateralized and ranks pari passu with the other Note evidencing such
Mortgage Loan. Special Notes account for less than 1% of the Initial Pool
Balance. Each Special Note fully amortizes on a schedule that is shorter than
the amortization schedule of the related Note also secured by the related
Mortgaged Property and that is based on excess cash flow not included in Net
Cash Flow for such Mortgaged Property. Such 'excess' cash flow is generated by
one of the following sources: (a) rental income from a dark anchor where the
tenant who has vacated is obligated to continue to pay rent for a specified
period and is a creditworthy entity; (b) rental income from the above-market
portion of rent under a lease to a creditworthy tenant; (c) the difference
between underwritten ground rent and actual required ground rental payments in
situations where ground rent steps up at specified dates and was underwritten at
the higher level; and (d) the difference between underwritten taxes and actual
taxes being paid pursuant to a tax abatement. The DSCR for each Special Note is
determined based on such 'excess' cash flow and the aggregate annual debt
service payments due on such Special Note. The Special Note for Bellemeade Plaza
relates to the circumstances described in the preceding clause (a) and the
Special Note for Airport Industrial relates to the circumstances described in
the preceding clause (c).
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<PAGE>
PREMIUM LOANS
44 of the Mortgage Loans, which represent 43% of the Initial Pool Balance,
are 'Premium Loans.' A lender that makes a Premium Loan advances to the borrower
at closing an amount that is roughly equivalent to the amount that would have
been advanced under a 'standard' securitizable loan, but a portion of that
amount (the 'Premium') is not advanced as part of the contract loan amount; that
is, the face amount of the note is less than the amount advanced to the
borrower. In return for its receipt of the Premium, the borrower agrees to pay a
rate of interest on the Premium Loan that is higher than the interest rate that
would have been imposed in a 'standard' loan. The 'excess' interest generated by
the spread of the higher rate over the 'standard' rate is sufficient to amortize
the Premium over the term of the loan or through the Anticipated Repayment Date.
A Premium Loan, therefore, has a higher interest rate and a lower principal
amount than a 'standard' loan, although the debt service payments on a Premium
Loan are, in general, approximately equivalent to payments required under a
'standard' loan. The Premium Loan borrower is not required to repay the Premium
as part of principal. However, the related loan documents provide for a
calculation of the amortization of the Premium over a term based on the
difference between the Mortgage Rate and a rate (the 'Base Interest Rate') that
approximates the lower rate that would have been imposed if the Premium were
part of the principal amount of the Mortgage Loan and amortized on a shorter
schedule (the 'Base Amortization Term'). The borrower is required to pay a
Prepayment Premium to compensate the Trust for the unamortized portion of the
Premium (a 'Return of Premium Amount') upon any prepayment of the loan,
including, in general, by reason of default, casualty or condemnation. See
'Description of the Mortgage Pool--Certain Terms and Conditions of the Mortgage
Loans--Payment Provisions in this Prospectus Supplement' and 'Certain Legal
Aspects of Mortgage Loans--Default Interest, Prepayment Charges and Prepayments'
in the Prospectus.
CCA's practice of originating Premium Loans is a by-product of its practice
of underwriting mortgage loans using refinance constants in assessing debt
service coverage ratios. A 'refinance constant' is derived from an assumed
interest rate (intended to reflect a conservative projection of prevailing rates
at the Anticipated Repayment Dates of such loans) and an assumed amortization
schedule. In the current interest rate environment, actual interest rates are
significantly lower than the refinance rates assumed by CCA. This approach to
underwriting generally results in loans having lower principal balances and
higher interest rates than loans offered by other lenders who use an 'actual
constant' (based on current interest rates and an actual amortization schedule)
in underwriting loans. The proceeds funded by CCA are generally equal to that
funded under comparable 'standard' mortgage loans, but such loans have
amortization schedules generally shorter than comparable 'standard' mortgage
loans. CCA's underwriting criteria generally require that the proceeds-to-value
ratios of Premium Loans not exceed 80%. Since such Premiums are required to be
repaid in the form of increased interest over the term to Anticipated Repayment
Date of the loans and such loans have equal or lower balances at their
Anticipated Repayment Dates than comparable standard mortgage loans would have
at their maturities or anticipated repayment dates, they do not adversely affect
the likelihood that such borrowers will be able to refinance their loans at
their Anticipated Repayment Dates. See 'Risk Factors and Other Special
Considerations--Risks Relating to Enforceability of Premium Loans.'
With respect to Premium Loans, (i) loan-to-value ratio ('LTV') means the
principal amount of such Premium Loan, exclusive of the Premium, divided by the
appraised Value of the related Mortgaged Property and (ii) proceeds-to-value
ratio ('PTV') means the total amount funded at closing of such Premium Loan,
including the Premium, divided by the Appraised Value of the related Mortgaged
Property. The weighted average of the Premiums (expressed as a percentage of the
initial principal balances of the related Mortgage Loans) at which all Mortgage
Loans were originated (including Mortgage Loans that were originated at par) is
104% and the weighted average of the Premiums at which the Premium Loans were
originated is 109%, with a range of 4% to 15%.
The ten largest Premium Loans (by Cut-off Date Principal Balance) have an
aggregate Cut-off Date Principal Balance of $348,955,663, represent 27% of the
Initial Pool Balance, had a weighted average Premium (expressed as a percentage
of the initial principal balances of such Premium Mortgage Loans) of 109%, a
weighted average DSCR of 1.49, a weighted average LTV of 64%, a weighted average
PTV of 70% and a weighted average ARD LTV/PTV of 57%. The Premium Loans have the
characteristics set forth below. For the characteristics of each Premium Loan,
see Annex A and Annex C.
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<PAGE>
PREMIUM LOANS
<TABLE>
<CAPTION>
RANGE OF AVERAGE WEIGHTED
PREMIUMS AS A WEIGHTED WEIGHTED WEIGHTED WEIGHTED CUT-OFF DATE WEIGHTED AVERAGE
% OF LOAN NUMBER AVERAGE AVERAGE AVERAGE ARD AVERAGE PRINCIPAL AVERAGE BASE
BALANCE OF NOTES LTV PTV LTV/PTV DSCR BALANCE PREMIUM AMORTIZATION
- -------------------------- -------- -------- -------- ----------- --------- ------------ -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
less than 5.0%............ 2 74% 77% 67% 1.31 $32,191,582 104% 336
5.0 - 9.9%................ 31 66% 72% 59% 1.35 $ 9,540,682 108% 320
10.00 - 15%............... 13 62% 69% 55% 1.59 $16,169,517 110% 299
Total/Weighted Average.... 46 66% 71% 59% 1.43 $12,594,966 109% 315
<CAPTION>
RANGE OF AGGREGATE
PREMIUMS AS A CUT-OFF DATE
% OF LOAN PRINCIPAL
BALANCE BALANCE
- -------------------------- ------------
<S> <C>
less than 5.0%............ $64,383,164
5.0 - 9.9%................ $295,761,151
10.00 - 15%............... $194,034,199
Total/Weighted Average.... $554,178,514
</TABLE>
CREDIT LEASE LOANS
11% of the Mortgage Loans, based on Initial Pool Balance (the 'Credit Lease
Loans'), are secured by Mortgages on Mortgaged Properties ('Credit Lease
Properties') that are, in each case, subject to a net lease obligation (a
'Credit Lease') of a tenant (a 'Credit Tenant'), which possesses, or whose
parent or affiliate that guarantees the lease obligations (a 'Guarantor')
possesses, a rating of 'BB-' (or the equivalent) or higher by the National
Association of Insurance Commissioners ('NAIC') or Standard & Poor's Rating
Services ('S&P') or one or more of the Rating Agencies. Scheduled monthly
payments under each Credit Lease are sufficient to pay in full and on a timely
basis, all interest and principal and other sums scheduled to be paid with
respect to the related Credit Lease Loan. None of the Credit Lease Loans are
Premium Loans. See 'Risk Factors and Other Special Considerations--Risks Related
to the Mortgage Loans--Credit Lease Loans Have Special Risks' in this Prospectus
Supplement.
All of the Credit Leases are 'Bondable Leases,' which means that the
related Credit Tenant has no right to terminate or abate rent, even in the event
of a casualty or condemnation or the failure of the related borrower to perform
required maintenance, repairs or replacement with respect to the related Credit
Lease Property. However, under each of the Credit Leases, the related Credit
Tenant is permitted to terminate the related Credit Lease only upon certain
condemnation or casualty events as long as the related Credit Tenant purchases
the related Credit Lease Property for an amount not less than that required to
pay the outstanding principal balance of the Mortgage Loan plus accrued
interest. In the case of the Accor Credit Leases, in the event of a casualty or
condemnation, the tenant may offer to purchase the Credit Lease Property or
substitute the Credit Lease Property with a new property, which offer may be
rejected by the landlord.
Each of the Credit Lease Loans (as identified on the following chart) is a
portion of a larger loan (each such larger loan, the 'Total Credit Lease Loan'),
consisting of two notes originated by CCA, one of which is being deposited in
this Trust Fund. The Total Credit Lease Loans have been split to reduce exposure
to a single Credit Tenant or guarantor in this securitization and to shorten the
average lives of the Certificates. The Note deposited into the Mortgage Pool has
an amortization schedule that fully amortizes the principal balance of such Note
within 120 months of the Cut-off Date. Each of the Other Notes related to such
Credit Lease Loans are interest only for the first ten years. After 120 months,
if the related Notes in this Mortgage Pool have fully amortized in accordance
with their amortization schedules, the related Other Notes will receive all of
the remaining principal payable with respect to the Total Credit Lease Loan. The
aggregate Cut-off Date Principal Balance of the Credit Lease Loans is
$147,284,666, which represents 11% of the Initial Pool Balance. The aggregate
Cut-off Date Principal Balance of the Total Credit Lease Loans is $770,583,811.
Unless otherwise specified, references herein to Credit Lease Loans refer only
to the related Note deposited in this Trust Fund. The other notes (each, the
'Other Note') are being held by CCA, and it is anticipated that each such Other
Note will be included in a mortgage securitization of the Depositor or an
affiliate of the Depositor in the future. Each of the Total Credit Lease Loans
initially will be serviced by the Servicer. Upon transfer of the Other Note to
another securitization, each Total Credit Lease Loan will be serviced by the
servicer of the other securitization.
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<PAGE>
CREDIT LEASE LOANS
<TABLE>
<CAPTION>
CUT-OFF DATE TOTAL CREDIT LEASE
PRINCIPAL LOAN CUT-OFF DATE TENANT/LEASE
PROPERTY NAME BALANCE(1) PRINCIPAL BALANCE(2) GUARANTOR RATING(3)
- --------------------------------------- ------------ ----------------------- -------------------------- -----------------
<S> <C> <C> <C> <C>
ACCOR-M-Six--Creditvest I.............. $ 9,717,785 $51,198,043 ACCOR 'BBB'/NA/NA
ACCOR-M-Six--Creditvest II............. $ 9,588,731 $50,518,132 ACCOR 'BBB'/NA/NA
ACCOR-M-Six--Limited Partnership....... $ 9,636,123 $49,944,954 ACCOR 'BBB'/NA/NA
ACCOR-M-Six--Penvest I................. $ 9,446,025 $49,766,696 ACCOR 'BBB'/NA/NA
ACCOR-M-Six--V......................... $ 10,287,380 $53,320,480 ACCOR 'BBB'/NA/NA
ACCOR-M-Six--VI........................ $ 9,861,548 $51,113,351 ACCOR 'BBB'/NA/NA
ACCOR-M-Six--III....................... $ 10,103,716 $52,368,529 ACCOR 'BBB'/NA/NA
ACCOR-M-Six--IV........................ $ 9,748,985 $50,529,929 ACCOR 'BBB'/NA/NA
ACCOR-M-Six--Penvest II................ $ 9,827,506 $51,776,544 ACCOR 'BBB'/NA/NA
Beckman--Miami......................... $ 12,196,303 $55,640,278 Beckman Coulter, Inc. 'BB+'/NA/'Ba1'
Beckman--Brea.......................... $ 15,441,913 $81,687,944 Beckman Coulter, Inc. 'BB+'/NA/'Ba1'
Circuit City--East Lansing............. $ 714,667 $ 4,457,122 Circuit City Stores, Inc. 'NAIC2'
Circuit City--Frederick................ $ 714,667 $ 4,457,122 Circuit City Stores, Inc. 'NAIC2'
Circuit City--Green Bay................ $ 714,667 $ 4,457,122 Circuit City Stores, Inc. 'NAIC2'
Circuit City--Harper Woods............. $ 857,600 $ 5,348,547 Circuit City Stores, Inc. 'NAIC2'
Circuit City--Indianapolis............. $ 714,667 $ 4,457,122 Circuit City Stores, Inc. 'NAIC2'
Circuit City--Jackson, TN.............. $ 524,089 $ 3,268,556 Circuit City Stores, Inc. 'NAIC2'
Circuit City--Kingsport................ $ 476,445 $ 2,971,414 Circuit City Stores, Inc. 'NAIC2'
Circuit City--Philadelphia............. $ 1,111,703 $ 6,933,301 Circuit City Stores, Inc. 'NAIC2'
Circuit City--Ridgeland................ $ 794,075 $ 4,952,357 Circuit City Stores, Inc. 'NAIC2'
Circuit City--Wichita Falls............ $ 476,445 $ 2,971,414 Circuit City Stores, Inc. 'NAIC2'
Bentley Mills Distribution Facility.... $ 3,298,811 $14,984,529 Interface, Inc. 'BB+'/NA/'Ba1'
The Money Store........................ $ 12,169,935 $86,244,089 First Union National Bank 'A+'/'AA-'/'Aa3'
Cinemark Pool Credit Lease............. $ 8,860,878 $27,216,232 Cinemark USA, Inc. 'BB-'/NA/'Ba3'
</TABLE>
- ------------------
(1) Or Allocated Loan Amount, if applicable.
(2) Only the Cut-off Date Principal Balance is included in the Mortgage Pool.
The remaining amount of the Total Credit Lease Loan is not included in the
Trust Fund.
(3) Long-term unsecured debt rating of NAIC or S&P/Fitch/Moody's.
Each of the Credit Leases (except for the Circuit City Credit Leases) has a
primary lease term (the 'Primary Term') which expires on or after the scheduled
final maturity date of the related Total Credit Lease Loan. The Primary Term of
the Circuit City Credit Leases expires 11 days before the maturity date of the
Total Circuit City Credit Lease Loans. The Credit Lease Loans in this Mortgage
Pool are scheduled to be repaid fully from the scheduled payment of rent under
the related Credit Leases by or on behalf of the Credit Tenant with respect to
such Credit Leases (the 'Monthly Rental Payments') made during the Primary Term
of such Credit Lease.
Although the Credit Lease Loans in the Trust Fund have an amortization
schedule that fully amortizes the principal balance of the related Note, each of
the related Other Notes (other than the Other Note for the Cinemark Credit Lease
Loan) are balloon notes that will require a substantial payment of principal at
maturity. In order to minimize the risks associated with making such balloon
payments, each of the related borrowers has obtained residual value insurance
policies (the 'Residual Value Policies') or surety bonds.
Generally, each Credit Lease Loan provides that if the related Credit
Tenant has defaulted in the performance of any covenant or agreement of such
Credit Lease and remains in default beyond the applicable notice and grace
periods, then the lender may require the related borrower either (i) to exercise
any of its rights under such Credit Lease or (ii) to terminate such Credit
Lease. A default under a Credit Lease will constitute a default under the
related Credit Lease Loan.
Each borrower under a Credit Lease Loan has assigned to the lender of the
related Credit Lease Loan, as security for such borrower's obligations
thereunder, such borrower's rights under the related Credit Leases and its
rights to all income and profits to be derived from the operation and leasing of
the related Credit Lease Property, including, but not limited to, an assignment
of its rights under any guaranty with respect to the Credit Tenant's obligations
under the related Credit Lease and an assignment of the
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<PAGE>
right to receive all Monthly Rental Payments due under the related Credit Lease.
Repayment of the Credit Lease Loans and other obligations of the borrowers will
be funded from such Monthly Rental Payments. Notwithstanding the foregoing, the
borrowers will remain liable for all obligations under the Credit Lease Loans
(subject to the non-recourse provisions thereof).
Each Credit Lease generally provides that the related Credit Tenant must
pay all real property taxes and assessments levied or assessed against the
related Credit Lease Property, and all charges for utility services, insurance
and other operating expenses incurred in connection with the operation of such
Credit Lease Property. The Monthly Rental Payments are deposited directly into a
Lock Box Account controlled by the Servicer. Although each Credit Lease requires
the Credit Tenant to fulfill its payment and maintenance obligations during the
term of the Credit Lease, in some cases the Credit Tenant has not covenanted to
operate the related Credit Lease Property for the term of the Credit Lease, and
the Credit Tenant may at any time cease actual operations at the Credit Lease
Property, but it remains obligated to continue to meet all of its obligations
under the Credit Lease.
The Circuit City Credit Leases, the Cinemark Credit Leases, the Money Store
Credit Leases and the Accor Credit Leases permit the Credit Tenant, at its own
expense, and generally with the consent of the borrower, to make such
alterations and construct additional buildings or improvements on the Credit
Lease Property as the Credit Tenant may deem necessary or desirable, or to
demolish any part of a building, provided that the Credit Tenant restores the
building to a structure whose value is equal to or greater than that of the
original building. Such actions, if undertaken by the Credit Tenant, will not
affect the Credit Tenant's obligations under the Credit Lease.
The Credit Leases having Cinemark USA, Inc. as the Credit Tenant provide
that at any time after the tenth anniversary of the commencement of such Credit
Lease, if the Credit Tenant determines in its good faith judgment that the
operation of such Credit Lease Property is economically obsolete, the Credit
Tenant may purchase the Credit Lease Property and terminate the Credit Lease. In
order to effect such a purchase, certain terms and conditions must be satisfied,
including, among other things, confirmation from the Rating Agencies that such
purchase will not result in a qualification, downgrade or withdrawal of the then
current rating of any Class of Certificates. The Cinemark Credit Leases further
provide that at any time after the second anniversary of the commencement of
such Credit Leases, but no more than once during any consecutive twelve month
period, the Credit Tenant may substitute the related Credit Lease Property with
a new property by conveying such new property to the related landlord and
substituting a new lease for the existing Credit Lease. In order to effect such
a substitution, certain terms and conditions must be satisfied, including, among
other things, receipt of confirmation from the Rating Agencies that such
substitution will not result in a qualification, downgrade or withdrawal of the
then current rating on any Class of Certificates. See also 'Description of the
Mortgage Loans--Significant Mortgage Loans--The ACCOR Credit Lease Loans and
Properties' in this Prospectus Suplement.
At the end of the term of a Credit Lease, a Credit Tenant generally is
obligated to surrender the Credit Lease Property in good order and in its
original condition received by the Credit Tenant, except for ordinary wear and
tear and repairs required to be performed by the Mortgagor.
CERTAIN TERMS AND CONDITIONS OF THE MORTGAGE LOANS
Annex A. For a detailed presentation of the characteristics of the Mortgage
Loans, on a loan-by-loan basis, see Annex A hereto.
Annex B. For a detailed presentation of the characteristics of the Mortgage
Loans, on a property-by-property basis, see Annex B.
Due Dates. All of the Mortgage Loans provide for scheduled payments of
principal and/or interest ('Monthly Payments') to be due on the eleventh day of
each month or, if the eleventh day is not a Business Day, either the next
Business Day or the first preceding Business Day (except for the Accor Credit
Lease Loans, which provide for Monthly Payments on the first day of each month).
A 'Business Day' is any day, other than a Saturday, Sunday or a day on which
banking institutions in Illinois, Texas or New York are authorized or obligated
by law, executive order or governmental decree to close. None of the Mortgage
Loans has a grace period for Monthly Payments.
Mortgage Rates; Calculations of Interest. Each of the Mortgage Loans
accrues interest on the basis of a 360-day year consisting of twelve 30-day
months or on the basis of the actual number of days elapsed and a 360 day year.
Each of the Mortgage Loans accrues interest at the Mortgage Rate, which is fixed
for the entire remaining term of such Mortgage Loan; provided, however, as
described below under '--Excess Interest,' certain of the Mortgage Loans accrue
interest at a higher rate (the 'Excess Rate') after their respective Anticipated
Repayment Dates. As used herein, the term 'Mortgage Rate' does not include the
Excess Rate.
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<PAGE>
Excess Interest. 176 of the Notes, representing approximately 88% of the
Initial Pool Balance, are notes which bear interest at their respective Mortgage
Rates until, or within 3 months after their respective Anticipated Repayment
Date (an 'ARD Note,' and the related Mortgage Loan, an 'ARD Loan'). Commencing
within three months of the respective Anticipated Repayment Date, each such Note
generally will bear interest at a fixed rate (the 'Revised Rate') per annum
equal to, for so long as such Note is in the Mortgage Pool, the Mortgage Rate
plus 2%; provided, however, in the event that an ARD Loan is purchased from the
Trust Fund on or after its Anticipated Repayment Date, as provided herein, the
interest rate will increase to a higher rate, generally 5% plus the greater of
the original interest rate and the sum of the then current applicable treasury
rate and the original spread. Until the principal balance of each such ARD Note
has been reduced to zero, the related borrower will only be required to pay
interest at the Mortgage Rate. Interest accrued at the excess of the related
Revised Rate over the related Mortgage Rate will be deferred (such accrued and
deferred interest and interest thereon, if any, is 'Excess Interest'). Except
where limited by applicable law, Excess Interest so accrued will earn interest
at the Revised Rate. Prior to the Anticipated Repayment Date, borrowers under
ARD Notes will be required to enter into a lock box agreement pursuant to which
all revenue will be deposited directly into a Lock Box Account controlled by the
Servicer. From and after the Anticipated Repayment Date, in addition to paying
interest (at the Mortgage Rate) and principal (based on the amortization
schedule) (together, the 'Monthly Debt Service Payment'), the related borrower
generally will be required to apply all monthly cash flow from the related
Mortgaged Property or Properties to pay the following amounts in the following
order of priority: (i) required payments to the tax and insurance escrow fund
and any ground lease escrow fund, (ii) payment of Monthly Debt Service, (iii)
payments to any other required escrow funds, (iv) payment of operating expenses
pursuant to the terms of an annual budget approved by the Servicer, (v) payment
of approved extraordinary operating expenses or capital expenses not set forth
in the approved annual budget or allotted for in any escrow fund, (vi) principal
on the Mortgage Loan until such principal is paid in full and (vii) Excess
Interest. The cash flow from the Mortgaged Property or Properties securing an
ARD Loan after payments of items (i) through (v) above is referred to herein as
'Excess Cash Flow.' As described below, ARD Loans generally provide that the
related borrower is prohibited from prepaying the Mortgage Loan until one to six
months prior to the Anticipated Repayment Date but, upon the commencement of
such period, may prepay the loan, in whole or in part, without payment of a
Prepayment Premium. The Anticipated Repayment Date for each ARD Loan is listed
in Annex A.
Class LR Certificateholders May Purchase ARD Loans After the Anticipated
Repayment Date. The holders of 100% of the Percentage Interests in the Class LR
Certificates, and if the holder of the Class LR Certificates does not exercise
its option, the holder of 100% of the Percentage Interests in the most
subordinate Class of Certificates then outstanding (not including the Class B-7H
Certificates), will have the option for up to two months after the Anticipated
Repayment Date for any ARD Loan to purchase such ARD Loan at a price equal to
its outstanding principal balance plus accrued and unpaid interest, unreimbursed
Property Advances and accrued and unpaid interest on Advances. As a condition to
such purchase, such holders will be required to deliver an opinion of counsel to
the effect that such purchase would not (i) result in a gain which would be
subject to the tax on net income derived from prohibited transactions imposed by
Code Section 860F(a)(1) or otherwise result in the imposition of any other tax
on the Lower-Tier REMIC or Upper-Tier REMIC under the REMIC provisions of the
Code or (ii) cause either of the Lower-Tier REMIC or Upper-Tier REMIC to fail to
qualify as a REMIC.
Amortization of Principal. As set forth in the following table, Mortgage
Loans have amortization terms that are generally the same as their respective
remaining terms to maturity.
AMORTIZATION CHARACTERISTICS OF THE NOTES
<TABLE>
<CAPTION>
% OF
INITIAL POOL NUMBER OF
TYPE OF NOTE BALANCE NOTES
------------ ------------ ---------
<S> <C> <C>
ARD Notes.............................................................................. 88% 125
Fully Amortizing Notes (other than ARD Loans).......................................... 12% 25
</TABLE>
Prepayment Provisions. Each Mortgage Loan prohibits voluntary prepayment
during a period (a 'Lock-out Period') ending on a date ranging from
approximately 27 months to 127 months after the Cut-off Date. The weighted
average Lock-out Period remaining from the Cut-off Date for the Mortgage Loans
is approximately 116 months. No Mortgage Loan imposes a fee or premium
('Prepayment Premium') for voluntary prepayments made after the expiration of
the related Lock-out Period, but Prepayment Premiums may be due in connection
with certain involuntary prepayments and, with respect to certain Premium Loans
that permit prepayment prior to the related Anticipated Repayment Date, the
unamortized portion of the Premium will be due with such prepayment. See 'Risk
Factors and Other Special Considerations--The Certificates-Special Prepayment
and Yield Considerations' in this Prospectus Supplement. Generally, the Lock-out
Periods for the ARD Loans expire on or one to six months prior to their
respective Anticipated Repayment Dates and the Lock-out Periods for the fully
amortizing Mortgage Loans (other
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<PAGE>
than ARD Loans) expire on or one to six months prior to their respective
maturity dates. Certain of the prepayment terms of each of the Mortgage Loans
are described in Annex A.
The Mortgage Loans provide generally that in the event of a condemnation or
casualty, the lender may apply the condemnation award or insurance proceeds to
the repayment of debt, which, in the case of some of the Mortgage Loans, will
require payment of any applicable Prepayment Premium. However, in the case of
most of the Mortgage Loans, if the award or loss is less than a specified
percentage of the original principal balance of the Mortgage Loan and if in the
reasonable judgment of the lender (i) the Mortgaged Property can be restored
within six months prior to the maturity of the related Note(s) to a property no
less valuable or useful than it was prior to the condemnation or casualty, (ii)
after a restoration the Mortgaged Property would adequately secure the
outstanding balance of the Note and (iii) no event of default has occurred or is
continuing, the proceeds or award may be applied by the borrower to the costs of
repairing or replacing the Mortgaged Property. In general, in the event that a
condemnation award or insurance proceeds are used to prepay a Mortgage Loan, the
constant monthly payment due under the related note will be reamortized based on
the remaining amortization term and the applicable interest rate. The Pooling
and Servicing Agreement provides that if a Mortgage Loan permits the lender to
apply certain amounts to a prepayment of principal (e.g., by applying casualty
or condemnation proceeds or funds escrowed for improvements not completed by the
required date) prior to the expiration of the related Lock-out Period, the
Special Servicer cannot apply such funds to such a prepayment unless the Special
Servicer has first received the consent of the Servicer (if the Special Servicer
is not the Servicer) or the holders of 66 2/3% of the Voting Rights of the
Certificates responding within 20 Business Days to a solicitation of their
consent. If such consent is not obtained, such funds will be made available to
the related borrowers to restore the related Mortgaged Property.
Certain Mortgage Loans provide that if casualty or condemnation proceeds
are above a specified amount, the borrower will be permitted to supplement such
proceeds with an amount sufficient to prepay the entire principal balance of the
Mortgage Loan. In such event, no Prepayment Premium would be required to be
paid.
Neither the Depositor nor either Mortgage Loan Seller makes any
representation as to the enforceability of the provision of any Mortgage Loan
requiring the payment of a Prepayment Premium, or of the collectability of any
Prepayment Premium. See 'Risk Factors and Other Special Considerations--Risks
Related to the Certificates--Risks Related to Prepayments' and '--Risks Related
to Yield' in this Prospectus Supplement and 'Certain Legal Aspects of Mortgage
Loans-Default Interest, Prepayment Charges and Prepayments' in the Prospectus.
Property Releases. All of the Mortgage Loans permit the applicable borrower
at any time after a specified period (the 'Defeasance Lock-out Period'), which
is generally the greater of approximately three years from the date of
origination and two years from the Closing Date, provided no event of default
exists, to obtain a release of a Mortgaged Property from the lien of the related
Mortgage (a 'Defeasance Option'), provided that, among other conditions, the
borrower (a) pays on any Due Date (the 'Release Date') (i) all interest accrued
and unpaid on the principal balance of the Note to and including the Release
Date, (ii) all other sums, excluding scheduled interest or principal payments,
due under the Mortgage Loan and all other loan documents executed in connection
therewith, (iii) an amount (the 'Collateral Substitution Deposit') that will be
sufficient to (x) purchase direct, non-callable obligations of the United States
of America providing payments (1) on or prior to, but as close as possible to,
all successive scheduled payment dates from the Release Date to the related
maturity date or in the case of an ARD Loan, the related Anticipated Repayment
Date and (2) in amounts equal to the scheduled payments due (or assumed balloon
payment on ARD Loans) on such dates under the Mortgage Loan or the defeased
amount thereof in the case of a partial defeasance, and (y) pay any costs and
expenses incurred in connection with the purchase of such U.S. government
obligations and (b) delivers a security agreement granting the Trust Fund a
first priority lien on the Collateral Substitution Deposit and the U.S.
government obligations purchased with the Collateral Substitution Deposit and an
opinion of counsel to such effect. The Pool Loans 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 the DSCR with respect to the remaining Mortgaged
Properties after the defeasance be no less than the greater of (x) the DSCR at
origination and (y) the DSCR immediately prior to such defeasance. The Servicer
will be responsible for purchasing the U.S. government obligations on behalf of
the borrower at the borrower's expense. Simultaneously with such actions, the
related Mortgaged Property will be released from the lien of the Mortgage Loan
and the pledged U.S. government obligations (together with any Mortgaged
Property not released, in the case of a partial defeasance) will be substituted
as the collateral securing the Mortgage Loan.
In general, a successor borrower established or designated by CCA will
assume all of the defeased obligations of a borrower exercising a Defeasance
Option under a Mortgage Loan and the borrower will be relieved of all of the
defeased obligations thereunder. If a Mortgage Loan is partially defeased, the
related Note will be split and only the defeased portion of the borrower's
obligations will be transferred to the successor borrower. The Depositor makes
no representation as to the enforceability of the
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<PAGE>
defeasance provisions of any Mortgage Loan. See 'Risk Factors and Other Special
Considerations--Risks Related to the Certificates--Risks Related to Prepayments'
and '--Risks Related to Yield' in this Prospectus Supplement.
Escrows. Generally, all of the Mortgage Loans, other than the Credit Lease
Loans, provide for monthly escrows to cover property taxes and insurance
premiums on the Mortgaged Properties (except in cases where three months to one
year of insurance premiums are escrowed). The Mortgage Loans secured by
leasehold interests also provide for escrows to make ground lease payments. Most
of the Mortgage Loans (excluding Credit Lease Loans and Mobile Home Park Loans)
require monthly escrows to cover ongoing replacements and capital repairs. See
Annex B for property-by-property detail.
'Due-on-Sale' and 'Due-on-Encumbrance' Provisions. The Mortgage Loans
generally contain 'due-on-sale' and 'due-on-encumbrance' clauses that in each
case permit the holder of the Mortgage Loan to accelerate the maturity of the
Mortgage Loan if the borrower sells or otherwise transfers or encumbers the
related Mortgaged Property without the consent of that holder. The Special
Servicer will determine, in a manner consistent with the Servicing Standard,
whether to exercise any right the lender 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.
Certain of the Mortgage Loans provide that the lender may condition an
assumption of the loan on the receipt of an assumption fee, which is in some
cases equal to one percent of the then unpaid principal balance of the
applicable Note, in addition to the payment of all costs and expenses incurred
in connection with such assumption. Certain of the Mortgages provide that such
consent may not be unreasonably withheld provided that (i) no event of default
has occurred, (ii) the proposed transferee is creditworthy and has sufficient
experience in the ownership and management of properties similar to the
Mortgaged Property, (iii) the Rating Agencies have confirmed in writing that
such transfer or further encumbrance will not result in a qualification,
reduction or withdrawal of the then current rating of the Certificates, (iv) the
transferee has executed and delivered an assumption agreement evidencing its
agreement to abide by the terms of the Mortgage Loan together with legal
opinions and title insurance endorsements and (v) the assumption fee has been
received (which assumption fee will be paid to the Servicer and the Special
Servicer, as provided in the Pooling and Servicing Agreement, and will not be
paid to the Certificateholders). See 'Certain Legal Aspects of Mortgage
Loans--Due-on-Sale and Due-on-Encumbrance' in the Prospectus and 'Risk Factors
and Other Special Considerations--Risks Related to the Mortgage Loans--Risks
Relating to Enforceability' in this Prospectus Supplement. The Depositor makes
no representation as to the enforceability of any due-on-sale or
due-on-encumbrance provision in any Mortgage Loan.
Mortgage Provisions Relating to Servicer's Right to Terminate Management
Agreements. Certain of the Mortgage Loans permit the lender to cause the related
borrowers to terminate the related management agreements upon the occurrence of
certain events. A significant number of Mortgage Loans where an affiliate of the
borrower manages the related Mortgaged Property or Properties, provides that if
the Debt Service Coverage Ratio for such Mortgage Loan falls below a certain
level, the lender will have the right to cause the termination of the related
management agreement and replace the manager with a manager acceptable to the
lender. The Mortgage Loans generally allow the lender to terminate the related
management agreements upon the occurrence of certain events of default under the
related loan agreements or mortgage documents. In addition, the lender is
generally permitted to cause the termination of a management agreement if the
manager breaches certain provisions of the management agreement which would
permit the termination of such agreement thereunder.
Cross-Collateralization and Cross-Default of Certain Mortgage Loans. 24 of
the Mortgage Loans (the 'Pool Loans'), representing 32% of the Mortgage Pool by
Cut-off Date Principal Balance, are secured by more than one Mortgaged Property.
However, because certain states require the payment of a mortgage recording or
documentary stamp tax based upon the principal amount of debt secured by a
mortgage, the Mortgages recorded with respect to certain Mortgaged Properties
secure only 150% of the Allocated Loan Amount of such Mortgaged Properties
(rather than the entire initial principal balance of the related Note or Notes).
See 'Risk Factors and Other Special Considerations-Risks Related to the Mortgage
Loans-Limitations on Enforceability of Cross-Collateralization' in this
Prospectus Supplement and 'Loan Characteristics' in Annex A.
Hazard, Liability and Other Insurance. The Mortgage Loans generally require
that each Mortgaged Property be insured (a) by a hazard insurance policy in an
amount equal to the greatest of (i) the full replacement cost of the
improvements and equipment without deduction for physical depreciation, (ii) the
outstanding principal balance of the Mortgage Loan (or, with respect to certain
Pool Loans, the full insurable value of the Mortgaged Property) and (iii) an
amount sufficient to prevent the insurer from deeming the borrower a co-insurer,
or in an amount satisfying other similar standards, and (b) by a flood insurance
policy if any part of the Mortgaged Property is located in an area identified by
the Federal Emergency Management Agency as an area having special flood hazards
and for which flood insurance has been made available under the National Flood
Insurance Program in an amount at least equal to the outstanding principal
amount of the Mortgage Loan (or with respect to certain Pool Loans, the full
insurable value of the Mortgaged Property) or the maximum limit of coverage
available, whichever is less, or in an
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<PAGE>
amount satisfying other similar standards. The hazard insurance policies are
required to cover loss or damage by fire and lightning and other risks and
hazards covered by a standard extended coverage insurance policy including, but
not limited to, riot and civil commotion, vandalism, malicious mischief,
burglary and theft. Certain of the Mortgaged Properties located in earthquake
risk areas, are insured by earthquake insurance, and certain of such insured
Mortgaged Properties may be insured in amounts less than the outstanding
principal balances of such Mortgage Loans. Certain of the Mortgaged Properties
located in areas having special hurricane hazards are insured by hurricane
insurance in amounts less than the outstanding principal balances of such
Mortgage Loans. Mobile Home Park Properties located in earthquake risk areas or
areas having special hurricane hazards are not insured against earthquake or
hurricane damage.
The Mortgage Loans also generally require that the borrower obtain and
maintain during the entire term of the Mortgage Loan (i) comprehensive public
liability insurance, including broad form property damage, blanket contractual
and personal injuries coverages and containing minimum limits per occurrence as
specified in the related Mortgage, (ii) rent loss and/or business interruption
insurance in an amount equal to the greater of (x) estimated annual (or a
specified longer period) gross revenues from the operations of the Mortgaged
Property and (y) projected annual (or a specified longer period) operating
expenses (including debt service) for the maintenance and operation of the
Mortgaged Property, or in an amount satisfying other similar standards, (iii)
except with respect to certain of the Mobile Home Park Loans, insurance against
loss or damage from leakage of sprinkler systems and explosion of steam boilers,
air conditioning equipment, high pressure piping, machinery and equipment, and
pressure vessels, (iv) if the Mortgaged Property is a commercial property,
worker's compensation insurance, (v) during any period of repair or restoration,
builders 'all risk' insurance, and (vi) such other insurance as may from time to
time be reasonably required by the lender in order to protect its interests.
Preferred Equity Investments. In general, with respect to each such
borrower, the Preferred Interest Holder is entitled to receive certain preferred
distributions prior to distributions being made to the other partners or
members. No monthly distribution to the Preferred Interest Holder is permitted
to be made until all required monthly debt service payments, reserve payments,
other payments under the related Mortgage Loan ('Monthly Mortgage Loan
Payments') and any obligations to other creditors have been made when due and
all monthly operating expenses with respect to the related Mortgaged Property
('Monthly Operating Expenses') have been paid. After payment of such amounts,
the Preferred Interest Holder is entitled to receive a distribution of a
preferred yield and a monthly return of capital equal to either (i) a scheduled
minimum payment or (ii) the greater of a scheduled minimum payment and specified
percentage of certain remaining cash flow from the Mortgaged Property or
Properties, after payment of Monthly Mortgage Loan Payments, Monthly Operating
Expenses and the monthly preferred yield to the Preferred Interest Holder (or,
in each case, if certain breaches have occurred, 100% of such remaining cash
flow).
Under the related partnership agreement, operating agreement or similar
agreement, the Preferred Interest Holder has certain specified rights,
including, in most cases, the right to terminate and replace the manager of the
related Mortgaged Property or Properties upon the occurrence of certain
specified breaches or in some cases, if the DSCR as of certain dates falls below
certain levels generally equal to the DSCR at the time of the origination of the
related Mortgage Loan. However, the right of the Preferred Interest Holder to
terminate any manager is expressly subordinate to the right of the Servicer to
terminate and replace such manager. If the Preferred Interest Holder is entitled
to terminate a manager at a time when the Servicer does not have such a right,
then prior to termination, the Preferred Interest Holder must receive written
confirmation from each of the Rating Agencies that such termination would not
cause a downgrade, qualification or withdrawal of any of its then current
ratings assigned to any Class of Certificates. Other than the increase in the
percentage of the cash flow used to calculate the monthly return of capital and
the right to terminate the manager as described above, the Preferred Interest
Holder has no further remedies under the relevant partnership, operating or
similar agreement in the event of nonpayment of its monthly preferred yield and
return of capital.
In general, the Preferred Interest Holder has the right to approve the
annual budget for the Mortgaged Property, which right is subject to any right
that the Servicer may have to approve such budgets. The Preferred Interest
Holder also has the right to approve certain actions of the related borrowers,
including certain transactions with affiliates, prepayment or refinancing of the
related Mortgage Loan, transfer of the related Mortgaged Property, entry into or
modification of substantial leases, improvement of the related Mortgaged
Property to a materially higher standard than comparable properties in the
vicinity of such Mortgaged Property (unless approved by the Servicer as
described below), and the dissolution, liquidation or the taking of certain
bankruptcy actions with respect to the borrower. With respect to the making of
any capital improvements in addition to those reserved for under the related
Mortgage Loan, the Servicer may approve such improvements without the consent of
the Preferred Interest Holder. In such event, the expenditure of amounts to make
such additional capital improvements, rather than to make the monthly
distribution to the Preferred Interest Holder, will not cause a breach which
gives rise to a right to terminate the related manager.
S-52
<PAGE>
SIGNIFICANT MORTGAGE LOANS
In connection with the origination of each of the seven largest Mortgage
Loans listed below, CCA, in addition to its ordinary underwriting procedures,
obtained audited financial statements, reviewed financial statements or engaged
independent accountants to perform agreed upon procedures with respect to
financial statements for a recent 12 month period with respect to the related
Mortgaged Properties and obtained market rental analysis for the Office
Properties.
The Prime Retail Pool Loan and Properties
The Loan. The largest Mortgage Loan in the Mortgage Pool (the 'Prime Retail
Pool Loan') was originated by CCA on June 15, 1998, had an original principal
balance of $81,920,584 and has a Cut-off Date Principal Balance of $81,857,269,
which represents approximately 6% of the Initial Pool Balance. The Prime Retail
Pool Loan is evidenced by a Note (the 'Prime Retail Pool Note') that is
cross-collateralized and cross-defaulted with a pari passu note (the 'Other
Prime Retail Pool Note') in an equal amount (the aggregate indebtedness
represented by such two notes being referred to herein as the 'Total Prime
Retail Pool Loan'). The Total Prime Retail Pool Loan had an original principal
balance of $163,841,167. The Total Prime Retail Pool Loan is secured by two fee
Mortgages and three fee and leasehold Mortgages (the 'Prime Retail Pool
Mortgages') encumbering four retail properties (the 'Prime Retail Pool
Properties') which are located in California, Indiana, Maine and New York.
<TABLE>
<S> <C> <C> <C>
Cut-off Date % of Initial Pool Balance: 6%
Principal Balance: $81,857,269
Origination Date: June 15, 1998 Maturity Date: July 11, 2028
Loan Type: ARD Property Type: Retail/Factory Outlet Centers
Monthly Payment: $624,102 No. of Properties: 4
Interest Rate: 8.40% Location of Properties: Indiana, Maine, New York and
California
Amortization Term: 360 months Appraised Value (aggregate for $285,900,000(1)
pool):
Debt Constant: 9.15% Total Square Feet: 1,591,482
DSCR: 1.54 Year Built/Renovated: 1984-1995/1995-1997(2)
Cut-off Date LTV: 57% Cut-off Date Principal $103
Balance/SqFt.:
Anticipated Repayment Date: July 11, 2008 Fee or Leasehold: 2 Fee and 3 Fee and
Leasehold(3)
ARD Balance: $73,982,703 Major Tenants/Sq. Ft./Lease See Chart Below
Expiration Date:
ARD LTV/PTV: 52% Occupancy: 97%(5)
Borrower Special Purpose Yes, with an independent Lock Box: Hard
Entity: director and a non- Premium Loan: Yes(5)
consolidation opinion.
</TABLE>
- ------------------
(1) For Total Prime Retail Pool Loan.
(2) For additional information, see '--The Properties' below.
(3) The Mortgaged Property in California is encumbered by a fee Mortgage and a
fee and leasehold Mortgage.
(4) See '--The Properties' below for additional information regarding major
tenants
(5) See '--The Premium' below for additional information regarding the Premium.
The Other Prime Retail Pool Note is being held by CCA and it is anticipated
that such note will be included in a mortgage securitization of the Depositor or
an affiliate of the Depositor in the future. The Prime Retail Pool Note was
separated from the Other Prime Retail Pool Note to reduce exposure to one
borrower in a particular securitization. The Total Prime Retail Pool Loan will
be serviced by the Servicer and, if necessary, specially serviced by the Special
Servicer. Even after the Other Prime Retail
S-53
<PAGE>
Note is transferred to a future securitization, servicing and special servicing
will remain with the Servicer and Special Servicer, as applicable.
The Premium. The Prime Retail Pool Loan is a Premium Loan. The chart below
contains significant information regarding this aspect of the Prime Retail Pool
Loan.
<TABLE>
<CAPTION>
BASE BASE CUT-OFF
TOTAL FUNDED PREMIUM INTEREST AMORTIZATION CUT-OFF DATE DATE ARD
AMOUNT AMOUNT RATE TERM LTV PTV LTV/PTV
------------ ----------- -------- ------------ ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
$180,000,000 $16,158,833 6.99% 316 months 57% 63% 52%
</TABLE>
See 'Description of the Mortgage Pool--The Mortgage Loan
Program-Underwriting Standards--Premium Loans' in this Prospectus Supplement for
additional information regarding Premium Loans.
The Borrower. The borrower under the Prime Retail Pool Loan consists of the
following four special purpose entities (collectively, the 'Prime Retail Pool
Borrower') as follows: (i) Outlet Village of Kittery Limited Partnership, a
Delaware limited partnership; (ii) the Prime Outlets at Gilroy Limited
Partnership, a Delaware limited partnership; (iii) The Prime Outlets at Michigan
City Limited Partnership, a Delaware limited partnership; and (iv) Finger Lakes
Outlet Center, L.L.C., a Delaware lim ited liability company. One percent of the
interest in each borrower entity is owned by Prime Retail Finance VII, Inc., and
99% of the interest in each borrower entity is owned by Prime Retail, L.P. Each
of the Prime Retail Pool Borrowers is an affiliate of Prime Retail, Inc.
('Prime'), a publicly traded REIT. The proceeds of the Prime Retail Pool Loan
were used to finance a portion of the merger of Prime with Horizon Group, Inc.
('Horizon') in connection with which Prime acquired the Prime Retail Pool
Properties from Horizon.
Substitution of Properties; Prepayment; Defeasance. Prior to July 11, 2008
(the 'Prime Retail Anticipated Repayment Date'), the Prime Retail Pool Borrower
may replace any of the Prime Retail Pool Properties upon transfer of such
property to a third party. The Prime Retail Pool Borrower must provide a
replacement factory outlet center or other retail property and must satisfy
certain conditions specified in the loan documents, including confirmation from
each of the Rating Agencies that such substitution would not cause a downgrade,
qualification or withdrawal of the then current ratings assigned to any Class of
Certificates.
Voluntary prepayment is prohibited until the third month preceding the
Prime Retail Anticipated Repayment Date for the Prime Retail Pool Loan. However,
the Prime Retail Pool Borrower may defease all or any portion of the Prime
Retail Pool Loan at any time from the second anniversary of the issuance of the
Certificates through the Prime Retail Anticipated Repayment Date. Defeasance
requires the satisfaction of certain conditions specified in the loan documents,
including confirmation from each of the Rating Agencies that such conditions
have been met. See 'Certain Terms and Conditions of the Mortgage Loans--Property
Releases' in this Prospectus Supplement.
Lock Box; Reserve Accounts; Financial Statements. The Prime Retail Pool
Borrower has entered into a lock box agreement whereby all rent from the Prime
Retail Pool Properties is required to be deposited by the tenants directly into
a Lock Box Account controlled by the Servicer. See 'The Pooling and Servicing
Agreement--Accounts--Lock Box Accounts' in this Prospectus Supplement. The Prime
Retail Pool Borrower also has established Reserve Accounts, including a required
repair reserve account, an ongoing tax and insurance reserve account, a ground
lease reserve account and an ongoing capital expenditure reserve account. See
'Description of the Mortgage Loans--Certain Terms and Conditions of the Mortgage
Loans--Escrows' and 'The Pooling and Servicing Agreement--Accounts--Cash
Collateral Accounts' in this Prospectus Supplement. The Prime Retail Pool
Borrower is required to furnish audited financial statements to the Servicer
within 90 days following the end of each of its fiscal years.
The Property Manager. The Prime Retail Pool Properties are managed, without
a formal management agreement by Prime Retail, L.P. (the 'Prime Retail Pool
Property Manager'), an entity wholly-owned by Prime and an affiliate of the
Prime Retail Pool Borrower that manages a total of 48 outlet centers having 13.4
million square feet of gross leasable area. The Prime Retail Pool Property
Manager was established to manage retail factory outlets. The fees payable to
the Prime Retail Pool Property Manager or any other property manager may not
exceed 4% of the gross revenues of the managed property and are subordinate to
debt service on the Prime Retail Pool Loan. The lender may terminate the Prime
Retail Pool Property Manager (or any other property manager of any Prime Retail
Pool Property) upon an event of default under the Prime Retail Pool Loan or if
the DSCR falls below 1.10.
The Ground Leases. A material portion of the Prime Retail Pool Property
known as Outlet Village of Kittery is located on land leased to the related
Prime Retail Pool Borrower pursuant to a ground lease which expires on October
1, 2009 (but provides for eight automatic five-year extensions). A material
portion of the Prime Retail Pool Property known as The Prime Outlets at Gilroy
S-54
<PAGE>
(such portion, the 'Prime Retail Pool Property Phase III and IV') is located on
land that is jointly owned by the Prime Retail Pool Borrower and Arcadia
Development Co. (the 'Prime Retail Pool Co-tenant'). The 50% undivided ownership
interest of the Prime Retail Pool Co-tenant in Prime Retail Pool Property Phase
III and IV is subject to a ground lease between the Prime Retail Pool Co-tenant,
as lessor, and the Prime Retail Pool Borrower, as lessee, that expires in 2092
and contains call and put options, subject to certain conditions, for the Prime
Retail Pool Borrower to purchase the Prime Retail Co-tenant's interest in Prime
Retail Pool Property Phase III and IV and for the Prime Retail Pool Co-tenant to
sell such interest to the Prime Retail Pool Borrower. See 'Risk Factors and
Other Special Considerations--Risks Related to the Mortgage Loans--Risks
Associated With Ground Leases' in this Prospectus Supplement for a discussion of
certain matters associated with ground leases.
In addition, another Prime Retail Pool Property, Finger Lakes Outlets, is
located on land that was conveyed to the Seneca County Industrial Development
Agency by a prior owner under a sale/leaseback arrangement pursuant to a Payment
in Lieu of Tax Agreement. Under this agreement, the owners of the leasehold are
required to pay periodic assessments and ad valorem taxes, each as specified in
such agreement. The Prime Retail Pool Borrower maintains reserves for such
payments as part of an ongoing tax reserve account. The term of the lease
agreement related to the Finger Lakes Outlet will expire on December 31, 2015
and the fee interest in the property will revert back to the Prime Retail Pool
Borrower. Because reserves are maintained for costs associated with the ground
lease and the Prime Retail Pool Borrower will hold a fee interest on the
maturity date of the Prime Retail Loan, the interest in this Mortgaged Property
is considered a fee interest.
The Properties. The Prime Retail Pool Properties consist of four retail
properties as follows: The Outlet Village of Kittery, located in Kittery, Maine;
The Prime Outlets at Gilroy, located in Gilroy, California; The Prime Outlets at
Michigan City, located in Michigan City, Indiana; and the Finger Lake Outlets,
located in Waterloo, New York. The Prime Retail Pool Properties are Factory
Outlet Center Properties, ranging in size from 130,797 square feet to 577,082
square feet. Collectively, the centers are approximately 97% leased.
<TABLE>
<CAPTION>
% OF
# YEAR ALLOCATED INITIAL
SQUARE BUILT/ LOAN POOL APPRAISED %
PROPERTY NAME FEET RENOVATED AMT. (1) BALANCE VALUE (2) LEASED (3)
------------------------ ------- ---------- ----------- ------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
Finger Lakes 392,688 1995 $18,880,768 1% $ 59,000,000 97%
Outlet Center
Kittery Outlet Village 130,797 1910(4) $ 5,624,238 0% $ 30,000,000 100%
/1995
Lighthouse Place 490,915 1987/1997 $23,442,364 2% $ 81,500,000 97%
Outlets at Gilroy 577,082 1989/1995 $33,973,214 3% $115,400,000 96%
<CAPTION>
MAJOR
TENANTS
MAJOR 1997
TENANTS SALES PSF
------------------ ---------
<S> <C>
VF Factory Outlet $ 310
Liz Claiborne $ 268
Reebok $ 400
Old Navy $ 358
Ralph Lauren $ 1,413
J. Crew $ 983
Spiegel Inc. $ 196
Eddie Bauer $ 495
J. Crew $ 408
Nike $ 689
VF Factory Outlet $ 244
Gap $ 559
Esprit Direct $ 442
</TABLE>
- ------------------
(1) Cut-off Date Principal Balance.
(2) Based on appraisals performed on various dates within 18 months prior to the
Cut-off Date.
(3) As of June 1, 1998.
(4) A portion of the outlet is an historic farm house built in 1910.
With respect to the Mortgaged Property known Kittery Outlet Village, a fuel
oil underground storage tank was reportedly removed in 1997; however a site
assessment was not conducted at that time. As a result, it is currently unknown
whether soil contamination exits on the Mortgaged Property. The environmental
consultant recommended further investigation. The Prime Retail Borrower obtained
a pollution liability insurance policy with $5,000,000 aggregate coverage and a
$100,000 deductible per incident covering such Mortgaged Property. For
additional information concerning certain environmental risks associated with
the Mortgaged Properties, see 'Risk Factors And Other Special
Considerations--Risks Related to the Mortgage Loans-- Environmental Risks
Related to the Mortgaged Properties' in this Prospectus Supplement.
See 'Risk Factors and Other Special Considerations--Risks Related to the
Mortgage Loans--Risks Associated with Commercial and Multifamily Lending
Generally' and '--Retail Properties Have Specific Risks' in this Prospectus
Supplement for a discussion of certain matters associated with Retail
Properties.
S-55
<PAGE>
The Soho Grand Hotel Loan and Property
The second largest Mortgage Loan in the Mortgage Pool (the 'Soho Grand
Hotel Loan') was originated by CCA on August 25, 1998, had an original principal
balance of $60,041,752 and has a Cut-off Date Principal Balance of $60,041,752,
which represents approximately 5% of the Initial Pool Balance. The Soho Grand
Hotel Loan is secured by a fee Mortgage (the 'Soho Grand Hotel Mortgage')
encumbering a property (the 'Soho Grand Hotel Property') located in New York,
New York.
<TABLE>
<S> <C> <C> <C>
Cut-off Date Principal Balance: $60,041,752 % of Initial Pool Balance: 5%
Origination Date: August 25, 1998 Maturity Date: September 11, 2023
Loan Type: ARD Property Type: Hotel-Full Service
Monthly Payment: $483,472.45 No. of Properties: 1
Interest Rate: 8.50% Location of Property: New York
Amortization Term: 300 months Appraised Value: $105,000,000
Debt Constant: 9.66% Rooms: 369
DSCR: 1.86 Year Built/Renovated: 1996/NA
Cut-off Date LTV: 57% Cut-off Date Balance $162,715
Anticipated Repayment Date: September 11, 2008 Fee or Leasehold: Fee
ARD Balance: $50,193,326
ARD LTV/PTV: 48% Occupancy: 94%(1)
Borrower Special Purpose Yes, with an independent Lock Box: Hard(2)
Entity: director and a non- Premium Loan: Yes(3)
consolidation opinion
</TABLE>
- ------------------
(1) During the 12 month period ending on June 30, 1998.
(2) Most receipts are credit card receivables which are deposited directly into
a Lock Box Account. See '--Lock Box; Reserve Accounts; Financial Statements'
below.
(3) See '--The Premium' below for more information regarding the Premium.
The Premium. The Soho Grand Hotel Loan is a Premium Loan. The chart below
contains significant information regarding this aspect of the Soho Grand Hotel
Loan.
<TABLE>
<CAPTION>
BASE BASE
TOTAL FUNDED PREMIUM INTEREST AMORTIZATION CUT-OFF DATE CUT-OFF DATE ARD
AMOUNT AMOUNT RATE TERM LTV PTV LTV/PTV
------------ ----------- -------- ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 66,250,000 $ 6,208,248 6.95% 274 months 57% 63% 48%
</TABLE>
See 'Description of the Mortgage Pool--The Mortgage Loan
Program--Underwriting Standards--Premium Loans' in this Prospectus Supplement
for additional information regarding Premium Loans.
The Borrower. Soho Grand Hotel, Inc. (the 'Soho Grand Hotel Borrower') is a
special purpose New York corporation that is wholly-owned by Hartz Mountain
Development Corp., a New Jersey corporation and an indirect subsidiary of Hartz
Mountain Group, Inc., a privately held Delaware corporation owned and controlled
by Leonard Stern and members of the Stern family.
Prepayment; Defeasance. Voluntary prepayment is prohibited until the
Anticipated Repayment Date for the Soho Grand Hotel Loan. However, the Soho
Grand Hotel Borrower may defease all or any portion of the Soho Grand Hotel Loan
at any time from the second anniversary of the date of the issuance of the
Certificates through the Anticipated Repayment Date. Defeasance requires the
satisfaction of certain conditions specified in the loan documents, including
confirmation from the Rating Agencies that such defeasance would not cause a
downgrade, qualification or withdrawal of the then current ratings assigned to
any Class of Certificates. See 'Certain Terms and Conditions of the Mortgage
Loans--Property Releases' in this Prospectus Supplement.
Lock Box; Reserve Accounts; Financial Statements. Most of the revenues
received at the Soho Grand Hotel Property are credit card receipts which,
pursuant to the terms of the Soho Grand Hotel Loan, are deposited directly into
a Lock Box Account controlled by the Servicer. Other receivables are required to
be deposited by the Soho Grand Hotel Borrower into a Lock Box Account. See 'The
Pooling and Servicing Agreement--Accounts--Lock Box Accounts' in this Prospectus
Supplement. The Soho Grand Hotel Borrower also has established Reserve Accounts,
including a required repair reserve account funded at closing, an
S-56
<PAGE>
ongoing tax and insurance reserve account, and an ongoing furniture, fixtures
and equipment reserve account. See 'Description of the Mortgage Loans--Certain
Terms and Conditions of the Mortgage Loans--Escrows' and 'The Pooling and
Servicing Agreement--Accounts--Cash Collateral Accounts' in this Prospectus
Supplement. The Soho Grand Hotel Borrower is required to furnish unaudited
financial statements to the Servicer within 90 days following the end of each of
its fiscal years unless the DSCR falls below 1.20, in which case the Soho Grand
Hotel Borrower is required to furnish audited financial statements.
The Property Manager. The Soho Grand Hotel Property is self-managed by the
Soho Grand Hotel Borrower. The lender may terminate the Soho Grand Hotel
Borrower as property manager upon an event of default under the Soho Grand Hotel
Loan. The fees payable to any property manager may not exceed 3.5% of gross
revenues from the Soho Grand Hotel Property and are subordinate to debt service
on the Soho Grand Hotel Loan.
The Property. The Soho Grand Hotel Property is a 15-story 'boutique' hotel
building with a restaurant located in SoHo, a neighborhood in Manhattan
consisting of up-scale shops, restaurants and art galleries. It has 369 rooms
and was more than 90% occupied for each full year since the start of its
operation in 1996.
See 'Risk Factors and Other Special Considerations-Risks Related to the
Mortgage Loans--Risks Associated with Commercial and Multifamily Lending
Generally' and '--Hotel Properties Have Specific Risks' for a discussion of
certain matters associated with hotel properties.
The Morgantown Mall and Commons Retail Loan and Properties
The third largest Mortgage Loan in the Mortgage Pool (the 'Morgantown Mall
and Commons Retail Loan') was originated by CCA on September 1, 1998, had an
original principal balance of $58,350,000 and has a Cut-off Date Principal
Balance of $58,350,000, which represents approximately 5% of the Initial Pool
Balance. The Morgantown Mall and Commons Retail Loan is evidenced by a single
note and secured by a fee Mortgage (the 'Morgantown Mortgage') encumbering two
Retail Properties known as the Morgantown Mall (the 'Morgantown Mall') and the
Morgantown Commons (the 'Morgantown Commons,' and, together with Morgantown
Mall, the 'Morgantown Retail Properties') both located in the District of Grant,
County of Monongolia, West Virginia.
<TABLE>
<S> <C> <C> <C>
Cut-off Date Principal Balance: $58,350,000 % of Initial Pool Balance: 5%
Origination Date: September 1, 1998 Maturity Date: September 11, 2028
Loan Type: ARD Property Type: Retail
Monthly Payment: $383,903 No. of Properties: 2
Interest Rate: 6.8990% Location of Property: West Virginia
Amortization Term: 360 months Appraised Value: $73,000,000
Debt Constant: 7.9090% Square Feet: 772,848
DSCR: 1.38 Year Built/Renovated: 1991/NA(1) and 1990/1997(2)
LTV: 80% Total Cut-off Date Principal $75
Balance/Square Feet:
Anticipated Repayment Date: September 11, 2008 Fee or Leasehold: Fee
Major Tenant Sq. Ft./Lease K-Mart/134,667sq.ft/2021, Elder
Expiration Date: Beerman/71,032sq.ft/2010,
Proffitts/86,479sq.ft/2011,
Sears/85704sq.ft/2005
ARD Balance: $50,740,213
ARD LTV: 70% Occupancy: 60%
Borrower Special Lock Box: Hard
Purpose Entity: Yes, with an independent Premium Loan: No
director and a non-
consolidation opinion
</TABLE>
(Footnotes on next page)
S-57
<PAGE>
(Footnotes from previous page)
- ------------------
(1) With respect to Morgantown Commons Property.
(2) With respect to Morgantown Mall Property.
The Borrower. Morgantown Mall Associates Limited Partnership (the
'Morgantown Retail Borrower') is a special purpose Ohio limited partnership. 1%
of the interest in the Morgantown Mall and Commons Retail Borrower is owned by
its general partner, Glimcher Morgantown Mall, Inc., a Delaware corporation, and
99% of the interest in the Morgantown Retail Borrower is owned by its sole
limited partner, Glimcher Properties Limited Partnership (the 'Morgantown
Limited Partner'), a Delaware limited partnership. The Morgantown Limited
Partner is the Morgantown Property Manager.
Prepayment; Defeasance. Voluntary prepayment is prohibited until the
Anticipated Repayment Date. However, the Morgantown Retail Borrower may defease
all or any portion of the Morgantown Retail Properties at any time from the
second anniversary of the issuance of the Certificates through the Anticipated
Repayment Date for the Morgantown Mall and Commons Retail Loan. Defeasance
requires the satisfaction of certain conditions specified in the loan documents,
including confirmation from the Rating Agencies that such defeasance would not
cause a downgrade, qualification or withdrawal of the then current ratings
assigned to any Class of Certificates. See 'Certain Terms and Conditions of the
Mortgage Loans--Property Releases' in this Prospectus Supplement.
Lock Box; Reserve Accounts; Financial Statements. Under the terms of the
Morgantown Mall and Commons Retail Loan, all rent from the Morgantown Retail
Properties is required to be deposited by the tenants directly into a Lock Box
Account controlled by the Servicer. See 'The Pooling and Servicing
Agreement--Accounts--Lock Box Accounts' in this Prospectus Supplement. The
Morgantown Retail Borrower has also established Reserve Accounts, including an
ongoing rollover reserve account and an ongoing capital expenditure reserve
account. See 'Description of the Mortgage Loans--Certain Terms and Conditions of
the Mortgage Loans--Escrows' and 'The Pooling and Servicing
Agreement--Accounts--Cash Collateral Accounts' in this Prospectus Supplement.
The Morgantown Mall and Commons Retail Borrower is required to furnish audited
financial statements to the Servicer within 90 days following the end of each of
its fiscal years.
The Property Manager. The Morgantown Retail Properties are managed pursuant
to a management agreement by Glimcher Properties Limited Partnership (the
'Morgantown Property Manager'), which is the Morgantown Limited Partner]. The
Morgantown Property Manager specializes in the management of various types of
retail properties and owns and/or manages 120 properties located in 24 states,
aggregating approximately 25 million square feet of gross leasable area. The
Morgantown Property Manager is entitled to receive a management fee of 4% of the
base and percentage rent on the Morgantown Retail Properties. The lender may
terminate the Morgantown Property Manager (or any other property manager of the
Morgantown Retail Properties) (i) upon an event of default under the Morgantown
Mall and Commons Retail Loan, (ii) if the DSCR falls below 1.10 or (iii) if the
cash flow falls below 85% of the underwritten cash flow (unless the decrease in
DSCR or cash flow results from the termination of the lease of an anchor
tenant). The fees payable to the Morgantown Property Manager or any other
property manager are subordinate to debt service on the Morgantown Mall and
Commons Retail Loan.
The Properties. The Morgantown Retail Properties consist of two shopping
centers: Morgantown Commons, built in 1991 and Morgantown Mall, built in 1990
and renovated in 1997. Each of the Morgantown Retail Properties consists of one
single-story building and is located in Morgantown, West Virginia. Morgantown
Commons is anchored by K-Mart, Office Max and Phar-Mor and its tenants include
Georgia Carpet and AAA of West Virginia. Morgantown Mall is anchored by Sears,
J.C. Penney and Elder Beerman and its tenants include Carmike Cinemas.
See 'Risk Factors and Other Special Considerations--Risks Related to the
Mortgage Loans--Risks Associated with Commercial and Multifamily Lending
Generally' and '--Retail Properties Have Specific Risks' for a discussion of
certain matters associated with Retail Properties.
S-58
<PAGE>
The 5670 Wilshire Loan and Property
The fourth largest Mortgage Loan in the Mortgage Pool (the '5670 Wilshire
Loan') was originated by CCA on August 20, 1998, had an original principal
balance of $54,431,011 and has a Cut-off Date Principal Balance of $54,431,011,
which represents approximately 4% of the Initial Pool Balance. The 5670 Wilshire
Loan is secured by a fee Mortgage (the '5670 Wilshire Mortgage') encumbering a
property (the '5670 Wilshire Property') located in Los Angeles, California.
<TABLE>
<S> <C> <C> <C>
Cut-off Date Principal Balance: $54,431,011 % of Initial Pool Balance: 4%
Origination Date: August 20, 1998 Maturity Date: September 11, 2028
Loan Type: ARD Property Type: Office
Monthly Payment: $418,527 No. of Properties: 1
Interest Rate: 8.5% Location of Property: California
Amortization Term: 360 months Appraised Value: $75,000,000
Debt Constant: 9.23% Square Feet: 408,061
DSCR: 1.28 Year Built/Renovated: 1964/1990-91
LTV: 73% Total Cut-off Date Principal
Balance/ Square Feet:(1) $133
Anticipated Repayment Date: September 11, 2008 Fee or Leasehold: Fee
ARD Balance: $49,248,419 Major Tenant: E! Entertainment Television,
Inc.
ARD LTV/PTV: 66% Occupancy: 93%
Borrower Special Lock Box: Hard
Purpose Entity: Yes, with an independent Premium Loan: Yes(1)
director and a non-
consolidation opinion
</TABLE>
- ------------------
(1) See '--The Premium' below for more information regarding the Premium.
The Premium. The 5670 Wilshire Loan is a Premium Loan. The chart below
contains significant information regarding this aspect of the 5670 Wilshire
Loan.
<TABLE>
<CAPTION>
BASE BASE CUT-OFF
TOTAL FUNDED PREMIUM INTEREST AMORTIZATION CUT-OFF DATE DATE ARD
AMOUNT AMOUNT RATE TERM LTV PTV LTV/PTV
------------ ---------- -------- ------------ ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 60,000,000 $5,568,989 7.035% 314 months 73% 80% 66%
</TABLE>
See 'Description of the Mortgage Pool--The Mortgage Loan
Program--Underwriting Standards--Premium Loans' in this Prospectus Supplement
for additional information regarding Premium Loans.
The Borrower. 5670 Wilshire L.P. (the '5670 Wilshire Borrower') is a
special purpose Delaware limited partnership. 0.25% of the interest in the 5670
Wilshire Borrower is owned by its general partner, 5670 Wilshire GP, Inc., a
Delaware corporation, and 99.75% of the interest in the 5670 Wilshire Borrower
is owned by its sole limited partner, J.H. Snyder Company III, L.P., a joint
venture comprised of members of the Jona Goldrich family and members of the
Jerry Snyder family.
Prepayment; Defeasance. Voluntary prepayment is prohibited until the
Anticipated Repayment Date for the 5670 Wilshire Loan. However, the 5670
Wilshire Borrower may defease all or any portion of the 5670 Wilshire Loan at
any time from the second anniversary of the issuance of the Certificates through
the Anticipated Repayment Date for the 5670 Wilshire Loan. Defeasance requires
the satisfaction of certain conditions specified in the loan documents,
including confirmation from the Rating Agencies that such defeasance would not
cause a downgrade, qualification or withdrawal of the then current ratings
assigned to any Class of Certificates. See 'Certain Terms and Conditions of the
Mortgage Loans--Property Releases' in this Prospectus Supplement.
S-59
<PAGE>
Lock Box; Reserve Accounts; Financial Statements. Under the terms of the
5670 Wilshire Loan, all rent from the 5670 Wilshire Properties is required to be
deposited by the tenants directly into a Lock Box Account controlled by the
Servicer. See 'The Pooling and Servicing Agreement--Accounts--Lock Box Accounts'
in this Prospectus Supplement. The 5670 Wilshire Borrower also has established
Reserve Accounts, including a required repair reserve account funded at closing,
an ongoing tax and insurance reserve account, an ongoing rollover reserve
account and an ongoing capital expenditure reserve account. See 'Description of
the Mortgage Loans--Certain Terms and Conditions of the Mortgage Loans-Escrows'
and 'The Pooling and Servicing Agreement--Accounts--Cash Collateral Accounts' in
this Prospectus Supplement. The 5670 Wilshire Borrower is required to furnish
audited financial statements to the Servicer within 90 days following the end of
each of its fiscal years.
The Property Manager. The 5670 Wilshire Property is managed pursuant to a
management agreement by J.H. Snyder Company, LLC (the '5670 Wilshire Property
Manager'), an affiliate of the 5670 Wilshire Borrower. The lender may terminate
the 5670 Wilshire Property Manager (or any other property manager of any 5670
Wilshire Property) upon an event of default under the 5670 Wilshire Loan or if
the DSCR falls below 1.15. The fees payable to the 5670 Wilshire Property
Manager or any other property manager are subordinate to debt service on the
5670 Wilshire Loan.
The Property. The 5670 Wilshire Property is a 27-story office building
located in the 'Miracle Mile' district of Los Angeles, California. The 5670
Wilshire Property was renovated in 1991 to become one of the top buildings in
the market. The major tenant is E-Entertainment Television, Inc., and other
tenants include the United States Securities and Exchange Commission and
Singapore Airlines.
See 'Risk Factors and Other Special Considerations--Risks Related to the
Mortgage Loans--Risks Associated with Commercial and Multifamily Lending
Generally' and '--Office Properties Have Specific Risks' for a discussion of
certain matters associated with Office Properties.
The Shidler Industrial Portfolio Loan and Properties
The fifth largest Mortgage Loan in the Mortgage Pool (the 'Shidler
Industrial Portfolio Loan') was originated by CCA on September 1, 1998, had an
original principal balance of $53,000,000 and has a Cut-off Date Principal
Balance of $53,000,000, which represents approximately 4% of the Initial Pool
Balance. The Shidler Industrial Portfolio Loan is secured by 16 fee Mortgages
(the 'Shidler Industrial Portfolio Mortgages') encumbering 16 properties (each,
a 'Shidler Industrial Portfolio Property' and collectively, the 'Shidler
Industrial Portfolio Properties') located in California and Arizona.
<TABLE>
<S> <C> <C> <C>
Cut-off Date Principal Balance: $53,000,000 % of Initial Pool Balance: 4%
Origination Date: September 1, 1998 Maturity Date: September 11, 2028
Loan Type: ARD Property Type: Industrial
Monthly Payment: $357,666 No. of Properties: 16
Interest Rate: 7.15% Location of Property: California and Arizona
Amortization Term: 360 months Appraised Value: $70,749,000
Debt Constant: 8.10% Square Feet: 1,695,789
DSCR: 1.19 Year Built/Renovated: 1952-1980/1994-1997
Cut-off Date LTV: 75% Cut-off Date Balance/SF: $31
Anticipated Repayment Date: September 11, 2008 Fee or Leasehold: Fee
ARD Balance: $46,405,871 Occupancy: 100%
ARD LTV: 66% Lock Box: Hard
Borrower Special Premium Loan: No
Purpose Entity: Yes
</TABLE>
The Borrower. Western Distribution Centers, LLC (the 'Shidler Industrial
Portfolio Borrower') is a special purpose Delaware limited liability company
affiliated with The Shidler Group ('Shidler'). Shidler is a national real estate
organization owning more than 70 million square feet of commercial property. 1%
of the interest in the Shidler Industrial Portfolio Borrower is owned by its
managing member, WDC, L.P., a California limited partnership, and 99% of the
interest in the Shidler Industrial
S-60
<PAGE>
Portfolio Borrower is owned by its sole regular member, Western Distribution
Centers Member, LLC (the 'Shidler Industrial Portfolio Regular Member'), a
Delaware limited liability company. The Shidler Industrial Portfolio Regular
Member is owned by (i) Marc Brutten and Patricia Brutten, (ii) Shidler Equities,
LP, a Hawaii limited partnership, (iii) James C. Reynolds, (iv) Presidio
Associates, a California limited partnership, (v) West Palm Blackpoint
Associates, L.P., a California limited part nership, and (vi) BRS-Titan
Investment Company, L.P., a California limited partnership.
Prepayment; Defeasance. Voluntary prepayment is prohibited until the
Anticipated Repayment Date for the Shidler Industrial Portfolio Loan. However,
the Shidler Industrial Portfolio Borrower may defease all or any portion of the
Shidler Industrial Portfolio Properties at any time from the second anniversary
of the issuance of the Certificates through the Anticipated Repayment Date for
the Shidler Industrial Portfolio Loan. The defeasance amount must be at least
125% of the Allocated Loan Amount for the parcel being defeased and the borrower
must satisfy certain conditions specified in the loan documents, including
confirmation from the Rating Agencies that such defeasance will not cause a
downgrade, qualification or withdrawal of the then current ratings assigned to
any Class of Certificates. See 'Certain Terms and Conditions of the Mortgage
Loans--Property Releases' in this Prospectus Supplement.
Lock Box; Reserve Accounts; Financial Statements. Under the terms of the
Shidler Industrial Portfolio Loan, all rent from the Shidler Industrial
Portfolio Properties is required to be deposited by the tenants directly into a
Lock Box Account controlled by the Servicer. See 'The Pooling and Servicing
Agreement--Accounts--Lock Box Accounts' in this Prospectus Supplement. The
Shidler Industrial Portfolio Borrower has also established Reserve Accounts,
including a rollover reserve account to be funded during the first four years of
the term of the loan, an ongoing tax and insurance reserve account, an
environmental remediation reserve account (approximately $10,000 for asbestos
maintenance programs at the Western & Chapman properties) and an ongoing capital
expenditure reserve account. See 'Description of the Mortgage Loans--Certain
Terms and Conditions of the Mortgage Loans--Escrows' and 'The Pooling and
Servicing Agreement--Accounts--Cash Collateral Accounts' in this Prospectus
Supplement. The Shidler Industrial Portfolio Borrower is required to furnish
reviewed financial statements to the Servicer within 90 days following the end
of each of its fiscal years.
The Property Manager. The Shidler Industrial Portfolio Property is managed
pursuant to a management agreement by Wellman Properties, LLC, a California
limited liability company (the 'Shidler Industrial Portfolio Property Manager').
The lender may terminate the Shidler Industrial Portfolio Property Manager (or
any other property manager of any Shidler Industrial Portfolio Property) upon an
event of default under the Shidler Industrial Portfolio Loan or if the DSCR
falls below 1.10. The fees payable to the Shidler Industrial Portfolio Property
Manager or any other property manager may not exceed 4% of the gross revenues of
the managed property and are subordinate to debt service on the Shidler
Industrial Portfolio Loan.
The Properties. The Shidler Industrial Portfolio Properties consist of 16
industrial properties as set forth on the table below. The Shidler Industrial
Properties are distribution centers and other types of industrial properties,
ranging in size from 27,920 square feet to 334,440 square feet. Collectively,
the properties are approximately 100% leased. Most of the Shidler Industrial
Portfolio Properties are 'B-Class' properties in and around in-fill
neighborhoods near Los Angeles.
<TABLE>
<CAPTION>
# SQUARE YEAR BUILT/ ALLOCATED APPRAISED
PROPERTY LOCATION FEET RENOVATED LOAN AMT. (1) VALUE
- --------------------------- --------------------------- -------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C>
3703 S. Hill Street 3703 S. Hill Street, 32,926 /1974N/A $ 1,600,000 $ 1,785,000
Los Angeles, CA
2001-2015 Saybrook 2001 Saybrook, 47,000 1952/N/A $ 1,500,000 $ 1,921,500
Commerce, CA
1900 Tubeway 1900 Tubeway, 50,135 1963/1994 $ 1,700,000 $ 2,005,500
Commerce, CA
2600 Yates 2600 Yates, 27,920 1953/1996 $ 900,000 $ 1,134,000
Commerce, CA
4150-4174 Bandini Boulevard 4150-4174 Bandini Bldv., 334,440 1971/N/A $ 8,100,000 $11,970,000
Vernon, CA
2800-2900 Sierra Pine 2800-2900 Sierra Pine, 129,050 1969/N/A $ 4,100,000 $ 4,725,000
Vernon, CA
13240, 13280 Amar Road 13240, 13280 Amar Rd., 117,184 1963/N/A $ 2,800,000 $ 3,822,000
City of Industry, CA
341-345 Baldwin Park 341-345 Baldwin Park, 173,200 1970/1997 $ 6,000,000 $ 6,678,000
City of Industry, CA
730-780 Baldwin Park 730-780 Baldwin Park, 204,871 1972/N/A $ 5,600,000 $ 8,190,000
City of Industry, CA
111 N. Hudson Avenue 111 N. Hudson Avenue, 40,000 1967/1997 $ 1,200,000 $ 1,533,000
City of Industry, CA
Nelson & Stafford, Industry Nelson & Stafford, 199,726 1977/N/A $ 6,000,000 $ 8,316,000
City of Industry, CA
Chapman & Western Chapman & Western, 67,754 1977/1994 $ 2,700,000 $ 3,622,500
Garden Grove, CA
<CAPTION>
MAJOR
PROPERTY % LEASED (2) MAJOR TENANT TENANT SF
- --------------------------- ------------ ---------------------- ---------
<S> <C> <C> <C>
3703 S. Hill Street 100% DHL Airways 32,926
2001-2015 Saybrook 100% Lee X 47,000
1900 Tubeway 100% Mackie 50,135
2600 Yates 100% David Textiles 27,920
4150-4174 Bandini Boulevard 100% JS Knitting, 49,700
Koral Industries
2800-2900 Sierra Pine 100% Beggs and Cobb 129,050
13240, 13280 Amar Road 100% GPS, 96,200
Warehouse Tech
341-345 Baldwin Park 100% JOICO 173,200
730-780 Baldwin Park 100% Warehouse Tech. 96,871
111 N. Hudson Avenue 100% Royal Computer 40,000
Nelson & Stafford, Industry 100% Cross Freight, 47,880
Treasure Chest
Chapman & Western 100% Pilkington Aerospace 67,754
</TABLE>
S-61
<PAGE>
<TABLE>
<CAPTION>
# SQUARE YEAR BUILT/ ALLOCATED APPRAISED
PROPERTY LOCATION FEET RENOVATED LOAN AMT. (1) VALUE
- --------------------------- --------------------------- -------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C>
15551 Red Hill Avenue 15551 Red Hill Avenue, 58,062 1970/N/A $ 2,400,000 $ 3,990,000
Tustin, CA
Wicks Business Park Wicks Business Park, 143,545 1980/N/A $ 6,200,000 $ 8,295,000
San Leandro, CA
1444-1446 Factor Ave. 1444-1446 Factor Avenue, 30,000 1972/1996 $ 900,000 $ 1,302,000
San Leandro, CA
2229-2235 E. Magnolia 2229-2235 E. Magnolia, 39,976 1975/N/A $ 1,300,000 $ 1,459,500
Phoenix, AZ
<CAPTION>
MAJOR
PROPERTY % LEASED (2) MAJOR TENANT TENANT SF
- --------------------------- ------------ ---------------------- ---------
<S> <C> <C> <C>
15551 Red Hill Avenue 100% Pacific Office Group 41,926
Wicks Business Park 96% Lucent, 17,436
David Liquid Crystals
1444-1446 Factor Ave. 100% Tender Loving Things 30,000
2229-2235 E. Magnolia 100% Airborne 39,976
</TABLE>
- ------------------
(1) Cut-off Date Principal Balance.
(2) As of July 1, 1998.
See 'Risk Factors and Other Special Considerations--Risks Related to the
Mortgage Loans--Risks Associated with Commercial and Multifamily Lending
Generally' and '--Industrial Properties Have Specific Risks' for a discussion of
certain matters associated with Industrial Properties.
The Eastland Mall Loan and Property
The sixth largest Mortgage Loan in the Mortgage Pool (the 'Eastland Mall
Loan') was originated by CCA on August 20, 1998, had an original principal
balance of $46,673,225 and has a Cut-off Date Principal Balance of $46,673,225,
which represents approximately 4% of the Initial Pool Balance. The Eastland Mall
Loan is secured by a fee Mortgage (the 'Eastland Mall Mortgage') encumbering a
property (the 'Eastland Mall Property') located in Charlotte, North Carolina.
<TABLE>
<S> <C> <C> <C>
Cut-off Date $46,673,225 % of Initial Pool 4%
Principal Balance: Balance:
Origination Date: August 20, 1998 Maturity Date: September 11, 2028
Loan Type: ARD Property Type: Retail
Monthly Payment: $358,877 No. of Properties: 1
Interest Rate: 8.50% Location of Property: North Carolina
Amortization Term: 360 months Appraised Value $64,000,000
Debt Constant: 9.23% Square Feet: 371,512
DSCR: 1.31 Range of Year Built/Renovated: 1975/NA
Cut-off Date LTV: 73% Cut-off Date $126
Balance/Sq.Ft.:
Anticipated September 11, 2008 Fee or Leasehold: Fee
Repayment Date: Major Tenant/Sq.Ft./ Harris Teeter/32,386 sq.
Lease Expiration Date ft./2001, Dillards(2),
Sears(2), J.C. Penney(2)
ARD Balance: $42,229,221 Occupancy: 90%
ARD LTV/PTV: 66% Lock Box: Hard
Borrower Special Yes Premium Loan: Yes(1)
Purpose Entity:
</TABLE>
- ------------------
(1) See '--The Premium' below for more information regarding the Premium.
(2) Space not owned by Eastland Mall Borrower.
S-62
<PAGE>
The Premium. The Eastland Mall Loan is a Premium Loan. The chart below
contains significant information regarding this aspect of the Eastland Mall
Loan.
<TABLE>
<CAPTION>
BASE
TOTAL FUNDED PREMIUM INTEREST BASE AMORTIZATION CUT-OFF CUT-OFF ARD
AMOUNT AMOUNT RATE TERM DATE LTV DATE PTV LTV/PTV
- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
$48,750,000 $2,076,775 7.84% 336 months 73% 76% 66%
</TABLE>
See 'Description of the Mortgage Pool--The Mortgage Loan
Program--Underwriting Standards--Premium Loans' in this Prospectus Supplement
for additional information regarding Premium Loans.
The Borrower. Eastland Mall Limited Partnership (the 'Eastland Mall
Borrower') is a special purpose Delaware limited partnership. 0.5% of the
interest in the Eastland Mall Borrower is owned by its general partner, Eastland
Retail Corp., a Delaware corporation, and 99.5% of the interest in the Eastland
Mall Borrower is owned by its sole limited partner, Eastland Mall, LLC (the
'Eastland Mall Limited Partner'), a Delaware limited liability company. The
Eastland Mall Limited Partner is owned by (i) Mall Venture Trust II, a Delaware
business trust owned by CCA, which owns a 1% interest in the Eastland Mall
Borrower, (ii) Glimcher Properties Limited Partnership, a Delaware limited
partnership and the Eastland Mall Property Manager (as defined below), which
owns a 20% interest in the Eastland Mall Borrower and (iii) Partnership
Acquisition Trust XXIII, a Delaware business trust owned by CCA, which owns a
79% equity interest in the Eastland Mall Limited Partner. For information
regarding the risks associated with equity investments held by CCA affiliates,
see 'Risk Factors and Other Special Considerations--Risks Related to the
Mortgage Loans--Risks Relating to Conflicts of Interest--Equity Investments' in
this Prospectus Supplement.
Prepayment; Defeasance. Voluntary prepayment is prohibited until the
Anticipated Repayment Date for the Eastland Mall Loan. However, the Eastland
Mall Borrower may defease all or any portion of the Eastland Mall Property at
any time from the second anniversary of the issuance of the Certificates through
the Anticipated Repayment Date for the Eastland Mall Loan. Defeasance requires
the satisfaction of certain conditions specified in the loan documents including
confirmation from the Rating Agencies that such defeasance would not cause a
downgrade, qualification or withdrawal of the then current ratings assigned to
any Class of Certificates. See 'Certain Terms and Conditions of the Mortgage
Loans--Property Releases' in this Prospectus Supplement.
Lock Box; Reserve Accounts; Financial Statements. Under the terms of the
Eastland Mall Loan, all rent from the Eastland Mall Properties is required to be
deposited by the tenants directly into a Lock Box Account controlled by the
Servicer. See 'The Pooling and Servicing Agreement--Accounts--Lock Box Accounts'
herein. The Eastland Mall Borrower has also established Reserve Accounts,
including a required repair reserve account funded at closing, an ongoing tax
and insurance reserve account, an ongoing rollover reserve account and an
ongoing capital expenditure reserve account. See 'Description of the Mortgage
Loans-- Certain Terms and Conditions of the Mortgage Loans--Escrows' and 'The
Pooling and Servicing Agreement--Accounts--Cash Collateral Accounts' herein. The
Eastland Mall Borrower is required to furnish reviewed financial statements to
the Servicer within 90 days following the end of each of its fiscal years.
The Property Manager. The Eastland Mall Property is managed pursuant to a
management agreement by Glimcher Properties Limited Partnership (the 'Eastland
Mall Property Manager'), which owns a 20% interest in the Eastland Mall Limited
Partner. The lender may terminate the Eastland Mall Property Manager (or any
other property manager of any Eastland Mall Property) upon an event of default
under the Eastland Mall Loan or if the DSCR falls below 1.10. The fees payable
to the Eastland Mall Property Manager or any other property manager may not
exceed 4.5% of the gross revenues from the Eastland Mall Property and are
subordinate to debt service on the Eastland Mall Loan.
The Property. The Eastland Mall Property is a shopping center consisting
of two buildings located along Central Avenue in Charlotte, North Carolina. The
Eastland Mall Property was built in 1975 and underwent several major renovations
between 1989 and 1997. The center is anchored by Sears, Dillard's, JC Penny and
Belk's, each of which owns its own store. Other tenants at the Eastland Mall
Property include Harris Teeter, The Gap, Footlocker and The Limited.
See 'Risk Factors and Other Special Considerations--Risks Related to the
Mortgage Loans--Risks Associated with Commercial and Multifamily Lending
Generally' and '--Retail Properties Have Specific Risks' for a discussion of
certain matters associated with Retail Properties.
S-63
<PAGE>
The Accor Credit Lease Loans and Properties
The Loans. Each of the nine Mortgage Loans in the Trust Fund (each, an
'Accor Credit Lease Loan,' and collectively, the 'Accor Credit Lease Loans') was
made to one of nine special purpose entities, each of which leases property to
an indirect subsidiary of ACCOR, a French Corporation ('Accor'). The Accor
Credit Lease Loans were originated by CCA on April 30, 1998 and are secured by
mortgages (each an 'Accor Mortgage,' and collectively, the 'Accor Mortgages'),
each encumbering a fee interest in a Mortgaged Property (each, an 'Accor Credit
Lease Property') in one of nine separate pools (each, an 'Accor Credit Lease
Property Pool') of Hotel Properties. Each of the nine Accor Credit Lease
Property Pools is security for only the related Accor Credit Lease Loan; there
is no cross-collateralization between Accor Credit Lease Property Pools. Each
Accor Credit Lease Loan is evidenced by a single Note (each, an 'Accor Note,'
and collectively, the 'Accor Notes'). Each of the Accor Notes is
cross-collateralized and cross-defaulted with another note (the 'Other Accor
Note') that is also secured by the related Accor Credit Lease Property Pool (the
aggregate indebtedness represented by each Accor Note and each related Other
Accor Note is referred to herein as a 'Total Accor Credit Lease Loan').
Collectively, the Accor Credit Lease Loans had an original principal balance of
$89,647,891 and has a Cut-off Date Principal Balance of $88,217,800, which
represents approximately 7% of the Initial Pool Balance. The nine separate Accor
Credit Lease Property Pools are as follows:
<TABLE>
<CAPTION>
CUT-OFF DATE
PRINCIPAL BALANCE
TOTAL CUT-OFF DATE (INCLUDED IN % OF INITIAL
POOL NAME PRINCIPAL BALANCE MORTGAGE POOL) POOL BALANCE
- --------- ------------------ ------------------ ------------
<S> <C> <C> <C>
Accor-M-Six-Creditvest I........................................... $ 51,198,043 $ 9,717,785 1%
Accor-M-Six-Creditvest II.......................................... $ 50,518,132 $ 9,588,731 1%
Accor-M-Six-III.................................................... $ 52,368,529 $ 10,103,716 1%
Accor-M-Six-IV..................................................... $ 50,529,929 $ 9,748,985 1%
Accor-M-Six-Limited Partnership.................................... $ 49,944,954 $ 9,636,123 1%
Accor-M-Six-Penvest I.............................................. $ 49,766,696 $ 9,446,025 1%
Accor-M-Six-Penvest II............................................. $ 51,776,544 $ 9,827,506 1%
Accor-M-Six V...................................................... $ 53,320,480 $ 10,287,380 1%
Accor-M-Six VI..................................................... $ 51,113,351 $ 9,861,548 1%
Total......................................................... $460,536,659 $ 88,217,800 7%
<CAPTION>
# OF MORTGAGED
POOL NAME PROPERTIES
- --------- --------------------
<S> <C>
Accor-M-Six-Creditvest I........................................... 15
Accor-M-Six-Creditvest II.......................................... 11
Accor-M-Six-III.................................................... 11
Accor-M-Six-IV..................................................... 13
Accor-M-Six-Limited Partnership.................................... 14
Accor-M-Six-Penvest I.............................................. 15
Accor-M-Six-Penvest II............................................. 16
Accor-M-Six V...................................................... 11
Accor-M-Six VI..................................................... 14
Total......................................................... 120
</TABLE>
Collectively, the Accor Mortgages consist of 120 fee Mortgages encumbering
120 Hotel Properties operated by Motel 6 Operating, L.P. ('Motel 6') and located
across the United States with locations primarily in California, Texas and
Florida. Motel 6 Operating, L.P. operates all of the Motel 6 motels in the
chain. The following is additional information summarizing the Accor Credit
Lease Loans.
<TABLE>
<S> <C> <C> <C>
Cut-off Date Principal Balance: $88,217,800 % of Initial Pool Balance(4): 7%
Origination Date: April 30, 1998 Maturity Date: September 1, 2008
Loan Type: Fully amortizing(1) Property Type: Hotel
Monthly Payment: $879,584(2) No. of Properties: 120
Interest Rate: 7.030% Appraised Value: $466,200,000
Amortization Term: 124 months(3) No. of Rooms: 13,829
Debt Constant: 11.96% Year Built/Renovated: Various
DSCR: 1.0 Cut-off Date Balance/Room(2):
33,302(4)
Cut-off Date LTV: 98% Guarantor/Tenant/Subtenant: ACCOR/Commercial Credit Leasing
III, Inc./Motel 6 Operating,
L.P.
Borrower Special Purpose Yes, with an independent Occupancy(4): 64%(5)
Entity: director and a non- Lock Box: Hard
consolidation opinion.
Premium Loan: No
</TABLE>
- ------------------
(1) Each of the Other Accor Notes is a balloon note with residual value
insurance. See '--The Accor Notes and the Other Accor Notes' below.
(2) Payments increase over time.
(3) The Total Accor Credit Lease Loans amortize over various periods, all of
which are greater than 240 weeks.
(4) Collectively, for the Total Accor Credit Lease Loans.
(5) As of December 31, 1997.
S-64
<PAGE>
The Accor Notes and the Other Accor Notes. Each of the Other Accor Notes
is being held by CCA and it is anticipated that such note will be included in a
mortgage securitization of the Depositor or an affiliate of the Depositor in the
future. Each of the Accor Notes was separated from the related Other Accor Note
to reduce exposure to one Credit Tenant in this securitization. The Accor Notes
have an amortization schedule that fully amortizes the principal balance within
120 months of the Cut-off Date. Each of the Other Accor Notes is interest only
for the first ten years and thereafter receives all of the principal remaining
unpaid with respect to the Total Accor Credit Lease Loans. Each of the Other
Accor Notes is a balloon note requiring a substantial payment of principal at
its maturity. The Total Accor Credit Lease Loans initially will be serviced by
the Servicer and specially serviced by the Special Servicer. Upon the transfer
of the Other Accor Notes to another securitization, the servicing for the Accor
Credit Lease Loans will be transferred to the servicer for such securitization.
The Credit Tenant, the Borrower, the Tenant and the Subtenant. The Accor
Tenant, has subleased each of the Accor Credit Lease Properties to Motel 6. The
Credit Tenant under each of the Accor Credit Leases is Universal Commercial
Credit Leasing III, Inc. (the 'Accor Credit Tenant'), a Delaware corporation and
indirect subsidiary of Accor. The obligations of the Accor Tenant under the
related Accor Credit Lease Loan are unconditionally guaranteed by Accor, one of
the world's largest hoteliers with 2,500 hotels in 70 countries. Accor has a
long-term unsecured debt rating of 'BBB' by S&P. In 1990, Accor purchased Motel
6, the Dallas-Based budget hotel chain. Accor is a global leader in the
hospitality industry (through the ownership, operation, franchising and leasing
of full and limited service hotels worldwide such as Novotel and Sofitel and
motels such as Motel 6 in the U.S.), the travel industy (through Carlson
Wagonlit Travel, in which Accor owns 50% of the ownership interest), the car
rental industry (through Europcar, in which Accor owns 50% ownership interest)
and the travel service voucher industry, as well as other lines of business
related to travel and leisure.
The borrowers under the Accor Loans consist of the following nine special
purpose entities (each, an 'Accor Borrower,' and collectively, the 'Accor
Borrowers') as follows: (i) M-Six Creditvest I Business Trust, a Delaware
business trust (the Mortgaged Properties of which are collectively referred to
as 'Pool I'); (ii) M-Six Creditvest II Business Trust, a Delaware business trust
(the Mortgaged Properties of which are collectively referred to as 'Pool II');
(iii) M-Six Limited Partnership, a Delaware limited partnership (the Mortgaged
Properties of which are collectively referred to as 'Pool III'); (iv) M-Six
Penvest I Business Trust, a Delaware business trust (the Mortgaged Properties of
which are collectively referred to as 'Pool IV'); (v) M-Six V Business Trust, a
Delaware business trust (the Mortgaged Properties of which are collectively
referred to as 'Pool V'); (vi) M-Six VI Business Trust, a Delaware business
trust (the Mortgaged Properties of which are collectively referred to as 'Pool
VI'), (vii) M-Six III Business Trust, a Delaware business trust (the Mortgaged
Properties of which are collectively referred to as 'Pool VII'); (viii) M-Six IV
Business Trust, a Delaware business trust (the Mortgaged Properties of which are
collectively referred to as 'Pool VIII'); and (ix) M-Six Penvest II, a Delaware
business trust (the Mortgaged Properties of which are collectively referred to
as 'Pool IX').
The Accor Credit Lease Properties have been leased by the related Accor
Borrower under nine separate lease agreements (each, an 'Accor Credit Lease')
See 'Description of the Mortgage Pool--the Mortgage Loan Program--Credit Lease
Loans' in this Prospectus Supplement.
Release and Substitution of Properties; Prepayment; Defeasance. Releases
and substitutions of Accor Credit Lease Properties may occur in connection with
(i) the failure of an Accor Credit Lease Property to comply with the Americans
with Disabilities Act or (ii) a major casualty or condemnation of an Accor
Credit Lease Property. In such event, the related Accor Tenant may offer to
purchase the related Accor Credit Lease Property for an amount at least equal to
the Allocated Loan Amount for such property or substitute a replacement property
of equal or greater value, each such release or substitution will be subject to
certain conditions including confirmation by the Rating Agencies that such
release or substitution would not cause a downgrade, qualification or withdrawal
of the then current ratings assigned to any Class of Certificates. In addition,
each Accor Tenant has the option to purchase some or all of the Accor Credit
Lease Properties for amounts sufficient to retire the related Accor Credit Lease
Loan on dates occuring after the maturity date of the Accor Credit Lease Loans.
Voluntary prepayment is prohibited until 60 days prior to the maturity date
for the related Accor Credit Lease Loan, except in connection with a major
casualty or major condemnation and if certain conditions are met. Each Accor
Borrower may defease all or any portion of the Accor Credit Lease Loan at any
time from the second anniversary of the issuance of the Certificates. Defeasance
requires the satisfaction of certain conditions specified in the loan documents,
including confirmation from each of the Rating Agencies that such defeasance
would not cause a downgrade, qualification or withdrawal of the then current
ratings assigned to any Class of Certifcates.
See 'Certain Terms and Conditions of the Mortgage Loans--Property Releases'
in this Prospectus Supplement.
The Properties. The Accor Credit Lease Properties consist of 120 Hotel
Properties located throughout 26 states. The Accor Credit Lease Properties are
motels operated by Motel 6, ranging in size from 52 rooms to 206 rooms.
Collectively, the Credit Lease Properties had approximately 64% occupancy during
1997.
S-65
<PAGE>
The Estate for Years Properties. With respect to the Accor Properties
included in two of the Accor Credit Lease Property pools, the related Accor
Borrowers own a fee interest in the Mortgaged Properties included in such pools.
With respect to the remaining Accor Credit Lease Properties (the 'Accor Estate
for Years Properties'), the related Accor Borrowers hold an 'estate for years'
ownership interest in the land and a fee interest in the improvements while a
separate remainder trust (the 'Accor Remainder Trust') owns a remainder interest
in the land. Each Accor Borrower and each related Accor Remainder Trust have
executed the related Accor Mortgage and have granted a lien and security
interest in their respective interest in the related Accor Property and all
agreements relating thereto. As a result, the Mortgage with respect to each
Accor Credit Lease Property creates a first lien on a fee interest in such Accor
Credit Lease Property.
See 'Risk Factors and Other Special Considerations--Risks Related to the
Mortgage Loans--Risks Associated with Commercial and Multifamily Lending
Generally,' '--Hotel Properties Have Special Risks' and '--Credit Lease Loans
Have Special Risks' for a discussion of certain matters associated with hotel
properties and Credit Lease Loans.
ADDITIONAL MORTGAGE LOAN INFORMATION
GENERAL MORTGAGE LOAN CHARACTERISTICS
(AS OF CUT-OFF DATE, UNLESS OTHERWISE INDICATED)
<TABLE>
<S> <C>
Initial Pool Balance (1)....................................................................................... 1,290,188,358
Number of Mortgage Loans....................................................................................... 194
Number of Notes................................................................................................ 202
Number of Mortgaged Properties................................................................................. 366
Average Mortgage Loan Balance.................................................................................. 6,650,455
Number of Premium Loans........................................................................................ 44
Aggregate Cut-off Date Principal Balance of Premium Loans...................................................... 554,178,514
Number of Credit Lease Loans................................................................................... 24
Aggregate Cut-off Date Principal Balance of Credit Lease Loans................................................. 147,284,666
Weighted Average Mortgage Rate................................................................................. 7.775%
Range of Mortgage Rates........................................................................................ 6.770% to 9.5%
Weighted Average Remaining Term to the Earlier
of Maturity or Anticipated Repayment Date.................................................................... 119
Range of Remaining Term to the Earlier of Maturity
or Anticipated Repayment Date................................................................................ 28-128
Weighted Average Original Amortization Term.................................................................... 321
Range of Original Amortization Terms........................................................................... 33-360
Weighted Average Net Cash Flow DSCR............................................................................ 1.42
Range of Net Cash Flow DSCRs................................................................................... 1.00-2.20
Weighted Average LTV at Cut-off Date(2)........................................................................ 70
Weighted Average PTV at Cut-off Date(2)........................................................................ 72
Range of LTVs(3)............................................................................................... 34 to 110
Range of PTVs(3)............................................................................................... 34 to 110
Weighted Average Anticipated Repayment Date LTV/PTV............................................................ 54
Percentage of Initial Pool Balance made up of:
ARD Loans.................................................................................................... 88%
Fully Amortizing Loans (other than ARD Loans)................................................................ 12%
Delinquent as of Cut-off Date.................................................................................. 0
</TABLE>
- ------------------
(1) Subject to a permitted variance of plus or minus 5%.
(2) Excluding Credit Lease Loans.
(3) Including Credit Lease Loans.
The tables, Annex A and Annex B set forth certain information with respect
to the Mortgage Loans and Mortgaged Properties. The statistics in the following
tables, Annex A and Annex B were primarily derived from information provided to
the Depositor by Bloomfield or CCA, which information may have been obtained
from the borrowers without independent verification except as noted. For
purposes of the tables, Annex A and Annex B:
S-66
<PAGE>
(1) 'Net Cash Flow' or 'NCF' is defined under '--The Mortgage Loan
Program--Underwriting Standards' above.
(2) 'Underwritten NOI' means Net Cash Flow before deducting for
capital expenditures, tenant improvements and leasing commissions for
non-hotel properties and before deducting for furniture, fixtures and
equipment for Hotel Properties.
(3) 'Net Cash Flow DSCR' for any Mortgage Loan is equal to the Net
Cash Flow from the related Mortgaged Property or Properties divided by the
Annual Debt Service for such Mortgage Loan (as defined below). Unless
otherwise specified herein, 'DSCR' means Net Cash Flow DSCR.
(4) 'Annual Debt Service' means the Monthly Payment as of the Cut-off
Date (as defined herein) multiplied by twelve. For purposes of determining
Net Cash Flow DSCR and NOI DSCR with respect to the Prime Retail Pool Loan,
the Airport Industrial Loan and each of the Credit Lease Loans, such DSCR
was calculated giving effect to the debt service for all other pari passu
notes (that is, Other Notes) secured by the related Mortgaged Property.
(5) 'NOI DSCR' for any Mortgage Loan is equal to the Underwritten NOI
from the related Mortgaged Property or Properties divided by the Annual
Debt Service for such Mortgage Loan.
(6) 'LTV' or 'Loan-to-Value Ratio' means, with respect to any Mortgage
Loan, the Cut-off Date Principal Balance of such Mortgage Loan (that is,
the principal amount of the Mortgage Loan against which the principal
amount of the Certificates is issued) divided by the Appraised Value of the
Mortgaged Property or Properties securing such Mortgage Loan. For purposes
of determining LTV with respect to the Prime Retail Loan, the Airport
Industrial Loan and each of the Credit Lease Loans, LTV was calculated
giving effect to all other pari passu notes (that is, Other Notes) secured
by the related Mortgaged Property.
(7) 'PTV' or 'Proceeds-to-Value Ratio' for any Premium Loan is equal
to the sum of the Premium funded at closing of such loan and the Cut-off
Date Principal Balance divided by the Appraised Value of the related
Mortgaged Property.
(8) 'Anticipated Repayment Date LTV/PTV' for any Mortgage Loan is
calculated in the same manner as LTV as of the Cut-off Date, except that
the Cut-off Date Principal Balance used to calculate the LTV as of the
Cut-off Date has been adjusted to give effect to the amortization of the
applicable Mortgage Loan to its Anticipated Repayment Date (any related
Premium will be fully amortized by the Anticipated Repayment Date). Such
calculation thus assumes that the value of the Mortgaged Property or
Properties securing a Mortgage Loan on the maturity date or Anticipated
Repayment Date, as applicable, is the same as the Appraised Value as of the
Cut-off Date. There can be no assurance that the value of any particular
Mortgaged Property will not have declined from the original value.
(9) '1997 NOI' and 'Most Recent NOI' (which is for the period ending
as of the date specified in Annex B) is the net operating income for a
Mortgaged Property as established by information provided by the borrowers,
except that in certain cases such net operating income has been adjusted by
removing certain non-recurring expenses and revenue or by certain other
normalizations. 1997 NOI and Most Recent NOI do not necessarily reflect
accrual of certain costs such as taxes and capital expenditures and do not
reflect non-cash items such as depreciation or amortization. In some cases,
capital expenditures may have been treated by a borrower as an expense or
expenses treated as capital expenditures. The Depositor has not verified
the accuracy of any information provided by each borrower or to reflect
changes in net operating income that may have occurred since the date of
the information provided by each borrower for the related Mortgaged
Property. 1997 NOI and Most Recent NOI were not necessarily determined in
accordance with generally accepted accounting principles. Moreover, 1997
NOI and Most Recent NOI are not a substitute for net income determined in
accordance with generally accepted accounting principles as a measure of
the results of a property's operations or a substitute for cash flows from
operating activities determined in accordance with generally accepted
accounting principles as a measure of liquidity and in certain cases may
reflect partial-year annualizations.
For purposes of determining Most Recent NOI as set forth on Annex B:
'Ann' means an annualized NOI calculated for the period indicated; and
'TTM' means NOI calculated for the trailing twelve months ending on
the date indicated.
'Imp TTM' means less than 12-months operating results were available
and an imputed TTM was calculated from available information.
(10) 'Allocated Loan Amount' means, for each Mortgaged Property that
is security for a Pool Loan, the portion of the principal amount of the
related Pool Loan allocated to such Mortgaged Property for certain purposes
(including, without
S-67
<PAGE>
limitation, determining the release prices of properties, if the Mortgage
Loan permits such releases) under such Mortgage Loan. The Allocated Loan
Amount for each Mortgaged Property securing a Pool Loan was determined
generally based on the ratio of the Net Cash Flow or net operating income
or appraised value, or some combination thereof, of such Mortgaged Property
to the aggregate Net Cash Flow or appraised value, or some combination
thereof, for all the Mortgaged Properties securing such Mortgage Loan. The
Allocated Loan Amount for each Mortgaged Property may be adjusted upon the
payment of principal of the related Mortgage Loan, whether upon
amortization, prepayment, or otherwise.
(11) 'Cut-off Date Allocated Loan Amount' means, for each Mortgaged
Property, the Allocated Loan Amount of such property as of the Cut-off
Date. In certain cases where Allocated Loan Amounts were not assigned by
the loan documentation, CCA assigned Allocated Loan Amounts based on the
above mentioned criteria.
(12) 'Original Loan Balance' means the principal balance of the
Mortgage Loan as of the date of origination.
(13) 'Cut-off Date Principal Balance' means the principal balance of
the Mortgage Loan as of the Cut-off Date after application of all payments
of principal thereon, whether or not received.
(14) 'Cut-off Date Principal Balance/Unit' means the principal balance
per unit of measure as of the Cut-off Date.
(15) 'Monthly Payment' means, for any Mortgage Loan, the current
monthly debt service payable on the related Mortgage Loan.
(16) 'Annual Debt Service' means, for any Mortgage Loan, the current
monthly debt service payment payable on October 1 or October 11, 1998 times
12.
(17) 'Maturity Date' means the maturity date of the Mortgage Loan as
stated in the related Note or Loan Agreement.
(18) 'Anticipated Repayment Date' or 'ARD' means for ARD Mortgage
Loans, the date on which excess cash flow is retained pursuant to the
related lock-box agreements for application to payment of principal and,
with respect to most of the ARD Loans the date on which Excess Interest
begins to accrue.
(19) 'Anticipated Remaining Term' means the term of the Mortgage Loan
from the Cut-off Date to the earlier of the Anticipated Repayment Date, if
applicable, and the maturity date.
(20) 'Remaining Lock-out' means the period of the term of the related
Mortgage Loan from the Cut-off Date during which the Mortgage Loan may not
be voluntarily prepaid.
(21) 'Appraised Value' means, for each of the Mortgaged Properties,
the appraised value of such property as determined by an appraisal thereof
prepared by an MAI appraiser not more than 18 months prior to the
origination date of the related Mortgage Loan. 93% of such appraisals met
the appraisal requirements of FIRREA. See 'Risk Factors and Other Special
Considerations--Risks Related to the Mortgage Loans--Limitations of
Appraisals' in this Prospectus Supplement.
(22) 'Amortization' means, the number of months, based on the constant
Monthly Payment as stated in the related Note or Loan Agreement, that would
be necessary to reduce the principal balance of the related Note to zero if
interest on such Note was calculated based on twelve 30-day months and a
360-day year.
(23) 'Year Built/Renovated' means the year in which the respective
Mortgaged Property was built and/or renovated.
(24) 'Units' and 'Type' mean the number of units in the respective
Mortgaged Property and the type of such Units.
(25) 'Occupancy' means the percentage of gross leaseable area, rooms,
units, beds or sites of the property that are leased. Occupancy rates are
calculated within a recent period and in certain cases reflect the average
occupancy rate over a period of time.
(26) 'Underwritten Occupancy' or 'U/W Occupancy' means the occupancy
rate used in determining Net Cash Flow.
(27) 'Tenant 1,' 'Tenant 2' and 'Tenant 3' (each a 'Tenant') mean,
with respect to the Office Properties and Retail Properties, the largest,
second largest and third largest tenants, respectively, if any. These
Tenants may occupy the space or sublease all or some portion thereof;
provided that such Tenant remains responsible for all obligations under the
lease. With respect to the Retail Properties, such Tenants may be viewed as
anchor tenants. An asterisk next to a Tenant means that the space occupied
by such tenant is not owned by the related borrower.
(28) '% of Total SF' means the square feet leased to Tenant as a
percentage of the total square feet of the Mortgaged Property.
S-68
<PAGE>
(29) 'Lease Expiration Date' means the year in which a Tenant's lease
is schedule to expire.
(30) 'Audit/Agreed Upon Procedures Upfront' indicates Mortgaged
Properties for which independent accountants performed audits, reviews or
specified procedures upon financial information provided by the borrower at
the request of CCA or the borrower. The cash flow and NOI information
presented in Annex B may not correspond to the comparable information
included in the accountants' reports because of adjustments made by CCA as
part of its underwriting procedures.
(31) 'Audit/Agreed Upon Procedures Forward' indicates Mortgaged
Properties for which annual independent accountant audits or specified
procedures are required throughout the term of the Mortgage Loan.
(32) 'Actual On-going Capital Reserve' means the annual reserves, as
indicated, per unit of measure or as a percentage of gross revenue and
escrowed on a monthly basis.
(33) 'Underwritten On-going Capital Reserves' means the annual reserve
per Unit or as a percentage of gross revenue deducted from NOI for purposes
of calculating Net Cash Flow.
(34) 'GLA' means the square footage of the gross leaseable area of
each Mortgaged Property. Due to rounding, percentages in the following
tables may not add to 100% and amounts may not add to indicated total or
subtotal.
Mortgaged Properties secured, or partially secured, by a leasehold estate
are indicated on Annex B under the heading 'Property Name' with an asterisk.
Mortgage Loans accruing interest on the basis of the actual number of days
elapsed and a 360-day year are indicated on Annex A under the heading 'Mortgage
Rate' with an asterisk.
The tables below set forth certain summary information regarding the
Mortgage Loans. See Annex A and Annex C hereto for certain characteristics of
the Mortgage Loans and the Notes on a loan-by-loan basis. See Annex C for
certain characteristics of the Premium Loans on a loan-by-loan basis. All
percentages of Initial Pool Balances used herein and in Annex A and Annex C are
based upon the Cut-off Date Principal Balance of the related Mortgage Loan or,
with respect to Pool Loans, are based upon the Allocated Loan Amount of the
related Mortgaged Property. All weighted average information regarding the
Mortgage Loans reflects weighting of the Mortgage Loans by their Cut-off Date
Principal Balances or, with respect to Pool Loans, Allocated Loan Amounts. The
'Cut-off Date Principal Balance' of each Mortgage Loan is equal to the unpaid
principal balance thereof as of the Cut-off Date, after application of all
payments of principal due on or before such date, whether or not received. All
numerical information provided herein and in Annex A, Annex B and Annex C with
respect to the Mortgage Loans is provided on an approximate basis. Certain
statistical information set forth herein may change prior to the date of
issuance of the Certificates due to changes in the composition of the Mortgage
Pool prior to the Closing Date. No Mortgage Loan represents more than 5% of the
entire Mortgage Pool. See 'Description of the Mortgage Pool--Changes in Mortgage
Pool Characteristics' in this Prospectus Supplement.
The information set forth in the following tables, Annex A, Annex B and
Annex C with respect to: (a) Weighted Average DSCR, Weighted Average Net Cash
Flow DSCR, Weighted Average NOI DSCR or Weighted Average LTV or Weighted Average
PTV is calculated excluding the Credit Lease Loans, (b) the ARD Balance with
respect to each of the Mortgage Loans secured by the Mortgaged Properties known
as 122-126 E. 103rd St., 1567-1575 Lexington Avenue, 1590 Lexington Avenue, 2156
2nd Avenue, 238 E. 111th/204 E. 112th St., 291 Pleasant Ave., 311 East 109th St.
and Westmont Apartments is calculated assuming that all scheduled prepayments
are made. Such Mortgage Loans require 'dual amortization': for purposes of
determining a payment default, the loan requires amortization on a longer
schedule but the loan is scheduled to prepay in an amount each month such that
the loan fully amortizes over a shorter period. Failure to make the scheduled
prepayments does not constitute an event of default but does trigger a cash trap
until such time as the balance is reduced to that resulting from the shorter
amortization schedule.
S-69
<PAGE>
RANGE OF DEBT SERVICE COVERAGE RATIOS
<TABLE>
<CAPTION>
WEIGHTED
PERCENT BY WEIGHTED AVERAGE WEIGHTED
CUT-OFF DATE NUMBER OF AGGREGATE AGGREGATE AVERAGE ANTICIPATED AVERAGE WEIGHTED
DEBT SERVICE LOANS OR CUT-OFF DATE CUT-OFF DATE MORTGAGE REMAINING AMORTIZING AVERAGE
COVERAGE RATIO POOL LOANS PRINCIPAL BALANCE PRINCIPAL BALANCE RATE TERM TERM DSCR
- ------------------------ ---------- ----------------- ----------------- -------- ----------- ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
1-1.1................... 24 $ 147,284,666 11% 7.254% 120 124 NA
1.1-1.2................. 4 79,759,002 6 7.480 119 360 1.19
1.2-1.3................. 45 316,268,376 25 8.146 118 353 1.25
1.3-1.4................. 32 292,890,250 23 7.650 120 348 1.34
1.4-1.5................. 25 77,663,543 6 7.437 120 342 1.45
1.5-1.6................. 23 168,490,585 13 7.984 118 348 1.54
1.6-1.7................. 16 61,295,936 5 7.275 120 340 1.64
1.7-1.8................. 10 56,270,258 4 8.040 118 347 1.73
1.8-1.9................. 5 67,059,350 5 8.347 120 303 1.86
1.9-2................... 4 10,819,016 1 7.293 117 323 1.94
2-2.1................... 4 8,189,605 1 7.411 120 322 2.07
2.1-2.2................. 1 1,197,772 0 7.530 121 300 2.12
2.2-2.3................. 1 3,000,000 0 6.800 123 360 2.20
--- ----------------- --- -------- --- --- ---
Total/Wtd. Avg.......... 194 $ 1,290,188,358 100% 7.775% 119 321 1.42
--- ----------------- --- -------- --- --- ---
--- ----------------- --- -------- --- --- ---
<CAPTION>
WEIGHTED
AVERAGE
CUT-OFF DATE WEIGHTED ANTICIPATED
DEBT SERVICE AVERAGE REPAYMENT
COVERAGE RATIO LTV DATE LTV
- ------------------------ -------- ------------
<S> <C> <C>
1-1.1................... NA 0%
1.1-1.2................. 75% 66
1.2-1.3................. 72 64
1.3-1.4................. 76 66
1.4-1.5................. 71 61
1.5-1.6................. 63 56
1.6-1.7................. 62 52
1.7-1.8................. 60 52
1.8-1.9................. 59 49
1.9-2................... 54 45
2-2.1................... 58 48
2.1-2.2................. 47 38
2.2-2.3................. 58 50
--- ---
Total/Wtd. Avg.......... 70% 54%
--- ---
--- ---
</TABLE>
RANGE OF LOAN-TO-VALUE RATIOS
<TABLE>
<CAPTION>
PERCENT BY WEIGHTED
AGGREGATE AGGREGATE WEIGHTED AVERAGE WEIGHTED
NUMBER OF CUT-OFF DATE CUT-OFF-DATE AVERAGE ANTICIPATED AVERAGE WEIGHTED WEIGHTED
RANGE OF LOANS OR PRINCIPAL PRINCIPAL MORTGAGE REMAINING AMORTIZATION AVERAGE AVERAGE
LOAN TO VALUE RATIOS POOL LOANS BALANCE BALANCE RATE TERM TERM DSCR LTV
- ------------------------- ---------- -------------- ------------ -------- ----------- ------------ -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Less than 40%............ 2 $ 2,698,143 0% 7.543% 120 300 1.84 36%
40%-49.99%.............. 10 32,976,654 3 7.509 119 331 1.71 46
50%-59.99%.............. 15 219,054,637 17 8.219 119 340 1.67 57
60%-69.99%.............. 47 221,269,392 17 8.195 118 342 1.38 66
70%-70.99%.............. 88 607,191,650 47 7.639 119 353 1.33 76
80%-89.99%.............. 10 79,210,886 6 7.334 119 280 1.38 83
90%-99.99%.............. 20 107,750,630 8 7.336 120 124 NA NA
100%-109.99%............. 1 9,748,985 1 7.030 120 124 NA NA
110%-119.99%............. 1 10,287,380 1 7.030 120 124 NA NA
--- -------------- --- -------- --- --- --- ---
Total/Wtd. Avg........... 194 $1,290,188,358 100% 7.775% 119 321 1.42 70%
--- -------------- --- -------- --- --- --- ---
--- -------------- --- -------- --- --- --- ---
<CAPTION>
WEIGHTED
AVERAGE
ANTICIPATED
REPAYMENT
RANGE OF DATE MINIMUM MAXIMUM
LOAN TO VALUE RATIOS LTV DSCR DSCR
- ------------------------- ----------- ------- -------
<S> <C> <C> <C>
Less than 40%............ 29% 1.70 2.07
40%-49.99%.............. 39 1.28 2.12
50%-59.99%.............. 50 1.30 2.20
60%-69.99%.............. 58 1.20 1.96
70%-70.99%.............. 66 1.14 2.08
80%-89.99%.............. 52 1.31 1.84
90%-99.99%.............. 0 NA NA
100%-109.99%............. 0 NA NA
110%-119.99%............. 0 NA NA
--- ------- -------
Total/Wtd. Avg........... 54% 1.14 2.20
--- ------- -------
--- ------- -------
</TABLE>
RANGE OF LOAN-TO-VALUE AT EARLIER OF ANTICIPATED REPAYMENT DATE OR MATURITY
<TABLE>
<CAPTION>
PERCENT BY WEIGHTED
AGGREGATE AGGREGATE WEIGHTED AVERAGE WEIGHTED
NUMBER OF CUT-OFF DATE CUT-OFF DATE AVERAGE ANTICIPATED AVERAGE WEIGHTED WEIGHTED
RANGE OF LOANS OR PRINCIPAL PRINCIPAL MORTGAGE REMAINING AMORTIZATION AVERAGE AVERAGE
LOAN TO VALUE RATIOS POOL LOANS BALANCE BALANCE RATE TERM TERM DSCR LTV
- -------------------------- ---------- -------------- ------------ -------- ----------- ------------ -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Less than 10%............. 24 $ 147,284,666 11% 7.254% 120 124 NA NA
20%-29.99%................ 1 1,700,000 0 7.550 120 300 1.70 34%
30%-39.99%................ 9 26,147,804 2 7.559 120 322 1.71 45
40%-49.99%................ 14 97,110,049 8 7.973 120 308 1.78 57
50%-59.99%................ 45 289,349,988 22 8.150 119 345 1.50 61
60%-69.99%................ 95 700,696,415 54 7.711 119 353 1.33 75
70%-79.99%................ 6 27,899,435 2 7.799 118 357 1.29 80
--- -------------- --- -------- --- --- --- ---
Total/Wtd. Avg. .......... 194 $1,290,188,358 100% 7.775% 119 321 1.42 70%
--- -------------- --- -------- --- --- --- ---
--- -------------- --- -------- --- --- --- ---
<CAPTION>
WEIGHTED
AVERAGE
ANTICIPATED
RANGE OF REPAYMENT MINIMUM MAXIMUM
LOAN TO VALUE RATIOS DATE LTV DSCR DSCR
- -------------------------- ----------- ------- -------
<S> <C> <C> <C>
Less than 10%............. 0% NA NA
20%-29.99%................ 28 1.70 1.70
30%-39.99%................ 38 1.28 2.12
40%-49.99%................ 47 1.30 2.09
50%-59.99%................ 54 1.22 2.20
60%-69.99%................ 66 1.18 2.08
70%-79.99%................ 71 1.14 1.50
--- ------- -------
Total/Wtd. Avg. .......... 54% 1.14 2.20
--- ------- -------
--- ------- -------
</TABLE>
S-70
<PAGE>
MORTGAGED PROPERTIES BY STATE
<TABLE>
<CAPTION>
PERCENT BY
AGGREGATE AGGREGATE WEIGHTED
CUT-OFF DATE CUT-OFF DATE WEIGHTED AVERAGE WEIGHED
PRINCIPAL BALANCE/ PRINCIPAL BALANCE/ AVERAGE ANTICIPATED AVERAGE WEIGHTED
NUMBER OF ALLOCATED ALLOCATED MORTGAGE REMAINING AMORTIZATION AVERAGE
STATE PROPERTIES LOAN AMOUNT LOAN AMOUNT RATE TERM TERM DSCR
- -------------------- --------- ------------------ ------------------ -------- ----------- ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
CA.................. 69 $ 318,399,493 25% 7.792% 119 316 1.37
NY.................. 20 127,735,213 10 8.139 120 316 1.63
TX.................. 42 74,152,207 6 7.511 119 292 1.50
NC.................. 11 73,809,335 6 8.090 120 343 1.39
MI.................. 20 71,152,583 6 7.508 121 341 1.33
FL.................. 23 64,066,757 5 7.848 116 292 1.43
WV.................. 3 59,092,777 5 6.892 120 357 1.38
IL.................. 12 50,960,024 4 8.283 118 346 1.31
PA.................. 16 44,020,667 3 7.865 120 327 1.32
HI.................. 1 39,500,000 3 7.550 118 334 1.33
IN.................. 8 37,933,182 3 8.024 118 321 1.53
GA.................. 12 37,907,878 3 7.814 118 341 1.53
OH.................. 17 37,278,435 3 7.588 120 309 1.39
MN.................. 14 33,679,887 3 8.036 116 355 1.33
AZ.................. 11 28,455,243 2 7.188 115 318 1.28
WI.................. 11 26,713,790 2 7.893 119 333 1.46
AL.................. 5 19,223,651 1 7.784 120 346 1.33
VA.................. 3 17,481,396 1 7.956 120 360 1.39
CT.................. 3 11,588,734 1 8.430 122 349 1.39
CO.................. 5 12,267,706 1 7.689 120 229 1.75
KY.................. 6 10,498,163 1 7.544 120 314 1.47
OK.................. 4 10,482,558 1 7.256 121 343 1.42
LA.................. 4 10,146,300 1 7.293 118 307 1.50
MD.................. 3 10,131,737 1 8.439 119 343 1.31
AK.................. 1 9,765,179 1 8.080 123 360 1.48
TN.................. 7 7,599,033 1 7.419 118 230 1.60
ME.................. 1 5,619,891 0 8.400 118 360 1.54
MA.................. 3 5,141,149 0 7.720 117 240 1.54
NJ.................. 3 4,926,806 0 7.675 118 330 1.55
KS.................. 3 3,985,510 0 7.267 118 283 1.48
RI.................. 1 3,872,190 0 7.060 120 300 1.54
UT.................. 3 3,747,457 0 7.030 120 124 0.00
IA.................. 2 3,718,434 0 8.310 121 331 1.58
WA.................. 2 3,079,183 0 7.262 119 360 1.41
NV.................. 3 2,473,489 0 7.126 120 201 1.30
OR.................. 2 1,694,263 0 7.030 120 124 0.00
NM.................. 2 1,606,206 0 7.030 120 124 0.00
AR.................. 3 1,515,293 0 7.030 120 124 0.00
MO.................. 2 1,391,371 0 7.030 120 124 0.00
MT.................. 2 1,343,297 0 7.030 120 124 0.00
SC.................. 2 1,237,814 0 7.030 120 124 0.00
MS.................. 1 794,075 0 7.640 120 123 0.00
--- ------------------ --- -------- --- --- ---
Total/Wtd. Avg...... 366 $ 1,290,188,358 100% 7.775% 119 321 1.42
--- ------------------ --- -------- --- --- ---
--- ------------------ --- -------- --- --- ---
<CAPTION>
WEIGHTED
AVERAGE
ANTICIPATED
WEIGHTED REPAYMENT
AVERAGE DATE
STATE LTV LTV/PTV
- -------------------- -------- -----------
<S> <C> <C>
CA.................. 68% 50%
NY.................. 62 52
TX.................. 74 50
NC.................. 71 61
MI.................. 74 61
FL.................. 69 45
WV.................. 80 69
IL.................. 65 56
PA.................. 74 60
HI.................. 82 68
IN.................. 61 46
GA.................. 68 57
OH.................. 72 53
MN.................. 72 64
AZ.................. 76 56
WI.................. 66 55
AL.................. 75 63
VA.................. 70 63
CT.................. 63 56
CO.................. 63 28
KY.................. 69 50
OK.................. 73 60
LA.................. 66 48
MD.................. 69 58
AK.................. 67 60
TN.................. 64 32
ME.................. 57 52
MA.................. 73 40
NJ.................. 67 57
KS.................. 73 48
RI.................. 58 46
UT.................. 0 0
IA.................. 61 53
WA.................. 75 66
NV.................. 76 26
OR.................. 0 0
NM.................. 0 0
AR.................. 0 0
MO.................. 0 0
MT.................. 0 0
SC.................. 0 0
MS.................. 0 0
--
---
Total/Wtd. Avg...... 70% 54%
--
--
---
---
</TABLE>
S-71
<PAGE>
RANGE OF YEARS BUILT
<TABLE>
<CAPTION>
WEIGHTED
PERCENT BY WEIGHTED AVERAGE WEIGHTED
AGGREGATE AGGREGATE AVERAGE ANTICIPATED AVERAGE WEIGHTED
RANGE OF NUMBER OF CUT-OFF DATE CUT-OFF DATE MORTGAGE REMAINING AMORTIZATION AVERAGE
YEARS BUILT PROPERTIES PRINCIPAL BALANCE PRINCIPAL BALANCE RATE TERM TERM DSCR
<S> <C> <C> <C> <C> <C> <C> <C>
1900-1909.................. 7 $ 11,865,447 1% 7.507% 119 318 1.55
1910-1919.................. 8 19,646,726 2 7.303 119 313 1.53
1920-1929.................. 3 14,859,498 1 8.634 117 360 1.33
1930-1939.................. 7 26,534,524 2 8.033 121 319 1.31
1940-1949.................. 3 18,562,422 1 8.264 120 358 1.32
1950-1959.................. 11 26,777,051 2 7.317 122 337 1.41
1960-1969.................. 35 160,096,347 12 7.891 119 339 1.36
1970-1979.................. 110 361,976,801 28 7.712 119 321 1.39
1980-1989.................. 146 410,570,214 32 7.772 118 315 1.42
1990-1998.................. 36 239,299,328 19 7.785 119 312 1.53
--- ----------------- --- -------- --- --- ---
Total/Wtd. Avg........... 366 $ 1,290,188,358 100% 7.775% 119 321 1.42
--- ----------------- --- -------- --- --- ---
--- ----------------- --- -------- --- --- ---
<CAPTION>
WEIGHTED
ANTICIPATED
WEIGHTED REPAYMENT
RANGE OF AVERAGE DATE
YEARS BUILT LTV LTV/PTV
<S> <C> <C>
1900-1909.................. 73% 60%
1910-1919.................. 66 54
1920-1929.................. 67 61
1930-1939.................. 65 55
1940-1949.................. 73 65
1950-1959.................. 73 62
1960-1969.................. 73 61
1970-1979.................. 70 54
1980-1989.................. 68 50
1990-1998.................. 68 52
-- --
Total/Wtd. Avg........... 70% 54%
-- --
-- --
</TABLE>
S-72
<PAGE>
CUT-OFF DATE PRINCIPAL BALANCE BY PROPERTY TYPE
<TABLE>
<CAPTION>
PERCENT BY
AGGREGATE
CUT-OFF
DATE WEIGHTED
AGGREGATE PRINCIPAL AVERAGE WEIGHTED
CUT-OFF BALANCE/ CUT-OFF WEIGHTED AVERAGE
NUMBER OF DATE PRINCIPAL ALLOCATED NUMBER OF BALANCE AVERAGE REMAINING
PROPERTY TYPE PROPERTIES BALANCE LOAN AMOUNT UNITS PER UNIT MORTGAGE RATE TERM
- ----------------------------------- --------- -------------- ----------- --------- ------------ ------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Retail
Anchored........................... 25 $ 138,479,100 11% 2,614,462 53 7.706% 119
Quasi-Anchored..................... 14 27,547,115 2 521,047 161 8.186 120
Mall............................... 2 90,673,225 7 913,517 99 7.719 120
Factory Outlet..................... 5 81,857,269 6 1,591,482 103 8.400 118
Unanchored......................... 12 32,934,139 3 509,664 65 7.706 120
-- -- --
-------------- --------- ------------ -----
TOTAL RETAIL....................... 58 371,490,848 29% 6,150,172 83 7.898% 119
Office
Office............................. 59 292,124,554 23 5,944,777 80 8.077 119
Medical Office..................... 2 9,480,368 1 120,766 79 8.030 113
-- -- --
-------------- --------- ------------ -----
TOTAL OFFICE....................... 61 301,604,922 23% 6,065,543 80 8.076% 119
MULTIFAMILY........................ 68 239,435,243 19% 8,957 26,732 7.462% 119
Hotel
Full Service....................... 2 69,764,744 5 596 117,055 8.639 120
Limited Service.................... 120 88,217,800 7 13,829 33,509 7.030 120
-- -- --
-------------- --------- ------------ -----
TOTAL HOTEL........................ 122 157,982,544 12% 14,425 36,961 7.741% 120
INDUSTRIAL......................... 31 150,284,102 12% 5,612,529 34 7.571% 119
MOBILE HOME PARK................... 23 59,767,059 5% 4,132 14,464 7.356% 119
Healthcare
Congregate Care.................... 1 3,376,291 0 66 51,156 8.080 116
Nursing............................ 2 6,247,348 0 170 36,749 7.667 121
-- -- --
-------------- --------- ------------ -----
TOTAL HEALTHCARE................... 3 9,623,639 1% 236 40,778 7.812% 119
-- -- --
-------------- --------- ------------ -----
Grand Total........................ 366 $1,290,188,358 100% 7.775% 119
-- -------------- -- ----- --
-- -------------- -- ----- --
<CAPTION>
WEIGHTED
AVERAGE
WEIGHTED ANTICIPATED
AVERAGE WEIGHTED REPAYMENT
AMORTIZATION MIN MAX AVERAGE WEIGHTED DATE
PROPERTY TYPE TERM DSCR DSCR DSCR AVERAGE LTV LTV/PTV
- ----------------------------------- ------------ ---- ---- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Retail
Anchored........................... 347 1.14 1.67 1.36 71% 62%
Quasi-Anchored..................... 206 1.24 1.29 1.25 65 25
Mall............................... 360 1.31 1.38 1.34 76 68
Factory Outlet..................... 360 1.54 1.54 1.54 57 52
Unanchored......................... 345 1.24 2.12 1.44 70 60
-- ---- ---- ---- -- --
TOTAL RETAIL....................... 343 1.14 2.12 1.40 69% 58%
Office
Office............................. 322 1.21 1.90 1.41 65 50
Medical Office..................... 347 1.29 1.31 1.30 72 63
-- ---- ---- ---- -- --
TOTAL OFFICE....................... 322 1.21 1.90 1.41 65% 50%
MULTIFAMILY........................ 344 1.18 2.20 1.41 75% 64%
Hotel
Full Service....................... 300 1.57 1.86 1.82 58 49
Limited Service.................... 124 NA NA NA NA 0
-- ---- ---- ---- --
TOTAL HOTEL........................ 202 1.57 1.86 1.82 58% 22%
INDUSTRIAL......................... 345 1.19 1.71 1.30 74% 63%
MOBILE HOME PARK................... 343 1.22 2.07 1.39 74% 64%
Healthcare
Congregate Care.................... 300 1.54 1.54 1.54 73 61
Nursing............................ 312 1.68 2.08 1.88 75 61
-- ---- ---- ---- --
TOTAL HEALTHCARE................... 308 1.54 2.08 1.76 74% 61%
-- ---- ---- ---- --
Grand Total........................ 321 1.14 2.20 1.42 70% 54%
-- ---- ---- ---- --
-- ---- ---- ---- --
</TABLE>
S-73
<PAGE>
RANGE OF CUT-OFF DATE PRINCIPAL BALANCES
<TABLE>
<CAPTION>
WEIGHTED
PERCENT BY WEIGHTED AVERAGE
NUMBER OF AGGREGATE AGGREGATE AVERAGE ANTICIPATED WEIGHTED
RANGE OF CUT-OFF DATE LOANS OR POOL CUT-OFF DATE CUT-OFF DATE MORTGAGE REMAINING AVERAGE
PRINCIPAL BALANCE LOANS PRINCIPAL BALANCE PRINCIPAL BALANCE RATE TERM AMORTIZATION
- ----------------------------- ------------- ----------------- ----------------- -------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Less Than $2,500,000 ........ 74 $ 107,813,729 8% 7.486% 119 313
2,500,000-4,999,999.......... 49 175,483,558 14 7.504 119 329
5,000,000-7,499,999.......... 25 156,442,764 12 7.719 119 349
7,500,000-9,999,999.......... 22 198,004,433 15 7.817 119 263
10,000,000-19,999,999 ....... 15 197,213,130 15 7.693 119 287
20,000,000-39,999,999 ....... 3 100,877,486 8 7.899 118 350
45,000,000-59,999,999 ....... 4 212,454,236 16 7.721 120 360
60,000,000-82,500,000 ....... 2 141,899,021 11 8.442 119 335
--- ----------------- --- -------- --- ---
Total/Wtd. Avg............... 194 $ 1,290,188,358 100% 7.775% 119 321
--- ----------------- --- -------- --- ---
--- ----------------- --- -------- --- ---
<CAPTION>
WEIGHTED
AVERAGE
WEIGHTED WEIGHTED ANTICIPATED
RANGE OF CUT-OFF DATE AVERAGE AVERAGE REPAYMENT
PRINCIPAL BALANCE DSCR LTV DATE LTV/PTV
- ----------------------------- -------- -------- ------------
<S> <C> <C> <C>
Less Than $2,500,000 ........ 1.53 69% 54%
2,500,000-4,999,999.......... 1.48 69 57
5,000,000-7,499,999.......... 1.41 69 61
7,500,000-9,999,999.......... 1.32 71 39
10,000,000-19,999,999 ....... 1.30 71 44
20,000,000-39,999,999 ....... 1.43 72 62
45,000,000-59,999,999 ....... 1.29 75 67
60,000,000-82,500,000 ....... 1.67 57 50
---- -- --
Total/Wtd. Avg............... 1.42 70% 54%
---- -- --
---- -- --
</TABLE>
RANGE OF ANTICIPATED REMAINING TERMS IN MONTHS
<TABLE>
<CAPTION>
WEIGHTED
PERCENT BY WEIGHTED AVERAGE WEIGHTED
AGGREGATE AGGREGATE AVERAGE ANTICIPATED AVERAGE
NUMBER OF CUT-OFF DATE CUT-OFF DATE MORTGAGE REMAINING AMORTIZATION
YEAR NOTES PRINCIPAL BALANCE PRINCIPAL BALANCE RATE TERM TERM
- ---- --------- ----------------- ----------------- -------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
24-29............................ 1 $ 192,867 0% 7.510% 28 33
84-89............................ 1 2,100,000 0 7.550 84 84
102-107.......................... 2 11,063,757 1 8.420 104 341
108-113.......................... 10 46,990,786 4 7.819 112 350
114-119.......................... 82 425,847,775 33 8.034 117 350
120-125.......................... 103 786,937,822 61 7.624 121 303
126-131.......................... 3 17,055,350 1 7.799 128 360
--- ----------------- --- -------- --- ---
Total/Wtd.Avg.................... 202 $ 1,290,188,358 100% 7.775% 119 321
--- ----------------- --- -------- --- ---
--- ----------------- --- -------- --- ---
<CAPTION>
WEIGHTED
AVERAGE
ANTICIPATED
WEIGHTED WEIGHTED REPAYMENT
AVERAGE AVERAGE DATE
YEAR DSCR LTV LTV/PTV
- ---- -------- -------- -----------
<S> <C> <C> <C>
24-29............................ NA 44% 33%
84-89............................ NA 82 68
102-107.......................... 1.21 72 65
108-113.......................... 1.33 73 65
114-119.......................... 1.44 67 59
120-125.......................... 1.42 71 50
126-131.......................... 1.33 72 63
---- -- --
Total/Wtd.Avg.................... 1.42 70% 54%
---- -- --
---- -- --
</TABLE>
RANGE OF REMAINING TERMS IN MONTHS
<TABLE>
<CAPTION>
WEIGHTED
PERCENT BY WEIGHTED AVERAGE WEIGHTED
AGGREGATE AGGREGATE AVERAGE ANTICIPATED AVERAGE WEIGHTED
RANGE OF NUMBER OF CUT-OFF DATE CUT-OFF DATE MORTGAGE REMAINING AMORTIZATION AVERAGE
REMAINING TERMS NOTES PRINCIPAL BALANCE PRINCIPAL BALANCE RATE TERM TERM DSCR
- --------------- --------- ----------------- ----------------- -------- ----------- ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
24-35.9.................... 1 $ 192,867 0% 7.510% 28 33 NA
84-95.9.................... 1 2,100,000 0 7.550 84 84 NA
120-131.9.................. 24 147,284,666 11 7.254 120 124 NA
264-275.9.................. 2 1,681,393 0 8.990 108 274 NA
276-287.9.................. 1 3,131,768 0 8.510 105 292 1.22
288-299.9.................. 37 98,907,154 8 7.564 119 298 1.53
300-311.9.................. 13 94,121,949 7 8.046 121 300 1.74
312-323.9.................. 7 20,790,138 2 8.028 120 321 1.38
324-335.9.................. 1 4,984,552 0 7.270 119 336 1.47
336-347.9.................. 1 7,931,989 1 8.385 104 360 1.21
348-359.9.................. 92 576,928,628 45 7.924 118 358 1.40
360-371.9.................. 22 332,133,254 26 7.701 120 359 1.34
--- ----------------- --- -------- --- --- ---
Total/Wtd. Avg............. 202 $ 1,290,188,358 100% 7.775% 119 321 1.42
--- ----------------- --- -------- --- --- ---
--- ----------------- --- -------- --- --- ---
<CAPTION>
WEIGHTED
ANTICIPATED
WEIGHTED REPAYMENT
RANGE OF AVERAGE DATE
REMAINING TERMS LTV LTV/PTV
- --------------- -------- -----------
<S> <C> <C>
24-35.9.................... 44% 33%
84-95.9.................... 82 68
120-131.9.................. NA 0
264-275.9.................. 62 51
276-287.9.................. 67 57
288-299.9.................. 69 55
300-311.9.................. 60 49
312-323.9.................. 69 60
324-335.9.................. 49 42
336-347.9.................. 74 67
348-359.9.................. 69 61
360-371.9.................. 73 65
--- --
Total/Wtd. Avg............. 70% 54%
--- --
--- --
</TABLE>
S-74
<PAGE>
ANTICIPATED REPAYMENT BY YEAR
<TABLE>
<CAPTION>
WEIGHTED
PERCENT BY WEIGHTED AVERAGE WEIGHTED
AGGREGATE AGGREGATE AVERAGE ANTICIPATED AVERAGE WEIGHTED
NUMBER OF CUT-OFF DATE CUT-OFF DATE MORTGAGE REMAINING AMORTIZATION AVERAGE
YEAR NOTES PRINCIPAL BALANCE PRINCIPAL BALANCE RATE TERM TERM DSCR
- ---- --------- ----------------- ----------------- -------- ----------- ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
2001....................... 1 $ 192,867 0% 7.510% 28 33 NA
2005....................... 1 2,100,000 0 7.550 84 84 NA
2007....................... 5 20,193,842 2 8.390 107 342 1.25
2008....................... 192 1,250,646,299 97 7.766 119 320 1.43
2009....................... 3 17,055,350 1 7.799 128 360 1.33
--- ----------------- --- -------- --- --- ---
Total/Wtd. Avg............. 202 $ 1,290,188,358 100% 7.775% 119 321 1.42
--- ----------------- --- -------- --- --- ---
--- ----------------- --- -------- --- --- ---
<CAPTION>
WEIGHTED
AVERAGE
ANTICPATED
WEIGHTED REPAYMENT
AVERAGE DATE
YEAR LTV LTV/PTV
- ---- -------- -----------
<S> <C> <C>
2001....................... 44% 33%
2005....................... 82 68
2007....................... 70 63
2008....................... 69 53
2009....................... 72 63
--- ---
Total/Wtd. Avg............. 70% 54%
--- ---
--- ---
</TABLE>
RANGE OF MORTGAGE RATES
<TABLE>
<CAPTION>
WEIGHTED
PERCENT BY WEIGHTED AVERAGE WEIGHTED
AGGREGATE AGGREGATE AVERAGE ANTICIPATED AVERAGE
RANGE OF NUMBER OF CUT-OFF DATE CUT-OFF DATE MORTGAGE REMAINING AMORTIZATION
MORTGAGE RATES NOTES PRINCIPAL BALANCE PRINCIPAL BALANCE RATE TERM TERM
- -------------- --------- ----------------- ----------------- -------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
6.75-6.9999....................... 17 $ 132,781,656 10% 6.878% 121 354
7.00-7.2499....................... 39 242,849,053 19 7.101 120 264
7.25-7.4999....................... 43 139,745,584 11 7.322 119 315
7.5-7.7499........................ 37 136,016,779 11 7.550 119 281
7.75-7.9999....................... 13 60,371,538 5 7.818 119 336
8.00-8.2499....................... 11 90,574,690 7 8.042 118 334
8.25-8.4999....................... 8 158,026,512 12 8.398 118 358
8.5-8.7499........................ 29 313,426,486 24 8.501 119 346
8.75-8.9999....................... 4 6,673,066 1 8.923 115 338
9.25-9.4999....................... 1 9,722,992 1 9.500 118 300
--- ----------------- --- -------- --- ---
Total/Wtd. Avg.................... 202 $ 1,290,188,358 100% 7.775% 119 321
--- ----------------- --- -------- --- ---
--- ----------------- --- -------- --- ---
<CAPTION>
WEIGHTED
AVERAGE
ANTICIPATED
WEIGHTED WEIGHTED REPAYMENT
RANGE OF AVERAGE AVERAGE DATE
MORTGAGE RATES DSCR LTV LTV/PTV
- -------------- -------- -------- -----------
<S> <C> <C> <C>
6.75-6.9999....................... 1.49 73% 63%
7.00-7.2499....................... 1.37 73 40
7.25-7.4999....................... 1.47 72 55
7.5-7.7499........................ 1.40 74 47
7.75-7.9999....................... 1.33 75 63
8.00-8.2499....................... 1.31 73 59
8.25-8.4999....................... 1.53 59 53
8.5-8.7499........................ 1.39 67 60
8.75-8.9999....................... 1.29 62 55
9.25-9.4999....................... 1.57 65 55
---- -- --
Total/Wtd. Avg.................... 1.42 70% 54%
---- -- --
---- -- --
</TABLE>
REMAINING LOCK-OUT PERIODS IN MONTHS
<TABLE>
<CAPTION>
PERCENT BY WEIGHTED
AGGREGATE AGGREGATE WEIGHTED AVERAGE WEIGHTED WEIGHTED WEIGHTED
NUMBER CUT-OFF DATE CUT-OFF DATE AVERAGE ANTICIPATED AVERAGE AVERAGE AVERAGE
REMAINING OF PRINCIPAL PRINCIPAL REMAINING REMAINING AMORTIZATION REMAINING MORTGAGE
LOCK-OUT PERIODS NOTES BALANCE BALANCE LOCKOUT TERM TERM TERM RATE
- ---------------- ------ ------------- ------------ --------- ----------- ------------ --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
24-28.9.............. 1 $ 192,867 0% 27 28 33 28 7.510%
78-82.9.............. 1 2,100,000 0 83 84 84 84 7.550
96-100.9............. 4 12,745,150 1 98 105 332 319 8.496
101-106.9............ 7 44,966,872 3 105 112 353 344 7.622
107-112.9............ 68 275,936,874 21 112 118 342 339 7.880
113-118.9............ 118 937,191,245 73 117 120 313 313 7.742
119-124.9............ 2 12,321,020 1 121 128 360 356 7.530
125-130.9............ 1 4,734,330 0 127 128 360 356 8.500
------ -------------- --- --- --- --- --- --------
Grand Total.......... 202 $1,290,188,358 100% 116 119 321 320 7.775%
------ -------------- --- --- --- --- --- --------
------ -------------- --- --- --- --- --- --------
<CAPTION>
WEIGHTED
ANTICIPATED
WEIGHTED WEIGHTED REPAYMENT
REMAINING AVERAGE AVERAGE DATE
LOCK-OUT PERIODS DSCR LTV LTV/PTV
- ---------------- -------- -------- -----------
<S> <C> <C> <C>
24-28.9.............. NA 44% 33%
78-82.9.............. NA 82 68
96-100.9............. 1.22 71 63
101-106.9............ 1.34 75 66
107-112.9............ 1.45 69 60
113-118.9............ 1.42 69 51
119-124.9............ 1.30 76 66
125-130.9............ 1.40 64 57
---- -- --
Grand Total.......... 1.42 70% 54%
---- -- --
---- -- --
</TABLE>
CHANGES IN MORTGAGE POOL CHARACTERISTICS
The description in this Prospectus Supplement of the Mortgage Pool and the
Mortgaged Properties is based upon the Mortgage Pool as expected to be
constituted at the close of business on the Cut-off Date, as adjusted for the
scheduled principal payments due on the Mortgage Loans on or before the Cut-off
Date. Prior to the issuance of the Offered Certificates, a Mortgage Loan may be
S-75
<PAGE>
removed from the Mortgage Pool if the Depositor deems such removal necessary or
appropriate or if it is prepaid. This may cause the range of Mortgage Rates and
maturities as well as the other characteristics of the Mortgage Loans to vary
from those described herein.
A Current Report on Form 8-K (the 'Form 8-K') will be available to
purchasers of the Offered Certificates and will be filed by the Depositor,
together with the Pooling and Servicing Agreement, with the Securities and
Exchange Commission within fifteen days after the initial issuance of the
Offered Certificates. In the event Mortgage Loans are removed from the Mortgage
Pool as set forth in the preceding paragraph, such removal will be noted in the
Form 8-K. Such Form 8-K will be available to purchasers and potential purchasers
of the Offered Certificates.
S-76
<PAGE>
DESCRIPTION OF THE OFFERED CERTIFICATES
GENERAL
The Certificates will be issued pursuant to the Pooling and Servicing
Agreement and will consist of 20 Classes to be designated as the Class A-1A
Certificates, the Class A-1B Certificates, the Class A-1C Certificates, the
Class PS-1 Certificates, the Class A-2 Certificates, the Class A-3 Certificates,
the Class A-4 Certificates, the Class A-5 Certificates, the Class B-1
Certificates, the Class B-2 Certificates, the Class B-3 Certificates, the Class
B-4 Certificates, the Class B-5 Certificates, the Class B-6 Certificates, the
Class B-7 Certificates, the Class B-7H Certificates, the Class V-1 Certificates,
the Class V-2 Certificates, the Class R Certificates and the Class LR
Certificates. Only the Class A-1A Certificates, the Class A-1B Certificates, the
Class A-1C Certificates, the Class A-2 Certificates, the Class A-3 Certificates,
the Class A-4 Certificates and the Class A-5 Certificates (the 'Offered
Certificates') are offered hereby. The Class PS-1 Certificates, the Class B-1
Certificates, the Class B-2 Certificates, the Class B-3 Certificates, the Class
B-4 Certificates, the Class B-5 Certificates, the Class B-6 Certificates, the
Class B-7 Certificates, the Class B-7H Certificates, the Class V-1 Certificates,
the Class V-2 Certificates, the Class R Certificates and Class LR Certificates
(the 'Private Certificates') are not offered hereby. The Classes of Certificates
other than the Class PS-1 Class V-1, Class V-2, Class R and Class LR
Certificates are sometimes referred to herein as the 'Sequential Certificates'.
The Certificates represent in the aggregate the entire beneficial ownership
interest in a Trust Fund consisting of: (i) the Mortgage Loans and all payments
under and proceeds of the Mortgage Loans due after the Cut-off Date; (ii) any
Mortgaged Property acquired by the Special Servicer on behalf of the Trust Fund
through foreclosure or deed in lieu of foreclosure (upon acquisition, an 'REO
Property') such funds or assets as from time to time are deposited in the
Collection Account, the Distribution Ac count, the Interest Reserve Account, the
Excess Interest Distribution Account, the Default Interest Distribution Account
and any account established in connection with REO Properties (an 'REO
Account'); (iii) the rights of the lender under all insurance policies with
respect to the Mortgage Loans; (iv) the Depositor's rights and remedies under
the Mortgage Loan Purchase and Sale Agreements and the Bloomfield Purchase
Agreement; and (v) all of the lender's right, title and interest in the Reserve
Accounts, the Cash Collateral Accounts and Lock Box Accounts. Distributions
allocable to interest on the Offered Certificates on each Distribution Date will
be based on the pass-through rate for the respective Class (the 'Pass-Through
Rate') and the aggregate principal balance (the 'Certificate Balance') or
notional balance (the 'Notional Balance') as applicable to such Class
outstanding immediately prior to such Distribution Date.
The Class A-1A, Class A-1B, Class A-1C, Class A-2, Class A-3, Class A-4 and
Class A-5 Certificates will have initial Certificate Balances of $[ ],
$[ ], $[ ], $[ ], $[ ], $[ ]
and $[ ], respectively. The Class B-1, Class B-2, Class B-3, Class
B-4, Class B-5 and Class B-6 Certificates will have initial Certificate Balances
of $[ ], $[ ], $[ ], $[ ] and
$[ ], respectively. The Class B-7 and Class B-7H Certificates will
have initial Certificate Balances, in the aggregate, of approximately
$[ ]. The Class PS-1 Certificates will have an initial Notional
Balance equal to $[ ], which is equal to the aggregate Stated
Principal Balance of the Mortgage Loans as of the Cut-off Date.
The Class R, Class LR, Class V-1 and Class V-2 Certificates will not have a
certificate balance or a notional balance.
The Certificate Balance of any Class of Certificates outstanding at any
time represents the maximum amount which 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; provided, however, that
in the event that Realized Losses previously allocated to a Class of
Certificates in reduction of the Certificate Balance thereof are recovered
subsequent to the reduction of the Certificate Balance of such Class to zero,
such Class may receive distributions in respect of such recoveries in accordance
with the priorities set forth under '--Distributions--Payment Priorities'
herein.
The respective Certificate Balance of each Class of Certificates (other
than the Class PS-1 Certificates, the Class V-1, Class V-2, Class R and Class LR
Certificates) will in each case be reduced by amounts actually distributed
thereon that are allocable to principal and by any Realized Losses (as defined
herein) allocated to such Class of Certificates. The Notional Balance of the
Class PS-1 Certificates will for purposes of distributions on each Distribution
Date equal the aggregate Stated Principal Balance of the Mortgage Loans as of
the first day of the related Interest Accrual Period. The notional balance of
the Class PS-1 Certificates will be reduced to the extent of all reductions in
the aggregate Stated Principal Balance of such Mortgage Loans.
S-77
<PAGE>
DISTRIBUTIONS
Method, Timing and Amount. Distributions on the Certificates will be made
on the fourth Business Day following the 11th day of each month beginning on
October 16, 1998 (each, a 'Distribution Date'), provided that if the 11th day of
a month is not a Business Day, then the Distribution Date shall be the fifth
Business Day following such 11th day. All distributions (other than the final
distribution on any Certificate) will be made by the Trustee to the persons in
whose names the Certificates are registered at the close of business on the 10th
day of the month in which the related Distribution Date occurs, or if such day
is not a Business Day, the preceding Business Day (the 'Record Date'); the
Record Date for the Distribution Date occurring on October [16], 1998 for all
purposes other than the receipt of distributions is the Closing Date. Such
distributions will be made (a) by wire transfer in immediately available funds
to the account specified by the Certificateholder at a bank or other entity
having appropriate facilities therefor, if such Certificateholder provides the
Trustee with wiring instructions no less than five Business Days prior to the
related Record Date, or otherwise (b) by check mailed to such Certificateholder.
The final distribution on any Offered Certificates will be made in like manner,
but only upon presentment or surrender (for notation that the Certificate
Balance thereof has been reduced to zero) of such Certificate at the location
specified in the notice to the holder thereof of such final distribution. All
distributions made with respect to a Class of Certificates on each Distribution
Date will be allocated pro rata among the outstanding Certificates of such Class
based on their respective Percentage Interests. The 'Percentage Interest'
evidenced by any Offered Certificate is equal to the initial denomination
thereof as of the Closing Date divided by the initial Certificate Balance or
Notional Balance, as applicable, of the related Class.
The aggregate distribution to be made with respect to the Certificates on
any Distribution Date will equal the Available Funds. The 'Available Funds' for
a Distribution Date will be the sum of all previously undistributed Monthly
Payments or other receipts on account of principal and interest on or in respect
of the Mortgage Loans (including Unscheduled Payments and Net REO Proceeds, if
any) received by the Servicer in the related Collection Period, plus (i) all P&I
Advances (except Subordinate Class Advance Amounts) made by the Servicer, the
Trustee or the Fiscal Agent, as applicable, in respect of such Distribution
Date, (ii) for the Distribution Date occurring in each March, the 'Withheld
Amounts' as described under '--The Pooling and Servicing Agreement--Accounts--
Interest Reserve Account' and required to be deposited in the Distribution
Account pursuant to the Pooling and Servicing Agreement, (iii) all other amounts
required to be deposited in the Collection Account by the Servicer pursuant to
the Pooling and Servicing Agreement allocable to the Mortgage Loans, (iv) any
late payments of Monthly Payments received after the end of the Collection
Period relating to such Distribution Date but prior to the related Servicer
Remittance Date and (v) any Servicer Prepayment Interest Shortfalls remitted by
the Servicer to the Collection Account (as described under '--Prepayment
Interest Shortfalls'), but excluding the following:
(a) amounts permitted to be used to reimburse the Servicer, the Special
Servicer, the Trustee or the Fiscal Agent, as applicable, for previously
unreimbursed Advances and interest thereon as described herein under 'The
Pooling and Servicing Agreement--Advances;'
(b) the aggregate amount of the Servicing Fee (which includes the fees for
both the Trustee and the Servicer) and the other Servicing Compensation (e.g.,
late fees, loan modification fees, extension fees, loan service transaction
fees, demand fees, beneficiary statement charges, and similar fees) payable to
the Servicer and the Special Servicing Fee (and other amounts payable to the
Special Servicer described under 'The Pooling and Servicing Agreement--Special
Servicing' herein), and reinvestment earnings on payments received with respect
to the Mortgage Loans which the Servicer or Special Servicer is entitled to
receive as additional servicing compensation, in each case in respect of such
Distribution Date;
(c) all amounts representing scheduled Monthly Payments due after the
related Due Date;
(d) to the extent permitted by the Pooling and Servicing Agreement, that
portion of liquidation proceeds, insurance proceeds and condemnation proceeds
with respect to a Mortgage Loan which represents any unpaid Servicing Fee and
special servicing compensation together with interest thereon as described
herein, to which the Servicer, the Special Servicer and the Trustee is entitled;
(e) all amounts representing certain expenses reimbursable or payable to
the Servicer, the Special Servicer, the Trustee or the Fiscal Agent and other
amounts permitted to be retained by the Servicer or withdrawn pursuant to the
Pooling and Servicing Agreement in respect of various items, including interest
thereon as provided in the Pooling and Servicing Agreement;
(f) Prepayment Premiums;
(g) Default Interest;
(h) Excess Interest;
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(i) with respect to the Actual/360 Mortgage Loans having Mortgage Rates
below [ ] %, and any Distribution Date relating to each Interest Accrual
Period ending in each February or any January occurring in a year which is not a
leap year, an amount equal to one day of interest on the Stated Principal
Balance of each such Mortgage Loan as of the Due Date occurring in the month
preceding the month in which such Distribution Date occurs at the related
Mortgage Rate to the extent such amounts are to be deposited in the Interest
Reserve Account and held for future distribution;
(j) all amounts received with respect to each Mortgage Loan previously
purchased or repurchased pursuant to the Pooling and Servicing Agreement during
the related Collection Period and subsequent to the date as of which the amount
required to effect such purchase or repurchase was determined; and
(k) the amount reasonably determined by the Trustee to be necessary to pay
any applicable federal, state or local taxes imposed on the Upper-Tier REMIC or
the Lower-Tier REMIC under the circumstances and to the extent described in the
Pooling and Servicing Agreement.
The 'Monthly Payment' with respect to any Mortgage Loan (other than any REO
Mortgage Loan) and any Due Date is the scheduled monthly payment of principal
(if any) and interest at the Mortgage Rate, including any constant Monthly
Payment, which is payable by the related borrower on the related Due Date. The
Monthly Payment with respect to an REO Mortgage Loan for any Distribution Date
is the monthly payment that would otherwise have been payable on the related Due
Date had the related Note not been discharged, determined as set forth in the
Pooling and Servicing Agreement
'Unscheduled Payments' are all net liquidation proceeds, net insurance
proceeds and net condemnation proceeds payable under the Mortgage Loans, the
repurchase price of any Mortgage Loan repurchased by the Mortgage Loan Sellers
or Bloomfield due to a breach of a representation or warranty made by them or
the purchase price paid by the parties described under 'The Pooling and
Servicing Agreement--Optional Termination,' and any other payments under or with
respect to the Mortgage Loans not scheduled to be made , including Principal
Prepayments, but excluding Prepayment Premiums.
'Net REO Proceeds' with respect to any REO Property and any related REO
Mortgage Loan (as defined herein) are all revenues received by the Special
Servicer with respect to such REO Property or REO Mortgage Loan net of any
insurance premiums, taxes, assessments and other costs and expenses permitted to
be paid therefrom pursuant to the Pooling and Servicing Agreement.
'Principal Prepayments' are payments of principal made by a borrower on a
Mortgage Loan that are received in advance of the scheduled Due Date for such
payments and are not accompanied by an amount of interest representing the full
amount of scheduled interest due on any date or dates in any month or months
subsequent to the month of prepayment, other than any amount paid in connection
with the release of the related Mortgaged Property through defeasance.
The 'Collection Period' with respect to a Distribution Date is the period
beginning on the day after the preceding Collection Period (or, with respect to
the first Distribution Date, the day after the Cut-off Date) and ending on the
11th day in the month in which such Distribution Date occurs (or, if such day is
not a Business Day, the following Business Day).
'Net Default Interest' with respect to any Mortgage Loan is any Default
Interest accrued on such Mortgage Loan less amounts required to pay the
Servicer, the Trustee or Fiscal Agent, as applicable, interest on Advances at
the Advance Rate.
'Default Interest' with respect to any Mortgage Loan is interest accrued on
such Mortgage Loan at the excess of (i) the related Default Rate over (ii) the
sum of the related Mortgage Rate and, if applicable, the related Excess Rate.
The 'Default Rate' with respect to any Mortgage Loan is the per annum rate
at which interest accrues on such Mortgage Loan following any event of default
on such Mortgage Loan including a default in the payment of a Monthly Payment.
'Excess Interest' with respect to each of the Mortgage Loans that has a
Revised Rate, interest accrued on such Mortgage Loan allocable to the Excess
Rate.
'Excess Rate' with respect to each of the Mortgage Loans that has a Revised
Rate, the difference between (a) the applicable Revised Rate and (b) the
applicable Mortgage Rate.
Payment Priorities. As used below in describing the priorities of
distribution of Available Funds for each Distribution Date, the terms set forth
below will have the following meanings.
The 'Interest Accrual Amount' with respect to any Distribution Date and any
Class of Certificates (other than the Class PS-1, Class V-1, Class V-2, Class R
and Class LR Certificates) is equal to interest for the related Interest Accrual
Period at the Pass-Through Rate for such Class on the related Certificate
Balance (provided, that for interest accrual purposes any distributions in
reduction of Certificate Balance or reductions in Certificate Balance as a
result of allocations of Realized Losses on the Distribution Date occurring in
an Interest Accrual Period will be deemed to have been made on the first day of
such Interest
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Accrual Period). The 'Interest Accrual Amount' with respect to any Distribution
Date and the Class PS-1 Certificates is equal to interest for the related
Interest Accrual Period at the Pass-Through Rate for such Class for such
Interest Accrual Period on the Notional Balance of such Class. Calculations of
interest (except in respect of the Interest Accrual Period beginning in
September 1998) due in respect of the Certificates will be made on the basis of
a 360-day year consisting of twelve 30-day months.
The 'Interest Distribution Amount' with respect to any Distribution Date
and the Class A-1A, Class A-1B, Class A-1C, Class A-2, Class A-3, Class A-4,
Class A-5, Class B-1, Class B-2, Class B-3, Class B-4, Class B-5, Class B-6,
Class B-7 and Class B-7H Certificates will equal the Interest Accrual Amount
thereof for such Distribution Date.
The 'Interest Distribution Amount' with respect to any Distribution Date
and the Class PS-1 Certificates is its Interest Accrual Amount for such
Distribution Date minus the aggregate Reduction Interest Distribution Amount in
respect of such Distribution Date.
The 'Reduction Interest Distribution Amount' for the Class PS-1
Certificates with respect to any Distribution Date and each of clauses Seventh,
Eleventh, Fifteenth, Nineteenth, Twenty-third, Twenty-seventh, Thirty-first,
Thirty-fifth, Thirty-ninth, Forty-third and Forty-sixth, under 'Distribution of
Available Funds' is the amount of interest accrued for the Interest Accrual
Period at the applicable Reduction Interest Pass-Through Rate for such Interest
Accrual Period on the aggregate amount of Appraisal Reduction Amounts and
Delinquency Reduction Amounts notionally allocated to the related Classes
referred to in subclause (B) of each such clause as of such Distribution Date,
as described below under '--Delinquency Reduction Amounts and Appraisal
Reduction Amounts.'
The 'Reduction Interest Pass-Through Rate' with respect to any Distribution
Date is (i) when the Class B-7 Certificates are the most subordinate Class
outstanding, the Weighted Average Net Mortgage Pass-Through Rate minus
[ ]%, (ii) when the Class B-6 Certificates are the most subordinate Class
outstanding, the Weighted Average Net Mortgage Pass-Through Rate minus
[ ]%, (iii) when the Class B-5 Certificates are the most subordinate Class
outstanding, the Weighted Average Net Mortgage Pass-Through Rate minus
[ ]%, (iv) when the Class B-4 Certificates are the most subordinate Class
outstanding, the Weighted Average Net Mortgage Pass-Through Rate minus
[ ]%, (v) when the Class B-3 Certificates are the most subordinate Class
outstanding, the Weighted Average Net Mortgage Pass-Through Rate minus
[ ]%, (vi) when the Class B-2 Certificates are the most subordinate Class
outstanding, the Weighted Average Net Mortgage Pass-Through Rate minus
[ ]%, (vii) when the Class B-1 Certificates are the most subordinate Class
outstanding, the Weighted Average Net Mortgage Pass-Through Rate minus
[ ]%, (viii) when the Class A-5 Certificates are the most subordinate Class
outstanding, [ ]%, (ix) when the Class A-4 Certificates are the most
subordinate Class outstanding, [ ]%, (x) when the Class A-3 Certificates
are the most subordinate Class outstanding, [ ]%, and (xi) when the Class
A-2 Certificates are the most subordinate Class outstanding, [ ]%.
The 'Reduction Interest Shortfalls' with respect to any Distribution Date
and each of the clauses Seventh, Eleventh, Fifteenth, Nineteenth, Twenty-third,
Twenty-seventh, Thirty-first, Thirty-fifth, Thirty-ninth, Forty-third and
Forty-sixth, under 'Distribution of Available Funds' is any shortfall in the
Reduction Interest Distribution Amount required to be distributed to the Class
PS-1 Certificates pursuant to such clause on such Distribution Date.
'Appraisal Reduction Amount' is the amount described under '--Appraisal
Reductions.'
'Delinquency Reduction Amount' is, in connection with a Delinquency, an
amount equal to the scheduled payment due on the related Due Date (adjusted to
the applicable Net Mortgage Pass-Through Rate with respect to the interest
portion) and not received from a borrower under any Mortgage Loan.
'Delinquency' means any failure of the borrower to make a scheduled payment
on a Due Date.
The 'Interest Accrual Period' with respect to any Distribution Date
commences on the eleventh day of the month preceding the month in which such
Distribution Date occurs and ends on the tenth day of the month in which such
Distribution Date occurs provided that the first Interest Accrual Period is
assumed to consist of 11 days. Except for the first Interest Accrual Period,
each Interest Accrual Period is assumed to consist of 30 days.
An 'Interest Shortfall' with respect to any Distribution Date for any Class
of Offered Certificates is any shortfall in the amount of interest required to
be distributed to such Class on such Distribution Date. No interest accrues on
Interest Shortfalls.
The 'Prepayment Interest Shortfall' with respect to any Distribution Date
is equal to the amount of any shortfall in collections of interest (adjusted to
the applicable Net Mortgage Pass-Through Rate) resulting from a Principal
Prepayment on such Mortgage Loan during the related Collection Period and prior
to the related Due Date. Such shortfall may result because interest on a
Principal Prepayment in full is paid by the related borrower only to the date of
prepayment.
The 'Pass-Through Rate' for any Class of Offered Certificates is the per
annum rate at which interest accrues on the Certificates of such Class during
any Interest Accrual Period. The Pass-Through Rate on the Class A-1A, Class A-1B
and
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Class A-1C Certificates is a per annum rate equal to [ ]%, [ ]% and
[ ]%, respectively. The Pass-Through Rate on the Class PS-1 Certificates is
a per annum rate equal to the Weighted Average Net Mortgage Pass-Through Rate
minus the Weighted Average Pass-Through Rate. The Pass-Through Rate on the Class
A-2 Certificates is a per annum rate equal to the Weighted Average Net Mortgage
Pass-Through Rate minus [ ]%. The Pass-Through Rate on the Class A-3
Certificates is a per annum rate equal to the Weighted Average Net Mortgage
Pass-Through Rate minus [ ]%. The Pass-Through Rate on the Class A-4
Certificates is a per annum rate equal to the Weighted Average Net Mortgage
Pass-Through Rate minus [ ]%. The Pass-Through Rate on the Class A-5
Certificates is a per annum rate equal to the Weighted Average Net Mortgage
Pass-Through Rate minus [ ]%. The Pass-Through Rate on the Class B-1, Class
B-2, Class B-3, Class B-4, Class B-5, Class B-6, Class B-7 and Class B-7H
Certificates is a per annum rate equal to [ ]%. The Class V-1, Class V-2,
Class R and Class LR Certificates do not have a Pass-Through Rate.
The 'Weighted Average Pass-Through Rate' for purposes of calculating the
Pass-Through Rate on the Class PS-1 Certificates, with respect to any Interest
Accrual Period, is the amount (expressed as a percentage), the numerator of
which is the sum of the products of (i) the Pass-Through Rate with respect to
each Class of Certificates having a Pass-Through Rate (other than the Class PS-1
Certificates) and (ii) the Certificate Balance of such Class as of the first day
of such Interest Accrual Period and the Notional Balance of such Class as of
such date and the denominator of which is the sum of the Certificate Balances of
each class included in clause (i) above as of such date (provided in each case,
any reductions in Certificate Balance as a result of distributions or
allocations of Realized Losses to such Class occurring in an Interest Accrual
Period will be deemed to have been made on the first day of such Interest
Accrual Period).
The 'Weighted Average Net Mortgage Pass-Through Rate' for any Distribution
Date is the amount (expressed as a percentage) (a) the numerator of which is the
sum for all Mortgage Loans of the products of (i) the Net Mortgage Pass-Through
Rate of each such Mortgage Loan and (ii) the Stated Principal Balance of each
such Mortgage Loan and (b) the denominator of which is the sum of the Stated
Principal Balances of all such Mortgage Loans as of their respective Due Date
preceding the prior Distribution Date.
The 'Net Mortgage Pass-Through Rate' with respect to any Mortgage and any
Distribution Date is the Mortgage Pass-Through Rate for such Mortgage Loan for
the related Interest Accrual Period minus the sum of the Servicing Fee Rate and
the Additional Servicing Fee Rate.
The 'Mortgage Pass-Through Rate' with respect to the Mortgage Loans that
provide for calculations of interest based on twelve months of 30 days each is
equal to the Mortgage Rate thereof.
The 'Mortgage Pass-Through Rate' with respect to the Mortgage Loans that
provide for interest based on a 360-day year and the actual number of days
elapsed, other than Mortgage Loans having Mortgage Rates less than or equal to
[ ]%, for any Interest Accrual Period, is equal to the Mortgage Rate
thereof multiplied by a fraction the numerator of which is the actual number of
days in such Interest Accrual Period and the denominator of which is 30.
The 'Mortgage Pass-Through Rate' with respect to Actual/360 Mortgage Loans
having Mortgage Rates less than or equal to [ ]% for any Interest Accrual
Period commencing in any (a) January, February, April, June, September and
November and any December occurring in a year immediately preceding any year
which is not a leap year, is the Mortgage Rate thereof, or (b) March, May, July,
August and October and any December occurring in a year immediately preceding a
year which is a leap year, is equal to the Mortgage Rate thereof multiplied by a
fraction the numerator of which is the actual number of days in such Interest
Accrual Period and the denominator of which is 30.
Notwithstanding the foregoing, the Mortgage Pass-Through Rate with respect
to each Mortgage Loan for the first Interest Accrual Period is the Mortgage Rate
thereof.
The 'Mortgage Rate' with respect to each Mortgage Loan and any Interest
Accrual Period is the annual rate, not including any Excess Rate, at which
interest accrues on such Mortgage Loan during such period (in the absence of a
default), as set forth in the related Note and on Annex A. The Mortgage Rate for
purposes of calculating the Weighted Average Net Mortgage Pass-Through Rate will
be the Mortgage Rate of such Mortgage Loan without taking into account any
reduction in the interest rate by a bankruptcy court pursuant to a plan of
reorganization or pursuant to any of its equitable powers or a reduction on
interest or principal due to a modification as described under 'The Pooling and
Servicing Agreement--Modifications in this Prospectus Supplement.'
The 'Principal Distribution Amount' for any Distribution Date will be equal
to the sum of:
(i) the principal component of all scheduled Monthly Payments due on the
Mortgage Loans on or before the related Due Date (if received or advanced);
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(ii) the Stated Principal Balance of each Mortgage Loan that was, during
the related Collection Period, repurchased from the Trust Fund in connection
with the breach of a representation or warranty or purchased from the Trust Fund
as described in this Prospectus Supplement under 'The Pooling and Servicing
Agreement--Optional Termination;'
(iii) the portion of Unscheduled Payments allocable to principal of any
Mortgage Loan which was liquidated during the related Collection Period;
(iv) to the extent not included in the preceding clauses, any other
principal payment on any Mortgage Loan received on or after the Maturity Date
thereof, to the extent received during the related Collection Period;
(v) to the extent not included in the preceding clause (iii) or (iv), all
other Principal Prepayments received in the related Collection Period; and
(vi) to the extent not included in the preceding clauses, any other full or
partial recoveries in respect of principal, including net insurance proceeds,
net liquidation proceeds and Net REO Proceeds received in the related Collection
Period (in the case of clauses (i) through (vi) net of any related outstanding
P&I Advances allocable to principal and excluding any amounts representing
recoveries of Subordinate Class Advance Amounts).
An 'REO Mortgage Loan' is any Mortgage Loan as to which the related
Mortgaged Property has become an REO Property.
Distribution of Available Funds. On each Distribution Date, prior to the
Crossover Date, the Available Funds for such Distribution Date will be
distributed in the following amounts and order of priority:
(i) First, pro rata, in respect of interest, to the Class A-1A, Class A-1B,
Class A-1C and Class PS-1 Certificates, up to an amount equal to the aggregate
Interest Distribution Amounts of such Classes;
(ii) Second, pro rata, to the Class A-1A, Class A-1B, Class A-1C and Class
PS-1 Certificates, in respect of interest, up to an amount equal to the
aggregate unpaid Interest Shortfalls previously allocated to such Classes;
(iii) Third, to the Class A-1A Certificates, in reduction of the
Certificate Balance thereof, an amount equal to the Principal Distribution
Amount until the Certificate Balance thereof is reduced to zero;
(iv) Fourth, to the Class A-1B Certificates, in reduction of the
Certificate Balance thereof, an amount equal to the Principal Distribution
Amount less amounts of Principal Distribution Amount distributed pursuant to all
prior clauses, until the Certificate Balance thereof is reduced to zero;
(v) Fifth, to the Class A-1C Certificates, in reduction of the Certificate
Balance thereof, an amount equal to the Principal Distribution Amount less
amounts of Principal Distribution Amount distributed pursuant to all prior
clauses, until the Certificate Balance thereof is reduced to zero;
(vi) Sixth, to the Class A-2 Certificates in respect of interest, up to an
amount equal to the Interest Distribution Amount of such Class;
(vii) Seventh, pro rata, (A) to the Class A-2 Certificates in respect of
interest, up to an amount equal to the unpaid Interest Shortfalls previously
allocated to such Class, (B) to the Class PS-1 Certificates in respect of the
Reduction Interest Distribution Amount attributable to the notional reduction in
the Certificate Balance of the Class A-2 Certificates as described under
'--Delinquency Reduction Amounts and Appraisal Reduction Amounts,' up to an
amount equal to the Reduction Interest Distribution Amount so attributable and
(C) to the Class PS-1 Certificates, up to an amount equal to the unpaid
Reduction Interest Shortfalls previously allocated to the Class PS-1
Certificates in respect of Reduction Interest Distribution Amounts distributable
under Clause (B);
(viii) Eighth, to the Class A-2 Certificates, in reduction of the
Certificate Balance thereof, an amount equal to the Principal Distribution
Amount less amounts of Principal Distribution Amount distributed pursuant to all
prior clauses, until the Certificate Balance of such Class is reduced to zero;
(ix) Ninth, to the Class A-2 Certificates, to the extent not distributed
pursuant to all prior clauses, for the unreimbursed amounts of Realized Losses,
if any, an amount equal to the aggregate of such unreimbursed Realized Losses
previously allocated to such Class;
(x) Tenth, to the Class A-3 Certificates in respect of interest, up to an
amount equal to the Interest Distribution Amount of such Class;
(xi) Eleventh, pro rata, (A) to the Class A-3 Certificates in respect of
interest, up to an amount equal to the unpaid Interest Shortfalls previously
allocated to such Class, (B) to the Class PS-1 Certificates in respect of the
Reduction Interest Distribution Amount attributable to the notional reduction in
the Certificate Balance of the Class A-3 Certificates as described under
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'--Delinquency Reduction Amounts and Appraisal Reduction Amounts,' up to an
amount equal to the Reduction Interest Distribution Amount so attributable and
(C) to the Class PS-1 Certificates, up to an amount equal to the unpaid
Reduction Interest Shortfalls previously allocated to the Class PS-1
Certificates in respect of Reduction Interest Distribution Amounts distributable
under Clause (B);
(xii) Twelfth, to the Class A-3 Certificates in reduction of the
Certificate Balance thereof, an amount equal to the Principal Distribution
Amount, less the amount of the Principal Distribution Amount distributed
pursuant to all prior clauses, until the Certificate Balance of such Class is
reduced to zero;
(xiii) Thirteenth, to the Class A-3 Certificates, to the extent not
distributed pursuant to all prior clauses, for the unreimbursed amounts of
Realized Losses, if any, up to an amount equal to the aggregate of such
unreimbursed Realized Losses previously allocated to such Class;
(xiv) Fourteenth, to the Class A-4 Certificates in respect of interest, up
to an amount equal to the Interest Distribution Amount of such Class;
(xv) Fifteenth, pro rata, (A) to the Class A-4 Certificates in respect of
interest, up to an amount equal to the unpaid Interest Shortfalls previously
allocated to such Class, (B) to the Class PS-1 Certificates in respect of the
Reduction Interest Distribution Amount attributable to the notional reduction in
the Certificate Balance of the Class A-4 Certificates as described under
'--Delinquency Reduction Amounts and Appraisal Reduction Amounts,' up to an
amount equal to the Reduction Interest Distribution Amount so attributable and
(C) to the Class PS-1 Certificates, up to an amount equal to the unpaid
Reduction Interest Shortfalls previously allocated to the Class PS-1
Certificates in respect of Reduction Interest Distribution Amounts distributable
under Clause (B);
(xvi) Sixteenth, to the Class A-4 Certificates, in reduction of the
Certificate Balance thereof, an amount equal to the Principal Distribution
Amount less amounts of Principal Distribution Amount distributed pursuant to all
prior clauses, until the Certificate Balance of such Class is reduced to zero;
(xvii) Seventeenth, to the Class A-4 Certificates, to the extent not
distributed pursuant to all prior clauses, for the unreimbursed amounts of
Realized Losses, if any, an amount equal to the aggregate of such unreimbursed
Realized Losses previously allocated to such Class;
(xviii) Eighteenth, to the Class A-5 Certificates in respect of interest,
up to an amount equal to the Interest Distribution Amount of such Class;
(xix) Nineteenth, pro rata, (A) to the Class A-5 Certificates in respect of
interest, up to an amount equal to the unpaid Interest Shortfalls previously
allocated to such Class, (B) to the Class PS-1 Certificates in respect of the
Reduction Interest Distribution Amount attributable to the notional reduction in
the Certificate Balance of the Class A-5 Certificates as described under
'--Delinquency Reduction Amounts and Appraisal Reduction Amounts,' up to an
amount equal to the Reduction Interest Distribution Amount so attributable and
(C) to the Class PS-1 Certificates, up to an amount equal to the unpaid
Reduction Interest Shortfalls previously allocated to the Class PS-1
Certificates in respect of Reduction Interest Distribution Amounts distributable
under Clause (B);
(xx) Twentieth, to the Class A-5 Certificates in reduction of the
Certificate Balance thereof, an amount equal to the Principal Distribution
Amount, less the amount of the Principal Distribution Amount distributed
pursuant to all prior clauses, until the Certificate Balance of such Class is
reduced to zero;
(xxi) Twenty-first, to the Class A-5 Certificates, to the extent not
distributed pursuant to all prior clauses, for the unreimbursed amounts of
Realized Losses, if any, an amount equal to the aggregate of such unreimbursed
Realized Losses previously allocated to such Class;
(xxii) Twenty-second, to the Class B-1 Certificates in respect of interest,
up to an amount equal to the Interest Distribution Amount of such Class;
(xxiii) Twenty-third, pro rata, (A) to the Class B-1 Certificates in
respect of interest, up to an amount equal to the unpaid Interest Shortfalls
previously allocated to such Class, (B) to the Class PS-1 Certificates in
respect of the Reduction Interest Distribution Amount attributable to the
notional reduction in the Certificate Balance of the Class B-1 Certificates as
described under '--Delinquency Reduction Amounts and Appraisal Reduction
Amounts,' up to an amount equal to the Reduction Interest Distribution Amount so
attributable and (C) to the Class PS-1 Certificates, up to an amount equal to
the unpaid Reduction Interest Shortfalls previously allocated to the Class PS-1
Certificates in respect of Reduction Interest Distribution Amounts distributable
under Clause (B);
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(xxiv) Twenty-fourth, to the Class B-1 Certificates, in reduction of the
Certificate Balance thereof, an amount equal to the Principal Distribution
Amount less amounts of Principal Distribution Amount distributed pursuant to all
prior clauses, until the Certificate Balance of such Class is reduced to zero;
(xxv) Twenty-fifth, to the Class B-1 Certificates, to the extent not
distributed pursuant to all prior clauses, for the unreimbursed amounts of
Realized Losses, if any, an amount equal to the aggregate of such unreimbursed
Realized Losses previously allocated to such Class;
(xxvi) Twenty-sixth, to the Class B-2 Certificates in respect of interest,
up to an amount equal to the Interest Distribution Amount of such Class;
(xxvii) Twenty-seventh, pro rata, (A) to the Class B-2 Certificates in
respect of interest, up to an amount equal to the unpaid Interest Shortfalls
previously allocated to such Class, (B) to the Class PS-1 Certificates in
respect of the Reduction Interest Distribution Amount attributable to the
notional reduction in the Certificate Balance of the Class B-2 Certificates as
described under '--Delinquency Reduction Amounts and Appraisal Reduction
Amounts,' up to an amount equal to the Reduction Interest Distribution Amount so
attributable and (C) to the Class PS-1 Certificates, up to an amount equal to
the unpaid Reduction Interest Shortfalls previously allocated to the Class PS-1
Certificates in respect of Reduction Interest Distribution Amounts distributable
under Clause (B);
(xxviii) Twenty-eighth, to the Class B-2 Certificates, in reduction of the
Certificate Balance thereof, an amount equal to the Principal Distribution
Amount less amounts of Principal Distribution Amount distributed pursuant to
prior clauses, until the Certificate Balance of such Class is reduced to zero;
(xxix) Twenty-ninth, to the Class B-2 Certificates, to the extent not
distributed pursuant to all prior clauses, for the unreimbursed amounts of
Realized Losses, if any, an amount equal to the aggregate of such unreimbursed
Realized Losses previously allocated to such Class;
(xxx) Thirtieth, to the Class B-3 Certificates in respect of interest, up
to an amount equal to the Interest Distribution Amount of such Class;
(xxxi) Thirty-first, pro rata, (A) to the Class B-3 Certificates in respect
of interest, up to an amount equal to the unpaid Interest Shortfalls previously
allocated to such Class, (B) to the Class PS-1 Certificates in respect of the
Reduction Interest Distribution Amount attributable to the notional reduction in
the Certificate Balance of the Class B-3 Certificates as described under
'--Delinquency Reduction Amounts and Appraisal Reduction Amounts,' up to an
amount equal to the Reduction Interest Distribution Amount so attributable and
(C) to the Class PS-1 Certificates, up to an amount equal to the unpaid
Reduction Interest Shortfalls previously allocated to the Class PS-1
Certificates in respect of Reduction Interest Distribution Amounts distributable
under Clause (B);
(xxxii) Thirty-second, to the Class B-3 Certificates, in reduction of the
Certificate Balance thereof, an amount equal to the Principal Distribution
Amount less amounts of Principal Distribution Amount distributed pursuant to all
prior clauses, until the Certificate Balance of such Class is reduced to zero;
(xxxiii) Thirty-third, to the Class B-3 Certificates, to the extent not
distributed pursuant to all prior clauses, for the unreimbursed amounts of
Realized Losses, if any, an amount equal to the aggregate of such unreimbursed
Realized Losses previously allocated to such Class;
(xxxiv) Thirty-fourth, to the Class B-4 Certificates in respect of
interest, up to an amount equal to the Interest Distribution Amount of such
Class;
(xxxv) Thirty-fifth, pro rata, (A) to the Class B-4 Certificates in respect
of interest, up to an amount equal to the unpaid Interest Shortfalls previously
allocated to such Class, (B) to the Class PS-1 Certificates in respect of the
Reduction Interest Distribution Amount attributable to the notional reduction in
the Certificate Balance of the Class B-4 Certificates as described under
'--Delinquency Reduction Amounts and Appraisal Reduction Amounts,' up to an
amount equal to the Reduction Interest Distribution Amount so attributable and
(C) to the Class PS-1 Certificates, up to an amount equal to the unpaid
Reduction Interest Shortfalls previously allocated to the Class PS-1
Certificates in respect of Reduction Interest Distribution Amounts distributable
under Clause (B);
(xxxvi) Thirty-sixth, to the Class B-4 Certificates, in reduction of the
Certificate Balance thereof, an amount equal to the Principal Distribution
Amount less amounts of Principal Distribution Amount distributed pursuant to all
prior clauses, until the Certificate Balance of such Class is reduced to zero;
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(xxxvii) Thirty-seventh, to the Class B-4 Certificates, to the extent not
distributed pursuant to all prior clauses, for the unreimbursed amounts of
Realized Losses, if any, an amount equal to the aggregate of such unreimbursed
Realized Losses previously allocated to such Class;
(xxxviii) Thirty-eighth, to the Class B-5 Certificates in respect of
interest, up to an amount equal to the Interest Distribution Amount of such
Class;
(xxxix) Thirty-ninth, pro rata, (A) to the Class B-5 Certificates in
respect of interest, up to an amount equal to the unpaid Interest Shortfalls
previously allocated to such Class, (B) to the Class PS-1 Certificates in
respect of the Reduction Interest Distribution Amount attributable to the
notional reduction in the Certificate Balance of the Class B-5 Certificates as
described under '--Delinquency Reduction Amounts and Appraisal Reduction
Amounts,' up to an amount equal to the Reduction Interest Distribution Amount so
attributable and (C) to the Class PS-1 Certificates, up to an amount equal to
the unpaid Reduction Interest Shortfalls previously allocated to the Class PS-1
Certificates in respect of Reduction Interest Distribution Amounts distributable
under Clause (B);
(xl) Fortieth, to the Class B-5 Certificates, in reduction of the
Certificate Balance thereof, an amount equal to the Principal Distribution
Amount less amounts of Principal Distribution Amount distributed pursuant to all
prior clauses, until the Certificate Balance of such Class is reduced to zero;
(xli) Forty-first, to the Class B-5 Certificates, to the extent not
distributed pursuant to all prior clauses, for the unreimbursed amounts of
Realized Losses, if any, an amount equal to the aggregate of such unreimbursed
Realized Losses previously allocated to such Class;
(xlii) Forty-second, to the Class B-6 Certificates in respect of interest,
up to an amount equal to the Interest Distribution Amount of such Class;
(xliii) Forty-third, pro rata, (A) to the Class B-6 Certificates in respect
of interest, up to an amount equal to the unpaid Interest Shortfalls previously
allocated to such Class, (B) to the Class PS-1 Certificates in respect of the
Reduction Interest Distribution Amount attributable to the notional reduction in
the Certificate Balance of the Class B-6 Certificates as described under
'--Delinquency Reduction Amounts and Appraisal Reduction Amounts,' up to an
amount equal to the Reduction Interest Distribution Amount so attributable and
(C) to the Class PS-1 Certificates, up to an amount equal to the unpaid
Reduction Interest Shortfalls previously allocated to the Class PS-1
Certificates in respect of Reduction Interest Distribution Amounts distributable
under Clause (B);
(xliv) Forty-fourth, to the Class B-6 Certificates, in reduction of the
Certificate Balance thereof, an amount equal to the Principal Distribution
Amount less amounts of Principal Distribution Amount distributed pursuant to all
prior clauses, until the Certificate Balance of such Class is reduced to zero;
(xlv) Forty-fifth, to the Class B-6 Certificates, to the extent not
distributed pursuant to all prior clauses, for the unreimbursed amounts of
Realized Losses, if any, an amount equal to the aggregate of such unreimbursed
Realized Losses previously allocated to such Class;
(xlvi) Forty-sixth, pro rata, (A) to the Class PS-1 Certificates in respect
of the Reduction Interest Distribution Amount attributable to the notional
reduction in the Certificate Balance of the Class B-7 and Class B-7H
Certificates as described under '--Delinquency Reduction Amounts and Appraisal
Reduction Amounts,' up to an amount equal to the Reduction Interest Distribution
Amount so attributable and (B) to the Class PS-1 Certificates, up to an amount
equal to the unpaid Reduction Interest Shortfalls previously allocated to the
Class PS-1 Certificates in respect of Reduction Interest Distribution Amounts
distributable under Clause (A);
(xlvii) Forty-seventh, pro rata, to the Class B-7 and Class B-7H
Certificates in respect of interest, up to an amount equal to the aggregate
Interest Distribution Amounts of such classes;
(xlviii) Forty-eighth, pro rata, to the Class B-7 and Class B-7H
Certificates in respect of interest, up to an amount equal to the aggregate
unpaid Interest Shortfalls previously allocated to such classes;
(xlvix) Forty-ninth, pro rata, based on Certificate Balance to the Class
B-7 and Class B-7H Certificates in reduction of the Certificate Balances
thereof, an amount equal to the Principal Distribution Amount less amounts of
the Principal Distribution Amount distributed pursuant to all prior clauses,
until the Certificate Balance of each such class is reduced to zero;
(l) Fiftieth, pro rata, to the Class B-7 and Class B-7H Certificates, to
the extent not distributed pursuant to all prior clauses, for the unreimbursed
amounts of Realized Losses, if any, an amount equal to the aggregate of such
unreimbursed Realized Losses previously allocated to such classes; and
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(li) Fifty-first, to the Class R and Class LR Certificates.
All references to 'pro rata' in the preceding clauses unless otherwise
specified mean pro rata based upon the amount distributable pursuant to such
clause.
Notwithstanding the foregoing, on each Distribution Date occurring on or
after the Crossover Date, the Principal Distribution Amount will be distributed
to the Class A-1A, Class A-1B and Class A-1C Certificates, pro rata, based on
their respective Certificate Balances, in reduction of their respective
Certificate Balances, until the Certificate Balance of each such Class is
reduced to zero, and any unreimbursed amounts of Realized Losses previously
allocated to such classes, if available, will be distributed pro rata based on
their respective Certificate Balances. The 'Crossover Date' is the Distribution
Date on which the Certificate Balance of each Class of Certificates other than
the Class A-1A, Class A-1B and Class A-1C Certificates have been reduced to
zero. The Class PS-1 Certificates will not be entitled to any distribution of
principal.
Prepayment Premiums. On each Distribution Date, Prepayment Premiums (which
will include any Prepayment Premiums related to the unamortized portion of any
Premium on any Premium Loans, to the extent applicable Lock-out Periods are
still in effect, as described herein under 'Description of the Mortgage
Pool--The Mortgage Loan Program--Underwriting Standards' and the portion of the
Repurchase Price relating to the Return of Premium Amount for any Premium Loan
that is repurchased from the Trust Fund, to the Extent applicable Lock-out
Periods are still in effect, as described herein under 'The Pooling and
Servicing Agreement--Representations and Warranties; Repurchase') with respect
to any Unscheduled Payments received in the related Collection Period shall be
distributed to the holders of the Offered Certificates outstanding on such
Distribution Date (and will not be applied to reduce the outstanding Certificate
Balance of such Class), in the following amounts and order of priority, with
respect to the Certificates of each Class in each case to the extent remaining
amounts of Prepayment Premiums are available therefor:
(i) First, to the Class PS-1 Certificates, an amount equal to (A) the
present value (discounted at the Discount Rate for the Class PS-1 Certificates
plus the Spread Rate for the Class PS-1 Certificates) of the aggregate interest
that would have been paid in respect of the Class PS-1 Certificates from the
Distribution Date occurring in the following month until the Notional Balance of
the Class PS-1 Certificates would have been reduced to zero had the related
prepayment not occurred, minus (B) the present value (discounted at the Discount
Rate for the Class PS-1 Certificates plus the Spread Rate for the Class PS-1
Certificates) of the aggregate interest that will be paid in respect of Class
PS-1 Certificates from the Distribution Date occurring in the following month
until the Notional Balance of the Class PS-1 Certificates is reduced to zero
following such prepayment (in each case assuming no further prepayments are made
except that all Mortgage Loans prepay on Anticipated Repayment Dates where
applicable);
(ii) Second, to the Class A-1A Certificates, an amount equal to (A) the
present value (discounted at the Discount Rate for the Class A-1A Certificates
plus the Spread Rate for the Class A-1A Certificates) of the aggregate principal
and interest that would have been paid in respect of the Class A-1A Certificates
from the Distribution Date occurring in the following month until the
Certificate Balance of the Class A-1A Certificates would have been reduced to
zero had the related prepayment not occurred, minus (B) the sum of (i) the
amount of such prepayment distributed in respect of the Class A-1A Certificates
and (ii) the present value (discounted at the Discount Rate for the Class A-1A
Certificates plus the Spread Rate for the Class A-1A Certificates) of the
aggregate principal and interest that will be paid in respect of the Class A-1A
Certificates from the Distribution Date occurring in the following month until
the Certificate Balance of the Class A-1A Certificates is reduced to zero
following such prepayment (in each case assuming no further prepayments are made
except that all Mortgage Loans prepay on Anticipated Repayment Dates where
applicable);
(iii) Third, to the Class A-1B Certificates, an amount equal to (A) the
present value (discounted at the Discount Rate for the Class A-1B Certificates
plus the Spread Rate for the Class A-1B Certificates) of the aggregate principal
and interest that would have been paid in respect of the Class A-1B Certificates
from the Distribution Date occurring in the following month until the
Certificate Balance of the Class A-1B Certificates would have been reduced to
zero had the related prepayment not occurred, minus (B) the sum of (i) the
amount of such prepayment distributed in respect of the Class A-1B Certificates
and (ii) the present value (discounted at the Discount Rate for the Class A-1B
Certificates plus the Spread Rate for the Class A-1B Certificates) of the
aggregate principal and interest that will be paid in respect of the Class A-1B
Certificates from the Distribution Date occurring in the following month until
the Certificate Balance of the Class A-1B Certificates is reduced to zero
following such prepayment (in each case assuming no further prepayments are made
except that all Mortgage Loans prepay on Anticipated Repayment Dates where
applicable); and
(iv) Fourth, to the Class A-1C Certificates, an amount equal to (A) the
present value (discounted at the Discount Rate for the Class A-1C Certificates
plus the Spread Rate for the Class A-1C Certificates) of the aggregate principal
and interest that would have been paid in respect of the Class A-1C Certificates
from the Distribution Date occurring in the following month until the
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Certificate Balance of the Class A-1C Certificates would have been reduced to
zero had the related prepayment not occurred, minus (B) the sum of (i) the
amount of such prepayment distributed in respect of the Class A-1C Certificates
and (ii) the present value (discounted at the Discount Rate for the Class A-1C
Certificates plus the Spread Rate for the Class A-1C Certificates) of the
aggregate principal and interest that will be paid in respect of the Class A-1C
Certificates from the Distribution Date occurring in the following month until
the Certificate Balance of the Class A-1C Certificates is reduced to zero
following such prepayment (in each case assuming no further prepayments are made
except that all Mortgage Loans prepay on Anticipated Repayment Dates where
applicable).
In all clauses above, Prepayment Premiums will only be distributed on a
Distribution Date (i) if the respective Certificate Balance or Notional Balance
of the related Class is greater than zero on the last Business Day of the
Interest Accrual Period ending immediately prior to such Distribution Date and
(ii) if the amount computed pursuant to the related clause above is greater than
zero. Any Prepayment Premiums remaining following the distributions described in
the preceding clauses (i) through ( vi) shall be distributed to holders of the
Private Certificates in accordance with the Pooling and Servicing Agreement.
The 'Discount Rate' with respect to any Class of Certificates is the rate
determined by the Trustee, in its good faith, to be the yield (interpolated and
rounded to the nearest one-thousandth of a percent, if necessary) in the
secondary market on United States Treasury securities with a maturity closest to
the then computed weighted average life (or, in the case of the Class PS-1
Certificates, the weighted average life of the interest payments) of such Class
(rounded to the nearest month) (without taking into account the related
prepayment).
The 'Spread Rate' for the Class PS-1 Certificates is [ ]% per annum,
the Class A-1A Certificates is [ ]% per annum, the Class A-1B Certificates
is [ ]% per annum and the Class A-1C Certificates is [ ]% per annum.
Default Interest and Excess Interest. On each Distribution Date, Net
Default Interest and Excess Interest received in the related Collection Period
with respect to a default on a Mortgage Loan will be distributed solely to the
Class V-1 and Class V-2 Certificates, respectively, to the extent set forth in
the Pooling and Servicing Agreement, and will not be available for distribution
to holders of the Offered Certificates. The Class V-1 and Class V-2 Certificates
are not entitled to any other distributions of interest, principal or Prepayment
Premiums.
The holders of a majority Percentage Interest of the Class LR Certificates
or the most subordinate Class of Certificates outstanding (other than the Class
B-7H Certificates) will have the limited right to purchase the ARD Loans on
their related Anticipated Repayment Dates under the circumstances described
under 'The Pooling and Servicing Agreement--Optional Termination' in this
Prospectus Supplement.
REALIZED LOSSES
The Certificate Balance of the Certificates will be reduced without
distribution on any Distribution Date as a write-off to the extent of any
Realized Loss allocated to the applicable Class of Certificates with respect to
such Distribution Date. As referred to herein, the 'Realized Loss' with respect
to any Distribution Date shall mean the amount, if any, by which the aggregate
Certificate Balance of the Sequential Certificates after giving effect to
distributions made on such Distribution Date exceeds the aggregate Stated
Principal Balance of the Mortgage Loans as of the Due Date occurring in the
month in which such Distribution Date occurs. Except as described in the next
sentence, any such Realized Losses will be applied to the Classes of
Certificates in the following order, until the Certificate Balance of each is
reduced to zero: first, to certain of the Private Certificates, second, to the
Class A-5 Certificates, third, to the Class A-4 Certificates, fourth to the
Class A-3 Certificates, fifth, to the Class A-2 Certificates and finally, pro
rata, to the Class A-1A, Class A-1B and Class A-1C Certificates based on their
respective outstanding balances. Any amounts recovered in respect of any such
amounts previously written-off as Realized Losses will be distributed to the
Classes of Sequential Certificates in reverse order of allocation of such
Realized Losses thereto. Shortfalls in Available Funds resulting from Servicing
Compensation (other than the Servicing Fee), interest on Advances to the extent
not covered by Default Interest, extraordinary expenses of the Trust Fund (other
than indemnification expenses), a reduction of the interest rate of a Mortgage
Loan by a bankruptcy court pursuant to a plan of reorganization or pursuant to
any of its equitable powers, a reduction in interest rate or a forgiveness of
principal of a Mortgage Loan as described under 'The Pooling and Servicing
Agreement--Modifications,' in this Prospectus Supplement or otherwise, will be
allocated in the same manner as Realized Losses. Shortfalls in Available Funds
resulting from (i) indemnification expenses of the Trust Fund required to be
paid pursuant to the Pooling and Servicing Agreement and (ii) Prepayment
Interest Shortfalls in excess of the sum of (x) the Servicing Fee attributable
to the Mortgage Loan being prepaid (not including the portion of the Servicing
fee attributable to the Trustee) and (y) investment income on the related
Principal Prepayment for the period such amount is held in the Collection
Account during the related Interest Accrual Period, will be allocated to, and be
deemed distributed to, each Class of Certificates, pro rata, based upon amounts
distributable to each such Class and, in the case of indemnification expenses,
will be allocated, first, in respect of interest and, second, in respect of
principal.
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The Notional Balance of the Class PS-1 Certificates will be reduced to reflect
reductions in the Stated Principal Balances of the Mortgage Loans as a result of
write-offs in respect of final recovery determinations in respect of liquidation
of defaulted Mortgage Loans.
The 'Stated Principal Balance' of any Mortgage Loan at any date of
determination will equal (a) the principal balance as of the Cut-off Date of
such Mortgage Loan, minus (b) the sum of (i) the principal portion of each
Monthly Payment due on such Mortgage Loan after the Cut-off Date and prior to
such date of determination, (ii) all voluntary and involuntary principal
prepayments and other unscheduled collections of principal received with respect
to such Mortgage Loan, to the extent distributed to holders of the Certificates
or applied to other payments required under the Pooling and Servicing Agreement
before such date of determination and (iii) any principal forgiven by the
Special Servicer or Interest Shortfalls resulting from reductions or deferrals
of interest, each as described herein under 'The Pooling and Servicing
Agreement--Modifications.' The Stated Principal Balance of a Mortgage Loan with
respect to which title to the related Mortgaged Property has been acquired by
the Trust Fund is equal to the principal balance thereof outstanding on the date
on which such title is acquired less any Net REO Proceeds allocated to principal
on such Mortgage Loan. The Stated Principal Balance of a Specially Serviced
Mortgage Loan with respect to which the Servicer or Special Servicer has
determined that it has received all payments and recoveries which the Servicer
or the Special Servicer, as applicable, expects to be finally recoverable on
such Mortgage Loan is zero.
DELINQUENCY REDUCTION AMOUNTS AND APPRAISAL REDUCTION AMOUNTS
The Certificate Balances of the Class A-2, Class A-3, Class A-4, Class A-5,
Class B-1, Class B-2, Class B-3, Class B-4, Class B-5, Class B-6 and Class B-7
Certificates will be notionally reduced (solely for purposes of determining the
payment priority of interest on the Class PS-1 Certificates in respect of
Reduction Interest Distribution Amounts) on any Distribution Date to the extent
of any Delinquency Reduction Amounts or Appraisal Reduction Amounts with respect
to such Distribution Date; provided that (i) if a Delinquency and an Appraisal
Reduction Event occur with respect to the same Distribution Date and the same
Mortgage Loan, the reduction will equal the Appraisal Reduction Amount, (ii)
following the occurrence of an Appraisal Reduction Event with respect to any
Mortgage Loan, no further Delinquency Reduction Amounts will be applied with
respect to such Mortgage Loan and any Delinquency Reduction Amounts previously
applied will be reversed and (iii) for any Distribution Date, the aggregate of
the Appraisal Reduction Amounts and Delinquency Reduction Amounts may not exceed
the Certificate Balance (as adjusted by any notional reductions) of the most
subordinate class of Certificates outstanding among the Class A-2, Class A-3,
Class A-4, Class A-5, Class B-1, Class B-2, Class B-3, Class B-4, Class B-5,
Class B-6 and Class B-7 Certificates (and to the extent the aggregate of the
Appraisal Reduction Amounts and Delinquency Reduction Amounts exceeds such
Certificate Balance, such excess will be applied notionally to the next most
subordinate Class of Certificates on the next Distribution Date). Any such
reductions will be applied notionally, first, to the Class B-7 and Class B-7H
Certificates, second to the Class B-6 Certificates, third, to the Class B-5
Certificates, fourth, to the Class B-4 Certificates, fifth, to the Class B-3
Certificates, sixth, to the Class B-2 Certificates, seventh, to the Class B-1
Certificates, eighth, to the Class A-5 Certificates, ninth, to the Class A-4
Certificates, tenth, to the Class A-3 Certificates, and finally, to the Class
A-2 Certificates (provided in each case that no Certificate Balance in respect
of any such class may be notionally reduced below zero). Any notional reduction
of the Certificate Balance of such Certificates as a result of any Delinquency
or Appraisal Reduction Event will be reversed to the extent there is a recovery
of any or all of the Delinquency Amounts or a Realized Loss. Additionally, a
reversal or additional reduction will occur to the extent that the Servicer's
Appraisal Estimate is less than or greater than the Appraisal Reduction as
adjusted to take into account a subsequent independent MAI appraisal. For
purposes of calculating Interest Accrual Amounts, any such reversal or
additional reductions made on the Distribution Date occurring in an Interest
Accrual Period will be deemed to have been made on the first day of such
Interest Accrual Period. See 'Description of the Offered
Certificates--Distribution--Payment Priorities' in this Prospectus Supplement.
PREPAYMENT INTEREST SHORTFALLS
The Servicer will deposit from its own funds any Prepayment Interest
Shortfalls into the Collection Account on the Servicer Remittance Date to the
extent such Prepayment Interest Shortfalls do not exceed the aggregate of the
Servicing Fee attributable to the Mortgage Loan being prepaid due the Servicer
and the investment income accruing on the related Principal Prepayment for such
related Collection Period and any Prepayment Shortfall Excess for the Collection
Period. Any Prepayment Interest Shortfalls in excess of the Servicing Fee
attributable to the Mortgage Loan being prepaid and the investment income
accruing on the related Principal Prepayment due to the Servicer for such period
will be allocated to each Class of Certificates, pro rata, based on amounts
distributable to each such class. Any interest that accrues on a prepayment on a
Mortgage Loan after the Due Date and before the following Servicer Remittance
Date will be paid to the Servicer.
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SUBORDINATION
As a means of providing a certain amount of protection to the holders of
the Class A-1A, Class A-1B, Class A-1C and Class PS-1 Certificates (except as
set forth below) against losses associated with delinquent and defaulted
Mortgage Loans, the rights of the holders of the Class A-2, Class A-3, Class A-4
and Class A-5 Certificates and certain of the Private Certificates to receive
distributions of interest and principal with respect to the Mortgage Loans, as
applicable, will be subordinated to such rights of the holders of the Class
A-1A, Class A-1B, Class A-1C and Class PS-1 Certificates. The Class A-2
Certificates will be likewise protected by the subordination of the Class A-3,
Class A-4 and Class A-5 Certificates and certain of the Private Certificates.
The Class A-3 Certificates will be likewise protected by the subordination of
the Class A-4 and Class A-5 Certificates and certain of the Private
Certificates. The Class A-4 Certificates will be likewise protected by the
subordination of the Class A-5 Certificates and certain of the Private
Certificates. The Class A-5 Certificates will be likewise protected by the
subordination of certain of the Private Certificates. This subordination will be
effected in two ways: (i) by the preferential right of the holders of a Class of
Sequential Certificates to receive on any Distribution Date the amounts of
interest and principal, distributable in respect of such Sequential Certificates
on such date prior to any distribution being made on such Distribution Date in
respect of any Classes of Sequential Certificates subordinate thereto, and (ii)
by the allocation of Realized Losses (as defined herein), first, to certain of
the Private Certificates, second to the Class A-5 Certificates, third, to the
Class A-4 Certificates, fourth, to the Class A-3 Certificates, fifth to the
Class A-2 Certificates, and finally, pro rata, to the Class A-1A, Class A-1B and
Class A-1C Certificates based on their respective Certificate Balances.
No other form of credit enhancement will be available for the benefit of
the holders of the Offered Certificates or the Class PS-1 Certificates.
APPRAISAL REDUCTIONS
With respect to the first Distribution Date following the earliest of (i)
the third anniversary of the date on which an extension of the maturity date of
a Mortgage Loan becomes effective as a result of a modification of such Mortgage
Loan by the Special Servicer, which extension does not change the amount of
Monthly Payments on the Mortgage Loan, (ii) 60 days after an uncured delinquency
occurs in respect of a Mortgage Loan, (iii) immediately after the date on which
a reduction in the amount of Monthly Payments on a Mortgage Loan, or a change in
any other material economic term of the Mortgage Loan, becomes effective as a
result of a modification of such Mortgage Loan by the Special Servicer, (iv)
immediately after a receiver has been appointed, (v) immediately after a
borrower declares bankruptcy, (vi) immediately after a Mortgage Loan becomes an
REO Mortgage Loan, or (vii) any other event which, in the discretion of the
Servicer and of which the Servicer becomes aware in performing its obligations
in accordance with the Servicing Standard would materially and adversely impair
the value of the Mortgaged Property and security for the related Mortgage Loan
(any of (i), (ii), (iii), (iv), (v), (vi) and (vii), an 'Appraisal Reduction
Event'), an Appraisal Reduction Amount will be calculated. The 'Appraisal
Reduction Amount' for any Distribution Date and for any Mortgage Loan as to
which any Appraisal Reduction Event has occurred will be an amount equal to the
excess of (a) the outstanding Stated Principal Balance of such Mortgage Loan
over (b) the excess of (i) 90% of the sum of the appraised values of the related
Mortgaged Properties as determined by independent MAI appraisals (the costs of
which shall be paid by the Servicer as an Advance) over (ii) the sum of (A) all
unpaid interest on such Mortgage Loan at a per annum rate equal to the Mortgage
Rate, (B) all unreimbursed Property Advances, the principal portion of all
unreimbursed P&I Advances and all unpaid interest on Advances at the Advance
Rate in respect of such Mortgage Loan and (C) all currently due and unpaid real
estate taxes, ground rents and assessments and insurance premiums and all other
amounts due and unpaid under the Mortgage Loan (which tax, premiums and other
amounts have not been the subject of an Advance by the Servicer). If no
independent MAI appraisal has been obtained within twelve months prior to the
first Distribution Date on or after an Appraisal Reduction Event has occurred,
the Servicer will be required to estimate the value of the related Mortgaged
Properties (the 'Servicer's Appraisal Estimate') and such estimate will be used
for purposes of the Appraisal Reduction Amount. Within 60 days after the
Appraisal Reduction Event, the Servicer will be required to obtain an
independent MAI appraisal (the cost of which shall constitute a Property
Advance). On the first Distribution Date occurring on or after the delivery of
such independent MAI appraisal, the Servicer will be required to adjust the
Appraisal Reduction Amount to take into account such appraisal (regardless of
whether the independent MAI appraisal is higher or lower than the Servicer's
Appraisal Estimate). Appraisal Reduction Amounts will be recalculated annually
based on Updated Appraisals.
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DELIVERY, FORM AND DENOMINATION
The Offered Certificates will be issued, maintained and transferred in the
book-entry form only in denominations of $50,000 initial Certificate Balance and
in multiples of $1 Certificate Balance or Notional Balance, as applicable, in
excess thereof.
The Offered Certificates will initially be represented by one or more
global Certificates for each such Class registered in the name of the nominee of
DTC. The Depositor has been informed by DTC that DTC's nominee will be Cede &
Co. No holder of an Offered Certificate will be entitled to receive a
certificate issued in fully registered, certificated form (each, a 'Definitive
Certificate') representing its interest in such Class, except under the limited
circumstances described in the Prospectus under 'Description of the
Certificates--Book Entry Registration.' Unless and until Definitive Certificates
are issued, all references to actions by holders of the Offered Certificates
will refer to actions taken by DTC upon instructions received from holders of
Offered Certificates through its participating organizations (together with
Cedel and Euroclear participating organizations, the 'Participants'), and all
references herein to payments, notices, reports, statements and other
information to holders of Offered Certificates will refer to payments, notices,
reports and statements to DTC or Cede & Co., as the registered holder of the
Offered Certificates, for distribution to holders of Offered Certificates
through its Participants in accordance with DTC procedures; provided, however,
that to the extent that the party responsible for distributing any report,
statement or other information has been provided with the name of the beneficial
owner of a Certificate (or the prospective transferee of such beneficial owner),
such report, statement or other information will be provided to such beneficial
owner (or prospective transferee).
Until Definitive Certificates are issued in respect of the Offered
Certificates, interests in the Offered Certificates will be transferred on the
book-entry records of DTC and its Participants. The Trustee will initially serve
as certificate registrar (in such capacity, the 'Certificate Registrar') for
purposes of recording and otherwise providing for the registration of the
Offered Certificates.
A 'Certificateholder' under the Pooling and Servicing Agreement will be the
person in whose name a Certificate is registered in the certificate register
maintained pursuant to the Pooling and Servicing Agreement, except that solely
for the purpose of giving any consent or taking any action pursuant to the
Pooling and Servicing Agreement, any Certificate registered in the name of the
Depositor, the Servicer, the Special Servicer, the Trustee (in its individual
capacity), a manager of a Mortgaged Property, a Mortgagor or any person
affiliated with the Depositor, the Servicer, the Special Servicer, the Trustee,
such manager or a Mortgagor will be deemed not to be outstanding and the Voting
Rights to which it is entitled will not be taken into account in determining
whether the requisite percentage of Voting Rights necessary to effect any such
consent or take any such action has been obtained; provided, however, that for
purposes of obtaining the consent of Certificateholders to an amendment to the
Pooling and Servicing Agreement, any Certificates beneficially owned by the
Servicer or Special Servicer or an affiliate will be deemed to be outstanding,
provided that such amendment does not relate to compensation of the Servicer or
Special Servicer or otherwise benefit the Servicer or the Special Servicer in
any material respect; and, provided, further, that for purposes of obtaining the
consent of Certificateholders to any action proposed to be taken by the Special
Servicer with respect to a Specially Serviced Mortgage Loan, any Certificates
beneficially owned by the Servicer or an affiliate will be deemed to be
outstanding, provided that, the Special Servicer is not the Servicer.
Notwithstanding the foregoing, solely for purposes of providing or distributing
any reports, statements or other information pursuant to the Pooling and
Servicing Agreement, a Certificateholder will include any beneficial owner (or
prospective transferee of a beneficial owner) to the extent that the party
required or permitted to provide or distribute such report, statement or other
information has been provided with the name of such beneficial owner (or
prospective transferee). The Percentage Interest of any Class of Offered
Certificate will be equal to the percentage obtained by dividing the
denomination of such Certificate by the aggregate initial Certificate Balance of
such Class of Certificates. See 'Description of the Certificates-- Book-Entry
Registration and Definitive Certificates' in the Prospectus.
BOOK-ENTRY REGISTRATION
Holders of Offered Certificates may hold their Certificates through DTC (in
the United States) or Cedel or Euroclear (in Europe) if they are Participants of
such system, or indirectly through organizations that are participants in such
systems. Cedel and Euroclear will hold omnibus positions on behalf of the Cedel
Participants and the Euroclear Participants, respectively, through customers'
securities accounts in Cedel's 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
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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, 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 Cedel 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 Cedel 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. Cedel Participants and Euroclear
Participants may not deliver instructions directly to the Depositaries.
Because of time-zone differences, credits of securities in Cedel or
Euroclear as a result of a transaction with a DTC Participant will be made
during the subsequent securities settlement processing, dated the Business Day
following the DTC settlement date, and such credits or any transactions in such
securities settled during such processing will be reported to the relevant Cedel
Participant or Euroclear Participant on such Business Day. Cash received in
Cedel or Euroclear as a result of sales of securities by or through a Cedel
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
Cedel or Euroclear cash account only as of the Business Day following settlement
in DTC. For additional information regarding clearance and settlement procedures
for the Offered Certificates and for information with respect to tax
documentation procedures relating to the Offered Certificates, see Annex D
hereto.
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 or the Luxembourg
Paying Agent 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, Cedel 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 or the Luxembourg Paying Agent to Cede & Co., as nominee for DTC. DTC
will forward such payments, reports and notices to its Participants, which
thereafter will forward them to Indirect Participants, Cedel, 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.
Except as required by law, neither the Depositor, the Servicer, the Fiscal
Agent, the Luxembourg Paying Agent nor the Trustee will have any liability for
any aspect of the records relating to or payments made on account of beneficial
ownership
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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.
Cedel is incorporated under the laws of Luxembourg as a professional
depository. Cedel holds securities for its participating organizations ('Cedel
Participants') and facilitates the clearance and settlement of securities
transactions between Cedel Participants through electronic book-entry changes in
accounts of Cedel Participants, thereby eliminating the need for physical
movement of certificates. Transactions may be settled in Cedel in any of 28
currencies, including United States dollars. Cedel provides to its Cedel
Participants, among other things, services for safekeeping, administration,
clearance and settlement of internationally traded securities and securities
lending and borrowing. Cedel interfaces with domestic markets in several
countries. As a professional depository, Cedel is subject to regulation by the
Luxembourg Monetary Institute. Cedel 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 Underwriter. 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 Cedel 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 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
Underwriter. 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 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 herein concerning DTC, Cedel and 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.
DEFINITIVE CERTIFICATES
Definitive Certificates will be delivered to beneficial owners of the
Offered Certificates ('Certificate Owners') (or their nominees) only if (i) DTC
is no longer willing or able properly to discharge its responsibilities as
depository with respect to the Book-Entry Certificates, and the Trustee is
unable to locate a qualified successor, (ii) the Depositor or the Trustee, at
its sole option, elects to terminate the book-entry system through DTC with
respect to some or all of any Class or Classes of Certificates, or (iii) after
the occurrence of an Event of Default under the Pooling and Servicing Agreement,
Certificate Owners representing a majority in principal amount of the Book-Entry
Certificates then outstanding advise DTC through DTC Participants in writing
that the continuation of a book-entry system through DTC (or a successor
thereto) is no longer in the best interest of Certificate Owners.
Upon the occurrence of any of the events described in clauses (i) through
(iii) in the immediately preceding paragraph, the Trustee or the Luxembourg
Paying Agent is required to notify all affected Certificateholders (through DTC
and related DTC Participants) of the availability through DTC of Definitive
Certificates. Upon delivery of Definitive Certificates, the Trustee, the
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Luxembourg Paying Agent, the Certificate Registrar, and the Servicer will
recognize the holders of such Definitive Certificates as holders under the
Pooling and Servicing Agreement ('Holders'). Distributions of principal and
interest on the Definitive Certificates will be made by the Trustee directly to
Holders of Definitive Certificates in accordance with the procedures set forth
in the Prospectus and/or the Pooling and Servicing Agreement.
Upon the occurrence of any of the events described in clauses (i) through
(iii) of the second preceding paragraph, requests for transfer of Definitive
Certificates will be required to be submitted directly to the Certificate
Registrar in a form acceptable to the Certificate Registrar (such as the forms
which will appear on the back of the certificate representing a Definitive
Certificate), signed by the Holder or such Holder's legal representative and
accompanied by the Definitive Certificate or Certificates for which transfer is
being requested. The Trustee will be appointed as the initial Certificate
Registrar.
TRANSFER RESTRICTIONS
In the event that holders of the Subordinated Offered Certificates become
entitled to receive Definitive Certificates under the circumstances described
under '--Definitive Certificates,' each prospective transferee of a Subordinated
Offered Certificate that is a Definitive Certificate will be required to (i)
deliver to the Depositor, the Certificate Registrar and the Trustee a
representation letter substantially in the form set forth as an exhibit to the
Pooling and Servicing Agreement stating that such transferee is not an employee
benefit plan or other retirement arrangement subject to Title I of the Employee
Retirement Income Security Act of 1974, as amended ('ERISA') or Section 4975 of
the Internal Revenue Code of 1986, as amended (the 'Code'), or a governmental
plan (as defined in Section 3(32) of ERISA) subject to any federal, state or
local law which is, to a material extent, similar to the foregoing provisions of
ERISA or the Code (each, a 'Plan'), or a person acting on behalf of or investing
the assets of a Plan, other than an insurance company investing the assets of
its general account under circumstances whereby the purchase and subsequent
holding of a Subordinated Offered Certificate would be exempt from the
prohibited transaction restrictions of ERISA and the Code under Sections I and
III of PTE 95-60, or (ii) provide an opinion of counsel and such other
documentation as described under 'Certain ERISA Considerations' in this
Prospectus Supplement. The purchaser or transferee of any interest in a
Subordinated Offered Certificate that is not a Definitive Certificate shall be
deemed to represent that it is not a person described in clause (i) above.
The Subordinated Offered Certificates will contain a legend describing such
restrictions on transfer and the Pooling and Servicing Agreement will provide
that any attempted or purported transfer in violation of these transfer
restrictions will be null and void.
PREPAYMENT AND YIELD CONSIDERATIONS
YIELD
The yield to maturity on the Offered Certificates will depend upon the
price paid by the Certificateholder, the rate and timing of the distributions in
reduction of Certificate Balance of such Certificates, the rate, timing and
severity of losses on the Mortgage Loans and the extent to which such losses are
allocable in reduction of the Certificate Balance of such Certificates, and the
extent to which Prepayment Premiums are received in connection with voluntary
prepayments, liquidations on default, or other early returns of principal, as
well as prevailing interest rates at the time of prepayment or default.
The rate of distributions in reduction of the Certificate Balance of any
Class of Offered Certificates, the aggregate amount of distributions on any
Class of Offered Certificates and the yield to maturity of any Class of Offered
Certificates will be directly related to the rate of payments of principal (both
scheduled and unscheduled) on the Mortgage Loans and the amount and timing of
borrower defaults. In addition, such distributions in reduction of Certificate
Balance may result from repurchases by the Mortgage Loan Seller due to missing
or defective documentation or breaches of representations and warranties with
respect to the Mortgage Loans as described herein under 'The Pooling and
Servicing Agreement--Representations and Warranties; Repurchase,' purchases of
the Mortgage Loans in the manner described under 'The Pooling and Servicing
Agreement--Optional Termination' or purchases of ARD Loans by Class LR
Certificateholders as described under 'Description of the Mortgage Pool--Certain
Terms and Conditions of the Mortgage Loans.'
Disproportionate principal payments (whether resulting from differences in
amortization terms, prepayments following expirations of the respective Lock-out
Periods or otherwise) on the Mortgage Loans having Net Mortgage Pass-Through
Rates that are higher or lower than the Weighted Average Net Mortgage
Pass-Through Rate will affect the Weighted Average Net Mortgage Pass-Through
Rate and accordingly the Pass-Through Rate of the Class A-2, Class A-3, Class
A-4 and Class A-5 Certificates for
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future periods and therefore the yield on such Classes. The weighted average of
the Net Mortgage Pass-Through Rates for each Distribution Date, assuming that
each Mortgage Loan with an Anticipated Repayment Date prepays on such date and
that each other Mortgage Loan does not prepay, is set forth on Annex E hereto.
The Certificate Balance of any Class of Offered Certificates may be reduced
without distributions thereon as a result of the allocation of Realized Losses
to such Class, reducing the maximum amount distributable to such Class in
respect of Certificate Balance, as well as the amount of interest that will
accrue thereon. In general, a Realized Loss occurs when the aggregate principal
balance of a Mortgage Loan is reduced without an equal distribution to
Certificateholders in reduction of the Certificate Balances of the Certificates.
Realized Losses are likely to occur only in connection with a default on a
Mortgage Loan and the liquidation of the related Mortgaged Properties or a
reduction in the principal balance of a Mortgage Loan by a bankruptcy court.
The rate of payments (including voluntary and involuntary prepayments) on
pools of Mortgage Loans is influenced by a variety of economic, demographic,
geographic, social, tax, legal and other factors, including the level of
mortgage interest rates and the rate at which borrowers default on their
mortgage loans.
The timing of changes in the rate of prepayment on the Mortgage Loans may
significantly affect the actual yield to maturity experienced by an investor
even if the average rate of principal payments experienced over time is
consistent with such investor's expectation. In general, the earlier a
prepayment of principal on the Mortgage Loans is applied in reduction of the
Certificate Balance of a Class of Offered Certificates, the greater the effect
on such investor's yield to maturity.
All of the Mortgage Loans have Lock-out Periods ranging from 27 months to
127 months following the Cut-off Date. The weighted average Lock-out Period for
the Mortgage Loans is approximately 116 months. All Mortgage Loans are locked
out until no earlier than six months preceding their Anticipated Repayment Date
or maturity date, as applicable. See 'Description of the Mortgage Pool--Certain
Terms and Conditions of the Mortgage Loans--Prepayment Provisions' herein.
Nevertheless, any such Mortgage Loan may be prepaid prior to the expiration of
any such Lock-out Period in connection with certain events of casualty or
condemnation. In addition, investors may receive early return of principal in
connection with defaults, repurchases for breach of representations and
warranties and optional redemption.
No representation is made as to the rate of principal payments on the
Mortgage Loans or as to the yield to maturity of any Class of Offered
Certificates. In addition, although Excess Cash Flow is applied to reduce the
principal of the ARD Loans after their respective Anticipated Repayment Dates,
there can be no assurance that any of such Mortgage Loans will be prepaid on
that date or any date prior to maturity. An investor is urged to make an
investment decision with respect to any Class of Offered Certificates based on
the anticipated yield to maturity of such Class of Offered Certificates
resulting from its purchase price and such investor's own determination as to
anticipated Mortgage Loan prepayment rates under a variety of scenarios. The
extent to which any Class of Offered Certificates is purchased at a discount or
a premium and the degree to which the timing of payments on such Class of
Offered Certificates is sensitive to prepayments will determine the extent to
which the yield to maturity of such Class of Offered Certificates may vary from
the anticipated yield. An investor should carefully consider the associated
risks, including, in the case of any Offered Certificates purchased at a
discount, the risk that a slower than anticipated rate of principal payments on
the Mortgage Loans could result in an actual yield to such investor that is
lower than the anticipated yield and, in the case of any Offered Certificates
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.
An investor should consider the risk that rapid rates of prepayments on the
Mortgage Loans, and therefore of amounts distributable in reduction of the
principal balance of the Offered Certificates entitled to distributions of
principal may coincide with periods of low prevailing interest rates. During
such periods, the effective interest rates on securities in which an investor
may choose to reinvest amounts distributed in reduction of the principal balance
of such investor's Offered Certificate may be lower than the Pass-Through Rate.
Conversely, slower rates of prepayments on the Mortgage Loans, and therefore of
amounts distributable in reduction of principal balance of the Offered
Certificates entitled to distributions of principal, may coincide with periods
of high prevailing interest rates. During such periods, the amount of principal
distributions resulting from prepayments available to an investor in such
Certificates for reinvestment at such high prevailing interest rates may be
relatively small.
The effective yield to holders of Offered Certificates will be lower than
the yield otherwise produced by the applicable Pass-Through Rate and purchase
prices because while interest is required to be paid by the Borrower on the
eleventh day of each month, the distribution of such interest will not be made
until the Distribution Date occurring in such month, and principal paid on any
Distribution Date will not bear interest during the period after the related Due
Date and before the Distribution Date occurs. Additionally, as described under
'Description of the Offered Certificates--Distributions' herein, if the portion
of the Available Funds distributable in respect of interest on any Class of
Offered Certificates on any Distribution Date is less than the amount of
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interest required to be paid to the holders of such Class, the shortfall will be
distributable to holders of such Class of Certificates on subsequent
Distribution Dates, to the extent of Available Funds on such Distribution Dates.
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.
RATED FINAL DISTRIBUTION DATE
The 'Rated Final Distribution Date,' September 16, 2030 is the Distribution
Date occuring two years after the latest Assumed Maturity Date of any of the
Mortgage Loans. Because certain of the Mortgage Loans have maturity dates that
occur earlier than the latest maturity date, and because certain of the Mortgage
Loans may be prepaid prior to maturity, it is possible that the Certificate
Balance of each Class of Offered Certificates will be reduced to zero
significantly earlier than the Rated Final Distribution Date.
WEIGHTED AVERAGE LIFE OF OFFERED CERTIFICATES
Weighted average life refers to the average amount of time that will elapse
from the date of determination to the date of distribution or allocation to the
investor of each dollar in reduction of Certificate Balance that is distributed
or allocated, respectively.
The weighted average lives of the Offered Certificates will be influenced
by, among other things, the rate at which principal of the Mortgage Loans is
paid, which may occur as a result of scheduled amortization, voluntary or
involuntary prepayments or liquidations. The weighted average lives of the
Offered Certificates may also be affected to the extent that additional
distributions in reduction of the Certificate Balance of such Certificates occur
as a result of the repurchase or purchase of Mortgage Loans from the Trust Fund
as described under 'The Pooling and Servicing Agreement--Representations and
Warranties; Repurchase' or
'--Optional Termination' in this Prospectus Supplement. Such a repurchase or
purchase from the Trust Fund will have the same effect on distributions to the
holders of Certificates as if the related Mortgage Loans had prepaid in full,
except that no Prepayment Premiums are made in respect thereof.
Prepayments on mortgage loans may be measured by a prepayment standard or
model. The model used in this Prospectus Supplement is the 'Constant Prepayment
Rate' or 'CPR' model. The CPR model represents an assumed constant annual rate
of prepayment each month, expressed as a per annum percentage of the then
scheduled principal balance of the pool of mortgage loans. As used in the
following tables the column headed '0% CPR' assumes that none of the Mortgage
Loans is prepaid before the related Anticipated Repayment Date or maturity date,
as applicable. The columns headed '10% CPR,' '25% CPR' and '50% CPR' assume that
prepayments on the Mortgage Loans are made at those levels of CPR following the
expiration of any Lock-out Period until the the related Anticipated Repayment
Date or maturity date, as applicable. All columns in the following table assume
that all of the ARD Loans are fully prepaid on their related Anticipated
Repayment Date and all of the other Mortgage Loans are paid in full on their
maturity date. There is no assurance, however, that prepayments of 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 foregoing assumptions are referred to herein as the 'Prepayment
Assumptions'.
The tables of 'Percentages of Initial Certificate Balance Outstanding for
the Offered Certificates' set forth below indicate the weighted average life of
each Class of Offered Certificates and set forth the percentage of the initial
Certificate Balance of such Offered Certificates that would be outstanding after
each of the dates shown at the various CPRs and based on the Prepayment
Assumptions. The tables have also been prepared on the basis of the Mortgage
Loan Assumptions. The Mortgage Loan Assumptions made in preparing the previous
and following tables are expected to vary from the actual performance of the
Mortgage Loans. It is highly unlikely that principal of the Mortgage Loans will
be repaid consistent with assumptions underlying any one of the scenarios.
Investors are urged to conduct their own analysis concerning the likelihood that
the Mortgage Loans may pay or prepay on any particular date.
Based on the Mortgage Loan Assumptions, the Prepayment Assumptions and the
various CPRs, the tables indicate the weighted average life of the Offered
Certificates and set forth the percentages of the initial Certificate Balance of
the Offered Certificates that would be outstanding after the Distribution Date
in September of each of the years indicated, at the indicated CPRs.
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PERCENTAGE OF INITIAL NOTIONAL BALANCE
OUTSTANDING AT THE RESPECTIVE CPRS SET FORTH BELOW
<TABLE>
<CAPTION>
CLASS A-1A
---------------------------------------------------
DISTRIBUTION DATE(1) 0% CPR 10% CPR 25% CPR 50% CPR 100% CPR
- ------------------------------------------------------------------------- ------ ------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
Initial Percentage....................................................... % % % %
September 15, 1999.......................................................
September 15, 2000.......................................................
September 15, 2001.......................................................
September 15, 2002.......................................................
September 15, 2003.......................................................
September 15, 2004.......................................................
September 15, 2005.......................................................
September 15, 2006.......................................................
September 15, 2007.......................................................
September 15, 2008.......................................................
September 15, 2009.......................................................
September 15, 2010.......................................................
September 15, 2011.......................................................
September 15, 2012.......................................................
September 15, 2013.......................................................
September 15, 2014.......................................................
September 15, 2015.......................................................
September 15, 2016.......................................................
September 15, 2017.......................................................
September 15, 2018.......................................................
Weighted Average Life (years)(2).........................................
</TABLE>
- ------------------
(1) Assuming that the 15th day of each of the months indicated is the
Distribution Date occurring in such month.
(2) The weighted average life of the Class A-1A Certificates is determined by
(i) multiplying the amount of each allocation in reduction of Certificate
Balance of such Class by the number of years from the date of determination
to the related Distribution Date, (ii) adding the results and (iii)
dividing the sum by the aggregate allocations in reduction of Notional
Balance referred to in clause (i).
PERCENTAGE OF INITIAL CERTIFICATE BALANCE
OUTSTANDING AT THE RESPECTIVE CPRS SET FORTH BELOW
<TABLE>
<CAPTION>
CLASS A-1B
---------------------------------------------------
DISTRIBUTION DATE(1) 0% CPR 10% CPR 25% CPR 50% CPR 100% CPR
- ------------------------------------------------------------------------- ------ ------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
Initial Percentage....................................................... % % % %
September 15, 1999.......................................................
September 15, 2000.......................................................
September 15, 2001.......................................................
September 15, 2002.......................................................
September 15, 2003.......................................................
September 15, 2004.......................................................
September 15, 2005.......................................................
September 15, 2006.......................................................
September 15, 2007.......................................................
September 15, 2008.......................................................
September 15, 2009.......................................................
September 15, 2010.......................................................
Weighted Average Life (years)(2).........................................
</TABLE>
- ------------------
(1) Assuming that the 15th day of each of the months indicated is the
Distribution Date occurring in such month.
(2) The weighted average life of the Class A-1B Certificates is determined by
(i) multiplying the amount of each distribution in reduction of Certificate
Balance of such Class by the number of years from the date of determination
to the related Distribution Date, (ii) adding the results and (iii)
dividing the sum by the aggregate distributions in reduction of Certificate
Balance referred to in clause (i).
S-96
<PAGE>
PERCENTAGE OF INITIAL CERTIFICATE BALANCE
OUTSTANDING AT THE RESPECTIVE CPRS SET FORTH BELOW
<TABLE>
<CAPTION>
CLASS A-1C
---------------------------------------------------
DISTRIBUTION DATE(1) 0% CPR 10% CPR 25% CPR 50% CPR 100% CPR
- ------------------------------------------------------------------------- ------ ------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
Initial Percentage....................................................... % % % %
September 15, 1999.......................................................
September 15, 2000.......................................................
September 15, 2001.......................................................
September 15, 2002.......................................................
September 15, 2003.......................................................
September 15, 2004.......................................................
September 15, 2005.......................................................
September 15, 2006.......................................................
September 15, 2007.......................................................
September 15, 2008.......................................................
September 15, 2009.......................................................
September 15, 2010.......................................................
September 15, 2011.......................................................
September 15, 2012.......................................................
September 15, 2013.......................................................
Weighted Average Life (years)(2).........................................
</TABLE>
- ------------------
(1) Assuming that the 15th day of each of the months indicated is the
Distribution Date occurring in such month.
(2) The weighted average life of the Class A-1C Certificates is determined by
(i) multiplying the amount of each distribution in reduction of Certificate
Balance of such Class by the number of years from the date of determination
to the related Distribution Date, (ii) adding the results and (iii)
dividing the sum by the aggregate distributions in reduction of Certificate
Balance referred to in clause (i).
PERCENTAGE OF INITIAL CERTIFICATE BALANCE
OUTSTANDING AT THE RESPECTIVE CPRS SET FORTH BELOW
<TABLE>
<CAPTION>
CLASS A-2
---------------------------------------------------
DISTRIBUTION DATE(1) 0% CPR 10% CPR 25% CPR 50% CPR 100% CPR
- ------------------------------------------------------------------------- ------ ------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
Initial Percentage....................................................... % % % %
September 15, 1999.......................................................
September 15, 2000.......................................................
September 15, 2001.......................................................
September 15, 2002.......................................................
September 15, 2003.......................................................
September 15, 2004.......................................................
September 15, 2005.......................................................
September 15, 2006.......................................................
September 15, 2007.......................................................
September 15, 2008.......................................................
September 15, 2009.......................................................
September 15, 2010.......................................................
September 15, 2011.......................................................
September 15, 2012.......................................................
September 15, 2013.......................................................
Weighted Average Life (years)(2).........................................
</TABLE>
- ------------------
(1) Assuming that the 15th day of each of the months indicated is the
Distribution Date occurring in such month.
(2) The weighted average life of the Class A-2 Certificates is determined by
(i) multiplying the amount of each distribution in reduction of Certificate
Balance of such Class by the number of years from the date of determination
to the related Distribution Date, (ii) adding the results and (iii)
dividing the sum by the aggregate distributions in reduction of Certificate
Balance referred to in clause (i).
S-97
<PAGE>
PERCENTAGE OF INITIAL CERTIFICATE BALANCE
OUTSTANDING AT THE RESPECTIVE CPRS SET FORTH BELOW
<TABLE>
<CAPTION>
CLASS A-3
---------------------------------------------------
DISTRIBUTION DATE(1) 0% CPR 10% CPR 25% CPR 50% CPR 100% CPR
- ------------------------------------------------------------------------- ------ ------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
Initial Percentage....................................................... % % % %
September 15, 1999.......................................................
September 15, 2000.......................................................
September 15, 2001.......................................................
September 15, 2002.......................................................
September 15, 2003.......................................................
September 15, 2004.......................................................
September 15, 2005.......................................................
September 15, 2006.......................................................
September 15, 2007.......................................................
September 15, 2008.......................................................
September 15, 2009.......................................................
September 15, 2010.......................................................
September 15, 2011.......................................................
September 15, 2012.......................................................
September 15, 2013.......................................................
Weighted Average Life (years)(2).........................................
</TABLE>
- ------------------
(1) Assuming that the 15th day of each of the months indicated is the
Distribution Date occurring in such month.
(2) The weighted average life of the Class A-3 Certificates is determined by
(i) multiplying the amount of each distribution in reduction of Certificate
Balance of such Class by the number of years from the date of determination
to the related Distribution Date, (ii) adding the results and (iii)
dividing the sum by the aggregate distributions in reduction of Certificate
Balance referred to in clause (i).
PERCENTAGE OF INITIAL CERTIFICATE BALANCE
OUTSTANDING AT THE RESPECTIVE CPRS SET FORTH BELOW
<TABLE>
<CAPTION>
CLASS A-4
---------------------------------------------------
DISTRIBUTION DATE(1) 0% CPR 10% CPR 25% CPR 50% CPR 100% CPR
- ------------------------------------------------------------------------- ------ ------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
Initial Percentage....................................................... % % % %
September 15, 1999.......................................................
September 15, 2000.......................................................
September 15, 2001.......................................................
September 15, 2002.......................................................
September 15, 2003.......................................................
September 15, 2004.......................................................
September 15, 2005.......................................................
September 15, 2006.......................................................
September 15, 2007.......................................................
September 15, 2008.......................................................
September 15, 2009.......................................................
September 15, 2010.......................................................
September 15, 2011.......................................................
September 15, 2012.......................................................
September 15, 2013.......................................................
September 15, 2014.......................................................
Weighted Average Life (years)(2).........................................
</TABLE>
- ------------------
(1) Assuming that the 15th day of each of the months indicated is the
Distribution Date occurring in such month.
(2) The weighted average life of the Class A-4 Certificates is determined by
(i) multiplying the amount of each distribution in reduction of Certificate
Balance of such Class by the number of years from the date of determination
to the related Distribution Date, (ii) adding the results and (iii)
dividing the sum by the aggregate distributions in reduction of Certificate
Balance referred to in clause (i).
S-98
<PAGE>
PERCENTAGE OF INITIAL CERTIFICATE BALANCE
OUTSTANDING AT THE RESPECTIVE CPRS SET FORTH BELOW
<TABLE>
<CAPTION>
CLASS A-5
---------------------------------------------------
DISTRIBUTION DATE(1) 0% CPR 10% CPR 25% CPR 50% CPR 100% CPR
- ------------------------------------------------------------------------- ------ ------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
Initial Percentage....................................................... % % % %
September 15, 1999.......................................................
September 15, 2000.......................................................
September 15, 2001.......................................................
September 15, 2002.......................................................
September 15, 2003.......................................................
September 15, 2004.......................................................
September 15, 2005.......................................................
September 15, 2006.......................................................
September 15, 2007.......................................................
September 15, 2008.......................................................
September 15, 2009.......................................................
September 15, 2010.......................................................
September 15, 2011.......................................................
September 15, 2012.......................................................
September 15, 2013.......................................................
September 15, 2014.......................................................
Weighted Average Life (years)(2).........................................
</TABLE>
- ------------------
(1) Assuming that the 15th day of each of the months indicated is the
Distribution Date occurring in such month.
(2) The weighted average life of the Class A-5 Certificates is determined by
(i) multiplying the amount of each distribution in reduction of Certificate
Balance of such Class by the number of years from the date of determination
to the related Distribution Date, (ii) adding the results and (iii)
dividing the sum by the aggregate distributions in reduction of Certificate
Balance referred to in clause (i).
S-99
<PAGE>
THE POOLING AND SERVICING AGREEMENT
GENERAL
The Certificates will be issued pursuant to a Pooling and Servicing
Agreement to be dated as of September 11, 1998 (the 'Pooling and Servicing
Agreement'), by and among the Depositor, the Servicer, the Special Servicer, the
Trustee and the Fiscal Agent.
Reference is made to the Prospectus for important information in addition
to that set forth herein regarding the terms of the Pooling and Servicing
Agreement and terms and conditions of the Offered Certificates. The Depositor
will provide to a prospective or actual holder of an Offered Certificate without
charge, upon written request, a copy (without exhibits) of the Pooling and
Servicing Agreement. Requests should be addressed to CAPCO America
Securitization Corporation, 2 World Financial Center, Building B, New York, New
York 10281-1198.
ASSIGNMENT OF THE MORTGAGE LOANS
On the Closing Date, the Depositor will sell, transfer or otherwise convey,
assign or cause the assignment of the Mortgage Loans, without recourse, to the
Trustee for the benefit of the holders of Certificates. On or prior to the
Closing Date, the Depositor will deliver to the Trustee, with respect to each
Mortgage Loan, certain documents and instruments including, among other things,
the following: (i) the original Note endorsed in blank; (ii) the original
Mortgage or counterpart thereof; (iii) the assignment of the Mortgage in
recordable form in favor of the Trustee; (iv) if applicable, preceding
assignments of mortgages; (v) the related security agreement, if applicable;
(vi) to the extent not contained in the Mortgages, the original assignments of
leases and rents or counterpart thereof; (vii) if applicable, the original
assignments of assignments of leases and rents to the Trustee; (viii) if
applicable, preceding assignments of assignments of leases and rents; (ix) where
applicable, a certified copy of the UCC-1 Financing Statements, if any,
including UCC-3 continuation statements and UCC-3 assignments; (x) the original
loan agreements; and (xi) the original lender's title insurance policy (or
marked commitments to insure). The Trustee will hold such documents in trust for
the benefit of the holders of Certificates. The Trustee is obligated to review
such documents for each Mortgage Loan within 60 days after the later of delivery
or the Closing Date and report any missing documents or certain types of defects
therein to the Depositor.
REPRESENTATIONS AND WARRANTIES; REPURCHASE
In the Pooling and Servicing Agreement, the Depositor will assign the
representations and warranties made by the Mortgage Loan Sellers to the
Depositor in the Mortgage Loan Purchase and Sale Agreements to the Trustee for
the benefit of Certificateholders. In the Mortgage Loan Purchase and Sale
Agreement between CCA and the Depositor, CCA will make the representations and
warranties set forth below (subject to certain exceptions specified in the
Mortgage Loan Purchase and Sale Agreements), as of the Closing Date (unless
otherwise specified) with respect to each Mortgage Loan. With respect to each
Mortgage Loan sold by the Holding Trust, the Holding Trust will assign the
representations and warranties made by CCA with respect to such Mortgage Loans
as of September 24, 1998 and will, itself, make certain of the representations
and warranties described below as of the Closing Date.
(i) immediately prior to the sale, transfer and assignment to the
Depositor, each related Note and Mortgage was not subject to an assignment,
other than to the Mortgage Loan Seller, or pledge, and the Mortgage Loan Seller
had good and marketable title to, and was the sole owner of, the Mortgage Loan;
(ii) the Mortgage Loan Seller has full right and the authority to sell,
assign and transfer such Mortgage Loan and the assignment to the Depositor
constitutes a legal, valid and binding assignment of such Mortgage Loan;
(iii) the Mortgage Loan Seller is transferring such Mortgage Loan free and
clear of any and all liens, pledges, charges or security interests of any nature
encumbering such Mortgage Loan, subject to matters described in clause (xi)
below;
(iv) each related Note, Mortgage, Assignment of Leases and Rents (if any)
and other agreement executed in connection with such Mortgage Loan are legal,
valid and binding obligations of the related borrower, enforceable in accordance
with their terms, except as such enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or other laws affecting the enforcement
of creditors' rights generally, or by general principles of equity (regardless
of whether such enforceability is considered in a proceeding in equity or at
law) and, to the best of the Mortgage Loan Seller's knowledge, there is no valid
defense, counterclaim, right of rescission or right of set-off or abatement
available to the related Borrower with respect to such Note, Mortgage and other
agreements;
S-100
<PAGE>
(v) each related Assignment of Leases and Rents creates a valid, collateral
or first priority assignment of, or a valid first priority security interest in,
certain rights under the related lease, subject only to a license granted to the
related borrower to exercise certain rights and to perform certain obligations
of the lessor under such lease, including the right to operate the related
Mortgaged Property; no person other than the related borrower owns any interest
in any payments due under such lease that is superior to or of equal priority
with the lender's interest therein;
(vi) each related assignment of Mortgage from the Mortgage Loan Seller to
the Depositor, and any related Reassignment of Assignment of Leases and Rents,
if any, or assignment of any other agreement executed in connection with such
Mortgage Loan, from the Mortgage Loan Seller to the Depositor constitutes the
legal, valid and binding assignment from the Mortgage Loan Seller to the
Depositor except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, liquidation, receivership, moratorium or other laws relating to
or affecting creditor's rights generally, or by general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law);
(vii) since origination, and except as set forth in the related mortgage
file, such Mortgage Loan has not been waived, modified, altered, satisfied,
canceled, subordinated or rescinded and, each related Mortgaged Property has not
been released from the lien of the related Mortgage in any manner which
materially interferes with the security intended to be provided by such
Mortgage;
(viii) each related Mortgage is a valid and enforceable first lien on the
related Mortgaged Property and such Mortgaged Property (subject to the matters
described in clause (xi) below) is free and clear of any mechanics' and
materialmen's liens which are prior to or equal with the lien of the related
Mortgage, except those which are insured against by a lender's title insurance
policy (as set forth in the Mortgage Loan Purchase and Sale Agreement);
(ix) the Mortgage Loan Seller has not taken any action that would cause the
representations and warranties made by each related borrower under such Mortgage
Loan not to be true;
(x) the Mortgage Loan Seller has no knowledge that the representations and
warranties made by each related borrower in such Mortgage Loan are not true in
any material respect;
(xi) the lien of each related Mortgage is insured by an ALTA lender's title
insurance policy (or a binding commitment therefor), or its equivalent as
adopted in the applicable jurisdiction, insuring CCA, its successors and
assigns, or the holder of the related Note as to the valid and first priority
lien of the Mortgage at least in the original principal amount of such Mortgage
Loan or Allocated Loan Amount of the related Mortgaged Property (as set forth on
the Mortgage Loan Schedule which is an exhibit to the Pooling and Servicing
Agreement), subject only to (a) the lien of 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 or operation 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 the value of
the Mortgaged Property and (c) the exceptions (general and specific) set forth
in such lender's title insurance policy, none of which, individually or in the
aggregate, materially interferes with the security intended to be provided by
such Mortgage or with the borrower's ability to pay its obligations when they
become due or the value of the Mortgaged Property; CCA or its successors or
assigns is the sole named insured of such policy; such policy is assignable to
the Depositor without the consent of or any notification to the insurer, and is
in full force and effect upon the consummation of the transactions contemplated
by the Mortgage Loan Purchase and Sale Agreements; no claims have been made
under such policy and CCA has not done anything, by act or omission, and CCA has
no knowledge of any matter, which would impair or diminish the coverage of such
policy; to the extent required by applicable law the insurer issuing such policy
is qualified to do business in the jurisdiction in which the related Mortgaged
Properties are located;
(xii) the proceeds of such Mortgage Loan have been fully disbursed and
there is no requirement for future advances thereunder and the Mortgage Loan
Seller covenants that it will not make any future advances under the Mortgage
Loan to the related borrower;
(xiii) each related Mortgaged Property is free of any material damage that
would affect materially and adversely the value of such Mortgaged Property as
security for the Mortgage Loan and is in good repair and there is no proceeding
pending for the total or partial condemnation of such Mortgaged Property;
(xiv) each of the related borrowers (and, in the event a Mortgaged Property
is secured by a senior housing or healthcare facility, each of the operators of
the senior housing/healthcare facility) is in possession of all material
licenses, permits and other authorizations necessary and required by all
applicable laws for the conduct of its business and all such licenses, permits
and authorizations are valid and in full force and effect; and if a related
Mortgaged Property is improved by a senior housing or
S-101
<PAGE>
healthcare facility, the most recent inspection or survey by governmental
authorities having jurisdiction in connection with such licenses, permits and
authorizations did not cite such Mortgaged Property for material violations
(which shall include only 'Level A' violations or the equivalent, in the case of
skilled nursing facilities, that have not been cured); and if a related
Mortgaged Property is improved by a hotel, the most recent inspection or review
by the franchisor, if any, did not cite such Mortgaged Property for material
violations of the related franchise agreement which have not been cured;
(xv) the Mortgage Loan Seller has inspected or caused to be inspected each
related Mortgaged Property (except certain of the Credit Lease Properties)
within the past twelve months preceding the Cut-off Date or within one month of
origination of the Mortgage Loan;
(xvi) such Mortgage Loan does not have a shared appreciation feature, other
contingent interest feature or negative amortization;
(xvii) except with respect to the Prime Retail Pool Loan, the Airport
Industrial Loan and the Credit Lease Loans, each of which has another Note from
CCA secured by the related Mortgaged Property (which other loan is not included
in the Trust Fund), such Mortgage Loan is a whole loan and no other party holds
an interest in the Mortgage Loan;
(xviii) (A) the Mortgage Rate (exclusive of any default interest, late
charges or yield maintenance charge) of such Mortgage Loan complied as of the
date of origination with, or is exempt from, applicable state or federal laws,
regulations and other requirements pertaining to usury; any and all other
requirements of any federal, state or local laws, including, without limitation,
truth-in-lending, real estate settlement procedures, equal credit opportunity or
disclosure laws, applicable to such Mortgage Loan have been complied with as of
the date of origination of such Mortgage Loan and (B) the Mortgage Loan Seller
has received an opinion that such Mortgage Loan is not usurious;
(xix) (A) with respect to each Mortgage Loan originated by CCA, no
fraudulent acts were committed by CCA during the origination process of such
Mortgage Loan and the origination, servicing and collection of each Mortgage
Loan is in all respects legal, proper and prudent in accordance with customary
industry standards and (B) with respect to each Mortgage Loan originated by
Bloomfield, to the best of the Mortgage Loan Seller's knowledge, no fraudulent
acts were committed by Bloomfield during the origination process of such
Mortgage Loan and the origination, servicing and collection of each Mortgage
Loan is in all respects legal, proper and prudent in accordance with customary
industry standards;
(xx) except with respect to the Willowick Industrial Park Loan, all taxes
and governmental assessments that prior to the Closing Date became due and owing
in respect of each related Mortgaged Property have been paid, or an escrow of
funds in an amount sufficient to cover such payments has been established;
(xxi) all escrow deposits and payments required pursuant to the Mortgage
Loans are in the possession, or under the control, of the Mortgage Loan Seller
or its agent and there are no deficiencies in connection therewith and all such
escrows and deposits have been conveyed by the Mortgage Loan Seller to the
Depositor and identified as such with appropriate detail;
(xxii) to the extent required under applicable law, as of the Cut-off Date,
the Mortgage Loan Seller was authorized to transact and do business in the
jurisdiction in which each related Mortgaged Property is located at all times
when it held the Mortgage Loan;
(xxiii) each related Mortgaged Property is insured by a fire and extended
perils insurance policy, issued by an insurer meeting the requirements under the
related Mortgage Loans, in an amount not less than the replacement cost and the
amount necessary to avoid the operation of any co-insurance provisions with
respect to the Mortgaged Property, except with respect to the Accor Credit Lease
Loans, the Money Store Credit Lease Loan, the Cinemark Pool B Credit Lease Loan
and the Circuit City Credit Lease Loans under which the related Mortgaged
Properties are self insured by the related Credit Tenant and except with respect
to certain portions of certain Mortgaged Properties in which a Credit Tenant
self-insures for its portion of such Mortgaged Property; each related Mortgaged
Property is also covered by business interruption insurance (for at least 12
months of rent interruptions) (except the Mortgaged Properties securing the
Accor Credit Lease Loans, the Money Store Credit Lease Loan and the Circuit City
Credit Lease Loans which do not have business interruption insurance) and
comprehensive general liability insurance in amounts generally required by
institutional lenders for similar properties; all premiums on such insurance
policies required to be paid as of the date hereof have been paid; such
insurance policies require prior notice to the insured of termination or
cancellation, and no such notice has been received; each related Mortgage or
loan agreement obligates the related borrower to maintain all such insurance
and, at such borrower's failure to do so, authorizes the lender to maintain such
insurance at the borrower's cost and expense and to seek reimbursement therefor
from such borrower;
S-102
<PAGE>
(xxiv) there is no default, breach, violation or event of acceleration
existing under the related Mortgage or the related Note and, to the Mortgage
Loan Seller's knowledge, no event which, with the passage of time or with notice
and the expiration of any grace or cure period, would and does constitute a
default, breach, violation or event of acceleration;
(xxv) such Mortgage Loan has not been 30 days or more delinquent since
origination and as of the Cut-off Date was not delinquent;
(xxvi) each related Mortgage contains customary and enforceable provisions
such as to render the rights and remedies of the holder thereof adequate for the
realization against the Mortgaged Property of the benefits of the security,
including realization by judicial or, if applicable, non-judicial foreclosure,
and there is no exemption available to the borrower which would interfere with
such right to foreclose. To the best of the Mortgage Loan Seller's knowledge, no
borrower is a debtor in a state or federal bankruptcy proceeding;
(xxvii) in each related Mortgage or Loan Agreement, the related borrower
represents and warrants that, except as set forth in certain environmental
reports and to the best of its knowledge (or with respect ot the Prime Retail
Pool Loan, its actual knowledge), it has not used, caused or permitted to exist
and will not use, cause or permit to exist on the related Mortgaged Property any
hazardous materials in any manner which violates federal, state or local laws,
ordinances, regulations, orders, directives or policies governing the use,
storage, treatment, transportation, manufacture, refinement, handling,
production or disposal of Hazardous Materials; the related borrower agrees to
indemnify, defend and hold the lender and its successors and assigns harmless
from and against any and all losses, liabilities, damages, injuries, penalties,
fines, expenses, and claims of any kind whatsoever (including attorneys' fees
and costs) paid, incurred or suffered by, or asserted against, any such party
resulting from a breach of certain representations, warranties or covenants
given by the borrower in such Mortgage or Loan Agreement. A Phase I
environmental report was conducted by a reputable environmental engineer in
connection with such Mortgage Loan, which report, except as otherwise disclosed
herein did not indicate any material non-compliance or material existence of
Hazardous Materials. To the best of the Mortgage Loan Seller's knowledge, except
as otherwise disclosed herein, each related Mortgaged Property is in material
compliance with all applicable federal, state and local laws pertaining to
environmental hazards, and, to the best of Mortgage Loan Seller's knowledge, no
notice of violation of such laws has been issued by any governmental agency or
authority; the Mortgage Loan Seller has not taken any action which would cause
the related Mortgaged Property not to be in compliance with all federal, state
and local laws pertaining to environmental hazards;
(xxviii) each related Mortgage or Loan Agreement contains provisions for
the acceleration of the payment of the unpaid principal balance of such Mortgage
Loan if, without complying with the requirements of the Mortgage or Loan
Agreement or obtaining the prior written consent of the lender or the
satisfaction of certain conditions, the related Mortgaged Property, or any
interest therein, is directly or indirectly transferred or sold, or encumbered
in connection with subordinate financing and each related Mortgage prohibits the
pledge or encumbrance of the Mortgaged Property without the consent of the
holder of the Mortgage Loan;
(xxix) (1) the Mortgage Loan is directly secured by a Mortgage on a
commercial property or multifamily residential property, and (2) the fair market
value of the real property securing such Mortgage Loan was at least equal to 80%
of the principal amount of the Mortgage Loan (a) at origination (or if the
Mortgage Loan has been modified in a manner that constituted a deemed exchange
under Section 1001 of the Code at a time when the Mortgage Loan was not in
default or default with respect thereto was not reasonably foreseeable, the date
of the last such modification) or (b) at the Closing Date; provided that the
fair market value of the real property interest must first be reduced by (A) the
amount of any lien on the real property interest that is senior to the Mortgage
Loan (unless such senior lien also secures a Mortgage Loan, in which event the
computation described in (a) and (b) shall be made on an aggregated basis) and
(B) a proportionate amount of any lien that is in parity wi th the Mortgage Loan
(unless such other lien secures a Mortgage Loan that is cross-collateralized
with such Mortgage Loan, in which event the computation described in (a) and (b)
shall be made on an aggregate basis). All improvements included for MAI
appraisals are within the boundaries of the related Mortgaged Property;
(xxx) except with respect to the Equity Loans (in which an affiliate of CCA
has an equity interest in the related borrower or direct parent of such
borrower), neither the Mortgage Loan Seller nor any affiliate thereof has any
obligation or right to make any capital contribution to any borrower under a
Mortgage Loan, other than contributions made on or prior to the Closing Date;
(xxxi) with respect to each Mortgaged Property where a material portion of
the estate of the related borrower therein is a leasehold estate and the fee
interest of the ground lessor is not subject and subordinate to the related
Mortgage:
(A) The ground lease or a memorandum regarding it has been duly recorded.
The ground lease permits the interest of the lessee to be encumbered by the
related Mortgage and does not restrict the use of the related Mortgaged Property
by such lessee, its
S-103
<PAGE>
successors or assigns in a manner that would adversely affect the security
provided by the related Mortgage. There has been no material change in the terms
of such ground lease since its recordation, except by written instruments, all
of which are included in the related Mortgage File;
(B) The lessor under such ground lease has agreed in writing and included
in the related Mortgage File that the ground lease may not be amended, modified,
canceled or terminated without the prior written consent of the lender and that
any such action without such consent is not binding on the lender, its
successors or assigns;
(C) The ground lease has an original term (or an original term plus one or
more optional renewal terms, which, under all circumstances, may be exercised,
and will be enforceable, by the lender) that extends not less than 10 years
beyond the stated maturity of the related Mortgage Loan;
(D) The ground lease is prior to any mortgage or other lien upon the
related fee interest and the landlord has not entered into an agreement to
subordinate the ground lease to future mortgages or liens on the fee interest;
(E) Except with respect to the Mortgaged Property known as Apartments of
Westgrove, and except with respect to the Mortgaged Property known as West Third
Street, the ground lease is assignable to the lender under the leasehold estate
and its assigns without the consent of the lessor thereunder;
(F) As of the date of execution and delivery, the ground lease is in full
force and effect and no default has occurred, nor is there any existing
condition which, but for the passage of time or giving of notice, would result
in a default under the terms of the ground lease;
(G) Except with respect to the Mortgaged Property known as Apartments of
Westgrove, the ground lease or ancillary agreement between the lessor and the
lessee requires the lessor to give notice of any default by the lessee to the
lender;
(H) Except with respect to the Mortgaged Property known as Apartments of
Westgrove, a lender is permitted a reasonable opportunity to cure any default
under the ground lease which is curable after the receipt of notice of any
default before the lessor may terminate the ground lease. All rights of the
lender under the ground lease and the related Mortgage (insofar as it relates to
the ground lease) may be exercised by or on behalf of the lender;
(I) The ground lease does not impose any restrictions on subletting that
would be viewed as commercially unreasonable by an institutional investor. The
lessor is not permitted to disturb the possession, interest or quiet enjoyment
of any subtenant of the lessee in the relevant portion of the Mortgaged Property
subject to the ground lease for any reason, or in any manner, which would
adversely affect the security provided by the related Mortgage;
(J) Any related insurance proceeds or condemnation award (other than in
respect of a total or substantially total loss or taking) will be applied either
to the repair or restoration of all or part of the related Mortgaged Property,
with the lender or a trustee appointed by it having the right to hold and
disburse such proceeds as repair or restoration progresses, or, if permitted by
the related ground lease, to the payment of the outstanding principal balance of
the Mortgage Loan, together with any accrued interest, except that in the case
of condemnation awards, the ground lessor is entitled to an amount of such award
generally based on the value of the unimproved land taken;
(K) Under the terms of the ground lease and the related Mortgage, any
related insurance proceeds, or condemnation award in respect of a total or
substantially total loss or taking of the related Mortgaged Property will be
applied first to the payment of the outstanding principal balance of the
Mortgage Loan, together with any accrued interest (except where contrary to
applicable law or in cases where a different allocation would not be viewed as
commercially unreasonable by any institutional investor, taking into account the
relative duration of the ground lease and the related Mortgage and the ratio of
the market value of the related Mortgage property to the outstanding principal
balance of such Mortgage Loan, and except that certain ground leases may require
insurance proceeds to be applied to the restoration of the property in respect
of casualties occurring prior to a specified time before the expiration of the
ground lease). Until the principal balance and accrued interest rate are paid in
full, neither the lessee nor the lessor under the ground lease will have the
option to terminate or modify the ground lease without prior written consent of
the lender as a result of any casualty or partial condemnation, except to
provide for an abatement of the rent; and
(L) Except with respect to the Mortgaged Property known as Apartments of
Westgrove, the ground lease requires the lessor to enter into a new lease upon
the termination of the ground lease or upon rejection of the ground lease in a
bankruptcy proceeding;
(xxxii) with respect to each Mortgage Loan originated by Bloomfield:
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(A) Such Mortgage Loan was underwritten in accordance with standards
established by the Mortgage Loan Seller, using application forms and related
credit documents approved by the Mortgage Loan Seller;
(B) The Mortgage Loan Seller approved each application and related credit
documents before a commitment by Bloomfield was issued, and no such commitment
was issued until the Mortgage Loan Seller agreed to fund such loan;
(C) The closing documents for such Mortgage Loan were prepared on forms
approved by the Mortgage Loan Seller, and reflect the Mortgage Loan Seller as
the successor and assign to Bloomfield; and
(D) Such loan was actually funded by the Mortgage Loan Seller, and was
assigned to the Mortgage Loan Seller at the closing;
(xxxiii) with respect to each Mortgage Loan secured by a Credit Lease:
(A) The rental payments under the Credit Lease are equal to or greater than
the payments due under the loan documents, and are payable without notice or
demand, and without setoff, counterclaim, recoupment, abatement, reduction or
defense;
(B) The obligations of the Credit Tenant under the Credit Lease, including,
but not limited to, the obligation of Credit Tenant to pay fixed and additional
rent, are not affected by reason of any damage to or destruction of any portion
of the leased property, any taking of the leased property or any part thereof by
condemnation or otherwise, or any prohibition, limitation, interruption,
cessation, restriction, prevention or interference of the Credit Tenant's use,
occupancy or enjoyment of the leased property, except that the Credit Lease may
permit a lease termination in any such event if notice by the Credit Tenant of
such termination is accompanied by the exercise of an option to purchase the
Mortgaged Property for at least the principal balance of the Mortgage Loan plus
accrued interest;
(C) All of the Credit Leases are Bondable;
(D) The borrower does not have any monetary obligations under the Lease,
and every monetary obligation associated with managing, owning, developing and
operating the leased property, including, but not limited to, the costs
associated with utilities, taxes, insurance, maintenance and repairs is an
obligation of the Credit Tenant;
(E) The borrower does not have any continuing nonmonetary obligations under
the Credit Lease, the performance of which would involve a material expenditure
of funds;
(F) The borrower has not made any false representation or warranty under
the Credit Lease that would impose any material monetary obligation upon the
borrower or result in the termination of the Credit Lease;
(G) The Credit Tenant cannot terminate the Credit Lease for any reason,
prior to the payment in full of or the payment of funds sufficient to pay in
full (a) the principal balance of the Mortgage Loan, (b) all accrued and unpaid
interest on the Mortgage Loan and (c) any other sums due and payable under the
Mortgage Loan, as of the termination date, except for a default by related
borrower under the Credit Lease;
(H) In the event the Credit Tenant assigns or sublets the leased property,
the Credit Tenant remains primarily obligated under the Credit Lease;
(I) The Credit Tenant has agreed to indemnify the related borrower from any
claims of any nature arising as a result of any hazardous material affecting the
leased property caused by the Credit Tenant and arising after commencement of
the Credit Lease;
(J) To the Mortgage Loan Seller's knowledge, each Credit Lease contains
customary and enforceable provisions which render the rights and remedies of the
lessor thereunder adequate for the enforcement and satisfaction of the lessor's
rights thereunder;
(K) In reliance on a tenant estoppel certificate and representation made by
the Tenant under the Credit Lease or representations made by the related
borrower under the Mortgage Loan documents, as of the closing date of each
Credit Lease Loan:
(1) each Credit Lease was in full force and effect, and no default by the
borrower or the Credit Tenant has occurred under the Credit Lease, nor is there
any existing condition which, but for the passage of time or the giving of
notice or both, would result in a default under the terms of the Credit Lease;
(2) none of the terms of the Credit Lease have been impaired, waived,
altered or modified in any respect (except as described in the related tenant
estoppel) and the Credit Lease Loan provides that the related Credit Lease
cannot be modified without the consent of the Mortgage Loan Seller;
(3) no Credit Tenant has been released in whole or in part, from its
obligations under the Credit Lease;
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(4) there is no current right of rescission, offset, abatement, diminution,
defense or counterclaim to any Credit Lease, nor will the operation of any of
the terms of the Credit Leases, or the exercise of any rights thereunder, render
the Credit Lease unenforceable (in whole or in part), or subject to any right of
rescission, offset, abatement, diminution, defense or counterclaim and no such
right or claim has been asserted with respect thereto; and
(5) each Credit Lease has a term ending on or after the final maturity of
the related Credit Lease Loan (except the Circuit City Credit Leases, which
terms end eleven days before the final maturity date of the related Circuit City
Credit Lease Loans) and each Credit Lease Loan is fully amortizing;
(L) Except with respect to the Accor Credit Lease Loans under which the
related Credit Lease Properties are subject to the Credit Leases between the
related borrowers, the Credit Tenant and Motel 6, the operator of each of the
Mortgaged Properties, and in certain cases are subject to a restaurant lease,
and except with respect to the Credit Lease Property securing the Money Store
Credit Lease Loan where a portion of the Credit Lease Property is subleased for
a cafeteria and an ATM machine, to the Mortgage Loan Seller's knowledge, the
Mortgaged Property is not subject to any lease other than the related Credit
Lease, no Person has any possessory interest in, or right to occupy, the
Mortgaged Property except under and pursuant to such Credit Lease and the Credit
Tenant under the related Credit Lease, or its wholly-owned subsidiary, is in
occupancy of the Mortgaged Property;
(M) The Mortgage Loan Seller is entitled to notice of any event of default
from the Credit Tenant under the Credit Lease;
(N) Each Credit Tenant under a Credit Lease is required to make all rental
payments directly to the Mortgage Loan Seller, its successors and assigns under
the related Credit Lease Loan;
(O) Each Credit Lease Loan provides that the related Credit Lease cannot be
modified without the consent of the Mortgage Loan Seller thereunder;
(P) The credit lease assignment creates a valid first priority security
interest in favor of the Mortgage Loan Seller, its successors and assigns, in
rights under the Credit Lease, including the right to monthly lease payments
and, to the extent payable under each Credit Lease, additional rent due under
the related Credit Lease, except with respect to the Accor Credit Lease Loans
under which the related borrowers retain the right to receive certain amounts
including additional rent and insurance proceeds;
(Q) No person owns any interest in any payments due under such Credit Lease
other than the borrower;
(R) Except with respect to the Accor Credit Lease Loans, the Credit Lease
is subordinate in right to the related Mortgage;
(S) Except with respect to the Accor Credit Lease Loans, where the Credit
Lease Properties may not be sold to any person actively engaged in the
management or operation of 30 or more limited service budget motels, in the
event the Trustee acquires title to a Credit Lease Property by foreclosure or
otherwise, the related borrower's interest under the related Credit Lease is
freely assignable by the Trustee and its successors and assigns to any person
without the consent of the Credit Tenant, and in the event the Borrower's
interest is so assigned, the Credit Tenant will be obligated to recognize the
assignee as lessor under such Credit Lease;
(T) The Credit Lease Loan is not secured by a property under construction
or substantial rehabilitation;
(U) The Interest Rate on the Credit Lease Loan is fixed rate;
(V) In the event any Credit Lease is accompanied by a guaranty from the
rated parent or affiliate of the Credit Tenant, (1) such guaranty is legal,
valid and binding against the guarantor, (2) such guarantor has also executed or
acknowledged in writing, with respect to the Mortgage, a subordination,
non-disturbance agreement and assignment to the Trustee, (3) the guaranty is
unconditional, irrevocable and absolute, without any right of offset,
counterclaim or defenses (4) the guaranty provides that it is a guaranty of both
the performance and payment of the financial obligations of the Credit Tenant,
and not only of collection, and (5) the guaranty is binding on the guarantor,
its successors and assigns and may not be amended or released without the
Trustee's consent;
(W) The Mortgaged Property has a permanent certificate of occupancy and the
Credit Tenant has commenced lease payments; and
(X) The Credit Tenant has agreed to indemnify the borrower from any claims
of any nature (other than, with respect to the ACCOR Credit Lease Loans, the
Cinemark Pool B Credit Lease Loan, the Money Store Credit Lease Loan, claims
resulting from the gross negligence or willful misconduct of the borrower)
relating to the Credit Lease and the Mortgaged Property.
(xxxiv) with respect to each Mortgaged Property improved by a hotel or a
healthcare facility, the Seller has, filed and/or recorded (or sent for filing
and/or recording on the closing date of the related Mortgage Loan), Uniform
Commercial Code financing statements on all furniture, fixtures, equipment and
(except with respect to the Accor Credit Lease Loans) all other personal
property used in the operation of the hotel or the healthcare facility;
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(xxxv) (A) except with respect to 2 Mortgage Loans which represent less
than 1% of the Initial Pool Balance, each borrower under a Mortgage Loan is an
entity whose organizational documents provide that it is, and at least so long
as the Mortgage Loan is outstanding will continue to be, a single-purpose
entity. (For this purpose, 'single-purpose entity' shall mean a person, other
than an individual, which is formed or organized solely for the purpose of
owning and operating a single property does not engage in any business unrelated
to such property and its financing, does not have any assets other than those
related to its interest in the property or its financing, or any indebtedness
other than as permitted by the related Mortgage or the other Mortgage Loan
documents, has its own books and records and accounts separate and apart from
any other person, and holds itself out as being a legal entity, separate and
apart from any other person);
(B) except with respect to the BGK Loans, a non-consolidation opinion was
obtained with respect to each Mortgage Loan that (either alone or together with
other Mortgage Loans made to a borrower or group of affiliated borrowers) has a
Cut-off Date Principal Balance in excess of $20,000,000;
(C) the Mortgage Loan documents for each Mortgage Loan having a Cut-off
Date Principal Balance in excess of $25,000,000 require that the Board of
Directors of the borrower, its corporate general partner, or managing member, as
applicable, include an independent director;
(xxxvi) with respect to each Mortgage Loan that is an ARD Loan:
(A) The maximum rate increase after the Anticipated Repayment Date is not
greater than 200 basis points above the original interest rate;
(B) Such Mortgage Loan begins amortizing no later than the 11th day of the
month following the Cut-off Date for such Mortgage Loan; such Mortgage Loan does
not have an interest only period after the Cut-off Date;
(C) The Anticipated Repayment Date is not less than seven years from the
closing date for such Mortgage Loan; and
(D) Such Mortgage Loan provides that from the Anticipated Repayment Date
through the maturity date for such Mortgage Loan, all excess cash flow (net of
budgeted and lender approved discretionary capital expenditures) will be applied
to repay principal due under the Mortgage Loan;
(xxxvii) each Mortgage Loan constitutes a 'qualified mortgage' within the
meaning of Section 860G(a)(3) of the Code (but without regard to the rule in
Treasury Regulations 1.860G-2(f)(2) that treats a defective obligation as a
qualified mortgage, or any substantially similar successor provision);
(xxxviii) with respect to each Mortgage Loan, the Prepayment Premium
(including any return of Premium Price) constitutes a 'customary prepayment
penalty' within the meaning of Treasury Regulations Section 1.860G-1(b)(2);
(xxxix) any Mortgage Loan which contains a provision for any defeasance of
mortgage collateral either (a) requires the consent of the holder of the
Mortgage Loan to any defeasance or (b) permits defeasance (i) no earlier than
two years after the Closing Date, (ii) only with substitute collateral
constituting 'government securities' within the meaning of Treas. Reg.
1.860G-2(a)(8)(i) and (iii) only to facilitate the disposition of the Mortgaged
Property and not as a part of an arrangement to collateralize a REMIC offering
with obligations that are not real estate mortgages;
(xl) the mortgage loan schedule which is an exhibit to the Pooling and
Servicing Agreement is complete and accurate in all respects;
(xli) except with respect to certain of the Mortgaged Properties which have
minor building violations, which, in the aggregate, do not represent more than
4% of the Initial Pool Balance, each Mortgaged Property is in compliance, in all
material respects, with all applicable laws, zoning ordinances, rules, covenants
and restrictions affecting the construction, occupancy, use and operation of
such Mortgaged Property. All inspections, licenses and certificates required,
including certificates of occupancy (if applicable), whether by law, ordinance,
regulation or insurance standards to be made or issued with regard to the
Mortgaged Property, have been obtained and are in full force and effect;
(xlii) with respect to the Mortgaged Properties that have earthquake,
windstorm or flood insurance, as of the Cut-off Date, such insurance is required
to be maintained until the principal balance of the related Mortgage Loan is
paid in full;
(xliii) with respect to each Mortgage Loan that is cross-collateralized or
cross-defaulted except with respect to the Prime Retail Pool Loan, the Airport
Industrial Loan and the Credit Lease Loans (each of which is
cross-collateralized with a pari passu note which is not included in the Trust
Fund), all other loans that are cross-collateralized or cross-defaulted with
such Mortgage Loan are included in the Mortgage Pool;
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(xliv) each of the related borrowers is organized under the laws of a state
or commonwealth of the United States;
(xlv) the Mortgage File that is being conveyed to the Trustee is materially
complete;
(xlvi) each Mortgaged Property (i) is located on or adjacent to a dedicated
road, or has access to an irrevocable easement permitting ingress and egress,
(ii) is served by public utilities, water and sewer (or septic facilities),
(iii) is a separate tax parcel (or has reserved funds sufficient to cover taxes
for the entire tax parcel), except with respect to the Burgandies Property,
which consists of four separate tax parcels all of which are contained within
the Mortgaged Property, and (iv) except with respect to certain of the ACCOR
Credit Lease Properties, has parking as required under applicable law;
(xlvii) the Mortgage Loan Seller has not advanced additional funds for
principal and interest or taxes and insurance (other than holdbacks at the
closing for the related Mortgage Loan from the proceeds of such loan);
(xlviii) no advance of funds has been made, directly or indirectly, by the
Seller to the borrower and no funds have been received from any person other
than the borrower for or on account of payments due on the Note or Mortgage;
(xlix) to the best of the Mortgage Loan Seller's knowledge, there is no
pending action, suit or proceeding, arbitration or governmental investigation
against the borrower or the Mortgaged Property an adverse outcome of which would
materially affect such borrower's performance under the loan documents or the
Certificateholders;
(l) except with respect to the Accor Credit Lease Loans which permit the
substitution of an Accor Credit Lease Property in connection with a failure to
comply with the Americans With Disabilities Act, the Note and Mortgage do not
require the lender to release any portion of the Mortgaged Property from the
lien of the Mortgage except upon payment in full of the Mortgage Loan, or, if
applicable, in the event of (A) a defeasance pursuant to the conditions
specified in the related loan documents, (B) the release of an immaterial
portion of the related Mortgage Property, (C) the payment of an Allocated Loan
Amount in the event of a casualty or condemnation, or (D) after the Anticipated
Repayment Date, a partial prepayment of an Allocated Loan Amount with respect to
a portion of the Mortgaged Property;
(li) with respect to each Mortgage Loan, the related loan documents permit
the lender, following a default under such Mortgage Loan, to apply funds
received in respect of such Mortgage Loan to amounts owing thereunder in the
order which the lender deems appropriate.
The Pooling and Servicing Agreement requires that the Servicer, the Special
Servicer or the Trustee notify the Mortgage Loan Sellers and the Depositor upon
its becoming aware of (a) any breach of any representation or warranty contained
in clauses (i), (ii), (iii), (iv), (v), (vi), (vii), (viii), (ix), (xi), (xii),
(xv), (xvi), (xvii), (xviii), (xix), (xx), (xxiv) or (xxix) and (b) any breach
of any representation or warranty contained in clauses (x), (xiii), (xiv),
(xxi), (xxii), (xxiii), (xxv), (xx vi), (xxvii), (xxviii), (xxx), (xxxi),
(xxxii), (xxxiii), (xxxiv), (xxxv), (xxxvi), (xxxvii), (xxxviii), (xxxix), (xl),
(xli), (xlii), (xliii), (xliv), (xlv), (xlvi), (xlvii), (xlviii), (xlix), (l) or
(li) that materially and adversely affects the value of such Mortgage Loan or
the interests of the holders of the Certificates therein. The Mortgage Loan
Purchase and Sale Agreement provides that, with respect to any such Mortgage
Loan, within 90 days after notice from the Servicer, the Special Servicer or the
Trustee, the Mortgage Loan Seller shall either (a) repurchase such Mortgage Loan
at an amount equal to (i) the outstanding principal balance of the Mortgage Loan
as of the Due Date as to which a payment was last made by the borrower (less any
P&I Advances previously made on account of principal), (ii) accrued interest up
to the Due Date in the month following the month in which such repurchase occurs
(less P&I Advances previously made on account of interest), (iii) the amount of
any unreimbursed Advances (with interest thereon) and any unreimbursed servicing
compensation relating to such Mortgage Loan, (iv) any expenses reasonably
incurred or to be incurred by the Servicer, the Special Servicer or the Trustee
in respect of the breach or defect giving rise to the repurchase obligation,
including any expenses arising out of the enforcement of the repurchase
obligation and, (v) with respect to each Mortgage Loan that is a Premium Loan,
any unearned premium or other amount that would have been due by the related
borrower if such Premium Loan were prepaid (such price the 'Repurchase Price')
or (b) promptly cure such breach in all material respects, provided, however,
that in the event that such breach is capable of being cured, as determined by
the Servicer, but not within such 90-day period and the Mortgage Loan Seller has
commenced and is diligently proceeding with the cure of such breach, the
Mortgage Loan Seller will have an additional 90 days to complete such cure;
provided, further, that with respect to such additional 90-day period the
Mortgage Loan Seller shall have delivered an officer's certificate to the
Trustee and the Servicer setting forth the reason such breach is not capable of
being cured within the initial 90-day period and what actions the Mortgage Loan
Seller is pursuing in connection with the cure thereof and stating that the
Mortgage Loan Seller anticipates that such breach will be cured within the
additional 90-day period; and, provided, further, that in the event the Mortgage
Loan Seller fails to cure such breach within such additional 90-day period, the
Repurchase Price shall include interest on any Advances made in respect of the
related Mortgage Loan during such period.
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Notwithstanding the foregoing, upon discovery by the Trustee, any custodian
for the Trustee, the Servicer or Special Servicer of a breach of a
representation or warranty that causes any Mortgage Loan not to be a 'qualified
mortgage' within the meaning of the REMIC provisions of the Code, such person
shall give prompt notice thereof to the Depositor and within 90 days after such
discovery, if such breach cannot be cured within such period, the Depositor
shall purchase, or cause the Mortgage Loan Seller to purchase, such Mortgage
Loan from the Trust Fund at the Repurchase Price.
The obligations of the Mortgage Loan Seller to repurchase or cure
constitute the sole remedies available to holders of Certificates or the Trustee
for a breach of a representation or warranty by the Mortgage Loan Seller with
respect to a Mortgage Loan. None of the Depositor (except as described in the
previous paragraph), the Servicer, the Special Servicer, the Trustee or the
Fiscal Agent will be obligated to purchase a Mortgage Loan if the Mortgage Loan
Seller defaults on its obligation to repurchase or cure, and no assurance can be
given that the Mortgage Loan Seller will fulfill such obligations. No assurance
can be given that the Depositor will perform any obligation to cure or
repurchase a Mortgage Loan for a breach of any representation referred to in the
second preceding paragraph. If such obligation is not met, as to a Mortgage Loan
that is not a 'qualified mortgage,' the Upper-Tier REMIC and Lower-Tier REMIC
may be disqualified. However, with respect to the Mortgage Loans acquired by the
Mortgage Loan Seller from Bloomfield, the Mortgage Loan Seller will also assign
to the Depositor, and the Depositor will further assign to the Trustee, the
Mortgage Loan Seller's rights and remedies against Bloomfield in respect of the
representations and warranties made by Bloomfield in its purchase and sale
agreement with the Mortgage Loan Seller (the 'Bloomfield Purchase Agreement'),
except that the Trustee will be required to reassign such rights and remedies to
the Mortgage Loan Seller as to individual Mortgage Loans repurchased by the
Mortgage Loan Seller.
SERVICING OF THE MORTGAGE LOANS; COLLECTION OF PAYMENTS
The Pooling and Servicing Agreement requires the Servicer and Special
Servicer to service and administer the Mortgage Loans, on behalf of the Trust
Fund, solely in the best interests of and for the benefit of all of the
Certificateholders (as determined by the Servicer or Special Servicer in the
exercise of its reasonable judgment) in accordance with applicable law, the
terms of the Pooling and Servicing Agreement and the Mortgage Loans and to the
extent not inconsistent with the foregoing, in the same manner in which, and
with the same care, skill, prudence and diligence with which, it (a) services
and administers similar mortgage loans comparable to the Mortgage Loans and held
for other similar third party portfolios or (b) administers mortgage loans for
its own account, whichever standard is higher, but without regard to (i) any
known relationship that the Servicer or Special Servicer, or an affiliate of the
Servicer or Special Servicer, may have with the borrowers or any other party to
the Pooling and Servicing Agreement; (ii) the ownership of any Certificate by
the Servicer or Special Servicer or any affiliate of the Servicer or Special
Servicer, as applicable; (iii) the Servicer's or Special Servicer's obligation
to make Advances or to incur servicing expenses with respect to the Mortgage
Loans; (iv) the Servicer's or Special Servicer's right to receive compensation
for its services under the Pooling and Servicing Agreement or with respect to
any particular transaction; (v) the ownership, or servicing or management for
others, by the Servicer or Special Servicer of any other loans or property; or
(vi) to the extent that an affiliate of the Mortgage Loan Sellers becomes the
Servicer or the Special Servicer, any obligation of a Mortgage Loan Seller to
repurchase any Mortgage Loan (the 'Servicing Standard').
The Servicer will service the Mortgage Loans with preferred equity or
mezzanine debt held by an affiliate of the Depositor (as identified in this
Prospectus Supplement under 'Risk Factors and Other Special
Considerations--Risks Related to the Mortgage Loans--Certain Additional Risks
Related to Mezzanine Financings' and '--Certain Additional Risks Related to
Preferred Equity Investments') pursuant to an operating advisor agreement with
CRIIMI MAE under which CRIIMI MAE will advise the Servicer with respect to
certain servicing-related decisions or actions. See 'The Pooling and Servicing
Agreement--The Operating Advisor Agreement' below. CRIIMI MAE will service each
Equity Loan for so long as an affiliate of the Depositor owns any equity
interest in the related borrower. The Servicer will service the Credit Lease
Loans only until the Other Notes under such Credit Lease Loans are sold to a
securitization of the Depositor or an affiliate. See 'Description of the
Mortgage Pool--Credit Lease Loans' in this Prospectus Supplement. The Servicer
and the Special Servicer are permitted, at their own expense, to employ
subservicers, agents or attorneys in performing any of their respective
obligations under the Pooling and Servicing Agreement, but will not thereby be
relieved of any such obligation, and will be responsible for the acts and
omissions of any such subservicers, agents or attorneys. The Pooling and
Servicing Agreement provides, however, that neither the Servicer, the Special
Servicer nor any of their respective directors, officers, employees or agents
shall have any liability to the Trust Fund or the Certificateholders for taking
any action or refraining from taking an action in good faith, or for errors in
judgment. The foregoing provision would not protect the Servicer or the Special
Servicer for the breach of its representations or warranties in the Pooling and
Servicing Agreement, the breach of certain specified covenants therein or any
liability by reason of willful misconduct, bad faith, fraud or
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negligence in the performance of its duties or by reason of its reckless
disregard of obligations or duties under the Pooling and Servicing Agreement.
The Pooling and Servicing Agreement requires the Servicer or the Special
Servicer, as applicable, to make efforts consistent with the Servicing Standard
to collect all payments called for under the terms and provisions of the
Mortgage Loans. Consistent with the above, the Servicer or Special Servicer may,
in its discretion, waive any late payment charge in connection with any
delinquent Monthly Payment with respect to any Mortgage Loan. Notwithstanding
the foregoing, with respect to the ARD Loans, the Servicer and Special Servicer
will be directed in the Pooling and Servicing Agreement not to take any
enforcement action with respect to payment of Excess Interest or principal in
excess of the principal component of the constant Monthly Payment prior to the
final maturity date. The Pooling and Servicing Agreement provides that if a
Mortgage Loan provides that the lender may in its discretion apply certain
amounts to a prepayment of principal (e.g., by applying casualty or condemnation
proceeds or funds escrowed improvements not completed by the required date)
prior to the expiration of the related Lock-out Period, the Special Servicer
cannot consent to such a prepayment unless the Special Servicer has first
received the consent of the Servicer. With respect to any Specially Serviced
Mortgage Loan, subject to the restrictions set forth below under '--Realization
Upon Mortgage Loans,' the Special Servicer will be entitled to pursue any of the
remedies set forth in the related Mortgage, including the right to acquire,
through foreclosure, all or any of the Mortgaged Properties securing such
Mortgage Loan. The Servicer or Special Servicer may elect to extend a Mortgage
Loan (subject to conditions described herein) notwithstanding its decision to
foreclose on certain of the Mortgaged Properties.
ADVANCES
The Servicer will be obligated to advance, on the Business Day immediately
preceding a Distribution Date (the 'Servicer Remittance Date') an amount (each
such amount, a 'P&I Advance') equal to the amount not received in respect of the
Monthly Payment on a Mortgage Loan (with interest at the Mortgage Pass-Through
Rate) that was delinquent as of the close of business on the immediately
preceding Due Date (and which delinquent payment has not been cured as of the
Servicer Remittance Date), or, in the event of a default in the payment of
amounts due on the maturity date of a Mortgage Loan, the amount equal to the
Monthly Payment or portion thereof not received that was due prior to the
maturity date provided, however, the Servicer will not be required to make an
Advance to the extent it determines that such advance would not be ultimately
recoverable from late payments, net insurance proceeds, net liquidation proceeds
and other collections with respect to the related Mortgage Loan. P&I Advances
are intended to maintain a regular flow of scheduled interest and principal
payments to holders of the Certificates entitled thereto, rather than to
guarantee or insure against losses. The Servicer will not be required or
permitted to make a P&I Advance for Excess Interest or Default Interest. The
amount required to be advanced in respect of delinquent Monthly Payments on a
Mortgage Loan that has been subject to an Appraisal Reduction Event will equal
the product of (a) the amount that would be required to be advanced by the
Servicer without giving effect to such Appraisal Reduction Event and (b) a
fraction, the numerator of which is the Stated Principal Balance of the Mortgage
Loan (as of the last day of the related Collection Period) less any Appraisal
Reduction Amounts thereof and the denominator of which is the Stated Principal
Balance (as of the last day of the related Collection Period). In addition, and
without duplication, the Servicer will [(i) make only one P&I Advance in respect
of each Mortgage Loan for the benefit of the most subordinate Class of
Sequential Certificates then outstanding unless the related defaulted Monthly
Payment is cured prior to the following Due Date on any Mortgage Loan and (ii)]
not make any P&I Advance in respect of Reduction Interest Distribution Amounts
or Reduction Interest Shortfalls. The amount to be advanced by the Servicer,
Trustee or Fiscal Agent in respect of any Mortgage Loan on any Distribution Date
will be reduced by the greater of the reduction in respect of any Appraisal
Reduction Amount and the reduction described in the preceding sentence. On any
Servicer Remittance Date on which the Servicer is not required to make a P&I
Advance to the most subordinate Class of Certificates (as described in the
preceding sentence), the Servicer will initially make such P&I Advance (for
accounting purposes only) but will be required, immediately subsequent to the
making of such P&I Advance, to reimburse itself (without interest) for such P&I
Advance from and up to all amounts with respect to such Mortgage Loan that would
be distributed to the most subordinate Class on the related Distribution Date
then outstanding if such Mortgage Loan was not in default (such amount of
reimbursement, the 'Subordinate Class Advance Amount'). No interest will accrue
on, or be payable with respect to, any outstanding Subordinate Class Advance
Amount.
The Trustee will provide to the Servicer written statements prior to the
Servicer Remittance Date listing (i) the aggregate Reduction Interest
Distribution Amounts and Reduction Interest Shortfalls for such Distribution
Date and (ii) the distribution due to the Holders of the most subordinate Class
of Sequential Certificates. For purposes of determining the most subordinate
Class of Sequential Certificates, (i) the Class A-1A, Class A-1B, Class A-1C and
Class PS-1 Certificates collectively and (ii) the Class B-7 and Class B-7H
Certificates together will, in each case, be treated as one Class.
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In addition to P&I Advances, the Servicer (and in limited circumstances,
the Special Servicer) will also be obligated (subject to the limitations
described herein) to make cash advances ('Property Advances,' and together with
P&I Advances, 'Advances') to pay delinquent real estate taxes, assessments and
hazard insurance premiums and to cover other similar costs and expenses
necessary to preserve the priority of the related Mortgage, enforce the terms of
any Mortgage Loan or to maintain such Mortgaged Property.
To the extent the Servicer fails to make an Advance it is required to make
under the Pooling and Servicing Agreement, the Trustee, subject to a
determination of recoverability, will make such required Advance or, in the
event the Trustee fails to make such Advance, the Fiscal Agent, subject to a
determination of recoverability, will make such Advance, in each case pursuant
to the terms of the Pooling and Servicing Agreement. To the extent the Special
Servicer fails to make an Advance it is required to make under the Pooling and
Servicing Agreement, the Servicer, subject to a determination of recoverability,
will make such an Advance. Both the Trustee and the Fiscal Agent will be
entitled to rely conclusively on any non-recoverability determination of the
Servicer or the Special Servicer, as the case may be. See '--The Trustee' and
'--The Fiscal Agent' below.
The Servicer, the Special Servicer, the Trustee or the Fiscal Agent, as
applicable, will be entitled to reimbursement for any Advance made by it in an
amount equal to the amount of such Advance and interest accrued thereon at the
Advance Rate (i) from late payments on the Mortgage Loan by the Mortgagor, (ii)
from insurance proceeds, condemnation proceeds, liquidation proceeds from the
sale of the Specially Serviced Mortgage Loan or the related Mortgaged Property
or other collections relating to the Mortgage Loan or (iii) upon determining in
good faith that such Advance or interest is not or will not be recoverable in
the manner described in the preceding two clauses, from any other amounts from
time to time on deposit in the Collection Account.
The Servicer, the Special Servicer, the Trustee and the Fiscal Agent will
each be entitled to receive interest on Advances at a per annum rate equal to
the sum of (i) the Prime Rate (as defined herein) plus (ii) 1% (the 'Advance
Rate'), compounded monthly, as of each Servicer Remittance Date and the Servicer
will be authorized to pay itself, the Special Servicer, the Trustee or the
Fiscal Agent, as applicable, such interest monthly from general collections with
respect to all of the Mortgage Loans prior to any payment to holders of
Certificates. To the extent that the payment of such interest at the Advance
Rate results in a shortfall in amounts otherwise payable on one or more Classes
of Certificates on the next Distribution Date, the Servicer, the Trustee or the
Fiscal Agent, as applicable, will be obligated to make a cash advance to cover
such shortfall, but only to the extent the Servicer, the Trustee or the Fiscal
Agent, as applicable, concludes that, with respect to each such Advance, such
Advance can be recovered from amounts payable on or in respect of the Mortgage
Loan to which the Advance is related. If the interest on such Advance is not
recovered from Default Interest on such Mortgage Loan, a shortfall will result
which will have the same effect as a Realized Loss. The 'Prime Rate' is the
rate, for any day, set forth as such in the 'Money Rates' section of The Wall
Street Journal, Eastern Edition.
The obligation of the Servicer, the Special Servicer, the Trustee or the
Fiscal Agent, as applicable, to make Advances with respect to any Mortgage Loan
pursuant to the Pooling and Servicing Agreement continues through the
foreclosure of such Mortgage Loan and until the liquidation of the Mortgage Loan
or related Mortgaged Properties. P&I Advances are intended to provide a limited
amount of liquidity, not to guarantee or insure against losses. None of the
Servicer, the Special Servicer, the Trustee or the Fiscal Agent will be required
to make any Advance that it determines in its good faith business judgment will
not be recoverable by the Servicer, the Special Servicer, the Trustee or the
Fiscal Agent, as applicable, out of related late payments, insurance proceeds,
liquidation proceeds and other collections with respect to the Mortgage Loan as
to which such Advances were made. In addition, if the Servicer, the Special
Servicer, the Trustee or the Fiscal Agent, as applicable, determines in its good
faith business judgment that any Advance previously made will not be recoverable
from the foregoing sources, then the Servicer, the Special Servicer, the Trustee
or the Fiscal Agent, as applicable, will be entitled to reimburse itself for
such Advance, plus interest thereon, out of amounts payable on or in respect of
all of the Mortgage Loans prior to distributions on the Certificates. Any such
judgment or determination with respect to the recoverability of Advances must be
evidenced by an officers' certificate delivered to the Trustee, Fiscal Agent and
Depositor in the case of the Servicer, the Servicer, in the case of the Special
Servicer, the Depositor, in the case of the Trustee or the Fiscal Agent, and the
Trustee in the case of the Fiscal Agent, setting forth such judgment or
determination of nonrecoverability and the considerations of the Servicer, the
Special Servicer, the Trustee or the Fiscal Agent, as applicable, forming the
basis of such determination (including but not limited to information selected
by the person making such determination in its good faith discretion such as
related income and expense statements, rent rolls, occupancy status, property
inspections, inquiries by the Servicer, the Special Servicer, the Trustee or the
Fiscal Agent, as applicable, and an independent appraisal performed by an
independent MAI appraiser selected by the Servicer, and conducted within the
past twelve months on the applicable Mortgaged Property).
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ACCOUNTS
Lock Box Accounts. Under Mortgage Loans representing 62% of the Initial
Pool Balance, one or more accounts in the name of the related borrower (the
'Lock Box Accounts') have been established into which rents or other revenues
from the related Mortgaged Properties are deposited by the related tenants.
Under other Mortgage Loans, which represent in the aggregate 8% of the Initial
Pool Balance, the borrower or the related property manager is required to
deposit rents and other revenues in the related Lock Box Account. Agreements
governing the Lock Box Accounts provide that the borrower has no withdrawal or
transfer rights with respect thereto and that all funds on deposit in the Lock
Box Accounts are periodically swept into the Cash Collateral Accounts (as
defined below). Additionally, all of the Mortgage Loans that have Anticipated
Repayment Dates require that a Lock Box Account be established prior to their
respective Anticipated Repayment Dates. The Lock Box Accounts will not be an
asset of the Trust REMICs.
Cash Collateral Accounts. With respect to certain of the Mortgage Loans
that have a Lock Box Account, one or more accounts in the name of the Servicer
on behalf of the Trust Fund (the 'Cash Collateral Accounts') have been
established into which funds in the related Lock Box Accounts will be swept on a
regular basis; with respect to certain other of the Mortgage Loans that have a
Lock Box Account, such Lock Box Account will be swept into one or more of the
Cash Collateral Accounts only in the event of a default by the related Borrower.
The Reserve Accounts generally will be sub-accounts of the Cash Collateral
Accounts. Any excess over the amount necessary to fund the Monthly Payment, the
Reserve Accounts and any other amounts due under the Mortgage Loans will be
returned to or retained by the related borrower provided no event of default of
which the Servicer is aware of has occurred and is continuing with respect to
such Mortgage Loan. However, as described under 'Description of the Mortgage
Pool--Certain Terms and Conditions of the Mortgage Loans--Excess Interest,'
after the respective Anticipated Repayment Date, if applicable, all amounts in
the related Cash Collateral Account in excess of the amount necessary to fund
the Monthly Payment and Reserve Accounts will be applied to (i) operating and
capital expenses, (ii) the reduction of the principal balance of the related
Mortgage Loan until such principal is paid in full and (iii) Excess Interest, in
that order. The Cash Collateral Accounts will not be an asset of the Trust
REMICs or the Servicer.
Collection Account. The Servicer will establish and maintain a segregated
account (the 'Collection Account') pursuant to the Pooling and Servicing
Agreement, and on each Due Date withdraw from each Cash Collateral Account an
amount equal to the Monthly Payment on the related Mortgage Loan and deposit
such amount into the Collection Account for application towards the Monthly
Payment (including Servicing Fees) due on the related Mortgage Loan. The
Servicer shall also deposit into the Collection Account with in one Business Day
of receipt all other payments in respect of the Mortgage Loans, other than
amounts to be deposited into any Reserve Account.
Distribution Accounts. The Trustee will establish and maintain one or more
segregated accounts (the 'Distribution Account') in the name of the Trustee for
the benefit of the holders of Certificates. With respect to each Distribution
Date, the Servicer will deposit in the Distribution Account, to the extent of
funds on deposit in the Collection Account, on the Servicer Remittance Date an
aggregate amount of immediately available funds equal to the sum of (i) the
Available Funds and (ii) the portion of the Servicing Fee representing the
Trustee's Fee. The Servicer will deposit all P&I Advances into the Distribution
Account on the related Servicer Remittance Date. To the extent the Servicer
fails to do so, the Trustee or the Fiscal Agent will deposit all P&I Advances
into the Distribution Account as described herein. See 'Description of the
Offered Certificates--Distributions' herein.
Interest Reserve Account. The Trustee will establish and maintain an
Interest Reserve Account ('Interest Reserve Account') in the name of the Trustee
for the benefit of the holders of the Certificates. On each Distribution Date
relating to an Interest Accrual Period ending in any February and on any
Distribution Date relating to an Interest Accrual Period ending in any January
which occurs in a year which is not a leap year, the Trustee will be required to
deposit, in respect of each Mortgage Loan having a Mortgage Rate less than or
equal to [ ]%, into the Interest Reserve Account, an amount equal to one day's
interest collected on the Stated Principal Balance of such Mortgage Loan as of
the Due Date occurring in the month preceding the month in which such
Distribution Date occurs at the related Mortgage Rate, to the extent a full
Monthly Payment or P&I Advance is made in respect thereof (all amounts so
deposited in any consecutive January and February, 'Withheld Amounts'). On each
Distribution Date occurring in March, the Servicer will be required to withdraw
from the Interest Reserve Account an amount equal to the Withheld Amounts from
the preceding January and February, if any, and deposit such amount into the
Distribution Account.
The Trustee will also establish and maintain one or more accounts, which
may be maintained as part of the Distribution Account, for each of the
'Upper-Tier Distribution Account,' the 'Default Interest Distribution Account'
and the 'Excess Interest Distribution Account,' each in the name of the Trustee
for the benefit of the holders of the Certificates.
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The Cash Collateral Accounts, Collection Account, the Distribution Account,
the Upper-Tier Distribution Account, the Interest Reserve Account, the Excess
Interest Distribution Account and the Default Interest Distribution Account will
be held in the name of the Trustee (or the Servicer on behalf of the Trustee) on
behalf of the holders of Certificates and the Servicer will be authorized to
make withdrawals from the Cash Collateral Accounts, the Collection Account and
the Interest Reserve Account. Each of the Cash Collateral Account, Collection
Account, any REO Account, the Distribution Account, the Upper-Tier Distribution
Account, the Interest Reserve Account, the Excess Interest Distribution Account
and the Default Interest Distribution Account will be either (i) (A) an account
or accounts maintained with a depository institution or trust company the short
term unsecured debt obligations or commercial paper of which are rated at least
P-1 by Moody's and F-1+ by Fitch in the case of accounts in which funds are held
for 30 days or less (or, in the case of accounts in which funds are held for
more than 30 days, the long term unsecured debt obligations of which are rated
at least 'AA' by Fitch and 'Aa2' by Moody's) or (B) as to which the Trustee has
received written confirmation from each of the Rating Agencies that holding
funds in such account would not cause any Rating Agency to qualify, withdraw or
downgrade any of its ratings on the Certificates or (ii) a segregated trust
account or accounts maintained with a federal or state chartered depository
institution or trust company acting in its fiduciary capacity which, in the case
of a state chartered depository institution, is subject to regulations
substantially similar to 12 C.F.R. Section 9.10(b), having in either case a
combined capital surplus of at least $50,000,000 and subject to supervision or
examination by federal and state authority, or any other account that, as
evidenced by a written confirmation from each Rating Agency, would not, in and
of itself, cause a downgrade, qualification or withdrawal of the then current
ratings assigned to the Certificates, which other account may be an account
maintained with the Trustee (an 'Eligible Bank'). LaSalle National Bank shall be
deemed to be an Eligible Bank unless the ratings of its long term unsecured debt
obligations or short term unsecured debt obligations are downgraded. Amounts on
deposit in the Collection Account, Cash Collateral Account, any REO Account and
the Interest Reserve Account may be invested in certain United States government
securities and other high-quality investments specified in the Pooling and
Servicing Agreement ('Permitted Investments'). Interest or other income earned
on funds in the Collection Account and Cash Collateral Accounts will be paid to
the Servicer (except to the extent required to be paid to the related borrower)
as additional servicing compensation and interest or other income earned on
funds in any REO Account will be payable to the Special Servicer. Interest or
other income earned on funds in the Interest Reserve Account, and interest or
other income on funds in the Collection Account to the extent not payable to the
Servicer, will be paid to the Mortgage Loan Seller as compensation for arranging
for on-going monitoring and surveillance of the Offered Certificates by the
Rating Agencies.
WITHDRAWALS FROM THE COLLECTION ACCOUNT
The Servicer may make withdrawals from the Collection Account for the
following purposes, to the extent permitted and in the priorities provided in
the Pooling and Servicing Agreement: (i) to remit on or before each Servicer
Remittance Date (A) to the Distribution Account an amount equal to the sum of
(I) Available Funds and any Prepayment Premiums and (II) the Trustee Fee for
such Distribution Date, (B) to the Default Interest Distribution Account an
amount equal to the Net Default Interest received in the related Collection
Period, (C) to the Excess Interest Distribution Account an amount equal to the
Excess Interest received in the related Collection Period, if any, and (D) to
the Interest Reserve Account an amount required to be withheld as described
under '--Accounts--Interest Reserve Account;' (ii) to pay or reimburse the
Servicer, the Special Servicer, the Trustee or the Fiscal Agent, as applicable,
for Advances made by any of them and, if applicable, interest on Advances
(provided, that the Trustee and Fiscal Agent will have priority with respect to
such payment or reimbursement), the Servicer's right to reimbursement for items
described in this clause (ii) being limited as described herein under
'--Advances;' (iii) to pay on or before each Servicer Remittance Date to the
Servicer and the Special Servicer as compensation, the aggregate unpaid
Servicing Compensation (not including the portion of the Servicing Fee
representing the Trustee's Fee), Special Servicing Fee, Principal Recovery Fee,
and any other servicing or special servicing compensation in respect of the
immediately preceding calendar month and to pay to the Mortgage Loan Seller its
monitoring and surveillance fee payable from the Collection Account; (iv) to pay
on or before each Distribution Date to the Depositor, Mortgage Loan Sellers or
Bloomfield with respect to each Mortgage Loan or REO Property that has
previously been purchased or repurchased by it pursuant to the Pooling and
Servicing Agreement, all amounts received thereon during the related Collection
Period and subsequent to the date as of which the amount required to effect such
purchase or repurchase was determined; (v) to the extent not reimbursed or paid
pursuant to any of the above clauses, to reimburse or pay the Servicer, the
Special Servicer, the Trustee, the Fiscal Agent and/or the Depositor for unpaid
servicing compensation (in the case of the Servicer, the Special Servicer or the
Trustee) and certain other unreimbursed expenses incurred by such persons
pursuant to and to the extent reimbursable under the Pooling and Servicing
Agreement and to satisfy any indemnification obligations of the Trust Fund under
the Pooling and Servicing Agreement; (vi) to pay to the Trustee amounts
requested by it to pay taxes on certain net income with respect to REO
Properties; (vii) to withdraw any amount deposited into the Collection Account
that was not required to be deposited therein; and (viii) to clear and terminate
the Collection Account pursuant to a plan for termination and liquidation of the
Trust Fund.
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ENFORCEMENT OF 'DUE-ON-SALE' AND 'DUE-ON-ENCUMBRANCE' CLAUSES
The Mortgage Loans contain provisions in the nature of 'due-on-sale'
clauses, which by their terms (a) provide that the Mortgage Loans shall (or may
at the lender's option) become due and payable upon the sale or other transfer
of an interest in the related Mortgaged Property or (b) provide that the
Mortgage Loans may not be assumed without the consent of the related lender in
connection with any such sale or other transfer. The Servicer or the Special
Servicer, as applicable, will not be required to enforce such due-on-sale
clauses and in connection therewith will not be required to (i) accelerate
payments thereon or (ii) withhold its consent to such an assumption if (x) such
provision is not exercisable under applicable law or such provision is
reasonably likely to result in meritorious legal action by the borrower or (y)
the Servicer or the Special Servicer, as applicable, determines, in accordance
with the Servicing Standard, that enforcement would be likely to result in an
equal to or greater recovery, on a present value basis (discounting at the
related Mortgage Rate), than would not enforcing such clause, or with respect to
a consent, is consistent with the Servicing Standard. If the Servicer or the
Special Servicer, as applicable, determines that granting such consent would be
likely to result in a greater recovery, the Servicer or the Special Servicer, as
applicable, is authorized to take or enter into an assumption agreement from or
with the proposed transferee as obligor thereon provided that (a) the credit
status of the prospective transferee is in compliance with the Servicer's or
Special Servicer's, as applicable, regular commercial mortgage origination or
servicing standards and criteria and the terms of the related Mortgage and (b)
the Servicer or the Special Servicer, as applicable, has received written
confirmation from each Rating Agency that such assumption or substitution would
not, in and of itself, cause a downgrade, qualification or withdrawal of the
then current ratings assigned to the Certificates; provided, however, that if
the Stated Principal Balance of such Mortgage Loan is less than the lesser of
(x) 5% of the total aggregate Stated Principal Balances of the Mortgage Loans
and (y) $30,000,000, and is not one of the ten largest Mortgage Loans in the
Trust Fund, such written confirmation shall not be required from any of the
Rating Agencies. No assumption agreement may contain any terms that are
different from any term of any Mortgage or related Note, except pursuant to the
provisions described under '--Realization Upon Mortgage Loans' and
'--Modifications,' in this Prospectus Supplement.
The Mortgage Loans contain provisions in the nature of a
'due-on-encumbrance' clause which by their terms (a) provide that the Mortgage
Loans shall (or may at the lender's option) become due and payable upon the
creation of any lien or other encumbrance on the related Mortgaged Property, or
(b) require the consent of the related lender to the creation of any such lien
or other encumbrance on the related Mortgaged Property. The Servicer or the
Special Servicer, as applicable, will not be required to enforce such
due-on-encumbrance clauses and in connection therewith will not be required to
(i) accelerate payments thereon or (ii) withhold its consent to such lien or
encumbrance if the Servicer or the Special Servicer, as applicable, (x)
determines, in accordance with the Servicing Standard, that such enforcement
would not be in the best interests of the Trust Fund or, with respect to a
consent, that granting such consent would be consistent with the Servicing
Standard and (y) receives prior written confirmation from each Rating Agency
that granting such consent would not, in and of itself, cause a downgrade,
qualification or withdrawal of any of the then current ratings assigned to the
Certificates. See 'Certain Legal Aspects of the Mortgage Loans--Due-on-Sale and
Due-on-Encumbrance' in the Prospectus.
INSPECTIONS
The Servicer (or with respect to any Specially Serviced Mortgage Loan, the
Special Servicer) is required to inspect each Mortgaged Property at such times
and in such manner as are consistent with the Servicing Standards described
herein, but in any event (i) is required to inspect each Mortgaged Property
securing a Note, with a Stated Principal Balance (or in the case of a Note
secured by more than one Mortgaged Property, having an Allocated Loan Amount) of
(a) $2,000,000 or more at least once every twelve months and (b) less than
$2,000,000 at least once every 24 months, in each case commencing in September
1999 (or at such lesser frequency, provided each Rating Agency has confirmed in
writing to the Servicer that such schedule will not result in the withdrawal,
downgrading or qualification of the then current ratings assigned to the
Certificates) and (ii) if the Mortgage Loan (a) becomes a 'Specially Serviced
Mortgage Loan,' (b) is delinquent for 60 days or (c) has a debt service coverage
ratio of less than 1.0, the Special Servicer is required to inspect the related
Mortgaged Properties as soon as practicable and thereafter at least every twelve
months, until such condition is cured.
INSURANCE POLICIES
The Pooling and Servicing Agreement requires the Servicer (or the Special
Servicer in the case of an REO Property) to obtain or cause the mortgagor on
each Mortgage Loan to maintain fire and hazard insurance with extended coverage
on the related Mortgaged Property in an amount which is at least equal to the
lesser of (A) one hundred percent (100%) of the then 'full replacement cost' of
the improvements and equipment, without deduction for physical depreciation, and
(B) the outstanding principal balance of the related Mortgage Loan, or such
greater amount as is necessary to prevent any reduction, by reason of the
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application of co-insurance and to prevent the Trustee thereunder from being
deemed a co-insurer and provided such policy shall include a 'replacement cost'
rider. The Pooling and Servicing Agreement also requires the Servicer (or the
Special Servicer in the case of an REO Property) to obtain or cause the
mortgagor on each Mortgaged Property generally to maintain insurance providing
coverage against at least 18 months of rent interruptions or such other amount
as required pursuant to the related loan documents (24 months with respect to an
REO Property) and any other insurance as is required in the related Mortgage
Loan. In the case of an REO Property, if the Special Servicer fails to maintain
fire and hazard insurance as described above or flood insurance as described
below, the Servicer will maintain such insurance. In the event the Special
Servicer or Servicer, as applicable, fails to pay a premium due on such
insurance policy, the Trustee or the Fiscal Agent, as applicable, will be
required to make an Advance to cover such payment. Any cost incurred by the
Servicer, Special Servicer, Trustee or Fiscal Agent in maintaining any such
insurance shall not, for the purpose of calculating distributions to
Certificateholders, be added to the unpaid principal balance of the related
Mortgage Loan, notwithstanding that the terms of such Mortgage Loan so permit.
Notwithstanding the foregoing insurance requirements, and in lieu thereof, the
Pooling and Servicing Agreement permits the Servicer to allow Credit Tenants
with respect to certain of the Mortgage Loans to self-insure with respect to
such risks in accordance with the terms of the related Credit Lease.
In general, the standard form of fire and hazard extended coverage policy
covers physical damage to or destruction of the improvements of the property by
fire, lightning, explosion, smoke, windstorm, hail, riot, strike and civil
commotion, subject to certain conditions and exclusions in each policy. Although
the policies relating to the Mortgage Loans will be underwritten by different
insurers in different states and therefore will not contain identical terms and
conditions, most such policies will not cover any physical damage resulting from
war, revolution, governmental actions, floods and other water-related causes,
earth movement (including earthquakes, landslides and mudflows), wet or dry rot,
vermin, domestic animals and certain other kinds of uninsured risks.
Nonetheless, certain of the Mortgage Loans require insurance coverage for floods
and other water-related causes and earth movement. When the Servicer determines
that a Mortgaged Property is located in a federally designated flood area, the
Pooling and Servicing Agreement requires the Servicer to use its best efforts to
cause the related borrower to maintain, or if not maintained, to itself obtain
(subject to the provisions concerning nonrecoverable Advances) flood insurance.
Such flood insurance shall be in an amount equal to the lesser of (i) the unpaid
principal balance of the related Mortgage Loan and (ii) the maximum amount of
such insurance required by the terms of the related Mortgage and as is available
for the related property under the national flood insurance program, if
available. If an REO Property (i) is located in a federally designated special
flood hazard area or (ii) is related to a Mortgage Loan pursuant to which
earthquake insurance was in place at the time of origination and continues to be
available at commercially reasonable rates, the Pooling and Servicing Agreement
requires that the Special Servicer obtain (subject to the issues concerning
nonrecoverable Advances) flood insurance and/or earthquake insurance. If a
recovery due to a flood or earthquake is not available for an REO Property but
would have been available if such insurance were maintained, the Special
Servicer will be required (subject to the provisions concerning nonrecoverable
Advances) to (i) immediately deposit into the Collection Account from its own
funds the amount that would have been recovered or (ii) apply to the restoration
and repair of the property from its own funds the amount that would have been
recovered, if such application is consistent with the Servicing Standard;
provided, however, that the Special Servicer shall not be responsible for any
shortfall in insurance proceeds resulting from an insurer's refusal or inability
to pay a claim.
The Servicer or the Special Servicer may obtain and maintain a blanket
insurance policy insuring against fire and hazard losses on all of the Mortgaged
Properties (other than REO Properties) as to which the related borrower has not
maintained insurance to satisfy its obligations concerning the maintenance of
insurance coverage. Any such blanket insurance policy shall be maintained with
an insurer qualified under the terms of the Pooling and Servicing Agreement.
Additionally, the Servicer or the Special Servicer may obtain a master force
placed insurance policy, as long as such policy is issued by an insurer
qualified under the terms of the Pooling and Servicing Agreement and provides no
less coverage in scope and amount than otherwise required to be maintained as
described in the preceding paragraphs.
The ability of the Servicer to assure that fire and hazard, flood or
earthquake insurance proceeds are appropriately applied may be dependent upon
its being named as an additional insured under such policy, or upon the extent
to which information in this regard is furnished by mortgagors.
Under the terms of the Mortgage Loans, the borrowers will be required to
present claims to insurers under hazard insurance policies maintained on the
related Mortgaged Properties. The Servicer or Special Servicer, as applicable,
on behalf of itself, the Trustee and Certificateholders, is obligated to present
or cause to be presented claims under any blanket insurance policy insuring
against hazard losses on Mortgaged Properties securing the Mortgage Loans.
However, the ability of the Servicer or Special Servicer, as applicable, to
present or cause to be presented such claims is dependent upon the extent to
which information in this regard is furnished to the Servicer or Special
Servicer, as applicable, by the borrowers.
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All insurance policies required shall name the Trustee or the Servicer or
the Special Servicer, on behalf of the Trustee as the lender, as loss payee.
EVIDENCE AS TO COMPLIANCE
The Pooling and Servicing Agreement requires the Servicer to cause a
nationally recognized firm of independent public accountants, which is a member
of the American Institute of Certified Public Accountants, to furnish to the
Trustee, the Depositor and the Rating Agencies on or before September 15 of each
year, beginning September 15, 1999, a statement to the effect that such firm has
examined certain documents and records relating to the servicing of similar
mortgage loans for the preceding twelve months and that on the basis of their
examination, conducted substantially in compliance with generally accepted
auditing standards and the Uniform Single Attestation Program for Mortgage
Bankers or the Audit Program for Mortgages serviced for FHLMC, such servicing
has been conducted in compliance with similar agreements except for such
significant exceptions or errors in records that, in the opinion of such firm,
generally accepted auditing standards and the Uniform Single Attestation Program
for Mortgage Bankers or the Audit Program for Mortgages serviced for FHLMC
require it to report, in which case such exceptions and errors shall be so
reported.
The Pooling and Servicing Agreement also requires the Servicer to deliver
to the Trustee, the Depositor and the Rating Agencies on or before September 15
of each year, beginning September 15, 1999, an officer's certificate of the
Servicer stating that, to the best of such officer's knowledge, the Servicer has
fulfilled its obligations under the Pooling and Servicing Agreement throughout
the preceding year or, if there has been a default, specifying each default
known to such officer and the action proposed to be taken with respect thereto.
CERTAIN MATTERS REGARDING THE DEPOSITOR, THE SERVICER AND THE SPECIAL SERVICER
Each of the Servicer and Special Servicer may assign its rights and
delegate its duties and obligations under the Pooling and Servicing Agreement in
connection with the sale or transfer of a substantial portion of its mortgage
servicing or asset management portfolio, provided that certain conditions are
satisfied including obtaining the consent of the Trustee and written
confirmation of each Rating Agency that such assignment or delegation will not
cause a qualification, withdrawal or downgrading of the then current ratings
assigned to the Certificates. The Pooling and Servicing Agreement provides that
the Servicer or Special Servicer may not otherwise resign from its obligations
and duties as Servicer or Special Servicer thereunder, except upon the
determination that performance of its duties is no longer permissible under
applicable law and provided that such determination is evidenced by an opinion
of counsel delivered to the Trustee. No such resignation may become effective
until the Trustee or a successor Servicer or Special Servicer has assumed the
obligations of the Servicer or Special Servicer under the Pooling and Servicing
Agreement. The Trustee or any other successor Servicer or Special Servicer
assuming the obligations of the Servicer or Special Servicer under the Pooling
and Servicing Agreement will be entitled to the compensation to which the
Servicer or Special Servicer would have been entitled. If no successor Servicer
or Special Servicer can be obtained to perform such obligations for such
compensation, additional amounts payable to such successor Servicer or Special
Servicer will be treated as Realized Losses.
The Pooling and Servicing Agreement also provides that neither the
Depositor, the Servicer, the Special Servicer, nor any director, officer,
employee or agent of the Depositor, the Servicer or the Special Servicer will be
under any liability to the Trust Fund or the holders of Certificates 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 neither the Depositor, the Servicer, the Special
Servicer nor any such person will be protected against any breach of its
representations and warranties made in the Pooling and Servicing Agreement or
any liability which would otherwise be imposed by reason of willful misconduct,
bad faith, fraud or negligence (or in the case of the Servicer, by reason of any
specific liability imposed for a breach of the Servicing Standard) in the
performance of duties thereunder or by reason of reckless disregard of
obligations and duties thereunder. The Pooling and Servicing Agreement further
provides that the Depositor, the Servicer, the Special Servicer and any
director, officer, employee or agent of the Depositor, the Servicer and the
Special Servicer will be entitled to indemnification by the Trust Fund for any
loss, liability or expense incurred in connection with any legal action relating
to the Pooling and Servicing Agreement or the Certificates, other than any loss,
liability or expense incurred by reason of willful misconduct, bad faith, fraud
or negligence in the performance of duties thereunder or by reason of reckless
disregard of obligations and duties thereunder.
In addition, the Pooling and Servicing Agreement provides that neither the
Depositor, the Servicer, nor the Special Servicer will be under any obligation
to appear in, prosecute or defend any legal action unless such action is related
to its duties under the Pooling and Servicing Agreement and which in its opinion
does not expose it to any expense or liability. The Depositor, the Servicer or
the Special Servicer may, however, in its discretion undertake any such action
which it may deem necessary or
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desirable with respect to the Pooling and Servicing Agreement and the rights and
duties of the parties thereto and the interests of the holders of Certificates
thereunder. In such event, the legal expenses and costs of such action and any
liability resulting therefrom will be expenses, costs and liabilities of the
Trust Fund, and the Depositor, the Servicer and the Special Servicer will be
entitled to be reimbursed therefor and to charge the Collection Account.
The Depositor is not obligated to monitor or supervise the performance of
the Servicer, the Special Servicer or the Trustee under the Pooling and
Servicing Agreement. The Depositor may, but is not obligated to, enforce the
obligations of the Servicer or the Special Servicer under the Pooling and
Servicing Agreement and may, but is not obligated to, perform or cause a
designee to perform any defaulted obligation of the Servicer or the Special
Servicer or exercise any right of the Servicer or the Special Servicer under the
Pooling and Servicing Agreement. In the event the Depositor undertakes any such
action, it will be reimbursed by the Trust Fund from the Collection Account to
the extent not recoverable from the Servicer or Special Servicer as applicable.
Any such action by the Depositor will not relieve the Servicer or the Special
Servicer of its obligations under the Pooling and Servicing Agreement.
Any person into which the Servicer may be merged or consolidated, or any
person resulting from any merger or consolidation to which the Servicer is a
party, or any person succeeding to the business of the Servicer, will be the
successor of the Servicer under the Pooling and Servicing Agreement, and shall
be deemed to have assumed all of the liabilities and obligations of the Servicer
under the Pooling and Servicing Agreement if each of the Rating Agencies has
confirmed in writing that such merger or consolidation or transfer of assets or
succession, in and of itself, will not cause a downgrade, qualification or
withdrawal of the then current ratings assigned by such Rating Agency for any
Class of Certificates.
EVENTS OF DEFAULT
Events of default of the Servicer (each, an 'Event of Default') under the
Pooling and Servicing Agreement consist, among other things, of (i) any failure
by the Servicer to remit to the Collection Account or any failure by the
Servicer to remit to the Trustee for deposit into the Upper-Tier Distribution
Account, Distribution Account, Excess Interest Distribution Account, Interest
Reserve Account or Default Interest Distribution Account any amount required to
be so remitted pursuant to the Pooling and Servicing Agreement or (ii) any
failure by the Servicer duly to observe or perform in any material respect any
of its other covenants or agreements or the breach of its representations or
warranties under the Pooling and Servicing Agreement which continues unremedied
for thirty (30) days after the giving of written notice of such failure to the
Servicer by the Depositor or the Trustee, or to the Servicer and to the
Depositor and the Trustee by the holders of Certificates evidencing Percentage
Interests of at least 25% of any affected Class; or (iii) any failure by the
Servicer to make any Advances as required pursuant to the Pooling and Servicing
Agreement; or (iv) confirmation in writing by any Rating Agency that not
terminating the Servicer would, in and of itself, cause the then current rating
assigned to any Class of Certificates to be qualified, withdrawn or downgraded;
(v) certain events of insolvency, readjustment of debt, marshaling of assets and
liabilities or similar proceedings and certain actions by, on behalf of or
against the Servicer indicating its insolvency or inability to pay its
obligations or (vi) the Servicer shall no longer be an 'approved' servicer by
each of the Rating Agencies for mortgage pools similar to the Trust Fund.
Events of Default of the Special Servicer under the Pooling and Servicing
Agreement include the items specified in clauses (i) through (vi) above with
respect to, and to the extent applicable to, the Special Servicer.
RIGHTS UPON EVENT OF DEFAULT
If an Event of Default with respect to the Servicer or Special Servicer
occurs, then the Trustee may, and at the direction of the holders of
Certificates evidencing at least 25% of the aggregate Voting Rights of all
Certificateholders, the Trustee will, terminate all of the rights and
obligations of the Servicer or Special Servicer as servicer or special servicer
under the Pooling and Servicing Agreement and in and to the Trust Fund.
Notwithstanding the foregoing, upon any termination of the Servicer under the
Pooling and Servicing Agreement the Servicer will continue to be entitled to
receive all accrued and unpaid servicing compensation through the date of
termination plus all Advances and interest thereon as provided in the Pooling
and Servicing Agreement. In the event that the Servicer is also the Special
Servicer and the Servicer is terminated, the Servicer will also be terminated as
Special Servicer.
On and after the date of termination following an Event of Default by the
Servicer, the Trustee will succeed to all authority and power of the Servicer
(and the Special Servicer if the Special Servicer is also the Servicer) under
the Pooling and Servicing Agreement and will be entitled to the compensation
arrangements to which the Servicer (and the Special Servicer if the Servicer is
also the Special Servicer) would have been entitled. If the Trustee is unwilling
or unable so to act, or if the holders of Certificates evidencing at least 25%
of the aggregate Voting Rights of all Certificateholders so request, or if the
long-term unsecured debt rating of the Trustee or the Fiscal Agent is not at
least 'AA' by Fitch and 'Aa2' by Moody's or if the Rating Agencies do not
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provide written confirmation that the succession of the Trustee as Servicer,
will not cause a qualification, withdrawal or downgrading of the then current
ratings assigned to the Certificates, the Trustee must appoint, or petition a
court of competent jurisdiction for the appointment of, a mortgage loan
servicing institution the appointment of which will not result in the
downgrading, qualification or withdrawal of the rating or ratings then assigned
to any Class of Certificates as evidenced in writing by each Rating Agency to
act as successor to the Servicer under the Pooling and Servicing Agreement.
Pending such appointment, the Trustee is obligated to act in such capacity. The
Trustee and any such successor may agree upon the servicing compensation to be
paid in accordance with the provisions of the Pooling and Servicing Agreement.
If the Special Servicer is not the Servicer and an Event of Default with
respect to the Special Servicer occurs, the Trustee will terminate the Special
Servicer and the Servicer will succeed to all the power and authority of the
Special Servicer under the Pooling and Servicing Agreement (provided that such
termination would not result in the downgrading, qualification or withdrawal of
the rating or ratings assigned to any Class of Certificates as evidenced in
writing by each Rating Agency) and will be entitled to the compensation to which
the Special Servicer would have been entitled.
No Certificateholder will have any right under the Pooling and Servicing
Agreement to institute any proceeding with respect to the Pooling and Servicing
Agreement or the Mortgage Loans, unless, with respect to the Pooling and
Servicing Agreement, such holder previously shall have given to the Trustee a
written notice of a default under the Pooling and Servicing Agreement, and of
the continuance thereof, and unless also the holders of Certificates of any
Class affected thereby evidencing Percentage Interests of at least 25% of such
Class shall have made written request of the Trustee to institute such
proceeding in its own name as Trustee under the Pooling and Servicing Agreement
and shall have offered to the Trustee such reasonable indemnity as it may
require against the costs, expenses and liabilities to be incurred therein or
thereby, and the Trustee, for 60 days after its receipt of such notice, request
and offer of indemnity, shall have neglected or refused to institute such
proceeding.
The Trustee will have no obligation to make any investigation of matters
arising under the Pooling and Servicing Agreement 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, unless such holders of
Certificates shall have offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities which may be incurred therein or
thereby.
AMENDMENT
The Pooling and Servicing Agreement may be amended at any time by the
Depositor, the Servicer, the Special Servicer, the Trustee and the Fiscal Agent
without the consent of any of the holders of Certificates (i) to cure any
ambiguity; (ii) to correct or supplement any provisions therein which may be
defective or inconsistent with any other provisions therein; (iii) to amend any
provision thereof to the extent necessary or desirable to maintain the rating or
ratings assigned to each Class of Certificates; (iv) to amend or supplement a
provision which will not adversely affect in any material respect the interests
of any Certificateholder not consenting thereto, as evidenced in writing by an
opinion of counsel or confirmation in writing from each Rating Agency that such
amendment will not result in a qualification, withdrawal or downgrading of the
then current ratings assigned to the Certificates; and (v) to amend or
supplement any provisions therein to the extent not inconsistent with the
provisions of the Pooling and Servicing Agreement and will not result in a
downgrade, qualification or withdrawal of the then current ratings assigned to
any Class of Certificates as confirmed in writing by each Rating Agency. The
Pooling Agreement requires that no such amendment shall cause the Upper-Tier
REMIC or the Lower-Tier REMIC to fail to qualify as a REMIC.
The Pooling and Servicing Agreement may also be amended from time to time
by the Depositor, the Servicer, the Special Servicer, the Trustee and the Fiscal
Agent with the consent of the holders of Certificates evidencing at least
66 2/3% of the Percentage Interests of each Class of Certificates affected
thereby for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of the Pooling and Servicing Agreement or
modifying in any manner the rights of the holders of Certificates; provided,
however, that no such amendment may (i) reduce in any manner the amount of, or
delay the timing of, payments received on the Mortgage Loans which are required
to be distributed on any Certificate; (ii) alter the obligations of the
Servicer, the Special Servicer, the Trustee or the Fiscal Agent to make a P&I
Advance or Property Advance or alter the servicing standards set forth in the
Pooling and Servicing Agreement; (iii) change the percentages of Voting Rights
of holders of Certificates which are required to consent to any action or
inaction under the Pooling and Servicing Agreement; or (iv) amend the section in
the Pooling and Servicing Agreement relating to the amendment of the Pooling and
Servicing Agreement, in each case, without the consent of the holders of all
Certificates representing all the Percentage Interests of the Class or Classes
affected thereby.
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VOTING RIGHTS
The 'Voting Rights' assigned to each Class shall be (a) 0% in the case of
the Class V-1, Class V-2, Class R and Class LR Certificates, (b) [ ]% in the
case of the Class PS-1 Certificates (the sum of such percentages for each such
Class outstanding is the 'Fixed Voting Rights Percentage'), provided that the
Voting Rights of the Class PS-1 Certificates will be reduced to zero on the
Distribution Date on which no Classes other than the Class B-7 and Class B-7H
Certificates are outstanding, (c) in the case of the Class A-1A, Class A-1B,
Class A-1C, Class A-2, Class A-3, Class A-4, Class A-5, Class B-1, Class B-2,
Class B-3, Class B-4, Class B-5, Class B-6, Class B-7 and Class B-7H
Certificates, a percentage equal to the product of (x) 100% minus the Fixed
Voting Rights Percentage multiplied by (y) a fraction, the numerator of which is
equal to the aggregate outstanding Certificate Balance of any such Class and the
denominator of which is equal to the aggregate outstanding Certificate Balances
of all Classes of Certificates. The Class PS-1 Certificates will not be entitled
to vote with respect to proposed extensions of a Specially Serviced Mortgage
Loan. The Voting Rights of any Class of Certificates shall be allocated among
holders of Certificates of such Class in proportion to their respective
Percentage Interests, except that any Certificate beneficially owned by the
Depositor, the Servicer, the Special Servicer, any mortgagor, the Trustee, a
manager, or any of their respective affiliates will be deemed not to be
outstanding; provided, however, that for purposes of obtaining the consent of
Certificateholders to an amendment to the Pooling and Servicing Agreement, any
Certificates beneficially owned by the Servicer or Special Servicer or an
affiliate thereof will be deemed to be outstanding, provided that such amendment
does not relate to compensation of the Servicer, Special Servicer or otherwise
benefit such entity or an affiliate (other th an solely in its capacity as
Certificateholder); and, provided, further, that for purposes of obtaining the
consent of Certificateholders to any action proposed to be taken by the Special
Servicer with respect to a Specially Serviced Mortgage Loan, any Certificates
beneficially owned by the Servicer or an affiliate will be deemed to be
outstanding if the Special Servicer is not the Servicer or any affiliate. The
Certificates beneficially owned by the Special Servicer or an affiliate thereof
shall be deemed outstanding for purposes of determining who the Directing
Holders (as defined below) are and for purposes of issuing Instructions (as
defined below). The Voting Rights of each Class of Certificates will be deemed
to be reduced on any day on which an Appraisal Reduction Amount is allocated to
such Class. The Fixed Voting Right Percentage of the Class PS-1 Certificates
will be proportionally reduced upon the allocation of Appraisal Reduction
Amounts with respect to any component of such Classes based on the amount of
such reduction.
REALIZATION UPON MORTGAGE LOANS
Specially Serviced Mortgage Loans; Appraisals. Contemporaneously with the
earliest of (i) the effective date of any modification of the Mortgage Rate,
principal balance or amortization terms of any Mortgage Loan, any extension of
the Maturity Date of a Mortgage Loan or consent to the release of any Mortgaged
Property or REO Property from the lien of the related Mortgage, (ii) the
occurrence of an Appraisal Reduction Event or (iii) the date on which the
Special Servicer, consistent with the Servici ng Standard, requests an Updated
Appraisal (as defined below), the Servicer (after consultation with the Special
Servicer) will obtain an appraisal (or a letter update from an existing
appraisal which is less than two years old) of the Mortgaged Property, or REO
Property, as the case may be, from an independent appraiser who is a member of
the American Institute of Real Estate Appraisers (an 'Updated Appraisal'), the
cost of which will constitute a Servicing Advance.
Following a default on a Mortgage Loan at maturity, the Special Servicer
may either foreclose or elect to grant a one-year extension of the Specially
Serviced Mortgage Loan; provided that the Special Servicer may only extend such
Mortgage Loan if (i) the Special Servicer determines in its reasonable judgment
that such borrower has attempted in good faith to refinance such Mortgage Loan
or Mortgaged Property, (ii) the Special Servicer determines that (A) extension
of such Mortgage Loan is consistent with the Servicing Standard and (B)
extension of such Mortgage Loan is likely to result in a recovery which on a net
present value basis would be greater than the recovery that would result from a
foreclosure, (iii) such extension requires that all cash flow on all related
Mortgage Properties in excess of amounts required to operate and maintain such
Mortgaged Properties be applied to payments of principal and interest on such
Mortgage Loan and (iv) the Special Servicer terminates the related Manager
unless the Special Servicer determines that retaining such Manager is conducive
to maintaining the value of such Mortgaged Properties; provided, further, that,
if, after notice to all Certificateholders, holders of Certificates evidencing
at least 66 2/3% of the Voting Rights of each Class of Certificates entitled to
vote direct the Special Servicer not to extend, the Special Servicer will not
extend; provided, further, that, if the Special Servicer is not the Servicer and
the Servicer would not elect to extend, holders of Certificates evidencing
greater than (a) 50% of the aggregate Voting Rights of all Certificateholders
entitled to vote and (b) 66 2/3% of the aggregate Voting Rights of all
Certificateholders entitled to vote who respond to such notice, may direct the
Special Servicer not to extend. Notwithstanding the foregoing, the Special
Servicer may extend pursuant to the Instructions of the Directing Holders (as
described and defined below). The holders of the Class PS-1 Certificates will
not be entitled to vote with respect to proposed extensions of a Specially
Serviced Mortgage Loan.
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Under certain circumstances the Special Servicer may modify the terms of
Specially Serviced Mortgage Loans as described below under '--Modifications.'
Deposits by Directing Holders. If the Special Servicer receives
Instructions and the Servicer has not otherwise been required to obtain an
Updated Appraisal as described above, the Servicer (after consultation with the
Special Servicer) will obtain an Updated Appraisal as soon as reasonably
practicable to determine the fair market value of each related Mortgaged
Property, after accounting for the estimated liquidation and carrying costs (the
'Fair Market Value' of such Mortgaged Property), provided that the cost of such
Updated Appraisal will constitute a Servicing Advance. Within two Business Days
after the Special Servicer's receipt of Instructions, the Directing Holders are
required to deposit (in proportion to their respective Percentage Interests)
into a segregated account (the 'Collateral Account') established by the Servicer
an amount equal to the lesser of (a) 125% of the Fair Market Value of the
related Mortgaged Property and (b) the outstanding principal balance of the
Mortgage Loan plus unreimbursed Advances (with interest thereon) and unpaid
accrued interest (the 'Deposit'). If no Updated Appraisal has yet been obtained,
the amount of the Deposit will be determined based on the Special Servicer's (or
if the Special Servicer is a Directing Holder, the Servicer's) estimate of the
Fair Market Value of the Mortgaged Property, in which case, upon the Special
Servicer's receipt of such Updated Appraisal, the Special Servicer (or if the
Special Servicer is a Directing Holder, the Servicer) will remit any excess
deposit to the Directing Holders, or the Directing Holders will deposit in the
Collateral Account any shortfall, as the case may be. In the event that the
Directing Holders do not make the required deposit within two Business Days of
the Special Servicer's receipt of Instructions, the Special Servicer will
disregard such Instructions. The Directing Holders will be deemed to have
granted to the Special Servicer (or the Servicer, if applicable) for the benefit
of Certificateholders a first priority security interest in the Collateral
Account, as security for the obligations of the Directing Holders.
If the Special Servicer is acting pursuant to Instructions, the Special
Servicer shall direct to the Servicer to withdraw from the Collateral Account
for deposit into the Collection Account on or prior to the Business Day
preceding each Servicer Remittance Date a sum equal to the P&I Advances and
Property Advances for the related Mortgage Loan which in the absence of
Instructions would be made by the Servicer or the Special Servicer (and the
obligation to make such advances shall not be subject to a non-recoverability
standard) and the Directing Holders shall, upon request therefor by the Special
Servicer (or if the Special Servicer is a Directing Holder, the Servicer),
deposit from their own funds into the Collateral Account the amount of such P&I
Advances or Property Advances. If the Directing Holders fail to make such
Deposit within one Business Day after receipt of the Special Servicer's or
Servicer's, as applicable, request, the Special Servicer will no longer be
required to follow such Instructions and will specially service such Mortgage
Loan as though no Instructions had been given; provided, however, that the
Directing Holders will be required to maintain the Collateral Account unless and
until the related Mortgage Loan is no longer a Specially Serviced Mortgage Loan
for nine consecutive months or has been liquidated. The Special Servicer or
Servicer, as applicable, will invest amounts on deposit in the Collateral
Account in Permitted Investments upon direction by the Directing Holders.
Directing Holders will be entitled to reinvestment income as received, and will
reimburse the Collateral Account for any losses incurred.
No Advances. Until the disposition of the Specially Serviced Mortgage Loan
or Mortgaged Property, as to which Directing Holders have provided Instructions,
or the cure of such default, no P&I Advances will be made in respect of amounts
distributable to the Class of the Directing Holders in respect of such Mortgage
Loan.
Material Defaults; Foreclosure. Upon the occurrence of a material default
under a Specially Serviced Mortgage Loan, the Special Servicer may, consistent
with servicing standards, accelerate such Specially Serviced Mortgage Loan and
commence a foreclosure or other acquisition with respect to the related
Mortgaged Property or Properties, provided, that the Special Servicer determines
that such acceleration and foreclosure are more likely to produce a greater
recovery to Certificateholders on a present value basis (discounting at the
related Mortgage Rate) than would a waiver of such default or an extension or
modification in accordance with the provisions described above or under
'--Modifications.' In connection with any foreclosure or other acquisition as to
which the Special Servicer is not required to act under Instructions from the
Directing Holders, the Servicer is required to pay the costs and expenses in any
such proceedings as an Advance unless the Servicer determines, in its good faith
judgment, that such Advance would constitute a Nonrecoverable Advance. The
Servicer will be entitled to reimbursement of Advances (with interest at the
Advance Rate) made as described in the preceding sentence. If the Special
Servicer is acting pursuant to Instructions, the cost and expenses in any such
proceeding will be required to be paid by the Directing Holders or the Special
Servicer, without reimbursement therefor by the Trust Fund.
Standards for Conduct Generally in Effecting Foreclosure or the Sale of
Defaulted Loans. In connection with any foreclosure or other acquisition, the
cost and expenses of any such proceeding shall be paid by the Special Servicer
as a Property Advance.
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If the Special Servicer elects to proceed with a non-judicial foreclosure
in accordance with the laws of the state where the Mortgaged Property is
located, the Special Servicer shall not be required to pursue a deficiency
judgment against the related Mortgagor, if available, or any other liable party
if the laws of the state do not permit such a deficiency judgment after a non-
judicial foreclosure or if the Special Servicer determines, in its best
judgment, that the likely recovery if a deficiency judgment is obtained will not
be sufficient to warrant the cost, time, expense and/or exposure of pursuing the
deficiency judgment and such determination is evidenced by an officers'
certificate delivered to the Trustee.
Notwithstanding any provision to the contrary, the Special Servicer shall
not, on behalf of the Trust Fund, obtain title to a Mortgaged Property as a
result of or in lieu of foreclosure or otherwise, and shall not otherwise
acquire possession of, or take any other action with respect to, any Mortgaged
Property if, as a result of any such action, the Trustee, for the Trust Fund or
the holders of Certificates, would be considered to hold title to, to be a
'mortgagee-in-possession' of, or to be an 'owner' or 'operator' of, such
Mortgaged Property within the meaning of CERCLA or any comparable law, unless
the Special Servicer has previously determined, based on an environmental
assessment report prepared by an independent person who regularly conducts
environmental audits, that: (i) such Mortgaged Property is in compliance with
applicable environmental laws or, if not, after consultation with an
environmental consultant that it would be in the best economic interest of the
Trust Fund to take such actions as are necessary to bring such Mortgaged
Property in compliance therewith and (ii) there are no circumstances present at
such Mortgaged Property relating to the use, management or disposal of any
hazardous materials for which investigation, testing, monitoring, containment,
clean-up or remediation could be required under any currently effective federal,
state or local law or regulation, or that, if any such hazardous materials are
present for which such action could be required, after consultation with an
environmental consultant it would be in the best economic interest of the Trust
Fund to take such actions with respect to the affected Mortgaged Property.
In the event that title to any Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be issued to the Trustee, or to its nominee, on behalf of holders of
Certificates. Notwithstanding any such acquisition of title and cancellation of
the related Mortgage Loan, such Mortgage Loan shall be considered to be an REO
Mortgage Loan held in the Trust Fund until such time as the related REO Property
shall be sold by the Trust Fund and shall be reduced only by collections net of
expenses.
If the Trust Fund acquires a Mortgaged Property by foreclosure or
deed-in-lieu of foreclosure upon a default of a Mortgage Loan, the Pooling and
Servicing Agreement provides that the Trustee (or the Special Servicer, on
behalf of the Trustee), must administer such Mortgaged Property so that it
qualifies at all times as 'foreclosure property' within the meaning of Code
Section 860G(a)(8). The Pooling and Servicing Agreement also requires that any
such Mortgaged Property be managed and operated by an 'independent contractor,'
within the meaning of applicable Treasury regulations, who furnishes or renders
services to the tenants of such Mortgaged Property. Generally, the Lower-Tier
REMIC will not be taxable on income received with respect to a Mortgaged
Property to the extent that it constitutes 'rents from real property,' within
the meaning of Code Section 856(c)(3)(A) and Treasury regulations thereunder.
'Rents from real property' do not include the portion of any rental based on the
net income or gain of any tenant or sub-tenant. No determination has been made
whether rent on any of the Mortgaged Properties meets this requirement. 'Rents
from real property' include charges for services customarily furnished or
rendered in connection with the rental of real property, whether or not the
charges are separately stated. Services furnished to the tenants of a particular
building will be considered as customary if, in the geographic market in which
the building is located, tenants in buildings which are of similar Class are
customarily provided with the service. No determination has been made whether
the services furnished to the tenants of the Mortgaged Properties are
'customary' within the meaning of applicable regulations. It is therefore
possible that a portion of the rental income with respect to a Mortgaged
Property owned by the Trust Fund, presumably allocated based on the value of any
non-qualifying services, would not constitute 'rents from real property.' In
addition to the foregoing, any net income from a trade or business operated or
managed by an independent contractor on a Mortgaged Property owned by the
Lower-Tier REMIC, including but not limited to a hotel or healthcare business,
will not constitute 'rents from real property.' Any of the foregoing types of
income may instead constitute 'net income from foreclosure property,' which
would be taxable to the Lower-Tier REMIC at the highest marginal federal
corporate rate (currently 35%) and may also be subject to state or local taxes.
Any such taxes would be chargeable against the related income for purposes of
determining the Net REO Proceeds available for distribution to holders of
Certificates. Under the Pooling and Servicing Agreement, the Special Servicer is
required to determine whether the earning of such income taxable to the
Lower-Tier REMIC would result in a greater recovery to Certificateholders on a
net after-tax basis than a different method of operation of such property. See
'Federal Income Tax Consequences--Federal Income Tax Consequences for REMIC
Certificates' and '--Taxes That May Be Imposed on the REMIC Pool--Net Income
from Foreclosure Property' in the Prospectus.
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If title to any Mortgaged Property is acquired by the Trust Fund, the
Special Servicer, pursuant to the Pooling and Servicing Agreement and on behalf
of the Trust Fund, will be required to sell the Mortgaged Property prior to the
close of the third calendar year beginning after the year of acquisition, unless
the Trustee receives (i) an opinion of independent counsel to the effect that
the holding of the property by the Trust Fund subsequent to the close of such
period will not result in the imposition of a tax on the Lower-Tier REMIC or the
Upper-Tier REMIC or cause the Trust Fund to fail to qualify as two separate
REMICs under the Code at any time that any Certificate is outstanding or (ii) an
extension from the Internal Revenue Service.
The limitations imposed by the Pooling and Servicing Agreement and the
REMIC provisions of the Code on the operations and ownership of any Mortgaged
Property acquired on behalf of the Trust Fund may result in the recovery of an
amount less than the amount that would otherwise be recovered. See 'Certain
Legal Aspects of Mortgage Loans--Foreclosure' in the Prospectus.
The Special Servicer may offer to sell to any person any Specially Serviced
Mortgage Loan (other than the Credit Lease Loans after the related Other Notes
have been deposited into another securitization of the Depositor) or an
affiliate of the Depositor or any REO Property, or may offer to purchase any
Specially Serviced Mortgage Loan or any REO Property (in each case at the
repurchase price set forth in the Pooling and Servicing Agreement, which
includes unpaid principal and interest thereon), if and when the Special
Servicer determines, consistent with the Servicing Standard set forth in the
Pooling and Servicing Agreement, that no satisfactory arrangements can be made
for collection of delinquent payments thereon and such a sale would be in the
best economic interests of the Trust Fund, but shall, in any event, so offer to
sell any REO Property no later than the time determined by the Special Servicer
to be sufficient to result in the sale of such REO Property within the period
specified in the Pooling and Servicing Agreement, including extensions thereof.
The Special Servicer shall give the Trustee not less than ten days' prior
written notice of its intention to sell any Specially Serviced Mortgage Loan or
REO Property, in which case the Special Servicer shall accept the highest offer
received from any person for any Specially Serviced Mortgage Loan or any REO
Property in an amount at least equal to the Repurchase Price or, at its option,
if it has received no offer at least equal to the Repurchase Price therefor,
purchase the Specially Serviced Mortgage Loan or REO Property at such Repurchase
Price.
In the absence of any such offer (or purchase by the Special Servicer), the
Special Servicer shall accept the highest offer received from any person that is
determined by the Special Servicer to be a fair price for such Specially
Serviced Mortgage Loan or REO Property, if the highest offeror is a person not
affiliated with the Special Servicer, the Servicer or the Depositor or is
determined to be a fair price by the Trustee (after consultation with an
independent appraiser if the highest offeror is an interested party).
Notwithstanding anything to the contrary herein, neither the Trustee, in its
individual capacity, nor any of its affiliates may make an offer for or purchase
any Specially Serviced Mortgage Loan or any REO Property.
The Special Servicer shall not be obligated by either of the foregoing
paragraphs or otherwise to accept the highest offer if the Special Servicer
determines, in accordance with the Servicing Standard, that rejection of such
offer would be in the best interests of the holders of Certificates. In
addition, the Special Servicer may accept a lower offer if it determines, in
accordance with the Servicing Standard, that acceptance of such offer would be
in the best interests of the holders of Certificates (for example, if the
prospective buyer making the lower offer is more likely to perform its
obligations, or the terms offered by the prospective buyer making the lower
offer are more favorable), provided that the offeror is not a person affiliated
with the Special Servicer. The Special Servicer is required to use its best
efforts to sell all Specially Serviced Mortgage Loans and REO Property prior to
the Rated Final Distribution Date.
MODIFICATIONS
The Special Servicer may, consistent with the Servicing Standard, agree to
any modification, waiver or amendment of any term of, forgive or defer interest
on and principal of, and/or add collateral for, any Mortgage Loan with the
consent of Certificateholders representing 100% of the Percentage Interests of
the most subordinate Class of Sequential Certificates then outstanding
determined as provided below, subject, however, to each of the following
limitations, conditions and restrictions: (i) a material default on such
Mortgage Loan has occurred or, in the Special Servicer's reasonable and good
faith judgment, a default in respect of payment on such Mortgage Loan is
reasonably foreseeable, and such modification, waiver, amendment or other action
is reasonably likely to produce a greater recovery to Certificateholders on a
present value basis (the relevant discounting of anticipated collections that
will be distributable to Certificateholders will be done at the related Mortgage
Rate), than would liquidation; (ii) no reduction of any scheduled monthly
payment of principal and/or interest on any Specially Serviced Mortgage Loan may
result in a debt service coverage ratio for such Mortgage Loan of greater than
1.10 to 1, and the Special Servicer may only agree to reductions lasting a
period of no more than twelve months and, in the aggregate, no more than three
consecutive reductions of twelve months or less each; (iii) the Special Servicer
may not release or substitute collateral or release mortgagors or guarantors
except in accordance with the provisions of the related Loan Documents; (iv) the
Special Servicer may not forgive an
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aggregate amount of principal of the Mortgage Loans in excess of the Certificate
Balance of the most subordinate Class of Sequential Certificates then
outstanding minus the aggregate of the greater of (A) any Appraisal Reduction
Amounts and (B) Delinquency Reduction Amounts of each Mortgage Loan that, in
each case, have not resulted in a Realized Loss; (v) the Special Servicer will
not permit any borrower to add any collateral unless the Special Servicer has
first determined in accordance with the Servicing Standard, based upon an
environmental assessment prepared by an independent person who regularly
conducts environmental assessments, at the expense of the borrower, that such
additional collateral is in compliance with applicable environmental laws and
regulations and that there are no circumstances or conditions present with
respect to such new collateral relating to the use, management or disposal of
any hazardous materials for which investigation, testing, monitoring,
containment, clean-up or remediation would be required under any then applicable
environmental laws and/or regulations; and (vi) the Special Servicer may
generally waive or reduce a Lock-out Period or any Prepayment Premiums only if
the commencement of a foreclosure proceeding with respect to the related
Mortgage Loan is imminent and the Special Servicer first receives written
notification from the Servicer that such action in the opinion of the Servicer,
consistent with the Servicing Standard and based solely upon information
furnished by the Special Servicer without independent investigation of the
Servicer thereof, is likely to produce a greater recovery, on a present value
basis, than would a foreclosure. For purposes of obtaining the consent of the
most subordinate Class of Sequential Certificates outstanding to any
modification described above, (A) the Class A-1A, Class A-1B, Class A-1C and
Class PS-1 Certificates collectively and (B) the Class B-7 and Class B-7H
Certificates together, will, in each case, be treated as one class. For purposes
of determining the amount of principal which the Special Servicer may forgive
pursuant to clause (v) above, the most subordinate Class will include the next
subordinate Class (determined as provided in the preceding sentence) provided
that Certificateholders evidencing 100% of the Percentage Interests of such
Class consent to such forgiveness. Notwithstanding the foregoing, the Special
Servicer will not be required to oppose the confirmation of a plan in any
bankruptcy or similar proceeding involving a borrower if in its reasonable and
good faith judgment such opposition would not ultimately prevent the
confirmation of such plan or one substantially similar.
Any payment of interest, which is deferred as described herein will not,
for purposes, including, without limitation, calculating monthly distributions
to Certificateholders, be added to the unpaid principal balance of the related
Mortgage Loan, notwithstanding that the terms of such Mortgage Loan so permit or
that such interest may actually be capitalized.
Following the execution of any modification, waiver or amendment agreed to
by the Special Servicer pursuant to clause (i) above, the Special Servicer must
deliver to the Trustee an officer's certificate setting forth in reasonable
detail the basis of the determination made by it pursuant to clause (i) above.
The Special Servicer or the Servicer may modify any term of a Mortgage Loan
if such modification (i) would not be 'significant' as such term is defined in
Code Section 1001 and Treasury Regulation Sections 1.860G-2(b)(3) and (ii) would
be in accordance with the servicing standard set forth in the Pooling and
Servicing Agreement or (b) as otherwise provided in the Pooling and Servicing
Agreement and except as otherwise provided above and under '--Realization Upon
Mortgage Loans.' The Pooling and Servicing Agreement will require the Servicer
or Special Servicer, as applicable, to provide copies of any modifications or
extensions to each Rating Agency.
In the event that the Special Servicer is unable to obtain consent from
100% of the Percentage Interests of the most subordinate Class of Certificates,
the Special Servicer will continue to retain the options described under
'Realization Upon Mortgage Loans,' including foreclosure or extension.
OPTIONAL TERMINATION
The Depositor and if the Depositor does not exercise the option, the
Servicer and, if neither the Depositor nor the Servicer exercises its option,
the holders of the Class LR Certificates representing greater than a 50%
Percentage Interest of the Class LR Certificates, and if such holders of the
Class LR Certificates fail to exercise such option, the Special Servicer will
have the option to purchase, at the purchase price specified herein, all of the
Mortgage Loans and all REO Property remaining in the Trust Fund, and thereby
effect termination of the Trust Fund and early retirement of the then
outstanding Certificates, on any Distribution Date on which the aggregate Stated
Principal Balance of the Mortgage Loans remaining in the Trust Fund is less than
1% of the Initial Pool Balance. The purchase price payable upon the exercise of
such option on such a Distribution Date will be an amount equal to the greater
of (i) the sum of (A) 100% of the outstanding principal balance of each Mortgage
Loan included in the Trust Fund as of the last day of the month preceding such
Distribution Date (less any P&I Advances previously made on account of
principal); (B) the fair market value of all other property included in the
Trust Fund as of the last day of the month preceding such Distribution Date, as
determined by an independent appraiser as of a date not more than 30 days prior
to the last day of the month preceding such Distribution Date; (C) all unpaid
interest accrued on such principal balance of each such Mortgage Loan (including
any
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Mortgage Loans as to which title to the related Mortgaged Property has been
acquired) at the Mortgage Rate (plus the Excess Rate, to the extent applicable)
to the last day of the month preceding such Distribution Date (less any P&I
Advances previously made on account of principal), and (D) unreimbursed Advances
(with interest thereon) and unpaid Trust Fund expenses and (ii) the aggregate
fair market value of the Mortgage Loans and all REO Property in the Trust Fund,
on the last day of the month preceding such Distribution Date, as determined by
an independent appraiser acceptable to the Servicer, together with one month's
interest thereon at the Mortgage Rate. The holders of 100% of the Percentage
Interest in the Class LR Certificates may purchase any Mortgage Loan on its
Anticipated Repayment Date at a price equal to the sum of the following: (i)
100% of the outstanding principal balance of such Mortgage Loan on such
Anticipated Repayment Date (less any P&I Advances previously made on account of
principal); (ii) all unpaid interest accrued on such principal balance of such
Mortgage Loan at the Mortgage Rate thereof, to the last day of the Interest
Accrual Period preceding such Anticipated Repayment Date (less any P&I Advances
previously made on account of interest); (iii) the aggregate amount of all
unreimbursed Advances with respect to such Mortgage Loan, with interest thereon
at the Advance Rate, and all unpaid Special Servicing Fees, Servicing Fees and
any other compensation due to the Servicer or Special Servicer, Trustee Fees and
Trust Fund expenses; and (iv) the amount of any liquidation expenses incurred by
the Trust Fund in connection with such purchase. Notwithstanding the foregoing,
such Mortgage Loan may not be purchased if the fair market value of the Mortgage
Loan is greater than 100% of the outstanding principal balance of such Mortgage
Loan.
The Holder of 100% of the most subordinate Class of Sequential Certificates
(provided that the Class B-7H Certificates shall not be considered a Class for
such purposes) may purchase any Mortgage Loan on or after its Anticipated
Repayment Date under the same terms and conditions hereunder as in the case of a
purchase by the Holder of the Class LR Certificates if the Holder of the Class
LR Certificates either (i) notifies the Holder of the most subordinate Class of
Sequential Certificates that it will not purchase such Mortgage Loan or (ii)
does not, in fact, purchase such Mortgage Loan on its Anticipated Repayment
Date. See 'Description of the Certificates-Termination' in the Prospectus.
THE TRUSTEE
LaSalle National Bank, a nationally chartered bank with its principal
offices in Chicago, Illinois, will act as Trustee pursuant to the Pooling and
Servicing Agreement. The Trustee's corporate trust office is located at 135
South LaSalle Street, Suite 1625, Chicago, Illinois 60674-4107, Attention: Asset
Backed Securities Trust Services, CCA-D7.
The Trustee may resign at any time by giving written notice to the
Depositor, the Servicer, Special Servicer and the Rating Agencies, provided that
no such resignation shall be effective until a successor has been appointed.
Upon such notice, the Servicer will appoint a successor trustee. If no successor
trustee is appointed within one month after the giving of such notice of
resignation, the resigning Trustee may petition the court for appointment of a
successor trustee.
The Servicer or the Depositor may remove the Trustee and the Fiscal Agent
if, among other things, the Trustee ceases to be eligible to continue as such
under the Pooling and Servicing Agreement or if at any time the Trustee becomes
incapable of acting, or is adjudged bankrupt or insolvent, or a receiver of the
Trustee or its property is appointed or any public officer takes charge or
control of the Trustee or of its property. The holders of Certificates
evidencing aggregate Voting Rights of at least 50% of all Certificateholders may
remove the Trustee and the Fiscal Agent upon written notice to the Depositor,
the Servicer, the Trustee and the Fiscal Agent. Any resignation or removal of
the Trustee and the Fiscal Agent and appointment of a successor trustee and, if
such trustee is not rated at least 'AA' by each Rating Agency, fiscal agent,
will not become effective until acceptance of the appointment by the successor
trustee and, if necessary, fiscal agent. Notwithstanding the foregoing, upon any
termination of the Trustee and Fiscal Agent under the Pooling and Servicing
Agreement, the Trustee and Fiscal Agent will continue to be entitled to receive
all accrued and unpaid compensation through the date of termination plus all
Advances and interest thereon as provided in the Pooling and Servicing
Agreement. Any successor trustee must have a combined capital and surplus of at
least $50,000,000 and such appointment must not result in the downgrade,
qualification or withdrawal of the then current ratings assigned to the
Certificates, as evidenced in writing by the Rating Agencies.
Pursuant to the Pooling and Servicing Agreement, the Trustee will be
entitled to withdraw from the Distribution Account a monthly fee (the 'Trustee
Fee'), which constitutes a portion of the Servicing Fee.
The Trust Fund will indemnify the Trustee and the Fiscal Agent against any
and all losses, liabilities, damages, claims or unanticipated expenses
(including reasonable attorneys' fees) arising in respect of the Pooling and
Servicing Agreement or the Certificates other than those resulting from the
negligence, bad faith or willful misconduct of the Trustee or the Fiscal Agent,
as applicable. Neither the Trustee nor the Fiscal Agent will be required to
expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties under the Pooling and Servicing Agreement, or
in the exercise of any of its rights or
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powers, if in the Trustee's or the Fiscal Agent's opinion, as applicable, the
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it. Each of the Servicer, the Special Servicer, the
Depositor, and the Trustee and certain related parties (each, a
'Cross-Indemnifying Party') will indemnify the Servicer, the Special Servicer,
the Trustee and the Fiscal Agent and certain related parties (each, a
'Cross-Indemnified Party') for losses incurred related to the willful
misconduct, bad faith, fraud and/or negligence in the performance of such
Indemnifying Party's respective duties under the Pooling and Servicing Agreement
or by reason of reckless disregard of its obligations and duties under the
Pooling and Servicing Agreement.
At any time, for the purpose of meeting any legal requirements of any
jurisdiction in which any part of the Trust Fund or property securing the same
is located, the Depositor and the Trustee acting jointly will have the power to
appoint one or more persons or entities approved by the Trustee to act (at the
expense of the Trustee) as co-trustee or co-trustees, jointly with the Trustee,
or separate trustee or separate trustees, of all or any part of the Trust Fund,
and to vest in such co-trustee or separate trustee such powers, duties,
obligations, rights and trusts as the Depositor and the Trustee may consider
necessary or desirable. Except as required by applicable law, the appointment of
a co-trustee or separate trustee will not relieve the Trustee of its
responsibilities, obligations and liabilities under the Pooling and Servicing
Agreement.
DUTIES OF THE TRUSTEE
The Trustee (except for the information under the first paragraph of '--The
Trustee') and Servicer (except for the information under '--The Servicer') will
make no representation as to the validity or sufficiency of the Pooling and
Servicing Agreement, the Certificates or the Mortgage Loans, this Prospectus
Supplement or related documents. The Trustee will not be accountable for the use
or application by the Depositor, the Servicer or the Special Servicer of any
Certificates issued to it or of the proceeds of such Certificates, or for the
use of or application of any funds paid to the Depositor, the Servicer or the
Special Servicer in respect of the assignment of the Mortgage Loans to the Trust
Fund, or any funds deposited in or withdrawn from the Lock Box Accounts, Cash
Collateral Accounts, Reserve Accounts, Collection Account, Excess Interest
Distribution Account, Interest Reserve Account and Default Interest Distribution
Account or any other account maintained by or on behalf of the Servicer or
Special Servicer, nor will the Trustee be required to perform, or be responsible
for the manner of performance of, any of the obligations of the Servicer or
Special Servicer under the Pooling and Servicing Agreement.
In the event that the Servicer fails to make a required Advance, the
Trustee will make such Advance, provided that the Trustee shall not be obligated
to make any Advance it deems to be nonrecoverable. The Trustee shall be entitled
to rely conclusively on any determination by the Servicer or the Special
Servicer that an Advance, if made, would not be recoverable. The Trustee will be
entitled to reimbursement for each Advance, with interest, made by it in the
same manner and to same extent as the Servicer or the Special Servicer.
If no Event of Default has occurred, and after the curing of all Events of
Default which may have occurred, the Trustee is required to perform only those
duties specifically required under the Pooling and Servicing Agreement. Upon
receipt of the various certificates, reports or other instruments required to be
furnished to it, the Trustee is required to examine such documents and to
determine whether they conform on their face to the requirements of the Pooling
and Servicing Agreement.
THE FISCAL AGENT
ABN AMRO Bank N.V., a banking corporation organized under the laws of The
Netherlands, will act as Fiscal Agent pursuant to the Pooling and Servicing
Agreement. The Fiscal Agent's office is located at 135 South LaSalle Street,
Chicago, Illinois 60603. The Fiscal Agent will be deemed to have been removed in
the event of the resignation or removal of the Trustee.
DUTIES OF THE FISCAL AGENT
The Fiscal Agent will make no representation as to the validity or
sufficiency of the Pooling and Servicing Agreement, the Certificates, the
Mortgage Loan, this Prospectus Supplement (except for the information above, see
'--The Fiscal Agent') or related documents. The duties and obligations of the
Fiscal Agent consist only of making Advances as described below and in
'--Advances' above; the Fiscal Agent shall not be liable except for the
performance of such duties and obligations.
In the event that the Servicer and the Trustee fail to make a required
Advance, the Fiscal Agent will make such Advance, provided that the Fiscal Agent
will not be obligated to make any Advance that it deems to be nonrecoverable.
The Fiscal Agent shall be entitled to rely conclusively on any determination by
the Servicer or the Trustee, as applicable, that an Advance, if made,
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would not be recoverable. The Fiscal Agent will be entitled to reimbursement for
each Advance made by it in the same manner and to the same extent as the Trustee
and the Servicer.
THE LUXEMBOURG PAYING AGENT
So long as the Class A-1A, Class A-1B, Class A-1C or Class A-2 Certificates
are listed on the Luxembourg Stock Exchange Banque Generale du Luxembourg (the
'Luxembourg Paying Agent') will act as the Luxembourg Paying Agent. The
Depositor will at all times maintain a Luxembourg Paying Agent with a specific
office in Luxembourg at 50 Avenue J.F. Kennedy L-2951, Luxembourg. The
Luxembourg Paying Agent will make no representation as to the validity or
sufficiency of the Class A-1A, Class A-1B, Class A-1C or Class A-2 Certificates,
the Mortgage Loans, this Prospectus Supplement or other related documents.
THE SERVICER
The Capital Company of America Client Services LLC (the 'CCA Servicer'), a
Delaware limited liability company, will be the Servicer and in such capacity
will be responsible for servicing the Mortgage Loans (other than the Specially
Serviced Mortgage Loans, REO Properties and Equity Loans, and except as
described in this Prospectus Supplement, with respect to certain Mortgage Loans
in which an affiliate of the Servicer maintains a preferred equity position in
the related borrower or in which an affiliate of the Servicer holds mezzanine
debt of the borrower or its parent). The CCA Servicer is a wholly owned
subsidiary of The Capital Company of America LLC. The principal offices of the
CCA Servicer are located at 600 E. Las Colinas Blvd., Suite 1300, Irving, Texas
75039.
As of August 25, 1998, the CCA Servicer serviced approximately 900
commercial and multifamily loans with an aggregate principal balance of
approximately $9.1 billion, including 316 loans representing approximately $4.2
billion that are currently included in securitized transactions. The portfolio
is significantly diversified both geographically and by product type. The CCA
Servicer will provide servicing for the Mortgage Loans as well as for mortgage
loans included in other public and private securitized transactions under
primary, sub-servicing and master servicing contracts.
The information concerning the CCA Servicer set forth herein has been
provided by the CCA Servicer, and none of the Mortgage Loan Sellers, the Special
Servicer, the Depositor, the Trustee, the Fiscal Agent or the Underwriters makes
any representation or warranty as to the accuracy thereof.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
Pursuant to the Pooling and Servicing Agreement, the Servicer will be
entitled to withdraw monthly from the Collection Account its portion of the
Servicing Fee. The monthly servicing fee with respect to any Mortgage Loan (the
'Servicing Fee') for any Distribution Date is an amount per Interest Accrual
Period equal to the product of (i) a per annum rate of 0.0533% (the 'Servicing
Fee Rate') and (ii) the Stated Principal Balance of such Mortgage Loan as of the
Due Date and includes the compensation payable to the Servicer and the Trustee
Fee. The Servicer's portion of the Servicing Fee relating to each Mortgage Loan
will be retained by the Servicer from payments and collections (including
insurance proceeds, condemnation proceeds and liquidation proceeds) in respect
of such Mortgage Loan. The Servicer will also be entitled to retain as
additional servicing compensation (together with the Servicer's portion of the
Servicing Fee, 'Servicing Compensation') (i) all investment income earned on
amounts on deposit in the Collection Account and certain Reserve Accounts (to
the extent consistent with the related Mortgage Loan) and (ii) to the extent
permitted by applicable law and the related Mortgage Loans which are not
Specially Serviced Mortgage Loans, any late payment charges, any loan
modification fees, extension fees or assumption fees (payable in connection with
a modification for which review by the Servicer is required), loan service
transaction fees, beneficiary statement changes, or similar items (but not
including Prepayment Premiums).
If the Servicer accepts a voluntary prepayment on a Mortgage Loan after the
related Lock-out Period with respect to such loan which results in a Prepayment
Interest Shortfall, the Servicer will be obligated to reduce its Servicing
Compensation as provided above under 'Description of the Offered
Certificates--Distributions--Prepayment Interest Shortfalls.'
Except as otherwise provided in the Pooling and Servicing Agreement or
reimbursed pursuant to an express provision of a loan agreement, the Servicer
will pay all expenses incurred in connection with its responsibilities under the
Pooling and Servicing Agreement (subject to reimbursement as described herein),
including all fees of any subservicers retained by it. The Trustee will withdraw
monthly from the Distribution Account the portion of the Servicing Fee
representing the Trustee Fee.
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SPECIAL SERVICING
CRIIMI MAE Services Limited Partnership ('CRIIMI MAE') will initially be
appointed as special servicer (the 'Special Servicer') to, among other things,
oversee the resolution of non-performing Mortgage Loans (other than the Credit
Lease Loans after the related Other Notes are deposited into a securitization of
the Depositor or an affiliate of the Depositor) and act as disposition manager
of REO Properties. For so long as an affiliate of the Servicer maintains a
preferred equity position in the borrower with respect to any Mortgage Loans,
CRIIMI MAE will act as operating advisor to the CCA Servicer, pursuant to the
terms of the Operating Advisor Agreement. See '--The Operating Advisor
Agreement' below. For so long as an affiliate of the Servicer holds an equity
position in the Equity Loans, CRIIMI MAE will be the Servicer with respect to
such Mortgage Loans. The principal offices of the Special Servicer are located
at 11200 Rockville Pike, Rockville, Maryland 20852. As of June 30, 1998, the
Special Servicer was responsible for the servicing of approximately 3,600
commercial and multifamily loans with an aggregate principal balance of
approximately $16.5 billion. The foregoing information concerning the Special
Servicer has been provided by it. Accordingly, neither the Depositor nor the
Underwriters make any representation or warranty as to the accuracy or
completeness of such information. The Pooling and Servicing Agreement will
provide that the Special Servicer will comply with the REMIC Provisions.
The Pooling and Servicing Agreement will provide that more than one Special
Servicer may be appointed, but only one Special Servicer may specially service
any Mortgage Loan.
The Pooling and Servicing Agreement provides that holders of Certificates
evidencing greater than 50% of the Percentage Interests of the most subordinate
Class of Sequential Certificates then outstanding (provided, however, that for
purposes of determining the most subordinate Class, the Class A-1A, Class A-1B,
Class A-1C and Class PS-1 Certificates collectively, and the Class B-7 and Class
B-7H Certificates together, will, in each case, be treated as one Class) may
replace the Special Servicer, provided that each Rating Agency confirms to the
Trustee in writing that such replacement, in and of itself, will not cause a
qualification, withdrawal or downgrading of the then current ratings assigned to
any Class of Certificates.
The duties of the Special Servicer relate to Specially Serviced Mortgage
Loans and to any REO Property. The Pooling and Servicing Agreement will define a
'Specially Serviced Mortgage Loan' to include any Mortgage Loan other than the
Credit Lease Loans after the related Other Notes have been deposited into a
securitization of the Depositor or an affiliate of the Depositor with respect to
which: (i) the related borrower has not made two consecutive Monthly Payments
(and has not cured at least one such delinquency by the next due date under the
related Mortgage Loan) or (ii) the Servicer, the Trustee and/or the Fiscal Agent
has made four consecutive P&I Advances (regardless of whether such P&I Advances
have been reimbursed); (iii) the borrower has expressed to the Servicer an
inability to pay or a hardship in paying the Mortgage Loan in accordance with
its terms; (iv) the Servicer has received notice that the borrower has become
the subject of any bankruptcy, insolvency or similar proceeding, admitted in
writing the inability to pay its debts as they come due or made an assignment
for the benefit of creditors; (v) the Servicer has received notice of a
foreclosure or threatened foreclosure of any lien on the Mortgaged Property
securing the Mortgage Loan; (vi) a default of which the Servicer has notice
(other than a failure by the borrower to pay principal or interest) and which
materially and adversely affects the interests of the Certificateholders has
occurred and remained unremedied for the applicable grace period specified in
the Mortgage Loan (or, if no grace period is specified, 60 days); provided, that
a default requiring a Property Advance will be deemed to materially and
adversely affect the interests of Certificateholders; or (vii) the Special
Servicer proposes to commence foreclosure or other workout arrangements;
provided, however, that a Mortgage Loan will cease to be a Specially Serviced
Mortgage Loan (i) with respect to the circumstances described in clauses (i) and
(ii) above, when the borrower thereunder has brought the Mortgage Loan current
(or, with respect to the circumstances described in clause (viii), pursuant to a
work-out implemented by the Special Servicer) and thereafter made three
consecutive full and timely monthly payments, including pursuant to any workout
of the Mortgage Loan, (ii) with respect to the circumstances described in clause
(iii), (iv), (v) and (vii) above, when such circumstances cease to exist in the
good faith judgment of the Servicer, or (iii) with respect to the circumstances
described in clause (vi) above, when such default is cured; provided, in either
case, that at that time no circumstance exists (as described above) that would
cause the Mortgage Loan to continue to be characterized as a Specially Serviced
Mortgage Loan.
Pursuant to the Pooling and Servicing Agreement, except with respect to the
Credit Lease Loan after the related Other Notes have been deposited into another
securitization of the Depositor or an affiliate of the Depositor, the Special
Servicer will be entitled to certain fees including a special servicing fee,
payable with respect to each Interest Accrual Period, equal to 1/12 of .50% of
the Stated Principal Balance of each related Specially Serviced Mortgage Loan
(the 'Special Servicing Fee'). In addition, the Special Servicer will be
entitled to receive (i) any (or if the Servicer's consent is required, 50% of)
assumption fees and certain loan modification fees related to the Specially
Serviced Mortgage Loans, (ii) any income earned on deposits in the REO Accounts
and
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(iii) a fee equal to the product of (a) a per annum rate of 0.005% (the
'Additional Servicing Fee Rate') and (b) the aggregate Stated Principal Balance
of the Mortgage Loans. Notwithstanding the foregoing, in the event that the
Special Servicer is, or is an affiliate of, the holder of Certificates
representing greater than 50% of the Percentage Interests of the most
subordinate Class of Sequential Certificates then outstanding (determined as
provided below), the Special Servicer will be entitled to receive a Special
Servicing Fee for each Interest Accrual Period equal to 1/12 of .25% of the
Stated Principal Balance of each Specially Serviced Mortgage Loan.
For purposes of determining whether the Special Servicer is entitled to
full compensation, with respect to any Mortgage Loan, the Class A-1A, Class
A-1B, Class A-1C and Class PS-1 Certificates collectively, and the Class B-7 and
Class B-7H Certificates together, will in each case, be treated as one class.
THE OPERATING ADVISOR AGREEMENT
The Pooling and Servicing Agreement provides that, where an affiliate of
the Servicer holds preferred equity of the borrower (or an affiliate of the
borrower) under any Mortgage Loan, the decisions with respect to the
administration of such Mortgage Loan shall be made by an operating advisor
acceptable to the Rating Agencies. The CCA Servicer and CRIIMI MAE, as operating
advisor (the 'Operating Advisor') have entered into an operating advisor
agreement to be dated as of the Closing Date (the 'Operating Advisor Agreement')
under which the Operating Advisor will undertake certain responsibilities of the
Servicer with respect lease reviews and approvals, calculation of and releases
from reserves, modifications, waivers and amendments of the terms of leases,
releases of collateral and transfers to special servicing. Pursuant to the terms
of the Operating Advisor Agreement, upon the payment of all amounts due in
respect of any preferred equity investment owned by an affiliate of the Servicer
or the transfer of such preferred equity investment to a party not affiliated
with the Servicer, the Operating Advisor Agreement will terminate with respect
to the related Mortgage Loan. For a list of the applicable Mortgage Loans, see
'Risk Factors and Other Special Considerations--Risks Related to the Mortgage
Loans--Certain Additional Risks Relating to Preferred Equity Investments' in
this Prospectus Supplement.
SERVICER AND SPECIAL SERVICER PERMITTED TO BUY CERTIFICATES
The Servicer and Special Servicer will be permitted to purchase any Class
of Certificates. Such a purchase by the Servicer or Special Servicer could cause
a conflict relating to the Servicer's or Special Servicer's duties pursuant to
the Pooling and Servicing Agreement and the Servicer's or Special Servicer's
interest as a holder of Certificates, especially to the extent that certain
actions or events have a disproportionate effect on one or more Classes of
Certificates. The Pooling and Servicing Agreement provides that the Servicer or
Special Servicer shall administer the Mortgage Loans in accordance with the
servicing standard set forth therein without regard to ownership of any
Certificate by the Servicer or Special Servicer or any affiliate thereof.
REPORTS TO CERTIFICATEHOLDERS; AVAILABLE INFORMATION
Trustee Reports
Based on information provided in monthly reports prepared by the Servicer
and the Special Servicer and delivered to the Trustee, the Trustee will prepare
and forward on each Distribution Date to each Certificateholder, the Depositor,
the Servicer, the Special Servicer, each Underwriter, each Rating Agency, the
Luxembourg Paying Agent and the Luxembourg Stock Exchange (for so long as the
Class A-1A, Class A-1B, Class A-1C or Class A-2 Certificates are listed on the
Luxembourg Stock Exchange) and, if requested, any potential investors in the
Certificates:
1. A statement (a 'Distribution Date Statement') setting forth, among
other things: (i) the amount of distributions, if any, made on such
Distribution Date to the Holders of each Class of Certificates applied
to reduce the respective Certificate Balances thereof; (ii) the amount
of distributions, if any, made on such Distribution Date to Holders of
each Class of Certificates allocable to (A) the Interest Accrual Amount
less any Prepayment Interest Shortfalls (not absorbed by the Servicer)
and/or (B) Prepayment Premiums and/or Reduction Interest Distribution
Amounts; (iii) the number of outstanding Mortgage Loans, the aggregate
unpaid principal balance of the Mortgage Loans at the close of business
on the related Due Date; (iv) the number and aggregate unpaid principal
balance of Mortgage Loans (A) delinquent one Collection Period, (B)
delinquent two Collection Periods, (C) delinquent three or more
Collection Periods, (D) that are Specially Serviced Mortgage Loans that
are not delinquent, or (E) as to which foreclosure proceedings have
been commenced; (v) with respect to any Mortgage Loan as to which the
related Mortgaged Property became a REO Property during the preceding
calendar month, the Stated Principal Balance and unpaid principal
balance of such Mortgage Loan as
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of the date such Mortgaged Property became an REO Property; (vi) as to
any Mortgage Loan repurchased by the Mortgage Loan Seller or otherwise
liquidated or disposed of during the related Collection Period, the
loan number thereof and the amount of proceeds of any repurchase of a
Mortgage Loan, Liquidation Proceeds and/or other amounts, if any,
received thereon during the related Collection Period and the portion
thereof included in the Available Funds for such Distribution Date;
(vii) with respect to any REO Property included in the Trust Fund as of
the close of business on the related Due Date, the loan number of the
related Mortgage Loan, the value of such REO Property based on the most
recent appraisal or valuation and the amount of any other income
collected with respect to any REO Property net of related expenses and
other amounts, if any, received on such REO Property during the related
Collection Period and the portion thereof included in the Available
Funds for such Distribution Date; (viii) with respect to any REO
Property sold or otherwise disposed of during the related Collection
Period, (A) the loan number of the related Mortgage Loan and the amount
of sale proceeds and other amounts, if any, received in respect of such
REO Property during the related Collection Period and the portion
thereof included in the available Funds for such Distribution Date and
(B) the date of the related determination by the Special Servicer that
it has recovered all payments which it expects to be finally
recoverable (the 'Final Recovery Determination'); (ix) the aggregate
Certificate Balance of each Class of Certificates before and after
giving effect to the distributions made on such Distribution Date ,
separately identifying any reduction in the aggregate Certificate
Balance of each such Class due to Realized Losses and/or Trust Fund
expenses; (x) the aggregate amount of Principal Prepayments made during
the related Collection Period and the aggregate amount of any
Prepayment Interest Shortfalls (not absorbed by the Servicer) for such
Distribution Date; (xi) the Pass-Through Rate and the Reduction
Interest Pass-Through Rate, if any, applicable to each Class of
Certificates for such Distribution Date; (xii) the aggregate amount of
the Servicing Fee, Special Servicing Fee and any other special
servicing compensation retained by or paid to the Servicer and the
Special Servicer during the related Collection Period; (xiii) the
amount of Realized Losses, Trust Fund expenses, Interest Shortfalls and
Reduction Interest Shortfalls, if any, incurred with respect to the
Mortgage Loans during the related Collection Period and in the
aggregate for all prior Collection Periods (except to the extent
reimbursed or paid); (xiv) the aggregate amount of Property Advances
and P&I Advances outstanding which have been made by the Servicer, the
Special Servicer, the Trustee and the Fiscal Agent; (xv) the amount of
any Appraisal Reduction Amounts allocated during the related Collection
Period on a loan-by-loan basis and the total Appraisal Reduction
Amounts as of such Distribution Date on a loan-by-loan basis. In the
case of information furnished pursuant to subclauses (i), (ii) and (ix)
above, the amounts shall be expressed as a dollar amount in the
aggregate for all Certificates of each applicable Class and per single
Certificate of a specified minimum denomination.
2. A report containing information regarding the Mortgage Loans as of the
end of the related Collection Period, which report shall contain
substantially the categories of information regarding the Mortgage Loans
set forth in this Prospectus Supplement in the tables under the caption
'Description of the Mortgage Pool--Certain Terms and Conditions of the
Mortgage Loans' (calculated, where applicable, on the basis of the most
recent relevant information provided by the borrowers to the Servicer or
the Special Servicer and by the Servicer or the Special Servicer, as the
case may be, to the Trustee) and such information shall be presented in
a tabular format substantially similar to the format utilized in this
Prospectus Supplement under such caption and a loan-by-loan listing (in
descending balance order) showing loan name, property type, location,
unpaid principal balance, Mortgage Rate, paid through date, maturity
date, net interest portion of the Monthly Payment, principal portion of
the Monthly Payment and any Prepayment Premiums received. Such loan-by-
loan listing will be made available electronically; provided, however,
the Trustee or the Luxembourg Paying Agent will provide any
Certificateholder with a written copy of such report upon request.
Certain information made available in the Distribution Date Statements
referred to in item (1) above may be obtained by calling LaSalle National
Bank's ASAP System at (312) 904-2200 and requesting statement number 356
and certain information regarding the Mortgage Loans may be made available
via the Trustee's website at www.lnbabs.com or the Trustee's bulletin board
service at (714) 282-3990 or information may be made available by such
other mechanism as the Trustee or the Luxembourg Paying Agent may have in
place from time-to-time.
Servicer Reports
The Servicer is required to deliver to the Trustee prior to each
Distribution Date, and the Trustee is to deliver to each Certificateholder, the
Depositor, each Underwriter, each Rating Agency, the Luxembourg Stock Exchange
(for so long as the Class A-1A, Class A-1B, Class A-1C or Class A-2 Certificates
are listed on the Luxembourg Stock Exchange) and, if requested, any potential
investor in the Certificates, on each Distribution Date, the following six
reports:
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(a) A 'Comparative Financial Status Report' setting forth, to the extent
such information is provided by the related borrowers, among other things, the
occupancy, revenue, net operating income and DSCR for the Mortgage Loans as of
the current Due Date for each of the following three periods; (i) the most
current available year-to-date, (ii) the previous two full fiscal years, and
(iii) the 'base year' (representing the original underwriting information used
as of the Cut-off Date).
(b) A 'Delinquent Loan Status Report' setting forth, among other things,
those Mortgage Loans which, as of the close of business on the Due Date
immediately preceding the preparation of such report, were delinquent one
Collection Period, delinquent two Collection Periods, delinquent three or more
Collection Periods, current but specially serviced, or in foreclosure but not
REO Property.
(c) An 'Historical Loan Modification Report' setting forth, among other
things, those Mortgage Loans which, as of the close of business on the Due Date
immediately preceding the preparation of such report, 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.
(d) An 'Historical Loss Estimate Report' setting forth, among other things,
as of the close of business on the Due Date immediately preceding the
preparation of such report, (i) the aggregate amount of liquidation proceeds and
liquidation expenses, both for the current period and historically, and (ii) the
amount of Realized Losses occurring during the related Collection Period, set
forth on a Mortgage Loan-by-Mortgage Loan basis.
(e) An 'REO Status Report' setting forth, among other things, with respect
to each REO Property that was included in the Trust Fund as of the close of
business on the Due Date immediately preceding the preparation of such report,
(i) the acquisition date of such REO Property, (ii) the amount of income
collected with respect to any REO Property net of related expenses and other
amounts, if any, received on such REO Property during the related Collection
Period and (iii) the value of the REO Property based on the most recent
appraisal or other valuation thereof available to the Servicer as of such date
of determination (including any prepared internally by the Special Servicer).
(f) A 'Watch List' setting forth, among other things, any Mortgage Loan
that is in jeopardy of becoming a Specially Serviced Mortgage Loan.
Subject to the receipt of necessary information from any subservicer, such
loan-by-loan listing will be made available electronically in the form of the
standard CSSA loan file and CSSA property file; provided, however, the Trustee
or the Luxembourg Paying Agent will provide Certificateholders with a written
copy of such report upon request. The information that pertains to Specially
Serviced Mortgage Loans and REO Properties reflected in such reports shall be
based solely upon the reports delivered by the Special Servicer to the Servicer
at least one Business Day prior to the Servicer Remittance Date. Absent manifest
error, none of the Servicer, the Special Servicer, the Trustee or the Luxembourg
Paying Agent shall be responsible for the accuracy or completeness of any
information supplied to it by a borrower or third party that is included in any
reports, statements, materials or information prepared or provided by the
Servicer, the Special Servicer or the Trustee, as applicable.
The Servicer is also required to deliver to the Trustee and the Luxembourg
Paying Agent the following materials:
(a) Annually, on or before June 30 or each year, commencing with June 30,
1999, with respect to each Mortgaged Property and REO Property, an 'Operating
Statement Analysis' 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) for such Mortgaged
Property or REO Property as of the end of the preceding calendar year. To the
extent delivery is required in the related Mortgage Loan, the Servicer (or the
Special Servicer in the case of Specially Serviced Mortgage Loans and REO
Properties) is required to use efforts consistent with the Servicing Standard to
obtain said annual operating statements and rent rolls.
(b) Within thirty days of receipt by the Servicer (or within ten days of
receipt by the Special Servicer with respect to any Specially Serviced Mortgage
Loan or REO Property) of annual operating statements, if any, with respect to
any Mortgaged Property or REO Property, an 'NOI Adjustment Worksheet' for such
Mortgaged Property (with the annual operating statements attached thereto as an
exhibit), presenting the computations made in accordance with the methodology
described in the Pooling and Servicing Agreement to 'normalize' the full year
net operating income and debt service coverage numbers used by the Servicer in
the other reports referenced above.
The Trustee is to deliver a copy of each Operating Statement Analysis
report and NOI Adjustment Worksheet that it receives from the Servicer to the
Depositor, each Underwriter and each Rating Agency promptly after its receipt
thereof. Upon request, the Trustee will make such reports available to the
Certificateholders and the Special Servicer. Any Certificateholder and any
potential
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investor in the Certificates may obtain a copy of any NOI Adjustment Worksheet
for a Mortgaged Property or REO Property in the possession of the Trustee upon
request.
In addition, within a reasonable period of time after the end of each
calendar year, the Trustee is required to send to each person who at any time
during the calendar year was a Certificateholder of record, a report summarizing
on an annual basis (if appropriate) the items provided to Certificateholders in
the monthly Distribution Date Statements and such other information as may be
required to enable such Certificateholders to prepare their federal income tax
returns. Such information is to include the amount of original issue discount
accrued on each Class of Certificate held by persons other than holders exempted
from the reporting requirements and information regarding the expenses of the
Trust Fund.
The Servicer shall be entitled to conclusively rely upon, without
investigation or inquiry, the information and reports delivered to it by the
borrowers and Special Servicer without any duty or obligation to recompute,
verify or recalculate any of the amounts and other information stated therein
(and the reports delivered by the Servicer may include any reasonable
disclaimers with respect to any information provided by third parties or with
respect to assumptions required to be made in the preparation of such reports as
the Servicer deems appropriate).
Other Information
The Pooling and Servicing Agreement requires that the Trustee, upon
reasonable prior notice, make available at its offices, during normal business
hours, for review by any Holder of a Certificate, the Depositor, the Special
Servicer, the Servicer, any Rating Agency, any potential investor in the
Certificates or any other Person to whom the Depositor believes such disclosure
is appropriate, originals or copies of, among other things, the following items
(except to the extent not permitted by applicable law or under any of the
Mortgage Loan documents): (i) the Pooling and Servicing Agreement and any
amendments thereto, (ii) all Distribution Date Statements delivered to holders
of the relevant Class of Offered Certificates since the Closing Date, (iii) all
annual officers' certificates and accountants' reports delivered by the Servicer
and Special Servicer to the Trustee since the Closing Date regarding compliance
with the relevant agreements, (iv) the most recent property inspection report
prepared by or on behalf of the Servicer or the Special Servicer with respect to
each Mortgaged Property, (v) the most recent annual operating statements, rent
rolls (to the extent such rent rolls have been made available by the related
borrower) and retail 'sales information,' if any, collected by or on behalf of
the Servicer or the Special Servicer with respect to each Mortgaged Property,
(vi) any and all modifications, waivers and amendments of the terms of a
Mortgage Loan entered into by the Servicer and/or the Special Servicer and (vii)
any and all officers' certificates and other evidence delivered to or by the
Trustee to support the Servicer's, the Trustee's or the Fiscal Agent's, as the
case may be, determination that any Advance, if made, would not be recoverable.
Copies of any and all of the foregoing items will be available from the Trustee
upon request; however, the Trustee will be permitted to require payment of a sum
sufficient to cover the reasonable costs and expenses of providing such copies.
For so long as the Class A-1A, Class A-1B, Class A-1C or Class A-2
Certificates are listed on the Luxembourg Stock Exchange, the Luxembourg Paying
Agent must make available at its offices, during normal business hours, for
review by any Holder of a Class A-1A, Class A-1B, Class A-1C or Class A-2
Certificate, the Depositor, the Special Servicer, the Servicer, any Rating
Agency, and the Luxembourg Stock Exchange, any Underwriter, any potential
investor of the Class A-1A, Class A -1B, Class A-1C or Class A-2 Certificates or
any other Person to whom the Depositor believes such disclosure is appropriate,
originals or copies of, among other things, items (i), (ii), (iv), (v) and (vi)
together with (i) all annual officers' certificates and accountants' reports
delivered by the Servicer and Special Servicer to the Luxembourg Paying Agent
since the Closing Date regarding compliance with the relevant agreements and
(ii) any and all officers' certificates and other evidence delivered to or by
the Luxembourg Paying Agent to support the Servicer's, Trustee's or the Fiscal
Agent's, as the case may be, determination that any Advance, if made, would not
be recoverable. Copies of all of the foregoing will be available from the
Luxembourg Paying Agent upon request; however, the Luxembourg Paying Agent will
be permitted to require payment of a sum sufficient to cover the reasonable
costs and expenses of providing such copies (other than copies to be provided to
the Luxembourg Stock Exchange, which will be provided free of charge).
CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS FOR MORTGAGED PROPERTIES LOCATED IN
CALIFORNIA, NEW YORK, TEXAS, NORTH CAROLINA AND MICHIGAN
The following discussion contains summaries of certain legal aspects of the
Mortgage Loans or portions of Mortgage Loans secured by parcels in California
(approximately 25% of the Initial Pool Balance), New York (approximately 10% of
the Initial Pool Balance), Texas (approximately 6% of the Initial Pool Balance),
North Carolina (approximately 6% of the Initial Pool Balance) and
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Michigan (approximately 6% of the Initial Pool Balance), which are general in
nature. The summaries do not purport to be complete and are qualified in their
entirety by reference to the applicable federal and state laws governing the
Mortgage Loans.
CALIFORNIA
Mortgage loans in California are generally secured by deeds of trust on the
related real estate. Foreclosure of a deed of trust in California may be
accomplished by a non-judicial trustee's sale under a specific provision in the
deed of trust or by judicial foreclosure. Public notice of either the trustee's
sale or the judgment of foreclosure is given for a statutory period of time
after which the mortgaged real estate may be sold by the Trustee, if foreclosed
pursuant to the Trustee's power of sale, or by court appointed sheriff under a
judicial foreclosure. Following a judicial foreclosure sale, the borrower or its
successor in interest may, for a period of up to one year, redeem the property.
California's 'one action rule' effectively prohibits a lender from suing the
borrower for the loan or taking certain other actions, such as offsetting funds,
prior to a foreclosure of the deed of trust. Further, under the California law,
once a property has been sold pursuant to a power-of-sale clause contained in a
deed of trust, the lender is precluded from seeking a deficiency judgment from
the borrower or, under certain circumstances, guarantors. In certain
circumstances, the lender may have a receiver appointed.
NEW YORK
Mortgage loans in New York are generally secured by mortgages on the
related real estate. Foreclosure of a mortgage is accomplished in judicial
proceedings. After an action for foreclosure is commenced and the lender secures
a judgment of foreclosure and sale, the court appoints a referee to compute the
amount owed together with certain costs and expenses of the action. Public
notice of the judgment of foreclosure and sale and the amount of the judgment is
given for a statutory period of time after which the mortgaged real estate is
sold by a referee at public auction. There is no right of redemption after
foreclosure sale. In certain circumstances, deficiency judgments may be
obtained. Under mortgages containing a statutorily sanctioned covenant, the
lender has a right to have a receiver appointed without notice and without
regard to the adequacy of the mortgaged real estate as security for the amount
owed.
TEXAS
Most mortgage loans in Texas are secured by deeds of trust and most Texas
foreclosures are accomplished by non judicial foreclosure under a power of sale.
The procedural requirements for Texas foreclosure include public posting, filing
and mailing of a foreclosure notice prior to the sale but not generally the
requirement of newspaper publication. There is not a general right of redemption
available to either a debtor or a junior lienholder after a foreclosure sale
under Texas law. Texas does not have either a 'one action rule' or
'antideficiency legislation.' Texas does have recent legislation, however, that
permits a debtor against whom a deficiency judgment is sought (or the guarantor
of such a debtor's obligations) to have the fair market value of the foreclosed
property determined and that amount credited against the debt (which credit may
be larger than the amount actually bid at the public nonjudicial sale). Texas
has stringent usury laws and a successful usury claim can become a bar to
foreclosure.
NORTH CAROLINA
Mortgage loans in North Carolina are usually secured by deeds of trust.
Under North Carolina law, deeds of trust are usually foreclosed pursuant to
power of sale set forth in the instrument and governed by statute, but judicial
foreclosure by action is also available. Power of sale foreclosure results in a
hearing before the clerk of superior court, which can be waived pursuant to
statute. The mortgage indebtedness can be paid at any time before the
foreclosure sale is final (including the last resale in the event of an upset
bid). There is no statutory or common law right of redemption after the
foreclosure sale or last resale is final. The liens for ad valorem personal
property taxes, ad valorem real property taxes, and municipal and county
assessments have statutory priority over previously recorded deeds of trust.
Pursuant to statutory power of sale rules, the security can be sold subject to
or together with a subordinate lien, lease or other right or interest, instead
of free and clear of the same, if the notice of sale so specifies. If a
subordinate interest holder files a request for notice of foreclosure sale
statutory notice must be given to the interest holder. Judgment can be rendered
against the borrower for the debt, which judgment can be obtained in lieu of
foreclosure, which can result in a statutory execution sale. A deficiency
judgment can be obtained after foreclosure sale unless the deed of trust is to
secure purchase money owed to the vendor.
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MICHIGAN
Most mortgage loans in Michigan are secured by a mortgage lien on the real
estate. Foreclosure of the mortgage may be by judicial action, or by
advertisement if the mortgage contains a power of sale. In a foreclosure by
advertisement, the property is advertised for sale for four consecutive weeks,
usually in a local legal newspaper. Thereafter, the property is sold by county
sheriff to the highest bidder at a public auction. There is a statutory right of
redemption for six months from the date of sale. A lender may maintain a suit
for deficiency following a foreclosure by advertisement. A court may, under
compelling circumstances, appoint a receiver.
USE OF PROCEEDS
The net proceeds from the sale of Offered Certificates will be used by the
Depositor to pay part of the purchase price of the Mortgage Loans.
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CERTAIN FEDERAL INCOME TAX CONSEQUENCES
GENERAL
The following summary and the discussion in the Prospectus under the
heading 'Certain Federal Income Tax Consequences-Federal Income Tax Consequences
for REMIC Certificates' are a general discussion of the anticipated material
federal income tax consequences of the purchase, ownership and disposition of
the Offered Certificates and are based on the advice of Cadwalader, Wickersham &
Taft. The summary below and such discussion in the Prospectus do not purport to
address all federal income tax consequences that may be applicable to particular
categories of investors, some of which may be subject to special rules. In
addition, such summary and such discussion do not address state, local or
foreign tax issues with respect to the acquisition, ownership or disposition of
the Offered Certificates. The authorities on which such summary and such
discussion are based are subject to change or differing interpretations, and any
such change or interpretation could apply retroactively. Such summary and such
discussion reflect the applicable provisions of the Code, as well as regulations
(the 'REMIC Regulations') promulgated by the U.S. Department of the Treasury.
Investors should consult their own tax advisors in determining the federal,
state, local, foreign or any other tax consequences to them of the purchase,
ownership and disposition of Certificates.
Elections will be made to treat the Trust Fund, exclusive of the Excess
Interest and the Default Interest in respect of the Mortgage Loans (such portion
of the Trust Fund, the 'Trust REMICs'), as two separate REMICs (the 'Upper-Tier
REMIC' and the 'Lower-Tier REMIC,' respectively) within the meaning of Code
Section 860D. The Lower-Tier REMIC will hold the Mortgage Loans (exclusive of
the Excess Interest and Default Interest) proceeds therefrom, the Collection
Account, the Distribution Account and any REO Property, and will issue (i)
certain uncertificated classes of regular interests (the 'Lower-Tier Regular
Interests' ) to the Upper-Tier REMIC and (ii) the Class LR Certificates, which
will represent the sole class of residual interests in the Lower-Tier REMIC. The
Upper-Tier REMIC will hold the Lower-Tier Regular Interests and the Upper-Tier
Distribution Account in which distributions thereon will be deposited, and will
issue the Class A-1A, Class A-1B, Class A-1C, Class PS-1, Class A- 2, Class A-3,
Class A-4, Class A-5, Class B-1, Class B-2, Class B-3, Class B-4, Class B-5,
Class B-6, Class B-7 and Class B-7H Certificates (the 'Regular Certificates') as
classes of regular interests and the Class R Certificates as the sole class of
residual interests in the Upper-Tier REMIC. Qualification as a REMIC requires
ongoing compliance with certain conditions. Assuming (i) the making of
appropriate elections, (ii) compliance with the Pooling and Servicing Agreement
and (iii) compliance with any changes in the law, including any amendments to
the Code or applicable temporary or final regulations of the United States
Department of the Treasury ('Treasury Regulations') thereunder, in the opinion
of Cadwalader, Wickersham & Taft, the Trust Fund will qualify as two separate
REMICs. References in this discussion to the 'REMIC' will, unless the context
dictates otherwise, refer to each of the Upper-Tier REMIC and the Lower-Tier
REMIC. The Class V-1 and Class V-2 Certificates will represent pro rata
undivided beneficial interests in the portion of the Trust Fund consisting of
Excess Interest and Default Interest in respect of the Mortgage Loans,
respectively, and such portions will be treated as a grantor trust for federal
income tax purposes.
The Offered Certificates will be treated as 'loans . . . secured by an
interest in real property which is . . . residential real property' or 'loans
secured by an interest in . . . health . . . institutions or facilities,
including structures designed or used primarily for residential purposes for
. . . persons under care' for domestic building and loan associations (but only
to the extent of the allocable portion of the Mortgage Loans secured by
Multifamily Properties, Mobile Home Park Properties or Healthcare Properties,
respectively) and 'real estate assets' for real estate investment trusts, to the
extent described in the Prospectus. As of the Cut-off Date, Multifamily Loans,
Mobile Home Park Loans and Healthcare Loans represent approximately 19%,
approximately 5% and approximately 1%, respectively, of the Mortgage Loans by
unpaid principal balance. Mortgage Loans which have been defeased with U.S.
Treasury obligations will not qualify for the foregoing treatments.
The Offered Certificates generally will be treated as newly originated debt
instruments for federal income tax purposes. Beneficial owners of the Offered
Certificates will be required to report income on such regular interests in
accordance with the accrual method of accounting. It is anticipated that the
Class A-1A, Class A-1B, Class A1-C, Class A-2, Class A-3, Class A-4 and Class
A-5 Certificates will not be issued with original issue discount for federal
income tax purposes. See 'Federal Income Tax Consequences--Federal Income Tax
Consequences for REMIC Certificates--Taxation of Regular Certificates--Premium'
in the Prospectus.
Although not free from doubt, it is anticipated that any prepayment
premiums will be treated as ordinary income to the extent allocable to
beneficial owners of the Offered Certificates as such amounts become due to such
beneficial owners.
For a discussion of the tax consequences of the ownership of Offered
Certificates by any person who is not a citizen or resident of the United
States, a corporation or partnership or other entity created or organized in or
under the laws of the United
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States or any political subdivision thereof or is a foreign estate or trust, see
'Federal Income Tax Consequences--Federal Income Tax Consequences for REMIC
Certificates--Taxation of Certain Foreign Investors--Regular Certificates' in
the Prospectus.
CERTAIN ERISA CONSIDERATIONS
The purchase by or transfer to a retirement plan or other employee benefit
retirement arrangement, including an individual retirement account or a Keogh
plan, which is subject to Title I of the Employee Retirement Income Security Act
of 1974, as amended ('ERISA') or Section 4975 of the Code, or a governmental
plan (as defined in Section 3(32) of ERISA) that is subject to any federal,
state or local law ('Similar Law') which is, to a material extent, similar to
the foregoing provisions of ERISA or the Code (each of which are hereinafter
referred to as a 'Plan'), or a collective investment fund in which such Plans
are invested, an insurance company using the assets of separate accounts or
general accounts which include assets of Plans (or which are deemed pursuant to
ERISA or any Similar Law to include assets of Plans) or other Persons acting on
behalf of any such Plan or using the assets of any such Plan to acquire the
Subordinated Offered Certificates is restricted. See 'Description of the Offered
Certificates--Transfer Restrictions' herein. Accordingly, except as specifically
referenced herein, the following discussion does not purport to discuss the
considerations under ERISA, Section 4975 of the Code or Similar Law with respect
to the purchase, holding or disposition of the Subordinated Offered Certificates
and for purposes of the following discussion all references to the Offered
Certificates are deemed to exclude the Subordinated Offered Certificates.
As described in the Prospectus under 'ERISA Considerations,' ERISA and the
Code impose certain duties and restrictions on Plans and certain persons who
perform services for Plans. For example, unless exempted, investment by a Plan
in the Offered Certificates may constitute or give rise to a prohibited
transaction under ERISA or the Code. There are certain exemptions issued by the
United States Department of Labor (the 'Department') that may be applicable to
an investment by a Plan in the Offered Certificates. The Department has granted
to the Underwriters individual prohibited transaction exemptions ('PTEs') as
follows: to NSI, PTE 93-32 (58 Fed Reg. 28,623 (May 14, 1993)), to Morgan
Stanley, PTE 90-24 (55 Fed. Reg. 20,548 (May 17. 1990)) and to Merrill Lynch,
PTE 90-29 (Fed. Reg. 21,459 (May 24, 1990)) (collectively, the 'Exemptions'),
each of which generally exempts from the application of certain of the
prohibited transaction provisions of Section 406 of ERISA, and the excise taxes
imposed by Sections 4975(a) and (b) of the Internal Revenue Code of 1986, as
amended (the 'Code'), and the civil penalties imposed by 502(i) of ERISA,
transactions relating to (i) the purchase, sale and holding of certain
pass-through certificates of the same general nature as the Class A-1A, Class
A-1B, Class A-1C and Class PS-1 Certificates (the 'Senior Offered Certificates')
by or on behalf of Plans and (ii) the servicing and operation of mortgage pools
such as the Mortgage Pool, provided that certain conditions are satisfied. See
'ERISA Considerations' in the Prospectus.
Among the conditions that must be satisfied for the Exemptions to apply to
the acquisition, holding and resale of the Senior Offered Certificates are the
following:
(1) The acquisition of Senior Offered Certificates by a Plan is on
terms (including the price for the Certificates) that are at least as
favorable to the Plan as they would be in an arm's length transaction with
an unrelated party;
(2) The rights and interests evidenced by Senior Offered Certificates
acquired by the Plan are not subordinated to the rights and interests
evidenced by the other Certificates of the Trust Fund;
(3) The Senior Offered Certificates acquired by the Plan have received
a rating at the time of such acquisition that is one of the three highest
generic rating categories from any of S&P, Moody's, Fitch or Duff & Phelps
Credit Rating Co. ('DCR');
(4) The Trustee must not be an affiliate of any other member of the
Restricted Group (as defined below);
(5) The sum of all payments made to and retained by any of the
Underwriters in connection with the distribution of Senior Offered
Certificates represents not more than reasonable compensation for
underwriting the Senior Offered 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 represents not more than the fair market value of
such Mortgage Loans. The sum of all payments made to and retained by the
Servicer and any other servicer represents not more than reasonable
compensation for such person's services under the Pooling and Servicing
Agreement and reimbursement of such person's reasonable expenses in
connection therewith; and
(6) The Plan investing in the certificates is an 'accredited investor'
as defined in Rule 501(a)(1) of Regulation D of the Securities and Exchange
Commission under the Securities Act of 1933.
The Trust Fund must also meet the following requirements:
(a) the corpus of the Trust Fund must consist solely of assets of
the type that have been included in other investment pools;
S-135
<PAGE>
(b) certificates in such other investment pools must have been
rated in one of the three highest rating categories of S&P, Moody's,
Fitch or DCR for at least one year prior to the Plan's acquisition of
the Senior Offered Certificates pursuant to the Exemptions; and
(c) certificates evidencing interests 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 the Senior Offered
Certificates pursuant to the Exemptions.
If all of the conditions of the Exemptions are met, whether or not a Plan's
assets would be deemed to include an ownership interest in the Mortgage Loans in
the Mortgage Pool, the acquisition, holding and resale of the Senior Offered
Certificates by Plans would be exempt from the prohibited transaction provisions
of ERISA and the Code.
Moreover, the Exemptions can provide relief from certain
self-dealing/conflict of interest prohibited transactions that may occur if a
Plan fiduciary causes a Plan to acquire certificates in a trust in which the
fiduciary (or its affiliate) is an obligor on the receivables, loans or
obligations held in the trust, provided that, among other requirements, (a) in
the case of an acquisition in connection with the initial issuance of
certificates, at least fifty percent of each class of certificates in which
Plans have invested is acquired by persons independent of the Restricted Group
(as defined below) and at least fifty percent of the aggregate interest in the
trust is acquired by persons independent of the Restricted Group (as defined
below); (b) such fiduciary (or its affiliate) is an obligor with respect to five
percent or less of the fair market value of the obligations contained in the
trust; (c) the Plan's investment in certificates of any class does not exceed
twenty-five percent of all of the certificates of that class outstanding at the
time of the acquisitions; and (d) immediately after the acquisition no more than
twenty-five percent of the assets of the Plan with respect to which such person
is a fiduciary are invested in certificates representing an interest in one or
more trusts containing assets sold or served by the same entity.
The Exemptions do not apply to the purchasing or holding of Senior Offered
Certificates by Plans sponsored by the Depositor, the Underwriters, the Trustee,
the Servicer, any obligor with respect to Mortgage Loans included in the Trust
Fund constituting more than five percent of the aggregate unamortized principal
balance of the assets in the Trust Fund, or any affiliate of such parties (the
'Restricted Group').
The Underwriters believe that the conditions to the applicability of the
Exemptions will generally be met with respect to the Senior Offered
Certificates, other than possibly those conditions which are dependent on facts
unknown to the Underwriters or which they cannot control, such as those relating
to the circumstances of the Plan purchaser or the Plan fiduciary making the
decision to purchase any such Class of Certificates. However, before purchasing
a Senior Offered Certificate, a fiduciary of a Plan should make its own
determination as to the availability of the exemptive relief provided by the
Exemptions or the availability of any other PTE, and whether the conditions of
any such exemption will be applicable to the Senior Offered Certificates. The
Department, in granting the Exemptions may not have considered interests in
pools of the exact nature as some of the Senior Offered Certificates. A
fiduciary of a Plan that is a governmental plan should make its own
determination as to the need for and the a vailability of any exemptive relief
under any Similar Law. See 'Description of the Offered Certificates--Transfer
Restrictions' in this Prospectus Supplement.
Any fiduciary of a Plan considering whether to purchase an Offered
Certificate should also carefully review with its own legal advisors the
applicability of the fiduciary duty and prohibited transaction provisions of
ERISA and the Code to such investment. See 'ERISA Considerations' in the
Prospectus.
BECAUSE THE CLASS A-2, CLASS A-3, CLASS A-4, AND CLASS A-5 (THE
'SUBORDINATED OFFERED CERTIFICATES') ARE SUBORDINATE TO ONE OR MORE CLASSES OF
CERTIFICATES, THE PURCHASE AND HOLDING OF THE SUBORDINATED OFFERED CERTIFICATES
BY OR ON BEHALF OF A PLAN MAY RESULT IN 'PROHIBITED TRANSACTIONS' WITHIN THE
MEANING OF ERISA, SECTION 4975 OF THE CODE OR ANY SIMILAR LAW. ACCORDINGLY, EACH
PROSPECTIVE TRANSFEREE OF A SUBORDINATED OFFERED CERTIFICATE THAT IS A
DEFINITIVE CERTIFICATE WILL BE REQUIRED TO ( A) DELIVER TO THE DEPOSITOR, THE
CERTIFICATE REGISTRAR AND THE TRUSTEE A REPRESENTATION LETTER SUBSTANTIALLY IN
THE FORM SET FORTH AS AN EXHIBIT TO THE POOLING AND SERVICING AGREEMENT STATING
THAT SUCH TRANSFEREE IS NOT A PLAN (INCLUDING A GOVERNMENTAL PLAN SUBJECT TO ANY
SIMILAR LAW) OR A PERSON ACTING ON BEHALF OF OR INVESTING THE ASSETS OF A PLAN,
OTHER THAN AN INSURANCE COMPANY INVESTING THE ASSETS OF ITS GENERAL ACCOUNT
UNDER CIRCUMSTANCES WHEREBY THE PURCHASE AND SUBSEQUENT HOLDING OF THE
SUBORDINATED OFFERED CERTIFICATE WOULD BE EXEMPT FROM THE PROHIBITED TRANSACTION
RESTRICTIONS OF ERISA AND THE CODE UNDER SECTIONS I AND III OF PTE 95-60, OR (B)
PROVIDE (I) AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE
CERTIFICATE REGISTRAR THAT THE PURCHASE OF THE SUBORDINATED OFFERED CERTIFICATE
WILL NOT RESULT IN THE ASSETS OF THE TRUST FUND BEING DEEMED TO BE 'PLAN ASSETS'
AND SUBJECT TO THE PROHIBITED TRANSACTION RESTRICTIONS OF ERISA, THE CODE OR ANY
SIMILAR LAW AND WILL NOT SUBJECT THE DEPOSITOR, THE SERVICER, THE SPECIAL
SERVICER, THE TRUSTEE, OR THE FISCAL AGENT TO ANY OBLIGATION IN ADDITION TO
THOSE UNDERTAKEN IN THE POOLING AND SERVICING AGREEMENT AND (II) SUCH OTHER
OPINIONS
S-136
<PAGE>
OF COUNSEL, OFFICERS' CERTIFICATES AND AGREEMENTS AS THE CERTIFICATE REGISTRAR
MAY REQUIRE IN CONNECTION WITH SUCH TRANSFER. THE PURCHASER OR TRANSFEREE OF ANY
INTEREST IN A SUBORDINATED OFFERED CERTIFICATE THAT IS NOT A DEFINITIVE
CERTIFICATE SHALL BE DEEMED TO REPRESENT THAT IT IS NOT A PERSON DESCRIBED IN
CLAUSE (A) ABOVE. THE SUBORDINATED OFFERED CERTIFICATES WILL CONTAIN A LEGEND
DESCRIBING SUCH RESTRICTIONS ON TRANSFER AND THE POOLING AND SERVICING AGREEMENT
WILL PROVIDE THAT ANY ATTEMPTED OR PURPORTED TRANSFER IN VIOLATION OF THESE
TRANSFER RESTRICTIONS WILL BE NULL AND VOID AB INITIO. SEE 'DESCRIPTION OF THE
OFFERED CERTIFICATES--TRANSFER RESTRICTIONS' IN THIS PROSPECTUS SUPPLEMENT.
The sale of Offered Certificates to a Plan is in no respect a
representation by the Depositor or the Underwriters that this investment meets
all relevant legal requirements with respect to investments by Plans generally
or any particular Plan, or that this investment is appropriate for Plans
generally or any particular Plan.
LEGAL INVESTMENT
Any Class of 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, for so long as the Mortgage Loans are secured by liens on real
estate.
Except as to the status of certain Classes of Offered Certificates as
'mortgage related securities,' no representation is made as to the proper
characterization of the Offered Certificates for legal investment purposes,
financial institution regulatory purposes, or other purposes, or as to the
ability of particular investors to purchase the Offered Certificates under
applicable legal investment restrictions. These uncertainties may adversely
affect the liquidity of the Offered Certificates. Accordingly, all institutions
whose investment activities are subject to legal investment laws and
regulations, regulatory capital requirements or review by regulatory authorities
should consult with their own legal advisors in determining whether and to what
extent the Offered Certificates constitute a legal investment 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') between Nomura Securities International, Inc.
('NSI'), Morgan Stanley & Co. Incorporated ('Morgan Stanley') and Merrill Lynch,
Pierce, Fenner & Smith Incorporated ('Merrill Lynch' and, collectively with NSI
and Morgan Stanley, (the 'Underwriters') and the Depositor, NSI and Morgan
Stanley will act as co-lead and joint bookrunning Underwriters with respect to
the Offered Certificates. NSI and Morgan Stanley will act as co-placement agents
for the Class PS-1 Certificates and Morgan Stanley will act as the sole
placement agent for the Class B-1, Class B-2, Class B-3, Class B-4, Class B-5,
Class B-6 and Class B-7 Certificates (collectively, the 'Private Certificates'),
in each case, with a limited number of institutional investors in transactions
exempt from the registration requirements of the Securities Act. The
Underwriters may place Offered Certificates through licensed dealers in Japan.
See 'Description of Offered Certificates--Transfer Restrictions' in this
Prospectus Supplement.
In the Underwriting Agreement, each Underwriter has agreed to purchase
Certificates as set forth below.
ALLOCATION TABLE
<TABLE>
<CAPTION>
CLASS CLASS CLASS CLASS CLASS CLASS CLASS
UNDERWRITER A-1A A-1B A-1C A-2 A-3 A-4 A-5
- --------------------------------------------------------- ------- ------- ------- ------- ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
Nomura Securities International, Inc. ................... [__] % [__] % [__] % [__] % [__]% [__] % [__] %
Morgan Stanley & Co. Incorporated........................ [__] % [__] % [__] % [__] % [__]% [__] % [__] %
Merrill Lynch, Pierce, Fenner & Smith Incorporated....... [__] % [__] % [__] % [__] % [__]% [__] % [__] %
</TABLE>
The Underwriting Agreement provides that the obligations of the
Underwriters are subject to the approval of certain legal matters by counsel,
and to certain other conditions.
The Depositor will indemnify the Underwriters against certain liabilities,
including civil liabilities under the Securities Act or will contribute to
payments that the Underwriters may be required to make in respect thereof in
accordance with the terms and provisions of the Underwriting Agreement.
There is currently no secondary market for the Offered Certificates. The
Underwriters currently expect to make a secondary market in the Offered
Certificates, but have no obligation to do so. There can be no assurance that an
active secondary market for the Offered Certificates will develop or that any
such market, if established, will continue.
S-137
<PAGE>
This Prospectus Supplement may only be issued or passed on in the United
Kingdom to a person who is of a kind described in Article 11(3) of the Financial
Services Act 1986 (Investment Advertisements) (Exemptions) Order 1996 or is a
person to whom this Prospectus Supplement may otherwise lawfully be issued or
passed on.
The Trust Fund described in this Prospectus Supplement may only be promoted
(whether by the issuing or passing on of documents as referred to in the
foregoing restriction or otherwise) by an authorized person under Chapter III of
the Financial Services Act 1986 of the United Kingdom ('FSA') to a person in the
United Kingdom if that person is a kind described in section 76(2) of the FSA or
as permitted by the Financial Services (Promotion of Unregulated Schemes)
Regulations 1991.
The Offered Certificates may not be offered or sold directly or indirectly
in Japan and this Prospectus Supplement may not be distributed or circulated in
Japan except in circumstances that do not constitute an offer to the public
within the meaning of the SEL.
If and to the extent required by applicable law or regulation, this
Prospectus Supplement and the Prospectus will be used by Nomura Securities
International, Inc. in connection with offers and sales related to market-making
transactions in the Offered Certificates with respect to which Nomura Securities
International, Inc. acts as principal. Nomura Securities International, Inc. may
also act as agent in such transactions. Sales may be made at negotiated prices
determined at the time of sale.
LEGAL MATTERS
The validity of the Certificates will be passed upon for the Depositor and
the Mortgage Loan Sellers by Cadwalader, Wickersham & Taft, New York, New York
and for the Underwriters by Sidley & Austin, New York, New York. In addition,
certain federal income tax matters will be passed upon for the Depositor by
Cadwalader, Wickersham & Taft.
RATING
It is a condition to the issuance of the Offered Certificates that (i) the
Class A-1A, Class A-1B and Class A-1C Certificates be rated 'AAA' by Fitch IBCA,
Inc. ('Fitch') and 'Aaa' by Moody's Investors Service, Inc. ('Moody's,' and
together with Fitch, the 'Rating Agencies'), (ii) the Class A-2 Certificates be
rated '[___]' by [___], (iii) the Class A-3 Certificates be rated '[___]' by
[___], (iv) the Class A-4 Certificates be rated '[ ]' by [ ] and (v) the
Class A-5 Certificates be '[ ]' by [ ]. The Rated Final Distribution
Date of each Class of Offered Certificates is September 16, 2030.
The Rating Agencies' ratings on the Offered Certificates address the
likelihood of the timely payment of interest and the ultimate repayment of
principal by the Rated Final Distribution Date. A security rating does not
address the frequency of prepayments (either voluntary or involuntary) or the
possibility that Certificateholders might suffer a lower than anticipated yield,
nor does a security rating address the likelihood of receipt of Prepayment
Premiums, Net Default Interest or Excess Interest. A security rating does not
represent any assessment of the yield to maturity that investors may experience.
The ratings do not address the fact that the Pass-Through Rates of the Offered
Certificates, to the extent that they are based on the Weighted Average Net
Mortgage Pass-Through Rate, will be affected by changes therein. See 'Risk
Factors and Other Special Considerations' herein and 'Yield Considerations' in
the Prospectus.
There can be no assurance as to whether any rating agency not requested to
rate the Offered Certificates will nonetheless issue a rating and, if so, what
such rating would be. A rating assigned to the Offered Certificates by a rating
agency that has not been requested by the Depositor to do so may be lower than
the rating assigned by the Rating Agencies pursuant to the Depositor's request.
The rating of the 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.
GENERAL INFORMATION
Application has been made to list the Class A-1A, Class A-1B, Class A-1C
and Class A-2 Certificates on the Luxembourg Stock Exchange. In connection with
the listing application, the formation documents pursuant to which the Depositor
was organized and a legal notice in relation to the issue of the Certificates
have been deposited with the Registrar of the District Court in Luxembourg
(Greffier en chef du Tribunal d'Arrondissement de et a Luxembourg), where such
documents are available for inspection and where copies of such documents may be
obtained upon request.
S-138
<PAGE>
The Class A-1A, Class A-1B, Class A-1C and Class A-2 Certificates have been
accepted for clearance through the facilities of Cedel and Euroclear. The Common
Code and ISIN for each such Class is set forth below:
<TABLE>
<CAPTION>
CLASS COMMON CODE ISIN
- ------------------------------------------------------------------------------- ----------- ----
<S> <C> <C>
A-1A...........................................................................
A-1B...........................................................................
A-1C...........................................................................
A-2............................................................................
</TABLE>
So long as the Certificates are listed on the Luxembourg Stock Exchange,
the Depositor will maintain a Luxembourg Paying Agent. Banque General du
Luxembourg is the Luxembourg Paying Agent and its office is located at 50 Avenue
J.F. Kennedy L-2951, Luxembourg. The Depositor must give the Certificateholders
at least 30 days notice of any change in or addition to the Luxembourg Paying
Agent or its specified office. Any notice to the Certificateholder is validly
given if:
1. Sent to Cedel or Euroclear and shall be deemed to be given on the date
on which it was so sent; or
2. Published in such newspaper or newspapers in the United States or
Luxembourg as the Trustee or the Luxembourg Paying Agent shall approve and shall
be deemed to have been given on the date of such publication or, if published
more than once or on different dates, on the first date on which publication
shall have been made in the newspaper or newspapers in which publication is
required.
So long as the Class A-1A, Class A-1B, Class A-1C and Class A-2
Certificates are listed on the Luxembourg Stock Exchange, copies of the
following documents may be inspected (and, in the case of the document listed in
1, may be obtained) during usual business hours at the specified offices of the
Trustee or the Luxembourg Paying Agent at any time after the date of this
document:
1. The articles of incorporation pursuant to which the Depositor is
organized;
2. the Pooling and Servicing Agreement;
3. the Operating Advisor Agreement;
4. the Mortgage Loan Purchase and Sale Agreements;
5. the Bloomfield Purchase Agreement; and
6. the Underwriting Agreement.
The Depositor does not produce publicly available financial statements nor
does it produce consolidated financial statements.
S-139
<PAGE>
INDEX OF SIGNIFICANT DEFINITIONS
<TABLE>
<S> <C>
1997 NOI.................................................................................................. S-67
A
Accor..................................................................................................... S-64
Accor Borrower............................................................................................ S-65
Accor Credit Lease........................................................................................ S-65
Accor Credit Lease Loan................................................................................... S-64
Accor Credit Lease Property............................................................................... S-64
Accor Credit Lease Property Pool.......................................................................... S-64
Accor Credit Tenant....................................................................................... S-65
Accor Estate for Years Properties......................................................................... S-66
Accor Mortgage............................................................................................ S-64
Accor Note................................................................................................ S-64
Accor Notes............................................................................................... S-64
Accor Remainder Trust..................................................................................... S-66
Actual On-going Capital Reserve........................................................................... S-69
ADA....................................................................................................... S-39
Additional Servicing Fee Rate............................................................................. S-128
Advance Rate.............................................................................................. S-111
Advances.................................................................................................. S-111
Amortization.............................................................................................. S-68
Ann....................................................................................................... S-67
Annual Debt Service....................................................................................... S-67, S-68
Anticipated Remaining Term................................................................................ S-68
Anticipated Repayment Date................................................................................ S-18, S-22, S-68
Anticipated Repayment Date LTV/PTV........................................................................ S-67
Appraisal Reduction Amount................................................................................ S-17, S-80, S-89
Appraisal Reduction Event................................................................................. S-89
Appraisal Reduction Events................................................................................ S-17
Appraised Value........................................................................................... S-68
ARD Loan.................................................................................................. S-49
ARD Notes................................................................................................. S-18, S-36
Audit/Agreed Upon Procedures Forward...................................................................... S-69
Audit/Agreed Upon Procedures Upfront...................................................................... S-69
Available Funds........................................................................................... S-78
B
Base Amortization Term.................................................................................... S-45
Base Interest Rate........................................................................................ S-45
Bloomfield................................................................................................ S-10
Bloomfield Purchase Agreement............................................................................. S-109
Business Day.............................................................................................. S-48
C
Cash Collateral Accounts.................................................................................. S-112
CCA....................................................................................................... S-9, S-10
CCA Servicer.............................................................................................. S-9, S-126
Cedel..................................................................................................... S-12
Cedel Participants........................................................................................ S-92
</TABLE>
S-140
<PAGE>
<TABLE>
<S> <C>
CERCLA.................................................................................................... S-35
Certificate Owners........................................................................................ S-92
Certificate Registrar..................................................................................... S-90
Certificateholder......................................................................................... S-90
Code...................................................................................................... S-93, S-135
Collateral Account........................................................................................ S-120
Collateral Substitution Deposit........................................................................... S-50
Collection Account........................................................................................ S-112
Collection Period......................................................................................... S-79
Combined LTV.............................................................................................. S-33
Commission................................................................................................ S-2
Cooperative............................................................................................... S-92
Credit Lease.............................................................................................. S-30, S-46
Credit Lease Loans........................................................................................ S-46
Credit Lease Properties................................................................................... S-46
Credit Tenant............................................................................................. S-46
CRIIMI MAE................................................................................................ S-9, S-127
Cross-Indemnified Party................................................................................... S-125
Cross-Indemnifying Party.................................................................................. S-125
Crossover Date............................................................................................ S-86
Cut-off Date Allocated Loan Amount........................................................................ S-68
Cut-off Date Principal Balance............................................................................ S-20, S-68, S-69
Cut-off Date Principal Balance/Unit....................................................................... S-68
D
DCR....................................................................................................... S-135
Default Interest.......................................................................................... S-79
Default Interest Distribution Account..................................................................... S-112
Default Rate.............................................................................................. S-79
Defeasance Lock-out Period................................................................................ S-50
Defeasance Option......................................................................................... S-50
Definitive Certificate.................................................................................... S-90
Delinquency............................................................................................... S-80
Delinquency Reduction Amount.............................................................................. S-80
Department................................................................................................ S-135
Deposit................................................................................................... S-120
Depositaries.............................................................................................. S-90
DHCR...................................................................................................... S-29
Discount Rate............................................................................................. S-87
Distribution Account...................................................................................... S-112
Distribution Date......................................................................................... S-78
Distribution Date Statement............................................................................... S-128
Distribution of Available Funds........................................................................... S-80
DSCR...................................................................................................... S-18, S-20, S-67
DTC....................................................................................................... S-12
</TABLE>
S-141
<PAGE>
<TABLE>
<S> <C>
E
Eastland Mall Borrower.................................................................................... S-63
Eastland Mall Limited Partner............................................................................. S-63
Eastland Mall Loan........................................................................................ S-62
Eastland Mall Mortgage.................................................................................... S-62
Eastland Mall Property.................................................................................... S-62
Eastland Mall Property Manager............................................................................ S-63
Eligible Bank............................................................................................. S-113
Equity Holder............................................................................................. S-38
Equity Loans.............................................................................................. S-9, S-38
ERISA..................................................................................................... S-93, S-135
Euroclear................................................................................................. S-12
Euroclear Operator........................................................................................ S-92
Euroclear Participants.................................................................................... S-92
Event of Default.......................................................................................... S-117
Excess Cash Flow.......................................................................................... S-49
Excess Interest........................................................................................... S-22, S-49, S-79
Excess Interest Distribution Account...................................................................... S-112
Excess Rate............................................................................................... S-48, S-79
F
Factory Outlet Center Loan................................................................................ S-42
Factory Outlet Center Property............................................................................ S-42
Fair Market Value......................................................................................... S-120
Final Recovery Determination.............................................................................. S-129
Fitch..................................................................................................... S-138
Fixed Voting Rights Percentage............................................................................ S-119
Form 8-K.................................................................................................. S-14, S-76
FSA....................................................................................................... S-138
G
GLA....................................................................................................... S-69
Glimcher Borrowers........................................................................................ S-31
Guarantor................................................................................................. S-46
H
Healthcare Loan........................................................................................... S-42
Healthcare Property....................................................................................... S-42
Holders................................................................................................... S-93
Holding Trust............................................................................................. S-10
Horizon................................................................................................... S-54
Hotel Loan................................................................................................ S-42
Hotel Property............................................................................................ S-42
I
Imp TTM................................................................................................... S-67
Indirect Participants..................................................................................... S-91
Industrial Loan........................................................................................... S-42
Industrial Property....................................................................................... S-42
Initial Pool Balance...................................................................................... S-42
Interest Accrual Amount................................................................................... S-79, S-80
Interest Accrual Period................................................................................... S-80
</TABLE>
S-142
<PAGE>
<TABLE>
<S> <C>
Interest Distribution Amount.............................................................................. S-80
Interest Reserve Account.................................................................................. S-112
Interest Shortfall........................................................................................ S-80
L
Lease Expiration Date..................................................................................... S-69
Level A................................................................................................... S-102
Loan-to-Value Ratio....................................................................................... S-21, S-67
Lock Box Accounts......................................................................................... S-112
Lock-out Period........................................................................................... S-23, S-49
Lower-Tier Regular Interests.............................................................................. S-134
Lower-Tier REMIC.......................................................................................... S-13, S-134
Luxembourg Paying Agent................................................................................... S-10, S-126
M
Maturity Date............................................................................................. S-68
Merrill Lynch............................................................................................. S-9, S-137
Mixed-use Loan............................................................................................ S-42
Mixed-use Property........................................................................................ S-42
Monthly Debt Service Payment.............................................................................. S-49
Monthly Mortgage Loan Payments............................................................................ S-52
Monthly Operating Expenses................................................................................ S-52
Monthly Payments.......................................................................................... S-22, S-48
Monthly Rental Payments................................................................................... S-47
Moody's................................................................................................... S-138
Morgan Stanley............................................................................................ S-9, S-137
Morgantown Commons........................................................................................ S-57
Morgantown Limited Partner................................................................................ S-58
Morgantown Mall........................................................................................... S-57
Morgantown Mall and Commons Retail Loan................................................................... S-57
Morgantown Property Manager............................................................................... S-58
Morgantown Retail Borrower................................................................................ S-58
Morgantown Retail Properties.............................................................................. S-57
Mortgage.................................................................................................. S-43
Mortgage Loan Sellers..................................................................................... S-10
Mortgage Loans............................................................................................ S-42
Mortgage Pass-Through Rate................................................................................ S-81
Mortgage Pool............................................................................................. S-42
Mortgage Rate............................................................................................. S-22, S-48, S-69, S-81
Mortgaged Properties...................................................................................... S-42
Motel 6................................................................................................... S-64
Multifamily Loan.......................................................................................... S-42
Multifamily Property...................................................................................... S-42
N
NACC...................................................................................................... S-10
NAIC...................................................................................................... S-46
Net Cash Flow............................................................................................. S-43, S-44, S-67
Net Cash Flow DSCR........................................................................................ S-67
Net Default Interest...................................................................................... S-79
Net Mortgage Pass-Through Rate............................................................................ S-81
</TABLE>
S-143
<PAGE>
<TABLE>
<S> <C>
Net REO Proceeds.......................................................................................... S-79
NOI DSCR.................................................................................................. S-67
Note...................................................................................................... S-43
NSI....................................................................................................... S-3, S-9, S-137
O
Occupancy................................................................................................. S-68
Offered Certificates...................................................................................... S-11, S-77
Office Loan............................................................................................... S-42
Office Property........................................................................................... S-42
Operating Advisor......................................................................................... S-128
Operating Advisor Agreement............................................................................... S-128
Original Loan Balance..................................................................................... S-68
Originators............................................................................................... S-10, S-43
Other Accor Note.......................................................................................... S-64
Other Note................................................................................................ S-39, S-46
Other Prime Retail Pool Note.............................................................................. S-53
P
P&I Advance............................................................................................... S-17, S-110
Participants.............................................................................................. S-90
Pass-Through Rate......................................................................................... S-11, S-77, S-80
Percentage Interest....................................................................................... S-78
Permitted Investments..................................................................................... S-113
Plan...................................................................................................... S-93, S-135
plan assets............................................................................................... S-136
Pool Loan................................................................................................. S-19
Pooling and Servicing Agreement........................................................................... S-100
Preferred Interest Holder................................................................................. S-33
Premium................................................................................................... S-37, S-45
Premium Loans............................................................................................. S-45
Prepayment Interest Shortfall............................................................................. S-80
Prepayment Premium........................................................................................ S-23, S-49
Primary Term.............................................................................................. S-47
Prime..................................................................................................... S-54
Prime Retail Anticipated Repayment Date................................................................... S-54
Prime Retail Pool Borrower................................................................................ S-54
Prime Retail Pool Co-tenant............................................................................... S-55
Prime Retail Pool Loan.................................................................................... S-53
Prime Retail Pool Mortgages............................................................................... S-53
Prime Retail Pool Note.................................................................................... S-53
Prime Retail Pool Properties.............................................................................. S-53
Prime Retail Pool Property Manager........................................................................ S-54
Prime Retail Pool Property Phase III and IV............................................................... S-55
Principal Distribution Amount............................................................................. S-81
Principal Prepayments..................................................................................... S-79
Private Certificates...................................................................................... S-11, S-77, S-137
Property Advances......................................................................................... S-111
Property Name............................................................................................. S-69
PTEs...................................................................................................... S-135
</TABLE>
S-144
<PAGE>
<TABLE>
<S> <C>
PTV....................................................................................................... S-18, S-45, S-67
R
Rated Final Distribution Date............................................................................. S-95
Rating Agencies........................................................................................... S-138
Realized Loss............................................................................................. S-87
Record Date............................................................................................... S-78
Reduction Interest Distribution Amount.................................................................... S-80
Reduction Interest Pass-Through Rate...................................................................... S-80
Reduction Interest Shortfalls............................................................................. S-80
Regular Certificates...................................................................................... S-134
Release Date.............................................................................................. S-50
Remaining Lock-out........................................................................................ S-68
REMIC..................................................................................................... S-13, S-134
REO Account............................................................................................... S-77
REO Mortgage Loan......................................................................................... S-82
REO Property.............................................................................................. S-77
Repurchase Price.......................................................................................... S-108
Reserve Accounts.......................................................................................... S-42
Residual Value Policies................................................................................... S-47
Restricted Group.......................................................................................... S-136
Retail Loan............................................................................................... S-42
Retail Property........................................................................................... S-42
Return of Premium Amount.................................................................................. S-37, S-45
Revised Rate.............................................................................................. S-49
Rules..................................................................................................... S-91
S
S&P....................................................................................................... S-46
SEC....................................................................................................... S-14
SEL....................................................................................................... S-2
Senior Offered Certificates............................................................................... S-135
Sequential Certificates................................................................................... S-77
Servicer Remittance Date.................................................................................. S-110
Servicer's Appraisal Estimate............................................................................. S-89
Servicing Compensation.................................................................................... S-126
Servicing Fee............................................................................................. S-126
Servicing Fee Rate........................................................................................ S-126
Servicing Standard........................................................................................ S-109
Shidler................................................................................................... S-60
Shidler Industrial Portfolio Borrower..................................................................... S-60
Shidler Industrial Portfolio Loan......................................................................... S-60
Shidler Industrial Portfolio Mortgages.................................................................... S-60
Shidler Industrial Portfolio Property..................................................................... S-60
Shidler Industrial Portfolio Property Manager............................................................. S-61
Shidler Industrial Portfolio Regular Member............................................................... S-61
Similar Law............................................................................................... S-135
SMMEA..................................................................................................... S-13
Soho Grand Hotel Borrower................................................................................. S-56
Soho Grand Hotel Loan..................................................................................... S-56
</TABLE>
S-145
<PAGE>
<TABLE>
<S> <C>
Soho Grand Hotel Mortgage................................................................................. S-56
Soho Grand Hotel Property................................................................................. S-56
Special Note.............................................................................................. S-44
Special Servicer.......................................................................................... S-127
Special Servicing Fee..................................................................................... S-127
Specially Serviced Mortgage Loan.......................................................................... S-114, S-127
Spread Rate............................................................................................... S-87
Stated Principal Balance.................................................................................. S-88
Subordinate Class Advance Amount.......................................................................... S-110
Subordinated Offered Certificates......................................................................... S-136
T
Tenant.................................................................................................... S-68
Tenant 1.................................................................................................. S-68
Tenant 2.................................................................................................. S-68
Terms and Conditions...................................................................................... S-92
Total Accor Credit Lease Loan............................................................................. S-64
Total Credit Lease Loan................................................................................... S-22, S-46
Total Prime Retail Pool Loan.............................................................................. S-53
Treasury Regulations...................................................................................... S-134
Trust REMICs.............................................................................................. S-134
Trustee Fee............................................................................................... S-124
TTM....................................................................................................... S-67
Type...................................................................................................... S-68
U
U/W Occupancy............................................................................................. S-68
Underwriters.............................................................................................. S-3, S-9, S-137
Underwriting Agreement.................................................................................... S-137
Units..................................................................................................... S-68
Updated Appraisal......................................................................................... S-119
Upper-Tier Distribution Account........................................................................... S-112
Upper-Tier REMIC.......................................................................................... S-13, S-134
V
Voting Rights............................................................................................. S-119
W
Weighted Average Net Mortgage Pass-Through Rate........................................................... S-81
Weighted Average Pass-Through Rate........................................................................ S-81
Withheld Amounts.......................................................................................... S-78, S-112
Y
Year Built/Renovated...................................................................................... S-68
</TABLE>
S-146
<PAGE>
Annex A: Characteristics of the Notes in the Pool
<TABLE>
<CAPTION>
Loan Loan Cut-off Date Principal Monthly Balloon/Anticipated
# Loan Name Type Balance Payment Repayment Date Balance
---- --------- ---- ---------------------- ------- ----------------------
<S> <C> <C> <C> <C> <C>
1 Prime Retail III Hyper $81,857,269 $ 624,101.85 $73,982,703
2 Soho Grand Hotel Hyper $60,041,752 $ 483,472.45 $50,193,326
3 Morgantown Mall and Commons Hyper $58,350,000 $ 383,902.97 $50,740,213
4 5670 Wilshire Building Hyper $54,431,011 $ 418,527.00 $49,248,419
5 Shidler Industrial Portfolio Hyper $53,000,000 $ 357,965.58 $46,405,871
6 Eastland Mall Hyper $46,673,225 $ 358,876.72 $42,229,221
7 Airport Industrial Hyper $37,400,000 $ 265,208.88 $32,648,268
7 Airport Industrial Fully $ 2,100,000 $ 32,262.23 $ 12,413
8 Banyan Pool I Hyper $34,763,291 $ 264,728.13 $31,418,401
9 Land Apartments Hyper $14,796,698 $ 106,414.65 $13,168,325
9 Land Apartments Hyper $ 6,852,162 $ 49,279.27 $ 6,098,083
9 Land Apartments Hyper $ 4,965,335 $ 35,709.61 $ 4,418,902
10 Burgandy Properties Hyper $17,709,939 $ 130,214.75 $15,877,613
11 One Park Plaza Hyper $16,000,000 $ 104,521.27 $13,887,160
12 Beckman Instruments - Brea Fully $15,441,913 $ 183,620.77 $ 1
13 Sun Life RV Resort Hyper $15,410,802 $ 105,842.48 $13,605,579
14 1400 Union Meeting Road Hyper $14,865,488 $ 114,458.04 $13,420,639
15 Cliffs of Dunwoody Hyper $13,976,544 $ 100,781.88 $12,463,267
16 6400 Shafer Court Hyper $13,048,409 $ 100,467.29 $11,825,054
17 Walzem Plaza S/C Hyper $12,425,236 $ 84,272.89 $10,851,000
18 Beckman - Miami Fully $12,196,303 $ 145,027.02 $ --
19 Money Store Fully $12,169,935 $ 94,014.55 $ --
20 Greenwich Portfolio Hyper $11,588,734 $ 89,196.16 $10,312,749
21 Monte Sano Apts. Hyper $11,184,830 $ 82,144.30 $ 9,973,881
22 Pointe West Hyper $10,803,901 $ 83,072.66 $ 9,775,203
23 Accor-M-Six V Fully $10,287,380 $ 102,853.41 $ --
24 Accor-M-Six III Fully $10,103,716 $ 101,017.15 $ --
25 1129 State Street Hyper $ 9,867,824 $ 75,978.12 $ 8,942,665
26 Accor-M-Six VI Fully $ 9,861,548 $ 98,595.95 $ --
27 Accor-M-Six Penvest II Fully $ 9,827,506 $ 97,639.15 $ --
28 Wasilla Retail Center Hyper $ 9,765,179 $ 72,187.15 $ 8,714,089
29 Accor-M-Six IV Fully $ 9,748,985 $ 97,470.54 $ --
30 Holiday Inn Sunspree-Padre Hyper $ 9,722,992 $ 85,236.57 $ 8,324,157
31 Accor-M-Six Creditvest I Fully $ 9,717,785 $ 96,549.17 $ --
32 Accor-M-Six Limited Partnership Fully $ 9,636,123 $ 96,342.14 $ --
33 Accor-M-Six Creditvest II Fully $ 9,588,731 $ 95,266.96 $ --
34 Rancho San Marcos Hyper $ 9,491,103 $ 72,978.37 $ 8,587,405
35 Accor-M-Six Penvest I Fully $ 9,446,025 $ 93,849.03 $ --
36 Palm Desert Country Club Hyper $ 9,296,755 $ 71,652.97 $ 8,399,958
37 New City Plaza Hyper $ 9,021,361 $ 66,595.06 $ 8,069,497
38 Cinemark Pool B Fully $ 8,860,878 $ 107,736.46 $ 1
39 Nordhoff Industrial Complex Hyper $ 8,360,541 $ 64,534.89 $ 7,556,323
40 Seven Corners Apts. Hyper $ 8,198,171 $ 60,250.52 $ 7,314,421
41 Citibank Office Plaza Hyper $ 8,024,402 $ 61,807.93 $ 7,276,353
42 Savannah Apartments Hyper $ 7,994,922 $ 52,955.83 $ 6,968,824
43 Belleville Manor Hyper $ 7,981,228 $ 56,101.59 $ 6,937,949
44 201-213 Fordham Rd. Hyper $ 7,956,903 $ 61,181.70 $ 7,170,216
45 Plantation Club Apartments Hyper $ 7,931,989 $ 60,862.26 $ 7,220,359
46 Silver Pointe SC Hyper $ 7,703,480 $ 54,189.12 $ 6,812,533
47 Central Medical Park Hyper $ 7,448,692 $ 56,134.23 $ 6,709,966
48 Friendly Village MHP Hyper $ 7,086,000 $ 48,242.04 $ 6,227,481
49 Springhill Business Center Hyper $ 7,038,428 $ 51,768.21 $ 6,298,504
50 Pacific Court Office Building Hyper $ 7,000,000 $ 45,494.97 $ 6,034,572
51 Banyan Pool 3 Hyper $ 6,947,966 $ 52,875.28 $ 6,276,733
52 Pride Center Hyper $ 6,750,000 $ 49,181.54 $ 5,409,680
53 Hidden Harbor Hyper $ 6,647,206 $ 48,908.29 $ 5,962,698
54 Oshkosh Center II Hyper $ 6,578,864 $ 47,535.30 $ 5,270,088
55 Waterford Plaza Hyper $ 6,552,811 $ 50,581.05 $ 5,948,022
56 Palm Harbor Apartments Hyper $ 6,501,098 $ 45,987.88 $ 5,761,164
57 Fiserve Building Hyper $ 6,395,157 $ 49,240.05 $ 5,795,576
58 Airport Atrium Hyper $ 2,900,911 $ 22,365.87 $ 2,626,589
58 Airport Atrium Hyper $ 2,103,161 $ 16,215.26 $ 1,904,277
58 Airport Atrium Hyper $ 1,378,863 $ 10,607.58 $ 1,252,684
59 Wicomico Hyper $ 6,319,292 $ 48,625.97 $ 5,724,266
60 Seven Mobile Home Properties Hyper $ 6,132,298 $ 44,919.14 $ 4,942,136
61 SL-Tulsa Hyper $ 6,100,000 $ 41,819.83 $ 5,361,821
62 Courtyard Apts. Hyper $ 5,996,214 $ 39,797.34 $ 5,203,003
63 Old Metairie Village Shopping Hyper $ 5,993,034 $ 40,930.58 $ 5,243,439
64 Willowick Industrial Park Hyper $ 5,860,886 $ 44,684.97 $ 5,297,076
65 Courtney Square Apartments Hyper $ 5,800,000 $ 40,660.80 $ 4,505,538
66 Plaza de la Fiesta III & IV Hyper $ 5,727,300 $ 43,798.83 $ 5,152,981
67 Motorola Hyper $ 5,669,902 $ 43,612.75 $ 5,133,030
68 Madison Village Hyper $ 5,546,899 $ 38,275.75 $ 4,886,649
69 K-Mart Shopping Center (Benton Harbor) Hyper $ 5,496,726 $ 37,184.54 $ 4,794,140
70 Parkleigh North Apts. Hyper $ 5,426,501 $ 35,761.99 $ 4,699,636
<CAPTION>
Loan Anticipated Repayment Maturity
# Loan Name Date Date Rate
---- --------- -------------------- -------- ----
<S> <C> <C> <C> <C>
1 Prime Retail III 11-Jul-08 11-Jul-28 8.400% *
2 Soho Grand Hotel 11-Sep-08 11-Sep-23 8.500% *
3 Morgantown Mall and Commons 11-Sep-08 11-Sep-28 6.890% *
4 5670 Wilshire Building 11-Sep-08 11-Sep-28 8.500% *
5 Shidler Industrial Portfolio 11-Sep-08 11-Sep-28 7.150% *
6 Eastland Mall 11-Sep-08 11-Sep-28 8.500% *
7 Airport Industrial 11-Sep-08 11-Sep-27 7.550% *
7 Airport Industrial 11-Sep-05 11-Sep-05 7.550% *
8 Banyan Pool I 11-Jun-08 11-Jun-28 8.380% *
9 Land Apartments 11-Oct-08 11-Oct-28 7.790% *
9 Land Apartments 11-Oct-08 11-Oct-28 7.790% *
9 Land Apartments 11-Oct-08 11-Oct-28 7.790% *
10 Burgandy Properties 11-May-08 11-May-28 8.000% *
11 One Park Plaza 11-Sep-08 11-Sep-28 6.820% *
12 Beckman Instruments - Brea 11-Sep-08 11-Sep-08 7.540%
13 Sun Life RV Resort 11-Jan-08 11-Jan-28 7.260% *
14 1400 Union Meeting Road 11-Sep-08 11-Jun-28 8.500% *
15 Cliffs of Dunwoody 11-Jun-08 11-Jun-28 7.800% *
16 6400 Shafer Court 11-Jun-08 11-Jun-28 8.500% *
17 Walzem Plaza S/C 11-Oct-08 11-Jul-28 7.180% *
18 Beckman - Miami 11-Sep-08 11-Sep-08 7.540%
19 Money Store 11-Sep-08 11-Sep-08 7.250% *
20 Greenwich Portfolio 11-Nov-08 11-Sep-27 8.430% *
21 Monte Sano Apts. 11-Oct-08 11-Jul-28 8.000% *
22 Pointe West 11-Sep-08 11-Sep-28 8.500% *
23 Accor-M-Six V 1-Sep-08 1-Sep-08 7.030%
24 Accor-M-Six III 1-Sep-08 1-Sep-08 7.030%
25 1129 State Street 11-Jun-08 11-Jun-28 8.500% *
26 Accor-M-Six VI 1-Sep-08 1-Sep-08 7.030%
27 Accor-M-Six Penvest II 1-Sep-08 1-Sep-08 7.030%
28 Wasilla Retail Center 11-Dec-08 11-Sep-28 8.080% *
29 Accor-M-Six IV 1-Sep-08 1-Sep-08 7.030%
30 Holiday Inn Sunspree-Padre 11-Jul-08 11-Apr-23 9.500% *
31 Accor-M-Six Creditvest I 1-Sep-08 1-Sep-08 7.030%
32 Accor-M-Six Limited Partnership 1-Sep-08 1-Sep-08 7.030%
33 Accor-M-Six Creditvest II 1-Sep-08 1-Sep-08 7.030%
34 Rancho San Marcos 11-Sep-08 11-Sep-28 8.500% *
35 Accor-M-Six Penvest I 1-Sep-08 1-Sep-08 7.030%
36 Palm Desert Country Club 11-Jul-08 11-Apr-28 8.500% *
37 New City Plaza 11-Jun-08 11-Mar-28 8.030% *
38 Cinemark Pool B 11-Sep-08 11-Sep-08 8.049%
39 Nordhoff Industrial Complex 11-May-08 11-Feb-28 8.500% *
40 Seven Corners Apts. 11-Sep-08 11-Jun-28 8.000% *
41 Citibank Office Plaza 11-May-08 11-May-28 8.500% *
42 Savannah Apartments 11-Aug-08 11-Aug-28 6.950% *
43 Belleville Manor 11-May-09 11-May-28 7.530% *
44 201-213 Fordham Rd. 11-Dec-08 11-Sep-28 8.500% *
45 Plantation Club Apartments 11-May-07 11-May-27 8.385% *
46 Silver Pointe SC 11-Mar-08 11-Dec-27 7.500% *
47 Central Medical Park 11-Dec-07 11-Sep-27 8.210% *
48 Friendly Village MHP 11-Jun-08 11-Jun-28 7.210% *
49 Springhill Business Center 11-Sep-08 11-Sep-28 8.025% *
50 Pacific Court Office Building 11-Dec-08 11-Sep-28 6.770% *
51 Banyan Pool 3 11-Jul-08 11-Jul-28 8.380% *
52 Pride Center 11-Dec-08 11-Sep-23 7.340% *
53 Hidden Harbor 11-Apr-08 11-Apr-28 8.000% *
54 Oshkosh Center II 11-Sep-08 11-Jun-23 7.210% *
55 Waterford Plaza 11-Feb-08 11-Feb-28 8.500% *
56 Palm Harbor Apartments 11-Feb-08 11-Nov-27 7.550% *
57 Fiserve Building 11-Jun-08 11-Jun-28 8.500% *
58 Airport Atrium 11-May-08 11-May-28 8.500% *
58 Airport Atrium 11-May-08 11-May-28 8.500% *
58 Airport Atrium 11-May-08 11-May-28 8.500% *
59 Wicomico 11-Jul-08 11-Jul-28 8.500% *
60 Seven Mobile Home Properties 11-Jul-08 11-Apr-23 7.340% *
61 SL-Tulsa 11-Sep-08 11-Sep-28 7.300% *
62 Courtyard Apts. 11-Nov-08 11-Aug-28 6.970% *
63 Old Metairie Village Shopping 11-Oct-08 11-Jul-28 7.250% *
64 Willowick Industrial Park 11-Jul-08 11-Jul-28 8.400% *
65 Courtney Square Apartments 11-Dec-08 11-Sep-23 6.910%
66 Plaza de la Fiesta III & IV 11-Dec-08 11-Dec-24 8.440% *
67 Motorola 11-Aug-08 11-Aug-28 8.500% *
68 Madison Village 11-Aug-08 11-Aug-28 7.360% *
69 K-Mart Shopping Center (Benton Harbor) 11-Nov-08 11-Aug-28 7.160% *
70 Parkleigh North Apts. 11-Nov-08 11-Aug-28 6.900% *
A-1
<PAGE>
Annex A: Characteristics of the Notes in the Pool
</TABLE>
<TABLE>
<CAPTION>
Loan Additional Anticipated Remaining Remaining
# Loan Name Amortization Amortization Seasoning Term Lockout DSCR
---- --------- ------------ ------------ --------- --------------------- --------- ----
<S> <C> <C> <C> <C> <C> <C> <C>
1 Prime Retail III 360 2 118 114 1.54
2 Soho Grand Hotel 300 0 120 119 1.86
3 Morgantown Mall and Commons 360 0 120 119 1.38
4 5670 Wilshire Building 360 0 120 119 1.28
5 Shidler Industrial Portfolio 360 0 120 119 1.19
6 Eastland Mall 360 0 120 119 1.31
7 Airport Industrial 348 0 120 119 1.33
7 Airport Industrial 84 0 84 83 1.00
8 Banyan Pool I 360 3 117 113 1.72
9 Land Apartments 360 -1 121 117 1.21
9 Land Apartments 360 -1 121 117 1.21
9 Land Apartments 360 -1 121 117 1.21
10 Burgandy Properties 360 4 116 112 1.30
11 One Park Plaza 360 0 120 119 1.61
12 Beckman Instruments - Brea 122 2 120 119 1.00
13 Sun Life RV Resort 360 8 112 105 1.22
14 1400 Union Meeting Road 360 3 120 113 1.23
15 Cliffs of Dunwoody 360 3 117 116 1.23
16 6400 Shafer Court 360 3 117 116 1.26
17 Walzem Plaza S/C 360 2 121 114 1.35
18 Beckman - Miami 122 2 120 119 1.00
19 Money Store 124 4 120 119 1.00
20 Greenwich Portfolio 349 1 122 115 1.39
21 Monte Sano Apts. 360 2 121 114 1.18
22 Pointe West 360 0 120 119 1.21
23 Accor-M-Six V 124 4 120 119 1.00
24 Accor-M-Six III 124 4 120 119 1.00
25 1129 State Street 360 3 117 116 1.35
26 Accor-M-Six VI 124 4 120 119 1.00
27 Accor-M-Six Penvest II 124 4 120 119 1.00
28 Wasilla Retail Center 360 0 123 116 1.48
29 Accor-M-Six IV 124 4 120 119 1.00
30 Holiday Inn Sunspree-Padre 300 5 118 111 1.57
31 Accor-M-Six Creditvest I 124 4 120 119 1.00
32 Accor-M-Six Limited Partnership 124 4 120 119 1.00
33 Accor-M-Six Creditvest II 124 4 120 119 1.00
34 Rancho San Marcos 360 0 120 119 1.26
35 Accor-M-Six Penvest I 124 4 120 119 1.00
36 Palm Desert Country Club 360 5 118 111 1.25
37 New City Plaza 360 6 117 110 1.14
38 Cinemark Pool B 126 6 120 119 1.00
39 Nordhoff Industrial Complex 360 7 116 109 1.26
40 Seven Corners Apts. 360 3 120 113 1.30
41 Citibank Office Plaza 360 4 116 115 1.27
42 Savannah Apartments 360 1 119 118 1.50
43 Belleville Manor 360 4 128 121 1.31
44 201-213 Fordham Rd. 300 0 123 116 1.24
45 Plantation Club Apartments 360 16 104 97 1.21
46 Silver Pointe SC 360 9 114 107 1.28
47 Central Medical Park 360 12 111 104 1.31
48 Friendly Village MHP 360 3 117 110 1.56
49 Springhill Business Center 360 0 120 119 1.50
50 Pacific Court Office Building 360 0 123 116 1.67
51 Banyan Pool 3 360 2 118 114 1.66
52 Pride Center 300 0 123 116 1.65
53 Hidden Harbor 360 5 115 108 1.21
54 Oshkosh Center II 300 3 120 113 1.42
55 Waterford Plaza 360 7 113 112 1.20
56 Palm Harbor Apartments 360 10 113 106 1.30
57 Fiserve Building 360 3 117 116 1.28
58 Airport Atrium 360 5 116 115 1.28
58 Airport Atrium 360 5 116 115 1.28
58 Airport Atrium 360 4 116 115 1.28
59 Wicomico 360 2 118 117 1.32
60 Seven Mobile Home Properties 300 5 118 111 1.31
61 SL-Tulsa 360 0 120 119 1.51
62 Courtyard Apts. 360 1 122 115 1.36
63 Old Metairie Village Shopping 360 2 121 114 1.48
64 Willowick Industrial Park 360 2 118 114 1.28
65 Courtney Square Apartments 300 0 123 116 1.37
66 Plaza de la Fiesta III & IV 315 0 123 116 1.36
67 Motorola 360 1 119 118 1.27
68 Madison Village 360 1 119 118 1.52
69 K-Mart Shopping Center (Benton Harbor) 360 1 122 115 1.53
70 Parkleigh North Apts. 360 1 122 115 1.44
<CAPTION>
Loan Cut-off Date Balloon/ Anticipated Repayment
# Loan Name LTV Date LTV
---- --------- ------------ -----------------------------
<S> <C> <C> <C>
1 Prime Retail III 57% 52%
2 Soho Grand Hotel 57% 48%
3 Morgantown Mall and Commons 80% 70%
4 5670 Wilshire Building 73% 66%
5 Shidler Industrial Portfolio 75% 66%
6 Eastland Mall 73% 66%
7 Airport Industrial 82% 68%
7 Airport Industrial 82% 68%
8 Banyan Pool I 56% 51%
9 Land Apartments 78% 69%
9 Land Apartments 78% 69%
9 Land Apartments 78% 69%
10 Burgandy Properties 76% 68%
11 One Park Plaza 62% 53%
12 Beckman Instruments - Brea 98% 0%
13 Sun Life RV Resort 78% 69%
14 1400 Union Meeting Road 71% 64%
15 Cliffs of Dunwoody 76% 68%
16 6400 Shafer Court 61% 55%
17 Walzem Plaza S/C 78% 68%
18 Beckman - Miami 97% 0%
19 Money Store 96% 0%
20 Greenwich Portfolio 63% 56%
21 Monte Sano Apts. 76% 68%
22 Pointe West 73% 66%
23 Accor-M-Six V 110% 0%
24 Accor-M-Six III 99% 0%
25 1129 State Street 69% 63%
26 Accor-M-Six VI 89% 0%
27 Accor-M-Six Penvest II 99% 0%
28 Wasilla Retail Center 67% 60%
29 Accor-M-Six IV 104% 0%
30 Holiday Inn Sunspree-Padre 65% 55%
31 Accor-M-Six Creditvest I 99% 0%
32 Accor-M-Six Limited Partnership 88% 0%
33 Accor-M-Six Creditvest II 96% 0%
34 Rancho San Marcos 70% 63%
35 Accor-M-Six Penvest I 96% 0%
36 Palm Desert Country Club 64% 58%
37 New City Plaza 78% 70%
38 Cinemark Pool B 97% 0%
39 Nordhoff Industrial Complex 66% 59%
40 Seven Corners Apts. 79% 70%
41 Citibank Office Plaza 66% 60%
42 Savannah Apartments 80% 70%
43 Belleville Manor 76% 66%
44 201-213 Fordham Rd. 66% 60%
45 Plantation Club Apartments 74% 67%
46 Silver Pointe SC 77% 68%
47 Central Medical Park 70% 63%
48 Friendly Village MHP 71% 62%
49 Springhill Business Center 60% 53%
50 Pacific Court Office Building 54% 46%
51 Banyan Pool 3 44% 40%
52 Pride Center 48% 39%
53 Hidden Harbor 75% 67%
54 Oshkosh Center II 74% 59%
55 Waterford Plaza 72% 65%
56 Palm Harbor Apartments 78% 69%
57 Fiserve Building 70% 63%
58 Airport Atrium 68% 62%
58 Airport Atrium 68% 62%
58 Airport Atrium 68% 62%
59 Wicomico 71% 64%
60 Seven Mobile Home Properties 84% 68%
61 SL-Tulsa 74% 65%
62 Courtyard Apts. 75% 65%
63 Old Metairie Village Shopping 76% 66%
64 Willowick Industrial Park 70% 63%
65 Courtney Square Apartments 77% 60%
66 Plaza de la Fiesta III & IV 68% 61%
67 Motorola 73% 66%
68 Madison Village 79% 70%
69 K-Mart Shopping Center (Benton Harbor) 58% 51%
70 Parkleigh North Apts. 79% 69%
</TABLE>
A-2
<PAGE>
Annex A: Characteristics of the Notes in the Pool
<TABLE>
<CAPTION>
Loan Loan Cut-off Date Principal Monthly Balloon/Anticipated
# Loan Name Type Balance Payment Repayment Date Balance
---- --------- ---- ---------------------- ------- ----------------------
<C> <C> <C> <C> <C> <C>
71 Southgate Estates MHP Hyper $ 5,044,555 $ 35,241.20 $ 4,460,702
72 7 West 45th St. Hyper $ 4,984,552 $ 34,874.39 $ 4,244,302
73 2100 Swift Road Hyper $ 4,734,330 $ 36,466.17 $ 4,222,720
74 Westwind Apts. Hyper $ 4,730,000 $ 31,188.43 $ 4,092,644
75 Stanford Townhouses Hyper $ 4,694,158 $ 31,363.97 $ 4,083,000
76 Mentor Industrial Hyper $ 4,691,155 $ 34,640.92 $ 3,784,276
77 New Braeburn Hyper $ 4,671,280 $ 32,467.25 $ 4,127,069
78 SL-Mogadore Hyper $ 4,554,309 $ 31,223.02 $ 4,003,179
79 ABFM Industrial 3712Building Hyper $ 4,518,966 $ 34,794.15 $ 4,079,746
80 1567-1575 Lexington Avenue Hyper $ 4,391,362 $ 30,105.34 $ 3,551,472
81 Mason Manor Hyper $ 4,339,792 $ 30,505.24 $ 3,772,510
82 118-40 Metropolitan Ave. Hyper $ 4,119,000 $ 28,745.40 $ 3,250,969
83 Clark & Diversey Shopping Hyper $ 4,087,720 $ 31,505.32 $ 3,693,405
84 Stanbridge Apartments Hyper $ 3,991,779 $ 28,450.04 $ 3,180,225
85 Village Townhomes Hyper $ 3,991,773 $ 26,746.55 $ 3,493,774
86 Ventu Park Shopping Center Hyper $ 3,928,007 $ 30,274.37 $ 3,549,098
87 Bowen's Wharf Hyper $ 3,872,190 $ 27,607.25 $ 3,087,367
88 Muraco Portfolio Hyper $ 3,867,053 $ 27,585.77 $ 3,081,831
89 Sherman West Apartments Hyper $ 3,795,644 $ 26,025.88 $ 3,340,331
90 Parkside Village Apts. Hyper $ 3,697,701 $ 24,665.91 $ 3,212,919
91 Harbor Greens Hyper $ 3,638,747 $ 28,162.53 $ 2,993,791
92 710 State Street Hyper $ 3,630,308 $ 28,983.93 $ 3,318,757
93 Fleming Foods - OK Hyper $ 3,627,886 $ 24,713.78 $ 3,170,083
94 Playa Vista Plaza Hyper $ 3,595,277 $ 23,589.33 $ 3,111,903
95 122-126 East 103rd Street Hyper $ 3,592,933 $ 24,631.64 $ 2,905,749
96 Stonewall Shopping Center Hyper $ 3,497,864 $ 23,473.94 $ 3,044,220
97 Tempo Cabana Apts. Hyper $ 3,492,419 $ 22,934.07 $ 3,025,114
98 Westmont Apts. Hyper $ 3,412,540 $ 24,449.95 $ 2,313,611
99 Great Western Bank Building Hyper $ 3,378,802 $ 24,844.93 $ 2,863,582
100 Chelmsford Crossing Hyper $ 3,376,291 $ 26,422.19 $ 2,784,372
101 Safeway Industrial Hyper $ 3,349,078 $ 25,534.27 $ 3,026,900
102 Bentley Mills Distribution Facility Fully $ 3,298,811 $ 31,626.20 $ --
103 Twin Pines Hyper $ 3,200,000 $ 23,731.04 $ 2,602,296
104 Corporate West One Hyper $ 3,131,768 $ 25,617.92 $ 2,649,468
105 Ingle West Office Building Hyper $ 3,097,778 $ 23,851.60 $ 2,796,689
106 Colony Ridge Apts. Hyper $ 3,089,134 $ 22,126.14 $ 2,469,117
107 SL-Lima Hyper $ 3,087,909 $ 23,090.51 $ 2,525,807
108 Collins Nursing Home Hyper $ 3,047,348 $ 23,137.74 $ 2,480,242
109 Westgrove Towers Hyper $ 3,000,000 $ 19,557.76 $ 2,588,414
110 Apartments of Westgrove Hyper $ 2,992,442 $ 20,526.37 $ 2,623,899
111 West Third Street Hyper $ 2,950,000 $ 21,551.40 $ 2,366,449
112 Pollyanna Apartments Hyper $ 2,940,339 $ 21,534.01 $ 2,629,839
113 Bellemeade Plaza Hyper $ 2,611,526 $ 19,415.60 $ 2,115,489
113 Bellemeade Plaza Fully $ 192,867 $ 7,780.70 $ --
114 Hiawassee Oaks Hyper $ 2,790,502 $ 18,987.12 $ 2,442,283
115 Giant Food Store Hyper $ 2,698,413 $ 18,327.28 $ 2,356,020
116 Timber Ridge Apts. Hyper $ 2,691,353 $ 19,446.26 $ 2,155,945
117 Bird Creek / Comfort Creek Hyper $ 2,680,000 $ 19,630.97 $ 2,151,871
118 GRW Building Hyper $ 2,591,802 $ 18,929.59 $ 2,190,434
119 University Hills Hyper $ 2,591,271 $ 17,701.33 $ 2,270,266
120 Grove Gate Apts Hyper $ 2,547,376 $ 18,104.29 $ 2,025,739
121 Colts Neck Shopping Center Hyper $ 2,497,554 $ 18,118.52 $ 2,000,596
122 Keosippi Mall Hyper $ 2,468,434 $ 19,882.34 $ 2,117,793
123 Pineville Commerce Center Hyper $ 2,395,247 $ 17,331.91 $ 1,918,500
124 90-92 Thompson Street Hyper $ 2,394,188 $ 16,649.87 $ 2,106,912
125 Walton Manor MHP Hyper $ 2,334,992 $ 16,359.94 $ 1,865,418
126 238 E. 111th/204 E. 112th Street Hyper $ 2,295,485 $ 15,736.88 $ 1,856,450
127 Palmwood Terrace Apartments Hyper $ 2,275,371 $ 15,322.33 $ 1,984,227
128 Hartnell Plaza Hyper $ 2,252,738 $ 16,333.68 $ 1,899,613
129 Carytown Square Hyper $ 2,244,796 $ 15,855.77 $ 1,983,481
130 Oak Creek Apts. Hyper $ 2,242,961 $ 15,732.33 $ 1,978,687
131 Hollywood News Hyper $ 2,241,115 $ 16,671.23 $ 1,815,065
132 Chateau Apts. Hyper $ 2,202,349 $ 14,866.81 $ 1,923,507
133 Miller Road Hyper $ 2,136,104 $ 15,559.53 $ 1,717,431
134 The Kellogg Property Hyper $ 2,075,000 $ 13,888.74 $ 1,803,180
135 Maple Lawn III Hyper $ 2,068,087 $ 14,169.24 $ 1,813,298
136 Stapley-McKellips Center Hyper $ 2,053,243 $ 14,150.77 $ 1,803,062
137 239 S. La Cienega Blvd. Hyper $ 2,031,676 $ 14,903.34 $ 1,637,476
138 Sunflower Terrace Apts. Hyper $ 1,989,165 $ 14,430.38 $ 1,597,744
139 Yearling Hyper $ 1,948,403 $ 13,283.55 $ 1,706,151
140 Briarwyck Apts. Hyper $ 1,900,000 $ 13,211.42 $ 1,497,647
141 H Lazy F MHP Hyper $ 1,796,658 $ 13,336.99 $ 1,451,997
142 Bayshore/Rockport Oaks Hyper $ 1,750,000 $ 11,443.68 $ 1,511,172
143 Burnhaven Hyper $ 1,743,404 $ 13,410.23 $ 1,578,323
144 Colton Midtown Plaza Hyper $ 1,700,000 $ 12,618.19 $ 1,382,883
<CAPTION>
Loan Anticipated Repayment Maturity
# Loan Name Date Date Rate
---- --------- -------------------- -------- ----
<S> <C> <C> <C> <C>
71 Southgate Estates MHP 11-Jul-08 11-Jul-28 7.480% *
72 7 West 45th St. 11-Aug-08 11-May-26 7.270% *
73 2100 Swift Road 11-May-09 11-May-28 8.500% *
74 Westwind Apts. 11-Dec-08 11-Sep-28 6.910% *
75 Stanford Townhouses 11-Oct-08 11-Jul-28 7.030% *
76 Mentor Industrial 11-Oct-08 11-Jul-23 7.470% *
77 New Braeburn 11-Jun-08 11-Jun-28 7.420% *
78 SL-Mogadore 11-Sep-08 11-Sep-28 7.300% *
79 ABFM Industrial 3712Building 11-Sep-08 11-Jun-28 8.500% *
80 1567-1575 Lexington Avenue 11-Jul-08 11-Jul-28 7.280% *
81 Mason Manor 11-May-09 11-May-28 7.530% *
82 118-40 Metropolitan Ave. 11-Dec-08 11-Sep-23 6.860% *
83 Clark & Diversey Shopping 11-Jul-08 11-Apr-28 8.500% *
84 Stanbridge Apartments 11-Oct-08 11-Jul-23 7.070% *
85 Village Townhomes 11-Jun-08 11-Jun-28 7.050% *
86 Ventu Park Shopping Center 11-Jul-08 11-Apr-28 8.500% *
87 Bowen's Wharf 11-Sep-08 11-Jun-23 7.060% *
88 Muraco Portfolio 11-Oct-08 11-Jul-23 7.080% *
89 Sherman West Apartments 11-Jul-08 11-Jul-28 7.290% *
90 Parkside Village Apts. 11-Nov-08 11-Aug-28 7.020% *
91 Harbor Greens 11-Jan-08 11-Oct-22 7.890% *
92 710 State Street 11-Jun-08 11-Jun-28 8.900% *
93 Fleming Foods - OK 11-Nov-08 11-Aug-28 7.230% *
94 Playa Vista Plaza 11-Oct-08 11-Jul-28 6.850% *
95 122-126 East 103rd Street 11-Jul-08 11-Jul-28 7.280% *
96 Stonewall Shopping Center 11-Nov-08 11-Aug-28 7.080% *
97 Tempo Cabana Apts. 11-Sep-08 11-Jun-28 6.850% *
98 Westmont Apts. 11-Jun-08 11-Mar-23 7.030% *
99 Great Western Bank Building 11-May-08 11-Feb-25 7.650% *
100 Chelmsford Crossing 11-May-08 11-Feb-23 8.080% *
101 Safeway Industrial 11-Jul-08 11-Jul-28 8.400% *
102 Bentley Mills Distribution Facility 11-Sep-08 11-Sep-08 7.880%
103 Twin Pines 11-Sep-08 11-Sep-23 7.540% *
104 Corporate West One 11-Jun-07 11-Jun-22 8.510% *
105 Ingle West Office Building 11-Sep-08 11-Jun-28 8.500% *
106 Colony Ridge Apts. 11-Aug-08 11-May-23 7.100% *
107 SL-Lima 11-May-08 11-May-23 7.590% *
108 Collins Nursing Home 11-Nov-08 11-Aug-25 7.800% *
109 Westgrove Towers 11-Dec-08 11-Sep-28 6.800% *
110 Apartments of Westgrove 11-Aug-08 11-May-28 7.280% *
111 West Third Street 11-Dec-08 11-Sep-23 7.370% *
112 Pollyanna Apartments 11-Jan-08 11-Oct-27 7.910% *
113 Bellemeade Plaza 11-Jul-08 11-Apr-23 7.510% *
113 Bellemeade Plaza 11-Jan-01 11-Jan-01 7.510% *
114 Hiawassee Oaks 11-Jul-08 11-Apr-28 7.190% *
115 Giant Food Store 11-Nov-08 11-Aug-28 7.200% *
116 Timber Ridge Apts. 11-Sep-08 11-Jun-23 7.210% *
117 Bird Creek / Comfort Creek 11-Dec-08 11-Sep-23 7.400% *
118 GRW Building 11-Aug-08 11-May-25 7.610% *
119 University Hills 11-Jul-08 11-Apr-28 7.230% *
120 Grove Gate Apts 11-Nov-08 11-Aug-23 7.050% *
121 Colts Neck Shopping Center 11-Nov-08 11-Aug-23 7.280% *
122 Keosippi Mall 11-Nov-08 11-Jan-25 8.670% *
123 Pineville Commerce Center 11-Oct-08 11-Jul-23 7.240% *
124 90-92 Thompson Street 11-Aug-08 11-May-28 7.420% *
125 Walton Manor MHP 11-Jul-08 11-Jul-23 6.880% *
126 238 E. 111th/204 E. 112th Street 11-Jul-08 11-Jul-28 7.280% *
127 Palmwood Terrace Apartments 11-Sep-08 11-Jun-28 7.100% *
128 Hartnell Plaza 11-Aug-08 11-May-25 7.530% *
129 Carytown Square 11-Aug-08 11-May-28 7.580% *
130 Oak Creek Apts. 11-Jul-08 11-Apr-28 7.500% *
131 Hollywood News 11-Aug-08 11-May-23 7.530% *
132 Chateau Apts. 11-Jul-08 11-Apr-28 7.110% *
133 Miller Road 11-Aug-08 11-May-23 7.290% *
134 The Kellogg Property 11-Dec-08 11-Sep-28 7.060% *
135 Maple Lawn III 11-Jul-08 11-Apr-28 7.260% *
136 Stapley-McKellips Center 11-Jul-08 11-Apr-28 7.320% *
137 239 S. La Cienega Blvd. 11-Aug-08 11-May-23 7.370% *
138 Sunflower Terrace Apts. 11-Jul-08 11-Apr-23 7.230% *
139 Yearling 11-Jul-08 11-Apr-28 7.210% *
140 Briarwyck Apts. 11-Dec-08 11-Sep-23 6.820% *
141 H Lazy F MHP 11-Oct-08 11-Jul-23 7.530% *
142 Bayshore/Rockport Oaks 11-Dec-08 11-Sep-28 6.830% *
143 Burnhaven 11-Aug-08 11-Aug-28 8.500% *
144 Colton Midtown Plaza 11-Sep-08 11-Sep-23 7.550% *
</TABLE>
A-3
<PAGE>
Annex A: Characteristics of the Notes in the Pool
<TABLE>
<CAPTION>
Loan Additional Anticipated Remaining Remaining
# Loan Name Amortization Amortization Seasoning Term Lockout DSCR
---- --------- ------------ ------------ --------- --------------------- --------- ----
<S> <C> <C> <C> <C> <C> <C> <C>
71 Southgate Estates MHP 360 2 118 111 1.32
72 7 West 45th St. 336 4 119 112 1.47
73 2100 Swift Road 360 4 128 127 1.40
74 Westwind Apts. 360 0 123 116 1.39
75 Stanford Townhouses 360 2 121 114 1.41
76 Mentor Industrial 300 2 121 114 1.33
77 New Braeburn 360 3 117 113 1.54
78 SL-Mogadore 360 0 120 119 1.63
79 ABFM Industrial 3712Building 360 3 120 113 1.71
80 1567-1575 Lexington Avenue 360 300 2 118 117 1.73
81 Mason Manor 360 4 128 121 1.28
82 118-40 Metropolitan Ave. 300 0 123 116 1.30
83 Clark & Diversey Shopping 360 5 118 111 1.21
84 Stanbridge Apartments 300 2 121 114 1.34
85 Village Townhomes 360 3 117 116 1.34
86 Ventu Park Shopping Center 360 5 118 111 1.20
87 Bowen's Wharf 300 3 120 113 1.54
88 Muraco Portfolio 300 2 121 114 1.37
89 Sherman West Apartments 360 2 118 111 1.43
90 Parkside Village Apts. 360 1 122 115 1.47
91 Harbor Greens 289 0 112 105 1.96
92 710 State Street 360 3 117 116 1.29
93 Fleming Foods - OK 360 1 122 115 1.27
94 Playa Vista Plaza 360 2 121 114 1.90
95 122-126 East 103rd Street 360 300 2 118 117 1.45
96 Stonewall Shopping Center 360 1 122 115 1.38
97 Tempo Cabana Apts. 360 3 120 113 1.74
98 Westmont Apts. 300 240 6 117 110 1.53
99 Great Western Bank Building 324 7 116 109 1.25
100 Chelmsford Crossing 300 7 116 109 1.54
101 Safeway Industrial 360 2 118 114 1.24
102 Bentley Mills Distribution Facility 125 5 120 119 1.00
103 Twin Pines 300 0 120 119 2.08
104 Corporate West One 292 7 105 98 1.22
105 Ingle West Office Building 360 3 120 113 1.29
106 Colony Ridge Apts. 300 4 119 112 1.79
107 SL-Lima 300 4 116 112 1.38
108 Collins Nursing Home 324 1 122 115 1.68
109 Westgrove Towers 360 0 123 116 2.20
110 Apartments of Westgrove 360 4 119 112 2.09
111 West Third Street 300 0 123 116 1.28
112 Pollyanna Apartments 360 11 112 105 1.41
113 Bellemeade Plaza 300 5 118 111 1.55
113 Bellemeade Plaza 33 5 28 27 1.23
114 Hiawassee Oaks 360 5 118 111 1.50
115 Giant Food Store 360 1 122 115 1.23
116 Timber Ridge Apts. 300 3 120 113 1.62
117 Bird Creek / Comfort Creek 300 0 123 116 1.26
118 GRW Building 324 4 119 112 1.32
119 University Hills 360 5 118 111 1.54
120 Grove Gate Apts 300 1 122 115 1.32
121 Colts Neck Shopping Center 300 1 122 115 1.67
122 Keosippi Mall 317 1 122 115 1.41
123 Pineville Commerce Center 300 2 121 114 1.44
124 90-92 Thompson Street 360 4 119 112 1.43
125 Walton Manor MHP 300 2 118 111 1.99
126 238 E. 111th/204 E. 112th Street 360 300 2 118 117 1.50
127 Palmwood Terrace Apartments 360 3 120 113 1.59
128 Hartnell Plaza 324 4 119 112 1.21
129 Carytown Square 360 4 119 112 1.38
130 Oak Creek Apts. 360 5 118 111 1.54
131 Hollywood News 300 4 119 112 1.51
132 Chateau Apts. 360 5 118 111 1.60
133 Miller Road 300 4 119 112 1.28
134 The Kellogg Property 360 0 123 116 1.41
135 Maple Lawn III 360 5 118 111 1.45
136 Stapley-McKellips Center 360 5 118 111 1.41
137 239 S. La Cienega Blvd. 300 4 119 112 1.29
138 Sunflower Terrace Apts. 300 5 118 111 1.83
139 Yearling 360 5 118 111 1.63
140 Briarwyck Apts. 300 0 123 116 1.84
141 H Lazy F MHP 300 2 121 114 1.69
142 Bayshore/Rockport Oaks 360 0 123 116 1.83
143 Burnhaven 360 1 119 118 1.24
144 Colton Midtown Plaza 300 17 120 119 1.70
<CAPTION>
Loan Cut-off Date Balloon/ Anticipated Repayment
# Loan Name LTV Date LTV
---- --------- ------------ -----------------------------
<S> <C> <C> <C>
71 Southgate Estates MHP 78% 69%
72 7 West 45th St. 49% 42%
73 2100 Swift Road 64% 57%
74 Westwind Apts. 80% 69%
75 Stanford Townhouses 72% 62%
76 Mentor Industrial 63% 50%
77 New Braeburn 75% 67%
78 SL-Mogadore 75% 66%
79 ABFM Industrial 3712Building 57% 52%
80 1567-1575 Lexington Avenue 78% 63%
81 Mason Manor 75% 65%
82 118-40 Metropolitan Ave. 53% 42%
83 Clark & Diversey Shopping 68% 62%
84 Stanbridge Apartments 80% 64%
85 Village Townhomes 77% 67%
86 Ventu Park Shopping Center 67% 61%
87 Bowen's Wharf 58% 46%
88 Muraco Portfolio 76% 60%
89 Sherman West Apartments 74% 65%
90 Parkside Village Apts. 75% 65%
91 Harbor Greens 65% 53%
92 710 State Street 62% 56%
93 Fleming Foods - OK 73% 63%
94 Playa Vista Plaza 43% 37%
95 122-126 East 103rd Street 80% 65%
96 Stonewall Shopping Center 81% 71%
97 Tempo Cabana Apts. 73% 63%
98 Westmont Apts. 68% 46%
99 Great Western Bank Building 73% 62%
100 Chelmsford Crossing 73% 61%
101 Safeway Industrial 68% 62%
102 Bentley Mills Distribution Facility 97% 0%
103 Twin Pines 75% 61%
104 Corporate West One 67% 57%
105 Ingle West Office Building 65% 59%
106 Colony Ridge Apts. 66% 53%
107 SL-Lima 67% 55%
108 Collins Nursing Home 75% 61%
109 Westgrove Towers 58% 50%
110 Apartments of Westgrove 50% 44%
111 West Third Street 74% 59%
112 Pollyanna Apartments 79% 71%
113 Bellemeade Plaza 44% 33%
113 Bellemeade Plaza 44% 33%
114 Hiawassee Oaks 85% 74%
115 Giant Food Store 74% 65%
116 Timber Ridge Apts. 82% 65%
117 Bird Creek / Comfort Creek 72% 58%
118 GRW Building 65% 55%
119 University Hills 65% 57%
120 Grove Gate Apts 80% 63%
121 Colts Neck Shopping Center 69% 56%
122 Keosippi Mall 69% 59%
123 Pineville Commerce Center 67% 54%
124 90-92 Thompson Street 65% 57%
125 Walton Manor MHP 56% 45%
126 238 E. 111th/204 E. 112th Street 77% 62%
127 Palmwood Terrace Apartments 80% 70%
128 Hartnell Plaza 72% 60%
129 Carytown Square 74% 65%
130 Oak Creek Apts. 75% 66%
131 Hollywood News 74% 60%
132 Chateau Apts. 76% 66%
133 Miller Road 72% 58%
134 The Kellogg Property 70% 61%
135 Maple Lawn III 75% 65%
136 Stapley-McKellips Center 79% 69%
137 239 S. La Cienega Blvd. 80% 64%
138 Sunflower Terrace Apts. 79% 64%
139 Yearling 78% 68%
140 Briarwyck Apts. 82% 64%
141 H Lazy F MHP 60% 49%
142 Bayshore/Rockport Oaks 80% 69%
143 Burnhaven 73% 66%
144 Colton Midtown Plaza 34% 28%
</TABLE>
A-4
<PAGE>
Annex A: Characteristics of the Notes in the Pool
<TABLE>
<CAPTION>
Loan Loan Cut-off Date Principal Monthly Balloon/Anticipated
# Loan Name Type Balance Payment Repayment Date Balance
---- --------- ---- ---------------------- ------- ----------------------
<S> <C> <C> <C> <C> <C>
145 Sax Drugs Hyper $ 1,693,119 $ 12,463.50 $ 1,366,272
146 Sea-Tac Gardens Apartments Hyper $ 1,692,665 $ 11,553.52 $ 1,482,270
147 Cherry Point Mall Hyper $ 1,481,393 $ 12,878.99 $ 1,211,569
147 Cherry Point Mall Hyper $ 200,000 $ 1,745.28 $ 162,487
148 The Point Hyper $ 1,600,000 $ 11,855.10 $ 1,289,884
149 311 East 109th Street Hyper $ 1,596,859 $ 10,947.40 $ 1,291,443
150 Peachwood Manor MHP Hyper $ 1,576,918 $ 10,778.39 $ 1,387,270
151 6972 Sheridan Hyper $ 1,550,000 $ 10,353.86 $ 1,346,221
152 Crest Oak Apartments Hyper $ 1,496,274 $ 10,314.16 $ 1,319,951
153 1 & 3 Eves Hyper $ 1,493,190 $ 10,818.83 $ 1,334,956
154 Highland Park Townhomes Hyper $ 1,492,180 $ 11,016.66 $ 1,205,853
155 Marbach Square Hyper $ 1,482,705 $ 11,254.40 $ 1,209,660
156 Sunpointe Gardens Apartments Hyper $ 1,455,232 $ 10,421.65 $ 1,162,104
157 Airport Executive Park Hyper $ 1,451,197 $ 11,071.66 $ 1,200,850
158 Parkside/Pleasant View MHP Hyper $ 1,422,288 $ 10,456.58 $ 1,145,575
159 Oakview Apartments Hyper $ 1,400,000 $ 10,047.25 $ 1,116,016
160 Expressway Commerce Complex Hyper $ 1,396,600 $ 9,702.87 $ 1,228,709
161 Brookside Apartments Hyper $ 1,386,518 $ 9,529.44 $ 1,216,387
162 Sundial Shopping Center Hyper $ 1,378,433 $ 9,479.64 $ 1,208,242
163 501 State Hyper $ 1,361,366 $ 10,868.97 $ 1,244,535
164 Uniontown Center Hyper $ 1,360,856 $ 10,069.48 $ 1,099,219
165 Cypress Creek Bus Pk Hyper $ 1,323,714 $ 10,251.02 $ 1,142,679
166 Riverside Estates Mobile Home Hyper $ 1,296,006 $ 9,539.34 $ 1,044,923
167 Winterhaven East Apartments Hyper $ 1,242,330 $ 8,299.50 $ 1,083,522
167 Winterhaven East Apartments Hyper $ 50,000 $ 339.10 $ 42,777
168 Bahamas Apartments Hyper $ 1,271,083 $ 9,355.89 $ 1,024,829
169 The Midland Building Hyper $ 1,250,000 $ 8,825.93 $ 1,107,094
170 236 & 238-240 East 7th Street Hyper $ 1,234,119 $ 9,496.71 $ 1,011,571
171 The River Park Center Hyper $ 1,197,772 $ 8,891.32 $ 967,999
172 Pasadena Plaza Mart Hyper $ 1,194,343 $ 9,214.15 $ 979,820
173 Pleasant View MHP Hyper $ 1,137,379 $ 8,049.25 $ 1,010,044
174 Circuit City-Philadelphia Fully $ 1,111,703 $ 13,277.48 $ 1
175 Nannette Apartments Hyper $ 1,076,568 $ 7,806.31 $ 863,471
176 Central Plaza Hyper $ 999,470 $ 7,005.85 $ 879,998
177 Brandenberry Square Apts Hyper $ 999,019 $ 7,240.96 $ 799,986
178 Champion MHP Hyper $ 998,143 $ 7,409.44 $ 806,665
179 East Brunswick Woods Hyper $ 936,063 $ 7,210.02 $ 848,801
180 Circuit City-Harper Woods Fully $ 857,600 $ 10,242.64 $ --
181 Circuit City-Ridgeland Fully $ 794,075 $ 9,483.93 $ --
182 1590 Lexington Avenue Hyper $ 748,528 $ 5,131.59 $ 605,365
183 Circuit City-East Lansing Fully $ 714,667 $ 8,535.54 $ --
184 Circuit City-Frederick Fully $ 714,667 $ 8,535.54 $ --
185 Circuit City-Green Bay Fully $ 714,667 $ 8,535.54 $ --
186 Circuit City-Indianapolis Fully $ 714,667 $ 8,535.54 $ --
187 2156 2nd Avenue Hyper $ 598,822 $ 4,105.27 $ 484,292
188 OCC Financial Plaza Hyper $ 598,604 $ 4,606.17 $ 542,239
189 103 East 102nd Street Hyper $ 548,920 $ 3,763.17 $ 443,933
190 Windgate Hyper $ 530,000 $ 3,920.10 $ 427,011
191 Circuit City-Jackson,TN Fully $ 524,089 $ 6,259.39 $ --
192 291 Pleasant Hyper $ 479,058 $ 3,284.22 $ 387,432
193 Circuit City-Kingsport Fully $ 476,445 $ 5,690.36 $ --
194 Circuit City-Witchita Falls Fully $ 476,445 $ 5,690.36 $ --
<CAPTION>
Loan Anticipated Repayment Maturity
# Loan Name Date Date Rate
---- --------- -------------------- -------- ----
<S> <C> <C> <C> <C>
145 Sax Drugs 11-Aug-08 11-May-23 7.410% *
146 Sea-Tac Gardens Apartments 11-Aug-08 11-May-28 7.230% *
147 Cherry Point Mall 11-Sep-07 11-Sep-20 8.990% *
147 Cherry Point Mall 11-Sep-07 11-Sep-20 8.990% *
148 The Point 11-Dec-08 11-Sep-23 7.530% *
149 311 East 109th Street 11-Jul-08 11-Jul-28 7.280% *
150 Peachwood Manor MHP 11-Jun-08 11-Jun-28 7.250% *
151 6972 Sheridan 11-Dec-08 11-Sep-28 7.040% *
152 Crest Oak Apartments 11-May-08 11-May-28 7.330% *
153 1 & 3 Eves 11-Feb-08 11-Feb-28 7.820% *
154 Highland Park Townhomes 11-Jul-08 11-Apr-23 7.430% *
155 Marbach Square 11-Jul-08 11-Apr-23 7.750% *
156 Sunpointe Gardens Apartments 11-Sep-08 11-Jun-23 7.110% *
157 Airport Executive Park 11-Sep-08 11-Dec-23 7.910% *
158 Parkside/Pleasant View MHP 11-Oct-08 11-Jul-23 7.420% *
159 Oakview Apartments 11-Dec-08 11-Sep-23 7.170% *
160 Expressway Commerce Complex 11-Aug-08 11-May-28 7.410% *
161 Brookside Apartments 11-Aug-08 11-May-28 7.300% *
162 Sundial Shopping Center 11-Oct-08 11-Jul-28 7.320% *
163 501 State 11-Jun-08 11-Jun-28 8.900% *
164 Uniontown Center 11-Sep-08 11-Jun-23 7.480% *
165 Cypress Creek Bus Pk 11-Jan-08 11-Oct-24 8.200% *
166 Riverside Estates Mobile Home 11-Sep-08 11-Jun-23 7.420% *
167 Winterhaven East Apartments 11-Apr-08 11-Jan-28 6.980% *
167 Winterhaven East Apartments 11-Apr-08 11-Jan-28 6.980% *
168 Bahamas Apartments 11-Sep-08 11-Jun-23 7.420% *
169 The Midland Building 11-Sep-08 11-Sep-28 7.600% *
170 236 & 238-240 East 7th Street 11-Jul-08 11-Apr-23 7.910% *
171 The River Park Center 11-Oct-08 11-Jul-23 7.530% *
172 Pasadena Plaza Mart 11-Jul-08 11-Apr-23 7.940% *
173 Pleasant View MHP 11-May-08 11-May-28 7.600% *
174 Circuit City-Philadelphia 11-Sep-08 11-Sep-08 7.640%
175 Nannette Apartments 11-Sep-08 11-Jun-23 7.250% *
176 Central Plaza 11-Nov-08 11-Aug-28 7.520% *
177 Brandenberry Square Apts 11-Nov-08 11-Aug-23 7.270% *
178 Champion MHP 11-Oct-08 11-Jul-23 7.530% *
179 East Brunswick Woods 11-May-08 11-Jun-28 8.500% *
180 Circuit City-Harper Woods 11-Sep-08 11-Sep-08 7.640%
181 Circuit City-Ridgeland 11-Sep-08 11-Sep-08 7.640%
182 1590 Lexington Avenue 11-Jul-08 11-Jul-28 7.280% *
183 Circuit City-East Lansing 11-Sep-08 11-Sep-08 7.640%
184 Circuit City-Frederick 11-Sep-08 11-Sep-08 7.640%
185 Circuit City-Green Bay 11-Sep-08 11-Sep-08 7.640%
186 Circuit City-Indianapolis 11-Sep-08 11-Sep-08 7.640%
187 2156 2nd Avenue 11-Jul-08 11-Jul-28 7.280% *
188 OCC Financial Plaza 11-Jul-08 11-Jul-28 8.500% *
189 103 East 102nd Street 11-Jul-08 11-Jul-28 7.280% *
190 Windgate 11-Dec-08 11-Sep-23 7.510% *
191 Circuit City-Jackson,TN 11-Sep-08 11-Sep-08 7.640%
192 291 Pleasant 11-Jul-08 11-Jul-28 7.280% *
193 Circuit City-Kingsport 11-Sep-08 11-Sep-08 7.640%
194 Circuit City-Witchita Falls 11-Sep-08 11-Sep-08 7.640%
</TABLE>
A-5
<PAGE>
Annex A: Characteristics of the Notes in the Pool
<TABLE>
<CAPTION>
Loan Additional Anticipated Remaining Remaining
# Loan Name Amortization Amortization Seasoning Term Lockout DSCR
---- --------- ------------ ------------ --------- --------------------- --------- ----
<S> <C> <C> <C> <C> <C> <C> <C>
145 Sax Drugs 300 4 119 112 1.26
146 Sea-Tac Gardens Apartments 360 4 119 112 1.50
147 Cherry Point Mall 276 12 108 101 1.25
147 Cherry Point Mall 262 0 108 101 1.25
148 The Point 300 0 123 116 1.28
149 311 East 109th Street 360 300 2 118 117 1.52
150 Peachwood Manor MHP 360 3 117 110 1.43
151 6972 Sheridan 360 0 123 116 1.55
152 Crest Oak Apartments 360 4 116 112 1.60
153 1 & 3 Eves 360 7 113 112 1.44
154 Highland Park Townhomes 300 5 118 111 1.54
155 Marbach Square 300 5 118 111 1.67
156 Sunpointe Gardens Apartments 300 3 120 113 1.28
157 Airport Executive Park 304 1 120 113 1.42
158 Parkside/Pleasant View MHP 300 2 121 114 1.45
159 Oakview Apartments 300 0 123 116 1.61
160 Expressway Commerce Complex 360 4 119 112 1.37
161 Brookside Apartments 360 4 119 112 1.31
162 Sundial Shopping Center 360 2 121 114 1.89
163 501 State 360 3 117 116 1.34
164 Uniontown Center 300 3 120 113 1.62
165 Cypress Creek Bus Pk 324 11 112 105 1.48
166 Riverside Estates Mobile Home 300 3 120 113 1.79
167 Winterhaven East Apartments 360 8 115 108 1.29
167 Winterhaven East Apartments 352 0 115 108 1.29
168 Bahamas Apartments 300 3 120 113 1.76
169 The Midland Building 360 7 120 119 1.90
170 236 & 238-240 East 7th Street 300 5 118 111 1.60
171 The River Park Center 300 2 121 114 2.12
172 Pasadena Plaza Mart 300 5 118 111 1.24
173 Pleasant View MHP 360 4 116 109 1.61
174 Circuit City-Philadelphia 123 3 120 119 1.00
175 Nannette Apartments 300 3 120 113 1.30
176 Central Plaza 360 1 122 115 1.72
177 Brandenberry Square Apts 300 1 122 115 2.02
178 Champion MHP 300 2 121 114 2.07
179 East Brunswick Woods 360 4 116 115 1.44
180 Circuit City-Harper Woods 123 3 120 119 1.00
181 Circuit City-Ridgeland 123 3 120 116 1.00
182 1590 Lexington Avenue 360 300 2 118 117 1.70
183 Circuit City-East Lansing 123 3 120 119 1.00
184 Circuit City-Frederick 123 3 120 119 1.00
185 Circuit City-Green Bay 123 3 120 119 1.00
186 Circuit City-Indianapolis 123 3 120 119 1.00
187 2156 2nd Avenue 360 300 2 118 117 1.36
188 OCC Financial Plaza 360 2 118 117 1.24
189 103 East 102nd Street 360 300 2 118 117 1.41
190 Windgate 300 0 123 116 1.31
191 Circuit City-Jackson,TN 123 3 120 119 1.00
192 291 Pleasant 360 300 2 118 117 1.66
193 Circuit City-Kingsport 123 3 120 119 1.00
194 Circuit City-Witchita Falls 123 3 120 119 1.00
<CAPTION>
Loan Cut-off Date Balloon/ Anticipated Repayment
# Loan Name LTV Date LTV
---- --------- ------------ -----------------------------
<S> <C> <C> <C>
145 Sax Drugs 77% 62%
146 Sea-Tac Gardens Apartments 77% 67%
147 Cherry Point Mall 62% 51%
147 Cherry Point Mall 62% 51%
148 The Point 66% 53%
149 311 East 109th Street 80% 65%
150 Peachwood Manor MHP 75% 66%
151 6972 Sheridan 70% 61%
152 Crest Oak Apartments 62% 55%
153 1 & 3 Eves 65% 58%
154 Highland Park Townhomes 71% 57%
155 Marbach Square 71% 58%
156 Sunpointe Gardens Apartments 49% 39%
157 Airport Executive Park 85% 71%
158 Parkside/Pleasant View MHP 62% 50%
159 Oakview Apartments 50% 40%
160 Expressway Commerce Complex 70% 61%
161 Brookside Apartments 73% 64%
162 Sundial Shopping Center 55% 48%
163 501 State 62% 57%
164 Uniontown Center 72% 58%
165 Cypress Creek Bus Pk 60% 52%
166 Riverside Estates Mobile Home 70% 56%
167 Winterhaven East Apartments 80% 69%
167 Winterhaven East Apartments 80% 69%
168 Bahamas Apartments 61% 49%
169 The Midland Building 45% 40%
170 236 & 238-240 East 7th Street 59% 48%
171 The River Park Center 47% 38%
172 Pasadena Plaza Mart 70% 58%
173 Pleasant View MHP 69% 62%
174 Circuit City-Philadelphia 96% 0%
175 Nannette Apartments 76% 61%
176 Central Plaza 57% 50%
177 Brandenberry Square Apts 43% 35%
178 Champion MHP 38% 31%
179 East Brunswick Woods 62% 57%
180 Circuit City-Harper Woods 96% 0%
181 Circuit City-Ridgeland 96% 0%
182 1590 Lexington Avenue 79% 64%
183 Circuit City-East Lansing 96% 0%
184 Circuit City-Frederick 96% 0%
185 Circuit City-Green Bay 96% 0%
186 Circuit City-Indianapolis 96% 0%
187 2156 2nd Avenue 71% 58%
188 OCC Financial Plaza 67% 60%
189 103 East 102nd Street 78% 63%
190 Windgate 78% 63%
191 Circuit City-Jackson,TN 97% 0%
192 291 Pleasant 80% 65%
193 Circuit City-Kingsport 96% 0%
194 Circuit City-Witchita Falls 96% 0%
</TABLE>
A-6
<PAGE>
Annex B
<TABLE>
<CAPTION>
Loan Asset
# # Property Name Address City State Zip
---- ----- ------------- ------- ---- ----- ---
<S> <C> <C> <C> <C> <C> <C>
Prime Retail III
1 1 Lighthouse Place 601 Wabash Street Michigan City IN 46360
1 2 Finger Lakes Outlet Center 655 Route 318 Waterloo NY 13168
1 3 * Outlets at Gilroy III and IV 681 Leaversly Road, Suite 175 Gilroy CA 95020
1 4 Outlets at Gilroy I, II and V 681 Leaversly Road, Suite 175 Gilroy CA 95020
1 5 * Kittery Outlet Village 294 U.S. Route 1 Kittery ME 03911
2 1 Soho Grand Hotel 310 West Broadway New York NY 10013
Morgantown Mall and Commons
3 1 Morgantown Mall 9500 Mall Road Morgantown WV 26505
3 2 Morgantown Commons 9500 Mall Road Morgantown WV 26505
4 1 5670 Wilshire 5670 Wilshire Los Angeles CA 90036
Shidler Industrial Portfolio
5 1 4150-4174 Bandini Boulevard 4150-4174 Bandini Boulevard Vernon CA 90023
5 2 Wicks Business Park Wicks Business Park San Leandro CA 94577
5 3 341-345 Baldwin Park 341-345 Baldwin Park Industry CA 91746
5 4 Nelson & Stafford, Industry Nelson & Stafford, Industry Industry CA 92841
5 5 730-780 Baldwin Park 730-780 Baldwin Park Industry CA 91746
5 6 2800-2900 Sierra Pine 2800-2900 Sierra Pine Vernon CA 90023
5 7 13240, 13280 Amar Road 13240, 13280 Amar Road Industry CA 91746
5 8 Chapman & Western Chapman & Western Garden Grove CA 92841
5 9 15551 Red Hill Avenue 15551 Red Hill Avenue Tustin CA 92780
5 10 1900 Tubeway 1900 Tubeway Commerce CA 90040
5 11 3707 S. Hill Street 3703 S. Hill Street Los Angeles CA 90007
5 12 2001-2015 Saybrook 2001-2015 Saybrook Commerce CA 90040
5 13 2229-2235 E. Magnolia 2229-2235 E. Magnolia Phoenix AZ 85034
5 14 111 N. Hudson Avenue 111 N. Hudson Avenue Industry CA 91746
5 15 1444-1446 Factor Ave. 1444-1446 Factor Ave. San Leandro CA 94577
5 16 2600 Yates 2600 Yates Commerce CA 90040
6 1 Eastland Mall 5471 Central Avenue Charlotte NC 28212
7 1 * Airport Industrial 3375 Koapaka Street Honolulu HI 96819
Banyan Pool I
8 1 Colonial Penn Insurance 4002 N. Eisenhower Blvd. Tampa FL 33602
8 2 Phoenix Business Center 2700 Northeast Expressway Atlanta GA 30345
8 3 Sand Lake Center 2407 Sand Lake Road Orlando FL 32809
8 4 Avalon Center 3145 Avalon Ridge Plaza Norcross GA 30092
8 5 Peachtree Point 3200-3280 Peachtree Industial Blvd. Norcross GA 30092
8 6 Southlake Corporate Center 3000 Corporate Center Drive Morrow GA 30260
8 7 Newtown Business Center 804,805, 808 &1051 Newtown Circle Lexington KY 40505
8 8 University CC III 6953 University Blvd. Orlando FL 32792
8 9 University CC II 6903 University Blvd. Orlando FL 32792
8 10 Airways Plaza 3033-3063 Airways Blvd Memphis TN 38116
8 11 Technology Center 4955 Corporate Drive Huntsville AL 35805
8 12 Park Center 2430 Sand Lake Road Orlando FL 32809
8 13 University CC IV 7071 University Blvd. Orlando FL 32792
8 14 Atrium 2345 Sand Lake Road Orlando FL 32809
8 15 University CC 1 7103 University Blvd. Orlando FL 32792
8 16 Metric Plaza 4208-4214 Metric Drive Orlando FL 32792
Land Apartments
9 1 Eastland Apartments 4243 Forest Creek Court Kentwood MI 49512
9 2 Crown Point Apartments 11800 Matt Urban Drive Holland MI 49423
9 3 Prairie Creek 1905 Prairie Parkway Wyoming MI 49509
Burgandy Properties
10 1 Mill Pond West 11701 W. River Hills Dr. Burnsville MN 55337
10 2 Mill Pond East 2100 East Cliff Road Burnsville MN 55337
10 3 Pebblebrook 1 4101 W. 98Th St. Bloomington MN 55437
10 4 Beach South 4201-46 Avenue North Robbinsdale MN 55422
10 5 Pebblebrook II 9901 Harrison Rd Bloomington MN 55437
11 1 One Park Plaza 3250 Wilshire Blvd. Los Angeles CA 90010
12 1 Beckman Instruments - Brea 200 And 250 S. Kraimer Blvd. Brea CA 92822
13 1 Sun Life RV Resort 5055 East University Drive Mesa AZ 85205
14 1 1400 Union Meeting 1400 Union Meeting Road Blue Bell PA 19422
15 1 Cliffs of Dunwoody 7275 Rosswell Road Atlanta GA 30328
16 1 6400 Shafer Court 6400 Shafer Court Rosemont IL 60018
17 1 Walzem Plaza S/C 5332-5400 East Walzem Road San Antonio TX 78218
18 1 Beckman - Miami 11800 Sw 147Th Ave. Miami FL 33196
19 1 Money Store Headquarters 707 Third Street West Sacramento CA 95605
Greenwich Portfolio
20 1 45 E.Putnam 45 E. Putnam Ave. Greenwich CT 06830
20 2 340-350 Greenwich Ave. 340-350 Greenwich Ave. Greenwich CT 06830
20 3 116-136 E. Putnam 116-136 E. Putnam Ave. Greenwich CT 06830
21 1 Monte Sano Apts. 125 Ridgegate Place Huntsville AL 35801
22 1 Pointe West 3033-3077 Kettering Blvd Dayton OH 45439
Accor-M-Six V
23 1 696 1530 N. 52Nd Dr. Phoenix AZ 85043
23 2 1007 2081 N. First Street San Jose CA 95131
23 3 639 1257 De La Torre Blvd Salinas CA 93905
23 4 689 660 South Palm Canyon Dr Palm Springs CA 92262
23 5 741 6015 Iliff Rd Northwest Albuquerque NM 87121
23 6 1257 2155 Hanford Road Burlington NC 27215
23 7 1117 7233 Davidson Parkway Stockbridge GA 30281
23 8 1067 4800 Gateway East El Paso TX 79905
23 9 1140 16884 Northwest Freeway Houston TX 77040
23 10 1010 820 W. Sepulveda Blvd Harbor City CA 90710
23 11 1160 2440 E. Lucky Lane Flagstaff AZ 86004
Accor-M-Six III
24 1 103 2560 Fontaine Road San Jose CA 95121
24 2 251 7450 Katella Avenue Stanton CA 90680
24 3 171 1600 S University Dr Provo UT 84601
24 4 1111 7219 Engle Road Middleburg Heights OH 44130
24 5 1143 4950 S. Outlet Center Drive Tucson AZ 85706
24 6 334 1321 I H 35 North San Marcos TX 78666
24 7 1150 5353 Midland Billings MT 59102
24 8 1109 32700 Barrington Road Madison Heights MI 48071
24 9 282 1505 E. Santa Fe Avenue Grants NM 87020
24 10 231 845 Lantana Street Corpus Christi TX 78408
24 11 121 3810 Patterson Ave Winston Salem NC 27105
25 1 1129 State Street 1109 - 1137 State Street Santa Barbara CA 93101
Accor-M-Six VI
26 1 15 176 W Sixth South St Salt Lake City UT 84101
26 2 471 750 Raintree Drive Carlsbad CA 92009
26 3 346 4200 Via Real Carpinteria CA 93013
26 4 1137 13100 Goldenwest Westminster CA 92683
26 5 1005 7850 College Town Drive Sacramento CA 95826
26 6 560 2753 Forest Lane Dallas TX 75234
26 7 620 436 W. I-30 & Beltline Garland TX 75043
26 8 1265 7501 Interstate 30 Little Rock AR 72209
26 9 128 3430 St Vardell Lane Charlotte NC 28210
26 10 1198 3120 Kultgen Freeway Waco TX 76706
26 11 1094 3950 Parkway Lane Hilliard OH 43026
26 12 1188 4621 E. Rittiman Rd. San Antonio TX 78218
26 13 292 407 West Palmdale Blvd Palmdale CA 93550
26 14 1182 12121 N.E. Expressway Oklahoma City OK 73131
Accor-M-Six Penvest II
27 1 142 5310 San Bernardo Ave Laredo TX 78040
27 2 651 2185 S.W. Loop 410 San Antonio TX 78227
27 3 1131 330 Goff Mountain Road Crosslanes WV 25313
27 4 522 704 N. Leavitt Amherst OH 44001
27 5 1047 900 N. Quince Street Escondido CA 92025
27 6 1120 5555 West 34Th Street Houston TX 77092
27 7 166 1111 East Sheldon St Prescott AZ 86301
27 8 458 546 Mcarthur Dr Alexandria LA 71301
27 9 1214 5120 Hinkleville Road Paducah KY 42001
27 10 1110 8300 Chicago Road Warren MI 48093
27 11 1092 3960 Nine Mile Rd. Cincinnati OH 45255
27 12 1262 63950 20Th Avenue North Palm Springs CA 92258
27 13 484 1405 Dunn Rd. St. Louis MO 63138
27 14 146 2749 S Carson St Carson City NV 89701
27 15 351 9400 El Camino Real Atascadero CA 93422
27 16 4 298 Atascadero Rd Morro Bay CA 93442
28 1 Wasilla Retail Center 591,595,695 Parks Hwy. Wasilla AK 99654
Accor-M-Six IV
29 1 263 3208 El Camino Real Santa Clara CA 95051
29 2 1127 4630 W. Ina Road Tucson AZ 85741
29 3 122 2626 East Randol Mill Rd Arlington TX 76011
29 4 1132 1860 Bowles Avenue Fenton MO 63026
29 5 1036 502 W. Arrow Highway San Dimas CA 91773
29 6 426 1000 Shiloh Lane Bessemer AL 35020
29 7 1250 1834 W. Lucas Street Florence SC 29501
29 8 225 3716 Houston Highway Victoria TX 77901
29 9 1088 830 Royal Drive Jackson MI 49204
29 10 1237 4013 Padre Boulevard South Padre Island TX 78597
29 11 172 201 S Thornton Drive Albany GA 31705
29 12 377 1417 N Moore Ave Moore OK 73160
29 13 440 I-95 & U.S. Hwy.17 Richmond Hill GA 31324
30 1 Holiday Inn Sunspree Padre Island 100 Padre Blvd. Padre Island TX 78597
Accor-M-Six Creditvest I
31 1 688 1310 W Lantana Road Lantana FL 33462
31 2 1052 17220 Downey Avenue Bellflower CA 90706
31 3 381 9725 Lenexa Dr Lenexa KS 66215
31 4 679 3708 Plaza Drive Oceanside CA 92056
31 5 1183 7827 N.Davis Highway Pensacola FL 32514
31 6 107 3524-28Th S E Toledo OH 49512
31 7 183 138 North W W White Road San Antonio TX 78219
31 8 422 300 I-20 E. Marshall TX 75670
31 9 1207 2500 Peters Road Ft. Pierce FL 34945
31 10 1278 1911 Julian R.Allsbrook Hwy Roanoke Rapids NC 27870
31 11 1135 6880 Sunset Strip Ave.,Nw North Canton OH 44720
31 12 417 10885 Harts Rd Jacksonville FL 32218
31 13 1091 3850 Hauck Rd Sharonville OH 45241
31 14 205 4585 Frederica St Owensboro KY 42301
31 15 794 5335 Hearterdowns Blvd Toledo OH 43614
Accor-M-Six Limited Partnership
32 1 1078 65 Newbury Street Danvers MA 01923
32 2 1268 10 Roosevelt Road Villa Park IL 60181
32 3 775 6330 Debonair Lane Speedway IN 46224
32 4 739 2400 Biddle Rd Medford OR 97504
32 5 1040 1535 Milwaukee Ave Glenview IL 60025
32 6 253 1800 North East Seventh Grants Pass OR 97526
32 7 245 52624 Us Hwy 31 N South Bend IN 46637
32 8 700 7707 Lee Hwy Chattanooga TN 37421
32 9 1059 88 Burnett Road Chicopee MA 01020
32 10 1254 8290 Louisiana Street Merrillville IN 46410
32 11 1283 1283 Motel 6 Drive Washington PA 15301
32 12 156 95 Wallace Rd Nashville TN 37211
32 13 699 323 Cartwright Rd Goodlettsville TN 37072
32 14 784 1800 Winnetka Circle Rolling Meadows IL 60008
Accor-M-Six Creditvest II
33 1 1267 43 Industrial Highway Essington PA 19029
33 2 476 496 N. Catalpa Midvale UT 84047
33 3 376 825 E Dania Beach Blvd Dania FL 33004
33 4 345 9638 Plainfield Rd. Houston TX 77036
33 5 402 3021 Idaho St Elko NV 89801
33 6 1142 2260 Elkhorn Road Lexington KY 40505
33 7 371 1201 N.W. 31St Ave Pompano Beach FL 33069
33 8 133 6001 Rogers Ave Fort Smith AR 72903
33 9 1035 1473 Holiday Lane Fairfield CA 94533
33 10 542 202 Grace Streeet Oxford AL 36203
33 11 1130 202 Jellison Blvd. Duncanville TX 75116
34 1 Rancho San Marcos Village 621-695 Rancho Santa Fe Road San Marcos CA 92069
Accor-M-Six Penvest I
35 1 294 12733 So Hwy 33 Santa Nella CA 95322
35 2 743 41900 Moreno Dr. Temecula CA 92590
35 3 1108 38300 Grand River Ave. Farmington Hills MI 48335
35 4 1136 8911 State Hwy. 146 Baytown TX 77520
35 5 385 820 I-45 South Conroe TX 77304
35 6 406 2800 I-10 Frontage Rd Port Allen LA 70767
35 7 586 1800 Harding Hwy Lima OH 45804
35 8 339 1607 Interstate 45 Huntville TX 77340
35 9 1200 105 Jones Road Spartanburg SC 29303
35 10 290 1540 Hwy 93 South Kalispell MT 59901
35 11 554 1289 E. Dubin-Granville Columbus OH 43229
35 12 1069 2324 Austin Parkway Flint MI 48507
35 13 158 110 West Access Road Longview TX 75601
35 14 1009 1560 East Fourth Street Ontario CA 91764
35 15 1264 1716 Fayetteville Road Van Buren AR 72956
36 1 Palm Desert Country Club S.C. 42329 Washington St. Palm Desert CA 92211
37 1 New City Plaza Route 304 & Main Street New City NY 10956
Cinemark Pool B
38 1 Colorado Springs, CO - Tinseltown 1545 E. Cheyenne Mountain Colorado Springs CO 80906
38 2 Mishawaka - Movies 10 910 W. Edison Mishawaka IN 46545
39 1 Nordhoff Industrial Complex 20500-20680 Chatsworth Dr. Chatsworth CA 91311
40 1 Seven Corners Apts. 6122 Willston Drive Falls Church VA 22044
41 1 Citibank Office Plaza 1699 E. Woodfield Road Schaumburg IL 60173
42 1 Savannah Apartments 7201 Hart Lane Austin TX 78731
43 1 Belleville Manor 8701 Belleville Road Belleville MI 48111
44 1 203 East Fordham Road 203 East Fordham Road Bronx NY 10458
45 1 Plantation Club Apartments 201 Plantation Club Drive Melbourne FL 32940
46 1 Silver Pointe SC 17015-17325 Silver Parkway Fenton MI 17015
47 1 Central Medical Park 2610 N. Duke Street Durham NC 27704
48 1 Friendly Village MHP 4377 W. County Line Road Greenwood IN 46142
49 1 Springhill Business Center 1524 Spring Hill Road Mclean VA 22102
50 1 Pacific Court Office Building 1411-1413 5Th Street Santa Monica CA 90401
Banyan Pool 3
51 1 Elmhurst 747 Church Road Elmhurst IL 60126
51 2 Milwaukee - Commerce 2485 - 2487 Commerce Road New Berlin WI 53146
51 3 Milwaukee - 160th 2455 - 2925 South 160Th Street New Berlin WI 53146
51 4 Milwaukee - Whittaker Way 14518 - 1467 Whittaker Way Menomonee Falls WI 53051
51 5 Milwaukee - Ryerson 15725 - 15793 Ryerson Road New Berlin WI 53146
52 1 Pride Center 22914-22964 Victory Blvd. Woodland Hills CA 91367
53 1 Hidden Harbor 1032 Hidden Harbour Drive Melbourne FL 32935
54 1 Oshkosh Center II W. 20Th & Koeller Oshkosh WI 54901
55 1 Waterford Plaza 100-10200 6Th Avenue North Plymouth MN 55441
56 1 Palm Harbor Apartments 2350 Cypress Pond Road Palm Harbor FL 34683
57 1 Fiserve Building 912 Fort Duquesne Blvd Pittsburgh PA 15222
Airport Atrium
58 1 Airport Atrium 5007 South Howell Avenue Milwaukee WI 53207
58 2 Sampson 1 130-150 Edgerton Avenue Milwaukee WI 53207
58 3 Braemar Building 7201 West 78Th Street Bloomington MN 55439
59 1 Wicomico 1601 Wicomico Street Baltimore MD 21230
Seven Mobile Home Properties
60 1 Woodside MHP Rte 309 And Wolf'S Crossing Road Orefield PA 18069
60 2 Natural Springs MHP 66 Natural Springs Road Gettysburg PA 17325
60 3 Mountainview East MHP 201 Rife Road Reading Township PA 17316
60 4 Progress Ridge MHP Nwc 36Th & Marshfield Harrisburg PA 17018
60 5 Southern Hills MHP Mt. Airy Road Hopewell Township PA 16650
60 6 Sunshine MHP Route 16 & Pen Mar Rd. Rouzerville PA 17250
60 7 Castle Hill MHP 2581 Old Harrisburg Road Gettysburg PA 17325
61 1 SL-Tulsa 4477 S. 7-Th East Ave Tulsa OK 74146
62 1 The Courtyard Apts. 14014 Moorpark St. Sherman Oaks CA 91403
63 1 Old Metairie Village Shopping Center 701 Metairie Road Metairie LA 70005
64 1 Willowick Industrial Park 1190 Burnett Avenue Concord CA 94520
65 1 Courtney Square Apartments Merry Lane Greenville NC 27858
66 1 Plaza de la Fiesta III & IV 7126-7148 Pacific Blvd. Huntington Park CA 90255
67 1 Motorola Training Center 1 Nelson C. White Parkway Mundelein IL 60060
68 1 Madison Village Hwy 20 & Arlington Drive Madison AL 35758
69 1 Pipestone Plaza 1950 Pipestone Road Benton Harbor MI 49022
70 1 Parkleigh North Apts. 4187 Beechwold Drive Columbus OH 43224
71 1 Southgate Estates MHP 271 Park Office Bloomington IL 61701
72 1 7 West 45th Street 7 West 45Th Street New York NY 10009
73 1 2100 Swift Drive 2100 Swift Drive Oak Brook IL 60521
74 1 Westwind Apts. 2215 Folsom Street Eau Claire WI 54703
75 1 Stanford Townhouses 26666 Stanford Dr. Southfield MI 48034
76 1 Mentor Industrial 8200 Tyler Blvd. Mentor OH 44060
77 1 Braebuurn Colony Apts. 8917 South Gessner Rd. Houston TX 77074
78 1 SL-Mogadore 3175 Gilchrest Road Mogadore OH 44260
79 1 ABFM Industrial Building 10001 S. Howell Ave. Oak Creek WI 53154
80 1 1567-1575 Lexington Avenue 1567-1575 Lextington Avenue New York NY 10029
81 1 Mason Manor MHP 2179 Hull Road Vevay Town MI 48854
82 1 118-40 Metropolitan Ave. 118-40 Metropolitan Ave. Kew Gardens NY 11415
83 1 Clark & Diversey Shopping Ctr. 613-623 W. Diversey Parkway Chicago IL 60614
84 1 Stanbridge Apartments 38 Jenkins Avenue Lansdale PA 19446
85 1 Village Townhomes 1004 West Cook Street Santa Maria CA 93454
86 1 Ventu Park Shopping Center 579 Ventu Road Thousand Oaks CA 91320
87 1 Bowen's Wharf 13 Bowen Wharf. S. Newport RI 02840
Muraco Portfolio
88 1 Lakeview Apts. 212 Old Liverpool Rd. Salina NY 13088
88 2 Oneida Apts. 580 Seneca Street Oneida NY 13421
88 3 Townsquare Apts. 116 Oswego Street Baldwinsville NY 13027
89 1 Sherman West Apartments 19050 Sherman Way Reseda CA 91335
90 1 Parkside Village Apts. 4991 Parkside Avenue Philadelphia PA 10031
91 1 Harbor Greens 1329-51 Figueroa Place Wilmington CA 90744
92 1 710 State Street 710 State Street Santa Barbara CA 93105
93 1 Flemings Foods Store 2500 Pennsylvannia Ave Oklahoma City OK 73107
94 1 Playa Vista Plaza 12555 W. Jefferson Blvd. Los Angeles CA 90094
95 1 122-126 East 103rd Street 122-126 East 103Rd Street New York NY 10029
96 1 Stonewall SC 3101 Clays Mill Road Lexington KY 40503
97 1 Tempo Cabana Apts. 2010 Curtis Drive Atlanta GA 30319
98 1 Westmont Apts 111 Acklen Park Dr. Nashville TN 37203
99 1 Great Western Bank Building 1040 Weston Road Broward County FL 33326
100 1 Chelmsford Crossing 199 Chelmsford St. Chelmsford MA 01824
101 1 Safeway Industrial 5135 Edison Avenue Chino CA 91710
102 1 The Bentley Mills Building 14641 Don Julian Road City Of Industry CA 91746
103 1 Twin Pines Healthcare Center 250 March St. Santa Paula CA 93060
104 1 Corporate West One 4300 Commerce Court Lisle IL 60532
105 1 Ingle West Office Building 1802 Brightseat Rd. Landover MD 20785
106 1 Colony Ridge Apts. 4373 Glenwood Road Decatur GA 30032
107 1 SL - Lima 951 Williams Ave. Lima OH 45801
108 1 Collins Nursing Home 5511 Baum Blvd. Pittsburgh PA 15253
109 1 Westgrove Towers 4700 Westgrove St. Raleigh NC 27606
110 1 * Apartments of Westgrove 4929 Faber Drive Raleigh NC 27606
111 1 * West Third Street 8 West 3Rd Street Winston-Salem NC 27101
112 1 Pollyanna Apartments 247 W. Dickson Ave. San Antonio TX 78214
113 1 Bellemeade Plaza 605 Lapalco Blvd Gretna LA 70056
114 1 Hiawassee Oaks Apartments 222 North Hiawassee Road Orlando FL 32835
115 1 Giant Food Store 4596 New Falls Road Levittown PA 19056
116 1 Timber Ridge Apts. 5920 Vermellon Drive Ft. Worth TX 76119
Bird Creek Comfort Creek
117 1 Bird Creek Mobile Home Park 1712 North General Bruce Drive Temple TX 76504
117 2 Comfort Mobile Home Park 7307 East Riverside Drive Austin TX 78074
118 1 GRW Building 801 Corporate Drive Lexington KY 40503
119 1 University Hills 2700 O'Connor Boulevard Irving TX 75062
120 1 Grove Gate Apartments 2575 Sw 27 Avenue Miami FL 33134
121 1 Colts Neck Shopping Center State Highway 34 Colts Neck NJ 07722
122 1 Keosippi Mall Us Route 218 Keokuk IA 52632
123 1 Pineville Commerce Center 501-591 North Polk Street Pineville NC 28134
124 1 90-92 Thompson Street 90-92 Thompson Street New York NY 10012
125 1 Walton Manor MHP 229 East Walton Blvd. Pontiac MI 48340
126 1 238 E. 111th/204 E. 112th Street 238 E. 111Th/204 E. 112Th Street New York NY 10029
127 1 Palmwood Terrace Apts. 4917 East Thomas Road Phoenix AZ 85018
128 1 Hartnell Plaza 931-969 W. Alisal Street Salinas CA 93901
129 1 Carytown Square 3218-3228 West Cary Street Richmond VA 23221
130 1 Oak Creek Apts. 1777 North Golfview Essexville MI 48732
131 1 Hollywood News Building 1545 North Wilcox Ave Los Angeles CA 90028
132 1 Chateau Apts. 711 W. Wenger Road Englewood CO 45322
133 1 Miller Road Business Ctr. 821-901 Miller Road Garland TX 75040
134 1 The Kellogg Property 70 S. Kellogg Avenue Goleta CA 93117
135 1 Maple Lawn III 232-234 E. Maple Dr. Troy MI 48084
136 1 Stapley-McKellips Center 1239 East Mckellips Mesa AZ 85203
137 1 239 S. La Cienega 239 S. La Cienega Blvd. Beverly Hills CA 90212
138 1 Sunflowers Terrace Apts. 5050 Sunflower Street Houston TX 77033
139 1 Yearling 128-4238 Rickenbacker Ave. Whitehall OH 45701
140 1 Briarwyck Apts. 10110 Walnut Street Dallas TX 75243
141 1 H Lazy F MHP 5445 County Rd. 154 Glenwood Springs CO 81601
Bayshore/Rockport Oaks
142 1 Bayshore Apartments 203 East Ransom Road Aransas Pass TX 78336
142 2 Rockport Oaks Garden Apartments 511 East Hackberry Rockport TX 78382
143 1 Burnhaven 14500 Burnhaven Drive Burnsville MN 55306
144 1 Colton Midtown Plaza 1820 East First Street Santa Ana CA 92705
145 1 Sax Drugs 22525 Wick Road Taylor MI 48180
146 1 Sea Tac Gardens Apts. 3405 South 176 St Seattle WA 98188
147 1 Cherry Point Mall 1300 Egg Harbor Rd. Sturgeon Bay WI 54235
148 1 The Point 1902-66 North Main Street Crown Point IN 46307
149 1 311 East 109th Street 311 East 109Th Street New York NY 10028
150 1 Peachwood Manor MHP 6895 S. Broadway Haysville KS 67233
151 1 6972 Sheridan 6982 North Sheridan Chicago IL 60626
152 1 Crest Oak Apts. 9900-9930 Bluebird St. Coon Rapids MN 55433
153 1 1&3 Eves 1&3 Eves Drive Evesham NJ 08053
154 1 Highland Park Townhomes 1404 N. 55Th Drive Kansas City KS 66102
155 1 Marbach Square SC 8300 Marbach Rd. San Antonio TX 78227
156 1 Sunpointe Gardens Apts. 2727 North Oracle Tucson AZ 85705
157 1 Airport Executive Park 2459 Roosevelt Highway College Park GA 30337
Parkside/Pleasant View MHP
158 1 Parkside MHP 2315 Park Lane Se Rochester MN 55904
158 2 Pleasantview MHP 9428 Grand Avenue Duluth MN 55808
159 1 Oakview Apartments 608-616 Lincoln Ave. St. Paul MN 55102
160 1 Expressway Commerce Complex 43466 I-94 Service Drive Belleville MI 48111
161 1 Brookside Apartments 804 100Th Street Court East Tacoma WA 98445
162 1 Sundial Shopping Center 5757 Sannibel Drive Minnetonka MN 55343
163 1 501 State Street 501 State Street Santa Barbara CA 93101
164 1 Uniontown Center 600-686 F Street Arcata CA 95521
165 1 * Cypress Creek Business Park 6555 N. Powerline Rd. Ft. Lauderdale FL 33009
166 1 Riverside Estates MHP 1891 Access Road Newton County GA 30014
167 1 Winterhaven East Apartments 3357 North Country Club Road Tucson AZ 85716
168 1 Bahamas Apartments 1568 Nome Street Aurora CO 80010
169 1 The Midland Building 206Th Avenue, Des Moines Iowa IA 50309
170 1 236 & 238-240 East 7th Street 236 & 238-240 E. 7Th St. New York NY 10009
171 1 The River Park Center 0123 Emma Rd. Basalt CO 81621
172 1 Pasadena Plaza Mart 1418 Spencer Highway South Houston TX 77587
173 1 Pleasant View MHP 305 S. Amy Lane Harker Heights TX 76543
174 1 Circuit City-Philadelphia 7207 Bustleton Aveneue Philadelphia PA 19149
175 1 Nanette Apartments 1360 Nanette Circle Reno NV 89502
176 1 Central Plaza 11111 Central Expressway Dallas TX 75230
177 1 Brandenberry Square Apts 5290 Brandenberry Columbus OH 43228
178 1 Champion MHP Route 5 East Elbridge NY 13060
179 1 East Brunswick Woods 758 Route 18 East Brunswick NJ 08816
180 1 Circuit City-Harper Woods 20570 Kelly Road Harper Woods MI 48224
181 1 Circuit City-Ridgeland 1055 East Countyline Road Ridgeland MS 39157
182 1 1590 Lexington Avenue 1590 Lexington Avenue New York NY 10029
183 1 Circuit City-East Lansing 2655 Grand River Avenue East Lansing MI 48823
184 1 Circuit City-Frederick 5606 Buckeystown Pike Fredrick MD 21701
185 1 Circuit City-Green Bay 1940 West Mason Street Green Bay WI 54303
186 1 Circuit City-Indianapolis 3670 Moller Road Indianapolis IN 46224
187 1 2156 2nd Avenue 2156 2Nd Avenue New York NY 10029
188 1 OCC Financial Plaza 7210 Metro Blvd Edina MN 55439
189 1 103 East 102nd Street 103 East 102Nd Street New York NY 10029
190 1 Windgate MHP 305 Farm Road 306 New Braunfels TX 78130
191 1 Circuit City-Jackson,TN 1938 Emporium Drive Jackson TN 38305
192 1 291 Pleasant 291 Pleasant New York NY 10029
193 1 Circuit City-Kingsport 1740 Idle Hour Road Kingsport TN 37660
194 1 Circuit City-Witchita Falls 3121 Lawence Road Wichita Fallas TX 76308
</TABLE>
<PAGE>
Annex B
<TABLE>
<CAPTION>
Loan Asset Year Built/ Unit Cut-off Date Principal
# # Property Name Property Type Renovated Units Type Balance
---- ----- ------------- ------------- --------- ----- ---- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Prime Retail III
1 1 Lighthouse Place Factory Outlet 1987/1997 490,915 sf $ 23,424,246
1 2 Finger Lakes Outlet Center Factory Outlet 1995 392,688 sf $ 18,866,176
1 3 * Outlets at Gilroy III and IV Factory Outlet 1989/1995 305,207 sf $ 18,457,096
1 4 Outlets at Gilroy I, II and V Factory Outlet 1989/1995 271,875 sf $ 15,489,862
1 5 * Kittery Outlet Village Factory Outlet 1984/1995 130,797 sf $ 5,619,891
--------- ------------
1,591,482 $ 81,857,269
2 1 Soho Grand Hotel Hotel-Full Service 1996 369 units $ 60,041,752
Morgantown Mall and Commons
3 1 Morgantown Mall Retail-Mall 1990/1997 542,005 sf $ 44,000,000
3 2 Morgantown Commons Retail-Anchored 1991 230,843 sf $ 14,350,000
--------- ------------
772,848 $ 58,350,000
4 1 5670 Wilshire Office 1964/1991 408,061 sf $ 54,431,011
Shidler Industrial Portfolio
5 1 4150-4174 Bandini Boulevard Industrial 1971 334,440 sf $ 8,100,000
5 2 Wicks Business Park Industrial 1980 143,545 sf $ 6,200,000
5 3 341-345 Baldwin Park Industrial 1970/1997 173,200 sf $ 6,000,000
5 4 Nelson & Stafford, Industry Industrial 1977 199,726 sf $ 6,000,000
5 5 730-780 Baldwin Park Industrial 1972 204,871 sf $ 5,600,000
5 6 2800-2900 Sierra Pine Industrial 1969 129,050 sf $ 4,100,000
5 7 13240, 13280 Amar Road Industrial 1963 117,184 sf $ 2,800,000
5 8 Chapman & Western Industrial 1977/1994 67,754 sf $ 2,700,000
5 9 15551 Red Hill Avenue Industrial 1970 58,062 sf $ 2,400,000
5 10 1900 Tubeway Industrial 1963/1994 50,135 sf $ 1,700,000
5 11 3707 S. Hill Street Industrial 1974 32,926 sf $ 1,600,000
5 12 2001-2015 Saybrook Industrial 1952 47,000 sf $ 1,500,000
5 13 2229-2235 E. Magnolia Industrial 1975 39,976 sf $ 1,300,000
5 14 111 N. Hudson Avenue Industrial 1967/1997 40,000 sf $ 1,200,000
5 15 1444-1446 Factor Ave. Industrial 1972/1996 30,000 sf $ 900,000
5 16 2600 Yates Industrial 1953/1996 27,920 sf $ 900,000
--------- ------------
1,695,789 $ 53,000,000
6 1 Eastland Mall Retail-Anchored 1975 371,512 sf $ 46,673,225
7 1 * Airport Industrial Industrial 1988/1992 716,681 sf $ 39,500,000
Banyan Pool I
8 1 Colonial Penn Insurance Office 1983/1998 79,179 sf $ 5,057,243
8 2 Phoenix Business Center Office 1979/1996 110,639 sf $ 3,890,305
8 3 Sand Lake Center Office 1984 70,080 sf $ 3,517,267
8 4 Avalon Center Office 1997 52,456 sf $ 3,180,546
8 5 Peachtree Point Office 1982/1996 71,747 sf $ 3,083,415
8 6 Southlake Corporate Center Office 1989 56,199 sf $ 2,860,037
8 7 Newtown Business Center Office 1980 87,113 sf $ 2,753,925
8 8 University CC III Office 1985 47,985 sf $ 1,879,673
8 9 University CC II Office 1983 39,168 sf $ 1,782,084
8 10 Airways Plaza Office 1982/1997 87,777 sf $ 1,738,775
8 11 Technology Center Office 1990 48,514 sf $ 1,345,984
8 12 Park Center Office 1982 47,219 sf $ 1,266,565
8 13 University CC IV Office 1987 19,840 sf $ 813,429
8 14 Atrium Office 1986 14,005 sf $ 790,395
8 15 University CC 1 Office 1982 20,800 sf $ 436,780
8 16 Metric Plaza Office 1985 32,000 sf $ 366,869
--------- ------------
884,721 $ 34,763,291
Land Apartments
9 1 Eastland Apartments Multifamily 1974/1996 456 units $ 14,796,698
9 2 Crown Point Apartments Multifamily 1994 184 units $ 6,852,162
9 3 Prairie Creek Multifamily 1974/1997 189 units $ 4,965,335
--------- ------------
829 $ 26,614,195
Burgandy Properties
10 1 Mill Pond West Multifamily 1974/1996 156 units $ 4,483,259
10 2 Mill Pond East Multifamily 1972/1996 150 units $ 3,976,975
10 3 Pebblebrook 1 Multifamily 1975/1996 84 units $ 3,126,421
10 4 Beach South Multifamily 1969/1996 136 units $ 3,106,054
10 5 Pebblebrook II Multifamily 1978/1996 84 units $ 3,017,231
--------- ------------
610 $ 17,709,939
11 1 One Park Plaza Office 1971/1996 410,437 sf $ 16,000,000
12 1 Beckman Instruments - Brea Office 1972 576,234 sf $ 15,441,913
13 1 Sun Life RV Resort Mobile Home Park 1982/1997 765 pads $ 15,410,802
14 1 1400 Union Meeting Office 1962/1995 230,889 sf $ 14,865,488
15 1 Cliffs of Dunwoody Multifamily 1971/1998 412 units $ 13,976,544
16 1 6400 Shafer Court Office 1980/1990 174,554 sf $ 13,048,409
17 1 Walzem Plaza S/C Retail-Anchored 1982/1998 246,608 sf $ 12,425,236
18 1 Beckman - Miami Office 1986/1992 568,032 sf $ 12,196,303
19 1 Money Store Headquarters Office 1998 403,000 sf $ 12,169,935
Greenwich Portfolio
20 1 45 E.Putnam Office 1931 37,000 sf $ 5,180,304
20 2 340-350 Greenwich Ave. Office 1940 9,000 sf $ 4,044,959
20 3 116-136 E. Putnam Office 1975 21,000 sf $ 2,363,471
--------- ------------
67,000 $ 11,588,734
21 1 Monte Sano Apts. Multifamily 1988/1996 324 units $ 11,184,830
22 1 Pointe West Office 1988 176,362 sf $ 10,803,901
Accor-M-Six V
23 1 696 Hotel-Ltd. Service 1988/1999 147 rooms $ 1,508,536
23 2 1007 Hotel-Ltd. Service 1977/1995 74 rooms $ 1,361,873
23 3 639 Hotel-Ltd. Service 1987/1998 128 rooms $ 1,068,547
23 4 689 Hotel-Ltd. Service 1989/1999 149 rooms $ 1,068,547
23 5 741 Hotel-Ltd. Service 1987/1998 130 rooms $ 1,026,643
23 6 1257 Hotel-Ltd. Service 1975/1999 112 rooms $ 900,931
23 7 1117 Hotel-Ltd. Service 1987/1995 107 rooms $ 796,172
23 8 1067 Hotel-Ltd. Service 1968/1999 200 rooms $ 754,268
23 9 1140 Hotel-Ltd. Service 1983/1996 119 rooms $ 733,316
23 10 1010 Hotel-Ltd. Service 1978/1997 56 rooms $ 586,653
23 11 1160 Hotel-Ltd. Service 1975/1996 103 rooms $ 481,894
--------- ------------
1,325 $ 10,287,380
Accor-M-Six III
24 1 103 Hotel-Ltd. Service 1972/1994 202 rooms $ 2,356,890
24 2 251 Hotel-Ltd. Service 1975/1997 206 rooms $ 1,178,445
24 3 171 Hotel-Ltd. Service 1974/1994 119 rooms $ 1,023,895
24 4 1111 Hotel-Ltd. Service 1984/1997 95 rooms $ 927,301
24 5 1143 Hotel-Ltd. Service 1986/1999 120 rooms $ 830,707
24 6 334 Hotel-Ltd. Service 1980/1999 126 rooms $ 753,432
24 7 1150 Hotel-Ltd. Service 1975/1998 118 rooms $ 714,794
24 8 1109 Hotel-Ltd. Service 1980/1997 100 rooms $ 637,519
24 9 282 Hotel-Ltd. Service 1979/1999 103 rooms $ 579,563
24 10 231 Hotel-Ltd. Service 1973/1997 124 rooms $ 560,244
24 11 121 Hotel-Ltd. Service 1975/1997 103 rooms $ 540,926
--------- ------------
1,416 $ 10,103,716
25 1 1129 State Street Retail-Anchored 1925/1992 138,619 sf $ 9,867,824
Accor-M-Six VI
26 1 15 Hotel-Ltd. Service 1965/1995 109 rooms $ 1,359,012
26 2 471 Hotel-Ltd. Service 1988/1996 160 rooms $ 1,149,933
26 3 346 Hotel-Ltd. Service 1981/1998 124 rooms $ 1,010,547
26 4 1137 Hotel-Ltd. Service 1985/1997 127 rooms $ 871,161
26 5 1005 Hotel-Ltd. Service 1978/1997 118 rooms $ 784,045
26 6 560 Hotel-Ltd. Service 1984/1998 100 rooms $ 679,506
26 7 620 Hotel-Ltd. Service 1988/1999 110 rooms $ 644,660
26 8 1265 Hotel-Ltd. Service 1985/1999 130 rooms $ 592,390
26 9 128 Hotel-Ltd. Service 1973/1995 122 rooms $ 592,390
26 10 1198 Hotel-Ltd. Service 1985/1999 110 rooms $ 540,120
26 11 1094 Hotel-Ltd. Service 1988/1997 104 rooms $ 453,004
26 12 1188 Hotel-Ltd. Service 1987/1994 112 rooms $ 435,581
26 13 292 Hotel-Ltd. Service 1979/1999 103 rooms $ 400,734
26 14 1182 Hotel-Ltd. Service 1984/1993 99 rooms $ 348,465
--------- ------------
1,628 $ 9,861,548
Accor-M-Six Penvest II
27 1 142 Hotel-Ltd. Service 1973/1996 94 rooms $ 971,323
27 2 651 Hotel-Ltd. Service 1986/1999 122 rooms $ 952,278
27 3 1131 Hotel-Ltd. Service 1986/1999 111 rooms $ 742,777
27 4 522 Hotel-Ltd. Service 1989 126 rooms $ 742,777
27 5 1047 Hotel-Ltd. Service 1931/1998 131 rooms $ 704,686
27 6 1120 Hotel-Ltd. Service 1989/1996 118 rooms $ 666,594
27 7 166 Hotel-Ltd. Service 1974/1991 79 rooms $ 628,503
27 8 458 Hotel-Ltd. Service 1986/1999 113 rooms $ 609,458
27 9 1214 Hotel-Ltd. Service 1977/1995 80 rooms $ 571,367
27 10 1110 Hotel-Ltd. Service 1970/1999 117 rooms $ 533,276
27 11 1092 Hotel-Ltd. Service 1986/1998 108 rooms $ 476,139
27 12 1262 Hotel-Ltd. Service 1988/1998 96 rooms $ 476,139
27 13 484 Hotel-Ltd. Service 1986/1995 81 rooms $ 457,093
27 14 146 Hotel-Ltd. Service 1973/1999 82 rooms $ 438,048
27 15 351 Hotel-Ltd. Service 1982/1999 117 rooms $ 438,048
27 16 4 Hotel-Ltd. Service 1963/1994 70 rooms $ 419,002
--------- ------------
1,645 $ 9,827,506
28 1 Wasilla Retail Center Retail-Anchored 1979/1993 124,267 sf $ 9,765,179
Accor-M-Six IV
29 1 263 Hotel-Ltd. Service 1976/1996 119 rooms $ 1,685,762
29 2 1127 Hotel-Ltd. Service 1985/1999 118 rooms $ 1,218,623
29 3 122 Hotel-Ltd. Service 1973/1994 122 rooms $ 1,015,519
29 4 1132 Hotel-Ltd. Service 1984/1990 109 rooms $ 934,278
29 5 1036 Hotel-Ltd. Service 1985/1997 99 rooms $ 853,036
29 6 426 Hotel-Ltd. Service 1983/1998 121 rooms $ 629,622
29 7 1250 Hotel-Ltd. Service 1987/1999 109 rooms $ 609,312
29 8 225 Hotel-Ltd. Service 1975/1999 52 rooms $ 609,312
29 9 1088 Hotel-Ltd. Service 1988/1998 95 rooms $ 568,691
29 10 1237 Hotel-Ltd. Service 1992/1999 80 rooms $ 426,518
29 11 172 Hotel-Ltd. Service 1974/1997 103 rooms $ 406,208
29 12 377 Hotel-Ltd. Service 1981/1999 121 rooms $ 406,208
29 13 440 Hotel-Ltd. Service 1983/1998 122 rooms $ 385,897
--------- ------------
1,370 $ 9,748,985
30 1 Holiday Inn Sunspree Padre Island Hotel-Full Service 1974/1994 227 rooms $ 9,722,992
Accor-M-Six Creditvest I
31 1 688 Hotel-Ltd. Service 1988/1999 154 rooms $ 1,069,147
31 2 1052 Hotel-Ltd. Service 1984/1997 155 rooms $ 954,596
31 3 381 Hotel-Ltd. Service 1981/1999 122 rooms $ 916,412
31 4 679 Hotel-Ltd. Service 1988/1996 136 rooms $ 916,412
31 5 1183 Hotel-Ltd. Service 1987/1994 180 rooms $ 859,136
31 6 107 Hotel-Ltd. Service 1972/1994 118 rooms $ 610,941
31 7 183 Hotel-Ltd. Service 1975/1994 101 rooms $ 553,666
31 8 422 Hotel-Ltd. Service 1984/1999 121 rooms $ 553,666
31 9 1207 Hotel-Ltd. Service 1991/1999 120 rooms $ 515,482
31 10 1278 Hotel-Ltd. Service 1984/1997 94 rooms $ 515,482
31 11 1135 Hotel-Ltd. Service 1987/1999 85 rooms $ 496,390
31 12 417 Hotel-Ltd. Service 1983/1997 126 rooms $ 496,390
31 13 1091 Hotel-Ltd. Service 1981/1998 111 rooms $ 458,206
31 14 205 Hotel-Ltd. Service 1974/1999 90 rooms $ 400,930
31 15 794 Hotel-Ltd. Service 1977/1997 100 rooms $ 400,930
--------- ------------
1,813 $ 9,717,785
Accor-M-Six Limited Partnership
32 1 1078 Hotel-Ltd. Service 1978/1997 108 rooms $ 1,235,400
32 2 1268 Hotel-Ltd. Service 1982/1996 109 rooms $ 935,375
32 3 775 Hotel-Ltd. Service 1968/1996 147 rooms $ 917,726
32 4 739 Hotel-Ltd. Service 1987/1998 116 rooms $ 900,077
32 5 1040 Hotel-Ltd. Service 1989/1995 134 rooms $ 847,132
32 6 253 Hotel-Ltd. Service 1979/1998 122 rooms $ 794,186
32 7 245 Hotel-Ltd. Service 1975/1994 126 rooms $ 635,349
32 8 700 Hotel-Ltd. Service 1987/1996 126 rooms $ 547,106
32 9 1059 Hotel-Ltd. Service 1972/1995 88 rooms $ 529,457
32 10 1254 Hotel-Ltd. Service 1980/1994 164 rooms $ 494,160
32 11 1283 Hotel-Ltd. Service 1985/1995 101 rooms $ 476,512
32 12 156 Hotel-Ltd. Service 1974 97 rooms $ 458,863
32 13 699 Hotel-Ltd. Service 1987/1999 94 rooms $ 441,214
32 14 784 Hotel-Ltd. Service 1989/1995 111 rooms $ 423,566
--------- ------------
1,643 $ 9,636,123
Accor-M-Six Creditvest II
33 1 1267 Hotel-Ltd. Service 1988/1995 130 rooms $ 1,604,269
33 2 476 Hotel-Ltd. Service 1985/1995 128 rooms $ 1,364,550
33 3 376 Hotel-Ltd. Service 1982 163 rooms $ 1,253,911
33 4 345 Hotel-Ltd. Service 1980/1996 205 rooms $ 1,014,193
33 5 402 Hotel-Ltd. Service 1981/1999 123 rooms $ 958,873
33 6 1142 Hotel-Ltd. Service 1979/1999 98 rooms $ 682,275
33 7 371 Hotel-Ltd. Service 1982/1996 127 rooms $ 645,395
33 8 133 Hotel-Ltd. Service 1973/1995 109 rooms $ 553,196
33 9 1035 Hotel-Ltd. Service 1982/1998 89 rooms $ 534,756
33 10 542 Hotel-Ltd. Service 1972/1998 116 rooms $ 516,316
33 11 1130 Hotel-Ltd. Service 1985/1998 76 rooms $ 460,997
--------- ------------
1,364 $ 9,588,731
34 1 Rancho San Marcos Village Retail-Unanchored 1982 113,027 sf $ 9,491,103
Accor-M-Six Penvest I
35 1 294 Hotel-Ltd. Service 1978/1998 111 rooms $ 887,298
35 2 743 Hotel-Ltd. Service 1988/1998 135 rooms $ 831,842
35 3 1108 Hotel-Ltd. Service 1985/1997 106 rooms $ 776,386
35 4 1136 Hotel-Ltd. Service 1980/1999 124 rooms $ 739,415
35 5 385 Hotel-Ltd. Service 1981/1996 123 rooms $ 739,415
35 6 406 Hotel-Ltd. Service 1982/1999 132 rooms $ 739,415
35 7 586 Hotel-Ltd. Service 1967/1996 97 rooms $ 683,959
35 8 339 Hotel-Ltd. Service 1980/1999 122 rooms $ 646,988
35 9 1200 Hotel-Ltd. Service 1990/1998 124 rooms $ 628,503
35 10 290 Hotel-Ltd. Service 1979/1999 114 rooms $ 628,503
35 11 554 Hotel-Ltd. Service 1975/1996 89 rooms $ 517,590
35 12 1069 Hotel-Ltd. Service 1988/1999 107 rooms $ 499,105
35 13 158 Hotel-Ltd. Service 1974/1997 78 rooms $ 388,193
35 14 1009 Hotel-Ltd. Service 1972/1999 69 rooms $ 369,707
35 15 1264 Hotel-Ltd. Service 1974/1999 94 rooms $ 369,707
--------- ------------
1,625 $ 9,446,025
36 1 Palm Desert Country Club S.C. Retail-Anchored 1993 129,168 sf $ 9,296,755
37 1 New City Plaza Retail-Anchored 1967/1997 121,274 sf $ 9,021,361
Cinemark Pool B
38 1 Colorado Springs, CO - Tinseltown Retail-Quasi-Anchored 1997/1998 109,986 sf $ 5,799,844
38 2 Mishawaka - Movies 10 Retail-Quasi-Anchored 1995/1998 62,088 sf $ 3,061,034
--------- ------------
172,074 $ 8,860,878
39 1 Nordhoff Industrial Complex Industrial 1976/1981 184,712 sf $ 8,360,541
40 1 Seven Corners Apts. Multifamily 1945/1996 284 units $ 8,198,171
41 1 Citibank Office Plaza Office 1979/1997 105,602 sf $ 8,024,402
42 1 Savannah Apartments Multifamily 1974/1996 290 units $ 7,994,922
43 1 Belleville Manor Mobile Home Park 1959/1988 358 pads $ 7,981,228
44 1 203 East Fordham Road Retail-Quasi-Anchored 1930/1987 25,296 sf $ 7,956,903
45 1 Plantation Club Apartments Multifamily 1985/1987 216 units $ 7,931,989
46 1 Silver Pointe SC Retail-Anchored 1997 86,141 sf $ 7,703,480
47 1 Central Medical Park Office-Medical Office 1978/1990 106,766 sf $ 7,448,692
48 1 Friendly Village MHP Mobile Home Park 1969/1997 504 pads $ 7,086,000
49 1 Springhill Business Center Office 1974 148,391 sf $ 7,038,428
50 1 Pacific Court Office Building Office 1990/1997 43,540 sf $ 7,000,000
Banyan Pool 3
51 1 Elmhurst Office 1982 140,776 sf $ 3,462,866
51 2 Milwaukee - Commerce Office 1977 67,126 sf $ 1,081,739
51 3 Milwaukee - 160th Office 1974 67,600 sf $ 936,904
51 4 Milwaukee - Whittaker Way Office 1980 52,800 sf $ 769,438
51 5 Milwaukee - Ryerson Office 1974/1988 49,280 sf $ 697,020
--------- ------------
377,582 $ 6,947,966
52 1 Pride Center Retail-Anchored 1972/1996 154,187 sf $ 6,750,000
53 1 Hidden Harbor Multifamily 1985 216 units $ 6,647,206
54 1 Oshkosh Center II Retail-Anchored 1997 111,614 sf $ 6,578,864
55 1 Waterford Plaza Retail-Anchored 1993 121,287 sf $ 6,552,811
56 1 Palm Harbor Apartments Multifamily 1987/1997 264 units $ 6,501,098
57 1 Fiserve Building Office 1982/1994 130,789 sf $ 6,395,157
Airport Atrium
58 1 Airport Atrium Office 1989/1993 57,530 sf $ 2,901,334
58 2 Sampson 1 Industrial 1973/1987 120,000 sf $ 2,103,467
58 3 Braemar Building Office 1983/1995 24,337 sf $ 1,378,133
--------- ------------
201,867 $ 6,382,934
59 1 Wicomico Industrial 1943/1990 364,969 sf $ 6,319,292
Seven Mobile Home Properties
60 1 Woodside MHP Mobile Home Park 1951/1995 52 pads $ 1,223,475
60 2 Natural Springs MHP Mobile Home Park 1960/1997 63 pads $ 1,161,804
60 3 Mountainview East MHP Mobile Home Park 1972/1986 62 pads $ 1,099,138
60 4 Progress Ridge MHP Mobile Home Park 1952/1996 65 pads $ 1,014,589
60 5 Southern Hills MHP Mobile Home Park 1960/1997 43 pads $ 688,329
60 6 Sunshine MHP Mobile Home Park 1960 43 pads $ 569,961
60 7 Castle Hill MHP Mobile Home Park 1970/1996 21 pads $ 375,000
--------- ------------
349 $ 6,132,298
61 1 SL-Tulsa Industrial 1962/1994 426,403 sf $ 6,100,000
62 1 The Courtyard Apts. Multifamily 1988/1995 80 units $ 5,996,214
63 1 Old Metairie Village Shopping Center Retail-Unanchored 1986/1997 84,845 sf $ 5,993,034
64 1 Willowick Industrial Park Industrial 1979/1991 107,358 sf $ 5,860,886
65 1 Courtney Square Apartments Multifamily 1980/1994 209 units $ 5,800,000
66 1 Plaza de la Fiesta III & IV Retail-Office 1990/1994 48,429 sf $ 5,727,300
67 1 Motorola Training Center Office 1992/1997 85,000 sf $ 5,669,902
68 1 Madison Village Retail-Anchored 1988 153,307 sf $ 5,546,899
69 1 Pipestone Plaza Retail-Anchored 1978/1995 176,532 sf $ 5,496,726
70 1 Parkleigh North Apts. Multifamily 1973/1997 216 units $ 5,426,501
71 1 Southgate Estates MHP Mobile Home Park 1975/1997 369 pads $ 5,044,555
72 1 7 West 45th Street Office 1913/1990 63,255 sf $ 4,984,552
73 1 2100 Swift Drive Office 1985/1998 58,000 sf $ 4,734,330
74 1 Westwind Apts. Multifamily 1977/1998 172 units $ 4,730,000
75 1 Stanford Townhouses Multifamily 1978/1997 118 units $ 4,694,158
76 1 Mentor Industrial Industrial 1962/1988 551,200 sf $ 4,691,155
77 1 Braebuurn Colony Apts. Multifamily 1969/1997 275 units $ 4,671,280
78 1 SL-Mogadore Industrial 1964/1994 353,882 sf $ 4,554,309
79 1 ABFM Industrial Building Industrial 1979/1989 305,000 sf $ 4,518,966
80 1 1567-1575 Lexington Avenue Multifamily 1910/1997 132 units $ 4,391,362
81 1 Mason Manor MHP Mobile Home Park 1975/1987 267 pads $ 4,339,792
82 1 118-40 Metropolitan Ave. Multifamily 1930/1997 82 units $ 4,119,000
83 1 Clark & Diversey Shopping Ctr. Retail-Anchored 1938/1985 19,265 sf $ 4,087,720
84 1 Stanbridge Apartments Multifamily 1972/1997 149 units $ 3,991,779
85 1 Village Townhomes Multifamily 1963/1993 140 units $ 3,991,773
86 1 Ventu Park Shopping Center Retail-Anchored 1983 57,898 sf $ 3,928,007
87 1 Bowen's Wharf Retail-Anchored 1960/1997 37,528 sf $ 3,872,190
Muraco Portfolio
88 1 Lakeview Apts. Multifamily 1984/1998 72 units $ 1,744,041
88 2 Oneida Apts. Multifamily 1971/1997 48 units $ 1,214,255
88 3 Townsquare Apts. Multifamily 1997 24 units $ 908,758
--------- ------------
144 $ 3,867,053
89 1 Sherman West Apartments Multifamily 1974/1997 134 units $ 3,795,644
90 1 Parkside Village Apts. Multifamily 1950/1990 120 units $ 3,697,701
91 1 Harbor Greens Multifamily 1973/1997 204 units $ 3,638,747
92 1 710 State Street Retail-Quasi-Anchored 1925/1992 23,643 sf $ 3,630,308
93 1 Flemings Foods Store Retail-Anchored 1989/1994 60,392 sf $ 3,627,886
94 1 Playa Vista Plaza Office 1985 86,696 sf $ 3,595,277
95 1 122-126 East 103rd Street Multifamily 1910/1997 86 units $ 3,592,933
96 1 Stonewall SC Retail-Anchored 1980/1997 76,836 sf $ 3,497,864
97 1 Tempo Cabana Apts. Multifamily 1965/1996 135 units $ 3,492,419
98 1 Westmont Apts Multifamily 1965/1996 121 units $ 3,412,540
99 1 Great Western Bank Building Office 1988 25,878 sf $ 3,378,802
100 1 Chelmsford Crossing Healthcare-Assisted Living 1997 66 beds $ 3,376,291
101 1 Safeway Industrial Industrial 1987/1995 118,273 sf $ 3,349,078
102 1 The Bentley Mills Building Industrial 1967 308,596 sf $ 3,298,811
103 1 Twin Pines Healthcare Center Healthcare-Nursing 1969/1996 99 beds $ 3,200,000
104 1 Corporate West One Office 1977/1994 48,275 sf $ 3,131,768
105 1 Ingle West Office Building Office 1983/1995 54,745 sf $ 3,097,778
106 1 Colony Ridge Apts. Multifamily 1972/1998 212 units $ 3,089,134
107 1 SL - Lima Industrial 1951/1998 258,000 sf $ 3,087,909
108 1 Collins Nursing Home Healthcare-Nursing 1900/1955 71 beds $ 3,047,348
109 1 Westgrove Towers Multifamily 1987/1996 166 units $ 3,000,000
110 1 * Apartments of Westgrove Multifamily 1986 97 units $ 2,992,442
111 1 * West Third Street Office 1911/1983 74,648 sf $ 2,950,000
112 1 Pollyanna Apartments Multifamily 1963/1996 176 units $ 2,940,339
113 1 Bellemeade Plaza Retail-Anchored 1981/1992 107,826 sf $ 2,804,393
114 1 Hiawassee Oaks Apartments Multifamily 1984 100 units $ 2,790,502
115 1 Giant Food Store Retail-Anchored 1986 40,100 sf $ 2,698,413
116 1 Timber Ridge Apts. Multifamily 1983/1995 212 units $ 2,691,353
Bird Creek Comfort Creek
117 1 Bird Creek Mobile Home Park Mobile Home Park 1969/1997 183 pads $ 1,696,163
117 2 Comfort Mobile Home Park Mobile Home Park 1970/1998 93 pads $ 983,837
--------- ------------
276 $ 2,680,000
118 1 GRW Building Office 1979/1996 55,599 sf $ 2,591,802
119 1 University Hills Retail-Unanchored 1959/1992 54,238 sf $ 2,591,271
120 1 Grove Gate Apartments Multifamily 1991 68 units $ 2,547,376
121 1 Colts Neck Shopping Center Retail-Unanchored 1979/1997 33,250 sf $ 2,497,554
122 1 Keosippi Mall Retail-Anchored 1969/1996 173,368 sf $ 2,468,434
123 1 Pineville Commerce Center Office 1986/1994 70,000 sf $ 2,395,247
124 1 90-92 Thompson Street Multifamily 1900/1985 27 units $ 2,394,188
125 1 Walton Manor MHP Mobile Home Park 1950/1997 256 pads $ 2,334,992
126 1 238 E. 111th/204 E. 112th Street Multifamily 1908/1997 59 units $ 2,295,485
127 1 Palmwood Terrace Apts. Multifamily 1979 100 units $ 2,275,371
128 1 Hartnell Plaza Retail-Anchored 1972/1996 36,000 sf $ 2,252,738
129 1 Carytown Square Retail-Office 1930/1991 29,232 sf $ 2,244,796
130 1 Oak Creek Apts. Multifamily 1974/1996 144 units $ 2,242,961
131 1 Hollywood News Building Office 1931/1978 41,736 sf $ 2,241,115
132 1 Chateau Apts. Multifamily 1974 86 units $ 2,202,349
133 1 Miller Road Business Ctr. Office 1970/1987 94,514 sf $ 2,136,104
134 1 The Kellogg Property Industrial 1990/1998 22,200 sf $ 2,075,000
135 1 Maple Lawn III Industrial-Office 1986 37,030 sf $ 2,068,087
136 1 Stapley-McKellips Center Retail-Unanchored 1996 23,790 sf $ 2,053,243
137 1 239 S. La Cienega Office-Medical Office 1955/1997 14,000 sf $ 2,031,676
138 1 Sunflowers Terrace Apts. Multifamily 1970/1996 160 units $ 1,989,165
139 1 Yearling Multifamily 1965/1996 144 units $ 1,948,403
140 1 Briarwyck Apts. Multifamily 1978/ 1993 112 units $ 1,900,000
141 1 H Lazy F MHP Mobile Home Park 1983/1997 96 pads $ 1,796,658
Bayshore/Rockport Oaks
142 1 Bayshore Apartments Multifamily 1986/1964 64 units $ 923,000
142 2 Rockport Oaks Garden Apartments Multifamily 1986/1960 60 units $ 827,000
--------- ------------
124 $ 1,750,000
143 1 Burnhaven Office 1980 30,206 sf $ 1,743,404
144 1 Colton Midtown Plaza Office 1984 59,648 sf $ 1,700,000
145 1 Sax Drugs Retail-Unanchored 1975 27,000 sf $ 1,693,119
146 1 Sea Tac Gardens Apts. Multifamily 1968/1998 62 units $ 1,692,665
147 1 Cherry Point Mall Retail-Anchored 1981/1993 124,470 sf $ 1,681,393
148 1 The Point Retail-Unanchored 1988 40,000 sf $ 1,600,000
149 1 311 East 109th Street Multifamily 1900/1996 34 units $ 1,596,859
150 1 Peachwood Manor MHP Mobile Home Park 1980/1996 132 pads $ 1,576,918
151 1 6972 Sheridan Multifamily 1970/1995 60 units $ 1,550,000
152 1 Crest Oak Apts. Multifamily 1973/1995 60 units $ 1,496,274
153 1 1&3 Eves Office 1984 33,491 sf $ 1,493,190
154 1 Highland Park Townhomes Multifamily 1971/1989 126 units $ 1,492,180
155 1 Marbach Square SC Retail-Anchored 1982/1997 50,150 sf $ 1,482,705
156 1 Sunpointe Gardens Apts. Multifamily 1977/1997 164 units $ 1,455,232
157 1 Airport Executive Park Office 1971/1997 59,810 sf $ 1,451,197
Parkside/Pleasant View MHP
158 1 Parkside MHP Mobile Home Park 1967/1994 118 pads $ 1,008,078
158 2 Pleasantview MHP Mobile Home Park 1957 82 pads $ 414,210
--------- ------------
200 $ 1,422,288
159 1 Oakview Apartments Multifamily 1919/1990 77 units $ 1,400,000
160 1 Expressway Commerce Complex Industrial 1980/1995 42,436 sf $ 1,396,600
161 1 Brookside Apartments Multifamily 1992/1996 52 units $ 1,386,518
162 1 Sundial Shopping Center Retail-Unanchored 1985/1998 23,832 sf $ 1,378,433
163 1 501 State Street Retail-Anchored 1920/1991 10,776 sf $ 1,361,366
164 1 Uniontown Center Retail-Anchored 1977/1993 26,006 sf $ 1,360,856
165 1 * Cypress Creek Business Park Office 1986 54,600 sf $ 1,323,714
166 1 Riverside Estates MHP Mobile Home Park 1980/1995 153 pads $ 1,296,006
167 1 Winterhaven East Apartments Multifamily 1982/1990 40 units $ 1,292,330
168 1 Bahamas Apartments Multifamily 1974/1998 99 units $ 1,271,083
169 1 The Midland Building Office 1913/1996 83,273 sf $ 1,250,000
170 1 236 & 238-240 East 7th Street Multifamily 1900/1996 50 units $ 1,234,119
171 1 The River Park Center Retail-Unanchored 1995 15,091 sf $ 1,197,772
172 1 Pasadena Plaza Mart Retail-Unanchored 1964/1981 48,434 sf $ 1,194,343
173 1 Pleasant View MHP Mobile Home Park 1982/1997 181 pads $ 1,137,379
174 1 Circuit City-Philadelphia Retail-Quasi-Anchored 1989 47,913 sf $ 1,111,703
175 1 Nanette Apartments Multifamily 1980/1997 42 units $ 1,076,568
176 1 Central Plaza Retail-Unanchored 1963/1997 16,925 sf $ 999,470
177 1 Brandenberry Square Apts Multifamily 1972 79 units $ 999,019
178 1 Champion MHP Mobile Home Park 1970/1983 171 pads $ 998,143
179 1 East Brunswick Woods Office 1983 19,545 units $ 936,063
180 1 Circuit City-Harper Woods Retail-Quasi-Anchored 1997 27,871 sf $ 857,600
181 1 Circuit City-Ridgeland Retail-Quasi-Anchored 1998 32,784 sf $ 794,075
182 1 1590 Lexington Avenue Multifamily 1905/1992 25 units $ 748,528
183 1 Circuit City-East Lansing Retail-Quasi-Anchored 1998 27,871 sf $ 714,667
184 1 Circuit City-Frederick Retail-Quasi-Anchored 1997 27,431 sf $ 714,667
185 1 Circuit City-Green Bay Retail-Quasi-Anchored 1997 28,380 sf $ 714,667
186 1 Circuit City-Indianapolis Retail-Quasi-Anchored 1997 33,665 sf $ 714,667
187 1 2156 2nd Avenue Multifamily 1910/1996 12 units $ 598,822
188 1 OCC Financial Plaza Office 1981 10,368 sf $ 598,604
189 1 103 East 102nd Street Multifamily 1900/1997 10 units $ 548,920
190 1 Windgate MHP Mobile Home Park 1986 55 pads $ 530,000
191 1 Circuit City-Jackson,TN Retail-Quasi-Anchored 1998 33,665 sf $ 524,089
192 1 291 Pleasant Multifamily 1910/1996 16 units $ 479,058
193 1 Circuit City-Kingsport Retail-Quasi-Anchored 1998 19,258 sf $ 476,445
194 1 Circuit City-Witchita Falls Retail-Quasi-Anchored 1998 21,196 sf $ 476,445
</TABLE>
<PAGE>
Annex B
<TABLE>
<CAPTION>
Cut-off Date
Principal Most Recent
Loan Asset Balance 1997 Period Most Recent Underwritten
# # Property Name / Unit Revenues Revenues Period Revenues
---- ----- ------------- -------- ----------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Prime Retail III
1 1 Lighthouse Place $ 95 $ 8,289,837 $ 8,980,404 6/15/1998 $ 9,137,831
1 2 Finger Lakes Outlet Center $ 96 $ 6,766,016 $ 7,276,089 4/30/1998 $ 7,215,263
1 3 * Outlets at Gilroy III and IV $ 121 $ 8,095,037 $ 8,064,932 6/15/1998 $ 8,133,121
1 4 Outlets at Gilroy I, II and V $ 114 $ 6,793,647 $ 6,768,383 6/15/1998 $ 6,825,609
1 5 * Kittery Outlet Village $ 86 $ 3,350,252 $ 3,461,856 4/30/1998 $ 3,487,034
-------- ----------- ----------- -----------
$ 103 $33,294,789 $34,551,664 $34,798,858
2 1 Soho Grand Hotel $162,715 $31,739,899 $35,063,593 6/30/98 $32,243,552
Morgantown Mall and Commons
3 1 Morgantown Mall $ 81 $ 7,087,483 $ 7,113,780 6/30/98 $ 7,121,492
3 2 Morgantown Commons $ 62 $ 2,068,814 $ 2,083,669 6/30/98 $ 2,076,480
-------- ----------- ----------- -----------
$ 75 $ 9,156,297 $ 9,197,449 $ 9,197,972
4 1 5670 Wilshire $ 133 $13,209,837 $13,452,727 7/31/98 $11,262,262
Shidler Industrial Portfolio
5 1 4150-4174 Bandini Boulevard $ 24 $ 924,558 $ 1,327,980 6/30/98 $ 1,118,963
5 2 Wicks Business Park $ 43 $ 750,371 $ 850,590 6/30/98 $ 849,992
5 3 341-345 Baldwin Park $ 35 $ 722,835 $ 812,978 6/30/98 $ 765,968
5 4 Nelson & Stafford, Industry $ 30 $ 639,749 $ 765,221 6/30/98 $ 923,164
5 5 730-780 Baldwin Park $ 27 $ 649,781 $ 781,974 6/30/98 $ 738,911
5 6 2800-2900 Sierra Pine $ 32 $ 418,379 $ 535,832 6/30/98 $ 499,394
5 7 13240, 13280 Amar Road $ 24 $ 373,760 $ 439,042 6/30/98 $ 396,827
5 8 Chapman & Western $ 40 $ 325,084 $ 388,446 6/30/98 $ 344,237
5 9 15551 Red Hill Avenue $ 41 $ 255,279 $ 348,522 6/30/98 $ 327,602
5 10 1900 Tubeway $ 34 $ 176,803 $ 218,642 6/30/98 $ 225,905
5 11 3707 S. Hill Street $ 49 $ 182,500 $ 217,451 6/30/98 $ 203,293
5 12 2001-2015 Saybrook $ 32 $ 168,892 $ 210,531 6/30/98 $ 198,257
5 13 2229-2235 E. Magnolia $ 33 $ 126,801 $ 210,146 6/30/98 $ 180,446
5 14 111 N. Hudson Avenue $ 30 $ 90,223 $ 162,979 6/30/98 $ 177,485
5 15 1444-1446 Factor Ave. $ 30 $ 109,138 $ 123,487 6/30/98 $ 116,687
5 16 2600 Yates $ 32 $ 89,768 $ 122,463 6/30/98 $ 114,491
-------- ----------- ----------- -----------
$ 31 $ 6,003,921 $ 7,516,284 $ 7,181,622
6 1 Eastland Mall $ 126 $11,294,228 $11,544,602 TTM 6/30/98 $11,724,542
7 1 * Airport Industrial $ 98 $12,288,134 $12,463,073 7/31/98 $12,550,191
Banyan Pool I
8 1 Colonial Penn Insurance $ 64 $ 1,741,614 $ 1,746,397 TTM 6/30/1998 $ 1,330,976
8 2 Phoenix Business Center $ 35 $ 950,748 $ 1,042,248 TTM 6/30/1998 $ 994,373
8 3 Sand Lake Center $ 50 $ 668,880 $ 781,148 TTM 6/30/1998 $ 834,171
8 4 Avalon Center $ 61 $ 114,000 $ 347,872 TTM 7/31/1998 $ 716,711
8 5 Peachtree Point $ 43 $ 919,355 $ 951,431 TTM 6/30/1998 $ 951,555
8 6 Southlake Corporate Center $ 51 $ 845,571 $ 889,685 TTM 6/30/1998 $ 842,624
8 7 Newtown Business Center $ 32 $ 658,173 $ 707,561 TTM 6/30/1998 $ 724,723
8 8 University CC III $ 39 $ 470,626 $ 497,220 TTM 6/30/1998 $ 528,791
8 9 University CC II $ 45 $ 446,192 $ 471,405 TTM 6/30/1998 $ 501,337
8 10 Airways Plaza $ 20 $ 810,660 $ 893,346 TTM 6/30/1998 $ 869,923
8 11 Technology Center $ 28 $ 502,281 $ 504,578 TTM 6/30/1998 $ 487,792
8 12 Park Center $ 27 $ 471,791 $ 413,503 TTM 6/30/1998 $ 489,672
8 13 University CC IV $ 41 $ 203,664 $ 215,172 TTM 6/30/1998 $ 228,835
8 14 Atrium $ 56 $ 216,172 $ 204,059 TTM 7/31/1998 $ 148,809
8 15 University CC 1 $ 21 $ 109,360 $ 115,539 TTM 6/30/1998 $ 122,876
8 16 Metric Plaza $ 11 $ 170,645 $ 179,441 TTM 6/30/1998 $ 211,260
-------- ----------- ----------- -----------
$ 39 $ 9,299,732 $ 9,960,606 $ 9,984,428
Land Apartments
9 1 Eastland Apartments $ 32,449 $ 2,205,275 $ 2,480,292 Ann 10/97-6/98 $ 2,501,191
9 2 Crown Point Apartments $ 37,240 $ 1,230,923 $ 1,291,864 Ann 9/97-6/98 $ 1,308,806
9 3 Prairie Creek $ 26,272 $ 890,203 $ 964,005 Ann. 10/97-6/98 $ 1,030,966
-------- ----------- ----------- -----------
$ 32,104 $ 4,326,401 $ 4,736,161 $ 4,840,963
Burgandy Properties
10 1 Mill Pond West $ 28,739 $ 1,049,828 $ 1,074,484 TTM 4/30/1998 $ 1,059,313
10 2 Mill Pond East $ 26,513 $ 976,976 $ 1,012,528 TTM 4/1/1998 $ 1,086,102
10 3 Pebblebrook 1 $ 37,219 $ 627,058 $ 642,351 TTM 4/30/1998 $ 645,937
10 4 Beach South $ 22,839 $ 866,764 $ 864,606 TTM 4/30/1998 $ 903,967
10 5 Pebblebrook II $ 35,919 $ 629,842 $ 642,941 TTM 4/1/1998 $ 643,386
-------- ----------- ----------- -----------
$ 29,033 $ 4,150,468 $ 4,236,910 $ 4,338,705
11 1 One Park Plaza $ 39 $ 6,488,545 $ 6,759,476 6/30/98 $ 5,675,555
12 1 Beckman Instruments - Brea $ 142 $ 7,198,400
13 1 Sun Life RV Resort $ 20,145 $ 2,243,999 $ 2,384,529 6/30/98 $ 2,353,466
14 1 1400 Union Meeting $ 64 $ 3,392,399 $ 3,488,966 4/30/98 $ 3,310,674
15 1 Cliffs of Dunwoody $ 33,924 $ 2,620,608 $ 2,615,693 TTM 6/30/98 $ 2,655,394
16 1 6400 Shafer Court $ 75 $ 3,430,196 $ 3,546,584 TTM 6/30/98 $ 3,482,795
17 1 Walzem Plaza S/C $ 50 $ 1,959,754 $ 2,023,197 5/31/98 $ 2,022,389
18 1 Beckman - Miami $ 98 $ 5,016,000
19 1 Money Store Headquarters $ 214 $ -- $ 6,677,563
Greenwich Portfolio
20 1 45 E.Putnam $ 140 $ 856,260 $ 923,786 6/30/98 $ 925,292
20 2 340-350 Greenwich Ave. $ 449 $ 460,990 $ 475,853 6/30/98 $ 460,558
20 3 116-136 E. Putnam $ 113 $ 657,303 $ 668,620 6/30/98 $ 655,857
-------- ----------- ----------- -----------
$ 173 $ 1,974,553 $ 2,068,259 $ 2,041,707
21 1 Monte Sano Apts. $ 34,521 $ 1,921,484 $ 1,945,943 7/31/98 $ 1,946,614
22 1 Pointe West $ 61 $ 2,421,921 $ 2,472,119 6/30/98 $ 2,410,870
Accor-M-Six V
23 1 696 $ 53,190 $ 1,913,000 $ 1,913,000 YE 12/31/1997 $ 1,913,000
23 2 1007 $ 95,388 $ 1,360,064 $ 1,360,064 YE 12/31/1997 $ 1,360,064
23 3 639 $ 43,269 $ 1,119,850 $ 1,119,850 YE 12/31/1997 $ 1,119,850
23 4 689 $ 37,170 $ 1,183,589 $ 1,183,589 YE 12/31/1997 $ 1,183,589
23 5 741 $ 40,932 $ 1,121,573 $ 1,121,573 YE 12/31/1997 $ 1,121,573
23 6 1257 $ 41,693 $ 1,017,418 $ 1,017,418 YE 12/31/1997 $ 1,017,418
23 7 1117 $ 38,567 $ 1,075,263 $ 1,075,263 YE 12/31/1997 $ 1,075,263
23 8 1067 $ 19,547 $ 1,254,992 $ 1,254,992 YE 12/31/1997 $ 1,254,992
23 9 1140 $ 31,940 $ 991,345 $ 991,345 YE 12/31/1997 $ 991,345
23 10 1010 $ 54,298 $ 656,522 $ 656,522 YE 12/31/1997 $ 656,522
23 11 1160 $ 24,250 $ 647,558 $ 647,558 YE 12/31/1997 $ 647,558
-------- ----------- ----------- -----------
$ 40,242 $12,341,174 $12,341,174 $12,341,174
Accor-M-Six III
24 1 103 $ 60,475 $ 3,241,278 $ 3,241,278 YE 12/31/1997 $ 3,241,278
24 2 251 $ 29,650 $ 1,396,329 $ 1,396,329 YE 12/31/1997 $ 1,396,329
24 3 171 $ 44,596 $ 1,113,104 $ 1,113,104 YE 12/31/1997 $ 1,113,104
24 4 1111 $ 50,593 $ 1,103,112 $ 1,103,112 YE 12/31/1997 $ 1,103,112
24 5 1143 $ 35,880 $ 1,116,103 $ 1,116,103 YE 12/31/1997 $ 1,116,103
24 6 334 $ 30,993 $ 981,578 $ 981,578 YE 12/31/1997 $ 981,578
24 7 1150 $ 31,397 $ 767,210 $ 767,210 YE 12/31/1997 $ 767,210
24 8 1109 $ 33,043 $ 948,353 $ 948,353 YE 12/31/1997 $ 948,353
24 9 282 $ 29,164 $ 762,028 $ 762,028 YE 12/31/1997 $ 762,028
24 10 231 $ 23,418 $ 918,758 $ 918,758 YE 12/31/1997 $ 918,758
24 11 121 $ 27,220 $ 807,477 $ 807,477 YE 12/31/1997 $ 807,477
-------- ----------- ----------- -----------
$ 36,983 $13,155,330 $13,155,330 $13,155,330
25 1 1129 State Street $ 71 $ 1,702,153 $ 1,775,190 6/30/98 $ 1,804,493
Accor-M-Six VI
26 1 15 $ 64,623 $ 1,608,219 $ 1,608,219 YE 12/31/1997 $ 1,608,219
26 2 471 $ 37,251 $ 1,371,234 $ 1,371,234 YE 12/31/1997 $ 1,371,234
26 3 346 $ 42,240 $ 1,318,387 $ 1,318,387 YE 12/31/1997 $ 1,318,387
26 4 1137 $ 35,554 $ 1,080,519 $ 1,080,519 YE 12/31/1997 $ 1,080,519
26 5 1005 $ 34,439 $ 1,152,209 $ 1,152,209 YE 12/31/1997 $ 1,152,209
26 6 560 $ 35,219 $ 945,251 $ 945,251 YE 12/31/1997 $ 945,251
26 7 620 $ 30,376 $ 937,412 $ 937,412 YE 12/31/1997 $ 937,412
26 8 1265 $ 23,619 $ 903,566 $ 903,566 YE 12/31/1997 $ 903,566
26 9 128 $ 25,167 $ 1,096,229 $ 1,096,229 YE 12/31/1997 $ 1,096,229
26 10 1198 $ 25,450 $ 825,499 $ 825,499 YE 12/31/1997 $ 825,499
26 11 1094 $ 22,577 $ 841,655 $ 841,655 YE 12/31/1997 $ 841,655
26 12 1188 $ 20,158 $ 786,098 $ 786,098 YE 12/31/1997 $ 786,098
26 13 292 $ 20,165 $ 698,703 $ 698,703 YE 12/31/1997 $ 698,703
26 14 1182 $ 18,244 $ 756,405 $ 756,405 YE 12/31/1997 $ 756,405
-------- ----------- ----------- -----------
$ 31,396 $ 14,321,386 $14,321,386 $14,321,386
Accor-M-Six Penvest II
27 1 142 $ 54,441 $ 1,140,084 $ 1,140,084 YE 12/31/1997 $ 1,140,084
27 2 651 $ 41,124 $ 1,121,020 $ 1,121,020 YE 12/31/1997 $ 1,121,020
27 3 1131 $ 35,255 $ 861,487 $ 861,487 YE 12/31/1997 $ 861,487
27 4 522 $ 31,058 $ 931,655 $ 931,655 YE 12/31/1997 $ 931,655
27 5 1047 $ 28,341 $ 1,156,872 $ 1,156,872 YE 12/31/1997 $ 1,156,872
27 6 1120 $ 29,762 $ 1,029,806 $ 1,029,806 YE 12/31/1997 $ 1,029,806
27 7 166 $ 41,915 $ 793,333 $ 793,333 YE 12/31/1997 $ 793,333
27 8 458 $ 28,415 $ 834,490 $ 834,490 YE 12/31/1997 $ 834,490
27 9 1214 $ 37,628 $ 730,923 $ 730,923 YE 12/31/1997 $ 730,923
27 10 1110 $ 24,014 $ 823,175 $ 823,175 YE 12/31/1997 $ 823,175
27 11 1092 $ 23,227 $ 859,369 $ 859,369 YE 12/31/1997 $ 859,369
27 12 1262 $ 26,131 $ 664,950 $ 664,950 YE 12/31/1997 $ 664,950
27 13 484 $ 29,731 $ 736,988 $ 736,988 YE 12/31/1997 $ 736,988
27 14 146 $ 28,145 $ 562,537 $ 562,537 YE 12/31/1997 $ 562,537
27 15 351 $ 19,725 $ 729,189 $ 729,189 YE 12/31/1997 $ 729,189
27 16 4 $ 31,536 $ 753,423 $ 753,423 YE 12/31/1997 $ 753,423
-------- ----------- ----------- -----------
$ 31,475 $13,729,301 $13,729,301 $13,729,301
28 1 Wasilla Retail Center $ 79 $ 2,119,983 $ 2,098,337 6/30/98 $ 2,147,073
Accor-M-Six IV
29 1 263 $ 73,424 $ 1,812,781 $ 1,812,781 YE 12/31/1997 $ 1,812,781
29 2 1127 $ 53,527 $ 1,399,593 $ 1,399,593 YE 12/31/1997 $ 1,399,593
29 3 122 $ 43,144 $ 1,271,615 $ 1,271,615 YE 12/31/1997 $ 1,271,615
29 4 1132 $ 44,426 $ 1,175,441 $ 1,175,441 YE 12/31/1997 $ 1,175,441
29 5 1036 $ 44,660 $ 1,017,088 $ 1,017,088 YE 12/31/1997 $ 1,017,088
29 6 426 $ 26,970 $ 836,747 $ 836,747 YE 12/31/1997 $ 836,747
29 7 1250 $ 28,974 $ 845,195 $ 845,195 YE 12/31/1997 $ 845,195
29 8 225 $ 60,733 $ 815,059 $ 815,059 YE 12/31/1997 $ 815,059
29 9 1088 $ 31,027 $ 814,093 $ 814,093 YE 12/31/1997 $ 814,093
29 10 1237 $ 27,634 $ 621,159 $ 621,159 YE 12/31/1997 $ 621,159
29 11 172 $ 20,441 $ 494,134 $ 494,134 YE 12/31/1997 $ 494,134
29 12 377 $ 17,400 $ 811,842 $ 811,842 YE 12/31/1997 $ 811,842
29 13 440 $ 16,395 $ 672,319 $ 672,319 YE 12/31/1997 $ 672,319
-------- ----------- ----------- -----------
$ 36,883 $12,587,066 $12,587,066 $12,587,066
30 1 Holiday Inn Sunspree Padre Island $ 42,833 $ 5,720,486 $ 5,748,420 TTM 4/30/1998 $ 5,573,871
Accor-M-Six Creditvest I
31 1 688 $ 36,577 $ 1,445,208 $ 1,445,208 YE 12/31/1997 $ 1,445,208
31 2 1052 $ 32,447 $ 1,404,906 $ 1,404,906 YE 12/31/1997 $ 1,404,906
31 3 381 $ 39,575 $ 1,235,523 $ 1,235,523 YE 12/31/1997 $ 1,235,523
31 4 679 $ 35,501 $ 1,302,963 $ 1,302,963 YE 12/31/1997 $ 1,302,963
31 5 1183 $ 25,146 $ 1,080,258 $ 1,080,258 YE 12/31/1997 $ 1,080,258
31 6 107 $ 27,277 $ 918,793 $ 918,793 YE 12/31/1997 $ 918,793
31 7 183 $ 28,881 $ 831,775 $ 831,775 YE 12/31/1997 $ 831,775
31 8 422 $ 24,107 $ 797,569 $ 797,569 YE 12/31/1997 $ 797,569
31 9 1207 $ 22,632 $ 856,672 $ 856,672 YE 12/31/1997 $ 856,672
31 10 1278 $ 28,892 $ 678,714 $ 678,714 YE 12/31/1997 $ 678,714
31 11 1135 $ 30,767 $ 688,600 $ 688,600 YE 12/31/1997 $ 688,600
31 12 417 $ 20,756 $ 901,322 $ 901,322 YE 12/31/1997 $ 901,322
31 13 1091 $ 21,748 $ 657,907 $ 657,907 YE 12/31/1997 $ 657,907
31 14 205 $ 23,470 $ 615,910 $ 615,910 YE 12/31/1997 $ 615,910
31 15 794 $ 21,123 $ 722,847 $ 722,847 YE 12/31/1997 $ 722,847
-------- ----------- ----------- -----------
$ 28,239 $14,138,967 $14,138,967 $14,138,967
Accor-M-Six Limited Partnership
32 1 1078 $ 59,289 $ 1,440,832 $ 1,440,832 YE 12/31/1997 $ 1,440,832
32 2 1268 $ 44,478 $ 1,287,258 $ 1,287,258 YE 12/31/1997 $ 1,287,258
32 3 775 $ 32,358 $ 1,353,727 $ 1,353,727 YE 12/31/1997 $ 1,353,727
32 4 739 $ 40,217 $ 1,235,918 $ 1,235,918 YE 12/31/1997 $ 1,235,918
32 5 1040 $ 32,767 $ 1,223,911 $ 1,223,911 YE 12/31/1997 $ 1,223,911
32 6 253 $ 33,741 $ 1,040,341 $ 1,040,341 YE 12/31/1997 $ 1,040,341
32 7 245 $ 26,136 $ 1,111,113 $ 1,111,113 YE 12/31/1997 $ 1,111,113
32 8 700 $ 22,506 $ 813,470 $ 813,470 YE 12/31/1997 $ 813,470
32 9 1059 $ 31,184 $ 748,280 $ 748,280 YE 12/31/1997 $ 748,280
32 10 1254 $ 15,618 $ 943,216 $ 943,216 YE 12/31/1997 $ 943,216
32 11 1283 $ 24,454 $ 785,894 $ 785,894 YE 12/31/1997 $ 785,894
32 12 156 $ 24,519 $ 917,010 $ 917,010 YE 12/31/1997 $ 917,010
32 13 699 $ 24,328 $ 706,743 $ 706,743 YE 12/31/1997 $ 706,743
32 14 784 $ 19,778 $ 1,103,887 $ 1,103,887 YE 12/31/1997 $ 1,103,887
-------- ----------- ----------- -----------
$ 30,399 $14,711,600 $14,711,600 $14,711,600
Accor-M-Six Creditvest II
33 1 1267 $ 65,016 $ 1,949,388 $ 1,949,388 YE 12/31/1997 $ 1,949,388
33 2 476 $ 56,165 $ 1,606,699 $ 1,606,699 YE 12/31/1997 $ 1,606,699
33 3 376 $ 40,529 $ 1,756,714 $ 1,756,714 YE 12/31/1997 $ 1,756,714
33 4 345 $ 26,065 $ 1,493,864 $ 1,493,864 YE 12/31/1997 $ 1,493,864
33 5 402 $ 41,072 $ 562,537 $ 562,537 YE 12/31/1997 $ 562,537
33 6 1142 $ 36,679 $ 927,830 $ 927,830 YE 12/31/1997 $ 927,830
33 7 371 $ 26,774 $ 1,005,432 $ 1,005,432 YE 12/31/1997 $ 1,005,432
33 8 133 $ 26,739 $ 771,065 $ 771,065 YE 12/31/1997 $ 771,065
33 9 1035 $ 31,656 $ 870,760 $ 870,760 YE 12/31/1997 $ 870,760
33 10 542 $ 23,450 $ 811,125 $ 811,125 YE 12/31/1997 $ 811,125
33 11 1130 $ 31,957 $ 793,067 $ 793,067 YE 12/31/1997 $ 793,067
-------- ----------- ----------- -----------
$ 37,037 $12,548,481 $12,548,481 $12,548,481
34 1 Rancho San Marcos Village $ 84 $ 1,336,813 $ 1,546,754 TTM 7/31/98 $ 1,609,020
Accor-M-Six Penvest I
35 1 294 $ 42,115 $ 1,020,811 $ 1,020,811 YE 12/31/1997 $ 1,020,811
35 2 743 $ 32,464 $ 1,033,524 $ 1,033,524 YE 12/31/1997 $ 1,033,524
35 3 1108 $ 38,589 $ 918,793 $ 918,793 YE 12/31/1997 $ 918,793
35 4 1136 $ 31,416 $ 976,419 $ 976,419 YE 12/31/1997 $ 976,419
35 5 385 $ 31,672 $ 1,082,973 $ 1,082,973 YE 12/31/1997 $ 1,082,973
35 6 406 $ 29,512 $ 1,081,294 $ 1,081,294 YE 12/31/1997 $ 1,081,294
35 7 586 $ 37,149 $ 937,018 $ 937,018 YE 12/31/1997 $ 937,018
35 8 339 $ 27,940 $ 830,644 $ 830,644 YE 12/31/1997 $ 830,644
35 9 1200 $ 26,704 $ 944,515 $ 944,515 YE 12/31/1997 $ 944,515
35 10 290 $ 29,046 $ 679,592 $ 679,592 YE 12/31/1997 $ 679,592
35 11 554 $ 30,640 $ 894,696 $ 894,696 YE 12/31/1997 $ 894,696
35 12 1069 $ 24,575 $ 816,278 $ 816,278 YE 12/31/1997 $ 816,278
35 13 158 $ 26,221 $ 469,026 $ 469,026 YE 12/31/1997 $ 469,026
35 14 1009 $ 28,229 $ 664,827 $ 664,827 YE 12/31/1997 $ 664,827
35 15 1264 $ 20,721 $ 589,743 $ 589,743 YE 12/31/1997 $ 589,743
-------- ----------- ----------- -----------
$ 30,626 $12,940,153 $12,940,153 $12,940,153
36 1 Palm Desert Country Club S.C. $ 72 $ 1,449,423 $ 1,459,355 6/30/98 $ 1,534,826
37 1 New City Plaza $ 74 $ 1,646,207 $ 1,699,846 TTM 6/30/98 $ 1,681,505
Cinemark Pool B
38 1 Colorado Springs, CO - Tinseltown $ 162 $ -- $ -- $ 1,813,260
38 2 Mishawaka - Movies 10 $ 151 $ -- $ -- $ 957,000
-------- ----------- ----------- -----------
$ 158 $ -- $ -- $ 2,770,260
39 1 Nordhoff Industrial Complex $ 45 $ 1,152,581 $ 1,399,665 5/31/98 $ 1,407,615
40 1 Seven Corners Apts. $ 28,867 $ 1,988,752 $ 1,997,446 TTM 2/28/98 $ 2,002,333
41 1 Citibank Office Plaza $ 76 $ 2,052,487 $ 2,333,286 5/31/98 $ 2,283,450
42 1 Savannah Apartments $ 27,569 $ 1,803,471 $ 2,056,877 9/97-6/98 Ann $ 2,095,517
43 1 Belleville Manor $ 22,294 $ 1,262,577 $ 1,291,649 6/30/98 $ 1,310,495
44 1 203 East Fordham Road $ 315 $ 1,373,606 $ 1,347,000 Imp 6/30/98 $ 1,302,436
45 1 Plantation Club Apartments $ 36,722 $ 1,661,882 $ 1,738,314 TTM 6/30/98 $ 1,733,798
46 1 Silver Pointe SC $ 89 $ 558,647 $ 808,872 imp 5/31/98 $ 1,182,274
47 1 Central Medical Park $ 70 $ 1,636,807 $ 1,672,619 5/31/98 $ 1,696,696
48 1 Friendly Village MHP $ 14,060 $ 1,295,793 $ 1,336,865 TTM 6/30/98 $ 1,398,744
49 1 Springhill Business Center $ 47 $ 1,181,682 $ 1,246,411 TTM 7/31/98 $ 1,362,551
50 1 Pacific Court Office Building $ 161 $ 1,226,013 $ 1,374,352 6/30/98 $ 1,330,235
Banyan Pool 3
51 1 Elmhurst $ 25 $ 1,280,335 $ 1,149,735 TTM 6/30/98 $ 910,716
51 2 Milwaukee - Commerce $ 16 $ 368,180 $ 360,755 TTM 6/30/1998 $ 325,499
51 3 Milwaukee - 160th $ 14 $ 320,673 $ 314,206 TTM 6/30/1998 $ 283,499
51 4 Milwaukee - Whittaker Way $ 15 $ 261,289 $ 256,020 TTM 6/30/1998 $ 230,999
51 5 Milwaukee - Ryerson $ 14 $ 237,536 $ 232,745 TTM 6/30/1998 $ 209,999
-------- ----------- ----------- -----------
$ 18 $ 2,468,013 $ 2,313,461 $ 1,960,712
52 1 Pride Center $ 44 $ 1,562,992 $ 1,466,682 6/30/98 $ 1,415,442
53 1 Hidden Harbor $ 30,774 $ 1,392,734 $ 1,398,721 TTM 6/30/98 $ 1,398,721
54 1 Oshkosh Center II $ 59 $ -- $ 1,020,065 6/30/98 $ 1,035,039
55 1 Waterford Plaza $ 54 $ 1,395,829 $ 1,390,022 TTM 7/31/98 $ 1,419,641
56 1 Palm Harbor Apartments $ 24,625 $ 1,490,959 $ 1,471,863 6/30/98 $ 1,570,715
57 1 Fiserve Building $ 49 $ 1,798,115 $ 1,820,867 TTM 6/30/98 $ 1,722,087
Airport Atrium
58 1 Airport Atrium $ 50 $ 744,399 $ 842,538 8/97 - 7/98 $ 728,704
58 2 Sampson 1 $ 18 $ 474,957 $ 472,274 8/1/97 - 7/31/9 $ 432,950
58 3 Braemar Building $ 57 $ 352,457 $ 375,930 TTM 6/30/98 $ 379,284
-------- ----------- ----------- -----------
$ 32 $ 1,571,813 $ 1,690,742 $ 1,540,938
59 1 Wicomico $ 17 $ 1,201,599 $ 1,222,012 TTM 6/30/98 $ 1,192,254
Seven Mobile Home Properties
60 1 Woodside MHP $ 23,528 $ 177,002 $ 177,002 12/31/97 $ 181,453
60 2 Natural Springs MHP $ 18,441 $ 185,798 $ 185,798 12/31/97 $ 178,075
60 3 Mountainview East MHP $ 17,728 $ 183,648 $ 184,735 1/31/98 $ 175,552
60 4 Progress Ridge MHP $ 15,609 $ 191,196 $ 191,196 12/31/97 $ 195,240
60 5 Southern Hills MHP $ 16,008 $ 121,344 $ 121,344 12/31/97 $ 129,365
60 6 Sunshine MHP $ 13,255 $ 84,098 $ 84,098 1/31/98 $ 84,420
60 7 Castle Hill MHP $ 17,857 $ 65,337 $ 65,337 12/31/97 $ 61,195
-------- ----------- ----------- -----------
$ 17,571 $ 1,008,423 $ 1,009,510 $ 1,005,300
61 1 SL-Tulsa $ 14 $ 1,315,679 $ 1,266,999 7/31/98 $ 1,339,691
62 1 The Courtyard Apts. $ 74,953 $ 1,002,799 $ 1,010,801 TTM 6/30/1998 $ 1,009,486
63 1 Old Metairie Village Shopping Center $ 71 $ 1,119,577 $ 1,166,436 TTM 4/30/1998 $ 1,120,563
64 1 Willowick Industrial Park $ 55 $ 1,142,646 $ 1,179,958 TTM 5/30/98 $ 1,224,743
65 1 Courtney Square Apartments $ 27,751 $ 1,050,440 $ 1,048,148 5/31/98 $ 1,053,915
66 1 Plaza de la Fiesta III & IV $ 118 $ 1,042,394 $ 1,055,860 6/30/98 $ 1,098,899
67 1 Motorola Training Center $ 67 $ 713,161 $ 1,069,741 4/30/98 $ 1,016,254
68 1 Madison Village $ 36 $ 857,135 $ 907,488 5/30/98 $ 895,369
69 1 Pipestone Plaza $ 31 $ 969,350 $ 1,060,576 5/30/98 $ 1,046,765
70 1 Parkleigh North Apts. $ 25,123 $ 1,055,185 $ 1,055,082 TTM 5/31/1998 $ 1,099,675
71 1 Southgate Estates MHP $ 13,671 $ 860,572 $ 866,800 TTM 4/30/98 $ 880,694
72 1 7 West 45th Street $ 79 $ 1,817,039 $ 1,858,832 6/30/98 $ 1,777,786
73 1 2100 Swift Drive $ 82 $ -- $ -- $ 984,897
74 1 Westwind Apts. $ 27,500 $ 975,319 $ 983,310 6/30/98 $ 1,013,348
75 1 Stanford Townhouses $ 39,781 $ 1,082,610 $ 1,086,952 6/30/98 $ 1,096,920
76 1 Mentor Industrial $ 9 $ 1,368,334 $ 1,468,178 7/31/98 $ 1,486,459
77 1 Braebuurn Colony Apts. $ 16,986 $ 1,343,996 $ 1,370,108 TTM 6/30/98 $ 1,426,619
78 1 SL-Mogadore $ 13 $ 783,876 $ 819,679 TTM 6/30/98 $ 799,622
79 1 ABFM Industrial Building $ 15 $ 1,467,922 $ 1,365,397 TTM 7/31/98 $ 941,688
80 1 1567-1575 Lexington Avenue $ 33,268 $ 800,267 $ 934,779 6/30/98 $ 1,004,177
81 1 Mason Manor MHP $ 16,254 $ 748,638 $ 724,607 6/30/98 $ 739,602
82 1 118-40 Metropolitan Ave. $ 50,232 $ 766,283 $ 761,947 6/30/98 $ 767,432
83 1 Clark & Diversey Shopping Ctr. $ 212 $ 771,683 $ 733,242 4/30/98 $ 734,953
84 1 Stanbridge Apartments $ 26,790 $ 945,394 $ 972,184 5/31/98 $ 1,000,883
85 1 Village Townhomes $ 28,513 $ 785,853 $ 818,504 TTM 4/30/98 $ 837,956
86 1 Ventu Park Shopping Center $ 68 $ 619,491 $ 612,221 TTM 6/30/98 $ 640,395
87 1 Bowen's Wharf $ 103 $ 1,115,734 $ 1,150,158 3/30/98 $ 1,132,386
Muraco Portfolio
88 1 Lakeview Apts. $ 24,223 $ 375,180 $ 392,956 6/30/98 $ 392,182
88 2 Oneida Apts. $ 25,297 $ 279,684 $ 285,639 6/30/98 $ 277,714
88 3 Townsquare Apts. $ 37,865 $ 158,779 $ 189,328 6/30/98 $ 172,376
-------- ----------- ----------- -----------
$ 26,855 $ 813,643 $ 867,923 $ 842,272
89 1 Sherman West Apartments $ 28,326 $ 840,274 $ 844,205 TTM 4/30/1998 $ 860,665
90 1 Parkside Village Apts. $ 30,814 $ 881,493 $ 891,959 6/30/98 $ 897,062
91 1 Harbor Greens $ 17,837 $ 888,807 $ 1,158,441 TTM 7/31/98 $ 1,321,627
92 1 710 State Street $ 154 $ 501,222 $ 531,758 7/31/98 $ 585,142
93 1 Flemings Foods Store $ 60 $ 465,000 $ 465,000 4/30/98 $ 442,913
94 1 Playa Vista Plaza $ 41 $ 1,286,603 $ 1,316,223 TTM 4/30/1998 $ 1,398,595
95 1 122-126 East 103rd Street $ 41,778 $ 623,062 $ 709,325 6/30/98 $ 711,673
96 1 Stonewall SC $ 46 $ 650,756 $ 657,456 TTM 5/31/98 $ 607,455
97 1 Tempo Cabana Apts. $ 25,870 $ 972,269 $ 981,606 TTM 2/28/98 $ 981,606
98 1 Westmont Apts $ 28,203 $ 840,250 $ 851,777 TTM 4/30/98 $ 851,777
99 1 Great Western Bank Building $ 131 $ 552,604 $ 547,113 7/31/98 $ 559,876
100 1 Chelmsford Crossing $ 51,156 $ 1,615,632 imp. 7/31/98 $ 1,633,245
101 1 Safeway Industrial $ 28 $ 652,646 $ 661,776 6/30/98 $ 667,279
102 1 The Bentley Mills Building $ 49 $ -- $ 1,300,349
103 1 Twin Pines Healthcare Center $ 32,323 $ 3,966,753 $ 4,172,017 5/31/98 $ 4,172,017
104 1 Corporate West One $ 65 $ 814,213 $ 874,394 TTM 6/30/1998 $ 844,791
105 1 Ingle West Office Building $ 57 $ 917,275 $ 941,137 TTM 3/31/98 $ 890,211
106 1 Colony Ridge Apts. $ 14,571 $ 1,029,196 $ 1,091,998 TTM 6/30/1998 $ 1,158,257
107 1 SL - Lima $ 12 $ 582,286 $ 576,120 Ann.4/1-6/30/98 $ 537,664
108 1 Collins Nursing Home $ 42,920 $ 3,978,657 $ 4,112,843 TTM 4/30/98 $ 4,112,843
109 1 Westgrove Towers $ 18,072 $ 966,008 $ 996,570 5/31/98 $ 1,000,925
110 1 * Apartments of Westgrove $ 30,850 $ 907,735 $ 924,467 TTM 4/30/1998 $ 898,465
111 1 * West Third Street $ 40 $ 918,723 $ 920,258 6/30/98 $ 864,419
112 1 Pollyanna Apartments $ 16,706 $ 733,514 $ 761,970 TTM 6/20/98 $ 827,628
113 1 Bellemeade Plaza $ 26 $ 793,232 $ 814,257 TTM 6/30/98 $ 816,862
114 1 Hiawassee Oaks Apartments $ 27,905 $ 646,057 $ 650,342 TTM 6/30/98 $ 658,298
115 1 Giant Food Store $ 67 $ 332,028 $ 326,670 4/30/98 $ 315,731
116 1 Timber Ridge Apts. $ 12,695 $ 783,191 $ 831,783 TTM 4/30/1998 $ 858,217
Bird Creek Comfort Creek
117 1 Bird Creek Mobile Home Park $ 9,269 $ 344,607 $ 364,154 TTM 6/30/98 $ 366,063
117 2 Comfort Mobile Home Park $ 10,579 $ 243,405 $ 234,565 TTM 6/30/98 $ 234,006
-------- ----------- ----------- -----------
$ 9,710 $ 588,012 $ 598,719 $ 600,069
118 1 GRW Building $ 47 $ 628,536 $ 640,497 TTM 4/30/1998 $ 603,495
119 1 University Hills $ 48 $ 547,442 $ 552,107 6/30/98 $ 523,186
120 1 Grove Gate Apartments $ 37,461 $ 532,887 $ 543,472 TTM 5/30/98 $ 532,665
121 1 Colts Neck Shopping Center $ 75 $ 574,922 $ 586,588 TTM 5/31/98 $ 560,447
122 1 Keosippi Mall $ 14 $ 810,024 $ 824,385 4/30/98 $ 804,046
123 1 Pineville Commerce Center $ 34 $ 419,769 $ 429,384 4/30/98 $ 453,016
124 1 90-92 Thompson Street $ 88,674 $ 384,035 $ 425,032 TTM 4/30/1998 $ 423,715
125 1 Walton Manor MHP $ 9,121 $ 751,782 $ 781,759 TTM 4/30/98 $ 842,424
126 1 238 E. 111th/204 E. 112th Street $ 38,907 $ 366,436 $ 448,012 6/30/98 $ 473,497
127 1 Palmwood Terrace Apts. $ 22,754 $ 521,161 $ 530,043 TTM 5/31/1998 $ 541,364
128 1 Hartnell Plaza $ 63 $ 418,248 $ 398,077 TTM 5/31/98 $ 368,566
129 1 Carytown Square $ 77 $ 407,654 $ 417,065 TTM 3/31/1998 $ 402,682
130 1 Oak Creek Apts. $ 15,576 $ 616,539 $ 619,454 Imp TTM 6/30/98 $ 628,473
131 1 Hollywood News Building $ 54 $ 487,009 $ 489,893 TTM 4/30/1998 $ 502,772
132 1 Chateau Apts. $ 25,609 $ 468,362 $ 457,102 imp 7/31/98 $ 534,984
133 1 Miller Road Business Ctr. $ 23 $ 355,245 $ 361,430 TTM 3/31/1998 $ 370,625
134 1 The Kellogg Property $ 93 $ 319,187 $ 323,682 7/31/98 $ 308,735
135 1 Maple Lawn III $ 56 $ 333,952 $ 366,915 4/30/98 $ 354,074
136 1 Stapley-McKellips Center $ 86 $ 319,980 $ 335,703 4/30/98 $ 336,137
137 1 239 S. La Cienega $ 145 $ 339,970 $ 341,917 TTM 7/31/98 $ 344,333
138 1 Sunflowers Terrace Apts. $ 12,432 $ 951,458 $ 988,532 6/30/98 $ 949,993
139 1 Yearling $ 13,531 $ 543,119 $ 565,786 TTM 6/30/98 $ 600,532
140 1 Briarwyck Apts. $ 16,964 $ 599,165 $ 618,204 7/31/98 $ 631,277
141 1 H Lazy F MHP $ 18,715 $ 425,000 $ 426,321 TTM 4/30/98 $ 428,200
Bayshore/Rockport Oaks
142 1 Bayshore Apartments $ 14,422 $ 296,910 $ 308,234 6/30/98 $ 315,717
142 2 Rockport Oaks Garden Apartments $ 13,783 $ 245,869 $ 249,117 5/30/98 $ 282,954
-------- ----------- ----------- -----------
$ 14,113 $ 542,779 $ 557,351 $ 598,671
143 1 Burnhaven $ 58 $ 505,168 $ 529,515 7/31/98 $ 484,429
144 1 Colton Midtown Plaza $ 29 $ 598,841 TTM 7/31/98 $ 717,475
145 1 Sax Drugs $ 63 $ 266,193 $ 305,805 4/30/98 $ 289,464
146 1 Sea Tac Gardens Apts. $ 27,301 $ 343,710 $ 345,728 TTM 3/31/1998 $ 353,131
147 1 Cherry Point Mall $ 14 $ 486,449 $ 522,254 7/30/98 $ 523,094
148 1 The Point $ 40 $ 374,924 $ 382,932 4/30/98 $ 367,913
149 1 311 East 109th Street $ 46,966 $ 201,392 $ 297,125 6/30/98 $ 292,158
150 1 Peachwood Manor MHP $ 11,946 $ 235,260 $ 246,486 TTM 4/30/1998 $ 260,903
151 1 6972 Sheridan $ 25,833 $ 334,913 $ 353,907 6/17/98 $ 365,498
152 1 Crest Oak Apts. $ 24,938 $ 354,712 $ 364,888 TTM 4/30/98 $ 387,085
153 1 1&3 Eves $ 45 $ 385,971 $ 377,944 TTM 6/30/98 $ 375,704
154 1 Highland Park Townhomes $ 11,843 $ 560,291 $ 597,507 TTM 6/30/98 $ 558,318
155 1 Marbach Square SC $ 30 $ 366,708 $ 369,031 TTM 4/30/1998 $ 371,305
156 1 Sunpointe Gardens Apts. $ 8,873 $ 584,082 $ 579,720 4/30/98 $ 590,195
157 1 Airport Executive Park $ 24 $ 363,697 $ 446,184 TTM 5/31/98 $ 456,894
Parkside/Pleasant View MHP
158 1 Parkside MHP $ 8,543 $ 266,465 $ 265,677 TTM 3/11/98 $ 271,399
158 2 Pleasantview MHP $ 5,051 $ 182,818 $ 188,039 TTM 3/11/98 $ 188,039
-------- ----------- ----------- -----------
$ 7,111 $ 449,283 $ 453,716 $ 459,438
159 1 Oakview Apartments $ 18,182 $ 428,310 $ 438,212 6/30/98 $ 447,812
160 1 Expressway Commerce Complex $ 33 $ 199,868 $ 248,858 6/30/98 $ 249,627
161 1 Brookside Apartments $ 26,664 $ 306,793 $ 305,516 6/20/98 $ 318,942
162 1 Sundial Shopping Center $ 58 $ 407,053 $ 407,379 3/31/98 $ 392,285
163 1 501 State Street $ 126 $ 233,532 $ 255,462 TTM 3/31/1998 $ 240,561
164 1 Uniontown Center $ 52 $ 324,245 $ 333,261 TTM 3/31/1998 $ 329,826
165 1 * Cypress Creek Business Park $ 24 $ 465,957 $ 479,562 Imp TTM $ 509,878
166 1 Riverside Estates MHP $ 8,471 $ 291,830 $ 326,400 TTM 4/30/1998 $ 352,348
167 1 Winterhaven East Apartments $ 32,308 $ 252,598 $ 252,664 7/31/98 $ 261,886
168 1 Bahamas Apartments $ 12,839 $ 422,866 $ 438,625 TTM 6/30/98 $ 457,646
169 1 The Midland Building $ 15 $ 569,687 $ 673,049 7/31/98 $ 743,333
170 1 236 & 238-240 East 7th Street $ 24,682 $ 308,623 $ 317,996 4/30/98 $ 338,681
171 1 The River Park Center $ 79 $ 364,873 $ 368,577 4/30/98 $ 350,254
172 1 Pasadena Plaza Mart $ 25 $ 277,561 $ 289,743 2/28/98 $ 284,155
173 1 Pleasant View MHP $ 6,284 $ 201,484 $ 206,243 TTM 3/31/98 $ 229,045
174 1 Circuit City-Philadelphia $ 145 $ 604,100
175 1 Nanette Apartments $ 25,633 $ 226,864 $ 228,434 TTM 5/31/1998 $ 227,521
176 1 Central Plaza $ 59 $ 158,500 $ 199,760 TTM 6/30/98 $ 219,546
177 1 Brandenberry Square Apts $ 12,646 $ 379,708 $ 387,712 TTM 5/31/98 $ 406,548
178 1 Champion MHP $ 5,837 $ 469,515 $ 472,099 4/30/98 $ 457,912
179 1 East Brunswick Woods $ 48 $ 260,165 $ 289,249 5/31/98 $ 279,422
180 1 Circuit City-Harper Woods $ 192 $ 466,020
181 1 Circuit City-Ridgeland $ 151 $ 431,500
182 1 1590 Lexington Avenue $ 29,941 $ 151,557 $ 183,112 6/30/98 $ 182,372
183 1 Circuit City-East Lansing $ 160 $ 388,350
184 1 Circuit City-Frederick $ 162 $ 388,350
185 1 Circuit City-Green Bay $ 157 $ 388,350
186 1 Circuit City-Indianapolis $ 132 $ 388,350
187 1 2156 2nd Avenue $ 49,902 $ 109,567 $ 116,696 6/30/98 $ 122,502
188 1 OCC Financial Plaza $ 58 $ 173,244 $ 173,244 5/31/98 $ 164,387
189 1 103 East 102nd Street $ 54,892 $ 112,659 $ 104,794 6/30/98 $ 104,584
190 1 Windgate MHP $ 9,636 $ 92,231 $ 93,366 TTM 5/31/98 $ 94,135
191 1 Circuit City-Jackson,TN $ 97 $ 284,790
192 1 291 Pleasant $ 29,941 $ 89,620 $ 102,521 6/30/98 $ 100,200
193 1 Circuit City-Kingsport $ 154 $ 258,900
194 1 Circuit City-Witchita Falls $ 140 $ 258,900
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Net
Most Recent Cash
Loan Asset Period Underwritten Net Cash NOI Flow
# # Property Name 1997 NOI NOI NOI Flow DSCR DSCR
---- ----- ------------- ----------- ----------- ------------ ----------- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Prime Retail III
1 1 Lighthouse Place $ 6,496,068 $ 7,077,933 $ 7,027,170 $ 6,425,113 1.66 1.54
1 2 Finger Lakes Outlet Center $ 4,984,451 $ 5,423,095 $ 5,422,252 $ 4,953,974 1.66 1.54
1 3 * Outlets at Gilroy III and IV $ 5,707,534 $ 5,685,643 $ 5,589,176 $ 5,235,433 1.66 1.54
1 4 Outlets at Gilroy I, II and V $ 4,789,968 $ 4,771,597 $ 4,690,638 $ 4,393,764 1.66 1.54
1 5 * Kittery Outlet Village $ 2,249,591 $ 2,323,616 $ 2,157,990 $ 1,988,485 1.66 1.54
----------- ----------- ------------ ----------- ---- ----
$24,227,612 $25,281,884 $24,887,226 $22,996,769 1.66 1.54
2 1 Soho Grand Hotel $13,249,354 $14,922,445 $12,426,229 $10,814,051 2.14 1.86
Morgantown Mall and Commons
3 1 Morgantown Mall $ 5,124,721 $ 5,087,784 $ 4,842,207 $ 4,598,520 1.45 1.38
3 2 Morgantown Commons $ 1,916,696 $ 1,912,476 $ 1,819,809 $ 1,747,411 1.45 1.38
----------- ----------- ----------- ------------ ---- ----
$ 7,041,417 $ 7,000,260 $ 6,662,016 $ 6,345,931 1.45 1.38
4 1 5670 Wilshire $ 9,188,139 $ 9,397,859 $ 7,201,947 $ 6,417,325 1.43 1.28
Shidler Industrial Portfolio
5 1 4150-4174 Bandini Boulevard $ 817,914 $ 1,118,958 $ 898,983 $ 783,718 1.34 1.19
5 2 Wicks Business Park $ 651,226 $ 656,660 $ 661,824 $ 598,701 1.34 1.19
5 3 341-345 Baldwin Park $ 623,696 $ 693,759 $ 641,884 $ 572,926 1.34 1.19
5 4 Nelson & Stafford, Industry $ 563,590 $ 556,821 $ 695,241 $ 616,323 1.34 1.19
5 5 730-780 Baldwin Park $ 552,330 $ 645,127 $ 596,971 $ 536,868 1.34 1.19
5 6 2800-2900 Sierra Pine $ 395,526 $ 466,378 $ 428,361 $ 379,796 1.34 1.19
5 7 13240, 13280 Amar Road $ 323,461 $ 349,524 $ 303,271 $ 261,496 1.34 1.19
5 8 Chapman & Western $ 296,090 $ 329,945 $ 285,393 $ 257,234 1.34 1.19
5 9 15551 Red Hill Avenue $ 229,688 $ 274,546 $ 259,775 $ 235,139 1.34 1.19
5 10 1900 Tubeway $ 164,926 $ 178,842 $ 184,654 $ 165,493 1.34 1.19
5 11 3707 S. Hill Street $ 167,912 $ 188,662 $ 173,891 $ 159,244 1.34 1.19
5 12 2001-2015 Saybrook $ 158,096 $ 179,325 $ 166,732 $ 148,582 1.34 1.19
5 13 2229-2235 E. Magnolia $ 89,350 $ 154,952 $ 125,840 $ 110,279 1.34 1.19
5 14 111 N. Hudson Avenue $ 65,905 $ 120,012 $ 132,933 $ 117,540 1.34 1.19
5 15 1444-1446 Factor Ave. $ 103,395 $ 108,880 $ 101,257 $ 89,552 1.34 1.19
5 16 2600 Yates $ 80,425 $ 102,301 $ 93,692 $ 83,022 1.34 1.19
----------- ----------- ----------- ----------- ---- ----
$ 5,283,530 $ 6,124,692 $ 5,750,702 $ 5,115,913 1.34 1.19
6 1 Eastland Mall $ 5,657,865 $ 5,866,962 $ 6,035,738 $ 5,632,905 1.40 1.31
7 1 * Airport Industrial $ 8,284,072 $ 8,426,488 $ 8,109,704 $ 7,665,917 1.40 1.33
Banyan Pool I
8 1 Colonial Penn Insurance $ 1,208,013 $ 1,223,508 $ 813,549 $ 679,364 2.10 1.72
8 2 Phoenix Business Center $ 694,678 $ 764,050 $ 714,051 $ 577,906 2.10 1.72
8 3 Sand Lake Center $ 477,029 $ 588,426 $ 620,678 $ 529,663 2.10 1.72
8 4 Avalon Center $ 87,000 $ 260,050 $ 582,927 $ 491,643 2.10 1.72
8 5 Peachtree Point $ 491,674 $ 584,157 $ 562,752 $ 446,430 2.10 1.72
8 6 Southlake Corporate Center $ 573,424 $ 578,091 $ 525,258 $ 437,922 2.10 1.72
8 7 Newtown Business Center $ 501,620 $ 543,051 $ 549,531 $ 442,262 2.10 1.72
8 8 University CC III $ 344,374 $ 369,706 $ 390,520 $ 335,893 2.10 1.72
8 9 University CC II $ 326,494 $ 350,511 $ 370,245 $ 318,454 2.10 1.72
8 10 Airways Plaza $ 332,276 $ 407,929 $ 387,813 $ 255,127 2.10 1.72
8 11 Technology Center $ 333,958 $ 321,685 $ 275,256 $ 220,193 2.10 1.72
8 12 Park Center $ 338,401 $ 283,605 $ 358,148 $ 302,444 2.10 1.72
8 13 University CC IV $ 149,028 $ 159,990 $ 168,997 $ 145,358 2.10 1.72
8 14 Atrium $ 151,795 $ 145,319 $ 91,254 $ 76,507 2.10 1.72
8 15 University CC 1 $ 80,022 $ 85,909 $ 90,745 $ 78,052 2.10 1.72
8 16 Metric Plaza $ 112,367 $ 121,364 $ 154,431 $ 121,948 2.10 1.72
----------- ----------- ----------- ----------- ---- ----
$ 6,202,153 $ 6,787,351 $ 6,656,155 $ 5,459,166 2.10 1.72
Land Apartments
9 1 Eastland Apartments $ 1,325,024 $ 1,642,527 $ 1,621,170 $ 1,507,170 1.30 1.21
9 2 Crown Point Apartments $ 695,819 $ 758,964 $ 743,790 $ 697,790 1.30 1.21
9 3 Prairie Creek $ 569,348 $ 612,652 $ 631,601 $ 584,351 1.30 1.21
----------- ----------- ----------- ----------- ---- ----
$ 2,590,191 $ 3,014,143 $ 2,996,561 $ 2,789,311 1.30 1.21
Burgandy Properties
10 1 Mill Pond West $ 487,555 $ 494,999 $ 514,718 $ 475,718 1.40 1.30
10 2 Mill Pond East $ 432,908 $ 460,724 $ 557,551 $ 520,051 1.40 1.30
10 3 Pebblebrook 1 $ 354,993 $ 365,548 $ 363,252 $ 342,252 1.40 1.30
10 4 Beach South $ 360,262 $ 352,751 $ 388,371 $ 354,371 1.40 1.30
10 5 Pebblebrook II $ 339,933 $ 359,788 $ 363,131 $ 342,131 1.40 1.30
----------- ----------- ----------- ----------- ---- ----
$ 1,975,651 $ 2,033,810 $ 2,187,023 $ 2,034,523 1.40 1.30
11 1 One Park Plaza $ 3,212,235 $ 3,615,370 $ 2,549,198 $ 2,015,029 2.03 1.61
12 1 Beckman Instruments - Brea $ 7,198,400 $ 7,198,400 1.00 1.00
13 1 Sun Life RV Resort $ 1,651,146 $ 1,714,424 $ 1,587,506 $ 1,549,256 1.25 1.22
14 1 1400 Union Meeting $ 2,135,340 $ 2,226,134 $ 2,005,276 $ 1,692,900 1.46 1.23
15 1 Cliffs of Dunwoody $ 1,526,538 $ 1,578,445 $ 1,575,118 $ 1,484,478 1.30 1.23
16 1 6400 Shafer Court $ 1,632,278 $ 1,866,608 $ 1,746,806 $ 1,521,762 1.45 1.26
17 1 Walzem Plaza S/C $ 1,511,987 $ 1,559,067 $ 1,548,197 $ 1,363,858 1.53 1.35
18 1 Beckman - Miami $ 5,016,000 $ 5,016,000 1.00 1.00
19 1 Money Store Headquarters $ 6,677,563 $ 6,677,563 1.00 1.00
Greenwich Portfolio
20 1 45 E.Putnam $ 629,021 $ 739,212 $ 695,557 $ 652,094 1.47 1.39
20 2 340-350 Greenwich Ave. $ 410,544 $ 419,726 $ 398,647 $ 377,334 1.47 1.39
20 3 116-136 E. Putnam $ 483,038 $ 496,732 $ 481,816 $ 454,164 1.47 1.39
----------- ----------- ----------- ----------- ---- ----
$ 1,522,603 $ 1,655,670 $ 1,576,020 $ 1,483,592 1.47 1.39
21 1 Monte Sano Apts. $ 1,235,489 $ 1,315,807 $ 1,248,581 $ 1,167,581 1.27 1.18
22 1 Pointe West $ 1,622,544 $ 1,715,644 $ 1,488,849 $ 1,205,011 1.49 1.21
Accor-M-Six V
23 1 696 $ 1,259,639 $ 1,259,639 $ 960,160 $ 472,560 1.00 1.00
23 2 1007 $ 999,034 $ 999,034 $ 851,368 $ 237,887 1.00 1.00
23 3 639 $ 671,706 $ 671,706 $ 530,436 $ 411,481 1.00 1.00
23 4 689 $ 630,135 $ 630,135 $ 449,337 $ 478,989 1.00 1.00
23 5 741 $ 623,298 $ 623,298 $ 523,298 $ 417,910 1.00 1.00
23 6 1257 $ 553,781 $ 553,781 $ 428,781 $ 360,046 1.00 1.00
23 7 1117 $ 567,353 $ 567,353 $ 381,074 $ 343,972 1.00 1.00
23 8 1067 $ 503,012 $ 503,012 $ 318,012 $ 642,939 1.00 1.00
23 9 1140 $ 475,013 $ 475,013 $ 431,013 $ 382,548 1.00 1.00
23 10 1010 $ 416,320 $ 416,320 $ 142,458 $ 180,023 1.00 1.00
23 11 1160 $ 334,428 $ 334,428 $ 242,391 $ 331,113 1.00 1.00
----------- ----------- ----------- ----------- ---- ----
$ 7,033,719 $ 7,033,719 $ 5,258,327 $ 4,259,468 1.00 1.00
Accor-M-Six III
24 1 103 $ 2,091,231 $ 2,091,231 $ 1,585,324 $ 596,788 1.00 1.00
24 2 251 $ 777,787 $ 777,787 $ (363,063) $ 608,605 1.00 1.00
24 3 171 $ 673,306 $ 673,306 $ 537,306 $ 351,573 1.00 1.00
24 4 1111 $ 635,774 $ 635,774 $ (112,226) $ 280,667 1.00 1.00
24 5 1143 $ 593,545 $ 593,545 $ 376,908 $ 354,527 1.00 1.00
24 6 334 $ 506,074 $ 506,074 $ 487,074 $ 372,254 1.00 1.00
24 7 1150 $ 429,944 $ 429,944 $ 369,944 $ 348,619 1.00 1.00
24 8 1109 $ 473,543 $ 473,543 $ (390,278) $ 295,439 1.00 1.00
24 9 282 $ 418,364 $ 418,364 $ 376,364 $ 304,303 1.00 1.00
24 10 231 $ 434,328 $ 434,328 $ (153,672) $ 366,345 1.00 1.00
24 11 121 $ 433,894 $ 433,894 $ (828,106) $ 304,303 1.00 1.00
----------- ----------- ----------- ----------- ---- ----
$ 7,467,790 $ 7,467,790 $ 1,885,575 $ 4,183,422 1.00 1.00
25 1 1129 State Street $ 1,217,342 $ 1,291,389 $ 1,326,237 $ 1,228,081 1.45 1.35
Accor-M-Six VI
26 1 15 $ 1,008,105 $ 1,008,105 $ 947,105 $ 273,381 1.00 1.00
26 2 471 $ 789,018 $ 789,018 $ 636,636 $ 401,293 1.00 1.00
26 3 346 $ 758,693 $ 758,693 $ 602,795 $ 311,002 1.00 1.00
26 4 1137 $ 638,736 $ 638,736 $ 163,916 $ 318,526 1.00 1.00
26 5 1005 $ 689,895 $ 689,895 $ (130,113) $ 295,953 1.00 1.00
26 6 560 $ 419,557 $ 419,557 $ (488,443) $ 250,808 1.00 1.00
26 7 620 $ 464,255 $ 464,255 $ 395,255 $ 275,889 1.00 1.00
26 8 1265 $ 417,987 $ 417,987 $ 222,307 $ 326,050 1.00 1.00
26 9 128 $ 610,218 $ 610,218 $ 526,218 $ 305,986 1.00 1.00
26 10 1198 $ 364,584 $ 364,584 $ 294,584 $ 275,889 1.00 1.00
26 11 1094 $ 403,984 $ 403,984 $ (320,016) $ 260,840 1.00 1.00
26 12 1188 $ 334,160 $ 334,160 $ 312,160 $ 280,905 1.00 1.00
26 13 292 $ 302,792 $ 302,792 $ 193,321 $ 258,332 1.00 1.00
26 14 1182 $ 277,708 $ 277,708 $ 251,708 $ 248,300 1.00 1.00
----------- ----------- ----------- ----------- ---- ----
$ 7,479,692 $ 7,479,692 $ 3,607,432 $ 4,083,153 1.00 1.00
Accor-M-Six Penvest II
27 1 142 $ 774,622 $ 774,622 $ 756,622 $ 235,468 1.00 1.00
27 2 651 $ 668,126 $ 668,126 $ 658,126 $ 305,607 1.00 1.00
27 3 1131 $ 455,566 $ 455,566 $ 389,566 $ 278,052 1.00 1.00
27 4 522 $ 531,003 $ 531,003 $ 283,003 $ 315,627 1.00 1.00
27 5 1047 $ 614,281 $ 614,281 $ 452,020 $ 328,152 1.00 1.00
27 6 1120 $ 510,077 $ 510,077 $ 435,077 $ 295,587 1.00 1.00
27 7 166 $ 466,504 $ 466,504 $ 349,492 $ 197,893 1.00 1.00
27 8 458 $ 341,655 $ 341,655 $ 179,102 $ 283,062 1.00 1.00
27 9 1214 $ 401,954 $ 401,954 $ 325,437 $ 200,398 1.00 1.00
27 10 1110 $ 379,029 $ 379,029 $ 247,312 $ 293,082 1.00 1.00
27 11 1092 $ 343,325 $ 343,325 $ 168,325 $ 270,538 1.00 1.00
27 12 1262 $ 320,820 $ 320,820 $ (148,723) $ 240,478 1.00 1.00
27 13 484 $ 350,332 $ 350,332 $ 324,332 $ 202,903 1.00 1.00
27 14 146 $ 284,284 $ 284,284 $ 281,284 $ 205,408 1.00 1.00
27 15 351 $ 244,220 $ 244,220 $ 150,206 $ 293,082 1.00 1.00
27 16 4 $ 285,907 $ 285,907 $ 145,562 $ 175,348 1.00 1.00
----------- ----------- ----------- ----------- ---- ----
$ 6,971,705 $ 6,971,705 $ 4,996,741 $ 4,120,687 1.00 1.00
28 1 Wasilla Retail Center $ 1,385,464 $ 1,376,948 $ 1,345,576 $ 1,282,001 1.55 1.48
Accor-M-Six IV
29 1 263 $ 1,323,047 $ 1,323,047 $ 1,103,710 $ 350,620 1.00 1.00
29 2 1127 $ 855,696 $ 855,696 $ 672,608 $ 347,673 1.00 1.00
29 3 122 $ 679,411 $ 679,411 $ 656,411 $ 359,459 1.00 1.00
29 4 1132 $ 654,945 $ 654,945 $ 618,945 $ 321,156 1.00 1.00
29 5 1036 $ 576,566 $ 576,566 $ (415,262) $ 291,692 1.00 1.00
29 6 426 $ 381,058 $ 381,058 $ 287,113 $ 356,513 1.00 1.00
29 7 1250 $ 449,930 $ 449,930 $ 410,930 $ 321,156 1.00 1.00
29 8 225 $ 448,086 $ 448,086 $ 339,086 $ 153,212 1.00 1.00
29 9 1088 $ 411,848 $ 411,848 $ 269,842 $ 279,907 1.00 1.00
29 10 1237 $ 329,148 $ 329,148 $ 279,148 $ 235,711 1.00 1.00
29 11 172 $ 77,925 $ 77,925 $(1,145,319) $ 303,478 1.00 1.00
29 12 377 $ 292,697 $ 292,697 $ 268,697 $ 356,513 1.00 1.00
29 13 440 $ 281,276 $ 281,276 $ 138,233 $ 359,459 1.00 1.00
----------- ----------- ----------- ----------- ---- ----
$ 6,761,633 $ 6,761,633 $ 3,484,142 $ 4,036,547 1.00 1.00
30 1 Holiday Inn Sunspree Padre Island $ 2,048,257 $ 2,169,118 $ 2,078,441 $ 1,606,609 2.03 1.57
Accor-M-Six Creditvest I
31 1 688 $ 762,812 $ 762,812 $ 561,208 $ 346,109 1.00 1.00
31 2 1052 $ 780,376 $ 780,376 $ 584,521 $ 348,357 1.00 1.00
31 3 381 $ 679,861 $ 679,861 $ 507,812 $ 274,191 1.00 1.00
31 4 679 $ 776,538 $ 776,538 $ 594,697 $ 305,655 1.00 1.00
31 5 1183 $ 657,916 $ 657,916 $ 507,142 $ 404,544 1.00 1.00
31 6 107 $ 432,319 $ 432,319 $ 304,195 $ 265,201 1.00 1.00
31 7 183 $ 443,667 $ 443,667 $ 402,078 $ 226,994 1.00 1.00
31 8 422 $ 391,317 $ 391,317 $ 351,439 $ 271,943 1.00 1.00
31 9 1207 $ 344,872 $ 344,872 $ 225,356 $ 269,696 1.00 1.00
31 10 1278 $ 344,692 $ 344,692 $ 310,756 $ 211,262 1.00 1.00
31 11 1135 $ 308,138 $ 308,138 $ 273,708 $ 191,034 1.00 1.00
31 12 417 $ (215,151) $ (215,151) $ (340,852) $ 283,180 1.00 1.00
31 13 1091 $ 238,944 $ 238,944 $ 206,049 $ 249,468 1.00 1.00
31 14 205 $ 281,172 $ 281,172 $ 195,255 $ 202,272 1.00 1.00
31 15 794 $ 329,717 $ 329,717 $ 293,575 $ 224,746 1.00 1.00
----------- ----------- ----------- ----------- ---- ----
$ 6,557,190 $ 6,557,190 $ 4,976,936 $ 4,074,652 1.00 1.00
Accor-M-Six Limited Partnership
32 1 1078 $ 814,974 $ 814,974 $ 130,139 $ 262,264 1.00 1.00
32 2 1268 $ 746,998 $ 746,998 $ 594,734 $ 264,693 1.00 1.00
32 3 775 $ 728,219 $ 728,219 $ 607,200 $ 356,971 1.00 1.00
32 4 739 $ 796,357 $ 796,357 $ 774,357 $ 281,691 1.00 1.00
32 5 1040 $ 660,233 $ 660,233 $ 438,728 $ 325,402 1.00 1.00
32 6 253 $ 628,050 $ 628,050 $ 270,050 $ 296,261 1.00 1.00
32 7 245 $ 630,906 $ 630,906 $ 497,391 $ 305,975 1.00 1.00
32 8 700 $ 379,579 $ 379,579 $ 278,579 $ 305,975 1.00 1.00
32 9 1059 $ 324,515 $ 324,515 $ 218,449 $ 213,697 1.00 1.00
32 10 1254 $ 378,863 $ 378,863 $ 236,761 $ 398,253 1.00 1.00
32 11 1283 $ 390,044 $ 390,044 $ 343,044 $ 245,266 1.00 1.00
32 12 156 $ 388,498 $ 388,498 $ 121,498 $ 235,552 1.00 1.00
32 13 699 $ 315,660 $ 315,660 $ 315,660 $ 228,267 1.00 1.00
32 14 784 $ 344,648 $ 344,648 $ 106,076 $ 269,549 1.00 1.00
----------- ----------- ----------- ----------- ---- ----
$ 7,527,544 $ 7,527,544 $ 4,932,666 $ 3,989,817 1.00 1.00
Accor-M-Six Creditvest II
33 1 1267 $ 1,279,713 $ 1,279,713 $ 1,209,713 $ 383,189 1.00 1.00
33 2 476 $ 1,112,583 $ 1,112,583 $ 1,067,583 $ 377,294 1.00 1.00
33 3 376 $ 1,020,808 $ 1,020,808 $ 792,633 $ 480,460 1.00 1.00
33 4 345 $ 716,652 $ 716,652 $ 650,652 $ 604,260 1.00 1.00
33 5 402 $ 284,284 $ 284,284 $ 281,284 $ 362,556 1.00 1.00
33 6 1142 $ 431,811 $ 431,811 $ 308,647 $ 288,866 1.00 1.00
33 7 371 $ 490,359 $ 490,359 $ 143,200 $ 374,347 1.00 1.00
33 8 133 $ 413,757 $ 413,757 $ 322,842 $ 321,290 1.00 1.00
33 9 1035 $ 432,079 $ 432,079 $ 343,218 $ 262,337 1.00 1.00
33 10 542 $ 331,667 $ 331,667 $ (317,992) $ 341,923 1.00 1.00
33 11 1130 $ 352,589 $ 352,589 $ 254,589 $ 224,018 1.00 1.00
----------- ----------- ----------- ----------- ---- ----
$ 6,866,302 $ 6,866,302 $ 5,056,369 $ 4,020,540 1.00 1.00
34 1 Rancho San Marcos Village $ 898,626 $ 1,179,506 $ 1,179,867 $ 1,105,851 1.35 1.26
Accor-M-Six Penvest I
35 1 294 $ 658,814 $ 658,814 $ 542,396 $ 270,548 1.00 1.00
35 2 743 $ 524,777 $ 524,777 $ 120,253 $ 329,045 1.00 1.00
35 3 1108 $ 432,319 $ 432,319 $ 303,134 $ 258,362 1.00 1.00
35 4 1136 $ 425,646 $ 425,646 $ 314,646 $ 302,234 1.00 1.00
35 5 385 $ 573,028 $ 573,028 $ 525,028 $ 299,797 1.00 1.00
35 6 406 $ 613,440 $ 613,440 $ 463,718 $ 321,733 1.00 1.00
35 7 586 $ 539,322 $ 539,322 $ 511,322 $ 236,425 1.00 1.00
35 8 339 $ 410,909 $ 410,909 $ 344,909 $ 297,360 1.00 1.00
35 9 1200 $ 534,561 $ 534,561 $ 489,561 $ 302,234 1.00 1.00
35 10 290 $ 344,197 $ 344,197 $ 332,197 $ 277,861 1.00 1.00
35 11 554 $ 406,391 $ 406,391 $ 356,391 $ 216,926 1.00 1.00
35 12 1069 $ 403,688 $ 403,688 $ 251,508 $ 260,799 1.00 1.00
35 13 158 $ 127,041 $ 127,041 $(1,122,959) $ 190,115 1.00 1.00
35 14 1009 $ 291,395 $ 291,395 $ 158,907 $ 168,179 1.00 1.00
35 15 1264 $ 260,701 $ 260,701 $ 180,957 $ 229,113 1.00 1.00
----------- ----------- ----------- ----------- ---- ----
$ 6,546,229 $ 6,546,229 $ 3,771,969 $ 3,960,732 1.00 1.00
36 1 Palm Desert Country Club S.C. $ 1,059,553 $ 1,127,525 $ 1,150,017 $ 1,076,733 1.34 1.25
37 1 New City Plaza $ 1,048,882 $ 1,044,479 $ 984,970 $ 911,469 1.23 1.14
Cinemark Pool B
38 1 Colorado Springs, CO - Tinseltown $ -- $ -- $ 1,813,260 $ 1,813,260 1.00 1.00
38 2 Mishawaka - Movies 10 $ -- $ -- $ 957,000 $ 957,000 1.00 1.00
----------- ----------- ----------- ----------- ---- ----
$ -- $ -- $ 2,770,260 $ 2,770,260 1.00 1.00
39 1 Nordhoff Industrial Complex $ 925,341 $ 1,160,110 $ 1,118,984 $ 973,079 1.44 1.26
40 1 Seven Corners Apts. $ 1,028,450 $ 1,006,069 $ 1,008,331 $ 937,331 1.39 1.30
41 1 Citibank Office Plaza $ 944,279 $ 1,188,684 $ 1,152,286 $ 944,057 1.55 1.27
42 1 Savannah Apartments $ 726,648 $ 1,014,946 $ 1,027,920 $ 955,420 1.62 1.50
43 1 Belleville Manor $ 869,075 $ 885,694 $ 901,863 $ 883,963 1.34 1.31
44 1 203 East Fordham Road $ 1,109,643 $ 1,090,071 $ 960,418 $ 907,466 1.31 1.24
45 1 Plantation Club Apartments $ 919,612 $ 908,690 $ 936,599 $ 882,599 1.28 1.21
46 1 Silver Pointe SC $ 394,753 $ 649,664 $ 918,559 $ 835,458 1.41 1.28
47 1 Central Medical Park $ 1,173,930 $ 1,136,809 $ 1,049,564 $ 879,685 1.56 1.31
48 1 Friendly Village MHP $ 848,593 $ 870,412 $ 926,602 $ 901,402 1.60 1.56
49 1 Springhill Business Center $ 958,771 $ 988,515 $ 1,058,924 $ 934,191 1.70 1.50
50 1 Pacific Court Office Building $ 995,206 $ 1,144,906 $ 1,020,000 $ 913,285 1.87 1.67
Banyan Pool 3
51 1 Elmhurst $ 969,542 $ 855,525 $ 624,549 $ 510,373 2.01 1.66
51 2 Milwaukee - Commerce $ 245,392 $ 236,928 $ 202,050 $ 169,113 2.01 1.66
51 3 Milwaukee - 160th $ 213,728 $ 206,356 $ 175,989 $ 147,292 2.01 1.66
51 4 Milwaukee - Whittaker Way $ 174,149 $ 168,142 $ 143,390 $ 120,016 2.01 1.66
51 5 Milwaukee - Ryerson $ 158,317 $ 152,857 $ 130,355 $ 109,105 2.01 1.66
----------- ----------- ----------- ----------- ---- ----
$ 1,761,128 $ 1,619,808 $ 1,276,333 $ 1,055,899
52 1 Pride Center $ 1,263,740 $ 1,141,608 $ 1,069,906 $ 976,315 1.81 1.65
53 1 Hidden Harbor $ 784,777 $ 767,263 $ 763,441 $ 709,441 1.30 1.21
54 1 Oshkosh Center II $ -- $ 894,553 $ 858,374 $ 808,054 1.50 1.42
55 1 Waterford Plaza $ 752,850 $ 778,847 $ 795,748 $ 728,016 1.31 1.20
56 1 Palm Harbor Apartments $ 719,989 $ 700,778 $ 783,047 $ 717,047 1.42 1.30
57 1 Fiserve Building $ 1,023,198 $ 1,021,152 $ 886,518 $ 756,880 1.50 1.28
Airport Atrium
58 1 Airport Atrium $ 498,667 $ 555,036 $ 426,993 $ 311,823 1.62 1.28
58 2 Sampson 1 $ 382,517 $ 382,289 $ 326,566 $ 278,410 1.62 1.28
58 3 Braemar Building $ 171,595 $ 226,402 $ 203,678 $ 165,773 1.62 1.28
----------- ----------- ----------- ----------- ---- ----
$ 1,052,779 $ 1,163,727 $ 957,237 $ 756,006 1.62 1.28
59 1 Wicomico $ 894,808 $ 930,843 $ 923,597 $ 769,578 1.58 1.32
Seven Mobile Home Properties
60 1 Woodside MHP $ 133,945 $ 133,945 $ 138,371 $ 135,771 1.34 1.31
60 2 Natural Springs MHP $ 152,194 $ 152,194 $ 140,585 $ 137,435 1.34 1.31
60 3 Mountainview East MHP $ 135,634 $ 135,929 $ 128,833 $ 125,683 1.34 1.31
60 4 Progress Ridge MHP $ 115,298 $ 115,298 $ 119,568 $ 116,318 1.34 1.31
60 5 Southern Hills MHP $ 85,777 $ 85,777 $ 84,073 $ 81,923 1.34 1.31
60 6 Sunshine MHP $ 84,098 $ 68,319 $ 66,957 $ 64,807 1.34 1.31
60 7 Castle Hill MHP $ 49,712 $ 49,712 $ 44,682 $ 43,590 1.34 1.31
----------- ----------- ----------- ----------- ---- ----
$ 756,658 $ 741,174 $ 723,069 $ 705,527 1.34 1.31
61 1 SL-Tulsa $ 886,049 $ 847,206 $ 905,357 $ 757,596 1.80 1.51
62 1 The Courtyard Apts. $ 717,599 $ 717,589 $ 671,369 $ 651,369 1.41 1.36
63 1 Old Metairie Village Shopping Center $ 846,341 $ 889,449 $ 838,580 $ 728,680 1.71 1.48
64 1 Willowick Industrial Park $ 776,637 $ 798,745 $ 810,618 $ 685,013 1.51 1.28
65 1 Courtney Square Apartments $ 747,389 $ 747,876 $ 718,387 $ 666,137 1.47 1.37
66 1 Plaza de la Fiesta III & IV $ 760,948 $ 767,612 $ 786,341 $ 714,580 1.50 1.36
67 1 Motorola Training Center $ 518,163 $ 858,581 $ 779,781 $ 663,863 1.49 1.27
68 1 Madison Village $ 736,812 $ 779,669 $ 754,006 $ 697,866 1.64 1.52
69 1 Pipestone Plaza $ 676,306 $ 787,800 $ 682,748 $ 682,748 1.53 1.53
70 1 Parkleigh North Apts. $ 651,882 $ 652,757 $ 670,166 $ 616,166 1.56 1.44
71 1 Southgate Estates MHP $ 584,319 $ 605,471 $ 566,504 $ 557,279 1.34 1.32
72 1 7 West 45th Street $ 909,852 $ 852,129 $ 734,128 $ 614,049 1.75 1.47
73 1 2100 Swift Drive $ -- $ -- $ 704,854 $ 611,532 1.61 1.40
74 1 Westwind Apts. $ 538,069 $ 544,378 $ 573,209 $ 520,351 1.53 1.39
75 1 Stanford Townhouses $ 560,801 $ 567,564 $ 561,783 $ 531,725 1.49 1.41
76 1 Mentor Industrial $ 609,664 $ 767,286 $ 742,961 $ 553,130 1.79 1.33
77 1 Braebuurn Colony Apts. $ 611,659 $ 630,174 $ 670,632 $ 601,882 1.72 1.54
78 1 SL-Mogadore $ 757,747 $ 801,813 $ 709,187 $ 609,380 1.89 1.63
79 1 ABFM Industrial Building $ 1,384,717 $ 1,344,966 $ 902,130 $ 715,451 2.16 1.71
80 1 1567-1575 Lexington Avenue $ 468,806 $ 593,538 $ 659,146 $ 624,796 1.82 1.73
81 1 Mason Manor MHP $ 494,959 $ 454,638 $ 482,921 $ 469,571 1.32 1.28
82 1 118-40 Metropolitan Ave. $ 535,949 $ 536,150 $ 467,594 $ 447,094 1.36 1.30
83 1 Clark & Diversey Shopping Ctr. $ 537,509 $ 520,881 $ 496,595 $ 459,026 1.31 1.21
84 1 Stanbridge Apartments $ 430,528 $ 488,102 $ 494,457 $ 457,207 1.45 1.34
85 1 Village Townhomes $ 418,150 $ 458,978 $ 466,464 $ 431,464 1.45 1.34
86 1 Ventu Park Shopping Center $ 458,074 $ 464,526 $ 473,891 $ 437,566 1.30 1.20
87 1 Bowen's Wharf $ 635,514 $ 660,496 $ 586,049 $ 509,240 1.77 1.54
Muraco Portfolio
88 1 Lakeview Apts. $ 236,601 $ 280,498 $ 224,674 $ 206,674 1.48 1.37
88 2 Oneida Apts. $ 180,235 $ 189,860 $ 164,537 $ 152,537 1.48 1.37
88 3 Townsquare Apts. $ 134,621 $ 158,719 $ 101,787 $ 95,787 1.48 1.37
----------- ----------- ----------- ----------- ---- ----
$ 551,457 $ 629,077 $ 490,998 $ 454,998 1.48 1.37
89 1 Sherman West Apartments $ 523,867 $ 526,132 $ 479,727 $ 446,227 1.54 1.43
90 1 Parkside Village Apts. $ 429,645 $ 483,509 $ 466,068 $ 436,068 1.57 1.47
91 1 Harbor Greens $ 187,070 $ 650,990 $ 712,561 $ 661,561 2.11 1.96
92 1 710 State Street $ 411,125 $ 438,121 $ 479,375 $ 448,919 1.38 1.29
93 1 Flemings Foods Store $ 457,903 $ 456,222 $ 376,345 $ 376,345 1.27 1.27
94 1 Playa Vista Plaza $ 701,018 $ 710,634 $ 751,506 $ 539,038 2.65 1.90
95 1 122-126 East 103rd Street $ 448,514 $ 506,097 $ 450,425 $ 428,430 1.52 1.45
96 1 Stonewall SC $ 506,914 $ 506,457 $ 455,013 $ 387,681 1.62 1.38
97 1 Tempo Cabana Apts. $ 495,585 $ 513,344 $ 511,312 $ 477,562 1.86 1.74
98 1 Westmont Apts $ 506,523 $ 494,047 $ 480,967 $ 449,755 1.64 1.53
99 1 Great Western Bank Building $ 426,085 $ 441,652 $ 414,129 $ 371,656 1.39 1.25
100 1 Chelmsford Crossing $ 447,445 $ 505,702 $ 489,020 1.59 1.54
101 1 Safeway Industrial $ 485,562 $ 455,252 $ 444,538 $ 380,125 1.45 1.24
102 1 The Bentley Mills Building $ 1,300,349 $ 1,300,349 1.00 1.00
103 1 Twin Pines Healthcare Center $ 517,148 $ 707,871 $ 615,949 $ 591,199 2.16 2.08
104 1 Corporate West One $ 486,429 $ 542,014 $ 466,516 $ 376,458 1.52 1.22
105 1 Ingle West Office Building $ 456,679 $ 521,421 $ 465,407 $ 370,313 1.63 1.29
106 1 Colony Ridge Apts. $ 439,996 $ 505,349 $ 536,236 $ 476,414 2.02 1.79
107 1 SL - Lima $ 521,363 $ 543,164 $ 472,200 $ 382,653 1.70 1.38
108 1 Collins Nursing Home $ 585,227 $ 705,670 $ 501,662 $ 466,162 1.81 1.68
109 1 Westgrove Towers $ 500,000 $ 568,299 $ 559,976 $ 516,484 2.39 2.20
110 1 * Apartments of Westgrove $ 556,309 $ 572,447 $ 542,064 $ 514,037 2.20 2.09
111 1 * West Third Street $ 520,264 $ 484,322 $ 426,063 $ 331,917 1.65 1.28
112 1 Pollyanna Apartments $ 289,073 $ 328,176 $ 407,894 $ 363,894 1.58 1.41
113 1 Bellemeade Plaza $ 548,074 $ 529,053 $ 555,086 $ 470,314 1.91 1.55
114 1 Hiawassee Oaks Apartments $ 333,129 $ 366,371 $ 366,860 $ 341,860 1.61 1.50
115 1 Giant Food Store $ 324,623 $ 320,391 $ 302,055 $ 271,161 1.37 1.23
116 1 Timber Ridge Apts. $ 352,067 $ 453,352 $ 430,757 $ 377,757 1.85 1.62
Bird Creek Comfort Creek
117 1 Bird Creek Mobile Home Park $ 185,355 $ 224,195 $ 187,275 $ 178,125 1.32 1.26
117 2 Comfort Mobile Home Park $ 148,795 $ 167,193 $ 123,735 $ 119,085 1.32 1.26
----------- ----------- ----------- ----------- ---- ----
$ 334,150 $ 391,388 $ 311,010 $ 297,210 1.32 1.26
118 1 GRW Building $ 389,593 $ 405,595 $ 365,086 $ 300,090 1.61 1.32
119 1 University Hills $ 395,508 $ 384,147 $ 368,813 $ 326,883 1.74 1.54
120 1 Grove Gate Apartments $ 347,213 $ 346,607 $ 303,921 $ 286,921 1.40 1.32
121 1 Colts Neck Shopping Center $ 437,084 $ 440,395 $ 402,189 $ 362,813 1.85 1.67
122 1 Keosippi Mall $ 501,125 $ 502,113 $ 467,912 $ 336,857 1.96 1.41
123 1 Pineville Commerce Center $ 357,280 $ 367,777 $ 298,556 $ 298,556 1.44 1.44
124 1 90-92 Thompson Street $ 261,634 $ 302,000 $ 296,154 $ 286,286 1.48 1.43
125 1 Walton Manor MHP $ 334,870 $ 376,314 $ 402,606 $ 389,806 2.05 1.99
126 1 238 E. 111th/204 E. 112th Street $ 198,801 $ 288,858 $ 297,829 $ 282,824 1.58 1.50
127 1 Palmwood Terrace Apts. $ 301,444 $ 307,827 $ 317,973 $ 292,973 1.73 1.59
128 1 Hartnell Plaza $ 305,269 $ 285,924 $ 258,536 $ 236,655 1.32 1.21
129 1 Carytown Square $ 313,343 $ 319,230 $ 302,487 $ 261,968 1.59 1.38
130 1 Oak Creek Apts. $ 311,159 $ 342,146 $ 327,230 $ 291,230 1.73 1.54
131 1 Hollywood News Building $ 390,824 $ 378,739 $ 372,246 $ 301,578 1.86 1.51
132 1 Chateau Apts. $ 290,497 $ 244,414 $ 309,645 $ 285,884 1.74 1.60
133 1 Miller Road Business Ctr. $ 290,581 $ 296,975 $ 295,360 $ 239,410 1.58 1.28
134 1 The Kellogg Property $ 264,240 $ 279,161 $ 249,952 $ 234,570 1.50 1.41
135 1 Maple Lawn III $ 266,038 $ 299,155 $ 272,017 $ 246,013 1.60 1.45
136 1 Stapley-McKellips Center $ 263,074 $ 280,750 $ 268,069 $ 238,936 1.58 1.41
137 1 239 S. La Cienega $ 282,038 $ 288,073 $ 255,898 $ 231,521 1.43 1.29
138 1 Sunflowers Terrace Apts. $ 389,204 $ 443,184 $ 357,731 $ 317,731 2.07 1.83
139 1 Yearling $ 243,319 $ 284,275 $ 295,073 $ 259,073 1.85 1.63
140 1 Briarwyck Apts. $ 289,766 $ 312,275 $ 319,548 $ 291,548 2.02 1.84
141 1 H Lazy F MHP $ 282,159 $ 287,807 $ 278,902 $ 270,298 1.74 1.69
Bayshore/Rockport Oaks
142 1 Bayshore Apartments $ 183,503 $ 185,046 $ 150,174 $ 134,174 2.07 1.83
142 2 Rockport Oaks Garden Apartments $ 133,578 $ 124,637 $ 134,456 $ 117,100 2.07 1.83
----------- ----------- ----------- ----------- ---- ----
$ 317,081 $ 309,683 $ 284,630 $ 251,274 2.07 1.83
143 1 Burnhaven $ 248,743 $ 280,985 $ 240,414 $ 199,048 1.49 1.24
144 1 Colton Midtown Plaza $ -- $ 238,004 $ 341,502 $ 257,914 2.26 1.70
145 1 Sax Drugs $ 201,891 $ 238,956 $ 204,707 $ 188,820 1.37 1.26
146 1 Sea Tac Gardens Apts. $ 227,021 $ 239,981 $ 225,253 $ 207,753 1.62 1.50
147 1 Cherry Point Mall $ 296,805 $ 347,002 $ 318,950 $ 218,820 1.82 1.25
148 1 The Point $ 278,366 $ 273,062 $ 242,518 $ 182,781 1.70 1.28
149 1 311 East 109th Street $ 126,448 $ 224,685 $ 208,060 $ 199,361 1.58 1.52
150 1 Peachwood Manor MHP $ 176,963 $ 189,426 $ 191,210 $ 184,610 1.48 1.43
151 1 6972 Sheridan $ 189,541 $ 200,312 $ 207,162 $ 192,162 1.67 1.55
152 1 Crest Oak Apts. $ 194,644 $ 193,508 $ 212,975 $ 197,975 1.72 1.60
153 1 1&3 Eves $ 231,367 $ 246,120 $ 229,160 $ 186,793 1.77 1.44
154 1 Highland Park Townhomes $ 224,025 $ 276,968 $ 234,556 $ 203,056 1.77 1.54
155 1 Marbach Square SC $ 275,625 $ 283,098 $ 271,071 $ 225,820 2.01 1.67
156 1 Sunpointe Gardens Apts. $ 209,016 $ 199,306 $ 201,274 $ 160,110 1.61 1.28
157 1 Airport Executive Park $ 227,752 $ 283,484 $ 251,137 $ 188,080 1.89 1.42
Parkside/Pleasant View MHP
158 1 Parkside MHP $ 114,283 $ 117,760 $ 122,734 $ 113,574 1.55 1.45
158 2 Pleasantview MHP $ 60,307 $ 75,809 $ 72,143 $ 68,043 1.55 1.45
----------- ----------- ----------- ----------- ---- ----
$ 174,590 $ 193,569 $ 194,877 $ 181,617 1.55 1.45
159 1 Oakview Apartments $ 194,915 $ 200,389 $ 213,672 $ 194,422 1.77 1.61
160 1 Expressway Commerce Complex $ 157,042 $ 191,355 $ 182,342 $ 159,653 1.57 1.37
161 1 Brookside Apartments $ 143,528 $ 145,014 $ 162,263 $ 149,263 1.42 1.31
162 1 Sundial Shopping Center $ 280,006 $ 283,119 $ 253,598 $ 214,868 2.23 1.89
163 1 501 State Street $ 187,114 $ 210,987 $ 188,133 $ 174,900 1.44 1.34
164 1 Uniontown Center $ 215,234 $ 224,818 $ 222,702 $ 195,583 1.84 1.62
165 1 * Cypress Creek Business Park $ 237,732 $ 203,660 $ 256,577 $ 181,975 2.09 1.48
166 1 Riverside Estates MHP $ 150,200 $ 213,423 $ 212,656 $ 205,006 1.86 1.79
167 1 Winterhaven East Apartments $ 108,895 $ 136,683 $ 144,342 $ 133,829 1.39 1.29
168 1 Bahamas Apartments $ 217,889 $ 227,013 $ 222,852 $ 198,102 1.98 1.76
169 1 The Midland Building $ 109,362 $ 216,680 $ 304,940 $ 201,351 2.88 1.90
170 1 236 & 238-240 East 7th Street $ 177,836 $ 194,837 $ 197,009 $ 182,009 1.73 1.60
171 1 The River Park Center $ 266,245 $ 266,106 $ 247,833 $ 225,839 2.32 2.12
172 1 Pasadena Plaza Mart $ 199,680 $ 217,531 $ 189,165 $ 137,227 1.71 1.24
173 1 Pleasant View MHP $ 128,911 $ 137,052 $ 161,260 $ 155,635 1.67 1.61
174 1 Circuit City-Philadelphia $ 604,100 $ 604,100 1.00 1.00
175 1 Nanette Apartments $ 139,533 $ 138,259 $ 133,659 $ 122,100 1.43 1.30
176 1 Central Plaza $ 109,022 $ 147,672 $ 162,799 $ 144,246 1.94 1.72
177 1 Brandenberry Square Apts $ 189,973 $ 203,741 $ 201,376 $ 175,306 2.32 2.02
178 1 Champion MHP $ 228,694 $ 230,179 $ 192,217 $ 183,667 2.16 2.07
179 1 East Brunswick Woods $ 128,515 $ 161,522 $ 154,301 $ 124,273 1.78 1.44
180 1 Circuit City-Harper Woods $ 466,020 $ 466,020 1.00 1.00
181 1 Circuit City-Ridgeland $ 431,500 $ 431,500 1.00 1.00
182 1 1590 Lexington Avenue $ 77,191 $ 112,121 $ 111,454 $ 104,784 1.81 1.70
183 1 Circuit City-East Lansing $ 388,350 $ 388,350 1.00 1.00
184 1 Circuit City-Frederick $ 388,350 $ 388,350 1.00 1.00
185 1 Circuit City-Green Bay $ 388,350 $ 388,350 1.00 1.00
186 1 Circuit City-Indianapolis $ 388,350 $ 388,350 1.00 1.00
187 1 2156 2nd Avenue $ 77,060 $ 81,525 $ 69,930 $ 66,780 1.42 1.36
188 1 OCC Financial Plaza $ 98,008 $ 91,380 $ 81,384 $ 68,701 1.47 1.24
189 1 103 East 102nd Street $ 71,697 $ 72,979 $ 66,162 $ 63,519 1.47 1.41
190 1 Windgate MHP $ 73,296 $ 70,672 $ 64,608 $ 61,858 1.37 1.31
191 1 Circuit City-Jackson,TN $ 284,790 $ 284,790 1.00 1.00
192 1 291 Pleasant $ 59,806 $ 74,258 $ 69,473 $ 65,473 1.76 1.66
193 1 Circuit City-Kingsport $ 258,900 $ 258,900 1.00 1.00
194 1 Circuit City-Witchita Falls $ 258,900 $ 258,900 1.00 1.00
</TABLE>
<PAGE>
Annex B
<TABLE>
<CAPTION>
Balloon/
Anticipated 1998
Loan Asset Repayment 1998 Occupancy Underwritten
# # Property Name Value LTV Date LTV Occupancy Period Occupancy
---- ---- ------------- ------ ---- --------- --------- ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Prime Retail III
1 1 Lighthouse Place $ 81,500,000 57% 52% 97% 6/1/98 95%
1 2 Finger Lakes Outlet Center $ 59,000,000 57% 52% 97% 6/1/98 95%
1 3 * Outlets at Gilroy III and IV $ 55,900,000 57% 52% 96% 6/1/98 95%
1 4 Outlets at Gilroy I, II and V $ 59,500,000 57% 52% 96% 6/1/98 95%
1 5 * Kittery Outlet Village $ 30,000,000 57% 52% 100% 6/1/98 95%
------------- --- ---
Hard $ 285,900,000 57% 52%
2 1 Soho Grand Hotel Hard $ 105,000,000 57% 48% 94% 6/30/98 85%
Morgantown Mall and Commons
3 1 Morgantown Mall $ 55,000,000 80% 70% 82% 6/30/98 82%
3 2 Morgantown Commons $ 18,000,000 80% 70% 98% 6/30/98 90%
------------- --- ---
Hard $ 73,000,000 80% 70%
4 1 5670 Wilshire Hard $ 75,000,000 73% 66% 93% 7/31/98 0%
Shidler Industrial Portfolio
5 1 4150-4174 Bandini Boulevard $ 11,970,000 75% 66% 100% 8/4/98 95%
5 2 Wicks Business Park $ 8,295,000 75% 66% 96% 8/4/98 95%
5 3 341-345 Baldwin Park $ 6,678,000 75% 66% 100% 8/4/98 95%
5 4 Nelson & Stafford, Industry $ 8,316,000 75% 66% 100% 8/4/98 95%
5 5 730-780 Baldwin Park $ 8,190,000 75% 66% 100% 8/4/98 95%
5 6 2800-2900 Sierra Pine $ 4,725,000 75% 66% 100% 8/4/98 95%
5 7 13240, 13280 Amar Road $ 3,822,000 75% 66% 100% 8/4/98 95%
5 8 Chapman & Western $ 3,622,500 75% 66% 100% 8/4/98 89%
5 9 15551 Red Hill Avenue $ 3,990,000 75% 66% 100% 8/4/98 95%
5 10 1900 Tubeway $ 2,005,500 75% 66% 100% 8/4/98 95%
5 11 3707 S. Hill Street $ 1,785,000 75% 66% 100% 8/4/98 95%
5 12 2001-2015 Saybrook $ 1,921,500 75% 66% 100% 8/4/98 95%
5 13 2229-2235 E. Magnolia $ 1,459,500 75% 66% 100% 8/4/98 95%
5 14 111 N. Hudson Avenue $ 1,533,000 75% 66% 100% 8/4/98 95%
5 15 1444-1446 Factor Ave. $ 1,302,000 75% 66% 100% 8/4/98 95%
5 16 2600 Yates $ 1,134,000 75% 66% 100% 8/4/98 10%
------------- --- ---
Hard $ 70,749,000 75% 66%
6 1 Eastland Mall Hard $ 64,000,000 73% 66% 90% 7/31/98 89%
7 1 * Airport Industrial Hard $ 85,000,000 82% 68% 90% 7/31/98 90%
Banyan Pool I
8 1 Colonial Penn Insurance $ 7,300,000 56% 51% 100% 6-30-98 93%
8 2 Phoenix Business Center $ 6,000,000 56% 51% 94% 6-30-98 93%
8 3 Sand Lake Center $ 7,193,300 56% 51% 100% 6-30-98 93%
8 4 Avalon Center $ 5,300,000 56% 51% 94% 6-30-98 94%
8 5 Peachtree Point $ 5,000,000 56% 51% 92% 6-30-98 92%
8 6 Southlake Corporate Center $ 4,800,000 56% 51% 95% 6-25-98 93%
8 7 Newtown Business Center $ 4,400,000 56% 51% 100% 6-30-98 95%
8 8 University CC III $ 3,694,900 56% 51% 94% 6-30-98 94%
8 9 University CC II $ 2,882,300 56% 51% 94% 6-30-98 94%
8 10 Airways Plaza $ 3,120,000 56% 51% 97% 6-30-98 88%
8 11 Technology Center $ 3,000,000 56% 51% 100% 6-30-98 95%
8 12 Park Center $ 2,990,300 56% 51% 85% 6-30-98 85%
8 13 University CC IV $ 1,572,100 56% 51% 94% 6-30-98 94%
8 14 Atrium $ 1,216,400 56% 51% 81% 6-30-98 81%
8 15 University CC 1 $ 1,751,500 56% 51% 94% 6-30-98 94%
8 16 Metric Plaza $ 1,599,200 56% 51% 100% 6-30-98 93%
- ----------- --- ---
Hard $ 61,820,000 56% 51%
Land Apartments
9 1 Eastland Apartments $ 18,750,000 78% 69% 92% 7/1/98 92%
9 2 Crown Point Apartments $ 9,200,000 78% 69% 98% 7/1/98 95%
9 3 Prairie Creek $ 6,300,000 78% 69% 88% 7/1/98 88%
- ----------- --- ---
Soft $ 34,250,000 78% 69%
Burgandy Properties
10 1 Mill Pond West $ 5,607,843 76% 68% 91% 4/1/98 91%
10 2 Mill Pond East $ 5,392,157 76% 68% 91% 4/1/98 91%
10 3 Pebblebrook 1 $ 3,825,000 76% 68% 99% 4/1/98 95%
10 4 Beach South $ 4,550,000 76% 68% 95% 4/1/98 94%
10 5 Pebblebrook II $ 3,825,000 76% 68% 100% 4/1/98 95%
- ----------- --- ---
Soft $ 23,200,000 76% 68%
11 1 One Park Plaza Hard $ 26,000,000 62% 53% 88% 6/30/98 87%
12 1 Beckman Instruments - Brea Hard $ 82,900,000 98% 0% 100% 9/1/98 100%
13 1 Sun Life RV Resort $ 19,830,000 78% 69% 85% 6/30/98 95%
14 1 1400 Union Meeting Hard $ 21,000,000 71% 64% 100% 3/31/98 93%
15 1 Cliffs of Dunwoody Soft $ 18,450,000 76% 68% 92% 5/31/1998 83%
16 1 6400 Shafer Court Hard $ 21,400,000 61% 55% 92% 5/26/98 93%
17 1 Walzem Plaza S/C Hard $ 15,900,000 78% 68% 93% 6/1/98 93%
18 1 Beckman - Miami Hard $ 57,000,000 97% 0% 100% 9/1/98 100%
19 1 Money Store Headquarters Hard $ 89,250,000 96% 0% 100% 9/1/98 100%
Greenwich Portfolio
20 1 45 E.Putnam $ 7,500,000 63% 56% 100% 7/21/98 95%
20 2 340-350 Greenwich Ave. $ 4,300,000 63% 56% 100% 7/21/98 95%
20 3 116-136 E. Putnam $ 6,700,000 63% 56% 100% 7/21/98 95%
------------ --- ---
$ 18,500,000 63% 56%
21 1 Monte Sano Apts. Soft $ 14,725,000 76% 68% 93% 8/10/98 93%
22 1 Pointe West Hard $ 14,700,000 73% 66% 93% 8/17/1998 93%
Accor-M-Six V
23 1 696 $ 7,200,000 110% 0% 86% YE 12/31/1997 86%
23 2 1007 $ 6,500,000 110% 0% 100% YE 12/31/1997 100%
23 3 639 $ 5,100,000 110% 0% 73% YE 12/31/1997 73%
23 4 689 $ 5,100,000 110% 0% 57% YE 12/31/1997 57%
23 5 741 $ 4,900,000 110% 0% 69% YE 12/31/1997 69%
23 6 1257 $ 4,300,000 110% 0% 72% YE 12/31/1997 72%
23 7 1117 $ 2,400,000 110% 0% 80% YE 12/31/1997 80%
23 8 1067 $ 3,600,000 110% 0% 53% YE 12/31/1997 53%
23 9 1140 $ 3,500,000 110% 0% 59% YE 12/31/1997 59%
23 10 1010 $ 2,800,000 110% 0% 80% YE 12/31/1997 80%
23 11 1160 $ 2,300,000 110% 0% 48% YE 12/31/1997 48%
------------- ---- --
Hard $ 47,700,000 110% 0%
Accor-M-Six III
24 1 103 $ 12,200,000 99% 0% 94% YE 12/31/1997 94%
24 2 251 $ 6,100,000 99% 0% 59% YE 12/31/1997 59%
24 3 171 $ 5,300,000 99% 0% 70% YE 12/31/1997 70%
24 4 1111 $ 2,900,000 99% 0% 76% YE 12/31/1997 76%
24 5 1143 $ 4,300,000 99% 0% 63% YE 12/31/1997 63%
24 6 334 $ 3,100,000 99% 0% 66% YE 12/31/1997 66%
24 7 1150 $ 2,800,000 99% 0% 51% YE 12/31/1997 51%
24 8 1109 $ 3,700,000 99% 0% 70% YE 12/31/1997 70%
24 9 282 $ 4,800,000 99% 0% 67% YE 12/31/1997 67%
24 10 231 $ 3,900,000 99% 0% 65% YE 12/31/1997 65%
24 11 121 $ 3,000,000 99% 0% 62% YE 12/31/1997 62%
------------- --- --
Hard $ 52,100,000 99% 0%
25 1 1129 State Street Hard $ 14,200,000 69% 63% 94% 6/30/98 94%
Accor-M-Six VI
26 1 15 $ 7,800,000 89% 0% 86% YE 12/31/1997 86%
26 2 471 $ 6,600,000 89% 0% 65% YE 12/31/1997 65%
26 3 346 $ 5,800,000 89% 0% 75% YE 12/31/1997 75%
26 4 1137 $ 5,000,000 89% 0% 68% YE 12/31/1997 68%
26 5 1005 $ 4,500,000 89% 0% 72% YE 12/31/1997 72%
26 6 560 $ 3,900,000 89% 0% 76% YE 12/31/1997 76%
26 7 620 $ 3,700,000 89% 0% 77% YE 12/31/1997 77%
26 8 1265 $ 3,400,000 89% 0% 56% YE 12/31/1997 56%
26 9 128 $ 3,400,000 89% 0% 69% YE 12/31/1997 69%
26 10 1198 $ 3,100,000 89% 0% 67% YE 12/31/1997 67%
26 11 1094 $ 2,600,000 89% 0% 62% YE 12/31/1997 62%
26 12 1188 $ 2,500,000 89% 0% 57% YE 12/31/1997 57%
26 13 292 $ 2,300,000 89% 0% 65% YE 12/31/1997 65%
26 14 1182 $ 2,000,000 89% 0% 67% YE 12/31/1997 67%
-------------- --- --
Hard $ 56,600,000 89% 0%
Accor-M-Six Penvest II
27 1 142 $ 3,900,000 99% 0% 86% YE 12/31/1997 86%
27 2 651 $ 2,500,000 99% 0% 66% YE 12/31/1997 66%
27 3 1131 $ 2,300,000 99% 0% 63% YE 12/31/1997 63%
27 4 522 $ 3,000,000 99% 0% 56% YE 12/31/1997 56%
27 5 1047 $ 2,200,000 99% 0% 72% YE 12/31/1997 72%
27 6 1120 $ 3,300,000 99% 0% 64% YE 12/31/1997 64%
27 7 166 $ 3,700,000 99% 0% 68% YE 12/31/1997 68%
27 8 458 $ 3,500,000 99% 0% 67% YE 12/31/1997 67%
27 9 1214 $ 3,200,000 99% 0% 67% YE 12/31/1997 67%
27 10 1110 $ 2,300,000 99% 0% 59% YE 12/31/1997 59%
27 11 1092 $ 5,100,000 99% 0% 67% YE 12/31/1997 67%
27 12 1262 $ 2,400,000 99% 0% 53% YE 12/31/1997 53%
27 13 484 $ 3,900,000 99% 0% 69% YE 12/31/1997 69%
27 14 146 $ 5,000,000 99% 0% 61% YE 12/31/1997 61%
27 15 351 $ 2,500,000 99% 0% 55% YE 12/31/1997 55%
27 16 4 $ 2,800,000 99% 0% 76% YE 12/31/1997 76%
------------- --- --
Hard $ 51,600,000 99% 0%
28 1 Wasilla Retail Center $ 14,500,000 67% 60% 97% 7/18/98 95%
Accor-M-Six IV
29 1 263 $ 8,300,000 104% 0% 99% YE 12/31/1997 99%
29 2 1127 $ 6,000,000 104% 0% 77% YE 12/31/1997 77%
29 3 122 $ 5,000,000 104% 0% 78% YE 12/31/1997 78%
29 4 1132 $ 4,600,000 104% 0% 74% YE 12/31/1997 74%
29 5 1036 $ 4,200,000 104% 0% 70% YE 12/31/1997 70%
29 6 426 $ 3,100,000 104% 0% 61% YE 12/31/1997 61%
29 7 1250 $ 3,000,000 104% 0% 64% YE 12/31/1997 64%
29 8 225 $ 3,000,000 104% 0% 91% YE 12/31/1997 91%
29 9 1088 $ 2,800,000 104% 0% 66% YE 12/31/1997 66%
29 10 1237 $ 2,100,000 104% 0% 77% YE 12/31/1997 77%
29 11 172 $ 2,000,000 104% 0% 60% YE 12/31/1997 60%
29 12 377 $ 2,000,000 104% 0% 70% YE 12/31/1997 70%
29 13 440 $ 1,900,000 104% 0% 57% YE 12/31/1997 57%
------------- ---- --
Hard $ 48,000,000 104% 0%
30 1 Holiday Inn Sunspree Padre Island Hard $ 15,000,000 65% 55% 62% TTM 4/30/1998 61%
Accor-M-Six Creditvest I
31 1 688 $ 5,600,000 99% 0% 70% YE 12/31/1997 70%
31 2 1052 $ 5,000,000 99% 0% 64% YE 12/31/1997 64%
31 3 381 $ 4,800,000 99% 0% 75% YE 12/31/1997 75%
31 4 679 $ 4,800,000 99% 0% 72% YE 12/31/1997 72%
31 5 1183 $ 4,500,000 99% 0% 73% YE 12/31/1997 73%
31 6 107 $ 3,200,000 99% 0% 63% YE 12/31/1997 63%
31 7 183 $ 2,900,000 99% 0% 65% YE 12/31/1997 65%
31 8 422 $ 2,900,000 99% 0% 61% YE 12/31/1997 61%
31 9 1207 $ 2,700,000 99% 0% 59% YE 12/31/1997 59%
31 10 1278 $ 2,700,000 99% 0% 58% YE 12/31/1997 58%
31 11 1135 $ 2,600,000 99% 0% 65% YE 12/31/1997 65%
31 12 417 $ 2,600,000 99% 0% 61% YE 12/31/1997 61%
31 13 1091 $ 2,400,000 99% 0% 52% YE 12/31/1997 52%
31 14 205 $ 2,100,000 99% 0% 60% YE 12/31/1997 60%
31 15 794 $ 2,100,000 99% 0% 60% YE 12/31/1997 60%
------------- --- --
Hard $ 50,900,000 99% 0%
Accor-M-Six Limited Partnership
32 1 1078 $ 2,800,000 88% 0% 68% YE 12/31/1997 68%
32 2 1268 $ 3,300,000 88% 0% 79% YE 12/31/1997 79%
32 3 775 $ 3,600,000 88% 0% 54% YE 12/31/1997 54%
32 4 739 $ 4,500,000 88% 0% 76% YE 12/31/1997 76%
32 5 1040 $ 4,800,000 88% 0% 79% YE 12/31/1997 79%
32 6 253 $ 7,000,000 88% 0% 66% YE 12/31/1997 66%
32 7 245 $ 5,300,000 88% 0% 56% YE 12/31/1997 56%
32 8 700 $ 2,500,000 88% 0% 66% YE 12/31/1997 66%
32 9 1059 $ 3,000,000 88% 0% 61% YE 12/31/1997 61%
32 10 1254 $ 5,200,000 88% 0% 65% YE 12/31/1997 65%
32 11 1283 $ 5,100,000 88% 0% 59% YE 12/31/1997 59%
32 12 156 $ 2,700,000 88% 0% 60% YE 12/31/1997 60%
32 13 699 $ 2,600,000 88% 0% 62% YE 12/31/1997 62%
32 14 784 $ 3,800,000 88% 0% 63% YE 12/31/1997 63%
------------- --- --
Hard $ 56,200,000 88% 0%
Accor-M-Six Creditvest II
33 1 1267 $ 8,700,000 96% 0% 79% YE 12/31/1997 79%
33 2 476 $ 7,400,000 96% 0% 79% YE 12/31/1997 79%
33 3 376 $ 6,800,000 96% 0% 75% YE 12/31/1997 75%
33 4 345 $ 5,500,000 96% 0% 54% YE 12/31/1997 54%
33 5 402 $ 5,200,000 96% 0% 61% YE 12/31/1997 61%
33 6 1142 $ 3,700,000 96% 0% 80% YE 12/31/1997 80%
33 7 371 $ 3,500,000 96% 0% 57% YE 12/31/1997 57%
33 8 133 $ 3,000,000 96% 0% 59% YE 12/31/1997 59%
33 9 1035 $ 2,900,000 96% 0% 80% YE 12/31/1997 80%
33 10 542 $ 2,800,000 96% 0% 67% YE 12/31/1997 67%
33 11 1130 $ 2,500,000 96% 0% 86% YE 12/31/1997 86%
------------ --- --
Hard $ 52,000,000 96% 0%
34 1 Rancho San Marcos Village Hard $ 13,600,000 70% 63% 94% 7/6/98 94%
Accor-M-Six Penvest
35 1 294 $ 4,800,000 96% 0% 75% YE 12/31/1997 75%
35 2 743 $ 4,500,000 96% 0% 64% YE 12/31/1997 64%
35 3 1108 $ 4,200,000 96% 0% 63% YE 12/31/1997 63%
35 4 1136 $ 4,000,000 96% 0% 67% YE 12/31/1997 67%
35 5 385 $ 3,500,000 96% 0% 75% YE 12/31/1997 75%
35 6 406 $ 4,000,000 96% 0% 72% YE 12/31/1997 72%
35 7 586 $ 3,700,000 96% 0% 73% YE 12/31/1997 73%
35 8 339 $ 2,100,000 96% 0% 64% YE 12/31/1997 64%
35 9 1200 $ 3,400,000 96% 0% 64% YE 12/31/1997 64%
35 10 290 $ 3,400,000 96% 0% 41% YE 12/31/1997 41%
35 11 554 $ 2,800,000 96% 0% 76% YE 12/31/1997 76%
35 12 1069 $ 2,700,000 96% 0% 62% YE 12/31/1997 62%
35 13 158 $ 4,000,000 96% 0% 61% YE 12/31/1997 61%
35 14 1009 $ 2,000,000 96% 0% 76% YE 12/31/1997 76%
35 15 1264 $ 2,000,000 96% 0% 52% YE 12/31/1997 52%
------------ --- --
Hard $ 51,100,000 96% 0%
36 1 Palm Desert Country Club S.C. $ 14,450,000 64% 58% 97% 6/1/98 96%
37 1 New City Plaza $ 11,500,000 78% 70% 79% 6/1/98 87%
Cinemark Pool B
38 1 Colorado Springs, CO - Tinseltown $ 18,000,000 97% 0% 100% 9/1/98 100%
38 2 Mishawaka - Movies 10 $ 9,500,000 97% 0% 100% 9/1/98 100%
------------ --- --
Hard $ 27,500,000 97% 0%
39 1 Nordhoff Industrial Complex $ 12,725,000 66% 59% 100% 7/13/98 90%
40 1 Seven Corners Apts. $ 10,400,000 79% 70% 99% 2/11/98 95%
41 1 Citibank Office Plaza Hard $ 12,100,000 66% 60% 99% 5/1/98 94%
42 1 Savannah Apartments Soft $ 10,010,000 80% 70% 95% 5/20/1998 90%
43 1 Belleville Manor $ 10,450,000 76% 66% 98% 6/25/98 95%
44 1 203 East Fordham Road Hard $ 12,000,000 66% 60% 100% 6/1/98 95%
45 1 Plantation Club Apartments Soft $ 10,700,000 74% 67% 95% 6/22/1998 95%
46 1 Silver Pointe SC $ 10,000,000 77% 68% 94% 7/1/98 92%
47 1 Central Medical Park $ 10,700,000 70% 63% 89% 3/20/98 90%
48 1 Friendly Village MHP $ 10,000,000 71% 62% 88% 6/30/98 88%
49 1 Springhill Business Center Hard $ 11,800,000 60% 53% 91% 7/22/98 86%
50 1 Pacific Court Office Building $ 13,000,000 54% 46% 100% 6/30/98 93%
Banyan Pool 3
51 1 Elmhurst $ 8,000,000 44% 40% 68% 6/30/98 68%
51 2 Milwaukee - Commerce $ 2,390,000 44% 40% 82% 8/1/98 82%
51 3 Milwaukee - 160th $ 2,070,000 44% 40% 82% 8/1/98 82%
51 4 Milwaukee - Whittaker Way $ 1,700,000 44% 40% 82% 8/1/98 82%
51 5 Milwaukee - Ryerson $ 1,540,000 44% 40% 82% 8/1/98 82%
------------ --- ---
Hard $ 15,700,000 44% 40%
52 1 Pride Center $ 14,000,000 48% 39% 92% 6/1/98 89%
53 1 Hidden Harbor $ 8,900,000 75% 67% 98% 1/25/98 94%
54 1 Oshkosh Center II $ 8,900,000 74% 59% 98% 7/1/98 95%
55 1 Waterford Plaza Hard $ 9,100,000 72% 65% 81% 8/10/98 88%
56 1 Palm Harbor Apartments $ 8,300,000 78% 69% 93% 8/3/98 91%
57 1 Fiserve Building Hard $ 9,150,000 70% 63% 100% 4/30/98 95%
Airport Atrium
58 1 Airport Atrium $ 4,300,000 68% 62% 95% 1/31/98 85%
58 2 Sampson 1 $ 3,100,000 68% 62% 100% 9/1/98 95%
58 3 Braemar Building $ 2,000,000 68% 62% 100% 4/1/98 93%
------------ --- ---
Hard $ 9,400,000 68% 62%
59 1 Wicomico Hard $ 8,900,000 71% 64% 99% 6/30/98 95%
Seven Mobile Home Properties
60 1 Woodside MHP $ 1,500,000 84% 68% 96% 3/1/98 90%
60 2 Natural Springs MHP $ 1,375,000 84% 68% 94% 3/1/98 94%
60 3 Mountainview East MHP $ 1,300,000 84% 68% 100% 3/1/98 95%
60 4 Progress Ridge MHP $ 1,200,000 84% 68% 95% 3/1/98 90%
60 5 Southern Hills MHP $ 815,000 84% 68% 91% 3/1/98 91%
60 6 Sunshine MHP $ 675,000 84% 68% 80% 3/1/98 80%
60 7 Castle Hill MHP $ 445,000 84% 68% 100% 3/1/98 95%
------------ --- ---
$ 7,310,000 84% 68%
61 1 SL-Tulsa Hard $ 8,250,000 74% 65% 97% 7/31/98 94%
62 1 The Courtyard Apts. $ 8,000,000 75% 65% 100% 7/16/98 95%
63 1 Old Metairie Village Shopping Center $ 7,900,000 76% 66% 96% 4/30/1998 94%
64 1 Willowick Industrial Park $ 8,400,000 70% 63% 95% 7/1/1998 94%
65 1 Courtney Square Apartments $ 7,500,000 77% 60% 94% 5/9/98 94%
66 1 Plaza de la Fiesta III & IV $ 8,400,000 68% 61% 100% 6/1/98 95%
67 1 Motorola Training Center Hard $ 7,800,000 73% 66% 100% 9/1/98 95%
68 1 Madison Village Hard $ 7,000,000 79% 70% 97% 5/29/98 97%
69 1 Pipestone Plaza Hard $ 9,400,000 58% 51% 100% 6/4/98 94%
70 1 Parkleigh North Apts. $ 6,850,000 79% 69% 97% 5/31/98 95%
71 1 Southgate Estates MHP $ 6,500,000 78% 69% 89% 4/16/1998 90%
72 1 7 West 45th Street $ 10,200,000 49% 42% 97% 5/5/98 93%
73 1 2100 Swift Drive Hard $ 7,400,000 64% 57% 100% 6/1/98 94%
74 1 Westwind Apts. $ 5,925,000 80% 69% 97% 3/17/98 95%
75 1 Stanford Townhouses $ 6,550,000 72% 62% 96% 6/30/1998 95%
76 1 Mentor Industrial $ 7,500,000 63% 50% 84% 7/31/98 85%
77 1 Braebuurn Colony Apts. Soft $ 6,200,000 75% 67% 100% 6/26/1998 93%
78 1 SL-Mogadore Hard $ 6,100,000 75% 66% 100% 8/1/1998 96%
79 1 ABFM Industrial Building Soft $ 7,900,000 57% 52% 100% 7/1/98 95%
80 1 1567-1575 Lexington Avenue Soft $ 5,600,000 78% 63% 94% 6/5/98 94%
81 1 Mason Manor MHP $ 5,825,000 75% 65% 87% 6/25/98 86%
82 1 118-40 Metropolitan Ave. $ 7,800,000 53% 42% 98% 7/1/98 95%
83 1 Clark & Diversey Shopping Ctr. $ 6,000,000 68% 62% 100% 6/1/1998 95%
84 1 Stanbridge Apartments Soft $ 5,000,000 80% 64% 97% 6/1/98 93%
85 1 Village Townhomes Soft $ 5,200,000 77% 67% 98% 5/30/98 87%
86 1 Ventu Park Shopping Center $ 5,850,000 67% 61% 92% 2/24/1998 92%
87 1 Bowen's Wharf $ 6,700,000 58% 46% 99% 5/1/98 95%
Muraco Portfolio
88 1 Lakeview Apts. $ 2,300,000 76% 60% 97% 6/1/98 95%
88 2 Oneida Apts. $ 1,600,000 76% 60% 100% 6/1/98 95%
88 3 Townsquare Apts. $ 1,200,000 76% 60% 100% 6/1/98 95%
------------ --- ---
$ 5,100,000 76% 60%
89 1 Sherman West Apartments $ 5,100,000 74% 65% 96% 3/6/98 95%
90 1 Parkside Village Apts. $ 4,947,000 75% 65% 96% 5/1/98 94%
91 1 Harbor Greens $ 5,600,000 65% 53% 94% 7/1/98 94%
92 1 710 State Street Hard $ 5,900,000 62% 56% 100% 5/1/1998 95%
93 1 Flemings Foods Store Hard $ 5,000,000 73% 63% 100% 6/30/98 95%
94 1 Playa Vista Plaza $ 8,350,000 43% 37% 91% 7/7/98 85%
95 1 122-126 East 103rd Street Soft $ 4,500,000 80% 65% 91% 6/5/98 91%
96 1 Stonewall SC $ 4,300,000 81% 71% 95% 6/3/98 95%
97 1 Tempo Cabana Apts. $ 4,800,000 73% 63% 100% 3/12/98 95%
98 1 Westmont Apts $ 5,000,000 68% 46% 90% 5/31/0998 93%
99 1 Great Western Bank Building $ 4,600,000 73% 62% 96% 7/31/98 93%
100 1 Chelmsford Crossing $ 4,600,000 73% 61% 96% 7/31/98 90%
101 1 Safeway Industrial $ 4,900,000 68% 62% 88% 6/30/98 89%
102 1 The Bentley Mills Building Hard $ 15,300,000 97% 0% 100% 6/1/98 100%
103 1 Twin Pines Healthcare Center Hard $ 4,250,000 75% 61% 94% 5/31/98 93%
104 1 Corporate West One $ 4,650,000 67% 57% 100% 6/30/98 94%
105 1 Ingle West Office Building $ 4,750,000 65% 59% 94% 4/8/98 92%
106 1 Colony Ridge Apts. $ 4,700,000 66% 53% 96% 3/25/1998 93%
107 1 SL - Lima Hard $ 4,600,000 67% 55% 100% 6/30/98 97%
108 1 Collins Nursing Home $ 4,070,000 75% 61% 89% TTM 4/30/98 89%
109 1 Westgrove Towers $ 5,160,000 58% 50% 94% 6/24/98 90%
110 1 * Apartments of Westgrove $ 6,000,000 50% 44% 94% 5/27/98 94%
111 1 * West Third Street $ 4,000,000 74% 59% 82% 6/30/98 84%
112 1 Pollyanna Apartments $ 3,700,000 79% 71% 98% 7/24/98 95%
113 1 Bellemeade Plaza $ 6,400,000 44% 33% 84% 6/1/1998 94%
114 1 Hiawassee Oaks Apartments Soft $ 3,300,000 85% 74% 99% 6/11/98 95%
115 1 Giant Food Store Hard $ 3,650,000 74% 65% 100% 9/1/1998 95%
116 1 Timber Ridge Apts. $ 3,300,000 82% 65% 95% 4/30/1998 91%
Bird Creek Comfort Creek
117 1 Bird Creek Mobile Home Park $ 2,340,000 72% 58% 91% 6/1/98 94%
117 2 Comfort Mobile Home Park $ 1,370,000 72% 58% 100% 6/1/98 95%
------------ --- ---
$ 3,710,000 72% 58%
118 1 GRW Building $ 4,000,000 65% 55% 100% 3/31/98 94%
119 1 University Hills $ 4,000,000 65% 57% 80% 7/1/98 83%
120 1 Grove Gate Apartments $ 3,200,000 80% 63% 97% 6/23/1998 95%
121 1 Colts Neck Shopping Center $ 3,600,000 69% 56% 100% 6/19/98 95%
122 1 Keosippi Mall $ 3,600,000 69% 59% 88% 6/1/98 88%
123 1 Pineville Commerce Center $ 3,552,000 67% 54% 98% 6/3/1998 90%
124 1 90-92 Thompson Street $ 3,700,000 65% 57% 100% 6/11/1998 95%
125 1 Walton Manor MHP $ 4,150,000 56% 45% 92% 5/12/1998 90%
126 1 238 E. 111th/204 E. 112th Street Soft $ 3,000,000 77% 62% 89% 6/5/98 89%
127 1 Palmwood Terrace Apts. $ 2,850,000 80% 70% 97% 5/31/1998 94%
128 1 Hartnell Plaza $ 3,150,000 72% 60% 94% 2/1/98 94%
129 1 Carytown Square $ 3,050,000 74% 65% 100% 3/1/98 95%
130 1 Oak Creek Apts. $ 3,000,000 75% 66% 97% 6/1/98 95%
131 1 Hollywood News Building $ 3,025,000 74% 60% 89% 4/30/1998 89%
132 1 Chateau Apts. $ 2,900,000 76% 66% 94% 5/26/98 87%
133 1 Miller Road Business Ctr. $ 2,975,000 72% 58% 100% 3/31/1998 95%
134 1 The Kellogg Property $ 2,950,000 70% 61% 100% 6/1/98 95%
135 1 Maple Lawn III $ 2,775,000 75% 65% 100% 3/1/98 95%
136 1 Stapley-McKellips Center $ 2,600,000 79% 69% 95% 2/28/98 95%
137 1 239 S. La Cienega Hard $ 2,550,000 80% 64% 93% 6/15/98 93%
138 1 Sunflowers Terrace Apts. $ 2,510,000 79% 64% 100% 5/1/98 95%
139 1 Yearling $ 2,500,000 78% 68% 99% 7/1/98 95%
140 1 Briarwyck Apts. $ 2,325,000 82% 64% 99% 7/31/98 95%
141 1 H Lazy F MHP $ 2,980,000 60% 49% 100% 6/5/1998 95%
Bayshore/Rockport Oaks
142 1 Bayshore Apartments $ 1,150,000 80% 69% 90% 6/1/98 90%
142 2 Rockport Oaks Garden Apartments $ 1,030,000 80% 69% 94% 6/1/98 90%
------------ --- ---
$ 2,180,000 80% 69%
143 1 Burnhaven Hard $ 2,400,000 73% 66% 98% 7/31/98 90%
144 1 Colton Midtown Plaza Hard $ 5,000,000 34% 28% 74% 8/1/1998 74%
145 1 Sax Drugs $ 2,200,000 77% 62% 100% 7/1/98 95%
146 1 Sea Tac Gardens Apts. $ 2,200,000 77% 67% 100% 4/1/98 95%
147 1 Cherry Point Mall $ 2,700,000 62% 51% 84% 6/1/98 87%
148 1 The Point $ 2,435,000 66% 53% 83% 12/1/97 85%
149 1 311 East 109th Street Soft $ 2,000,000 80% 65% 100% 6/5/98 95%
150 1 Peachwood Manor MHP $ 2,100,000 75% 66% 100% 4/30/1998 95%
151 1 6972 Sheridan $ 2,200,000 70% 61% 100% 6/17/98 95%
152 1 Crest Oak Apts. Soft $ 2,400,000 62% 55% 91% 4/1/1998 91%
153 1 1&3 Eves Hard $ 2,300,000 65% 58% 100% 6/30/1998 95%
154 1 Highland Park Townhomes $ 2,100,000 71% 57% 90% 6/30/98 90%
155 1 Marbach Square SC $ 2,100,000 71% 58% 100% 1/27/1998 95%
156 1 Sunpointe Gardens Apts. $ 3,000,000 49% 39% 66% 4/30/1998 66%
157 1 Airport Executive Park $ 1,700,000 85% 71% 97% 5/5/98 92%
Parkside/Pleasant View MHP
158 1 Parkside MHP $ 1,400,000 62% 50% 94% 4/23/1998 91%
158 2 Pleasantview MHP $ 900,000 62% 50% 92% 4/23/1998 93%
------------ --- ---
$ 2,300,000 62% 50%
159 1 Oakview Apartments $ 2,800,000 50% 40% 93% 7/13/98 93%
160 1 Expressway Commerce Complex $ 2,000,000 70% 61% 100% 6/1/98 95%
161 1 Brookside Apartments $ 1,900,000 73% 64% 94% 6/24/98 94%
162 1 Sundial Shopping Center $ 2,500,000 55% 48% 94% 5/19/98 94%
163 1 501 State Street Hard $ 2,200,000 62% 57% 100% 5/1/1998 95%
164 1 Uniontown Center $ 1,900,000 72% 58% 78% 5/1/98 78%
165 1 * Cypress Creek Business Park $ 2,200,000 60% 52% 96% 5/20/98 93%
166 1 Riverside Estates MHP $ 1,850,000 70% 56% 100% 3/1/98 89%
167 1 Winterhaven East Apartments $ 1,625,000 80% 69% 97% 6/19/98 89%
168 1 Bahamas Apartments $ 2,100,000 61% 49% 94% 4/30/1998 92%
169 1 The Midland Building Hard $ 2,750,000 45% 40% 78% 6/30/98 68%
170 1 236 & 238-240 East 7th Street $ 2,100,000 59% 48% 97% 5/31/98 95%
171 1 The River Park Center $ 2,560,000 47% 38% 96% 5/1/98 93%
172 1 Pasadena Plaza Mart $ 1,700,000 70% 58% 100% 2/1/98 90%
173 1 Pleasant View MHP $ 1,640,000 69% 62% 93% 3/1/1998 93%
174 1 Circuit City-Philadelphia Hard $ 7,100,000 96% 0% 100% 9/1/98 100%
175 1 Nanette Apartments $ 1,425,000 76% 61% 98% 6/3/98 90%
176 1 Central Plaza $ 1,750,000 57% 50% 100% 5/31/1998 90%
177 1 Brandenberry Square Apts $ 2,300,000 43% 35% 93% 7/6/1998 90%
178 1 Champion MHP $ 2,600,000 38% 31% 98% 5/31/1998 95%
179 1 East Brunswick Woods Hard $ 1,500,000 62% 57% 88% 6/1/98 88%
180 1 Circuit City-Harper Woods Hard $ 5,470,000 96% 0% 100% 9/1/98 100%
181 1 Circuit City-Ridgeland Hard $ 5,100,000 96% 0% 100% 9/1/98 100%
182 1 1590 Lexington Avenue Soft $ 950,000 79% 64% 100% 6/5/98 95%
183 1 Circuit City-East Lansing Hard $ 4,600,000 96% 0% 100% 9/1/98 100%
184 1 Circuit City-Frederick Hard $ 4,560,000 96% 0% 100% 9/1/98 100%
185 1 Circuit City-Green Bay Hard $ 4,600,000 96% 0% 100% 9/1/98 100%
186 1 Circuit City-Indianapolis Hard $ 4,600,000 96% 0% 100% 9/1/98 100%
187 1 2156 2nd Avenue Soft $ 840,000 71% 58% 100% 6/5/98 95%
188 1 OCC Financial Plaza Hard $ 900,000 67% 60% 100% 6-30-98 95%
189 1 103 East 102nd Street Soft $ 700,000 78% 63% 100% 6/5/98 95%
190 1 Windgate MHP $ 680,000 78% 63% 95% 6/1/98 93%
191 1 Circuit City-Jackson,TN Hard $ 3,340,000 97% 0% 100% 9/1/98 100%
192 1 291 Pleasant Soft $ 600,000 80% 65% 100% 6/5/98 95%
193 1 Circuit City-Kingsport Hard $ 3,040,000 96% 0% 100% 9/1/98 100%
194 1 Circuit City-Witchita Falls Hard $ 3,040,000 96% 0% 100% 9/1/98 100%
</TABLE>
<PAGE>
Annex B
<TABLE>
<CAPTION>
Audit/ Audit/
Agreed Agreed U/W Actual
Upon Upon Ongoing Ongoing
Loan Asset Procedures Procedures Capital Capital Reserve
# # Property Name Upfront Forward Reserve Reserve Units
---- ----- ------------- ------- ------- ------- ------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Prime Retail III
1 1 Lighthouse Place Yes Yes $0.15 $0.15 $psf
1 2 Finger Lakes Outlet Center Yes Yes $0.15 $0.15 $psf
1 3 * Outlets at Gilroy III and IV Yes Yes $0.21 $0.21 $psf
1 4 Outlets at Gilroy I, II and V Yes Yes $0.21 $0.21 $psf
1 5 * Kittery Outlet Village Yes Yes $0.37 $0.37 $psf
2 1 Soho Grand Hotel Yes Yes 5% 5% % revenue
Morgantown Mall and Commons
3 1 Morgantown Mall Yes Yes $0.15 $0.15 $psf
3 2 Morgantown Commons Yes Yes $0.15 $0.15 $psf
4 1 5670 Wilshire Yes Yes $0.20 $0.20 $psf
Shidler Industrial Portfolio
5 1 4150-4174 Bandini Boulevard Yes Yes $0.15 $0.15 $psf
5 2 Wicks Business Park Yes Yes $0.15 $0.15 $psf
5 3 341-345 Baldwin Park Yes Yes $0.15 $0.15 $psf
5 4 Nelson & Stafford, Industry Yes Yes $0.15 $0.15 $psf
5 5 730-780 Baldwin Park Yes Yes $0.15 $0.15 $psf
5 6 2800-2900 Sierra Pine Yes Yes $0.15 $0.15 $psf
5 7 13240, 13280 Amar Road Yes Yes $0.15 $0.15 $psf
5 8 Chapman & Western Yes Yes $0.15 $0.15 $psf
5 9 15551 Red Hill Avenue Yes Yes $0.15 $0.15 $psf
5 10 1900 Tubeway Yes Yes $0.15 $0.15 $psf
5 11 3707 S. Hill Street Yes Yes $0.15 $0.15 $psf
5 12 2001-2015 Saybrook Yes Yes $0.15 $0.15 $psf
5 13 2229-2235 E. Magnolia Yes Yes $0.15 $0.15 $psf
5 14 111 N. Hudson Avenue Yes Yes $0.15 $0.15 $psf
5 15 1444-1446 Factor Ave. Yes Yes $0.15 $0.15 $psf
5 16 2600 Yates Yes Yes $0.15 $0.15 $psf
6 1 Eastland Mall Yes Yes $0.15 $0.15 $psf
7 1 * Airport Industrial Yes Yes $0.15 $0.15 $psf
Banyan Pool I
8 1 Colonial Penn Insurance Yes Yes $0.20 $0.20 $psf
8 2 Phoenix Business Center Yes Yes $0.20 $0.20 $psf
8 3 Sand Lake Center Yes Yes $0.29 $0.29 $psf
8 4 Avalon Center Yes Yes $0.20 $0.20 $psf
8 5 Peachtree Point Yes Yes $0.35 $0.35 $psf
8 6 Southlake Corporate Center Yes Yes $0.20 $0.20 $psf
8 7 Newtown Business Center Yes Yes $0.25 $0.25 $psf
8 8 University CC III Yes Yes $0.20 $0.20 $psf
8 9 University CC II Yes Yes $0.20 $0.20 $psf
8 10 Airways Plaza Yes Yes $0.60 $0.60 $psf
8 11 Technology Center Yes Yes $0.20 $0.20 $psf
8 12 Park Center Yes Yes $0.23 $0.23 $psf
8 13 University CC IV Yes Yes $0.20 $0.20 $psf
8 14 Atrium Yes Yes $0.24 $0.24 $psf
8 15 University CC 1 Yes Yes $0.20 $0.20 $psf
8 16 Metric Plaza Yes Yes $0.21 $0.21 $psf
Land Apartments
9 1 Eastland Apartments No Yes $250 $250 $/unit
9 2 Crown Point Apartments No Yes $250 $250 $/unit
9 3 Prairie Creek No Yes $250 $250 $/unit
Burgandy Properties
10 1 Mill Pond West Yes Yes $250 $250 $/unit
10 2 Mill Pond East Yes Yes $250 $250 $/unit
10 3 Pebblebrook 1 Yes Yes $250 $250 $/unit
10 4 Beach South Yes Yes $250 $250 $/unit
10 5 Pebblebrook II Yes Yes $250 $250 $/unit
11 1 One Park Plaza Yes Yes $0.20 $0.25 $psf
12 1 Beckman Instruments - Brea NA NA NA NA $psf
13 1 Sun Life RV Resort No No $50 $50 $/unit
14 1 1400 Union Meeting No No $0.19 $0.20 $psf
15 1 Cliffs of Dunwoody Yes Yes $220 $220 $/unit
16 1 6400 Shafer Court No Yes $0.20 $0.20 $psf
17 1 Walzem Plaza S/C No No $0.18 $0.18 $psf
18 1 Beckman - Miami NA NA NA NA $psf
19 1 Money Store Headquarters NA NA NA NA $psf
Greenwich Portfolio
20 1 45 E.Putnam No No $0.22 $0.22 $psf
20 2 340-350 Greenwich Ave. No No $0.41 $0.41 $psf
20 3 116-136 E. Putnam No No $0.15 $0.15 $psf
21 1 Monte Sano Apts. No No $250 $250 $/unit
22 1 Pointe West No Yes $0.20 $0.20 $psf
Accor-M-Six V
23 1 696 NA NA NA NA % revenue
23 2 1007 NA NA NA NA % revenue
23 3 639 NA NA NA NA % revenue
23 4 689 NA NA NA NA % revenue
23 5 741 NA NA NA NA % revenue
23 6 1257 NA NA NA NA % revenue
23 7 1117 NA NA NA NA % revenue
23 8 1067 NA NA NA NA % revenue
23 9 1140 NA NA NA NA % revenue
23 10 1010 NA NA NA NA % revenue
23 11 1160 NA NA NA NA % revenue
Accor-M-Six III
24 1 103 NA NA NA NA % revenue
24 2 251 NA NA NA NA % revenue
24 3 171 NA NA NA NA % revenue
24 4 1111 NA NA NA NA % revenue
24 5 1143 NA NA NA NA % revenue
24 6 334 NA NA NA NA % revenue
24 7 1150 NA NA NA NA % revenue
24 8 1109 NA NA NA NA % revenue
24 9 282 NA NA NA NA % revenue
24 10 231 NA NA NA NA % revenue
24 11 121 NA NA NA NA % revenue
25 1 1129 State Street Yes Yes $0.15 $0.15 $psf
Accor-M-Six VI
26 1 15 NA NA NA NA % revenue
26 2 471 NA NA NA NA % revenue
26 3 346 NA NA NA NA % revenue
26 4 1137 NA NA NA NA % revenue
26 5 1005 NA NA NA NA % revenue
26 6 560 NA NA NA NA % revenue
26 7 620 NA NA NA NA % revenue
26 8 1265 NA NA NA NA % revenue
26 9 128 NA NA NA NA % revenue
26 10 1198 NA NA NA NA % revenue
26 11 1094 NA NA NA NA % revenue
26 12 1188 NA NA NA NA % revenue
26 13 292 NA NA NA NA % revenue
26 14 1182 NA NA NA NA % revenue
Accor-M-Six Penvest II
27 1 142 NA NA NA NA % revenue
27 2 651 NA NA NA NA % revenue
27 3 1131 NA NA NA NA % revenue
27 4 522 NA NA NA NA % revenue
27 5 1047 NA NA NA NA % revenue
27 6 1120 NA NA NA NA % revenue
27 7 166 NA NA NA NA % revenue
27 8 458 NA NA NA NA % revenue
27 9 1214 NA NA NA NA % revenue
27 10 1110 NA NA NA NA % revenue
27 11 1092 NA NA NA NA % revenue
27 12 1262 NA NA NA NA % revenue
27 13 484 NA NA NA NA % revenue
27 14 146 NA NA NA NA % revenue
27 15 351 NA NA NA NA % revenue
27 16 4 NA NA NA NA % revenue
28 1 Wasilla Retail Center No No $0.15 $0.15 $psf
Accor-M-Six IV
29 1 263 NA NA NA NA % revenue
29 2 1127 NA NA NA NA % revenue
29 3 122 NA NA NA NA % revenue
29 4 1132 NA NA NA NA % revenue
29 5 1036 NA NA NA NA % revenue
29 6 426 NA NA NA NA % revenue
29 7 1250 NA NA NA NA % revenue
29 8 225 NA NA NA NA % revenue
29 9 1088 NA NA NA NA % revenue
29 10 1237 NA NA NA NA % revenue
29 11 172 NA NA NA NA % revenue
29 12 377 NA NA NA NA % revenue
29 13 440 NA NA NA NA % revenue
30 1 Holiday Inn Sunspree Padre Island No No 5% 5% % revenue
Accor-M-Six Creditvest I
31 1 688 NA NA NA NA % revenue
31 2 1052 NA NA NA NA % revenue
31 3 381 NA NA NA NA % revenue
31 4 679 NA NA NA NA % revenue
31 5 1183 NA NA NA NA % revenue
31 6 107 NA NA NA NA % revenue
31 7 183 NA NA NA NA % revenue
31 8 422 NA NA NA NA % revenue
31 9 1207 NA NA NA NA % revenue
31 10 1278 NA NA NA NA % revenue
31 11 1135 NA NA NA NA % revenue
31 12 417 NA NA NA NA % revenue
31 13 1091 NA NA NA NA % revenue
31 14 205 NA NA NA NA % revenue
31 15 794 NA NA NA NA % revenue
Accor-M-Six Limited Partnership
32 1 1078 NA NA NA NA % revenue
32 2 1268 NA NA NA NA % revenue
32 3 775 NA NA NA NA % revenue
32 4 739 NA NA NA NA % revenue
32 5 1040 NA NA NA NA % revenue
32 6 253 NA NA NA NA % revenue
32 7 245 NA NA NA NA % revenue
32 8 700 NA NA NA NA % revenue
32 9 1059 NA NA NA NA % revenue
32 10 1254 NA NA NA NA % revenue
32 11 1283 NA NA NA NA % revenue
32 12 156 NA NA NA NA % revenue
32 13 699 NA NA NA NA % revenue
32 14 784 NA NA NA NA % revenue
Accor-M-Six Creditvest II
33 1 1267 NA NA NA NA % revenue
33 2 476 NA NA NA NA % revenue
33 3 376 NA NA NA NA % revenue
33 4 345 NA NA NA NA % revenue
33 5 402 NA NA NA NA % revenue
33 6 1142 NA NA NA NA % revenue
33 7 371 NA NA NA NA % revenue
33 8 133 NA NA NA NA % revenue
33 9 1035 NA NA NA NA % revenue
33 10 542 NA NA NA NA % revenue
33 11 1130 NA NA NA NA % revenue
34 1 Rancho San Marcos Village No Yes $0.15 $0.15 $psf
Accor-M-Six Penvest I
35 1 294 NA NA NA NA % revenue
35 2 743 NA NA NA NA % revenue
35 3 1108 NA NA NA NA % revenue
35 4 1136 NA NA NA NA % revenue
35 5 385 NA NA NA NA % revenue
35 6 406 NA NA NA NA % revenue
35 7 586 NA NA NA NA % revenue
35 8 339 NA NA NA NA % revenue
35 9 1200 NA NA NA NA % revenue
35 10 290 NA NA NA NA % revenue
35 11 554 NA NA NA NA % revenue
35 12 1069 NA NA NA NA % revenue
35 13 158 NA NA NA NA % revenue
35 14 1009 NA NA NA NA % revenue
35 15 1264 NA NA NA NA % revenue
36 1 Palm Desert Country Club S.C. No No $0.15 $0.15 $psf
37 1 New City Plaza No No $0.15 $0.15 $psf
Cinemark Pool B
38 1 Colorado Springs, CO - Tinseltown NA NA NA NA $psf
38 2 Mishawaka - Movies 10 NA NA NA NA $psf
39 1 Nordhoff Industrial Complex No No $0.20 $0.20 $psf
40 1 Seven Corners Apts. No Yes $250 $250 $/unit
41 1 Citibank Office Plaza No Yes $0.25 $0.25 $psf
42 1 Savannah Apartments Yes Yes $250 $250 $/unit
43 1 Belleville Manor No No $50.00 $0.00 $/unit
44 1 203 East Fordham Road No No $0.20 $0.20 $psf
45 1 Plantation Club Apartments Yes Yes $250 $250 $/unit
46 1 Silver Pointe SC No No $0.15 $0.15 $psf
47 1 Central Medical Park Yes No $0.20 $0.20 $psf
48 1 Friendly Village MHP No No $50 $0 $/unit
49 1 Springhill Business Center No Yes $0.15 $0.15 $psf
50 1 Pacific Court Office Building No No $0.33 $0.33 $psf
Banyan Pool 3
51 1 Elmhurst Yes Yes $0.27 $0.27 $psf
51 2 Milwaukee - Commerce Yes Yes $0.17 $0.17 $psf
51 3 Milwaukee - 160th Yes Yes $0.23 $0.23 $psf
51 4 Milwaukee - Whittaker Way Yes Yes $0.15 $0.15 $psf
51 5 Milwaukee - Ryerson Yes Yes $0.25 $0.25 $psf
52 1 Pride Center No No $0.22 $0.22 $psf
53 1 Hidden Harbor Yes Yes $250 $250 $/unit
54 1 Oshkosh Center II No No $0.15 $0.15 $psf
55 1 Waterford Plaza Yes Yes $0.20 $0.20 $psf
56 1 Palm Harbor Apartments No No $250 $250 $/unit
57 1 Fiserve Building No Yes $0.20 $0.20 $psf
Airport Atrium No Yes
58 1 Airport Atrium No Yes $0.22 $0.22 $psf
58 2 Sampson 1 No Yes $0.15 $0.15 $psf
58 3 Braemar Building No Yes $0.20 $0.20 $psf
59 1 Wicomico No Yes $0.15 $0.15 $psf
Seven Mobile Home Properties
60 1 Woodside MHP No No $50 $50 $/unit
60 2 Natural Springs MHP No No $50 $50 $/unit
60 3 Mountainview East MHP No No $50 $50 $/unit
60 4 Progress Ridge MHP No No $50 $50 $/unit
60 5 Southern Hills MHP No No $50 $50 $/unit
60 6 Sunshine MHP No No $50 $50 $/unit
60 7 Castle Hill MHP No No $52 $52 $/unit
61 1 SL-Tulsa No Yes $0.15 $0.15 $psf
62 1 The Courtyard Apts. No No $250 $250 $/unit
63 1 Old Metairie Village Shopping Center No No $0.15 $0.15 $psf
64 1 Willowick Industrial Park Yes No $0.21 $0.21 $psf
65 1 Courtney Square Apartments No No $250 $250 $/unit
66 1 Plaza de la Fiesta III & IV No No $0.15 $0.15 $psf
67 1 Motorola Training Center No Yes $0.20 $0.20 $psf
68 1 Madison Village No Yes $0.20 $0.20 $psf
69 1 Pipestone Plaza No No $0.15 $0.15 $psf
70 1 Parkleigh North Apts. No No $250 $250 $/unit
71 1 Southgate Estates MHP No No $50.00 $0.00 $/unit
72 1 7 West 45th Street No No $0.20 $0.20 $psf
73 1 2100 Swift Drive No Yes $0.23 $0.23 $psf
74 1 Westwind Apts. No No $307 $307 $/unit
75 1 Stanford Townhouses No No $255 $255 $/unit
76 1 Mentor Industrial No No $0.10 $0.10 $psf
77 1 Braebuurn Colony Apts. No Yes $250 $250 $/unit
78 1 SL-Mogadore No Yes $0.15 $0.15 $psf
79 1 ABFM Industrial Building No No $0.20 $0.20 $psf
80 1 1567-1575 Lexington Avenue No No $250 $250 $/unit
81 1 Mason Manor MHP No No $50 $0 $/unit
82 1 118-40 Metropolitan Ave. No No $250 $250 $/unit
83 1 Clark & Diversey Shopping Ctr. No No $0.15 $0.09 $psf
84 1 Stanbridge Apartments No No $250 $250 $/unit
85 1 Village Townhomes Yes Yes $250 $250 $/unit
86 1 Ventu Park Shopping Center No No $0.15 $0.15 $psf
87 1 Bowen's Wharf No No $0.28 $0.28 $psf
Muraco Portfolio
88 1 Lakeview Apts. No No $250 $250 $/unit
88 2 Oneida Apts. No No $250 $250 $/unit
88 3 Townsquare Apts. No No $250 $250 $/unit
89 1 Sherman West Apartments No No $250 $250 $/unit
90 1 Parkside Village Apts. No No $250 $250 $/unit
91 1 Harbor Greens No No $250 $250 $/unit
92 1 710 State Street Yes Yes $0.15 $0.15 $psf
93 1 Flemings Foods Store No No $0.27 $0.27 $psf
94 1 Playa Vista Plaza No No $0.15 $0.15 $psf
95 1 122-126 East 103rd Street No No $250 $250 $/unit
96 1 Stonewall SC No No $0.20 $0.20 $psf
97 1 Tempo Cabana Apts. No No $250 $250 $/unit
98 1 Westmont Apts No No $258 $258 $/unit
99 1 Great Western Bank Building No No $0.26 $0.26 $psf
100 1 Chelmsford Crossing No No $250 $250 $psf
101 1 Safeway Industrial Yes No $0.15 $0.15 $psf
102 1 The Bentley Mills Building NA NA NA NA $psf
103 1 Twin Pines Healthcare Center No Yes $250 $250 $psf
104 1 Corporate West One No No $0.20 $0.20 $psf
105 1 Ingle West Office Building No No $0.20 $0.20 $psf
106 1 Colony Ridge Apts. No No $282 $282 $/unit
107 1 SL - Lima No Yes $0.15 $0.15 $psf
108 1 Collins Nursing Home No No $500 $500 $psf
109 1 Westgrove Towers No No $262 $262 $/unit
110 1 * Apartments of Westgrove No No $289 $289 $/unit
111 1 * West Third Street No No $0.22 $0.22 $psf
112 1 Pollyanna Apartments No No $250 $250 $/unit
113 1 Bellemeade Plaza No No $0.23 $0.23 $psf
114 1 Hiawassee Oaks Apartments No No $250 $250 $/unit
115 1 Giant Food Store No No $0.21 $0.21 $psf
116 1 Timber Ridge Apts. No No $250 $250 $/unit
Bird Creek Comfort Creek
117 1 Bird Creek Mobile Home Park No No $50.00 $0.00 $/unit
117 2 Comfort Mobile Home Park No No $50.00 $0.00 $/unit
118 1 GRW Building No No $0.21 $0.21 $psf
119 1 University Hills No No $0.15 $0.15 $psf
120 1 Grove Gate Apartments No No $250 $250 $/unit
121 1 Colts Neck Shopping Center No No $0.22 $0.22 $psf
122 1 Keosippi Mall No No $0.19 $0.19 $psf
123 1 Pineville Commerce Center No No $0.17 $0.17 $psf
124 1 90-92 Thompson Street No No $250 $250 $/unit
125 1 Walton Manor MHP No No $50 $0 $/unit
126 1 238 E. 111th/204 E. 112th Street No No $250 $250 $/unit
127 1 Palmwood Terrace Apts. No No $250 $250 $/unit
128 1 Hartnell Plaza No No $0.20 $0.20 $psf
129 1 Carytown Square No No $0.17 $0.17 $psf
130 1 Oak Creek Apts. No No $250 $250 $/unit
131 1 Hollywood News Building No No $0.51 $0.51 $psf
132 1 Chateau Apts. No No $276 $276 $/unit
133 1 Miller Road Business Ctr. No No $0.22 $0.20 $psf
134 1 The Kellogg Property No No $0.15 $0.15 $psf
135 1 Maple Lawn III No No $0.15 $0.15 $psf
136 1 Stapley-McKellips Center No No $0.12 $0.12 $psf
137 1 239 S. La Cienega No No $0.20 $0.20 $psf
138 1 Sunflowers Terrace Apts. No No $250 $250 $/unit
139 1 Yearling No No $250 $250 $/unit
140 1 Briarwyck Apts. No No $250 $250 $/unit
141 1 H Lazy F MHP No No $50 $0 $/unit
Bayshore/Rockport Oaks
142 1 Bayshore Apartments No No $250 $250 $/unit
142 2 Rockport Oaks Garden Apartments No No $289 $289 $/unit
143 1 Burnhaven No Yes $0.20 $0.20 $psf
144 1 Colton Midtown Plaza No No $0.20 $0.20 $psf
145 1 Sax Drugs No No $0.15 $0.15 $psf
146 1 Sea Tac Gardens Apts. No No $250 $250 $/unit
147 1 Cherry Point Mall No No $0.28 $0.28 $psf
148 1 The Point No No $0.16 $0.16 $psf
149 1 311 East 109th Street No No $252 $252 $/unit
150 1 Peachwood Manor MHP No No $50 $0 $/unit
151 1 6972 Sheridan No No $250 $250 $/unit
152 1 Crest Oak Apts. Yes Yes $250 $250 $/unit
153 1 1&3 Eves No Yes $0.31 $0.31 $psf
154 1 Highland Park Townhomes No No $250 $250 $/unit
155 1 Marbach Square SC No No $0.28 $0.28 $psf
156 1 Sunpointe Gardens Apts. No No $251 $251 $/unit
157 1 Airport Executive Park No No $0.27 $0.27 $psf
Parkside/Pleasant View MHP
158 1 Parkside MHP No No $78 $50 $/unit
158 2 Pleasantview MHP No No $50 $50 $/unit
159 1 Oakview Apartments No No $250 $250 $/unit
160 1 Expressway Commerce Complex No No $0.15 $0.15 $psf
161 1 Brookside Apartments No No $250 $250 $/unit
162 1 Sundial Shopping Center No No $0.17 $0.17 $psf
163 1 501 State Street Yes Yes $0.15 $0.15 $psf
164 1 Uniontown Center No No $0.26 $0.26 $psf
165 1 * Cypress Creek Business Park No No $0.20 $0.20 $psf
166 1 Riverside Estates MHP No No $50 $50 $psf
167 1 Winterhaven East Apartments No No $263 $263 $/unit
168 1 Bahamas Apartments No No $250 $250 $/unit
169 1 The Midland Building No Yes $0.20 $0.20 $psf
170 1 236 & 238-240 East 7th Street No No $300 $300 $/unit
171 1 The River Park Center No No $0.20 $0.20 $psf
172 1 Pasadena Plaza Mart No No $0.20 $0.20 $psf
173 1 Pleasant View MHP No No $31 $0 $/unit
174 1 Circuit City-Philadelphia NA NA NA NA $psf
175 1 Nanette Apartments No No $275 $275 $/unit
176 1 Central Plaza No No $0.15 $0.15 $psf
177 1 Brandenberry Square Apts No No $330 $330 $/unit
178 1 Champion MHP No No $50 $0 $/unit
179 1 East Brunswick Woods No Yes $0.26 $0.26 $psf
180 1 Circuit City-Harper Woods NA NA NA NA $psf
181 1 Circuit City-Ridgeland NA NA NA NA $psf
182 1 1590 Lexington Avenue No No $250 $250 $/unit
183 1 Circuit City-East Lansing NA NA NA NA $psf
184 1 Circuit City-Frederick NA NA NA NA $psf
185 1 Circuit City-Green Bay NA NA NA NA $psf
186 1 Circuit City-Indianapolis NA NA NA NA $ psf
187 1 2156 2nd Avenue No No $250 $250 $/unit
188 1 OCC Financial Plaza No Yes $0.20 $0.20 $psf
189 1 103 East 102nd Street No No $250 $250 $/unit
190 1 Windgate MHP No No $50 $0 $/unit
191 1 Circuit City-Jackson,TN NA NA NA NA $psf
192 1 291 Pleasant No No $250 $250 $/unit
193 1 Circuit City-Kingsport NA NA NA NA $psf
194 1 Circuit City-Witchita Falls NA NA NA NA $psf
</TABLE>
<PAGE>
Annex B
<TABLE>
<CAPTION>
Lease % of
Loan Asset Expiration Total
# # Property Name Tenant 1 Date SF Tenant 2
---- ----- ------------- -------- ---------- ----- --------
<S> <C> <C> <C> <C> <C> <C>
Prime Retail III
1 1 Lighthouse Place Spiegal Inc. 2006 5% Levi's
1 2 Finger Lakes Outlet Center VF Factory Outlet 2005 7% Liz Claiborne
1 3 * Outlets at Gilroy III and IV VF Factory Outlet 2004 8% Springmaid-Wamsutta
1 4 Outlets at Gilroy I, II and V Nike 2005 5% Gap
1 5 * Kittery Outlet Village Old Navy 2000 16% Lenox
2 1 Soho Grand Hotel
Morgantown Mall and Commons
3 1 Morgantown Mall Elder Beerman 2010 13% Proffitts
3 2 Morgantown Commons K-Mart 2021 58% Phar-Mor
4 1 5670 Wilshire E Entertainment 2001 30% Sec and Exchange Commision
Shidler Industrial Portfolio
5 1 4150-4174 Bandini Boulevard JS Knitting 2000 15% Koral Industries
5 2 Wicks Business Park Lucent 2001 12% Davis Liquid Crytals
5 3 341-345 Baldwin Park JOICO 2001 100%
5 4 Nelson & Stafford, Industry Cross Freight 2003 24% Treasure Chest
5 5 730-780 Baldwin Park Warehouse Tech 1999 47%
5 6 2800-2900 Sierra Pine Beggs and Cobb 2001 100%
5 7 13240, 13280 Amar Road GPS 1999 82% Warehouse Tech
5 8 Chapman & Western Pilkington Aerospace 1999 100%
5 9 15551 Red Hill Avenue Pacific Office Group 2000 72%
5 10 1900 Tubeway Mackie 2002 100%
5 11 3707 S. Hill Street DHL Airways 2000 100%
5 12 2001-2015 Saybrook Lee-X 1999 100%
5 13 2229-2235 E. Magnolia Airborne 1998 100%
5 14 111 N. Hudson Avenue Royal Computer 2000 100%
5 15 1444-1446 Factor Ave. Tender Loving Things 1999 100%
5 16 2600 Yates David Textiles 1999 100%
6 1 Eastland Mall Harris Teeter 2001 9% Dillards
7 1 * Airport Industrial
Banyan Pool I
8 1 Colonial Penn Insurance Colonial Penn Insurance Co. 2000 100%
8 2 Phoenix Business Center Viacom 2006 21% GSA
8 3 Sand Lake Center Corinthian College 2003 45% Island One
8 4 Avalon Center Home Wireless Network 2004 41% Greentree Financial
8 5 Peachtree Point
8 6 Southlake Corporate Center Georgia Depart. of Revenue 2001 19%
8 7 Newtown Business Center Mas Hamilton 1998 37% Airborne Freight
8 8 University CC III Avnet 1999 21%
8 9 University CC II Universal Systems 2000 26%
8 10 Airways Plaza Federal Express 1999 87%
8 11 Technology Center Nichols Research Group 2001 65%
8 12 Park Center
8 13 University CC IV Micro Design 2000 105%
8 14 Atrium
8 15 University CC 1
8 16 Metric Plaza U.S. Postal Service 2002 50% Ocean Optics
Land Apartments
9 1 Eastland Apartments
9 2 Crown Point Apartments
9 3 Prairie Creek
Burgandy Properties
10 1 Mill Pond West
10 2 Mill Pond East
10 3 Pebblebrook 1
10 4 Beach South
10 5 Pebblebrook II
11 1 One Park Plaza DMJM 2001 29% McKay & Bryne
12 1 Beckman Instruments - Brea Beckman 2018 100%
13 1 Sun Life RV Resort
14 1 1400 Union Meeting Certaineed 1999 43% Landis GYR
15 1 Cliffs of Dunwoody
16 1 6400 Shafer Court Alumni Holidays 2005 9% Miller & Co.
17 1 Walzem Plaza S/C Service Merchandise 2002 26% Solo Serve
18 1 Beckman - Miami Beckman 2018 100%
19 1 Money Store Headquart Money Store 2019 54%
Greenwich Portfolio
20 1 45 E.Putnam
20 2 340-350 Greenwich Ave.
20 3 116-136 E. Putnam
21 1 Monte Sano Apts.
22 1 Pointe West Ameritech 2002 7% L. M. Berry Inc.
Accor-M-Six V
23 1 696
23 2 1007
23 3 639
23 4 689
23 5 741
23 6 1257
23 7 1117
23 8 1067
23 9 1140
23 10 1010
23 11 1160
Accor-M-Six III
24 1 103
24 2 251
24 3 171
24 4 1111
24 5 1143
24 6 334
24 7 1150
24 8 1109
24 9 282
24 10 231
24 11 121
25 1 1129 State Street Longs Drugs 2016 21%
Accor-M-Six VI
26 1 15
26 2 471
26 3 346
26 4 1137
26 5 1005
26 6 560
26 7 620
26 8 1265
26 9 128
26 10 1198
26 11 1094
26 12 1188
26 13 292
26 14 1182
Accor-M-Six Penvest II
27 1 142
27 2 651
27 3 1131
27 4 522
27 5 1047
27 6 1120
27 7 166
27 8 458
27 9 1214
27 10 1110
27 11 1092
27 12 1262
27 13 484
27 14 146
27 15 351
27 16 4
28 1 Wasilla Retail Center Carrs 2010 49% Sears
Accor-M-Six IV
29 1 263
29 2 1127
29 3 122
29 4 1132
29 5 1036
29 6 426
29 7 1250
29 8 225
29 9 1088
29 10 1237
29 11 172
29 12 377
29 13 440
30 1 Holiday Inn Sunspree Padre Island
Accor-M-Six Creditvest I
31 1 688
31 2 1052
31 3 381
31 4 679
31 5 1183
31 6 107
31 7 183
31 8 422
31 9 1207
31 10 1278
31 11 1135
31 12 417
31 13 1091
31 14 205
31 15 794
Accor-M-Six Limited Partnership
32 1 1078
32 2 1268
32 3 775
32 4 739
32 5 1040
32 6 253
32 7 245
32 8 700
32 9 1059
32 10 1254
32 11 1283
32 12 156
32 13 699
32 14 784
Accor-M-Six Creditvest II
33 1 1267
33 2 476
33 3 376
33 4 345
33 5 402
33 6 1142
33 7 371
33 8 133
33 9 1035
33 10 542
33 11 1130
34 1 Rancho San Marcos Village Von's 2012 33% 24 Hour Fitness
Accor-M-Six Penvest I
35 1 294
35 2 743
35 3 1108
35 4 1136
35 5 385
35 6 406
35 7 586
35 8 339
35 9 1200
35 10 290
35 11 554
35 12 1069
35 13 158
35 14 1009
35 15 1264
36 1 Palm Desert Country Club S.C. Lucky Stores 2013 39% Sav-On Drugs
37 1 New City Plaza Shop Rite 2015 46% Rite Aid
Cinemark Pool B
38 1 Colorado Springs, CO - Tinseltown Cinemark 2018 100%
38 2 Mishawaka - Movies 10 Cinemark 2018 100%
39 1 Nordhoff Industrial Complex Balfab Inc. 2002 33% Electro Adapter
40 1 Seven Corners Apts.
41 1 Citibank Office Plaza McGladrey & Pullen 2002 47% Merrill Lynch
42 1 Savannah Apartments
43 1 Belleville Manor
44 1 203 East Fordham Road Rocky Kim 2007 47% Payless Shoe Source
45 1 Plantation Club Apartments
46 1 Silver Pointe SC Sears 2007 25% Fashion Bug
47 1 Central Medical Park Triangle Orthopedic Assoc. 2007 13% Durham
48 1 Friendly Village MHP
49 1 Springhill Business Center NTB 1998 10% Hurleys Auto Radio
50 1 Pacific Court Office Building
Banyan Pool 3
51 1 Elmhurst Hatchell & Associates 2001 8% MFS Telecom
51 2 Milwaukee - Commerce ABB 2002 99%
51 3 Milwaukee - 160th National Service 2000 17% Precision Color
51 4 Milwaukee - Whittaker Way Lippert Corp. 2001 18% RoAn Corp.
51 5 Milwaukee - Ryerson JC Media 2000 25% PCS Prime
52 1 Pride Center Lucky Market 2015 29% Sears
53 1 Hidden Harbor
54 1 Oshkosh Center II Roundy's Grocery Store 2017 59% OfficeMax
55 1 Waterford Plaza Rainbow Foods 2009 53% Big Top Liquors
56 1 Palm Harbor Apartments
57 1 Fiserve Building Fiserv 2004 100%
Airport Atrium
58 1 Airport Atrium Northern Computer 2000 35% OccuCenters
58 2 Sampson 1 Terminal Warehouse 2000 54% Trailwood Transportation
58 3 Braemar Building Burnet Realty 2000 49% Providers Choice
59 1 Wicomico Eastern Standard 2009 59% PICO
Seven Mobile Home Properties
60 1 Woodside MHP
60 2 Natural Springs MHP
60 3 Mountainview East MHP
60 4 Progress Ridge MHP
60 5 Southern Hills MHP
60 6 Sunshine MHP
60 7 Castle Hill MHP
61 1 SL-Tulsa Whmer Inc. 2000 21% Jean Marie Creations
62 1 The Courtyard Apts.
63 1 Old Metairie Village Shopping Center David Briggs Enterprises, Inc. 1999 16% Blockbuster Video
64 1 Willowick Industrial Park Wolco 2000 4% Entertainment Publ.
65 1 Courtney Square Apartments
66 1 Plaza de la Fiesta III & IV
67 1 Motorola Training Center Motorola 2002 100%
68 1 Madison Village Kmart 2013 56% Winn Dixie
69 1 Pipestone Plaza Kmart 2013 59% Factory Card Outlet
70 1 Parkleigh North Apts.
71 1 Southgate Estates MHP
72 1 7 West 45th Street
73 1 2100 Swift Drive USN Communications, Inc. 2008 100%
74 1 Westwind Apts.
75 1 Stanford Townhouses
76 1 Mentor Industrial Donray Companies 2001 30% Horsburgh & Scott
77 1 Braebuurn Colony Apts.
78 1 SL-Mogadore Acron Storage 2008 100%
79 1 ABFM Industrial Building ABFM Industrial 2008 100%
80 1 1567-1575 Lexington Avenue
81 1 Mason Manor MHP
82 1 118-40 Metropolitan Ave.
83 1 Clark & Diversey Shopping Ctr. Record Town - Coconuts 2001 46% Nine West Group
84 1 Stanbridge Apartments
85 1 Village Townhomes
86 1 Ventu Park Shopping Center Hughes Supermarket 2007 57%
87 1 Bowen's Wharf Chart House 2003 18%
Muraco Portfolio
88 1 Lakeview Apts.
88 2 Oneida Apts.
88 3 Townsquare Apts.
89 1 Sherman West Apartments
90 1 Parkside Village Apts.
91 1 Harbor Greens
92 1 710 State Street Beaveridge 2000 37%
93 1 Flemings Foods Store Fleming Foods 2009 99%
94 1 Playa Vista Plaza Playa Capital Corp 2000 28% City National Bank
95 1 122-126 East 103rd Street
96 1 Stonewall SC Foodtown 2000 28% Rite-Aid
97 1 Tempo Cabana Apts.
98 1 Westmont Apts
99 1 Great Western Bank Building Great Western Bank 2008 22%
100 1 Chelmsford Crossing
101 1 Safeway Industrial R. Danielson 2000 16% Calvary Chapel
102 1 The Bentley Mills Building Bently Mills 2015 100%
103 1 Twin Pines Healthcare Center
104 1 Corporate West One Maryland Casualty 2000 28% Paddock Publications
105 1 Ingle West Office Building Washington Homes 2000 45% PG County Private
106 1 Colony Ridge Apts.
107 1 SL - Lima Bell & Weaver 2003 100%
108 1 Collins Nursing Home
109 1 Westgrove Towers
110 1 * Apartments of Westgrove
111 1 * West Third Street Forsythe County MIS 2000 17%
112 1 Pollyanna Apartments
113 1 Bellemeade Plaza Gordon's of Gretna 2005 20% K&B Drugstore
114 1 Hiawassee Oaks Apartments
115 1 Giant Food Store Giant Food Store 2006 100%
116 1 Timber Ridge Apts.
Bird Creek Comfort Creek
117 1 Bird Creek Mobile Home Park
117 2 Comfort Mobile Home Park
118 1 GRW Building GRW Engineers 2003 59%
119 1 University Hills
120 1 Grove Gate Apartments
121 1 Colts Neck Shopping Center Medical Associates 1998 26%
122 1 Keosippi Mall Heilig Meyers 2004 21% Dollar General
123 1 Pineville Commerce Center Cornerstone Church 2000 9% Sherwin Williams
124 1 90-92 Thompson Street
125 1 Walton Manor MHP
126 1 238 E. 111th/204 E. 112th Street
127 1 Palmwood Terrace Apts.
128 1 Hartnell Plaza Fairway Grocery 2000 64% M. Mikes Pizza
129 1 Carytown Square Maxperts 1999 21%
130 1 Oak Creek Apts.
131 1 Hollywood News Building Imagic 2001 54%
132 1 Chateau Apts.
133 1 Miller Road Business Ctr. Jumpking 2001 72%
134 1 The Kellogg Property Acroamatics Telemetry 2000 63%
135 1 Maple Lawn III Ameritech 2001 55% Panasonic
136 1 Stapley-McKellips Center Tot's Unlimited 2006 29%
137 1 239 S. La Cienega Mooswsa Heikali 2000 31% Jon S. Rokhsarzadeh, DDS
138 1 Sunflowers Terrace Apts.
139 1 Yearling
140 1 Briarwyck Apts.
141 1 H Lazy F MHP
Bayshore/Rockport Oaks
142 1 Bayshore Apartments
142 2 Rockport Oaks Garden Apartments
143 1 Burnhaven Morgan Stanley 2001 23% IMC, Inc
144 1 Colton Midtown Plaza
145 1 Sax Drugs Sax Drugs 2009 39%
146 1 Sea Tac Gardens Apts.
147 1 Cherry Point Mall Dunhams Sporting 2002 14% Bay Furniture
148 1 The Point
149 1 311 East 109th Street
150 1 Peachwood Manor MHP
151 1 6972 Sheridan
152 1 Crest Oak Apts.
153 1 1&3 Eves Electronic Warfare Assoc. 1999 31%
154 1 Highland Park Townhomes
155 1 Marbach Square SC Thrift Junction 1999 50%
156 1 Sunpointe Gardens Apts.
157 1 Airport Executive Park Advanced Multimedia 2000 7% HBC Inc. (OK's Golf)
Parkside/Pleasant View MHP
158 1 Parkside MHP
158 2 Pleasantview MHP
159 1 Oakview Apartments
160 1 Expressway Commerce Complex I-94 Marine 1999 31% Hobart Corp.
161 1 Brookside Apartments
162 1 Sundial Shopping Center Twin City Stores 2000 19% Sundial Wine and Spirits
163 1 501 State Street S.B. Brewing Company 2000 49% Fig & Haley Billiards
164 1 Uniontown Center Round Table Pizza 2003 13% Arcata Pet
165 1 * Cypress Creek Business Park Gold Coast Autotronics 1999 11% Sound Mortgage Corp.
166 1 Riverside Estates MHP
167 1 Winterhaven East Apartments
168 1 Bahamas Apartments
169 1 The Midland Building Polk County Attourney's Off. 2000 17% Polk county Adnimistration
170 1 236 & 238-240 East 7th Street
171 1 The River Park Center
172 1 Pasadena Plaza Mart Bally's Healthclub 2002 61%
173 1 Pleasant View MHP
174 1 Circuit City-Philadelphia Circuit City
175 1 Nanette Apartments
176 1 Central Plaza Cindi's Restaurant & NY Deli 2003 34%
177 1 Brandenberry Square Apts
178 1 Champion MHP
179 1 East Brunswick Woods Dezine Healthcare Solutions 2000 41%
180 1 Circuit City-Harper Woods Circuit City
181 1 Circuit City-Ridgeland Circuit City
182 1 1590 Lexington Avenue
183 1 Circuit City-East Lansing Circuit City
184 1 Circuit City-Frederick Circuit City
185 1 Circuit City-Green Bay Circuit City
186 1 Circuit City-Indianapolis Circuit City
187 1 2156 2nd Avenue
188 1 OCC Financial Plaza Life Rate Systems 2001 100%
189 1 103 East 102nd Street
190 1 Windgate MHP
191 1 Circuit City-Jackson,TN Circuit City
192 1 291 Pleasant
193 1 Circuit City-Kingsport Circuit City
194 1 Circuit City-Witchita Falls Circuit City
</TABLE>
<PAGE>
Annex B
<TABLE>
<CAPTION>
Lease % of Lease % of
Loan Asset Expiration Total Expiration Total
# # Property Name Date SF Tenant 3 Date SF
---- ----- ------------- ---- -- -------- ---- --
<S> <C> <C> <C> <C> <C> <C> <C>
Prime Retail III
1 1 Lighthouse Place 2006 3% Bass Company 2004 2%
1 2 Finger Lakes Outlet Center 2010 3% Reebok 2000 2%
1 3 * Outlets at Gilroy III and IV 2002 4% Espirit Direct 2002 3%
1 4 Outlets at Gilroy I, II and V 2005 4% Reebok 2000 4%
1 5 * Kittery Outlet Village 2002 9% Corning/Revere 2001 8%
2 1 Soho Grand Hotel
Morgantown Mall and Commons
3 1 Morgantown Mall 2011 16% Sears 2005 16%
3 2 Morgantown Commons 2006 18% OfficeMax 2011 10%
4 1 5670 Wilshire 2002 9% Singapore Airlines 2000 7%
Shidler Industrial Portfolio
5 1 4150-4174 Bandini Boulevard 2001 12%
5 2 Wicks Business Park 2000 12%
5 3 341-345 Baldwin Park
5 4 Nelson & Stafford, Industry 2001 24%
5 5 730-780 Baldwin Park
5 6 2800-2900 Sierra Pine
5 7 13240, 13280 Amar Road 1999 18%
5 8 Chapman & Western
5 9 15551 Red Hill Avenue
5 10 1900 Tubeway
5 11 3707 S. Hill Street
5 12 2001-2015 Saybrook
5 13 2229-2235 E. Magnolia
5 14 111 N. Hudson Avenue
5 15 1444-1446 Factor Ave.
5 16 2600 Yates
6 1 Eastland Mall 2005 43% Sears expired 52%
7 1 * Airport Industrial
Banyan Pool I
8 1 Colonial Penn Insurance
8 2 Phoenix Business Center 2001 24% Inacom 2000 23%
8 3 Sand Lake Center 2002 27% ITEC Productions 1998 27%
8 4 Avalon Center 2004 29%
8 5 Peachtree Point
8 6 Southlake Corporate Center
8 7 Newtown Business Center 1998 28%
8 8 University CC III
8 9 University CC II
8 10 Airways Plaza
8 11 Technology Center
8 12 Park Center
8 13 University CC IV
8 14 Atrium
8 15 University CC 1
8 16 Metric Plaza 2003 31%
Land Apartments
9 1 Eastland Apartments
9 2 Crown Point Apartments
9 3 Prairie Creek
Burgandy Properties
10 1 Mill Pond West
10 2 Mill Pond East
10 3 Pebblebrook 1
10 4 Beach South
10 5 Pebblebrook II
11 1 One Park Plaza 2000 3% Portals 2000 2%
12 1 Beckman Instruments - Brea
13 1 Sun Life RV Resort
14 1 1400 Union Meeting 2006 11%
15 1 Cliffs of Dunwoody
16 1 6400 Shafer Court 2003 7% Lincoln Financial Group 2001 6%
17 1 Walzem Plaza S/C 2006 15% MacFrugals 2006 10%
18 1 Beckman - Miami
19 1 Money Store Headquarters
Greenwich Portfolio
20 1 45 E.Putnam
20 2 340-350 Greenwich Ave.
20 3 116-136 E. Putnam
21 1 Monte Sano Apts.
22 1 Pointe West 1998 7%
Accor-M-Six V
23 1 696
23 2 1007
23 3 639
23 4 689
23 5 741
23 6 1257
23 7 1117
23 8 1067
23 9 1140
23 10 1010
23 11 1160
Accor-M-Six III
24 1 103
24 2 251
24 3 171
24 4 1111
24 5 1143
24 6 334
24 7 1150
24 8 1109
24 9 282
24 10 231
24 11 121
25 1 1129 State Street
Accor-M-Six VI
26 1 15
26 2 471
26 3 346
26 4 1137
26 5 1005
26 6 560
26 7 620
26 8 1265
26 9 128
26 10 1198
26 11 1094
26 12 1188
26 13 292
26 14 1182
Accor-M-Six Penvest II
27 1 142
27 2 651
27 3 1131
27 4 522
27 5 1047
27 6 1120
27 7 166
27 8 458
27 9 1214
27 10 1110
27 11 1092
27 12 1262
27 13 484
27 14 146
27 15 351
27 16 4
28 1 Wasilla Retail Center 2001 17%
Accor-M-Six IV
29 1 263
29 2 1127
29 3 122
29 4 1132
29 5 1036
29 6 426
29 7 1250
29 8 225
29 9 1088
29 10 1237
29 11 172
29 12 377
29 13 440
30 1 Holiday Inn Sunspree Padre Island
Accor-M-Six Creditvest I
31 1 688
31 2 1052
31 3 381
31 4 679
31 5 1183
31 6 107
31 7 183
31 8 422
31 9 1207
31 10 1278
31 11 1135
31 12 417
31 13 1091
31 14 205
31 15 794
Accor-M-Six Limited Partnership
32 1 1078
32 2 1268
32 3 775
32 4 739
32 5 1040
32 6 253
32 7 245
32 8 700
32 9 1059
32 10 1254
32 11 1283
32 12 156
32 13 699
32 14 784
Accor-M-Six Creditvest II
33 1 1267
33 2 476
33 3 376
33 4 345
33 5 402
33 6 1142
33 7 371
33 8 133
33 9 1035
33 10 542
33 11 1130
34 1 Rancho San Marcos Village 2012 21%
Accor-M-Six Penvest I
35 1 294
35 2 743
35 3 1108
35 4 1136
35 5 385
35 6 406
35 7 586
35 8 339
35 9 1200
35 10 290
35 11 554
35 12 1069
35 13 158
35 14 1009
35 15 1264
36 1 Palm Desert Country Club S.C. 2013 17%
37 1 New City Plaza 2001 5%
Cinemark Pool B
38 1 Colorado Springs, CO - Tinseltown
38 2 Mishawaka - Movies 10
39 1 Nordhoff Industrial Complex 2002 28%
40 1 Seven Corners Apts.
41 1 Citibank Office Plaza 2003 15%
42 1 Savannah Apartments
43 1 Belleville Manor
44 1 203 East Fordham Road 1999 32%
45 1 Plantation Club Apartments
46 1 Silver Pointe SC 2007 9% Hollywood Video 2002 9%
47 1 Central Medical Park 2007 10%
48 1 Friendly Village MHP
49 1 Springhill Business Center 1999 7% Pardove International 2002 7%
50 1 Pacific Court Office Building
Banyan Pool 3
51 1 Elmhurst 1999 10%
51 2 Milwaukee - Commerce
51 3 Milwaukee - 160th 1998 14%
51 4 Milwaukee - Whittaker Way 2002 18%
51 5 Milwaukee - Ryerson 2010 25%
52 1 Pride Center 2004 21%
53 1 Hidden Harbor
54 1 Oshkosh Center II 2012 21%
55 1 Waterford Plaza 1999 6%
56 1 Palm Harbor Apartments
57 1 Fiserve Building
Airport Atrium
58 1 Airport Atrium 2001 13%
58 2 Sampson 1 2001 46%
58 3 Braemar Building 2002 19%
59 1 Wicomico 1998 9%
Seven Mobile Home Properties
60 1 Woodside MHP
60 2 Natural Springs MHP
60 3 Mountainview East MHP
60 4 Progress Ridge MHP
60 5 Southern Hills MHP
60 6 Sunshine MHP
60 7 Castle Hill MHP
61 1 SL-Tulsa 2003 19% United Warehouse 2000 15%
62 1 The Courtyard Apts.
63 1 Old Metairie Village Shopping Center 2000 7%
64 1 Willowick Industrial Park 2002 5% Ecenberger-Gaddd 2001 4%
65 1 Courtney Square Apartments
66 1 Plaza de la Fiesta III & IV
67 1 Motorola Training Center
68 1 Madison Village 2007 23%
69 1 Pipestone Plaza 2007 7% JoAnn Fabrics 2003 6%
70 1 Parkleigh North Apts.
71 1 Southgate Estates MHP
72 1 7 West 45th Street
73 1 2100 Swift Drive
74 1 Westwind Apts.
75 1 Stanford Townhouses
76 1 Mentor Industrial 2002 13%
77 1 Braebuurn Colony Apts.
78 1 SL-Mogadore
79 1 ABFM Industrial Building
80 1 1567-1575 Lexington Avenue
81 1 Mason Manor MHP
82 1 118-40 Metropolitan Ave.
83 1 Clark & Diversey Shopping Ctr. 2004 21%
84 1 Stanbridge Apartments
85 1 Village Townhomes
86 1 Ventu Park Shopping Center
87 1 Bowen's Wharf
Muraco Portfolio
88 1 Lakeview Apts.
88 2 Oneida Apts.
88 3 Townsquare Apts.
89 1 Sherman West Apartments
90 1 Parkside Village Apts.
91 1 Harbor Greens
92 1 710 State Street
93 1 Flemings Foods Store
94 1 Playa Vista Plaza 2006 11%
95 1 122-126 East 103rd Street
96 1 Stonewall SC 2008 14%
97 1 Tempo Cabana Apts.
98 1 Westmont Apts
99 1 Great Western Bank Building
100 1 Chelmsford Crossing
101 1 Safeway Industrial 1999 5% Cavalry Chapel 1999 10%
102 1 The Bentley Mills Building
103 1 Twin Pines Healthcare Center
104 1 Corporate West One 2001 31%
105 1 Ingle West Office Building 2000 39%
106 1 Colony Ridge Apts.
107 1 SL - Lima
108 1 Collins Nursing Home
109 1 Westgrove Towers
110 1 * Apartments of Westgrove
111 1 * West Third Street
112 1 Pollyanna Apartments
113 1 Bellemeade Plaza 2001 17%
114 1 Hiawassee Oaks Apartments
115 1 Giant Food Store
116 1 Timber Ridge Apts.
Bird Creek Comfort Creek
117 1 Bird Creek Mobile Home Park
117 2 Comfort Mobile Home Park
118 1 GRW Building
119 1 University Hills
120 1 Grove Gate Apartments
121 1 Colts Neck Shopping Center
122 1 Keosippi Mall 1999 9% Stage 2007 8%
123 1 Pineville Commerce Center 2003 7% Aqua Export 2000 12%
124 1 90-92 Thompson Street
125 1 Walton Manor MHP
126 1 238 E. 111th/204 E. 112th Street
127 1 Palmwood Terrace Apts.
128 1 Hartnell Plaza 2002 9%
129 1 Carytown Square
130 1 Oak Creek Apts.
131 1 Hollywood News Building
132 1 Chateau Apts.
133 1 Miller Road Business Ctr.
134 1 The Kellogg Property
135 1 Maple Lawn III 1999 45%
136 1 Stapley-McKellips Center
137 1 239 S. La Cienega 2001 16% Richard Hill, DC 2000 10%
138 1 Sunflowers Terrace Apts.
139 1 Yearling
140 1 Briarwyck Apts.
141 1 H Lazy F MHP
Bayshore/Rockport Oaks
142 1 Bayshore Apartments
142 2 Rockport Oaks Garden Apartments
143 1 Burnhaven 2001 20%
144 1 Colton Midtown Plaza
145 1 Sax Drugs
146 1 Sea Tac Gardens Apts.
147 1 Cherry Point Mall 2000 11%
148 1 The Point
149 1 311 East 109th Street
150 1 Peachwood Manor MHP
151 1 6972 Sheridan
152 1 Crest Oak Apts.
153 1 1&3 Eves
154 1 Highland Park Townhomes
155 1 Marbach Square SC
156 1 Sunpointe Gardens Apts.
157 1 Airport Executive Park 2000 3% Outreach Ministries 2001 3%
Parkside/Pleasant View MHP
158 1 Parkside MHP
158 2 Pleasantview MHP
159 1 Oakview Apartments
160 1 Expressway Commerce Complex 2001 28%
161 1 Brookside Apartments
162 1 Sundial Shopping Center 2000 15%
163 1 501 State Street 2001 32%
164 1 Uniontown Center 2000 12%
165 1 * Cypress Creek Business Park 1999 7%
166 1 Riverside Estates MHP
167 1 Winterhaven East Apartments
168 1 Bahamas Apartments
169 1 The Midland Building 2000 7%
170 1 236 & 238-240 East 7th Street
171 1 The River Park Center
172 1 Pasadena Plaza Mart
173 1 Pleasant View MHP
174 1 Circuit City-Philadelphia
175 1 Nanette Apartments
176 1 Central Plaza
177 1 Brandenberry Square Apts
178 1 Champion MHP
179 1 East Brunswick Woods
180 1 Circuit City-Harper Woods
181 1 Circuit City-Ridgeland
182 1 1590 Lexington Avenue
183 1 Circuit City-East Lansing
184 1 Circuit City-Frederick
185 1 Circuit City-Green Bay
186 1 Circuit City-Indianapolis
187 1 2156 2nd Avenue
188 1 OCC Financial Plaza
189 1 103 East 102nd Street
190 1 Windgate MHP
191 1 Circuit City-Jackson,TN
192 1 291 Pleasant
193 1 Circuit City-Kingsport
194 1 Circuit City-Witchita Falls
</TABLE>
<PAGE>
Annex C: Premium Loans
<TABLE>
<CAPTION>
Cut-off Cut-off Anticipated Repayment Cut-off Date
Loan Name Date LTV PTV Date LTV/PLTV DSCR Principal Balance
--------- -------- ------- --------------------- ---- -----------------
<S> <C> <C> <C> <C> <C>
1 Prime Retail III 57% 63% 52% 1.54 $ 81,857,269
2 Soho Grand Hotel 57% 63% 48% 1.86 $ 60,041,752
4 5670 Wilshire Building 73% 80% 66% 1.28 $ 54,431,011
6 Eastland Mall 73% 76% 66% 1.31 $ 46,673,225
8 Banyan Pool I 56% 62% 51% 1.72 $ 34,763,291
10 Burgandy Properties 76% 80% 68% 1.30 $ 17,709,939
14 1400 Union Meeting Road 71% 76% 64% 1.23 $ 14,865,488
15 Cliffs of Dunwoody 76% 80% 68% 1.23 $ 13,976,544
16 6400 Shafer Court 61% 67% 55% 1.26 $ 13,048,409
20 Greenwich Portfolio 63% 69% 56% 1.39 $ 11,588,734
21 Monte Sano Apts. 76% 80% 68% 1.18 $ 11,184,830
22 Pointe West 73% 80% 66% 1.21 $ 10,803,901
25 1129 State Street 69% 75% 63% 1.35 $ 9,867,824
28 Wasilla Retail Center 67% 74% 60% 1.48 $ 9,765,179
30 Holiday Inn Sunspree-Padre 65% 75% 55% 1.57 $ 9,722,992
34 Rancho San Marcos 70% 76% 63% 1.26 $ 9,491,103
36 Palm Desert Country Club 64% 71% 58% 1.25 $ 9,296,755
39 Nordhoff Industrial Complex 66% 72% 59% 1.26 $ 8,360,541
40 Seven Corners Apts. 79% 84% 70% 1.30 $ 8,198,171
41 Citibank Office Plaza 66% 73% 60% 1.27 $ 8,024,402
44 201-213 Fordham Rd. 66% 71% 60% 1.24 $ 7,956,903
49 Springhill Business Center 60% 64% 53% 1.50 $ 7,038,428
51 Banyan Pool 3 44% 49% 40% 1.66 $ 6,947,966
53 Hidden Harbor 75% 80% 67% 1.21 $ 6,647,206
55 Waterford Plaza 72% 77% 65% 1.20 $ 6,552,811
57 Fiserve Building 70% 77% 63% 1.28 $ 6,395,157
58 Airport Atrium 68% 75% 62% 1.28 $ 2,900,911
58 Airport Atrium 68% 75% 62% 1.28 $ 2,103,161
58 Airport Atrium 68% 75% 62% 1.28 $ 1,378,863
59 Wicomico 71% 76% 64% 1.32 $ 6,319,292
64 Willowick Industrial Park 70% 75% 63% 1.28 $ 5,860,886
66 Plaza de la Fiesta III & IV 68% 75% 61% 1.36 $ 5,727,300
67 Motorola 73% 79% 66% 1.27 $ 5,669,902
73 2100 Swift Road 64% 70% 57% 1.40 $ 4,734,330
78 SL-Mogadore 75% 80% 66% 1.63 $ 4,554,309
79 ABFM Industrial 3712Building 57% 63% 52% 1.71 $ 4,518,966
83 Clark & Diversey Shopping 68% 75% 62% 1.21 $ 4,087,720
86 Ventu Park Shopping Center 67% 73% 61% 1.20 $ 3,928,007
92 710 State Street 62% 68% 56% 1.29 $ 3,630,308
101 Safeway Industrial 68% 73% 62% 1.24 $ 3,349,078
105 Ingle West Office Building 65% 71% 59% 1.29 $ 3,097,778
122 Keosippi Mall 69% 75% 59% 1.41 $ 2,468,434
143 Burnhaven 73% 79% 66% 1.24 $ 1,743,404
163 501 State 62% 68% 57% 1.34 $ 1,361,366
179 East Brunswick Woods 62% 68% 57% 1.44 $ 936,063
188 OCC Financial Plaza 67% 72% 60% 1.24 $ 598,604
---- ---- ---- ----- -------------
Total / Weighted Average: 66% 71% 59% 1.43 $ 554,178,514
<CAPTION>
Base Base
Loan Name Premium Rate Rate Amortization Amortization
--------- ------- ---- ---- ------------ ------------
<S> <C> <C> <C> <C> <C>
1 Prime Retail III 110% 6.990% 8.400% 316 360
2 Soho Grand Hotel 110% 6.950% 8.500% 273 300
4 5670 Wilshire Building 110% 7.035% 8.500% 314 360
6 Eastland Mall 104% 7.840% 8.500% 335 360
8 Banyan Pool I 110% 6.950% 8.380% 315 360
10 Burgandy Properties 104% 7.380% 8.000% 338 360
14 1400 Union Meeting Road 107% 7.410% 8.500% 323 360
15 Cliffs of Dunwoody 105% 7.050% 7.800% 334 360
16 6400 Shafer Court 110% 7.090% 8.500% 315 360
20 Greenwich Portfolio 110% 7.000% 8.430% 309 349
21 Monte Sano Apts. 106% 7.160% 8.000% 331 360
22 Pointe West 109% 7.240% 8.500% 319 360
25 1129 State Street 107% 7.440% 8.500% 324 360
28 Wasilla Retail Center 110% 6.650% 8.080% 316 360
30 Holiday Inn Sunspree-Padre 115% 7.250% 9.500% 265 300
34 Rancho San Marcos 109% 7.267% 8.500% 319 360
36 Palm Desert Country Club 109% 7.140% 8.500% 316 360
39 Nordhoff Industrial Complex 108% 7.280% 8.500% 320 360
40 Seven Corners Apts. 106% 7.140% 8.000% 330 360
41 Citibank Office Plaza 109% 7.180% 8.500% 317 360
44 201-213 Fordham Rd. 107% 7.520% 8.500% 326 300
49 Springhill Business Center 107% 7.080% 8.025% 328 360
51 Banyan Pool 3 110% 6.950% 8.380% 315 360
53 Hidden Harbor 107% 7.020% 8.000% 327 360
55 Waterford Plaza 106% 7.560% 8.500% 327 360
57 Fiserve Building 109% 7.160% 8.500% 317 360
58 Airport Atrium 110% 7.060% 8.500% 314 360
58 Airport Atrium 110% 7.060% 8.500% 314 360
58 Airport Atrium 110% 7.060% 8.500% 316 360
59 Wicomico 107% 7.460% 8.500% 325 360
64 Willowick Industrial Park 107% 7.325% 8.400% 324 360
66 Plaza de la Fiesta III & IV 110% 7.010% 8.440% 315 354
67 Motorola 109% 7.160% 8.500% 312 360
73 2100 Swift Road 110% 7.190% 8.500% 323 360
78 SL-Mogadore 108% 7.090% 7.300% 324 360
79 ABFM Industrial 3712Building 110% 7.000% 8.500% 313 360
83 Clark & Diversey Shopping 110% 7.090% 8.500% 315 360
86 Ventu Park Shopping Center 109% 7.260% 8.500% 319 360
92 710 State Street 110% 7.440% 8.900% 313 360
101 Safeway Industrial 107% 7.325% 8.400% 324 360
105 Ingle West Office Building 108% 7.340% 8.500% 321 360
122 Keosippi Mall 110% 7.150% 8.670% 283 317
143 Burnhaven 109% 7.210% 8.500% 318 360
163 501 State 110% 7.440% 8.900% 313 360
179 East Brunswick Woods 109% 7.160% 8.500% 317 360
188 OCC Financial Plaza 109% 7.270% 8.500% 320 360
----- ------ ------ ----- -----
Total / Weighted Average: 109% 7.163% 8.414% 315 351
</TABLE>
<PAGE>
ANNEX D
GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES
Except in certain limited circumstances, the globally offered Capco America
Securitization Corporation, Commercial Mortgage Pass-Through Certificates,
Series 1998-D7 (the 'Global Securities') will be available only in book-entry
form. Investors in the Global Securities may hold such Global Securities through
any of The Depositary Trust Company ('DTC'), Cedel or Euroclear. The Global
Securities will be tradable as home market instruments in both the European and
U.S. domestic markets. Initial settlement and all secondary trades will settle
in same-day funds.
Secondary market trading between investors holding Global Securities
through Cedel and Euroclear will be conducted in the ordinary way in accordance
with their normal rules and operating procedures and in accordance with
conventional Eurobond practice (i.e., seven calendar days settlement).
Secondary market trading between investors holding Global Securities
through DTC will be conducted according to the rules and procedures applicable
to U.S. corporate debt obligations.
Secondary cross-market trading between Cedel or Euroclear and DTC
Participants holding Offered Certificates will be effected on a delivery against
payment basis through the respective Depositaries of Cedel and Euroclear (in
such capacity) and as DTC Participants.
Non-U.S. holders (as described below) of Global Securities will be subject
to U.S. withholding taxes unless such holders meet certain requirements and
deliver appropriate U.S. tax documents to the securities clearing organizations
of their participants.
INITIAL SETTLEMENT
All Global Securities will be held in book-entry form by DTC in the name of
Cede & Co. as nominee of DTC. Investors' interests in the Global Securities will
be represented through financial institutions acting on their behalf as direct
and indirect Participants in DTC. As a result, Cedel and Euroclear will hold
positions on behalf of their participants through their respective Depositaries,
which in turn will hold such positions in accounts as DTC Participants.
Investor securities custody accounts will be credited with their holdings
against payment in same-day funds on the settlement date.
Investors electing to hold their Global Securities through Cedel or
Euroclear accounts will follow the settlement procedures applicable to
conventional Eurobonds, except that there will be no temporary global security
and no 'lock-up' or restricted period. Global Securities will be credited to the
securities custody accounts on the settlement date against payment in same-day
funds.
SECONDARY MARKET TRADING
Since the purchaser determines the place of delivery, it is important to
establish at the time of the trade where both the purchaser's and seller's
accounts are located to ensure that settlement can be made on the desired value
date.
Trading between DTC Participants. Secondary market trading between DTC
Participants will be settled in same-day funds.
Trading between Cedel and/or Euroclear Participants. Secondary market
trading between Cedel Participants or Euroclear Participants will be settled
using the procedures applicable to conventional Eurobonds in same-day funds.
Trading between DTC seller and Cedel or Euroclear purchaser. When Global
Securities are to be transferred from the account of a DTC Participant to the
account of a Cedel Participant or a Euroclear Participant, the purchaser will
send instructions to Cedel or Euroclear through a Cedel Participant or Euroclear
Participant at least one business day prior to settlement. Cedel or Euroclear
will instruct the respective Depositary, as the case may be, to receive the
Global Securities against payment. Payment will include interest accrued on the
Global Securities from and including the last coupon payment date to and
excluding the settlement date, calculated on the basis of a year of 360 days
consisting of twelve 30-day months. Payment will then be made by the respective
Depositary to the DTC Participant's account against delivery of the Global
Securities. After settlement has been completed, the Global Securities will be
credited to the respective clearing system and by the clearing system, in
accordance with its usual procedures, to the Cedel Participant's or Euroclear
Participant's account. The securities credit will appear the next day (European
time) and the cash debit will be back-valued to, and the interest on the Global
Securities will accrue from, the value date
D-1
<PAGE>
(which would be the preceding day when settlement occured in New York). If
settlement is not completed on the intended value date (i.e., the trade fails),
the Cedel or Euroclear cash debit will be valued instead as of the actual
settlement date.
Cedel Participants and Euroclear Participants will need to make available
to the respective clearing systems the funds necessary to process same-day funds
settlement. The most direct means of doing so is to pre-position funds for
settlement, either from cash on hand or existing lines of credit, as they would
for any settlement occurring within Cedel or Euroclear. Under this approach,
they may take on credit exposure to Cedel or Euroclear until the Global
Securities are credited to their accounts one day later.
As an alternative, if Cedel or Euroclear has extended a line of credit to
them, Cedel Participants can elect not to pre-posititon funds and allow that
credit line to be drawn upon to finance settlement. Under this procedure, Cedel
Participants or Euroclear Participants purchasing Global Securities would incur
overdraft charges for one day, assuming they cleared the overdraft when the
Global Securities were credited to their accounts. However, interest on the
Global Securities would accrue from the value date. Therefore, in many cases the
investment income on the Global Securities earned during that one day period may
substantially reduce or offset the amount of such overdraft charges, although
this result will depend on each Cedel Participant's or Euroclear Participant's
particular cost of funds.
Since the settlement is taking place during New York business hours, DTC
Participants can employ their usual procedures for sending Global Securities to
the respective Depositary for the benefit of Cedel Participants or Euroclear
Participants. The sale proceeds will be available to the DTC seller on the
settlement date. Thus, to the DTC Participant a cross-market transaction will
settle no differently than a trade between two DTC Participants.
Trading between Cedel or Euroclear seller and DTC purchaser. Due to time
zone differences in their favor, Cedel Participants and Euroclear Participants
may employ their customary procedures for transactions in which Global
Securities are to be transferred by the respective clearing system, through the
respective Depositary, to a DTC Participant. The seller will send instructions
to Cedel or Euroclear through a Cedel Participant or Euroclear Participant at
least one business day prior to settlement. In these cases, Cedel or Euroclear
will instruct the respective Depositary, as appropriate, to deliver the bonds to
the DTC Participant's account against payment. Payment will include interest
accrued on the Global Securities from and including the last coupon payment date
to and excluding the settlement date, calculated on the basis of a year of 360
days consisting of 12 30-day months. The payment will then be reflected in the
account of the Cedel Participant or Euroclear Participant the following day, and
receipt of the cash proceeds in the Cedel Participant's or Euroclear
Participant's account would be back-valued to the value date (which would be the
preceding day, when settlement occurred in New York). Should the Cedel
Participant or Euroclear Participant have a line of credit with its respective
clearing system and elect to be in debit in anticipation of receipt of the sale
proceeds in its account, the back-valuation will extinguish any overdraft
charges incurred over the one-day period. If settlement is no completed on the
intended value date (i.e., the trade fails) receipt of the cash proceeds in the
Cedel Participant's or Euroclear Participant's account would instead be valued
as of the actual settlement date.
Finally, day traders that use Cedel or Euroclear and that purchase Global
Securities from DTC Participants for delivery to Cedel Participants or Euroclear
Participants should note that these trades would automatically fail on the sale
side unless affirmative action were taken. At least three techniques should be
readily available to eliminate this potential problem:
(a) borrowing through Cedel or Euroclear for one day (until the purchase
side of the day trade is reflected in their Cedel or Euroclear accounts) in
accordance with the clearing system's customary procedures;
(b) borrowing the Global Securities in the U.S. from A DTC Participant no
later than one day prior to settlement, which would give the Global Securities
sufficient time to be reflected in their Cedel or Euroclear account in order to
settle the sale side of the trade; or
(c) staggering the value dates for the buy and sell sides of the trade so
that the value date for the purchase from the DTC Participant is at least one
day prior to the value date for the sale to the Cedel Participant or Euroclear
Participant.
CERTAIN U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS
A beneficial owner of Global Securities holding securities through Cedel or
Euroclear (or through DTC if the holder has an address outside the U.S.) will be
subject to the 30% U.S. withholding tax that generally applies to payments of
interest (including original issue discount) on registered debt issued by U.S.
Persons (as defined herein), unless (i) each clearing system, bank or other
financial institution that holds customers' securities in the ordinary course of
its trade or business in the chain or intermediaries
D-2
<PAGE>
between such beneficial owner and the U.S. entity required to withhold tax
complies with applicable certification requirements and (ii) such beneficial
owner takes one of the following steps to obtain an exemption or reduced tax
rate.
Exceptions for non-U.S. Persons (Form W-8): Beneficial owners of
Certificates that are non-U.S. Persons can obtain a complete exemption from the
withholding tax by filing a signed Form W-8 (Certificate of Foreign Status). If
the information shown on Form W-8 changes, a new Form W-8 must be filed within
30 days of such change.
Exception for Non-U.S. Persons with effectively connected income (Form
4224). A non-U.S. Person, including a non-U.S. corporation or bank with a U.S.
branch, for which the interest income is effectively connected with its conduct
of a trade or business in the United States, can obtain an exemption from the
withholding tax by filing for 4224 (Exemption from Withholding of Tax on Income
Effectively Connected with the Conduct of a Trade or Business in the United
States).
Exemption or reduced rate for non-U.S. Persons resident in treaty countries
(Form 1001). Non-U.S. Persons that are beneficial owners of a Certificate and
reside in a country that has a tax treaty with the United States can obtain an
exemption or reduced tax rate (depending on the treaty terms) by filing Form
1001 (Ownership, Exemption or Reduced Rate Certificate). If the treaty provides
only for a reduced rate, withholding tax will be imposed at that rate unless the
filer alternatively files Form W-8. Form 1001 may be filed by the holder of a
Certificate or his agent.
Exemption for U.S. Persons (Form W-9). U.S. Persons can obtain a complete
exemption from the withholding tax by filing Form W-9 (Payer's Request for
Taxpayer Identification Number and Certification).
U.S. Federal Income Tax Reporting Procedure. The holder of a Global
Security or, in the case of a Form 1001 or a Form 4224 filer, his agent, files
by submitting the appropriate form to the person through whom it holds (the
clearing agency, in the case of persons holding directly on the books of the
clearing agency). Form W-8 and Form 1001 are effective for three calendar years
and Form 4224 is effective for one calendar year.
The term 'U.S. Person' means (i) a citizen or resident of the United
States, (ii) a corporation or partnership organized in or under the laws of the
United States or any political subdivision thereof, (iii) an estate the income
of which is includible in gross income for United States tax purposes,
regardless of its source or (iv) a trust if a court within the United States is
able to exercise primary supervision over the administration of such trust, and
one or more U.S. Persons have the authority to control all substantial decisions
of such trust. This summary does not deal with all aspects of U.S. federal
income tax withholding that may be relevant to foreign holders of the Global
Securities. Investors are advised to consult their own tax advisors for specific
tax advice concerning their holding and disposing of the Global Securities.
D-3
<PAGE>
PROSPECTUS DATED SEPTEMBER 2, 1998
MORTGAGE PASS-THROUGH CERTIFICATES
(ISSUABLE IN SERIES)
CAPCO AMERICA SECURITIZATION CORPORATION
(FORMERLY KNOWN AS NOMURA ASSET SECURITIES CORPORATION)
DEPOSITOR
The Certificates offered hereby and by Supplements to this Prospectus (the
'Offered Certificates') will be offered from time to time in series. Each series
of Certificates will represent in the aggregate the entire beneficial ownership
interest in a trust fund (with respect to any series, the 'Trust Fund')
consisting of a segregated pool of mortgage loans secured by liens on retail,
office, multifamily, hotel, mobile home park, industrial, senior
housing/healthcare and mixed retail properties (the 'Mortgage Loans', or
sometimes referred to herein as the 'Mortgage Assets'). The Trust Fund for a
series of Certificates may also include letters of credit, insurance policies,
guarantees, reserve funds or other types of credit support, or any combination
thereof (with respect to any series, collectively, 'Credit Support'), and
currency or interest rate exchange agreements and other financial assets, or any
combination thereof (with respect to any series, collectively, 'Cash Flow
Agreements'). See 'Description of the Trust Funds', 'Description of the
Certificates' and 'Description of Credit Support'.
Each series of Certificates will consist of one or more classes of
Certificates that may (i) provide for the accrual of interest thereon based on
fixed, variable or adjustable rates; (ii) be senior or subordinate to one or
more other classes of Certificates in respect of certain distributions on the
Certificates; (iii) be entitled to principal distributions, with
disproportionately low, nominal or no interest distributions; (iv) be entitled
to interest distributions, with disproportionately low, nominal or no principal
distributions; (v) provide for distributions of accrued interest thereon only
following the occurrence of certain events, such as the retirement of one or
more other classes of Certificates of such series; or (vi) provide for
distributions of principal sequentially, or based on specified payment
schedules, 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. See 'Description of the Certificates'.
Principal and interest with respect to Certificates will be distributable
monthly, quarterly, semi-annually or at such other intervals and on the dates
specified in the related Prospectus Supplement. Distributions on the
Certificates of any series will be made only from the assets of the related
Trust Fund.
The Certificates of each series will not represent an obligation of or
interest in the Depositor, any Master Servicer, any Special Servicer or any of
their respective affiliates, except to the limited extent described herein and
in the related Prospectus Supplement. Only those Certificates and assets in the
related Trust Fund as are disclosed in the related Prospectus Supplement will be
guaranteed or insured by any governmental agency or instrumentality or by any
other person. The assets in each Trust Fund will be held in trust for the
benefit of the holders of the related series of Certificates pursuant to a
Pooling and Servicing Agreement or a Trust 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 voluntary and
involuntary prepayments) on the Mortgage Assets in the related Trust Fund and
the timing of receipt of such payments as described under the caption 'Yield
Considerations' herein and in the related Prospectus Supplement. A Trust Fund
may be subject to early termination under the circumstances described herein and
in the related Prospectus Supplement.
Prospective investors should review the information appearing under the
caption 'Special Considerations' herein and such information as may be set forth
under the caption 'Risk Factors and Other Special Considerations' in the related
Prospectus Supplement before purchasing any Offered Certificate.
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
one or more 'real estate mortgage investment conduits' for federal income tax
purposes. See also 'Federal Income Tax Consequences' herein.
PROSPECTIVE INVESTORS SHOULD REVIEW THE DISCUSSION OF MATERIAL RISKS
APPEARING UNDER THE CAPTION 'SPECIAL CONSIDERATIONS' HEREIN COMMENCING ON PAGE
13.
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. This
Prospectus may not be used to consummate sales of a series of Offered
Certificates unless accompanied by a Prospectus Supplement.
Offers of the Offered Certificates may be made through one or more
different methods, including offerings through underwriters, as more fully
described under 'Method of Distribution' herein and in the related Prospectus
Supplement. All Offered Certificates will be distributed by, or sold by
underwriters managed by:
NOMURA SECURITIES INTERNATIONAL, INC.
THE DATE OF THIS PROSPECTUS IS SEPTEMBER 2, 1998
<PAGE>
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.
PROSPECTUS SUPPLEMENT
As more particularly described herein, the Prospectus Supplement relating
to the Offered Certificates of each series will, among other things, set forth
with respect to such Certificates, as appropriate: (i) a description of the
class or classes of Certificates, the payment provisions with respect to each
such class and the Pass-Through Rate or method of determining the Pass-Through
Rate with respect to each such class; (ii) the aggregate principal amount and
distribution dates relating to such series and, if applicable, the initial and
final scheduled distribution dates for each class; (iii) information as to the
assets comprising the 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'); (iv) the circumstances, if any, under which the Trust Fund may
be subject to early termination; (v) additional information with respect to the
method of distribution of such Certificates; (vi) whether one or more REMIC
elections will be made and designation of the regular interests and residual
interests; (vii) the aggregate original percentage ownership interest in the
Trust Fund to be evidenced by each class of Certificates; (viii) information as
to any Master Servicer, any Special Servicer (or provision for the appointment
thereof) and the Trustee, as applicable; (ix) information as to the nature and
extent of subordination with respect to any class of Certificates that is
subordinate in right of payment to any other class; and (x) whether such
Certificates will be initially issued in definitive or book-entry form.
AVAILABLE INFORMATION
The Depositor has filed with the Securities and Exchange Commission (the
'Commission') a Registration Statement (of which this Prospectus forms a part)
under the Securities Act of 1933, as amended, with respect to the Offered
Certificates. This Prospectus and the Prospectus Supplement relating to each
series of Certificates 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, Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661; and New York Regional Office, Seven World Trade Center,
New York, New York 10048. The Commission also maintains a site on the World Wide
Web (the 'Web') at 'http://www.sec.gov' at which users can view and download
copies of reports, proxy and information statements and other information filed
electronically through the Electronic Data Gathering, Analysis and Retrieval
('EDGAR') system.
No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus and any Prospectus
Supplement with respect hereto and, if given or made, such information or
representations must not be relied upon. This Prospectus and any Prospectus
Supplement with respect hereto 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.
A Master Servicer or the Trustee will be required to mail to holders of
Offered Certificates of each series periodic unaudited reports concerning the
related Trust Fund. Unless and until definitive Certificates are issued, such
reports may be sent on behalf of the related Trust Fund to Cede & Co. ('Cede'),
as nominee of The Depository Trust Company ('DTC') and registered holder of the
Offered Certificates, pursuant to the applicable Agreement. If so specified in
the related Prospectus Supplement, such reports may be sent to beneficial owners
identified to the Master Servicer or Trustee. Such reports may also be available
to holders of interests in the Certificates (the 'Certificateholders') upon
request to their respective DTC participants. See 'Description of the
Certificates--Reports to Certificateholders' and 'Description of the 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. Reports filed
by the Depositor with the Commission pursuant to the Exchange Act will be filed
by means of the EDGAR system and therefore should be available at the
Commission's site on the Web.
2
<PAGE>
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 the offering of the Offered Certificates evidencing an interest therein. The
Depositor will provide or cause to be provided without charge to each person to
whom this Prospectus is delivered in connection with the offering of one or more
classes of 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 classes 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 2 World Financial
Center--Building B, New York, New York 10281-1198, Attention: Secretary, or by
telephone at (212) 667-9300. The Depositor has determined that its financial
statements are not material to the offering of any Offered Certificates. See
'Financial Information' herein.
3
<PAGE>
TABLE OF CONTENTS
<TABLE>
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<S> <C>
Prospectus Supplement....................................................... 2
Available Information....................................................... 2
Incorporation of Certain Information by Reference........................... 3
Summary of Prospectus....................................................... 8
Special Considerations...................................................... 13
Limited Liquidity........................................................... 13
Limited Assets.............................................................. 13
Average Life of Certificates; Prepayments; Yields........................... 13
Limited Nature of Ratings................................................... 14
Risks Associated with Certain Mortgage Loans and Mortgaged Properties....... 14
Retail Properties........................................................... 15
Office Properties........................................................... 15
Multifamily Properties...................................................... 15
Hotel Properties............................................................ 16
Balloon Payments............................................................ 16
Obligor Default............................................................. 17
Mortgagor Type.............................................................. 17
Junior Mortgage Loans....................................................... 17
Credit Support Limitations.................................................. 17
Enforceability.............................................................. 18
Environmental Risks......................................................... 18
Limited Liquidity and Market Value.......................................... 18
ERISA Considerations........................................................ 19
Certain Federal Tax Considerations Regarding Residual Certificates.......... 19
Certain Federal Tax Considerations Regarding Original Issue Discount........ 19
Consent..................................................................... 19
Book-Entry Registration..................................................... 19
Description of the Trust Funds.............................................. 20
Mortgage Assets............................................................. 20
Mortgage Loans.............................................................. 20
Default and Loss Considerations with Respect to the Mortgage Loans.......... 20
Mortgage Loan Information in Prospectus Supplements......................... 21
Mortgage Underwriting Standards and Procedures.............................. 22
Payment Provisions of the Mortgage Loans.................................... 22
MBS......................................................................... 23
Collection Accounts......................................................... 24
Credit Support.............................................................. 24
Cash Flow Agreements........................................................ 24
Use of Proceeds............................................................. 24
Yield Considerations........................................................ 25
General..................................................................... 25
Pass-Through Rate........................................................... 25
Timing of Payment of Interest and Principal................................. 25
Principal Prepayments....................................................... 25
Prepayments--Maturity and Weighted Average Life............................. 26
Other Factors Affecting Weighted Average Life............................... 27
Type of Mortgage Loan....................................................... 27
Foreclosures and Payment Plans.............................................. 27
Due-on-Sale and Due-on-Encumbrance Clauses.................................. 27
The Depositor............................................................... 27
Description of the Certificates............................................. 28
</TABLE>
4
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<TABLE>
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<S> <C>
General..................................................................... 28
Distributions............................................................... 29
Available Funds............................................................. 30
Distributions of Interest on the Certificates............................... 30
Distributions of Principal of the Certificates.............................. 31
Distributions on the Certificates of Prepayment Premiums or in Respect of
Equity Participations..................................................... 31
Allocation of Losses and Shortfalls......................................... 31
Advances in Respect of Delinquencies........................................ 31
Reports to Certificateholders............................................... 32
Termination................................................................. 33
Book-Entry Registration and Definitive Certificates......................... 34
Description of the Agreements............................................... 35
Assignment of Mortgage Assets; Repurchases.................................. 35
Representations and Warranties; Repurchases................................. 36
Payments on Mortgage Assets; Deposits to Collection Account................. 37
Collection and Other Servicing Procedures................................... 38
Special Servicers........................................................... 39
Sub-Servicers............................................................... 39
Realization Upon Defaulted Whole Loans...................................... 39
Hazard Insurance Policies................................................... 41
Due-on-Sale and Due-on-Encumbrance Provisions............................... 42
Retained Interest; Servicing Compensation and Payment of Expenses........... 42
Evidence as to Compliance................................................... 42
Certain Matters Regarding a Master Servicer, a Special Servicer and the
Depositor................................................................. 43
Event of Default............................................................ 43
Rights Upon Event of Default................................................ 44
Amendment................................................................... 44
Duties of the Trustee....................................................... 45
The Trustee................................................................. 45
Description of Credit Support............................................... 46
General..................................................................... 46
Subordinate Certificates.................................................... 46
Cross-Support Provisions.................................................... 46
Insurance or Guarantees with Respect to the Mortgage Assets................. 46
Letter of Credit............................................................ 47
Insurance Policies and Surety Bonds......................................... 47
Certificate Guarantee Insurance............................................. 47
Reserve Funds............................................................... 47
Certain Legal Aspects of Mortgage Loans..................................... 48
General..................................................................... 48
Types of Mortgage Instruments............................................... 48
Leases and Rents............................................................ 48
Personalty.................................................................. 49
Installment Contracts....................................................... 49
Junior Mortgages; Rights of Senior Mortgages or Beneficiaries............... 49
Subordinate Financing....................................................... 50
Foreclosure................................................................. 51
Judicial Foreclosure........................................................ 51
Non-Judicial Foreclosure/Power of Sale...................................... 51
Limitations on Lender's Rights.............................................. 51
Rights of Redemption........................................................ 53
Anti-Deficiency Legislation................................................. 53
Leasehold Risks............................................................. 54
</TABLE>
5
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<TABLE>
<CAPTION>
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<S> <C>
Bankruptcy Laws............................................................. 54
Environmental Legislation................................................... 56
Due-on-Sale and Due-on-Encumbrance.......................................... 57
Acceleration on Default..................................................... 57
Default Interest, Prepayment Charges and Prepayments........................ 57
Applicability of Usury Laws................................................. 58
Alternative Mortgage Instruments............................................ 58
Soldiers' and Sailors' Civil Relief Act of 1940............................. 58
Forfeitures in Drug and RICO Proceedings.................................... 59
Certain Laws and Regulations................................................ 59
Type of Mortgaged Property.................................................. 59
Americans with Disabilities Act............................................. 59
Federal Income Tax Consequences............................................. 60
Federal Income Tax Consequences for REMIC Certificates...................... 60
General..................................................................... 60
Status of REMIC Certificates................................................ 60
Qualification as a REMIC.................................................... 61
Taxation of Regular Certificates............................................ 62
General..................................................................... 62
Original Issue Discount..................................................... 63
Acquisition Premium......................................................... 64
Variable Rate Regular Certificates.......................................... 65
Deferred Interest........................................................... 66
Market Discount............................................................. 66
Premium..................................................................... 66
Election to Treat All Interest Under the Constant Yield Method.............. 67
Sale or Exchange of Regular Certificates.................................... 67
Treatment of Losses......................................................... 67
Taxation of Residual Certificates........................................... 68
Taxation of REMIC Income.................................................... 68
Basis and Losses............................................................ 69
Treatment of Certain Items of REMIC Income and Expense...................... 70
Limitations on Offset or Exemption of REMIC Income.......................... 70
Tax-Related Restrictions on Transfer of Residual Certificates............... 71
Sale or Exchange of a Residual Certificate.................................. 73
Mark to Market Regulations.................................................. 73
Taxes That May Be Imposed on the REMIC Pool................................. 73
Prohibited Transactions..................................................... 73
Contributions to the REMIC Pool After the Startup Day....................... 74
Net Income from Foreclosure Property........................................ 74
Liquidation of the REMIC Pool............................................... 74
Administrative Matters...................................................... 74
Limitations on Deduction of Certain Expenses................................ 75
Taxation of Certain Foreign Investors....................................... 75
Regular Certificates........................................................ 75
Residual Certificates....................................................... 76
Backup Withholding.......................................................... 76
Reporting Requirements...................................................... 76
Federal Income Tax Consequences for Certificates as to Which No REMIC
Election Is Made.......................................................... 77
Standard Certificates....................................................... 77
General..................................................................... 77
Tax Status.................................................................. 77
Premium and Discount........................................................ 78
</TABLE>
6
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<TABLE>
<CAPTION>
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<S> <C>
Recharacterization of Servicing Fees........................................ 78
Sale or Exchange of Standard Certificates................................... 79
Stripped Certificates....................................................... 79
General..................................................................... 79
Status of Stripped Certificates............................................. 80
Taxation of Stripped Certificates........................................... 80
Reporting Requirements and Backup Withholding............................... 81
Taxation of Certain Foreign Investors....................................... 82
ERISA Considerations........................................................ 83
General..................................................................... 83
Certain Requirements Under ERISA............................................ 83
General..................................................................... 83
Parties in Interest/Disqualified Persons.................................... 83
Delegation of Fiduciary Duty................................................ 83
Administrative Exemptions................................................... 84
Governmental Plans.......................................................... 84
Unrelated Business Taxable Income; Residual Certificates.................... 84
Legal Investment............................................................ 84
Method of Distribution...................................................... 86
Legal Matters............................................................... 87
Financial Information....................................................... 87
Rating...................................................................... 87
Index of Principal Definitions.............................................. 88
</TABLE>
7
<PAGE>
SUMMARY OF PROSPECTUS
The following summary of material information does not contain all the
material information regarding the Certificates and is qualified in its entirety
by reference to the more detailed information appearing elsewhere in this
Prospectus and by reference to the information with respect to each series of
Certificates contained in the Prospectus Supplement to be prepared and delivered
in connection with the offering of such series. An Index of Principal
Definitions is included at the end of this Prospectus.
Title of
Certificates..... Mortgage Pass-Through Certificates, issuable in series (the
'Certificates').
Depositor.......... CAPCO America Securitization Corporation, a wholly-owned
subsidiary of The Capital Company of America LLC. See 'The
Depositor'.
Master Servicer.... The master servicer (the 'Master Servicer'), if any, for
each series of Certificates will be named in the related
Prospectus Supplement. See 'Description of the
Agreements--Collection and Other Servicing Procedures'.
Special Servicer... The special servicer (the 'Special Servicer'), if any, for
each series of Certificates will be named, or the
circumstances in accordance with which a Special Servicer
will be appointed will be described, in the related
Prospectus Supplement. See 'Description of the
Agreements--Special Servicer'.
Trustee............ The trustee (the 'Trustee') for each series of Certificates
will be named in the related Prospectus Supplement. See
'Description of the Agreements--The Trustee'.
Issuer............. The issuer of each series of Certificates will be the
related Trust Fund.
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 multifamily and
commercial mortgage loans (the 'Mortgage Loans'). Except to
the extent described in the related Prospectus Supplement,
the Mortgage Loans will not be guaranteed or insured by the
Depositor or any of its affiliates or by any governmental
agency or instrumentality or other person. As more
specifically described herein, the Mortgage Loans will be
secured by liens on, or security interest in, properties
consisting of (i) residential properties consisting of five
or more rental or cooperatively-owned dwelling units (the
'Multifamily Properties') or (ii) office buildings, shopping
centers, hotels, motels, nursing homes, hospitals or other
health-care related facilities, mobile home parks,
industrial plants, mixed use or other types of commercial
properties (the 'Commercial Properties' and together with
Multifamily Properties, the 'Mortgaged Properties'). The
Mortgaged Properties may be located in any one of the fifty
states or the District of Columbia or such other locations
as are disclosed in the related Prospectus Supplement. All
Mortgage Loans will have individual principal balances at
origination of not less than $25,000 and original terms to
maturity of not more than 40 years. All Mortgage Loans will
have been originated by persons other than the Depositor,
and all Mortgage Assets will have been purchased, either
directly or indirectly, by the Depositor on or before the
date of initial issuance of the related series of
Certificates. As described herein and in the Prospectus
Supplement, each Mortgage Loan may (i) 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 from an adjustable to a fixed Mortgage Rate, or
from a fixed to an adjustable Mortgage Rate, from time to
time at the mortgagor's election; (ii) provide for scheduled
payments to maturity, payments that adjust from time to time
in accommodate changes in the Mortgage Rate or to reflect
the occurrence of certain events, and may provide negative
amortization or accelerated amortization; (iii) be fully
amortizing or require a balloon payment due on its stated
maturity date; (iv) contain prohibitions on prepayment or
require payment of a premium or a yield maintenance penalty
in connection with a
8
<PAGE>
prepayment; and (v) provide for payments of principal,
interest or both, on due dates that occur monthly,
quarterly, semi-annually or other interval. See 'Description
of the Trust Funds--Mortgage Assets'.
(b) Collection
Account....... Each Trust Fund will include one or more accounts
(collectively, the 'Collection Account') established and
maintained on behalf of the Certificateholders into which
the person or persons designated in the related Prospectus
Supplement will deposit all payments and collections
received or advanced with respect to the Mortgage Assets and
other assets in the Trust Fund other than certain fees and
expenses. A Collection Account may be maintained as an
interest bearing or a non-interest bearing account, and
funds held therein may be invested in certain short-term,
investment grade obligations, as described in the related
Prospectus Supplement. See 'Description of the
Agreements--Payments on Mortgage Assets; Deposits to
Collection 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 or by one or
more other types of credit support, such as a letter of
credit, an insurance policy on the Mortgage Loans,
guarantee, certificate guarantee insurance policy, reserve
fund or another type of credit support, or a combination
thereof (any such coverage with respect to the Certificates
of any series, 'Credit Support'). The amount and types of
coverage, the identification of the entity providing the
coverage (if applicable) and related information with
respect to each type of Credit Support, if any, will be
described in the Prospectus Supplement for a series of
Certificates. The Prospectus Supplement for any series of
Certificates evidencing an interest in a Trust Fund that
includes MBS will describe any credit support that is
included as part of the trust fund evidenced or secured by
such MBS. See 'Special Considerations--Credit Support
Limitations' and 'Description of Credit Support'.
(d) Cash Flow
Agreements.... If so provided in the related Prospectus Supplement, the
Trust Fund may include guaranteed investment contracts
pursuant to which moneys held in the funds and accounts
established for the related series will be invested at a
specified rate. The Trust Fund may also include certain
other agreements, such as interest rate exchange agreements,
interest rate cap or floor agreements, currency exchange
agreements or similar agreements provided 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'), including 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
provide certain information with respect 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 MBS will describe any
cash flow agreements that are included as part of the trust
fund evidenced or secured by such MBS. See 'Description of
the Trust Funds--Cash Flow Agreements'.
Description of
Certificates..... Each series of Certificates evidencing an interest in a
Trust Fund consisting of Mortgage Loans will be issued
pursuant to a Pooling and Servicing Agreement and each
series of Certificates evidencing an interest in a Trust
Fund the Mortgage Assets of which consisting of MBS will be
issued pursuant to a Trust Agreement. Pooling and Servicing
Agreements and Trust Agreements are sometimes referred to
herein as 'Agreements'. Each series of Certificates
(including any class or classes of Certificates of such
series not offered hereby) will represent in the aggregate
the entire beneficial ownership interest in the Trust Fund.
Each class of Certificates (other than
9
<PAGE>
certain Stripped Interest Certificates, as defined below)
will have a stated principal amount (a 'Certificate
Balance') and (other than certain Stripped Principal
Certificates, as defined below), will accrue interest
thereon based on a fixed, variable or adjustable interest
rate (a 'Pass-Through Rate'). The related Prospectus
Supplement will specify the Certificate Balance and the
Pass-Through Rate for each class of Certificates, as
applicable, or in the case of a variable or adjustable Pass-
Through Rate, the method for determining the Pass-Through
Rate. Each series of Certificates will consist of one or
more classes or subclasses of Certificates that may (i) be
senior (collectively, 'Senior Certificates') or subordinate
(collectively, 'Subordinate Certificates') to one or more
other classes of Certificates in respect of certain
distributions on the Certificates; (ii) be entitled to
principal distributions, with disproportionately low,
nominal or no interest distributions (collectively,
'Stripped Principal Certificates'); (iii) be entitled to
interest distributions, with disproportionately low, nominal
or no principal distributions (collectively, 'Stripped
Interest Certificates'); (iv) provide for distributions of
accrued interest thereon only following the occurrence of
certain events, such as the retirement of one or more other
classes of Certificates of such series (collectively,
'Accrual Certificates'); and/or (v) provide for payments of
principal sequentially, based on specified payment schedules
or other methodologies, to the extent of available funds.
Any such classes or subclasses may include classes or
subclasses of Offered Certificates. 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 'Special Considerations--
Limited Assets' and 'Description of the Certificates'. The
Offered Certificates will not be listed on any securities
exchange and will not be quoted in an automated quotation
system of a registered securities association. This fact may
limit the liquidity of the Offered Certificates. See
'Special Considerations--Limited Liquidity and Market
Value'.
Distributions of
Interest on
Certificates..... Interest on each class of Offered Certificates (other than
certain classes of Stripped Interest Certificates and
Stripped Principal Certificates) of each series will accrue
at the applicable Pass-Through Rate on the outstanding
Certificate Balance thereof 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 with respect to interest on Stripped Interest
Certificates may be made on each Distribution Date on the
basis of a notional amount as described in the related
Prospectus Supplement. Distributions of interest with
respect to one or more classes of Certificates may be
reduced to the extent of certain delinquencies and other
contingencies described herein and in the related Prospectus
Supplement. See 'Special Considerations--Average Life of
Certificates; Prepayments; Yields', 'Yield Considerations',
and 'Description of the Certificates--Distributions of
Interest on the Certificates'.
Distributions of
Principal of
Certificates..... The initial aggregate Certificate Balance of the
Certificates of each series (other than certain classes of
Stripped Interest Certificates) will generally not exceed
the outstanding principal balance of the Mortgage Assets as
of the close of business on the day of the month specified
in the related Trust Fund (the 'Cut-off Date'), after
application of scheduled payments due on or before such
date, whether or not received. The Certificate Balance of a
Certificate outstanding from time to time represents the
maximum amount that the holder thereof is then entitled to
receive in respect of principal from future cash flow on the
assets in the related Trust Fund. Distributions of principal
will be made on each Distribution Date to the class or
classes of Certificates entitled thereto until the
Certificate Balance of such Certificates
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have been reduced to zero. Distributions of principal of any
class of Certificates will be made on a pro rata basis among
all of the Certificates of such class. Stripped Interest
Certificates with no Certificate Balance will not receive
distributions in respect of principal. See 'Description of
the Certificates--Distributions of Principal of the
Certificates'.
Advances........... In connection with a series of Certificates evidencing an
interest in a Trust Fund consisting of Mortgage Assets other
than MBS, the Master Servicer may be obligated as part of
its servicing responsibilities to make certain advances with
respect to delinquent scheduled payments on the Mortgage
Loans in such Trust Fund. Advances made by a Master Servicer
are reimbursable generally from subsequent recoveries in
respect of such Mortgage Loans, and in certain
circumstances, from other assets available in the Trust
Fund. The Master Servicer will be entitled to receive
interest on its outstanding advances, payable from amounts
in the related Trust Fund. The Prospectus Supplement for any
series of Certificates evidencing an interest in a Trust
Fund that includes MBS will describe any corresponding
advancing obligation of any person in connection with such
MBS. See 'Description of the Certificates--Advances in
Respect of Delinquencies'. Purchasers of any series of
Certificates will be advised of any advances relating to
such Certificates by means of the report to be delivered to
Certificateholders in connection with each distribution. See
'Description of the Certificates--Reports to
Certificateholders'.
Termination........ A series of Certificates may be subject to optional early
termination through the repurchase of the Mortgage Assets in
the related Trust Fund. If so provided in the related
Prospectus Supplement, upon the reduction of the Certificate
Balance of a specified class or classes of Certificates by a
specified percentage or amount, the party specified therein
will solicit bids for the purchase of all of the Mortgage
Assets of the Trust Fund under the circumstances and in the
manner set forth therein. See 'Description of the
Certificates--Termination'.
Registration of
Certificates..... If so provided in the related Prospectus Supplement, one or
more classes of the Offered Certificates will initially be
represented by one or more Certificates registered in the
name of Cede & Co., as the nominee of DTC. No person
acquiring an interest in Offered Certificates so registered
will be entitled to receive a definitive certificate
representing such person's interest except in the event that
definitive certificates are issued under the limited
circumstances described herein. See 'Special
Considerations--Book-Entry Registration' and 'Description of
the Certificates--Book-Entry Registration and Definitive
Certificates'.
Special
Considerations... An investment in the Offered Certificates may include
certain material risks. See 'Special Considerations' herein
and 'Risk Factors and Other Special Considerations' in the
related Prospectus Supplement.
Federal Income Tax
Consequences..... The federal income tax consequences to Certificateholders
will vary depending on whether one or more elections are
made to treat the Trust Fund or specified portions thereof
as one or more 'real estate mortgage investment conduits'
(each, a 'REMIC') under the provisions of the Internal
Revenue Code of 1986, as amended (the 'Code'). The
Prospectus Supplement for each series of Certificates will
specify whether one or more such elections will be made. See
'Federal Income Tax Consequences'.
ERISA
Considerations... A fiduciary of an employee benefit plan or other retirement
arrangement, including an individual retirement account, or
a Keogh plan which is subject to the Employee Retirement
Income Security Act of 1974, as amended ('ERISA'), or
Section 4975 of the Code (each a 'Plan'), or a collective
investment fund in which such Plans are invested, or an
insurance company using assets of a separate account or
general account which includes assets of Plans (or which is
deemed pursuant to ERISA to
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include assets of Plans), or other pensions acting on behalf
of any such Plan or using the assets of any such Plan, which
proposes to cause a Plan to acquire any of the Offered
Certificates 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 permissible either under ERISA or Section 4975
of the Code. See 'ERISA Considerations' herein and in the
related Prospectus Supplement.
Legal Investment... The related Prospectus Supplement will specify whether the
Offered Certificates will constitute 'mortgage related
securities' for purposes of the Secondary Mortgage Market
Enhancement Act of 1984, as amended. 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 the date of issuance, as to each series, each class of
Offered Certificates will be rated not lower than investment
grade by one or more nationally recognized statistical
rating agencies (each, a 'Rating Agency'). See 'Rating'
herein and in the related Prospectus Supplement.
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SPECIAL CONSIDERATIONS
Investors should consider, in connection with the purchase of Offered
Certificates, among other things, the following factors and certain other
factors as may be set forth in 'Risk Factors and Other Special Considerations'
in the related Prospectus Supplement.
LIMITED LIQUIDITY
There can be no assurance that a secondary market for the Certificates of
any series will develop or, if it does develop, that it will provide holders
with liquidity of investment or will continue while Certificates of such series
remain outstanding. Any such secondary market may provide less liquidity to
investors than any comparable market for securities evidencing interests in
single-family mortgage loans. The market value of Certificates will fluctuate
with changes in prevailing rates of interest. Consequently, sale of Certificates
by a holder in any secondary market that may develop may be at a discount from
100% of their original principal balance or from their purchase price.
Furthermore, secondary market purchasers may look only hereto, to the related
Prospectus Supplement and to the reports to Certificateholders delivered
pursuant to the Agreement as described herein under the heading 'Description of
the Certificates--Reports to Certificateholders,' '--Book-Entry Registration and
Definitive Certificates' and 'Description of the Agreements--Evidence as to
Compliance' for information concerning the Certificates. Certificateholders will
have no redemption rights. Each class of Offered Certificates of a series will
be issued in minimum denominations corresponding to Certificate Balances or, in
the case of Stripped Interest Certificates, notional amounts specified in the
related Prospectus Supplement. Nomura Securities International, Inc., through
one or more of its affiliates, currently expects to make a secondary market in
the Offered Certificates, but has no obligation to do so.
LIMITED ASSETS
A series of Certificates will not have any claim against or security
interest in the Trust Funds for any other series. If the related Trust Fund is
insufficient to make payments on such Certificates, no other assets will be
available for payment of the deficiency. Additionally, certain amounts remaining
in certain funds or accounts, including the Certificate Account and any accounts
maintained as Credit Support, may be withdrawn under certain conditions, as
described in the related Prospectus Supplement. In the event of such withdrawal,
such amounts will not be available for future payment of principal of or
interest on the Certificates. With respect to 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 the related Prospectus Supplement.
AVERAGE LIFE OF CERTIFICATES; PREPAYMENTS; YIELDS
Prepayments on the Mortgage Assets in any Trust Fund (including principal
prepayments on the Mortgage Loans resulting from both voluntary and involuntary
liquidations) generally will result in a faster rate of principal payments on
one or more classes of the related Certificates than if payments on such
Mortgage Assets were made as scheduled. Thus, the prepayment experience on the
Mortgage Assets may affect the average life of each class of related
Certificates. The rate of principal payments on pools of mortgage loans varies
between pools and from time to time is influenced by a variety of economic,
demographic, geographic, social, tax, legal and other factors. There can be no
assurance as to the rate of prepayment on the Mortgage Assets in any Trust Fund
or that the rate of payments will conform to any model described herein or in
any Prospectus Supplement. If prevailing interest rates are significantly below
the applicable mortgage rates, principal prepayments are likely to be higher
than if prevailing rates are at or above the rates borne by the Mortgage Loans
underlying or comprising the Mortgage Assets in any Trust Fund. As a result, the
actual maturity of any class of Certificates could occur significantly earlier
than expected. A series of Certificates may include one or more classes of
Certificates with priorities of payment and, as a result, yields on other
classes of Certificates, including classes of Offered Certificates, of such
series may be more sensitive to prepayments on Mortgage Assets. A series of
Certificates may include one or more classes offered at a significant premium or
discount. Yields on such classes of Certificates will be sensitive, and in some
cases extremely sensitive, to voluntary and involuntary prepayments on Mortgage
Assets and, where the amount of interest payable with respect to a class is
disproportionately high, as compared to the amount of principal, as with certain
classes of Stripped Interest Certificates, a holder might, in some prepayment
scenarios, fail to recoup its original investment. A series of Certificates may
include one or more classes of Certificates, including classes of Offered
Certificates, that provide for distribution of principal thereof from amounts
attributable to interest accrued but not currently distributable on one or more
classes of Accrual Certificates and, as a result, yields on such Certificates
will be sensitive to (a) the provisions of such Accrual Certificates relating to
the timing of distributions of interest thereon and (b) if such Accrual
Certificates accrue interest at a variable
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or adjustable Pass-Through Rate, changes in such rate. See 'Yield
Considerations' herein and, if applicable, in the related Prospectus Supplement.
LIMITED NATURE OF RATINGS
Any rating assigned by a Rating Agency to a class of Certificates will
reflect such Rating Agency's assessment solely of the likelihood that holders of
Certificates of such class will receive payments to which such
Certificateholders are entitled under the related Agreement. Such rating will
not constitute an assessment of the likelihood that principal prepayments on the
related Mortgage Assets will be made, the degree to which the rate of such
prepayments might differ from that originally anticipated or the likelihood of
early optional termination of the series of Certificates. Such rating will not
address the possibility that prepayment at higher or lower rates than
anticipated by an investor may cause such investor to experience a lower than
anticipated yield or that an investor purchasing a Certificate at a significant
premium might fail to recoup its initial investment under certain prepayment
scenarios. Each Prospectus Supplement will identify any payment to which holders
of Offered Certificates of the related series are entitled that is not covered
by the applicable rating.
The amount, type and nature of credit support, if any, established with
respect to a series of Certificates will be determined on the basis of criteria
established by each Rating Agency rating classes of such series. Such criteria
are sometimes based upon an actuarial analysis of the behavior of mortgage loans
in a larger group. Such analysis is often the basis upon which each Rating
Agency determines the amount of credit support required with respect to each
such class. There can be no assurance that the historical data supporting any
such actuarial analysis will accurately reflect future experience nor any
assurance that the data derived from a large pool of mortgage loans accurately
predicts the delinquency, foreclosure or loss experience of any particular pool
of Mortgage Assets. No assurance can be given that values of any Mortgaged
Properties have remained or will remain at their levels on the respective dates
of origination of the related Mortgage Loans. Moreover, there is no assurance
that appreciation of real estate values generally will limit loss experiences on
the Mortgaged Properties. If the commercial or multifamily residential real
estate markets should experience an overall decline in property values such that
the outstanding principal balances of the Mortgage Loans underlying or
comprising the Mortgage Assets in a particular Trust Fund and any secondary
financing on the related Mortgaged Properties become equal to or greater than
the value of the Mortgaged Properties, the rates of delinquencies, foreclosures
and losses could be higher than those now generally experienced by institutional
lenders. In addition, adverse economic conditions (which may or may not affect
real property values) may affect the timely payment by mortgagors of scheduled
payments of principal and interest on the Mortgage Loans and, accordingly, the
rates of delinquencies, foreclosures and losses with respect to any Trust Fund.
To the extent that such losses are not covered by Credit Support, such losses
will be borne, at least in part, by the holders of one or more classes of the
Certificates of the related series. See 'Description of Credit Support' and
'Rating'.
RISKS ASSOCIATED WITH CERTAIN MORTGAGE LOANS AND MORTGAGED PROPERTIES
Mortgage loans made with respect to multifamily or commercial property may
entail risks of delinquency and foreclosure, and risks of loss in the event
thereof, that are greater than similar risks associated with single-family
property. See 'Description of the Trust Funds--Mortgage Assets'. The ability of
a mortgagor to repay a loan secured by an income-producing property typically is
dependent primarily upon the successful operation of such property rather than
any independent income or assets of the mortgagor; thus, the value of an
income-producing property is directly related to the net operating income
derived from such property. In contrast, the ability of a mortgagor to repay a
single-family loan typically is dependent primarily upon the mortgagor's
household income, rather than the capacity of the property to produce income;
thus, other than in geographical areas where employment is dependent upon a
particular employer or an industry, the mortgagor's income tends not to reflect
directly the value of such property. A decline in the net operating income of an
income-producing property will likely affect both the performance of the related
loan as well as the liquidation value of such property, whereas a decline in the
income of a mortgagor on a single-family property will likely affect the
performance of the related loan but may not affect the liquidation value of such
property.
The performance of a mortgage loan secured by an income-producing property
leased by the mortgagor to tenants as well as the liquidation value of such
property may be dependent upon the business operated by such tenants in
connection with such property, the creditworthiness of such tenants or both; the
risks associated with such loans may be offset by the number of tenants or, of
applicable, a diversity of types of business operated by such tenants.
It is anticipated that all or a substantial portion of the Mortgage Loans
included in any Trust Fund will be nonrecourse loans or loans for which recourse
may be restricted or unenforceable, as to which, in the event of mortgagor
default, recourse may be had only against the specific multifamily or commercial
property and such other assets, if any, as have been pledged to secure the
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Mortgage Loan. With respect to those Mortgage Loans that provide for recourse
against the mortgagor and its assets generally, there can be no assurance that
such recourse will ensure a recovery in respect of a defaulted Mortgage Loan
greater than the liquidation value of the related Mortgaged Property.
Further, the concentration of default, foreclosure and loss risks in
individual mortgagors or Mortgage Loans in a particular Trust Fund or the
related Mortgaged Properties will generally be greater than for pools of
single-family loans both because the Mortgage Assets in a Trust Fund will
generally consist of a smaller number of loans than would a single-family pool
of comparable aggregate unpaid principal balance and because of the higher
principal balance of individual Mortgage Loans.
RETAIL PROPERTIES
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.
Whether a retail property is 'anchored' or 'unanchored' is also an important
distinction. Retail properties that are anchored have traditionally been
percived to be less risky. While there is no strict definition of an anchor, it
is generally understood that a retail anchor tenant is proportionately large in
size and is vital in attracting customers to the property. Furthermore, the
correlation between the success of tenant businesses and property value is
increased when the property is a single tenant property.
Unlike office or hotel properties, retail properties also face competition
from sources outside a given real estate market. Catalogue retailers, home
shopping networks, 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 rent collectible at the retail properties
included in the Mortgaged Properties.
OFFICE PROPERTIES
Significant factors determining the value of office properties 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 properties may be adversely
affected if there is 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 properties 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 property 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 will impact on an office property's ability to attract
stable tenants on a consistent basis. In addition, the cost of refitting office
space of a new tenant is often more costly than for other property types.
MULTIFAMILY PROPERTIES
Significant factors determining the value and successful operation of a
multifamily property are the location of the property, the number of competing
residential developments in the local market (such as apartment buildings,
manufactured housing communities and site-built single family homes), the
physical attributes of the multifamily apartment building (such as its age and
appearance) and state and local regulations affecting such property. In
addition, the successful operation of an apartment building will depend upon
other factors, such as its reputation, the ability of management to provide
adequate maintenance and insurance, and the types of services it provides.
Certain states regulate the relationship of an owner and its tenants.
Commonly, these laws require a written lease, good cause for eviction,
disclosure of fees, and notification to residents of changed land use, while
prohibiting unreasonable rules, retaliatory evictions, and restrictions on a
resident's choice of unit vendors. Apartment building owners have been the
subject of suits under state 'Unfair and Deceptive Practices Acts' and other
general consumer protection statutes for coercive, abusive or unconscionable
leasing and sales practices. A few states offer more significant protection. For
example, there are provisions that
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limit the basis on which a landlord may terminate a tenancy or increase its rent
or prohibit a landlord from terminating a tenancy solely by reason of the sale
of the owner's building.
In addition to state regulation of the landlord-tenant relationship,
numerous counties and municipalities impose rent control on apartment buildings.
These ordinances may limit rent increases to fixed percentages, to percentages
of increases in the consumer price index, to increases set or approved by a
governmental agency, or to increases determined through mediation or binding
arbitration. In many cases, the rent control laws do not permit vacancy
decontrol. Local authority to impose rent control is pre-empted by state law in
certain states, and rent control is not imposed at the state level in those
states. In some states, however, local rent control ordinances are not
pre-empted for tenants having short-term or month-to-month leases, and
properties there may be subject to various forms of rent control with respect to
those tenants. Any limitations on a borrower's ability to raise property rents
may impair such borrower's ability to repay its Mortgage Loan from its net
operating income or the proceeds of a sale or refinancing of the related
Mortgaged Property.
Adverse economic conditions, either local or national, may limit the amount
of rent that can be charged 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 or
factory closings and national and local politics, including current or future
rent stabilization and rent control laws and agreements. In addition, the level
of mortgage interest rates may encourage tenants to purchase single-family
housing. The housing and construction quality of a particular building may
affect the occupancy level as well as the rents that may be charged for
individual units. The characteristics of a neighborhood may change over time or
in relation to newer developments.
HOTEL PROPERTIES
Various factors, including location, quality and franchise affiliation
affect the economic performance of a hotel. Adverse economic conditions, either
local, regional or national, may limit the amount that can be charged for a room
and may result in a reduction in occupancy levels. The construction of competing
hotels can have similar effects. To meet competition in the industry and to
maintain economic values, continuing expenditures must be made for modernizing,
refurbishing, and maintaining existing facilities prior to the expiration of
their anticipated useful lives. Because hotel rooms are generally rented for
short periods of time, hotels tend to respond more quickly to adverse economic
conditions and competition than do other commercial properties. Furthermore, the
financial strength and capabilities of the owner and operator of a hotel may
have a substantial impact on such hotel'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.
The demand for particular accommodations may also be affected by changes in
travel patterns caused by changes in energy prices, strikes, relocation of
highways, the construction of additional highways and other factors.
Hotel properties may be franchises of national or regional hotel chains.
The viability of any such hotel property depends in part on the continued
existence and financial strength of the franchisor, the public perception of the
franchise service mark and the duration of the franchise licensing agreements.
The transferability of franchise license agreements may be restricted and, in
the event of a foreclosure on any such hotel property, the mortgage may not have
the right to use the franchise license without the franchisor's consent.
Conversely, a lender may be unable to remove a franchisor that it desires to
replace following a foreclosure. Further, in the event of a foreclosure on a
hotel property, it is unlikely that the Trustee (or Master Servicer or Special
Servicer) or purchaser of such hotel property would be entitled to the rights
under any liquor license for such hotel property and such party would be
required to apply in its own right for such license or licenses. There can be no
assurance that a new license could be obtained or that it could be obtained
promptly.
BALLOON PAYMENTS
Certain of the Mortgage Loans as of the Cut-off Date may not be fully
amortizing over their terms to maturity and, thus, will require substantial
principal payments (i.e., balloon payments) at their stated maturity. Mortgage
Loans with balloon payments involve a greater degree of risk because the ability
of a mortgagor to make a balloon payment typically will depend upon its ability
either to timely refinance the loan or to timely sell the related Mortgaged
Property. The ability of a mortgagor to accomplish either of these goals will be
affected by a number of factors, including the level of available mortgage rates
at the time of sale or refinancing, the mortgagor's equity in the related
Mortgaged Property, the financial condition and operating history of the
mortgagor and the related Mortgaged Property, tax laws, rent control laws (with
respect to certain Multifamily Properties and mobile home parks), reimbursement
rates (with respect to certain hospitals, nursing homes and convalescent homes),
renewability
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of operating licenses, prevailing general economic conditions and the
availability of credit for commercial or multifamily, as the case may be, real
properties generally.
OBLIGOR DEFAULT
In order to maximize recoveries on defaulted Mortgage Loans, a Master
Servicer typically will have considerable flexibility to extend and modify
Mortgage Loans that are in default or as to which a payment default is
reasonably foreseeable, including in particular with respect to balloon
payments. In addition, a Master Servicer or a Special Servicer may receive a
workout fee based on receipts from or proceeds of such Mortgage Loans. While a
Master Servicer generally will be required to determine that any such extension
or modification is likely to produce a greater recovery on a present value basis
than liquidation, there can be no assurance that such flexibility with respect
to extensions or modifications or payment of a workout fee will increase the
present value of receipts from or proceeds of Mortgage Loans that are in default
or as to which a default is reasonably foreseeable. The recent foreclosure and
delinquency experience with respect to loans serviced by a Master Servicer or,
if applicable, any Special Servicer or significant Sub-Servicer will be provided
in the related Prospectus Supplement.
MORTGAGOR TYPE
Mortgage Loans made to partnerships, corporations or other entities may
entail risks of loss from delinquency and foreclosure that are greater than
those of Mortgage Loans made to individuals. Partnerships, corporations and
certain other types of organizations generally limit the liability of the
beneficial owners of such organizations for the obligations of such
organizations, and therefore limit the recourse of a lender to the assets of
such beneficial owners. The mortgagor's sophistication and form of organization
may increase the likelihood of protracted litigation or bankruptcy in default
situations.
JUNIOR MORTGAGE LOANS
Certain of the Mortgage Loans may be secured by junior Mortgages which are
subordinate to senior mortgages or deeds of trust held by other lenders or
institutional investors. The rights of any Trust Fund (and therefore the
Certificateholders), as beneficiary under a junior Mortgage, are subordinate to
those of the mortgagee or beneficiary under the senior mortgage or deed of
trust, including the prior rights of the senior mortgage or beneficiary to
receive rents, hazard insurance and condemnation proceeds and to cause the
Mortgaged Property securing the Mortgage Loan to be sold upon default of the
mortgagor or trustor, thereby extinguishing the Trust Fund's junior Mortgage
unless the Servicer or the Special Servicer asserts the Trust Fund's subordinate
interest in the Mortgaged Property in foreclosure litigation or satisfies the
defaulted senior loan. See 'Certain Legal Aspects of Mortgage Loans--Junior
Mortgages; Rights of Senior Mortgages or Beneficiaries' herein.
CREDIT SUPPORT LIMITATIONS
The Prospectus Supplement for a series of Certificates will describe any
Credit Support in the related Trust Fund, which may include letters of credit,
insurance policies, guarantees, reserve funds or other types of credit support,
or combinations thereof. 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). 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. 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 a series
has been repaid. As a result, the impact of significant losses and shortfalls on
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 (each, a 'Covered Trust'), holders of
Certificates evidencing an interest in a Covered Trust will be subject to the
risk that such Credit Support will be exhausted by the claims of other Covered
Trusts.
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, other losses or 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'.
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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 mortgagor sells, transfers
or conveys the related Mortgaged Property or its interest in the Mortgaged
Property. Mortgages may also include a debt-acceleration clause, which permits
the lender to accelerate the debt upon a monetary or non-monetary default of the
mortgagor. 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.
If so specified in the related Prospectus Supplement, the Mortgage Loans
will be secured by an assignment of leases and rents pursuant to which the
mortgagor typically assigns its right, title and interest as landlord under the
leases on the related Mortgaged Property and the income derived therefrom to the
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
mortgagor defaults, the license terminates and the lender is entitled to collect
rents. Such assignments may not be perfected as security interests prior to
actual possession of the cash flows. Some state laws may require that the lender
take possession of the Mortgaged Property and obtain a judicial appointment of a
receiver before becoming entitled to collect the rents. In addition, if
bankruptcy or similar proceedings are commenced by or in respect of the
mortgagor, the lender's ability to collect the rents may be adversely affected.
See 'Certain Legal Aspects of Mortgage Loans-- Leases and Rents'.
ENVIRONMENTAL RISKS
Real property pledged as security for a mortgage loan may be subject to
certain environmental risks. Various environmental laws may make a current or
previous owner or operator of real property liable for the costs of removal or
remediation of hazardous or toxic substances on, under or adjacent to such
property. Those laws often impose liability whether or not the owner or operator
knew of, or was responsible for, the presence of such hazardous or toxic
substances. For example, certain laws impose liability for release of
asbestos-containing materials into the air or require the removal or containment
of ACMs. The owner's liability for any required remediation generally is not
limited by law and could accordingly exceed the value of the property and/or the
aggregate assets of the owner. In addition, the presence of hazardous or toxic
substances, or the failure to remediate such property, may adversely affect the
owner's or operator's ability to use such property as collateral for a loan. In
certain states, contamination of a property may give rise to a lien on the
property to assure the costs of cleanup. In some states this lien has priority
over the lien of an existing mortgage. In addition, third parties may seek
recovery from owners or operators of real property for personal injury
associated with exposure to hazardous substances. Persons who arrange for the
disposal or treatment of hazardous or toxic substances may also be liable for
the costs of removal or remediation of such substances at the disposal or
treatment facility.
The federal Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended, as well as certain other federal and state
laws, provide that a secured lender (such as the Trust Fund) may be liable, as
an 'owner' or 'operator,' of the real property regardless of whether the
borrower or a previous owner caused the environmental damage, if (i) agents or
employees of a lender are deemed to have participated in the management of the
borrower or (ii) under certain conditions the Trust Fund actually takes
possession of a borrower's property or control of its day-to-day operations, as
for example, through the appointment of a receiver or foreclosure. Although
recently enacted legislation clarifies the activities in which a lender may
engage without becoming subject to liability under CERCLA and similar federal
laws, such legislation has no applicability to state environmental laws. Each
Pooling and Servicing Agreement will provide that the Master Servicer, acting on
behalf of the Trust Fund, may not acquire title to a Mortgaged Property securing
a Mortgage Loan or take over its operation unless the Master Servicer has
previously determined, based upon a report prepared by a person who regularly
conducts environmental audits, that (i) the Mortgaged Property is in compliance
with applicable environmental laws and regulations or, if not, that taking such
actions as are necessary to bring the Mortgaged Property in compliance therewith
is reasonably likely to produce a greater recovery on a present value basis than
not taking such actions and (ii) there are no circumstances or conditions that
have resulted in any contamination or, if circumstances or conditions have
resulted in any contamination or if such circumstances or conditions require
remedial action, taking such actions with respect to the affected Mortgaged
Property is reasonably likely to produce a greater recovery on a present value
basis that not taking such actions. See 'Certain Legal Aspects of Mortgage
Loans--Environmental Legislation'.
LIMITED LIQUIDITY AND MARKET VALUE
There is currently no secondary market for the Offered Certificates. In
addition, the Offered Certificates will not be listed on any securities exchange
and will not be quoted in an automated quotation system of a registered
securities association. While the underwriter with respect to a series of
Certificates may intend to make a secondary market in the related Offered
Certificates, underwriters are under no obligation to do so. Accordingly, there
can be no assurance that a secondary market for any series of Offered
Certificates will develop. Moreover, if a secondary market does develop, there
can be no assurance that it will provide
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holders of Offered Certificates with liquidity of investment or that it will
continue for the life of the Offered Certificates. Lack of liquidity could
result in a substantial decrease in the market value of the Offered
Certificates. In addition, the market value of the Offered Certificates at any
time may be affected by many factors, including then prevailing interest rates,
and no representation is made by any person or entity as to the market value of
any Offered Certificates at any time.
ERISA CONSIDERATIONS
Generally, ERISA applies to investments made by employee benefit plans and
transactions involving the assets of such plans. Due to the complexity of
regulations which 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 RESIDUAL CERTIFICATES
Holders of Residual Certificates will be required to report on their
federal income tax returns as ordinary income their pro rata share of the
taxable income of the REMIC, regardless of the amount or timing of their receipt
of cash payments, as described in 'Federal Income Tax Consequences--Federal
Income Tax Consequences for REMIC Certificates'. Accordingly, under certain
circumstances, holders of Offered Certificates that constitute Residual
Certificates may have taxable income and tax liabilities arising from such
investment during a taxable year in excess of the cash received during such
period. The requirement that holders of Residual Certificates report their pro
rata share of the taxable income and net loss of the REMIC will continue until
the Certificate Balances of all classes of Certificates of the related series
have been reduced to zero, even though holders of Residual Certificates have
received full payment of their stated interest and principal. A portion (or, in
certain circumstances, all) of such Certificateholder's share of the REMIC
taxable income may be treated as 'excess inclusion' income to such holder which
(i) generally, will not be subject to offset by losses from other activities,
(ii) for a tax-exempt holder, will be treated as unrelated business taxable
income and (iii) for a foreign holder, will not qualify for exemption from
withholding tax. Individual holders of Residual Certificates may be limited in
their ability to deduct servicing fees and other expenses of the REMIC. In
addition, Residual Certificates are subject to certain restrictions on transfer.
Because of the special tax treatment of Residual Certificates, the taxable
income arising in a given year on a Residual Certificate will not be equal to
the taxable income associated with investment in a corporate bond or stripped
instrument having similar cash flow characteristics and pre-tax yield.
Therefore, the after-tax yield on the Residual Certificate may be significantly
less than that of a corporate bond or stripped instrument having similar cash
flow characteristics.
CERTAIN FEDERAL TAX CONSIDERATIONS REGARDING ORIGINAL ISSUE DISCOUNT
Accrual Certificates will be, and certain of the other Classes of
Certificates of a series may be, issued with 'original issue discount' for
federal income tax purposes, which generally will result in recognition of some
taxable income in advance of the receipt of cash attributable to such income.
See 'Federal Income Tax Consequences--Federal Income Tax Consequences for REMIC
Certificates--Taxation of Regular Certificates'.
CONSENT
Under certain circumstances, the consent or approval of the holders of a
specified percentage of the aggregate Certificate Balance of all outstanding
Certificates of all series or a similar means of allocating decision-making
under the Agreement ('Voting Rights') will be required to direct, and will be
sufficient to bind all Certificateholders to, certain actions, including
amending the related Agreement in certain circumstances. See 'Description of the
Agreements--Events of Default,' '--Rights Upon Event of Default' and
'--Amendment'.
BOOK-ENTRY REGISTRATION
If so provided in the Prospectus Supplement, one or more classes of the
Certificates will be initially represented by one or more certificates
registered in the name of Cede, the nominee for DTC, and will not be registered
in the names of the Certificateholders or their nominees. Because of this,
unless and until Definitive Certificates are issued, Certificateholders will not
be recognized by the Trustee as 'Certificateholders' (as that term is to be used
in the related Agreement). Hence, until such time, Certificateholders will be
able to exercise the rights of Certificateholders only indirectly through DTC
and its participating organizations. See 'Description of the
Certificates--Book-Entry Registration and Definitive Certificates'.
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DESCRIPTION OF THE TRUST FUNDS
MORTGAGE ASSETS
The primary assets of each Trust Fund (the 'Mortgage Assets') will include
Multifamily and Commercial Loans (collectively, the 'Mortgage Loans'). The
Mortgage Assets will not be guaranteed or insured by the Depositor or any of its
affiliates. The Prospectus Supplement will describe any guarantee or insurance
relating to the Mortgage Assets by any governmental agency or instrumentality or
by any other person. 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 and may be an
affiliate of the Depositor.
MORTGAGE LOANS
The Mortgage Loans will be secured by liens on, or security interests in,
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 ('Multifamily Properties' and the related loans,
'Multifamily Loans') or (ii) office buildings, retail stores, hotels or motels,
nursing homes, hospitals or other health care-related facilities, mobile home
parks, industrial plants, mixed use or other types of commercial properties
('Commercial Properties' and the related loans, 'Commercial Loans') located in
any one of the fifty states or the District of Columbia or such other locations
as are disclosed in the related Prospectus Supplement. The Mortgage Loans will
be secured by mortgages or deeds of trust or other similar security instruments
creating a first or more junior lien on Mortgaged Properties. Multifamily
Property may include mixed commercial and residential structures and may include
apartment buildings owned by private cooperative housing corporations
('Cooperatives'). The Mortgaged Properties may include leasehold interest in
properties, the title to which is held by third party lessors. 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. The Mortgage Loans will be evidenced by promissory
notes (the 'Mortgage Notes') secured by mortgages or deeds of trust (the
'Mortgages') creating a lien on the Mortgaged Properties. Mortgage Loans will
generally also be secured by an assignment of leases and rents and/or operating
or other cash flow guarantees relating to the Mortgage Loan.
DEFAULT AND LOSS CONSIDERATIONS WITH RESPECT TO THE MORTGAGE LOANS
Mortgage Loans secured by commercial and multifamily properties are
markedly different from owner-occupied single-family home mortgage loans. The
repayment of loans secured by commercial or multifamily properties is typically
dependent upon the successful operation of such property rather than upon the
liquidation value of the real estate. The Mortgage Loans will be non-recourse
loans, which means that, absent special facts, the mortgagee may look only to
the Net Operating Income from the property for repayment of the mortgage debt,
and not to any other of the mortgagor's assets, in the event of the mortgagor's
default. Lenders typically look to the Debt Service Coverage Ratio of a loan
secured by income-producing property as an important measure of the risk of
default on such a loan. The 'Debt Service Coverage Ratio' of a Mortgage Loan at
any given time is the ratio of the Net Operating Income for a twelve-month
period to the annualized scheduled payments on the Mortgage Loan. 'Net Operating
Income' is typically defined as total operating revenues (including primarily
rental income and any expense reimbursement, ancillary income, late charges and
deposit forfeitures) minus total operating expenses (including primarily
expenses for advertising, general administration, management fees and
disbursements, utilities, repairs and maintenance, insurance, real estate taxes
and replacement reserves based solely on the mortgagor's estimates of the useful
lives of various assets). Net Operating Income does not reflect capital
expenditures or partnership expenses. The Net Operating Income of a Mortgaged
Property will fluctuate over time and may be sufficient or insufficient to cover
debt service on the related Mortgage Loan at any given time.
As the primary component of Net Operating Income, rental income (and
maintenance payments from tenant-stockholders of a Cooperative) is subject to
the vagaries of the applicable real estate market and/or business climate.
Properties typically leased, occupied or used on a short-term basis, such as
health care-related facilities, hotels and motels, and mini-warehouse and self-
storage facilities, tend to be affected more rapidly by changes in market or
business conditions than do properties leased, occupied or used for longer
periods, such as (typically) warehouses, retail stores, office buildings and
industrial plants. Commercial Loans may be secured by owner-occupied Mortgaged
Properties or Mortgaged Properties leased to a single tenant. Accordingly, a
decline in the financial condition of the mortgagor 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.
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Changes in the expense components of Net Operating Income due to the
general economic climate or economic conditions in a locality or industry
segment, such as increases in interest rates, real estate and personal property
tax rates and other operating expenses including energy costs; changes in
governmental rules, regulations and fiscal policies, including environmental
legislation; and acts of God may also affect the risk of default on the related
Mortgage Loan. As may be further described in the related Prospectus Supplement,
in some cases leases of Mortgaged Properties may provide that the lessee, rather
than the mortgagor, is responsible for payment of certain of these expenses
('Net Leases'); however, because leases are subject to default risks as well
when a tenant's income is insufficient to cover its rent and operating expenses,
the existence of such 'net of expense' provisions will only temper, not
eliminate, the impact of expense increases on the performance of the related
Mortgage Loan.
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 and hospitals,
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 may be particularly subject to legal
limitations and regulations but, because of such regulations, may also be less
sensitive to fluctuations in market rents generally.
The liquidation value of any Mortgaged Property may be adversely affected
by risks generally incident to interests in real property, including declines in
rental or occupancy rates. Lenders generally use the Loan-to-Value Ratio of a
mortgage loan as a measure of risk of loss if a property must be liquidated upon
a default by the mortgagor. The 'Loan-to-Value Ratio' of a Mortgage Loan at any
given time is the ratio (expressed as a percentage) of the then outstanding
principal balance of the Mortgage Loan to the Value of the related Mortgaged
Property. The 'Value' of a Mortgaged Property, other than with respect to
Refinance Loans, is generally the lesser of (a) the appraised value determined
in an appraisal obtained by the originator at origination of such loan and (b)
the sales price for such property. Refinance Loans are loans made to refinance
existing loans. The Value of the Mortgaged Property securing a Refinance Loan is
the appraised value thereof determined in an appraisal obtained at the time of
origination of the Refinance Loan. The Value of a Mortgaged Property as of the
date of initial issuance of the related series of Certificates may be less than
the value at origination and will fluctuate from time to time based upon changes
in economic conditions and the real estate market.
Appraised values of income-producing properties may be based on the market
comparison method (recent resale value of comparable properties at the date of
the appraisal), the cost replacement method (the cost of replacing the property
at such date), the income capitalization method (a projection of value based
upon the property's projected net cash flow), or upon a selection from or
interpolation of the values derived from such methods. Each of these appraisal
methods presents analytical challenges. 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 create significantly different results, or
where a high Loan-to-Value Ratio accompanies a high Debt Service Coverage Ratio
(or vice versa), the analysis of default and loss risks is even more difficult.
While the Depositor believes that the foregoing considerations are
important factors that generally distinguish the Mortgage Loans from
single-family mortgage loans and provide insight to the risks associated with
income-producing real estate, there is no assurance that such factors will in
fact have been 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 Certain Mortgage Loans and Mortgaged Properties,'
'--Balloon Payments,' '--Mortgagor Default' and '--Mortgagor Type'.
MORTGAGE LOAN INFORMATION IN PROSPECTUS SUPPLEMENTS
Each Prospectus Supplement will contain information, as of the date of such
Prospectus Supplement and to the extent then applicable and specifically known
to the Depositor, with respect to the Mortgage Loans constituting related Trust
Assets, including (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 of property securing the
Mortgage Loans (e.g., Multifamily Property or Commercial Property and the type
of property in each such category), (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
Loan-to-Value Ratios at origination of the Mortgage Loans, (vi) the Mortgage
Rates or range of Mortgage Rates and the weighted average Mortgage Rate borne by
the
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Mortgage Loans, (vii) the geographical distribution of the Mortgaged Properties
on a state-by-state basis, (viii) information with respect to prepayment
provisions, if any, of the Mortgage Loans, (ix) the weighted average Retained
Interest, if any, (x) with respect to Mortgage Loans with adjustable Mortgage
Rates ('ARM Loans'), the adjustment dates, the highest, lowest and weighted
average margin, and the maximum Mortgage Rate variation at the time of any
adjustment and over the life of the ARM Loan, (xi) the Debt Service Coverage
Ratio either at origination or as of a more recent date (or both) and (xii)
information regarding the payment characteristics of the Mortgage Loans,
including without limitation balloon payment and other amortization provisions.
The related Prospectus Supplement will also contain certain information
available to the Depositor with respect to the provisions of leases and the
nature of tenants of the Mortgaged Properties and other information referred to
in a general manner under 'Description of the Trust Funds--Mortgage
Assets--Default and Loss Considerations with Respect to the Mortgage Loans'
above. If specific information respecting the Mortgage Loans is not known to the
Depositor at the time Certificates are initially offered, more general
information of the nature described above will be provided in the Prospectus
Supplement, and specific information will be set forth in a report which will be
available to purchasers of the related Certificates at or before the initial
issuance thereof and will be filed as part of a Current Report on Form 8-K with
the Commission within fifteen days after such initial issuance.
MORTGAGE UNDERWRITING STANDARDS AND PROCEDURES
The underwriting procedures and standards for Mortgage Loans included in a
Mortgage Pool will be specified in the related Prospectus Supplement to the
extent such procedures and standards are known or available. Such Mortgage Loans
may be originated by an affiliate of the Depositor in contemplation of the
transactions contemplated by this Prospectus and the related Prospectus
Supplement or may be have been originated by third-parties and acquired by the
Depositor directly or through its affiliates in negotiated transactions.
Underwriting procedures are intended to evaluate, among other things, the
income derived from the Mortgaged Property, the capabilities of the management
of the project, including a review of management's past performance record, its
management reporting and control procedures (to determine its ability to
recognize and respond to problems) and its accounting procedures to determine
cash management ability, the obligor's credit standing and repayment ability and
the value and adequacy of the Mortgaged Property as collateral. Mortgage Loans
insured by the Federal Housing Administration ('FHA'), a division of the United
States Department of Housing and Urban Development ('HUD'), will have been
originated by mortgage lenders which are approved by HUD as an FHA mortgagee in
the orginated course of their real estate lending activities and will comply
with the underwriting policies of FHA.
The adequacy of a Mortgaged Property as security for repayment will
generally have been determined by appraisal by appraisers selected in accordance
with preestablished guidelines established by or acceptable to the loan
originator for appraisers or other appropriate market studies. If so specified
in the related Prospectus Supplement, the appraiser must have personally
inspected the property and verified that it was in good condition and that
construction, if new, has been completed. An appraisal can be based upon, among
other things, a cash flow analysis and/or a market data analysis of recent sales
of comparable properties or a replacement cost analysis based on the current
cost of constructing or purchasing a similar property.
No assurance can be given that values of the Mortgaged Properties have
remained or will remain at their levels on the dates of origination of the
related Mortgage Loans. Further, there is no assurance that appreciation of real
estate values generally will limit loss experiences on commercial properties or
multifamily properties. If the commercial real estate market should experience
an overall decline in property values such that the outstanding balances of the
Mortgage Loans and any additional financing on the Mortgaged Properties in a
particular Mortgage Pool become equal to or greater than the value of the
Mortgaged Properties, the actual rates of delinquencies, foreclosures and losses
could be higher than those now generally experienced in the mortgage lending
industry. Even where Credit Support covers all losses resulting from defaults
and foreclosure, the effect of defaults and foreclosures may be to increase
prepayment experience on the Mortgage Loans, thus shortening weighted average
life and affecting yield to maturity.
PAYMENT PROVISIONS OF THE MORTGAGE LOANS
The Mortgage Loans generally will (i) have individual principal balances at
origination of not less than $25,000, (ii) have original terms to maturity of
not more than 40 years and (iii) provide for payments of principal, interest or
both, on due dates that occur monthly, quarterly or semi-annually or at such
other interval as is specified in the related Prospectus Supplement. Mortgage
Loan may: (i) 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 from an adjustable to a
fixed Mortgage Rate, or from
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a fixed to an adjustable Mortgage Rate, from time to time at the mortgagor's
election; (ii) provide for scheduled payments to maturity or payments that
adjust from time to time to accommodate changes in the Mortgage Rate or to
reflect the occurrence of certain events, and may provide for negative
amortization or accelerated amortization, (iii) be fully amortizing or require a
balloon payment due on its stated maturity date; and (iv) contain prohibitions
on prepayment (a 'Lock-out Period' and the date of expiration thereof, a
'Lock-out Date') 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. In the event that holders of any
class or classes of Offered Certificates will be entitled to all or a portion of
any Prepayment Premiums collected in respect of Mortgage Loans, the related
Prospectus Supplement will specify the method or methods by which any such
amounts will be allocated. A Mortgage Loan may also contain provisions entitling
the mortgagee to a share of profits realized from the operation or disposition
of the Mortgaged Property ('Equity Participations'), as described in the related
Prospectus Supplement. In the event that holders of any class or classes of
Offered Certificates will be entitled to all or a portion of an Equity
Participation, the related Prospectus Supplement will specify the terms and
provisions of the Equity Participation and the method or methods by which
distributions in respect thereof will be allocated among such Certificates.
MBS
Any mortgage pass-through certificates or other mortgage-backed securities
evidencing interests in or secured by Mortgage Loans (collectively, the 'MBS')
will have been issued pursuant to a participation and servicing agreement, a
pooling and servicing agreement, an indenture or similar agreement (an 'MBS
Agreement'). A seller (the 'MBS Issuer') and/or servicer (the 'MBS Servicer') of
the underlying Mortgage Loans will have entered into the MBS Agreement with a
trustee or a custodian under the MBS Agreement (the 'MBS Trustee'), if any, or
with the original purchaser of the interest in the underlying Mortgage Loans
evidenced by the MBS.
The MBS Issuer of any MBS may include the Depositor or an affiliate of the
Depositor. Any MBS (i) will have been issued in an offering exempt from the
registration requirements of the 1933 Act and, if offered in a private
placement, will have been held by persons other than the issuer of such MBS or
its affiliates for at least two years or (ii) will have been issued in an
offering registered under the 1933 Act, and thus may include one or more Classes
of Certificates.
Distributions of principal and interest will be made on MBS on the dates
specified in the related Prospectus Supplement. The MBS may be issued in one or
more classes with characteristics similar to the classes of Certificates
described in this Prospectus. Principal and interest distributions will be made
on the MBS by the MBS Trustee or the MBS Servicer. The MBS Issuer or the MBS
Servicer or another person specified in the related Prospectus Supplement may
have the right or obligation to repurchase or substitute assets underlying the
MBS after a certain date or under other circumstances specified in the related
Prospectus Supplement.
Enhancement in the form of reserve funds, subordination of other credit
support similar to that described for the Certificates under 'Description of
Credit Support' may be provided with respect to the MBS. The type,
characteristics and amount of such credit support, if any, will be a function of
certain characteristics of the Mortgage Loans evidenced or secured by such MBS
and other factors and generally will have been established for the MBS on the
basis of requirements of either any Rating Agency that may have assigned a
rating to the MBS or the initial purchasers of the MBS. In addition, MBS may
consist of classes of MBS which are subordinate to other classes of MBS of the
same series.
The Prospectus Supplement for a series of Certificates evidencing interests
in Mortgage Assets that included MBS will specify, to the extent available, (i)
the aggregate approximate initial and outstanding principal amount and type of
the MBS to be included in the Trust Fund, (ii) the original and remaining term
to stated maturity of the MBS, if applicable, (iii) the pass-through or bond
rate of the MBS or formula for determining such rates, (iv) the applicable
payment provisions for the MBS, (v) the MBS Issuer, MBS Servicer and MBS
Trustee, as applicable, (vi) certain characteristics of the credit support, if
any, such as subordination, reserve funds, insurance policies, letters of credit
or guarantees relating to the related Underlying Mortgage Loans or directly to
such MBS, (vii) the characteristics of any subordination to which such MBS may
be subject; (viii) the terms on which the related Underlying Mortgage Loans for
such MBS or the MBS may, or are required to, be purchased prior to their
maturity, (ix) the terms on which Mortgage Loans may be substituted for those
originally underlying the MBS, (x) the servicing fees payable under the MBS
Agreement, (xi) to the extent available to the Depositor, the type of
information in respect of the Underlying Mortgage Loans described under
'Description of the Trust Funds--Mortgage Assets--Mortgage Loan Information in
Prospectus Supplements' and (xii) the characteristics of any cash flow
agreements that are included as part of the trust fund evidenced or secured by
the MBS.
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COLLECTION ACCOUNTS
Each Trust Fund will include one or more accounts (collectively, the
'Collection Account') established and maintained on behalf of the
Certificateholders into which the person or persons designated in the related
Prospectus Supplement will deposit all payments and collections received or
advanced with respect to the Mortgage Assets and other assets in the Trust Fund.
A Collection Account may be maintained as an interest bearing or a non-interest
bearing account, and funds held therein may be invested in certain short-term,
investment grade obligations.
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 a letter of credit, insurance policy for the Mortgage Loans, certificate
guarantee insurance, guarantee, reserve fund or another type of credit support,
or a combination thereof (any such coverage with respect to the Certificates of
any series, 'Credit Support'). The amount and types of coverage, the
identification of the entity providing the coverage (if applicable) and related
information with respect to each type of Credit Support, if any, will be
described in the Prospectus Supplement for a series of Certificates. See 'Risk
Factors--Credit Support Limitations' and 'Description of Credit Support'.
CASH FLOW AGREEMENTS
The Trust Fund may include guaranteed investment contracts pursuant to
which moneys held in the funds and accounts established for the related series
will be invested at a specified rate. The Trust Fund may also include certain
other agreements, such as interest rate exchange agreements, interest rate cap
or floor agreements, currency exchange agreements or similar agreements provided
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'), 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 provide certain information with respect to the obligor under
any such Cash Flow Agreement.
USE OF PROCEEDS
The net proceeds to be received from the sale of the Certificates will be
applied by the Depositor primarily to the purchase of Trust Assets. Any
remaining proceeds will be used by the Depositor for general corporate purposes
(such as paying its allocable share of rent, administrative expenses and the
cost of services rendered by employees of its affiliates) and
transaction-specific expenses (including, but not limited to, obtaining any
external credit enhancement, establishing any reserve funds and paying other
costs incurred in connection with structuring and issuing the Certificates). The
Depositor expects to sell the Certificates from time to time, but the timing and
amount of offerings of Certificates will depend on a number of factors,
including the volume of Mortgage Assets acquired by the Depositor, prevailing
interest rates, availability of funds and general market conditions.
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<PAGE>
YIELD CONSIDERATIONS
GENERAL
The yield on any Offered Certificate will depend on the price paid by the
Certificateholder, the Pass-Through Rate of the Certificate, the receipt and
timing of receipt of distributions on the Certificate and the weighted average
life of the Mortgage Assets in the related Trust Fund. See 'Risk
Factors--Average Life of Certificates; Prepayments; Yields'.
PASS-THROUGH RATE
Certificates of any class within a series may have fixed, variable or
adjustable Pass-Through Rates, which may or may not be based upon the interest
rates borne by the Mortgage Assets in the related Trust Fund. The Prospectus
Supplement with respect to any series of Certificates will specify the
Pass-Through Rate for each class of such Certificates or in the case of 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 Asset
on the Pass-Through Rate of one or more classes of Certificates; and whether the
distributions of interest on the Certificates of any class will be dependent, in
whole or in part, on the performance of any obligor under a Cash Flow Agreement.
TIMING OF PAYMENT OF INTEREST AND PRINCIPAL
Each payment of interest on the Certificates (or addition to the
Certificate Balance of a class of Accrual Certificates) on a Distribution Date
will include interest accrued during the Interest Accrual Period for such
Distribution Date. If the Interest Accrual Period ends on a date other than a
Distribution Date for the related series, the yield realized by the holders of
such Certificates may be lower than the yield that would result in the Interest
Accrual Period ended on such Distribution Date. In addition, interest accrued
for an Interest Accrual period for one or more classes of Certificates may be
calculated on the assumption that distributions of principal (and additions to
the Certificate Balance of Accrual Certificates) and allocations of losses on
the Mortgage Assets may be made on the first day of the Interest Accrual Period
for a Distribution Date and not on such Distribution Date. Such method would
produce a lower effective yield than if interest were calculated on the basis of
the actual principal amount outstanding during an Interest Accrual Period. The
Interest Accrual Period for any class of Offered Certificates will be described
in the related Prospectus Supplement.
PRINCIPAL PREPAYMENTS
The yield to maturity on the Certificates will be affected by the rate of
principal payments on the Mortgage Assets (including principal prepayments on
Mortgage Loans resulting from both voluntary prepayments by the mortgagors and
involuntary liquidations). The rate at which principal prepayments occur on the
Mortgage Loans will be affected by a variety of factors, including, without
limitation, the terms of the Mortgage Loans, the level of prevailing interest
rates, the availability of mortgage credit and economic, demographic,
geographic, tax, legal and other factors. In general, however, if prevailing
interest rates fall significantly below the Mortgage Rates on the Mortgage Loans
comprising or underlying the Mortgage Assets in a particular Trust Fund, such
Mortgage Loans are likely to be the subject of higher principal prepayments than
if prevailing rates remain at or above the rates borne by such Mortgage Loans.
In this regard, it should be noted that certain Mortgage Assets may consist of
Mortgage Loans with different Mortgage Rates and the stated pass-through or
pay-through interest rate of certain MBS may be a number of percentage points
higher or lower than certain of the Underlying Mortgage Loans. The rate of
principal payments on some or all of the classes of Certificates of a series
will correspond to the rate of principal payments on the Mortgage Assets in the
related Trust Fund and is likely to be affected by the existence of Lock-out
Periods and Prepayment Premium provisions of the Mortgage Loans underlying or
comprising such Mortgage Assets, and by the extent to which the servicer of any
such Mortgage Loan is able to enforce such provisions. Mortgage Loans with a
Lock-out Period or a Prepayment Premium provision, to the extent enforceable,
generally would be expected to experience a lower rate of principal prepayments
than otherwise identical Mortgage Loans without such provisions, with shorter
Lock-out Periods or with lower Prepayment Premiums.
If the purchaser of a Certificate offered at a discount calculates its
anticipated yield to maturity based on an assumed rate of distributions of
principal that is faster than that actually experienced on the Mortgage Assets,
the actual yield to maturity will be lower than that so calculated. Conversely,
if the purchaser of a Certificate offered at a premium calculates its
anticipated yield to maturity based on an assumed rate of distributions or
principal that is slower than that actually experienced on the Mortgage Assets,
the actual yield to maturity will be lower than that so calculated. In either
case, the effect of voluntary and involuntary prepayments of the Mortgage Assets
on the yield on one or more classes of the Certificates of such series in the
related Trust Fund may be mitigated or exacerbated by any provisions for
sequential or selective distribution of principal to such classes.
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<PAGE>
The timing of changes in the rate of principal payments on the Mortgage
Assets may significantly affect an investor's actual yield to maturity, even if
the average rate of distributions of principal is consistent with an investor's
expectation. In general, the earlier a principal payment is received on the
Mortgage Assets and distributed on a Certificate, the greater the effect on such
investor's yield to maturity. The effect of an investor's yield of principal
payments occurring at a rate higher (or lower) than the rate anticipated by the
investor during a given period may not be offset by a subsequent like decrease
(or increase) in the rate of principal payments.
PREPAYMENTS--MATURITY AND WEIGHTED AVERAGE LIFE
The rates at which principal payments are received on the Mortgage Assets
included in or comprising a Trust Fund and the rate at which payments are made
from any Credit Support or Cash Flow Agreement for the related series of
certificates may affect the ultimate maturity and the weighted average life of
each class of such series. Prepayments on the Mortgage Loans comprising or
underlying the Mortgage Assets in a particular Trust Fund will generally
accelerate the rate at which principal is paid on some or all of the classes of
the Certificates of the related series.
Weighted average life refers to the average amount of time that will elapse
from the date of issue of a security until each dollar of principal of such
security will be repaid to the investor. The weighted average life of a class of
Certificates of a series will be influenced by the rate at which principal on
the Mortgage Loans comprising or underlying the Mortgage Assets is paid to such
class, which may be in the form of scheduled amortization or prepayments (for
this purpose, the term 'prepayment' includes prepayments, in whole or in part,
and liquidations due to default).
In addition, the weighted average life of the Certificates may be affected
by the varying maturities of the Mortgage Loans comprising or underlying the
Mortgage Assets. If any Mortgage Loans comprising or underlying the Mortgage
Assets in a particular Trust Fund have actual terms to maturity of less than
those assumed in calculating final scheduled Distribution Dates for the classes
of Certificates of the related series, one or more classes of such Certificates
may be fully paid prior to their respective final scheduled Distribution Dates,
even in the absence of prepayments. Accordingly, the prepayment experience of
the Mortgage Assets will, to some extent, be a function of the mix of Mortgage
Rates and maturities of the Mortgage Loans comprising or underlying such
Mortgage Assets. See 'Description of the Trust Funds'.
Prepayments on loans are also commonly measured relative to a prepayment
standard or model, such as the Constant Prepayment Rate ('CPR') prepayment model
or the Standard Prepayment Assumption ('SPA') prepayment model, each as
described below. CPR represents a constant assumed rate of prepayment each month
relative to the then outstanding principal balance of a pool of loans for the
life of such loans. SPA represents an assumed rate of prepayment each month
relative to the then outstanding principal balance of a pool of loans. A
prepayment assumption of 100% 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 thirtieth month. Beginning in the thirtieth 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 pool of loans, including the Mortgage
Loans underlying or comprising the Mortgage Assets. Moreover, CPR and SPA were
developed based upon historical prepayment experience for single-family loans.
Thus, it is likely that prepayment of any Mortgage Loans comprising or
underlying the Mortgage Assets for any series will not 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 life 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 Mortgage Loans
comprising or underlying the related Mortgage Assets are made at rates
corresponding to various prepayment rates. Such tables and assumptions are
intended to illustrate the sensitivity of weighted average life of the
Certificates to various prepayment rates and will not be intended to predict or
to provide information that will enable investors to predict the actual weighted
average life of the Certificates. It is unlikely that prepayment of any Mortgage
Loans comprising or underlying the Mortgage Assets for any series will conform
to any particular prepayment rate.
26
<PAGE>
OTHER FACTORS AFFECTING WEIGHTED AVERAGE LIFE
Type of Mortgage Loan
A number of Mortgage Loans may have balloon payments due at maturity, and
because the ability of a mortgagor to make a balloon payment typically will
depend upon its ability either to refinance the loan or to sell the related
Mortgaged Property, there is a risk that a number of Mortgage Loans having
balloon payments may default at maturity, or that the servicer may extend the
maturity of such a Mortgage Loan in connection with a workout. In the case of
defaults, recovery of proceeds may be delayed by, among other things, bankruptcy
of the mortgagor or adverse conditions in the market where the property is
located. In order to minimize losses on defaulted Mortgage Loans, the servicer
may be given considerable flexibility to modify Mortgage Loans that are in
default or as to which a default is reasonably foreseeable. Any defaulted
balloon payment or modification that extends the maturity of a Mortgage Loan
will tend to extend the weighted average life of the Certificates, thereby
lengthening the period of time elapsed from the date of issuance of a
Certificate until it is retired.
FORECLOSURES AND PAYMENT PLANS
The number of foreclosures and the principal amount of the Mortgage Loans
comprising or underlying the Mortgage Assets that are foreclosed in relation to
the number of Mortgage Loans that are repaid in accordance with their terms will
affect the weighted average life of the Mortgage Loans comprising or underlying
the Mortgage Assets and that of the related series of Certificates. Servicing
decisions made with respect to the Mortgage Loans, including the use of payment
plans prior to a demand for acceleration and the restructuring of Mortgage Loans
in bankruptcy proceeds, may also have an effect upon the payment patterns of
particular Mortgage Loans and thus the weighted average life of the
Certificates.
DUE-ON-SALE AND DUE-ON-ENCUMBRANCE CLAUSES
Acceleration of mortgage payments as a result of certain transfers of or
the creation of encumbrances upon underlying Mortgaged Property is another
factor affecting prepayment rates. A number of the Mortgage Loans comprising or
underlying the Mortgage Assets may include 'due-on-sale' clauses or
'due-on-encumbrance' clauses that allow the holder of the Mortgage Loans to
demand payment in full of the remaining principal balance of the Mortgage Loans
upon sale or certain other transfers of or the creation of encumbrances upon the
related Mortgaged Property. With respect to any Whole Loans, the Master Servicer
will, if required by the related Agreement, on behalf of the Trust Fund, employ
its usual practices in determining whether to exercise any such right that the
Trustee may have as mortgagee to accelerate payment of the Whole Loan. See
'Certain Legal Aspects of Mortgage Loans--Due-on-Sale and Due-on-Encumbrance'
and 'Description of the Agreements--Due-on-Sale and Due-on-Encumbrance
Provisions'.
THE DEPOSITOR
Capco America Securitization Corporation, the Depositor, formerly known as
Nomura Asset Securities Corporation, a Delaware corporation, was organized on
June 23, 1992 for the purpose of acquiring Mortgage Assets and selling interests
therein or bonds secured thereby. Capco America Securitization Corporation is a
wholly owned subsidiary of The Capital Company of America LLC ('CCA'), which is
in turn a wholly-owned subsidiary of Nomura Asset Capital Corporation, which is
in turn a wholly-owned subsidiary of Nomura Holding America Inc. ('NHA'), a
United States-based holding company, incorporated in Delaware, which is wholly
owned by The Nomura Securities Co., Ltd., a Japanese corporation. The Nomura
Securities Co., Ltd. is engaged in the domestic and international securities
business. It is currently contemplated that, upon the occurrence of certain
events, approximately 30% of the direct or indirect equity in CCA will be
transferred to current senior management of CCA and that NHA will own, directly
or indirectly, approximately 70% of the remaining equity in CCA. The Depositor
maintains its principal office at Two World Financial Center--Building B, 21st
Floor, New York, New York 10281-1198. Its telephone number is (212) 667-9300.
The Depositor does not have, nor is it expected in the future to have, any
significant assets.
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<PAGE>
DESCRIPTION OF THE CERTIFICATES
GENERAL
The Certificates of each series (including any class of Certificates not
offered hereby) will represent the entire beneficial ownership interest in the
Trust Fund created pursuant to the related Agreement. Each series of
Certificates will consist of one or more classes or subclasses of Certificates
that may be senior (collectively, 'Senior Certificates') or subordinate
(collectively, 'Subordinate Certificates') Certificates. Each series may consist
of one or more of the types of Certificates described below.
Types of Certificates classified by interest payments can include:
<TABLE>
<CAPTION>
CATEGORY OF CLASS DEFINITION
- ----------------- ----------
<S> <C>
Ascending Rate........... Certificates that have predetermined Pass-Through
Rates that change one or more times on dates
determined before issuance.
Fixed Rate............... Certificates with Pass-Through Rates that are fixed
throughout the life of such Certificates.
Floating Rate............ Certificates with Pass-Through Rates that are reset
periodically based on an index and that vary directly
with changes in the index.
Inverse Floating Rate.... Certificates with Pass-Through Rates that are reset
periodically based on an index and that vary inversely
with changes in the index.
Stripped Interest........ Certificates that receive some or all of the interest
payments made on the underlying Mortgage Loans or
other Trust Fund assets and little or no principal.
Stripped Interest Certificates have either a nominal
or a notional principal amount. A nominal principal
amount represents actual principal that will be paid
on the class. It is referred to as nominal since it is
extremely small compared to other classes of
Certificates. A notional principal amount is the
amount used as a reference to calculate the amount of
interest due on a Stripped Interest Certificate that
is not entitled to any principal.
Stripped Principal....... Certificates that do not receive any interest.
WAC (or Weighted Average
Coupon)................ Certificates whose Pass-Through Rate represents a
blended interest rate that may change from period to
period.
Accrual.................. Certificates that accrete all or a portion of their
interest, which is added to the outstanding principal
balance. This accretion may continue until the class
of Certificates begins receiving principal payments,
until some other event has occurred or until the class
is retired.
</TABLE>
Types of Certificates classified by allocation of principal distributions
can include:
<TABLE>
<S> <C>
PAC (or Planned
Amortization Class).... Certificates that are designed to receive principal
payments using a predetermined schedule derived by
assuming two constant prepayment rates for the
underlying Mortgage Loans. A PAC schedule will reflect
a 'structuring range' both above and below the
Prepayment Assumption for the related series. The PAC
Certificates in any series may include two or more
'types'. The PAC Certificates within any type have a
single structuring range. The different types have
different structuring ranges and/or different
principal payment priorities.
Scheduled................ Certificates that are designed to receive principal
payments using a predetermined schedule, but that are
not designated as PAC or TAC Certificates. Classes
consisting of both PAC and TAC components are also
designated as Scheduled Classes.
Sequential Pay........... Certificates that receive principal payments in a
prescribed sequence, that do not have predetermined
schedules and that under all circumstances receive
payments of principal continuously from the first
Distribution Date on which they receive principal
until they are retired. Sequential Pay Certificates
may receive principal payments
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
CATEGORY OF CLASS DEFINITION
- ----------------- ----------
<S> <C>
concurrently with one or more other classes of
Sequential Pay Certificates. A single class of
Certificates that receives principal payments before
or after all other classes in the same series may be
identified as a Sequential Pay Certificate.
Sticky Jump/Non-Sticky
Jump................... Certificates whose principal payment priorities change
temporarily or permanently upon the occurrence of one
or more 'trigger' events. A Sticky Jump Certificate
'jumps' to its new priority on the first Distribution
Date when the trigger condition is met and retains
('sticks' to) that priority until retired. If the
principal payment change is not permanent, the
Certificate is referred to as a Non-Sticky Jump.
Strip.................... Certificates that receive a constant proportion, or
'strip', of the principal payments on the underlying
Mortgage Loans or other Trust Fund assets.
Support (or Companion)... Certificates that receive principal payments on any
Payment Date only if scheduled payments have been made
on specified PAC, TAC and/or Scheduled Classes.
TAC (or Targeted
Amortization Class).... Certificates that are designed to receive principal
payments using a predetermined schedule derived by
assuming a single constant prepayment rate for the
underlying Mortgage Loans. The TAC Certificates in any
series may include two or more 'types'. The different
types have different principal payment priorities
and/or have schedules that are derived from different
assumed prepayment rates.
Index Allocation Class... Certificates whose principal payment allocations are
based on the value of an index.
</TABLE>
The Prospectus Supplement for any series including classes similar to any
of those described above will contain a complete description of their
characteristics and risk factors, including, as applicable, (i) mortgage
principal prepayment effects on the weighted average lives of classes; (ii) the
risk that Stripped Interest Certificates purchased at a premium may not return
their purchase prices under rapid prepayment scenarios and (iii) the degree to
which an investor's yield is sensitive to principal prepayment. Any class of
Certificates may be divided into two or more subclasses of Certificates.
Each class of Offered Certificates of a series will be issued in minimum
denominations corresponding to Certificate Balances or, in case of Stripped
Interest Certificates, notional amounts specified in the related Prospectus
Supplement. The transfer of any Offered Certificates may be registered and such
Certificates may be exchanged without the payment of any service charge payable
in connection with such registration of transfer or exchange, but the Depositor
or the Trustee or any agent thereof may require payment of a sum sufficient to
cover any tax or other governmental charge. One or more classes of Certificates
of a series may be issued in definitive form ('Definitive Certificates') or in
book-entry form ('Book-Entry Certificates'), as provided in the related
Prospectus Supplement. See 'Risk Factors--Book-Entry Registration' and
'Description of the Certificates--Book-Entry Registration and Definitive
Certificates'. Definitive Certificates will be exchangeable for other
Certificates of the same class and series of a like aggregate Certificate
Balance or notional amount but of different authorized denominations. See 'Risk
Factors--Limited Liquidity' and '--Limited Assets'.
DISTRIBUTIONS
Distributions allocable to principal and interest on the Certificates of
each series will be made by or on behalf of the Trustee on each Distribution
Date as specified in the related Prospectus Supplement from the Available Funds
for such series on such Distribution Date. Distributions (other than the final
distribution) will be made to the persons in whose names the Certificates are
registered (the 'Record Date'), and the amount of each distribution will be
determined (the 'Determination Date') as of the close of business on the date
specified in the related Prospectus Supplement. All distributions with respect
to each class of Certificates on each Distribution Date will be allocated pro
rata among the outstanding Certificates in 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 so notified the Trustee or its designee
no later than the date specified in the related Prospectus Supplement (and, if
so provided in the related Prospectus Supplement, holds Certificates in the
requisite amount specified therein), or by check mailed to the address of the
person entitled thereto as it appears on the Certificate Register; provided,
however, that the final distribution in retirement of the Certificates (whether
Definitive Certificates or Book-Entry Certificates) will be made only upon
presentation and surrender of the Certificates at the office or agency of the
Trustee or its agent specified in the notice to Certificateholders of such final
distribution.
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<PAGE>
AVAILABLE FUNDS
All distributions on the Certificates of each series on each Distribution
Date will be made from the Available Funds described below, in accordance with
the terms described in the related Prospectus Supplement. 'Available Funds' for
each Distribution Date will generally equal the sum of the following amounts:
(i) the total amount of all cash on deposit in the related Collection
Account as of the corresponding Determination Date, exclusive of:
(a) all scheduled payments of principal and interest collected
but due on a date subsequent to the related Collection Period (a
'Collection Period' with respect to any Distribution Date will usually
commence on the second day of the month in which the immediately
preceding Distribution Date occurs, or the day after Cut-off Date in
the case of the first Collection Period, and will end on the first day
of the month of the related Distribution Date).
(b) all prepayments, together with related payments of the
interest thereon, Liquidation Proceeds, Insurance Proceeds, and other
unscheduled recoveries received subsequent to the related Prepayment
Period, as defined in the related Prospectus Supplement, and
(c) all amounts in the Collection Account that are due or
reimbursable to the Depositor, the Trustee, a Mortgage Asset Seller, a
Sub-Servicer or the Master Servicer or that are payable in respect of
certain expenses of the related Trust Fund;
(ii) if the related Prospectus Supplement so provides, interest or
investment income on amounts on deposit in the Collection Account,
including any net amounts paid under any Cash Flow Agreements;
(iii) all advances made by a Master Servicer with respect to such
Distribution Date;
(iv) if and to the extent the related Prospectus Supplement so
provides, amounts paid by a Master Servicer with respect to interest
shortfalls resulting from voluntary and involuntary prepayments during the
related Prepayment Period; and
(v) to the extent not on deposit in the related Collection Account as
of the corresponding Determination Date, any amounts collected under, from
or in respect of any Credit Support with respect to such Distribution Date.
As described below, the entire Available Distribution Amount will be
distributed among the related Certificates (including any Certificates not
offered hereby) on each Distribution Date, and accordingly will be released from
the Trust Fund and will not be available for any future distributions.
DISTRIBUTIONS OF INTEREST ON THE CERTIFICATES
Each class of Certificates (other than classes of Stripped Principal
Certificates that have no Pass-Through Rate) may have a different Pass-Through
Rate, which may be a fixed, variable or adjustable Pass-Through Rate. The
related Prospectus Supplement will specify the Pass-Through Rate for each class
or, in the case of a variable or adjustable Pass-Through Rate, the method for
determining the Pass-Through Rate. Interest on the Certificates will typically
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 will
be made on each Distribution Date (other than any class of Accrual Certificates,
which will be entitled to distributions of accrued interest commencing only on
the Distribution Date, or under the circumstances, specified in the related
Prospectus Supplement, and any class of Stripped Principal Certificates that are
not entitled to any distributions of interest) 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, Accrued Certificate Interest on such class will be
added to the Certificate Balance thereof on each Distribution Date. With respect
to each class of Certificates and each Distribution Date (other than certain
classes of Stripped Interest Certificates), 'Accrued Certificate Interest' will
be equal to interest accrued during the related Interest Accrual Period on the
outstanding Certificate Balance thereof immediately prior to the Distribution
Date, at the applicable Pass-Through Rate, reduced to reflect prepayment
interest shortfalls as described below (for this purpose, the term 'prepayment'
includes prepayments, in whole or in part, and liquidations due to default).
Accrued Certificate Interest on Stripped Interest Certificates will be equal to
interest accrued on the outstanding notional amount thereof immediately prior to
each Distribution Date, at the applicable Pass-Through Rate, reduced as
described below. The method of determining the notional amount for any class of
Stripped Interest Certificates will be described in the related Prospectus
Supplement. Reference to notional amount is solely for convenience in certain
calculations and does not represent the right to receive any distributions of
principal.
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<PAGE>
The Accrued Certificate Interest on each class of Certificates will be reduced
in the event of prepayment interest shortfalls, which are shortfalls in
collections of interest for a full accrual period resulting from prepayments
prior to the due date in such accrual period on the Mortgage Loans comprising or
underlying the Mortgage Assets in the Trust Fund for the related series, with
such shortfall allocated among all of the classes of Certificates of that series
in the manner specified in the related Prospectus Supplement. See 'Risk
Factors--Average Life of Certificates; Prepayments; Yields' and 'Yield
Considerations'.
DISTRIBUTIONS OF PRINCIPAL OF THE CERTIFICATES
The Certificates of each series, other than certain classes of Stripped
Interest Certificates, will have a 'Certificate Balance' which, at any time,
will equal the then maximum amount that the holder 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 Certificate will be reduced to the extent of distributions of
principal thereon from time to time, and by the amount of losses allocated to
such Certificate incurred in respect of the related Mortgage Assets, may be
increased in respect of deferred interest on the related Mortgage Loans to the
extent provided in the related Prospectus Supplement and, in the case of Accrual
Certificates prior to the Distribution Date on which distributions of interest
are required to commence, will be increased by any Accrued Certificate Interest.
The initial aggregate Certificate Balance of all classes of Certificates of a
series will not be greater than the outstanding aggregate principal balance of
the related Mortgage Assets as of the applicable Cut-off Date. The initial
aggregate Certificate Balance of a series and each class thereof will be
specified in the related Prospectus Supplement. Distributions of principal will
be made on each Distribution Date to the class or classes of Certificates
entitled thereto in accordance with the provisions described in such Prospectus
Supplement until the Certificate Balance of such class has been reduced to zero.
Stripped Interest Certificates with no Certificate Balance are not entitled to
any distributions of principal.
DISTRIBUTIONS ON THE CERTIFICATES OF PREPAYMENT PREMIUMS OR IN RESPECT OF EQUITY
PARTICIPATIONS
Prepayment Premiums or payments in respect of Equity Participations that
are collected on the Mortgage Assets in the related Trust Fund will be
distributed on each Distribution Date to the class or classes of Certificates
entitled thereto in accordance with the provisions described in the related
Prospectus Supplement.
ALLOCATION OF LOSSES AND SHORTFALLS
With respect to 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 a class of
Subordinate Certificates in the priority and manner and subject to the
limitations specified in the related Prospectus Supplement. See 'Description of
Credit Support' for a description of the types of protection that may be
included in a Trust Fund against losses and shortfalls on Mortgage Assets
comprising such Trust Fund.
ADVANCES IN RESPECT OF DELINQUENCIES
With respect to any series of Certificates evidencing an interest in a
Trust Fund consisting of Mortgage Assets other than MBS, the Master Servicer, if
required by the related Agreement, will be required as part of its servicing
responsibilities to advance on or before each Distribution Date its own funds or
funds held in the Collection Account that are not included in the Available
Funds for such Distribution Date, in an amount equal to the aggregate of
payments of principal (other than any balloon payments) and interest (net of
related servicing fees and Retained Interest) that were due on the Whole Loans
in such Trust Fund during the related Collection Period and were delinquent on
the related Determination Date, subject to the Master Servicer's good faith
determination that such advances will be reimbursable from (a) Related Proceeds
(as defined below) or (b) in the case of a series of Certificates that includes
one or more classes of Subordinate Certificates and if so provided in the
related Prospectus Supplement, the greater of (x) the outstanding Certificate
Balance of such Subordinate Certificates and (y) Related Proceeds. See
'Description of Credit Support'.
Advances are intended to maintain a regular flow of scheduled interest and
principal payments to holders of the class or classes of Certificates entitled
thereto, rather than to guarantee or insure against losses. Advances of the
Master Servicer's funds will typically be reimbursable only out of related
recoveries on the Mortgage Loans (including amounts received under any form of
Credit Support) respecting which such advances were made (as to any Mortgage
Loan, 'Related Proceeds'); provided, however, that any such advance will be
reimbursable from any amounts in the Collection Account to the extent that the
Master Servicer shall determine that such advance (a 'Nonrecoverable Advance')
is not ultimately recoverable from Related Proceeds. If advances have been made
by the Master Servicer from excess funds in the Collection Account, the Master
Servicer is required to replace such
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funds in the Collection Account on any future Distribution Date to the extent
that funds in the Collection Account on such Distribution Date are less than
payments required to be made to Certificateholders on such date. The obligations
of the Master Servicer to make advances may be secured by a cash advance reserve
fund or a surety bond. 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.
The Master Servicer will be entitled to receive interest at the rate
specified in the related Prospectus Supplement on its outstanding advances and
will be entitled to pay itself such interest periodically from general
collections on the Mortgage Loans prior to any payment to Certificateholders or
as otherwise provided in the related Agreement and described in such Prospectus
Supplement.
The Prospectus Supplement for any series of Certificates evidencing an
interest in a Trust fund that includes MBS will describe any corresponding
advancing obligation of any person in connection with such MBS.
REPORTS TO CERTIFICATEHOLDERS
With each distribution to holders of any class of Certificates of a series,
a Master Servicer or the Trustee, as provided in the related Prospectus
Supplement, will forward or cause to be forwarded to each such holder, to the
Depositor and to such other parties as may be specified in the related
Agreement, a statement setting forth, in each case to the extent applicable and
available:
(i) the amount of such distribution to holders of Certificates of such
class applied to reduce the Certificate Balance thereof;
(ii) the amount of such distribution to holders of Certificates of
such class allocable to Accrued Certificate Interest;
(iii) the amount of such distribution allocable to (a) Prepayment
Premiums and (b) payments on account of Equity Participations;
(iv) the amount of related servicing compensation received by a Master
Servicer, any Special Servicer and any Sub-Servicer and such other
customary information as any such Master Servicer or the Trustee 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 Mortgage Assets at the
close of business on such Distribution Date;
(vii) the number and aggregate principal balance of 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 two or
more months, (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) the aggregate amount of any interest
accrued and payable on related servicing expenses and related advances
assuming such Mortgage Loan is subsequently liquidated through foreclosure,
(f) whether a notice of acceleration has been sent to the mortgagor and, if
so, the date of such notice, (g) whether foreclosure proceedings have been
commenced and, if so, the date so commenced and (h) if such Mortgage Loan
is more than three months delinquent and foreclosure has not been
commenced, the reason therefor;
(ix) with respect to any Whole Loan liquidated during the related
Collection Period or Prepayment Period, as applicable (other than by
payment in full), (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
Master Servicer in respect of such Mortgage Loan and (e) the amount of any
loss to Certificateholders;
(x) with respect to each REO Property relating to a Whole Loan and
included in the Trust Fund as of the end of the related Collection Period
or Prepayment Period, as applicable, (a) the loan number of the related
Mortgage Loan, (b) the date of acquisition, (c) the book value, (d) the
principal balance of the related Mortgage Loan immediately following such
Distribution Date (calculated as if such Mortgage Loan were still
outstanding taking into account certain limited modifications to the terms
thereof specified in the Agreement), (e) the aggregate amount of
unreimbursed servicing expenses and unreimbursed advances in respect
thereof and (f) if applicable, the aggregate amount of interest accrued and
payable on related servicing expenses and related advances;
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(xi) with respect to any such REO Property sold during the related Due
Period or Prepayment Period, as applicable, (a) the loan number of the
related Mortgage Loan, (b) the aggregate amount of sale proceeds, (c) the
portion of such sales proceeds payable or reimbursable to the 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 aggregate Certificate Balance or notional amount, as the
case may be, of each class of Certificates (including any class of
Certificates not offered hereby) at the close of business on such
Distribution Date, separately identifying any reduction in such Certificate
Balance due to the allocation of any loss and 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 during the
related Prepayment Period;
(xiv) the amount deposited in the reserve fund, if any, on such
Distribution Date;
(xv) the amount remaining in the reserve fund, if any, as of the close
of business on such Distribution Date;
(xvi) the aggregate unpaid Accrued Certificate Interest, if any, on
each class of Certificates at the close of business on such Distribution
Date;
(xvii) in the case of Certificates with a variable Pass-Through Rate,
the Pass-Through Rate applicable to such Distribution Date, as calculated
in accordance with the method specified in the related Prospectus
Supplement;
(xviii) in the case of Certificates with an adjustable Pass-Through
Rate, for statements to be distributed in any month in which an adjustment
date occurs, the adjustable Pass-Through Rate applicable to the next
succeeding Distribution Date as calculated in accordance with the method
specified in the related Prospectus Supplement;
(xix) as to any series which incudes Credit Support, the amount of
coverage of each instrument of Credit Support included therein as of the
close of business on such Distribution Date; and
(xx) the aggregate amount of payments by the mortgagors of (a) default
interest, (b) late charges and (c) assumption and modification fees
collected during the related Collection Period or Prepayment Period, as
applicable. In the case of information furnished pursuant to subclauses
(i)-(iv) above, the amounts shall be expressed as a dollar amount per
minimum denomination of Certificates or for such other specified portion
thereof. 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
Master Servicer, if any, or the Trustee, as provided in the related Prospectus
Supplement, shall furnish to each person who at any time during the calendar
year was a holder of a Certificate a statement containing the 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 of the Master Servicer or the Trustee shall be deemed to have
been satisfied to the extent that substantially comparable information shall be
provided by the Master Servicer or the Trustee pursuant to any requirements of
the Code as are from time to time in force. See 'Description of the
Certificates--Book-Entry Registration and Definitive Certificates'.
TERMINATION
The obligations created by the Agreement for each series of Certificates
will terminate upon the payment to Certificateholders of that series of all
amounts held in the Collection Account or by the Master Servicer, if any, or the
Trustee and required to be paid to them pursuant to such 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 Trust Fund by the party entitled to effect such termination. In no event,
however, will the trust created by the Agreement continue beyond the date
specified in the related Prospectus Supplement. Written notice of termination of
the Agreement will be given to each Certificateholder, and the final
distribution will be made only upon surrender and cancellation of the
Certificates at an office or agency appointed by the Trustee, which will be
specified in the notice of termination.
If so specified in the related Prospectus Supplement, upon the reduction of
the aggregate Certificate Balance of a series of Certificates by a specified
percentage (which percentage will exceed 90%), certain parties (which may
include the Depositor, the Servicer, the Special Servicer, the holders of
certain Classes of Certificates or such other party as is identified therein)
will have the option to effect an early termination through the repurchase of
the assets in the related Trust Fund by the party specified therein. If so
provided in the related Prospectus Supplement, the party specified therein will
solicit bids for the purchase of all assets of the Trust Fund under the
circumstances and in the manner set forth therein; provided, however, that the
Trustee will not be permitted to
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accept any bid for the purchase of the assets of such Trust Fund which is less
than the greater of (1) the aggregate fair market value of all the Mortgage
Loans and REO Properties then included in the Trust Fund, as mutually determined
by the Master Servicer and the Trustee, and (2) the sum of (i) the aggregate
Purchase Price of all the Mortgage Loans then included in the Trust Fund, (ii)
the aggregate amount of unreimbursed advances, if any, with interest thereon at
the rate specified in the related Prospectus Supplement and (iii) the fair
market value of all REO Properties then included in the Trust Fund, as
determined by an appraiser mutually agreed upon by the Master Servicer and the
Trustee. Upon the termination of a Trust Fund and the sale of the assets of the
Trust Fund neither the Trust Fund, the Trustee, the Depositor, the Master
Servicer, the Special Servicer nor the holders of any Class of Certificates will
have any liability with respect to the sale of the assets of the Trust Fund;
provided however that the foregoing will not limit or otherwise affect any
Certificateholders rights under any of the federal securities laws. In the event
that the fair market value of any REO Properties included in the Trust Fund at
the time of any such termination is less than the principal balance of the
related Mortgage Loans, a Realized Loss may occur in connection with such
termination.
BOOK-ENTRY REGISTRATION AND DEFINITIVE CERTIFICATES
If so provided in the Prospectus Supplement for a series of Certificates,
the Offered Certificates of one or more classes of such series will be issued as
Book-Entry Certificates, and each such class will be represented by one or more
single Certificates registered in the name of the depository, The Depository
Trust Company ('DTC').
DTC is a limited-purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a 'clearing
corporation' within the meaning of the UCC and a 'clearing agency' registered
pursuant to the provisions of Section 17A of the Exchange Act. DTC was created
to hold securities for its participating organizations ('Participants') and
facilitate the clearance and settlement of securities transactions between
Participants through electronic book-entry changes in their accounts, thereby
eliminating the need for physical movement of certificates. Participants include
Nomura Securities International, Inc., securities brokers and dealers, banks,
trust companies and clearing corporations and may include certain other
organizations. Indirect access to the DTC system also is available to others
such as banks, brokers, dealers and trust companies that clear through or
maintain a custodial relationship with a Participant, either directly or
indirectly ('Indirect Participants').
Holders of 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, such Certificateholders will receive all
distributions of principal of and interest on the Offered Certificates from the
Trustee or the applicable paying agent through DTC and its Participants. Under a
book-entry format, Certificateholders will receive payments after the related
Distribution Date because, while payments are required to be forwarded to Cede &
Co. ('Cede'), as nominee for DTC, on each such date, DTC will forward such
payments to its Participants which thereafter will be required to forward them
to Indirect Participants or Certificateholders. The only 'Certificateholder' (as
such term is used in the Agreement) will be Cede, as nominee of DTC, and the
Certificateholders will not be recognized by the Trustee as Certificateholders
under the Agreement. Certificateholders will be permitted to exercise the rights
of Certificateholders under the related Agreement only indirectly through DTC
and its Participants who in turn will exercise their rights through DTC.
Under the rules, regulations and procedures creating and affecting DTC and
its operations, DTC is required to make book-entry transfers among Participants
on whose behalf it acts with respect to the Certificates and is required to
receive and transmit distributions of principal and interest on the
Certificates. Participants and Indirect Participants with which
Certificateholders have accounts with respect to the Certificates similarly are
required to make book-entry transfers and receive and transmit such payments on
behalf of their respective Certificateholders.
Because DTC can act only on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of a
Certificateholder to pledge Certificates to persons or entities that do not
participate in the DTC system, or otherwise take actions in respect of 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 Certificateholder under an Agreement only at the direction of one or
more Participants to whose account with DTC the Certificates are credited.
Certificates initially issued in book-entry form will be issued in fully
registered, certificated form to Certificateholders or their nominees
('Definitive Certificates'), 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 the
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.
Upon the occurrence of any of the events described in the immediately
preceding paragraph, DTC is required to notify all Participants of the
availability through DTC of Definitive Certificates for the Certificates. Under
surrender by DTC of the
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certificate or certificates representing such Certificates and instructions for
reregistration, the Trustee will issue such Certificates in the form of
Definitive Certificates, and thereafter the Trustee will recognize the holders
of such Definitive Certificates as Certificateholders under the Agreement. In
the event that Definitive Certificates are issued or DTC ceases to be the
clearing agency for the Certificates, the Agreement will provide that the
applicable Certificateholders will be notified of such event.
DESCRIPTION OF THE AGREEMENTS
The Certificates of each series evidencing interests in a Trust Fund
consisting of Mortgage Loans will be issued pursuant to a Pooling and Servicing
Agreement among the Depositor, a Master Servicer, any Special Servicer appointed
as of the date of the Pooling and Servicing Agreement and the Trustee. The
Certificates of each series evidencing interests in a Trust Fund consisting
exclusively of MBS will be issued pursuant to a Trust Agreement between the
Depositor and a Trustee. Any Master Servicer, any such Special Servicer and the
Trustee with respect to any series of Certificates will be named in the related
Prospectus Supplement. The provisions of each Agreement will vary depending upon
the nature of the Certificates to be issued thereunder and the nature of the
related Trust Fund. A form of a Pooling and Servicing Agreement has been filed
as an exhibit to the Registration Statement of which this Prospectus is a part.
The following summaries describe certain provisions that may appear in each
Agreement. The Prospectus Supplement for a series of Certificates will describe
any provision of the Agreement relating to such series that materially differs
from the description thereof contained in this Prospectus. The summaries do not
purport to be complete and are subject to, and are qualified in their entirety
by reference to, all of the provisions of the Agreement for each Trust Fund and
the 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 Agreement
(without exhibits) relating to any series of Certificates without charge upon
written request of a holder of a Certificate of such series addressed to Nomura
Asset Securities Corporation, Two World Financial Center--Building B, 21st
Floor, New York, New York 10281-1198. Attention: Secretary.
ASSIGNMENT OF MORTGAGE ASSETS; REPURCHASES
At the time of issuance of any series of Certificates, the Depositor will
cause the Mortgage Assets included in the related Trust Fund to be assigned to
the Trustee, together with all principal and interest received by or on behalf
of the Depositor on or with respect to such Mortgage Assets after the Cut-off
Date, other than principal and interest due on or before the Cut-off Date and
other than any Retained Interest. The Trustee will, concurrently with such
assignment, deliver the Certificates to the Depositor in exchange for the
Mortgage Assets and the other assets comprising the Trust Fund for such series.
Each Mortgage Asset will be identified in a schedule appearing as an exhibit to
the related Agreement. Such schedule will include detailed information in
respect of each Mortgage Loan included in the related Trust Fund such as the
address of the related Mortgaged Property and type of such property, the
Mortgage Rate and, if applicable, the applicable index, margin, adjustment date
and any rate cap information, the original and remaining term to maturity, the
original and outstanding principal balance and balloon payment, if any, the
Value, Loan-to-Value Ratio and Debt Service Coverage Ratio as of the date
indicated and payment and prepayment provisions, if applicable and in respect of
each MBS included in the related Trust Fund, including without limitation, the
MBS Issuer, MBS Servicer and MBS Trustee, the pass-through or bond rate or
formula for determining such rates, the issue date and original and remaining
term to maturity, if applicable, the original and outstanding principal amount
and payment provisions, if applicable.
With respect to each Whole Loan, the Depositor will deliver or cause to be
delivered to the Trustee (or to the custodian hereinafter referred to) certain
loan documents, including the Mortgage Note endorsed, without recourse, to the
order of the Trustee, the Mortgage with evidence of recording indicated thereon
(except for any Mortgage not returned from the public recording office, in which
case the Depositor will deliver or cause to be delivered a copy of such Mortgage
together with its certificate that the original of such Mortgage was delivered
to such recording office) and an assignment of the Mortgage to the Trustee in
recordable form. The Depositor will promptly cause the assignment of each
related Whole Loan to be recorded in the appropriate public office for real
property records, except in the State of California or in other states where, in
the opinion of counsel acceptable to the Trustee, such recording is not required
to protect the Trustee's interest in the Whole Loan against the claim of any
subsequent transferee or any successor to or creditor of the Depositor, the
Master Servicer, the relevant Mortgage Asset Seller or any other prior holder of
the Whole Loan.
The Trustee (or the custodian) will review such Whole 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. If any such document is found to be missing or defective in
any material respect, the Trustee (or such custodian) shall take such action as
required in the Agreement, which may include immediately notifying the Master
Servicer and the Depositor. If the Mortgage Asset Seller, upon notification,
cannot cure the omission or defect within a specified number of days after
receipt of such notice, the Mortgage Asset
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Seller will be obligated, within a specified number of days of receipt of such
notice, to repurchase the related Whole Loan from the Trustee at the Purchase
Price or substitute for such Mortgage Loan. There can be no assurance that a
Mortgage Asset Seller will fulfill this repurchase or substitution obligation.
Although the Master Servicer is obligated to use its best efforts to enforce
such obligation to the extent of its obligations with respect to a Warranting
Party as described under '--Representations and Warranties; Repurchases',
neither the Master Servicer nor the Depositor will be obligated to repurchase or
substitute for such Mortgage Loan if the Mortgage Asset Seller defaults on its
obligation. This repurchase or substitution obligation may constitute the sole
remedy available to the Certificateholders or the Trustee for omission of, or a
material defect in, a constituent document.
With respect to each MBS, the Depositor will deliver or cause to be
delivered to the Trustee (or the custodian) the original certificate or other
definitive evidence of the MBS, together with bond power or other instruments,
certifications or documents required to transfer fully the MBS to the Trustee
for the benefit of the Certificateholders in accordance with the related MBS
Agreement. The Depositor will promptly cause the Trustee to be registered, with
the applicable persons, as the holder of the MBS.
REPRESENTATIONS AND WARRANTIES; REPURCHASES
The Depositor may make or assign certain representations and warranties
pursuant to the related Agreement with respect to each Whole Loan constituting a
Mortgage Asset in the related Trust Fund, as of a specified date (the person
making such representations and warranties, the 'Warranting Party') covering, by
way of example, the following types of matters: (i) the accuracy of the
information set forth for such Whole Loan on the schedule of Mortgage Assets
appearing as an exhibit to the Agreement; (ii) the existence of title insurance
insuring the lien priority of the Whole Loan; (iii) the authority of the
Mortgage Asset Seller to sell the Whole Loan; (iv) the payment status of the
Whole Loan and the status of payments of taxes, assessments and other charges
affecting the related Mortgaged Property; (v) the existence of customary
provisions in the related Mortgage Note and Mortgage to permit realization
against the Mortgaged Property of the benefit of the security of the Mortgage;
and (vi) the existence of hazard and extended perils insurance coverage on the
Mortgaged Property.
Any Warranting Party shall be a Mortgage Asset Seller or an affiliate
thereof or such other person acceptable to the Depositor and shall be identified
in the related Prospectus Supplement.
Representations and warranties made in respect of a Whole Loan may have
been made as of a date prior to the applicable Cut-off Date. A substantial
period of time may have elapsed between such date and the date of initial
issuance of the related series of Certificates evidencing an interest in such
Whole Loan. In the event of a breach of any such representation or warranty, the
Warranting Party may be obligated pursuant to the related Agreement to cure such
breach or repurchase or replace the affected Whole Loan as described below.
Since the representations and warranties may not address events that may occur
following the date as of which they were made, the Warranting Party will have a
cure, repurchase or substitution obligation in connection with a breach of such
a representation and warranty only if the relevant event that causes such breach
occurs prior to such date. Such party would have no such obligations if the
relevant event that causes such breach occurs after such date. However, the
Depositor will not include any Whole Loan in the Trust Fund for any series of
Certificates if anything has come to the Depositor's attention that would cause
it to believe that the representations and warranties made in respect of such
Whole Loan will not be accurate and complete in all material respects as of the
date of initial issuance of the related series of Certificates.
Each Agreement will provide that the Master Servicer and/or Trustee will be
required to notify promptly the relevant Warranting Party of any breach of any
representation or warranty made by or on behalf of it in respect of a Whole Loan
that materially and adversely affects the value of such Mortgage Loan or the
interests therein of the Certificateholders. If such Warranting Party cannot
cure such breach within a specified period following the date on which such
party was notified of such breach, then such Warranting Party will be obligated
to repurchase such Mortgage Loan from the Trustee within a specified period from
the date on which the Warranting Party was notified of such breach, at the
Purchase Price therefor. As to any Whole Loan, the 'Purchase Price' will
typically equal to the sum of the unpaid principal balance thereof plus unpaid
accrued interest thereon at the Mortgage Rate from the date as to which interest
was last paid to the end of the accrual period in which the relevant purchase is
to occur. If so provided in the Prospectus Supplement for a series, a Warranting
Party, rather than repurchase a Mortgage Loan as to which a breach has occurred,
will have the option, within a specified period after initial issuance of such
series of Certificates, to cause the removal of such Mortgage Loan from the
Trust Fund and substitute in its place one or more other Whole Loans, in
accordance with the standards described in the related Prospectus Supplement.
The Master Servicer will be required under the applicable Agreement to use its
best efforts to enforce such obligations of the Warranting Party for the benefit
of the Trustee and the holders of the Certificates, following the practices it
would employ in its good faith business judgment were it the owner of such Whole
Loan. This repurchase or substitution obligation will constitute the sole remedy
available to holders of Certificates or the Trustee for a breach of
representation by a Warranting Party.
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Neither the Depositor (except to the extent that it is the Warranting
Party) nor the Master Servicer will be obligated to purchase or substitute for a
Whole Loan if a Warranting Party defaults on its obligation to do so, and no
assurance can be given that Warranting Parties will carry out such obligations
with respect to Whole Loans.
With respect to a Trust Fund that includes MBS, the related Prospectus
Supplement will describe any representations or warranties made or assigned by
the Depositor with respect to such MBS, the person making them and the remedies
for breach thereof.
A Master Servicer will make certain representations and warranties
regarding its authority to enter into, and its ability to perform its
obligations under, the related Agreement. Upon a breach of any such
representation of the Master Servicer which materially and adversely affects the
interests of the Certificateholders, the Master Servicer will be obligated to
cure the breach in all material respects.
PAYMENTS ON MORTGAGE ASSETS; DEPOSITS TO COLLECTION ACCOUNT
The Master Servicer, if any, and/or the Trustee will, as to each Trust
Fund, establish and maintain or cause to be established and maintained one or
more Collection Accounts for the collection of payments on the related Mortgage
Assets, which must be either (i) maintained with a bank or trust company, and in
a manner, satisfactory to the Rating Agency or Agencies rating any class of
Certificates of such series or (ii) an account or accounts the deposits in which
are insured by the Bank Insurance Fund ('BIF') or the Savings Association
Insurance Fund ('SAIF') of the Federal Deposit Insurance Corporation ('FDIC')
(to the limits established by the FDIC) and the uninsured deposits in which are
otherwise secured such that the Certificateholders have a claim with respect to
the funds in the Collection Account or a certified first priority security
interest against any collateral securing such funds that is superior to the
claims of any other depositors or general creditors of the institution with
which the Collection Account is maintained. The collateral eligible to secure
amounts in the Collection Account is limited to United States government
securities and other investment grade investments specified in the Agreement
('Permitted Investments'). A Collection Account may be maintained as an interest
bearing or a non-interest bearing account and the funds held therein may be
invested pending each succeeding Distribution Date in Permitted Investments. Any
interest or other income earned on funds in the Collection Account will
generally be paid to a Master Servicer or its designee as additional servicing
compensation. The Collection Account may be maintained with an institution that
is an affiliate of the Master Servicer, if applicable, provided that such
institution meets the standards set forth above. If permitted by the Rating
Agency or Agencies and so specified in the related Prospectus Supplement, a
Collection Account may contain funds relating to more than one series of
mortgage pass-through certificates and may contain other funds respecting
payments on mortgage loans belonging to the Master Servicer or serviced or
master serviced by it on behalf of others.
A Master Servicer or the Trustee will deposit or cause to be deposited in
the Collection Account for each Trust Fund on a daily basis, unless otherwise
provided in the Agreement and described in the related Prospectus Supplement,
the following payments and collections received, or advances made, by the Master
Servicer or the Trustee or on its behalf subsequent to the Cut-off Date (other
than payments due on or before the Cut-off Date, and exclusive of any amounts
representing a Retained Interest):
(i) all payments on account of principal, including principal
prepayments, and on account of modification or assumption fees, on the
Mortgage Assets;
(ii) all payments on account of interest on the Mortgage Assets,
including any late charges or default interest collected, and to the extent
that any class or classes of Certificates is entitled thereto, all payments
on account of Prepayment Premiums or Equity Participations, in each case
net of any portion thereof retained by a Master Servicer or a Sub-Servicer
as its servicing compensation and net of any Retained Interest;
(iii) all proceeds of the hazard insurance policies (to the extent
such proceeds are not applied to the restoration of the property or
released to the mortgagor in accordance with the normal servicing
procedures of a Master Servicer or the related Sub-Servicer, subject to the
terms and conditions of the related Mortgage and Mortgage Note)
(collectively, 'Insurance Proceeds') and all other amounts received and
retained in connection with a taking of a Mortgaged Property by exercise of
a power of eminent domain or condemnation or the liquidation of defaulted
Mortgage Loans, by foreclosure or otherwise ('Liquidation Proceeds'),
together with the net proceeds on a monthly basis with respect to any
Mortgaged Properties acquired for the benefit of Certificateholders by
foreclosure or by deed in lieu of foreclosure or otherwise;
(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';
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(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 any Mortgage Loan or property in respect thereof
purchased by the Master Servicer, the Depositor, any Sub-Servicer or any
Mortgage Asset Seller as described under 'Description of the
Agreements--Assignment of Mortgage Assets; Repurchases' and
'--Representations and Warranties; Repurchases', exclusive of the Retained
Interest, if any, in respect of such Mortgage Loan, and all proceeds of any
Mortgage Asset purchased as described under 'Description of the
Certificates--Termination';
(viii) all payments required to be deposited in the Collection Account
with respect to any deductible clause in any blanket insurance policy
described under '--Hazard Insurance Policies'; and
(ix) any amount required to be deposited by a Master Servicer or the
Trustee in connection with losses realized on investments for the benefit
of the Master Servicer or the Trustee, as the case may be, of funds held in
the Collection Account.
The Agreement for a series of Certificates may provide that a special trust
account (the 'REO Account') will be established and maintained in order to be
used in connection with REO Properties and, if specified in the related
Prospectus Supplement, certain other Mortgaged Properties. To the extent set
forth in the Agreement, certain withdrawals from the REO Account will be made
to, among other things, (i) make remittances to the Collection Account as
required by the Agreement, (ii) pay taxes, assessments, insurance premiums,
other amounts necessary for the proper operation, management and maintenance of
the REO Properties and such Mortgaged Properties and certain third-party
expenses in accordance with the Agreement and (iii) provide for the
reimbursement of certain expenses in respect of the REO Properties and such
Mortgaged Properties.
The amount at any time credited to the REO Account will be fully insured to
the maximum coverage possible or will be invested in Permitted Investments that
mature, or are subject to withdrawal or redemption, on or before the business
day on which such amounts are required to be remitted to the Master Servicer for
deposit in the Collection Account. The income from the investment of funds in
the REO Account in Permitted Investments shall be deposited in the REO Account
for remittance to the Collection Account, and the risk of loss of funds in the
REO Account resulting from such investments will be borne by the Trust Fund.
COLLECTION AND OTHER SERVICING PROCEDURES
The Master Servicer, directly or through Sub-Servicers, is required to make
reasonable efforts to collect all scheduled payments under the Whole Loans and
will follow or cause to be followed such collection procedures as it would
follow with respect to mortgage loans that are comparable to the Whole Loans and
held for its own account, provided such procedures are consistent with the
Agreement and any related hazard insurance policy or instrument of Credit
Support included in the related Trust Fund described herein or under
'Description of Credit Support'. Each Master Servicer will be required to
perform the customary functions of a servicer of comparable loans, including
collecting payments from mortgagors; maintaining hazard insurance policies as
described herein and in any related Prospectus Supplement, and filing and
settling claims thereunder; maintaining escrow or impoundment accounts of
mortgagors for payment of taxes, insurance and other items required to be paid
by any mortgagor pursuant to the Whole Loan; processing assumptions or
substitutions, although the Master Servicer is generally required to exercise
due-on-sale clauses to the extent such exercise is permitted by law and would
not adversely affect insurance coverage; attempting to cure delinquencies;
supervising foreclosures; inspecting and managing Mortgaged Properties under
certain circumstances; and maintaining accounting records relating to the Whole
Loans. The Master Servicer will be responsible for filing and settling claims in
respect of particular Whole Loans under any applicable instrument of Credit
Support. See 'Description of Credit Support'.
Consistent with the general servicing standard set forth above, the Master
Servicer may, in its discretion, waive any late payment charge in respect of a
late Whole Loan payment and, only upon determining that the coverage under any
related hazard insurance policy or instrument of Credit Support will not be
affected, extend or cause to be extended the due dates for payments due on a
Whole Loan for a period not greater than that specified in the applicable
Agreement.
The Master Servicer may agree to modify, waive or amend any term of any
Whole Loan in a manner consistent with the general servicing standards set forth
above so long as the modification, waiver or amendment will not (i) affect the
amount or timing of any payments of principal or interest on the Whole Loan or
(ii) in its judgment, materially impair the security for the Whole Loan or
reduce the likelihood of timely payment of amounts due thereon. The Master
Servicer also may agree to any modification, waiver or amendment that would so
affect or impair the payments on, or the security for, a Whole Loan if (i) in
its
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judgment, a material default on the Whole Loan has occurred or a payment default
is imminent and (ii) in its judgment, such modification, waiver or amendment
will minimize the loss that might otherwise be experienced with respect to the
Whole Loan. The Master Servicer is required to notify the Trustee in the event
of any modification, waiver or amendment of any Whole Loan.
SPECIAL SERVICERS
To the extent so specified in the related Prospectus Supplement, generally
in the event that a Mortgage Loan is in default or if certain events occur that
indicate that a default is imminent, a special servicer (the 'Special Servicer')
may be appointed to perform certain servicing functions in connection with such
Mortgage Loan. The related Prospectus Supplement will set forth certain
information with respect to the Special Servicer and will describe the rights,
obligations and compensation of a Special Servicer. A Master Servicer will only
be responsible for the duties and obligations of a Special Servicer to the
extent set forth in the Prospectus Supplement. A Special Servicer may be an
affiliate of the Depositor and may have other business relationships with the
Depositor and its affiliates.
SUB-SERVICERS
A Master Servicer and/or any Special Servicer may each delegate their
respective servicing obligations in respect of the Whole Loans to third-party
servicers (each, a 'Sub-Servicer'), but such Master Servicer and/or Special
Servicer will remain obligated under the related Agreement. The sub-servicing
agreement between a Master Servicer and/or Special Servicer and a Sub-Servicer
(a 'Sub-Servicing Agreement') will be consistent with the terms of the related
Agreement and will not result in a withdrawal or downgrading of the rating of
any class of Certificates issued pursuant to such Agreement. Although each Sub-
Servicing Agreement will be a contract solely between the Master Servicer or
Special Servicer, as applicable, and the Sub-Servicer, the related Agreement
will provide that, if for any reason the Master Servicer or Special Servicer for
such series of Certificates is no longer acting in such capacity, the Trustee or
any successor Master Servicer or Special Servicer must recognize the Sub-
Servicer's rights and obligations under such Sub-Servicing Agreement.
The Master Servicer or Special Servicer, as applicable, will be solely
liable for all fees owed by it to any Sub-Servicer, irrespective of whether the
Master Servicer's or Special Servicer's compensation pursuant to the related
Agreement is sufficient to pay such fees. However, a Sub-Servicer may be
entitled to a Retained Interest in certain Whole Loans. Each Sub-Servicer will
be reimbursed by the Master Servicer or Special Servicer, as applicable, for
certain expenditures which it makes, generally to the same extent the Master
Servicer or Special Servicer, as applicable, would be reimbursed under an
Agreement. See '--Retained Interest, Servicing Compensation and Payment of
Expenses'.
The Master Servicer or Special Servicer, as applicable, may require any
Sub-Servicer to agree to indemnify the Master Servicer or Special Servicer for
any liability or obligation sustained by the Master Servicer or Special Servicer
in connection with any act or failure to act by the Sub-Servicer in its
servicing capacity. An Agreement may require a Sub-Servicer to maintain a
fidelity bond and an errors and omissions policy with respect to its officers,
employees and other persons acting on its behalf or on behalf of the Master
Servicer or Special Servicer.
REALIZATION UPON DEFAULTED WHOLE LOANS
A mortgagor's failure to make required payments may reflect inadequate
operating income or the diversion of that income from the service of payments
due under the Mortgage Loan, and may call into question such mortgagor's ability
to make timely payment of taxes and to pay for necessary maintenance of the
related Mortgaged Property. The Master Servicer is required to monitor any Whole
Loan which is in default, contact the mortgagor concerning the default, evaluate
whether the causes of the default can be cured over a reasonable period without
significant impairment of the value of the Mortgaged Property, initiate
corrective action in cooperation with the mortgagor if cure is likely, inspect
the Mortgaged Property and take such other actions as it would normally take
with respect to similar loans serviced for its own portfolio. A significant
period of time may elapse before the Master Servicer is able to assess the
success of such corrective action or the need for additional initiatives.
The time within which the Master Servicer makes the initial determination
of appropriate action, evaluates the success of corrective action, develops
additional initiatives, institutes foreclosure proceedings and actually
forecloses (or takes a deed to a Mortgaged Property in lieu of foreclosure) on
behalf of the Certificateholders, may vary considerably depending on the
particular Whole Loan, the Mortgaged Property, the mortgagor, the presence of an
acceptable party to assume the Mortgage Loan and the laws of the jurisdiction in
which the Mortgaged Property is located. Under federal bankruptcy law, in
certain cases the Master Servicer may not be permitted to accelerate a Whole
Loan or to foreclose on a Mortgaged Property for a considerable period of time.
See 'Certain Legal Aspects of Mortgage Loans'.
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If so specified in the Prospectus Supplement for a series of Certificates
that includes one or more subordinate classes, any holder or holders of a class
of Subordinate Certificates having the lowest priority of payment may purchase
from the Trust Fund at the purchase price described in such Supplement any Whole
Loan as to which the number of scheduled payments thereunder specified in such
Supplement are delinquent.
The Master Servicer, on behalf of the Trustee, may at any time institute
foreclosure proceedings, exercise any power of sale contained in any mortgage,
obtain a deed in lieu of foreclosure, or otherwise acquire title to a Mortgaged
Property securing a Whole Loan by operation of law or otherwise, if such action
is consistent with the servicing standard described herein and a default on the
related Mortgage Loan has occurred or, in the Master Servicer's judgment, is
imminent. The Master Servicer may not, however, acquire title to any Mortgaged
Property or take any action that would cause the Trust Fund to be an 'owner' or
an 'operator' within the meaning of certain federal or state environmental laws,
unless the Master Servicer has also 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) The Mortgaged Property is in compliance with applicable
environmental laws or, if not, that it would be in the best economic
interest of the Trust Fund to take such actions as are necessary to cause
the Mortgaged Property to comply therewith (the cost of which actions will
be an expense of the Trust Fund); and
(ii) There are no circumstances or conditions present at the Mortgaged
Property relating to the use, management or disposal of any hazardous
substances, hazardous materials, wastes, or petroleum-based materials for
which investigation, testing, monitoring, containment, clean-up or
remediation could be required under any federal, state or local law or
regulation, or, if such substances, materials or wastes are present for
which such action could be required, that it would be in the best economic
interest of the Trust Fund to take such actions with respect to the
Mortgaged Property (the cost of which actions will be an expense of the
Trust Fund).
If title to any Mortgaged Property is acquired by the Trust Fund, the
Master Servicer, pursuant to the related Agreement and on behalf of the Trust
Fund, will be required to sell the Mortgaged Property within two years of
acquisition, unless the Trustee receives (i) an opinion of independent counsel
to the effect that the holding of the property by the Trust Fund subsequent to
two years after its acquisition 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 or (ii) an extension from
the Internal Revenue Service.
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 any of its obligations with
respect to the management and operation of such Mortgaged Property. Any such
property acquired by the Trust Fund will be managed in a manner consistent with
the management and operation by the Master Servicer of similar property owned by
it.
The limitations imposed by the Agreement and the REMIC provisions of the
Code (if a REMIC election has been made with respect to the related Trust Fund)
on the operations and ownership of any Mortgaged Property acquired on behalf of
the Trust Fund may result in the recovery of an amount less than the amount that
would otherwise be recovered. See 'Certain Legal Aspects of Mortgage
Loans--Foreclosure'.
If recovery on a defaulted Whole Loan under any related instrument of
Credit Support is not available, the Master Servicer nevertheless will be
obligated to follow or cause to be followed such normal practices and procedures
as it deems necessary or advisable to realize upon the defaulted Whole Loan. If
the proceeds of any liquidation of the property securing the defaulted Whole
Loan are less than the outstanding principal balance of the defaulted Whole Loan
plus interest accrued thereon at the Mortgage Rate plus the aggregate amount of
expenses incurred by the Master Servicer in connection with such proceedings and
which are reimbursable under the Agreement, the Trust Fund will realize a loss
in the amount of such difference. The Master Servicer will be entitled to
withdraw or cause to be withdrawn from the Collection Account out of the
Liquidation Proceeds recovered on any defaulted Whole Loan, prior to the
distribution of such Liquidation Proceeds to Certificateholders, amounts
representing its normal servicing compensation on the Whole Loan, unreimbursed
servicing expenses incurred with respect to the Whole Loan and any unreimbursed
advances of delinquent payments made with respect to the Whole Loan.
If any property securing a defaulted Whole Loan is damaged and proceeds, if
any, from the related hazard insurance policy are insufficient to restore the
damaged property to a condition sufficient to permit recovery under the related
instrument of Credit Support, if any, the Master Servicer is not required to
expend its own funds to restore the damaged property unless it determines (i)
that such restoration will increase the proceeds to Certificateholders on
liquidation of the Whole Loan after reimbursement of
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the Master Servicer for its expenses and (ii) that such expenses will be
recoverable by it from related Insurance Proceeds or Liquidation Proceeds.
As servicer of the Whole Loans, a Master Servicer, on behalf of itself, the
Trustee and the Certificateholders, will present claims to the obligor under
each instrument of Credit Support, and will take such reasonable steps as are
necessary to receive payment or to permit recovery thereunder with respect to
defaulted Whole Loans.
If a Master Servicer or its designee recovers payments under any instrument
of Credit Support with respect to any defaulted Whole Loan, the Master Servicer
will be entitled to withdraw or cause to be withdrawn from the Collection
Account out of such proceeds, prior to distribution thereof to
Certificateholders, amounts representing its normal servicing compensation on
such Whole Loan, unreimbursed servicing expenses incurred with respect to the
Whole Loan and any unreimbursed advances of delinquent payments made with
respect to the Whole Loan. See '--Hazard Insurance Policies' and 'Description of
Credit Support'.
HAZARD INSURANCE POLICIES
Any Agreement for a Trust Fund that includes Whole Loans will require the
Master Servicer to cause the mortgagor on each Whole Loan to maintain a hazard
insurance policy providing for coverage of the standard form of fire insurance
policy with extended coverage customary in the state in which the Mortgaged
Property is located. Such coverage generally will be in general in an amount
equal to the lesser of the principal balance owing on such Whole Loan and the
amount necessary to fully compensate for any damage or loss to the improvements
on the Mortgaged Property on a replacement cost basis, but in either case not
less than the amount necessary to avoid the application of any co-insurance
clause contained in the hazard insurance policy. The ability of the Master
Servicer to assure that hazard insurance proceeds are appropriately applied may
be dependent upon its being named as an additional insured under an hazard
insurance policy and under any flood insurance policy referred to below, or upon
the extent to which information in this regard is furnished by mortgagors. 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 mortgagor in accordance with the Master Servicer's normal
servicing procedures, subject to the terms and conditions of the related
Mortgage and Mortgage Note) will be deposited in the Collection Account. The
Agreement will provide that the Master Servicer may satisfy its obligation to
cause each mortgagor to maintain such a hazard insurance policy by the Master
Servicer's maintaining a blanket policy insuring against hazard losses on the
Whole Loans. If such blanket policy contains a deductible clause, the Master
Servicer will be required to deposit in the Collection Account all sums that
would have been deposited therein but for such clause. The Master Servicer will
also be required to maintain a fidelity bond and errors and omission policy with
respect to its officers and employees that provides coverage against losses that
may be sustained as a result of an officer's or employee's misappropriation of
funds or errors and omissions in failing to maintain insurance, subject to
certain limitations as to amount of coverage, deductible amounts, conditions,
exclusions and exceptions.
In general, the standard form of fire and extended coverage policy covers
physical damage to or destruction of the improvements of the property by fire,
lightning, explosion, smoke, windstorm and hail, and riot, strike and civil
commotion, subject to the conditions and exclusions specified in each policy.
Although the policies relating to the Whole Loans will be underwritten by
different insurers under different state laws in accordance with different
applicable state forms, and therefore will not contain identical terms and
conditions, the basic terms thereof are dictated by respective state laws, and
most 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 uninsured risks. When a
Mortgaged Property securing a Whole Loan is located at origination in a
federally designated flood area, each Agreement requires the Master Servicer to
cause the mortgagor to acquire and maintain flood insurance in an amount equal
in general to the lesser of (i) the amount necessary to fully compensate for any
damage or loss to the improvements which are part of the Mortgaged Property or a
replacement cost basis and (ii) the maximum amount of insurance available under
the federal flood insurance program, whether or not the area is participating in
the program.
The hazard insurance policies covering the Mortgaged Properties securing
the Whole Loans will typically contain a co-insurance clause that in effect
requires the insured at all times to carry insurance of a specified percentage
(generally 80% to 90%) of the full replacement value of the improvements on the
property in order to recover the full amount of any partial loss. If the
insured's coverage falls below this specified percentage, such clause generally
provides 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.
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Under the terms of the Whole Loans, mortgagors will be required to present
claims to insurers under hazard insurance policies maintained on the related
Mortgaged Properties. The Master Servicer, on behalf of the Trustee and
Certificateholders, is obligated to present or cause to be presented claims
under any blanket insurance policy insuring against hazard losses on Mortgaged
Properties securing the Whole Loans. However, the ability of the Master Servicer
to present or cause to be presented such claims is dependent upon the extent to
which information in this regard is furnished to the Master Servicer by
mortgagors.
DUE-ON-SALE AND DUE-ON-ENCUMBRANCE PROVISIONS
Certain of the Whole Loans may contain clauses requiring the consent of the
mortgagee to any sale or other transfer of the related Mortgaged Property, or
due-on-sale clauses entitling the mortgagee to accelerate payment of the Whole
Loan upon any sale or other transfer of the related Mortgaged Property. Certain
of the Whole Loans may contain clauses requiring the consent of the mortgagee to
the creation of any other lien or encumbrance on the Mortgaged Property or
due-on-encumbrance clauses entitling the mortgagee to accelerate payment of the
Whole Loan upon the creation of any other lien or encumbrance upon the Mortgaged
Property. The Master Servicer, on behalf of the Trust Fund, will determine
whether to exercise any right the Trustee may have as mortgagee to accelerate
payment of any such Whole Loan or to withhold its consent to any transfer or
further encumbrance in accordance with the general servicing standard described
herein under 'Description of the Agreements--Collection and Other Servicing
Procedures'.
Any fee collected by or on behalf of the Master Servicer for entering into
an assumption agreement will be retained by or on behalf of the Master Servicer
as additional servicing compensation. See 'Certain Legal Aspects of Mortgage
Loans--Due-on-Sale and Due-on-Encumbrance'.
RETAINED INTEREST; SERVICING COMPENSATION AND PAYMENT OF EXPENSES
The Prospectus Supplement for a series of Certificates will specify whether
there will be any Retained Interest in the Mortgage Assets, and, if so, the
owner thereof. If so, the Retained Interest will be established on a
loan-by-loan basis and will be specified on an exhibit to the related Agreement.
A 'Retained Interest' in a Mortgage Asset represents a specified portion of the
interest payable thereon. The Retained Interest will be deducted from mortgagor
payments as received and will not be part of the related Trust Fund.
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 payment on each Whole Loan. Since any Retained Interest and a Master
Servicer's primary compensation are percentages of the principal balance of each
Mortgage Asset, such amounts will decrease in accordance with the amortization
schedule of the Mortgage Loans underlying or comprising such Mortgage Asset. The
Prospectus Supplement with respect to a series of Certificates evidencing
interests in a Trust Fund that includes Whole Loans may provide that, as
additional compensation, the Master Servicer or the Sub-Servicers may retain all
or a portion of assumption fees, modification fees, late payment charges or
Prepayment Premiums collected from mortgagors and any interest or other income
which may be earned on funds held in the Collection Account or any Sub-Servicing
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,
to the extent provided in the related Prospectus Supplement, pay from its
servicing compensation certain expenses incurred in connection with its
servicing of the Mortgage Loans, including, without limitation, payment of the
fees and disbursements of the Trustee and independent accountants, payment of
expenses incurred in connection with distributions and reports to
Certificateholders, and payment of any other expenses described in the related
Prospectus Supplement. Certain other expenses, including certain expenses
relating to defaults and liquidations on the Mortgage Loans and, to the extent
so provided in the related Prospectus Supplement, interest thereon at the rate
specified therein, and the fees of any Special Servicer, may be borne by the
Trust Fund.
EVIDENCE AS TO COMPLIANCE
Each Agreement relating to Mortgage Assets which include Whole Loans will
provide that on or before a specified date in each year, beginning with the
first such date at least six months after the related Cut-off Date, a firm of
independent public accountants will furnish a statement to the Trustee to the
effect that, on the basis of the examination by 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 (including the
related Agreement) was conducted in compliance with the terms of such agreements
except for any significant exceptions or errors in records that, in the opinion
of the firm, either the Audit
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Program for Mortgages serviced for FHLMC, or paragraph 4 of the Uniform Single
Audit Program for Mortgage Bankers, requires it to report. In rendering its
statement such firm may rely, as to matters relating to the direct servicing of
mortgage loans by Sub-Servicers, upon comparable statements for examinations
conducted substantially in compliance with the Uniform Single Audit Program for
Mortgage Bankers or the Audit Program for Mortgages serviced for FHLMC (rendered
within one year of such statement) of firms of independent public accountants
with respect to the related Sub-Servicer.
Each such Agreement will also provide for delivery to the Trustee, on or
before a specified date in each year, of an annual statement signed by two
officers of the Master Servicer to the effect that the Master Servicer has
fulfilled its obligations under the Agreement throughout the preceding year.
Copies of the annual accountants' statement and the statement of officers
of a Master Servicer will be obtainable by Certificateholders without charge
upon written request to the Master Servicer at the address set forth in the
related Prospectus Supplement.
CERTAIN MATTERS REGARDING A MASTER SERVICER, A SPECIAL SERVICER AND THE
DEPOSITOR
The Master Servicer, if any, under each Agreement will be named in the
related Prospectus Supplement. The entity serving as Master Servicer may be an
affiliate of the Depositor and may have other normal business relationships with
the Depositor or Depositor's affiliates.
The Agreement will provide that the Master Servicer may resign from its
obligations and duties thereunder only if such resignation, and the appointment
of a successor, will not result in a downgrading of the rating of any class of
Certificates or upon a determination that its duties under the Agreement are no
longer permissible under applicable law. No such resignation will become
effective until the Trustee or a successor servicer has assumed the Master
Servicer's obligations and duties under the Agreement.
Each Agreement will further provide that neither any Master Servicer, the
Depositor nor any director, officer, employee, or agent of a Master Servicer or
the Depositor will be under any liability to the related Trust Fund or
Certificateholders for any action taken, or for refraining from the taking of
any action, in good faith pursuant to the Agreement; provided, however, that
neither a Master Servicer, the Depositor nor any such person will be protected
against any liability which would otherwise be imposed by reason of willful
misfeasance, bad faith or gross negligence in the performance of duties
thereunder or by reason of reckless disregard of obligations and duties
thereunder. Each Agreement will further provide that any Master Servicer, the
Depositor and any director, officer, employee or agent of a Master Servicer or
the Depositor will be entitled to indemnification by the related Trust Fund and
will be held harmless against any loss, liability or expense incurred in
connection with any legal action relating to the Agreement or the Certificates,
other than any loss, liability or expense related to any specific Mortgage Loan
or Mortgage Loans (unless any such loss, liability or expense is otherwise
reimbursable pursuant to the Agreement) and any loss, liability or expense
incurred by reason of willful misfeasance, bad faith or gross negligence in the
performance of duties thereunder or by reason of reckless disregard of
obligations and duties thereunder. In addition, each Agreement will provide that
neither any Master Servicer nor the Depositor will be under any obligation to
appear in, prosecute or defend any legal action which is not incidental to its
respective responsibilities under the Agreement and which in its opinion may
involve it in any expense or liability. Any such Master Servicer or the
Depositor may, however, in its discretion undertake any such action which it may
deem necessary or desirable with respect to the Agreement and the rights and
duties of the parties thereto and the interests of the Certificateholders
thereunder. In 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 be reimbursed therefor and to charge the Collection
Accounts.
Any person into which the Master Servicer may be merged or consolidated, or
any person resulting from any merger or consolidation to which the Master
Servicer is a party, or any person succeeding to the business of the Master
Servicer, will be the successor of the Master Servicer under the related
Agreement, provided that such person satisfies the criteria specified in the
Agreement.
If the Master Servicer retains a Special Servicer, the standard of care
for, and any indemnification to be provided to, the Special Servicer will be set
forth in the related Agreement.
EVENT OF DEFAULT
Events of Default under the related Agreement for a Trust Fund that
includes Whole Loans will, in general, consist of (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, any required
payment that continues unremedied for five days after the giving of written
notice of such failure
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to the Master Servicer by the Trustee or the Depositor, or to the Master
Servicer, the Depositor and the Trustee by the holders of Certificates
evidencing not less than 25% of the Voting Rights, (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 Agreement which continues unremedied
for thirty days (fifteen days in the case of a failure to pay the premium for
any insurance policy or instrument of Credit Support required to be maintained
pursuant to the Agreement) after the giving of written notice of such failure to
the Master Servicer by the Trustee or the Depositor, or to the Master Servicer,
the Depositor and the Trustee by the holders of Certificates evidencing not less
than 25% of the Voting Rights; and (iii) certain events of insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings and certain actions by or on behalf of the Master Servicer
indicating its insolvency or inability to pay its obligations.
RIGHTS UPON EVENT OF DEFAULT
So long as an Event of Default under an Agreement remains unremedied, the
Depositor or the Trustee may, at the direction of holders of Certificates
evidencing not less than 51% of the Voting Rights, the Trustee shall, terminate
all of the rights and obligations of the Master Servicer under the Agreement
relating to such Trust Fund and in and to the Mortgage Loans (other than any
Retained Interest of the Master Servicer), whereupon the Trustee will succeed to
all of the responsibilities, duties and liabilities of the Master Servicer under
the Agreement (except that if the Trustee is prohibited by law from obligating
itself to make advances regarding delinquent mortgage loans, then the Trustee
will not be so obligated) and will be entitled to similar compensation
arrangements. In the event that the Trustee is unwilling or unable so to act, it
may or, at the written request of the holders of Certificates entitled to at
least 51% of the Voting Rights, it shall appoint, or petition a court of
competent jurisdiction for the appointment of, a loan servicing institution
acceptable to the Rating Agency with a net worth at the time of such appointment
of at least $15,000,000 to act as successor to the Master Servicer under the
Agreement. Pending such appointment, the Trustee is obligated to act in such
capacity. The Trustee and any such successor may agree upon the servicing
compensation to be paid, which in no event may be greater than the compensation
payable to the Master Servicer under the Agreement.
No Certificateholder will have the right under any Agreement to institute
any proceeding with respect thereto unless such holder previously has given to
the Trustee written notice of default and unless the holders of Certificates
evidencing not less than 25% of the Voting Rights have made written request upon
the Trustee to institute such proceeding in its own name as Trustee thereunder
and have offered to the Trustee reasonable indemnity, and the Trustee for
fifteen days has neglected or refused to institute any such proceeding. The
Trustee, however, is under no obligation to exercise any of the trusts or powers
vested in it by any 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 covered by such Agreement, 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 Agreement may be amended by the Depositor, the Master Servicer, if
any, and the Trustee, without the consent of any of the holders of Certificates
covered by the Agreement, to cure any ambiguity, to correct, modify or
supplement any provision therein, or to make any other provisions with respect
to matters or questions arising under the Agreement which are not inconsistent
with the provisions thereof, provided that such action will not adversely affect
in any material respect the interests of any holder of Certificates covered by
the Agreement. An Agreement may also be amended by the Depositor, the Master
Servicer, if any, and the Trustee with the consent of the holders of
Certificates evidencing not less than 66% of the Voting Rights, for any purpose;
provided, however, that no such amendment may (i) reduce in any manner the
amount of or delay the timing of, payments received on Mortgage Loans which are
required to be distributed on any Certificate without the consent of the holder
of such Certificate, (ii) adversely affect in any material respect the interests
of the holders of any class of Certificates in a manner other than as described
in (i), without the consent of the holders of Certificates of such class
evidencing not less than 66% of the aggregate Voting Rights of such class or
(iii) reduce the aforesaid percentage of Voting Rights required for the consent
to any such amendment without the consent of the holders of all Certificates
covered by such Agreement then outstanding. However, with respect to any series
of Certificates as to which one or more REMIC elections is to be made, the
Trustee will not consent to any amendment of the Agreement unless it shall first
have received an opinion of counsel to the effect that such amendment will not
cause the Trust Fund (or designated portion thereof) to fail to qualify as a
REMIC at any time that the related Certificates are outstanding.
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DUTIES OF THE TRUSTEE
The Trustee will make no representations as to the validity or sufficiency
of any Agreement, the Certificates or any Mortgage Loan or related document and
is not accountable for the use or application by or on behalf of any Master
Servicer of any funds paid to the Master Servicer or its designee or any Special
Servicer in respect of the Certificates or the Mortgage Loans, or deposited into
or withdrawn from the Certificate Account or any other account by or on behalf
of the Master Servicer or any Special Servicer. If no Event of Default has
occurred and is continuing, the Trustee is required to perform only those duties
specifically required under the related Agreement. However, upon receipt of the
various certificates, reports or other instruments required to be furnished to
it, the Trustee is required to examine such documents and to determine whether
they conform to the requirements of the Agreement.
THE TRUSTEE
The Trustee under each Agreement will be named in the related Prospectus
Supplement. The commercial bank, national banking association or trust company
serving as Trustee may have typical banking relationships with the Depositor and
its affiliates and with any Master Servicer and its affiliates.
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DESCRIPTION OF CREDIT SUPPORT
GENERAL
For any series of Certificates, Credit Support may be provided with respect
to one or more classes thereof or the related Mortgage Assets. Credit Support
may be in the form of the subordination of one or more classes of Certificates,
letters of credit, insurance policies on the Mortgage Loans, certificate
guarantee insurance, guarantees, the establishment of one or more reserve funds
or another method of Credit Support described in the related Prospectus
Supplement, or any combination of the foregoing. If so provided in the related
Prospectus Supplement, any form of Credit Support may be structured so as to be
drawn upon by more than one series to the extent described therein.
Credit Support will generally not provide protection against all risks of
loss and will not guarantee repayment of the entire Certificate Balance of the
Certificates and interest thereon. If losses or shortfalls occur that exceed the
amount covered by Credit Support or that are not covered by Credit Support,
Certificateholders will bear their allocable share of deficiencies. Moreover,
holders of Certificates of a Covered Trust will be subject to the risk that such
Credit Support will be exhausted by the claims of other Covered Trusts prior to
such Covered Trust receiving any of its intended share of such coverage.
If Credit Support is provided with respect to one or more classes of
Certificates of a series, or the related Mortgage Assets, the related Prospectus
Supplement will include a description of (a) the nature and amount of coverage
under such Credit Support, (b) any conditions to payment thereunder not
otherwise described herein, (c) 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 (d) 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, including (i) a brief description of its principal business
activities, (ii) its principal place of business, place or incorporation and the
jurisdiction under which it is chartered or licensed to do business, (iii) if
applicable, the identity of regulatory agencies that exercise primary
jurisdiction over the conduct of its business and (iv) its total assets, and its
stockholders' or policyholders' surplus, if applicable, as of the date specified
in the Prospectus Supplement. See 'Special Considerations--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. The rights of the
holders of Subordinate Certificates to receive distributions of principal and
interest from the Certificate Account on any Distribution Date will be
subordinated to such rights of the holders of Senior Certificates to the extent
specified in the related Prospectus Supplement. The subordination of a class may
apply only in the event of (or may be limited to) certain types of losses or
shortfalls. The relative interests of the Senior Certificates and the
Subordinate Certificates of a Series may be subject to adjustment from time to
time on the basis of distributions received in respect thereof. The related
Prospectus Supplement will set forth information concerning the amount of
subordination of a class or classes of Subordinate Certificates in a series, the
circumstances in which such subordination will be applicable and the manner, if
any, in which the amount of subordination will be effected. If one or more
classes of Subordinate Certificates of a series are Offered Certificates, the
related Prospectus Supplement will provide information as to the sensitivity of
distributions on such Certificates based on certain default assumptions.
CROSS-SUPPORT PROVISIONS
If the Mortgage Assets for a series are divided into separate groups, each
supporting a separate class or classes of Certificates of a series, credit
support may be provided by cross-support provisions requiring that distributions
be made on Senior Certificates evidencing interests in one group of Mortgage
Assets prior to distributions on Subordinate Certificates evidencing interests
in a different group of Mortgage Assets within the Trust Fund. The Prospectus
Supplement for a series that includes a cross-support provision will describe
the manner and conditions for applying such provisions.
INSURANCE OR GUARANTEES WITH RESPECT TO THE MORTGAGE ASSETS
If so provided in the Prospectus Supplement for a series of Certificates,
the Mortgage Loans underlying or comprising the Mortgage Assets in the related
Trust Fund will be covered for various default risks by insurance policies or
guarantees, or the MBS comprising the Mortgage Assets in the related Trust Fund
will be covered by the types of Credit Support described herein. A copy of any
such material instrument for a series will be filed with the Commission as an
exhibit to a Current Report on Form 8-K to be filed within 15 days of issuance
of the Certificates of the related series.
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LETTER OF CREDIT
If so provided in the Prospectus Supplement for a series of Certificates,
the Mortgage Loans underlying or comprising the Mortgage Assets in the related
Trust Fund 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, equal to the percentage specified in the related Prospectus
Supplement of the aggregate principal balance of the Mortgage Assets on the
related Cut-off Date or one or more classes of Certificates. If so specified in
the related Prospectus Supplement, the letter of credit may permit draws in the
event of only certain types of losses. The amount available under the letter of
credit will, in all cases, be reduced to the extent of the unreimbursed payments
thereunder. 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 for a series will be filed with the Commission as an
exhibit to a Current Report on Form 8-K to be filed within 15 days of issuance
of the Certificates of the related series.
INSURANCE POLICIES AND SURETY BONDS
If so provided in the Prospectus Supplement for a series of Certificates,
the Mortgage Loans underlying or comprising the Mortgage Assets in the related
Trust Fund 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
for a series will be filed with the Commission as an exhibit to a Current Report
on Form 8-K to be filed with the Commission within 15 days of issuance of the
Certificates of the related series.
CERTIFICATE GUARANTEE INSURANCE
If so specified in the related Prospectus Supplement, certificate guarantee
insurance, if any, with respect to a series of Certificates will be provided by
one or more insurance companies. Such certificate guarantee insurance will
guarantee, with respect to one or more classes of Certificates of the applicable
series, timely distributions of interest and full distributions of principal on
the basis of a schedule of principal distributions set forth in or determined in
the manner specified in the related Prospectus Supplement. If so specified in
the related Prospectus Supplement, the certificate guarantee insurance will also
guarantee against any payment made to a Certificateholder which is subsequently
recovered as a 'voidable preference' payment under the Bankruptcy Code. A copy
of the certificate guarantee insurance for a series, if any, will be filed with
the Commission as an exhibit to a Current Report on Form 8-K to be filed with
the Commission within 15 days of issuance of the Certificates of the applicable
series.
RESERVE FUNDS
If so provided in the Prospectus Supplement for a series of Certificates,
the Mortgage Loans underlying or comprising the Mortgage Assets in the related
Trust Fund will be covered by one or more reserve funds in which cash, a letter
of credit, Permitted Investments, a demand note or a combination thereof will be
deposited, in the amounts so specified in such Prospectus Supplement. The
reserve funds for a series may also be funded over time by depositing therein a
specified amount of the distributions received on the related Mortgage Assets as
specified in the related Prospectus Supplement.
Amounts on deposit in any reserve fund for a series, together with the
reinvestment income thereon, if any, will be applied for the purposes, in the
manner, and to the extent specified in the related Prospectus Supplement. A
reserve fund may be provided to increase the likelihood of timely distributions
of principal of and interest on the Certificates. Reserve funds may be
established to provide limited protection against only certain types of losses
and shortfalls. Following each Distribution Date amounts in a reserve fund in
excess of any amount required to be maintained therein may be released from the
reserve fund under the conditions and to the extent specified in the related
Prospectus Supplement and will not be available for further application to the
Certificates.
Moneys deposited in any Reserve Funds will be invested in Permitted
Investments. 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. Whether a Reserve Fund, if any, for a series will be a
part of the Trust Fund will be disclosed in the related Prospectus Supplement.
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Additional information concerning any Reserve Fund will be set forth in the
related Prospectus Supplement, including the initial balance of such Reserve
Fund, the balance required to be maintained in the Reserve Fund, the manner in
which such required balance will decrease over time, the manner of funding such
Reserve Fund, the purposes for which funds in the Reserve Fund may be applied to
make distributions to Certificateholders and use of investment earnings from the
Reserve Fund, if any.
CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS
The following discussion contains general summaries of certain legal
aspects of loans secured by commercial and multifamily residential properties
that are general in nature. Because such legal aspects are governed by
applicable state law (which laws may differ substantially), the summaries do not
purport to be complete nor to reflect the laws of any particular state, nor to
encompass the laws of all states in which the security for the Mortgage Loans is
situated. The summaries are qualified in their entirety by reference to the
applicable federal and state laws governing the Mortgage Loans. See 'Description
of the Trust Funds--Mortgage Assets'.
GENERAL
All of the Mortgage Loans are loans evidenced by a note or bond and secured
by instruments granting a security interest in real property which may be
mortgages, deeds of trust, or deeds to secure debt, depending upon the
prevailing practice and law in the state in which the Mortgaged Property is
located. Mortgages, deeds of trust and deeds to secure debt are herein
collectively referred to as 'mortgages'. Any of the foregoing types of mortgages
will create a lien upon, or grant a title interest in, the subject property, the
priority of which will depend on the terms of the particular security
instrument, as well as separate, recorded, contractual arrangements with others
holding interests in the mortgaged property, the knowledge of the parties to
such instrument as well as the order of recordation of the instrument in the
appropriate public recording office. However, recording does not generally
establish priority over governmental claims for real estate taxes and
assessments and other charges imposed under governmental police powers.
TYPES OF MORTGAGE INSTRUMENTS
A mortgage either creates a lien against or constitutes a conveyance of
real property between two parties -a mortgagor (the borrower and usually the
owner of the subject property) and a mortgagee (the lender). In contrast, a deed
of trust is a three-party instrument, among a trustor (the equivalent of a
mortgagor), a trustee to whom the mortgaged property is conveyed, and a
beneficiary (the lender) for whose benefit the conveyance is made. As used in
this Prospectus, unless the context otherwise requires, 'mortgagor' includes the
trustor under a deed of trust and a grantor under a deed to secure debt. Under a
deed of trust, the mortgagor grants the property, irrevocably until the debt is
paid, in trust, generally with a power of sale as security for the indebtedness
evidenced by the related note. A deed to secure debt typically has two parties.
By executing a deed to secure debt, the grantor conveys title to, as opposed to
merely creating a lien upon, the subject property to the grantee until such time
as the underlying debt is repaid, generally with a power of sale as security for
the indebtedness evidenced by the related mortgage note. As used in this
Prospectus, unless the context otherwise requires, the term 'mortgagee' means
the lender and, in the case of the deed of trust, the trustee thereunder in
certain cases. In case the mortgagor under a mortgage is a land trust, there
would be an additional party because legal title to the property is held by a
land trustee under a land trust agreement for the benefit of the mortgagor. At
origination of a mortgage loan involving a land trust, the mortgagor executes a
separate undertaking to make payments on the mortgage note. The mortgagee's
authority under a mortgage, the trustee's authority under a deed of trust and
the grantee's authority under a deed to secure debt are governed by the express
provisions of the mortgage, the law of the state in which the real property is
located, certain federal laws (including, without limitation, the Soldiers' and
Sailor's Civil Relief Act of 1940) and, in some cases, in deed of trust
transactions, the directions of the beneficiary.
LEASES AND RENTS
Mortgages that encumber income-producing property often contain an
assignment of rents and leases, pursuant to which the mortgagor assigns its
right, title and interest as landlord under each lease and the income derived
therefrom to the lender, while the mortgagor retains a revocable license to
collect the rents for so long as there is no unremedied default. If the
mortgagor defaults and such default is not remedied by the mortgagor within the
cure period, if any, 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'); generally these
rates are either assigned by the mortgagor, which remains entitled to
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collect such rates absent a default, or pledged by the mortgagor, as security
for the loans. 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, the lender will generally be required to commence a foreclosure
or otherwise take possession of the property in order to collect the room rates
after a default. Even after a foreclosure, the potential rent payments from the
property may be less than the periodic payments that had been due under the
mortgage. For instance, the net income that would otherwise be generated from
the property may be less than the amount that would have been needed to service
the mortgage debt if the leases on the property are at below-market rents, or as
the result of excessive maintenance, repair or other obligations which a lender
succeeds to as landlord.
PERSONALTY
Certain types of Mortgaged Properties, such as hotels, motels and
industrial plants, are likely to derive a significant part of their value from
personal property which does not constitute 'fixtures' under applicable state
real property law, and hence, would not be subject to the lien of a mortgage.
Such property is generally pledged or assigned as security to the lender under
the UCC. In order to perfect its security interest therein, the lender generally
must file UCC financing statements and, to maintain perfection of such security
interest, file continuation statements generally every five years.
INSTALLMENT CONTRACTS
The Mortgage Loans included in a Trust Fund may also consist of Installment
Contracts. Under an Installment Contract the seller (hereinafter referred to in
this Section as the 'lender') retains legal title to the property and enters
into an agreement with the purchaser (hereinafter referred to in this Section as
the 'borrower') for the payment of the purchase price, plus interest, over the
term of such contract. Only after full performance by the borrower of the
contract is the lender obligated to convey title to the real estate to the
borrower. As with mortgage or deed of trust financing, during the effective
period of the Installment Contract, the borrower is generally responsible for
maintaining the property in good condition and for paying real estate taxes,
assessments and hazard insurance premiums associated with the property.
The method of enforcing the rights of the lender under an Installment
Contract varies on a state-by-state basis depending upon the extent to which
state courts are willing, or able pursuant to state statute, to enforce the
contract strictly according to its terms. The terms of Installment Contracts
generally provide that upon a default by the borrower, the borrower loses his or
her right to occupy the property, the entire indebtedness is accelerated, and
the buyer's equitable interest in the property is forfeited. The lender in such
a situation does not have to foreclose in order to obtain title to the property,
although in some cases a quiet title action is in order if the borrower has
filed the Installment Contract in local land records and an ejectment action may
be necessary to recover possession. In a few states, particularly in cases of
borrower default during the early years of an Installment Contract, the courts
will permit ejectment of the buyer and a forfeiture of his or her interest in
the property. However, most state legislatures have enacted provisions by
analogy to mortgage law protecting borrowers under Installment Contracts from
the harsh consequences of forfeiture. Under such statutes, a judicial or
nonjudicial foreclosure may be required, the lender may be required to give
notice of default and the borrower may be granted some grace period during which
the contract may be reinstated upon full payment of the default amount and the
borrower may have a post-foreclosure statutory redemption right. In other
states, courts in equity may permit a borrower with significant investment in
the property under an Installment Contract for the sale of real estate to share
in the proceeds of sale of the property after the indebtedness is repaid or may
otherwise refuse to enforce the forfeiture clause. Nevertheless, generally
speaking, the lender's procedures for obtaining possession and clear title under
an Installment Contract for the sale of real estate in a given state are simpler
and less time-consuming and costly than are the procedures for foreclosing and
obtaining clear title to a mortgaged property.
JUNIOR MORTGAGES; RIGHTS OF SENIOR MORTGAGES OR BENEFICIARIES
Some of the Mortgage Loans included in the Mortgage Pool for a series will
be secured by junior mortgages or deeds of trust which are subordinate to senior
mortgages or deeds of trust held by other lenders or institutional investors.
The rights of the Trust Fund (and therefore the Certificateholders), as
beneficiary under a junior deed of trust or as mortgagee under a junior
mortgage, are subordinate to those of the mortgagee or beneficiary under the
senior mortgage or deed of trust, including the prior rights of the senior
mortgagee or beneficiary to receive rents, hazard insurance and condemnation
proceeds and to cause the property securing the Mortgage Loan to be sold upon
default of the mortgagor or trustor, thereby extinguishing the junior
mortgagee's or junior beneficiary's lien unless the Master Servicer asserts its
subordinate interest in a property in foreclosure litigation or satisfies the
defaulted senior loan. As discussed more fully below, in many states a junior
mortgagee or beneficiary may satisfy a defaulted
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senior loan in full, adding the amounts expended to the balance due on the
junior loan. Absent a provision in the senior mortgage, no notice of default is
required to be given to the junior mortgagee.
The form of the mortgage or deed of trust used by many institutional
lenders confers on the mortgagee or beneficiary the right both to receive all
proceeds collected under any hazard insurance policy and all awards made in
connection with any condemnation proceedings, and to apply such proceeds and
awards to any indebtedness secured by the mortgage or deed of trust, in such
order as the mortgage or beneficiary may determine. Thus, in the event
improvements on the property are damaged or destroyed by fire or other casualty,
or in the event the property is taken by condemnation, the mortgagee or
beneficiary under the senior mortgage or deed of trust 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 indebtedness secured by the senior mortgage or deed of trust. Proceeds in
excess of the amount of senior mortgage indebtedness will, in most cases, be
applied to the indebtedness of a junior mortgage or trust deed to the extent the
junior mortgage or deed of trust so provides. The laws of certain states may
limit the ability of mortgagees or beneficiaries to apply the proceeds of hazard
insurance and partial condemnation awards to the secured indebtedness. In such
states, the mortgagor or trustor must be allowed to use the proceeds of hazard
insurance to repair the damage unless the security of the mortgagee or
beneficiary has been impaired. Similarly, in certain states, the mortgagee or
beneficiary is entitled to the award for a partial condemnation of the real
property security only to the extent that its security is impaired.
The form of mortgage or deed of trust used by many institutional lenders
typically contains a 'future advance' clause, which provides, in essence, that
additional amounts advanced to or on behalf of the mortgagor or trustor by the
mortgagee or beneficiary are to be secured by the mortgage or deed of trust.
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 'optional' advance. If the mortgagee or beneficiary is
obligated to advance the additional amounts, the advance may be entitled to
receive the same priority as amounts initially made under the mortgage or deed
of trust, notwithstanding that there may be intervening junior mortgages or
deeds of trust and other liens between the date of recording of the mortgage or
deed of trust and the date of the future advance, and notwithstanding that the
mortgagee or beneficiary had actual knowledge of such intervening junior
mortgages or deeds of trust and other liens at the time of the advance. Where
the mortgagee or beneficiary is not obligated to advance the additional amounts
and has actual knowledge of the intervening junior mortgages or deeds of trust
and other liens, the advance may be subordinate to such intervening junior
mortgages or deeds of trust and other liens. Priority of advances under a
'future advance' clause rests, in many other states, on state law giving
priority to all advances made under the loan agreement up to a 'credit limit'
amount stated in the recorded mortgage.
Another provision typically found in the form of the mortgage or deed of
trust used by many institutional lenders obligates the mortgagor or trustor to
pay before delinquency all taxes and assessments on the property and, when due,
all encumbrances, charges and liens on the property which appear prior to the
mortgage or deed of trust, to provide and maintain fire insurance on the
property, to maintain and repair the property and not to commit or permit any
waste thereof, and to appear in and defend any action or proceeding purporting
to affect the property or the rights of the mortgagee or beneficiary under the
mortgage or deed of trust. Upon a failure of the mortgagor or trustor to perform
any of these obligations, the mortgagee or beneficiary is given the right under
the mortgage or deed of trust to perform the obligation itself, at its election,
with the mortgagor or trustor agreeing to reimburse the mortgagee or beneficiary
for any sums expended by the mortgagee or beneficiary on behalf of the trustor.
All sums so expended by the mortgagee or beneficiary become part of the
indebtedness secured by the mortgage or deed of trust.
The form of mortgage or deed of trust used by many institutional lenders
typically requires the mortgagor or trustor to obtain the consent of the
mortgagee or beneficiary in respect of actions affecting the mortgaged property,
including, without limitation, leasing activities (including new leases and
termination or modification of existing leases), alterations and improvements to
buildings forming a part of the mortgaged property and management and leasing
agreements for the mortgaged property. Tenants will often refuse to execute
lease unless the mortgagee or beneficiary executes a written agreement with the
tenant not to disturb the tenant's possession of its premises in the event of a
foreclosure. A senior mortgagee or beneficiary may refuse to consent to matters
approved by a junior mortgagee or beneficiary with the result that the value of
the security for the junior mortgage or deed of trust is diminished. For
example, a senior mortgagee or beneficiary may decide not to approve a lease or
to refuse to grant to a tenant a non-disturbance agreement. If, as a result, the
lease is not executed, the value of the mortgaged property may be diminished.
SUBORDINATE FINANCING
Where the mortgagor encumbers mortgaged property with one or more junior
liens, the senior lender is subjected to additional risk. First, the mortgagor
may have difficulty servicing and repaying multiple loans. In addition, if the
junior loan permits recourse to the mortgagor (as junior loans often do) and the
senior loan does not, a mortgagor may be more likely to repay sums due on the
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junior loan than those on the senior 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
mortgagor 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 mortgagor is
additionally burdened. Third, if the mortgagor defaults on the senior loan
and/or any junior loan or loans, the existence of junior loans and actions taken
by junior 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.
FORECLOSURE
Foreclosure is a legal procedure that allows the mortgagee to recover its
mortgage debt by enforcing its rights and available legal remedies under the
mortgage. If the mortgagor defaults in payment or performance of its obligations
under the note or mortgage and, by reason thereof, the indebtedness has been
accelerated, the mortgagee has the right to institute foreclosure proceedings to
sell the mortgaged property at public auction to satisfy the indebtedness.
Foreclosure procedures with respect to the enforcement of a mortgage vary
from state to state. Two primary methods of foreclosing a mortgage are judicial
foreclosure and non-judicial foreclosure pursuant to a power of sale granted in
the mortgage instrument. There are other foreclosure procedures available in
some states that are either infrequently used or available only in certain
limited circumstances, such as strict foreclosure.
JUDICIAL FORECLOSURE
A judicial foreclosure proceeding is conducted in a court having
jurisdiction over the mortgaged property. Generally, the action is initiated by
the service of legal pleadings upon all parties having a subordinate interest of
record in the real property and all parties in possession of the property, under
leases or otherwise, whose interests are subordinate to the mortgage. Delays in
completion of the foreclosure may occasionally result from difficulties in
locating defendants. When the lender's right to foreclosure is contested, the
legal proceedings can be costly and time-consuming. Upon successful completion
of a judicial foreclosure proceeding, the court generally issues a judgment of
foreclosure and appoints a referee or other officer to conduct a public sale of
the mortgaged property, the proceeds of which are used to satisfy the judgment.
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 the power of sale granted in the deed of trust. A
power of sale is typically granted in a deed of trust. It may also be contained
in any other type of mortgage instrument. A power of sale allows a non-judicial
public sale to be conducted generally following a request from the
beneficiary/lender to the trustee to sell the property upon any default by the
mortgagor under the terms of the mortgage note or the mortgage instrument and
after notice of sale is given in accordance with the terms of the mortgage
instrument, as well as applicable state law. In some states, prior to such sale,
the trustee under a deed of trust must record a notice of default and notice of
sale and send a copy to the mortgagor 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 mortgagor or junior
lienholder may then have the right, during a reinstatment period required in
some states, to cure the default by paying the entire actual amount in arrears
(without acceleration) plus the expenses incurred in enforcing the obligation.
In other states, the mortgagor or the junior lienholder is not provided a period
to reinstate the loan, but has only the right to pay off the entire debt to
prevent the foreclosure sale. Generally, the procedure for public sale, the
parties entitled to notice, the method of giving notice and the applicable time
periods are governed by state law and vary among the states. Foreclosure of a
deed to secure debt is also generally accomplished by a non-judicial sale
similar to that required by a deed of trust, except that the lender or its
agent, rather than a trustee, is typically empowered to perform the sale in
accordance with the terms of the deed to secure debt and applicable law.
LIMITATIONS ON LENDER'S RIGHTS
United States courts have traditionally imposed general equitable
principles to limit the remedies available to a mortgagee in connection with
foreclosure. These equitable principles are generally designed to relieve the
mortgagor from the legal effect of mortgage defaults, to the extent that such
effect is perceived as harsh or unfair. Relying on such principles, a court may
alter the
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specific terms of a loan to the extent it considers necessary to prevent an
injustice, undue oppression or overreaching, or may require the lender to
undertake affirmative and expensive actions to determine the cause of the
mortgagor's default and the likelihood that the mortgagor 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 mortgagors who are suffering from a temporary
financial disability. In other cases, courts have limited the right of the
lender to foreclose if the default under the mortgage is not monetary, e.g., the
mortgagor failed to maintain the mortgaged property adequately or the mortgagor
executed a junior mortgage on the mortgaged property. The exercise by the court
of its equity powers will depend on the individual circumstances of each case
presented to it. Finally, some courts have been faced with the issue of whether
federal or state constitutional provisions reflecting due process concerns for
adequate notice require that a mortgagor receive notice in addition to
statutorily-prescribed minimum notice. For the most part, these cases have
upheld the reasonableness of the notice provisions or have found that a public
sale under a mortgage providing for a power of sale does not involve sufficient
state action to afford constitutional protections to the mortgagor.
A foreclosure action is subject to most of the delays and expenses of other
lawsuits if defenses are raised or counterclaims are interposed, and sometimes
require several years to complete.
Also, a third party may be unwilling to purchase a mortgaged property at a
public sale because of the difficulty in determining the value of such property
at the time of sale, due to, among other things, redemption rights which may
exist and the possibility of physical deterioration of the property during the
foreclosure proceedings. Potential buyers may be reluctant to purchase property
at a foreclosure sale as a result of the 1980 decision of the United States
Court of Appeals for the Fifth Circuit in Durrett v. Washington National
Insurance Company and other decisions that have followed its reasoning. The
court in Durrett held that even a non-collusive, regularly conducted foreclosure
sale was a fraudulent transfer under the federal Bankruptcy Code, as amended
from time to time (11 U.S.C.) and, therefore, could be rescinded in favor of the
bankrupt's estate, if (i) the foreclosure sale was held while the debtor was
insolvent and not more than one year prior to the filing of the bankruptcy
petition and (ii) the price paid for the foreclosed property did not represent
'fair consideration' ('reasonably equivalent value' under the Bankruptcy Code).
Although the reasoning and result of Durrett in respect of the Bankruptcy Code
was rejected by the United States Supreme Court in May 1994, the case could
nonetheless be persuasive to a court applying a state fraudulent conveyance law
which has 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 lesser of fair market value and the underlying debt and accrued and
unpaid interest plus the expenses of foreclosure. Generally, state law controls
the amount of foreclosure costs and expenses which may be recovered by a lender.
Thereafter, subject to the mortgagor's right in some states to remain in
possession during a redemption period, if applicable, the lender will become the
owner of the property and have both the benefits and burdens of ownership of the
mortgaged property. For example, the lender will have the obligation to pay debt
service on any senior mortgages, to pay taxes, obtain casualty insurance and to
make such repairs at its own expense as are necessary to render the property
suitable for sale. Frequently, the lender employs a third party management
company to manage and operate the property. The costs of operating and
maintaining a commercial or multifamily residential property may be significant
and may be greater than the income derived from that property. The costs of
management and operation of those mortgaged properties which are hotels, motels
or restaurants or nursing or convalescent homes or hospitals may be particularly
significant because of the expertise, knowledge and, with respect to nursing or
convalescent homes or hospitals, regulatory compliance, required to run such
operations and the effect which foreclosure and a change in ownership may have
on the public's and the industry's (including franchisors') perception of the
quality of such operations. The lender will commonly obtain the services of a
real estate broker and pay the broker's commission in connection with the sale
of the property. Depending upon market conditions, the ultimate proceeds of the
sale of the property may not equal the lender's investment in the property.
Moreover, a lender commonly incurs substantial legal fees and court costs in
acquiring a mortgaged property through contested foreclosure and/or bankruptcy
proceedings. Furthermore, a few states require that any environmental
contamination at certain types of properties be cleaned up before a property may
be resold. In addition, a lender may be responsible under federal or state law
for the cost of cleaning up a mortgaged property that is environmentally
contaminated. See '--Environmental Legislation'. Generally state law controls
the amount of foreclosure expenses and costs, including attorneys' fees, that
may be recovered by a lender.
A junior mortgagee may not foreclose on the property securing the junior
mortgage unless it forecloses subject to senior mortgages and any other prior
liens, in which case it may be obliged to make payments on the senior mortgages
to avoid their foreclosure. In addition, in the event that the foreclosure of a
junior mortgage triggers the enforcement of a 'due-on-sale' clause contained in
a senior mortgage, the junior mortgagee may be required to pay the full amount
of the senior mortgage to avoid its foreclosure. Accordingly, with respect to
those Mortgage Loans which are junior mortgage loans, if the lender purchases
the property the lender's title will be subject to all senior mortgages, prior
liens and certain governmental liens.
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The proceeds received by the referee or trustee from the sale are generally
applied first to the costs, fees and expenses of sale, to unpaid real estate
taxes and assessments and then in satisfaction of the indebtedness secured by
the mortgage under which the sale was conducted. Any proceeds remaining after
satisfaction of senior mortgage debt are generally payable to the holders of
junior mortgages and other liens and claims in order of their priority, whether
or not the mortgagor is in default. Any additional proceeds are generally
payable to the mortgagor. The payment of the proceeds to the holders of junior
mortgages may occur in the foreclosure action of the senior mortgage or a
subsequent ancillary proceeding or may require the institution of separate legal
proceedings by such holders.
In connection with a series of Certificates for which an election is made
to qualify the Trust Fund, or a portion thereof, as a REMIC, the REMIC
Regulations and the Agreement may require the Master Servicer to hire an
independent contractor to operate any foreclosed property relating to Whole
Loans.
RIGHTS OF REDEMPTION
The purposes of a foreclosure action are to enable the mortgagee to realize
upon its security and to bar the mortgagor, and all persons who have an interest
in the property which is subordinate to the mortgage being foreclosed, from
exercise of their 'equity of redemption'. The doctrine of equity of redemption
provides that, until the property covered by a mortgage has been sold in
accordance with a properly conducted foreclosure and foreclosure sale, those
having an interest which is subordinate to that of the foreclosing mortgagee
have an equity of redemption and may redeem the property by paying the entire
debt with interest. In addition, in some states, when a foreclosure action has
been commenced, the redeeming party must pay certain costs of such action. Those
having an equity of redemption must generally be made parties and joined in the
foreclosure proceeding in order for their equity of redemption to be cut off and
terminated.
The equity of redemption is generally a common-law (non-statutory) right
which exists prior to completion of the foreclosure, is not waivable by the
mortgagor, must be exercised prior to foreclosure sale and should be
distinguished from the post-sale statutory rights of redemption. In some states,
after sale pursuant to a deed of trust or foreclosure of a mortgage, the
mortgagor and foreclosed junior lienors are given a statutory period in which to
redeem the property from the foreclosure sale. In some states, statutory
redemption may occur only upon payment of the foreclosure sale price. In other
states, redemption may be authorized if the former mortgagor pays only a portion
of the sums due. The effect of a statutory right of redemption is to diminish
the ability of the lender to sell the foreclosed property. The exercise of a
right of redemption would defeat the title of any purchaser from a foreclosure
sale or sale under a deed of trust. Consequently, the practical effect of the
redemption right is to force the lender to maintain the property and pay the
expenses of ownership until the redemption period has expired. In some states, a
post-sale statutory right of redemption may exist following a judicial
foreclosure, but not following a trustee's sale under a deed of trust.
Under the REMIC Regulations currently in effect, property acquired by
foreclosure generally must not be held for more than two years. With respect to
a series of Certificates for which an election is made to qualify the Trust Fund
or a part thereof as a REMIC, the Agreement will permit foreclosed property to
be held for more than two years if the Trustee receives (i) an extension from
the Internal Revenue Service or (ii) an opinion of counsel to the effect that
holding such property for such period is permissible under the REMIC
Regulations.
ANTI-DEFICIENCY LEGISLATION
Some or all of the Mortgage Loans may be nonrecourse loans, as to which
recourse may be had only against the specific property securing the related
Mortgage Loan and a personal money judgment may not be obtained against the
mortgagor. Even if a mortgage loan by its terms provides for recourse to the
mortgagor, some states impose prohibitions or limitations on such recourse. For
example, statutes in some states limit the right of the lender to obtain a
deficiency judgment against the mortgagor following foreclosure or sale under a
deed of trust. A deficiency judgment would be a personal judgment against the
former mortgagor equal to the difference between the net amount realized upon
the public sale of the real property and the amount due to the lender. Some
states require the lender to exhaust the security afforded under a mortgage by
foreclosure in an attempt to satisfy the full debt before bringing a personal
action against the mortgagor. In certain other states, the lender has the option
of bringing a personal action against the mortgagor on the debt without first
exhausting such security; however, in some of these states, the lender,
following judgment on such personal action, may be deemed to have elected a
remedy and may be precluded from exercising remedies with respect to the
security. In some cases, a lender will be precluded from exercising any
additional rights under the note or mortgage if it has taken any prior
enforcement action. Consequently, the practical effect of the election
requirement, in those states permitting such election, is that lenders will
usually proceed against the security first rather than bringing a personal
action against the mortgagor. Finally, other statutory provisions limit any
deficiency judgment against the former mortgagor following a
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judicial sale to the excess of the outstanding debt over the fair market value
of the property at the time of the public sale. The purpose of these statutes is
generally to prevent a lender from obtaining a large deficiency judgment against
the former mortgagor as a result of low or no bids at the judicial sale.
LEASEHOLD RISKS
Mortgage Loans may be secured by a mortgage on a ground lease. Leasehold
mortgages are subject to certain risks not associated with mortgage loans
secured by the fee estate of the mortgagor. The most significant of these risks
is that the ground lease creating the leasehold estate could terminate, leaving
the leasehold mortgagee without its security. The ground lease may terminate if,
among other reasons, the ground lessee breaches or defaults in its obligations
under the ground lease or there is a bankruptcy of the ground lessee or the
ground lessor. This risk may be minimized if the ground lease contains certain
provisions protective of the mortgagee, but the ground leases that secure
Mortgage Loans may not contain some of these protective provisions, and
mortgages may not contain the other protections discussed in the next paragraph.
Protective ground lease provisions include the right of the leasehold mortgagee
to receive notices from the ground lessor of any defaults by the the mortgagor;
the right to cure such defaults, with adequate cure periods; if a default is not
susceptible of cure by the leasehold mortgagee, the right to acquire the
leasehold estate through foreclosure or otherwise; the ability of the ground
lease to be assigned to and by the leasehold mortgagee or purchaser at a
foreclosure sale and for the concomitant release of the ground lessee's
liabilities thereunder; and the right of the leasehold mortgagee to enter into a
new ground lease with the ground lessor on the same terms and conditions as the
old ground lease in the event of a termination thereof.
In addition to the foregoing protections, a leasehold mortgagee may require
that the ground lease or leasehold mortgage prohibit the ground lessee from
treating the ground lease as terminated in the event of the ground lessor's
bankruptcy and rejection of the ground lease by the trustee for the
debtor-ground lessor. As further protection, a leasehold mortgage may provide
for the assignment of the debtor-ground lessee's right to reject a lease
pursuant to Section 365 of the Bankruptcy Reform Act of 1978, as amended (11
U.S.C.) (the 'Bankruptcy Code'), although the enforceability of such clause has
not been established. Without the protections described in the foregoing
paragraph, a leasehold mortgagee may lose the collateral securing its leasehold
mortgage. In addition, terms and conditions of a leasehold mortgage are subject
to the terms and conditions of the ground lease. Although certain rights given
to a ground lessee can be limited by the terms of a leasehold mortgage, the
rights of a ground lessee or a leasehold mortgagee with respect to, among other
things, insurance, casualty and condemnation will be governed by the provisions
of the ground lease.
BANKRUPTCY LAWS
The Bankruptcy Code and related state laws may interfere with or affect the
ability of a lender to realize upon collateral and/or to enforce a deficiency
judgment. For example, under the Bankruptcy Code, virtually all actions
(including foreclosure actions and deficiency judgment proceedings) are
automatically stayed upon the filing of the bankruptcy petition, and, usually,
no interest or principal payments are made during the course of the bankruptcy
case. The delay and the consequences thereof caused by such automatic stay can
be significant. Also, under the Bankruptcy Code, the filing of a petition in
bankruptcy by or on behalf of a junior lienor may stay the senior lender from
taking action to foreclose out such junior lien.
Under the Bankruptcy Code, provided certain substantive and procedural
safeguards for the lender are met, the amount and terms of a mortgage secured by
property of the debtor may be modified under certain circumstances. The
outstanding amount of the loan secured by the real property may be reduced to
the then-current value of the property (with a corresponding partial reduction
of the amount of lender's security interest) pursuant to a confirmed plan or
lien avoidance proceeding, thus leaving the lender a general unsecured creditor
for the difference between such value and the outstanding balance of the loan.
Other modifications may include the modification or denial of enforceability of
due-on-sale or due-on-encumbrance clauses, the reduction in the amount of each
scheduled payment, which reduction may result from a reduction in the rate of
interest and/or the alteration of the repayment schedule (with or without
affecting the unpaid principal balance of the loan), and/or an extension (or
reduction) of the final maturity date. Some courts with federal bankruptcy
jurisdiction have approved plans, based on the particular facts of the
reorganization case, that effected the curing of a mortgage loan default by
paying arrearages over a number of years. Also, under federal bankruptcy law, a
bankruptcy court may permit a debtor through its rehabilitative plan to
de-accelerate a secured loan and to reinstate the loan even though the lender
accelerated the mortgage loan and final judgment of foreclosure had been entered
in state court (provided no sale of the property had yet occurred) prior to the
filing of the debtor's petition. This may be done even if the full amount due
under the original loan is never repaid.
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The Bankruptcy Code has 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. It should be
noted, however, that the court may find that the lender has no security interest
in either pre-petition or post-petition revenues if the court finds that the
loan documents do not contain language covering accounts, room rents, or other
forms of personalty necessary for a security interest to attach to hotel
revenues.
To the extent that a mortgagor's ability to make payment on a mortgage loan
is dependent on its receipt of payments of rent under a lease of the related
property, such ability may be impaired by the commencement of a bankruptcy
proceeding relating to a lessee under such lease. Under the Bankruptcy Code, the
commencement of a bankruptcy proceeding in which the lessee is the debtor
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, (a) assume the lease
and retain it or assign it to a third party or (b) 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, however, as the lessor may be
forced to continue under the lease with a lessee that is a poor credit risk or
an unfamiliar tenant if the lease was assigned, and any assurances provided to
the lessor may, in fact, be inadequate. If the lease is rejected, the lessor
will be treated as an unsecured creditor with respect to its claim for damages
for termination of the lease. In addition, pursuant to Section 502(b)(6) of the
Bankruptcy Code, a lessor's damages for lease rejection in respect of future
rent installments are limited to the rent reserved by the lease, without
acceleration, for the greater of one year, or 15%, not to exceed three years, of
the remaining term of the lease.
In a bankruptcy or similar proceeding, action may be taken seeking the
recovery as a preferential transfer of any payments made by the mortgagor under
the related Mortgage Loan to the Trust Fund. Payments on long-term debt may be
protected from recovery as preferences if they are payments in the ordinary
course of business made on debts incurred in the ordinary course of business.
Whether any particular payment would be protected depends upon the facts
specific to a particular transaction.
A trustee in bankruptcy, in some cases, may be entitled to collect its
costs and expenses in preserving or selling the mortgaged property ahead of
payment to the lender. In certain circumstances, a debtor in bankruptcy may have
the power to grant liens senior to the lien of a mortgage, and analogous state
statutes and general principles of equity may also provide a mortgagor with
means to halt a foreclosure proceeding or sale and to force a restructuring of a
mortgage loan on terms a lender would not otherwise accept. Moreover, the laws
of certain states also give priority to certain tax liens over the lien of a
mortgage or deed of trust. Under the Bankruptcy Code, if the court finds that
actions of the mortgagee have been unreasonable, the lien of the related
mortgage may be subordinated to the claims of unsecured creditors.
Pursuant to the federal doctrine of 'substantive consolidation' or to the
(predominantly state law) doctrine of 'piercing the corporate veil', a
bankruptcy court, in the exercise of its equitable powers, also has the
authority to order that the assets and liabilities of a related entity be
consolidated with those of an entity before it. Thus, property ostensibly the
property of one entity may be determined to be the property of a different
entity in bankruptcy, the automatic stay applicable to the first bankrupt entity
extended to the second and the rights of creditors of the second entity impaired
in the fashion set forth above in the discussion of ordinary bankruptcy
principles. Depending on facts and circumstances not wholly in existence at the
time a loan is originated or transferred to the Trust Fund, the application of
any of these doctrines to one or more of the mortgagors in the context of the
bankruptcy of one or more of their affiliates could result in material
impairment of the rights of the Certificateholders. For each mortgagor that is
described as a 'special purpose entity', 'single purpose entity' or
'bankruptcy-remote entity' in the Prospectus Supplement, the activities that may
be conducted by such mortgagor and its ability to incur debt are restricted by
the applicable Mortgage or the organizational documents of such mortgagor in
such manner as is intended to make the likelihood of a bankruptcy proceeding
being commenced by or against such mortgagor remote, and such mortgagor has been
organized and is designed to operate in a manner such that its separate
existence should be respected notwithstanding a bankruptcy proceeding in respect
of one or more affiliated entities of such mortgagor. However, the Depositor
makes no representation as to the likelihood of the institution of a bankruptcy
proceeding by or in respect of any mortgagor or the likelihood that the separate
existence of any mortgagor would be respected if there were to be a bankruptcy
proceeding in respect of any affiliated entity of a mortgagor.
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ENVIRONMENTAL LEGISLATION
A lender may be subject to unforeseen environmental risks when taking a
security interest in real or personal property. Such environmental risks may
give rise to (i) a diminution in value of property securing any Mortgage Loan,
(ii) limitation on the ability to foreclose against such property, or (iii) in
certain circumstances as more fully described below, liability for cleanup costs
or other remedial actions, which liability could exceed the value of the
principal balance of the related Mortgage Loan or of such Mortgaged Property.
Under the laws of many states, contamination on a property may give rise to
a lien on the property for cleanup costs. In several states, such a lien has
priority over all existing liens (a 'superlien') including those of existing
mortgages; in those states, the lien of a mortgage contemplated by this
transaction may lose its priority to such a superlien.
CERCLA imposes strict, as well as joint and several, liability on several
classes of potentially responsible parties, including current owners and
operators of the property, regardless of whether they caused or contributed to
the contamination. Many states have laws similar to CERCLA. CERCLA excludes from
the definition of 'owner or operator' any person 'who, without participating in
the management of . . . [the] facility, holds indicia of ownership primarily to
protect his security interest' ('secured-creditor exemption').
A lender may lose its secured-creditor exemption and be held liable under
CERCLA as an owner or operator, if such lender or its employees or agents
participate in management of the property. Also, if the lender takes title to or
possession of the property, the secured-creditor exemption may be deemed to be
unavailable under certain circumstances, and the lender may be liable to the
government or private parties for clean-up or other remedial costs pursuant to
CERCLA.
The Asset Conservation, Lender Liability and Deposit Insurance Act of 1996
('Conservation Act') amended, among other things, the provisions of CERCLA with
respect to lender liability and the secured creditor exemption. The Conservation
Act offers protection to lenders by defining the activities in which a lender
can engage and still have the benefit of the secured creditor exemption. The
lender will be deemed to have participated in the management of a Mortgaged
Property if it actually participates in the operational affairs of the property
or the borrower. The Conservation Act provides that 'merely having the capacity
to influence, or unexercised right to control' operations does not constitute
participation in management. A lender will lose the protection of the secured
creditor exemption if it exercises decisionmaking control over the borrower's
environmental compliance and hazardous substance handling or disposal practices,
or assumes day-to-day management of all operational functions of the Mortgaged
Property. The Conservation Act also provides that a lender may continue to have
the benefit of the secured creditor exemption even if it forecloses on a
Mortgaged Property, purchases it at a foreclosure sale or accepts a deed-in-lieu
of foreclosure provided that the lender seeks to sell the Mortgaged Property at
the earliest practicable commercially reasonable time on commercially reasonable
terms. The protections afforded lenders under the Conservation Act are subject
to terms and conditions that have not been clarified by the courts.
The secured creditor exemption does not protect a lender from liability
under CERCLA in cases where the lender arranges for disposal of hazardous
substances or for transportation of hazardous substances. In addition, the
secured creditor exemption does not govern liability for cleanup costs under
federal laws other than CERCLA. Liability under CERCLA extends to the
investigation and remediation of releases of 'hazardous substances.' The
definition of 'hazardous substances' under CERCLA specifically excludes
petroleum products. Therefore a federal statute of particular significance is
Subtitle I of the Resource Conservation and Recovery Act ('RCRA'), which governs
the operation and management of underground petroleum storage tanks. Under the
Conservation Act, the holders of security interests in underground storage tanks
or properties containing such tanks are accorded protections similar to the
protections accorded to lenders under CERCLA. It should be noted, however, that
liability for cleanup of petroleum contamination may be governed by state law,
which may not provide for any specific protection for secured creditors.
In some states, transfer of some types of properties is conditioned upon
cleanup of contamination prior to transfer. In these cases, a lender that
becomes the owner of a property through foreclosure, deed-in-lieu of foreclosure
or otherwise, may be required to clean up the contamination before selling or
otherwise transferring the property.
Beyond statute-based environmental liability, there exist common law causes
of action (for example, actions based on nuisance or on toxic tort resulting in
death, personal injury or damage to property) related to hazardous environmental
conditions on a property. While it may be more difficult to hold a lender liable
in such cases, unanticipated or uninsurable liabilities of the borrower may
jeopardize the borrower's ability to meet its loan obligations.
If a lender is or becomes liable, it may bring an action for contribution
against the owner or operator who created the environmental contamination, but
that person or entity may be bankrupt or otherwise judgment proof. It is
possible that cleanup
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costs could become a liability of the Trust Fund and occasion a loss to
Certificateholders in certain circumstances described above if such remedial
costs were incurred.
Unless otherwise provided in the related Prospectus Supplement, the
Warranting Party with respect to any Whole Loan included in a Trust Fund for a
particular series of Certificates will represent that a 'Phase I assessment' as
described in and meeting the requirements of the then current version of Chapter
5 of the Federal National Mortgage Association Multifamily Guide has been
received and reviewed. In addition, the Agreement may provide that the Master
Servicer, acting on behalf of the Trustee, will not acquire title to a Mortgaged
Property or take over its operation unless the Master Servicer has previously
determined, based on a report prepared by a person who regularly conducts
environmental audits, that (a) there are no circumstances or conditions present
at the Mortgaged Property relating to substances for which some investigation or
clean-up action could be required or that it would be in the best economic
interest of the Trust Fund to take such actions with respect to the affected
Mortgaged Property and (b) that the Mortgaged Property is in compliance with
applicable environmental laws or that it would be in the best economic interest
of the Trust Fund to take the actions necessary to comply with such laws. See
'Description of the Agreements-- Realization Upon Defaulted Whole Loans'.
DUE-ON-SALE AND DUE-ON-ENCUMBRANCE
Certain of the Mortgage Loans may contain due-on-sale and
due-on-encumbrance clauses. These clauses generally provide that the lender may
accelerate the maturity of the loan if the mortgagor sells or otherwise
transfers or encumbers the mortgaged property. Certain of these clauses may
provide that, upon an attempted breach thereof by the mortgagor of an otherwise
non-recourse loan, the mortgager becomes personally liable for the mortgage
debt. The enforceability of due-on-sale clauses has been the subject of
legislation or litigation in many states and, in some cases, the enforceability
of these clauses was limited or denied. However, with respect to certain loans
the Garn-St Germain Depository Institutions Act of 1982 preempts state
constitutional, statutory and case law that prohibits the enforcement of
due-on-sale clauses and permits lenders to enforce these clauses in accordance
with their terms subject to certain limited exceptions. Unless otherwise
provided in the related Prospectus Supplement, a Master Servicer, on behalf of
the Trust Fund, will determine whether to exercise any right the Trustee may
have as mortgagee to accelerate payment of any such Mortgage Loan or to withhold
its consent to any transfer or further encumbrance in accordance with the
general servicing standard described herein under 'Description of the
Agreements--Collection and Other Servicing Procedures'.
ACCELERATION ON DEFAULT
Some of the Mortgage Loans included in a Trust Fund will include a
'debt-acceleration' clause, which permits the lender to accelerate the full debt
upon a monetary or nonmonetary default of the borrower. The courts of all states
will enforce clauses providing for acceleration in the event of a material
payment default after giving effect to any appropriate notices. The equity
courts of any state, however, may refuse to foreclose a mortgage or deed of
trust when an acceleration of the indebtedness would be inequitable or unjust or
the circumstances would render the acceleration unconscionable. Furthermore, in
some states, the borrower may avoid foreclosure and reinstate an accelerated
loan by paying only the defaulted amounts and the costs and attorneys' fees
incurred by the lender in collecting such defaulted payments.
State courts also are known to apply various legal and equitable principles
to avoid enforcement of the forfeiture provisions of Installment Contracts. For
example, a lender's practice of accepting late payments from the borrower may be
deemed a waiver of the forfeiture clause. State courts also may impose equitable
grace periods for payment of arrearages or otherwise permit reinstatement of the
contract following a default. Not infrequently, if a borrower under an
Installment Contract has significant equity in the property, equitable
principles will be applied to reform or reinstate the contract or to permit the
borrower to share the proceeds upon a foreclosure sale of the property if the
sale price exceeds the debt.
DEFAULT INTEREST, PREPAYMENT CHARGES AND PREPAYMENTS
Forms of notes and mortgages used by lenders may contain provisions
obligating the mortgagor to pay a late charge or additional interest if payments
are not timely made, and in some circumstances may provide for prepayment fees
or yield maintenance penalties if the obligation is paid prior to maturity or
prohibit such prepayment for a specified period. In certain states, there are or
may be specific limitations upon the late charges which a lender may collect
from a mortgagor for delinquent payments. Certain states also limit the amounts
that a lender may collect from a mortgagor as an additional charge if the loan
is prepaid. The enforceability, under the laws of a number of states of
provisions providing for prepayment fees or penalties upon, or prohibition of,
an involuntary prepayment is unclear, and no assurance can be given that, at the
time a Prepayment Premium is
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required to be made on a Mortgage Loan in connection with an involuntary
prepayment, the obligation to make such payment, or the provisions of any such
prohibition, will be enforceable under applicable state law. The absence of a
restraint on prepayment, particularly with respect to Mortgage Loans having
higher Mortgage Rates, may increase the likelihood of refinancing or other early
retirements of the Mortgage Loans.
APPLICABILITY OF USURY LAWS
Title V of the Depository Institutions Deregulation and Monetary Control
Act of 1980, enacted in March 1980 ('Title V'), provides that state usury
limitations shall not apply to certain types of residential (including
multifamily but not other commercial) first mortgage loans originated by certain
lenders after March 31, 1980. A similar federal statute was in effect with
respect to mortgage loans made during the first three months of 1980. The
statute authorized any state to reimpose interest rate limits by adopting,
before April 1, 1983, a law or constitutional provision that expressly rejects
application of the federal law. In addition, even where Title V is not so
rejected, any state is authorized by the law to adopt a provision limiting
discount points or other charges on mortgage loans covered by Title V. Certain
states have taken action to reimpose interest rate limits and/or to limit
discount points or other charges.
The Depositor has been advised by counsel that a court interpreting Title V
would hold that first mortgage loans secured by primarily residential properties
that are originated on or after January 1, 1980 are subject to federal
preemption. Therefore, in a state that has not taken the requisite action to
reject application of Title V or to adopt a provision limiting discount points
or other charges prior to origination of such mortgage loans, any such
limitation under such state's usury law would not apply to such mortgage loans.
ALTERNATIVE MORTGAGE INSTRUMENTS
Alternative mortgage instruments, including adjustable rate mortgage loans,
originated by non-federally chartered lenders have historically been subjected
to a variety of restrictions. Such restrictions differed from state to state,
resulting in difficulties in determining whether a particular alternative
mortgage instrument originated by a state-chartered lender was in compliance
with applicable law. These difficulties were alleviated substantially as a
result of the enactment of Title VIII of the Garn-St Germain Act ('Title VIII').
Title VIII provides that, notwithstanding any state law to the contrary,
state-chartered banks may originate alternative mortgage instruments in
accordance with regulations promulgated by the Comptroller of the Currency with
respect to origination of alternative mortgage instruments by national banks,
state-chartered credit unions may originate alternative mortgage instruments in
accordance with regulations promulgated by the National Credit Union
Administration (the 'NCUA') with respect to origination of alternative mortgage
instruments by federal credit unions, and all other non-federally chartered
housing creditors, including state-chartered savings and loan associations,
state-chartered savings banks and mortgage banking companies, may originate
alternative mortgage instruments in accordance with the regulations promulgated
by the Federal Home Loan Bank Board (now the Office of Thrift Supervision) with
respect to origination of alternative mortgage instruments by federal savings
and loan associations. Title VIII provides that any state may reject
applicability of the provision of Title VIII by adopting, prior to October 15,
1985, a law or constitutional provision expressly rejecting the applicability of
such provisions. Certain states have taken such action.
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 mortgagor who enters military service after the
origination of such mortgagor's Mortgage Loan (including a mortgagor 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 mortgagor's active duty status, unless a
court orders otherwise upon application of the lender. The Relief Act applies to
mortgagors 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 mortgagors
who enter military service (including reservists who are called to active duty)
after origination of the related Mortgage Loan, no information can be provided
as to the number of loans that may be 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 any form of Credit Support (if any) 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 mortgagor's
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period of active duty status, and, under certain circumstances, during an
additional three month period thereafter. Thus, in the event that such a
Mortgage Loan goes into default, there may be delays and losses occasioned
thereby.
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 'Crime
Control Act'), the government may seize the property even before conviction. The
government must publish notice of the forfeiture proceeding and may give notice
to all parties 'known to have an alleged interest in the property', including
the holders of mortgage loans.
A lender may avoid forfeiture of its interest in the property if it
establishes that: (i) its mortgage was executed and recorded before commission
of the crime upon which the forfeiture is based, or (ii) the lender was, at the
time of execution of the mortgage, 'reasonably without cause to believe' that
the property was used in, or purchased with the proceeds of, illegal drug or
RICO activities.
CERTAIN LAWS AND REGULATIONS
The Mortgaged Properties will be subject to compliance with various
federal, state and local statutes and regulations. Failure to comply (together
with an inability to remedy any such failure) could result in material
diminution in the value of a Mortgaged Property which could, together with the
possibility of limited alternative uses for a particular Mortgaged Property
(i.e., a nursing or convalescent home or hospital), result in a failure to
realize the full principal amount of the related Mortgage Loan.
TYPE OF MORTGAGED PROPERTY
The lender may be subject to additional risk depending upon the type and
use of the Mortgaged Property in question. For instance, Mortgaged Properties
which are hospitals, nursing homes or convalescent homes may present special
risks to lenders in large part due to significant governmental regulation of the
operation, maintenance, control and financing of health care institutions.
Mortgages on Mortgaged Properties which are owned by the borrower under a
condominium form of ownership are subject to the declaration, by-laws and other
rules and regulations of the condominium association. Mortgaged Properties which
are hotels or motels may present additional risk to the lender in that: (i)
hotels and motels are typically operated pursuant to franchise, management and
operating agreements which may be terminable by the operator; and (ii) the
transferability of the hotel's operating, liquor and other licenses to the
entity acquiring the hotel either through purchase or foreclosure is subject to
the vagaries of local law requirements. In addition, Mortgaged Properties which
are multifamily residential properties or cooperatively owned multifamily
properties may be subject to rent control laws, which could impact the future
cash flows of such properties.
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 which are
structural in nature from existing places of public accommodation to the extent
'readily achievable.' In addition, under the ADA, alterations to a place of
public accommodation or a commercial facility are to be made so that, to the
maximum extent feasible, such altered portions are readily accessible to and
usable by disabled individuals. The 'readily achievable' standard takes into
account, among other factors, the financial resources of the affected site,
owner, landlord or other applicable person. In addition to imposing a possible
financial burden on the borrower in its capacity as owner or landlord, the ADA
may also impose such requirements on a foreclosing lender who succeeds to the
interest of the borrower as owner or landlord. Furthermore, since the 'readily
achievable' standard may vary depending on the financial condition of the owner
or landlord, a foreclosing lender who is financially more capable than the
borrower of complying with the requirements of the ADA may be subject to more
stringent requirements than those to which the borrower is subject.
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FEDERAL INCOME TAX CONSEQUENCES
The following represents the opinion of Cadwalader, Wickersham & Taft as to
the matters discussed herein. The following is a general discussion of the
anticipated material federal income tax consequences of the purchase, ownership
and disposition of Certificates. The discussion below does not purport to
address all federal income tax consequences that may be applicable to particular
categories of investors, some of which may be subject to special rules. The
authorities on which this discussion is based are subject to change or differing
interpretations, and any such change or interpretation could apply
retroactively. This discussion reflects the applicable provisions of the
Internal Revenue Code of 1986, as amended (the 'Code'), as well as regulations
(the 'REMIC Regulations') promulgated by the U.S. Department of Treasury (the
'Treasury') on December 23, 1992. Investors should consult their own tax
advisors in determining the federal, state, local and other tax consequences to
them of the purchase, ownership and disposition of Certificates.
For purposes of this discussion, where the applicable Prospectus Supplement
provides for a fixed retained yield with respect to the Mortgage Assets
underlying a series of Certificates, references to the Mortgage will be deemed
to refer to that portion of the Mortgage Assets held by the Trust Fund which
does not include the Retained Interest. References to a 'holder' or
'Certificateholder' in this discussion generally mean the beneficial owner of a
Certificate.
FEDERAL INCOME TAX CONSEQUENCES FOR REMIC CERTIFICATES
GENERAL
With respect to a particular series of Certificates, an election may be
made to treat the Trust Fund or one or more segregated pools of assets therein
as one or more REMICs within the meaning of Code Section 860D. A Trust Fund or a
portion thereof as to which a REMIC election will be made will be referred to as
a 'REMIC Pool'. For purposes of this discussion, Certificates of a series as to
which one or more REMIC elections are made are referred to as 'REMIC
Certificates' and will consist of one or more Classes of 'Regular Certificates'
and one Class of 'Residual Certificates' in the case of each REMIC Pool.
Qualification as a REMIC requires ongoing compliance with certain conditions.
With respect to each series of REMIC Certificates, Cadwalader, Wickersham &
Taft, tax counsel to the Depositor, has advised the Depositor that in the firm's
opinion, assuming (i) the making of such an election, (ii) compliance with the
Agreement and (iii) compliance with any changes in the law, including any
amendments to the Code or applicable Treasury regulations thereunder, each REMIC
Pool will qualify as a REMIC. In such case, the Regular Certificates will be
considered to be 'regular interests' in the REMIC Pool and generally will be
treated for federal income tax purposes as if they were newly originated debt
instruments, and the Residual Certificates will be considered to be 'residual
interests' in the REMIC Pool. The Prospectus Supplement for each series of
Certificates will indicate whether one or more REMIC elections with respect to
the related Trust Fund will be made, in which event references to 'REMIC' or
'REMIC Pool' herein shall be deemed to refer to each such REMIC Pool. If so
specified in the applicable Prospectus Supplement, the portion of a Trust Fund
as to which a REMIC election is not made may be treated as a grantor trust for
federal income tax purposes. See '--Federal Income Tax Consequences for
Certificates as to Which No REMIC Election Is Made'. For purposes of this
discussion, unless otherwise specified, the term 'Mortgage Loans' will be used
to refer to Mortgage Loans, MBS and Installment Contracts.
STATUS OF REMIC CERTIFICATES
REMIC Certificates held by a domestic building and loan association will
constitute 'a regular or residual interest in a REMIC' within the meaning of
Code Section 7701(a)(19)(C)(xi) but only in the same proportion that the assets
of the REMIC Pool would be treated as 'loans . . . secured by an interest in
real property which is . . . residential real property' or 'loans secured by an
interest in . . . health . . . institutions or facilities, including structures
designed or used previously for residential purposes for . . . persons under
care' (such as single family or multifamily properties or health-care
properties, but not other commercial properties) within the meaning of Code
Section 7701(a)(19)(C), and otherwise will not qualify for such treatment. REMIC
Certificates held by a real estate investment trust will constitute 'real estate
assets' within the meaning of Code Section 856(c)(4)(A), and interest on the
Regular Certificates and income with respect to Residual Certificates will be
considered 'interest on obligations secured by mortgages on real property or on
interests in real property' within the meaning of Code Section 856(c)(3)(B) in
the same proportion that, for both purposes, the assets of the REMIC Pool would
be so treated. If at all times 95% or more of the assets of the REMIC Pool
qualify for each of the foregoing respective treatments, the REMIC Certificates
will qualify for the corresponding status in their entirety. For purposes of
Code Section 856(c)(4)(A), payments of principal and interest on the Mortgage
Loans that are reinvested pending distribution to holders of REMIC Certificates
qualify for such treatment. Where two REMIC Pools are a part of a tiered
structure they will be treated as one REMIC for purposes of the tests
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described above respecting asset ownership of more or less than 95%. In
addition, if the assets of the REMIC include Buy-Down Mortgage Loans, it is
possible that the percentage of such assets constituting 'loans . . . secured by
an interest in real property' for purposes of Code Section 7701(a)(19)(C)(v),
may be required to be reduced by the amount of the related Buy-Down Funds.
Regular Certificates will represent 'qualified mortgages,' within the meaning of
Code Section 860G(a)(3), for other REMICs and 'permitted assets,' within the
meaning of Code Section 860L(c), for financial asset securitization investment
trusts. REMIC Certificates held by a regulated investment company will not
constitute 'Government securities' within the meaning of Code Section
851(b)(4)(A)(i). REMIC Certificates held by certain financial institutions will
constitute an 'evidence of indebtedness' within the meaning of Code Section
582(c)(1). The Small Business Job Protection Act of 1996 (the 'SBJPA of 1996')
repealed the reserve method for bad debts of domestic building and loan
associations and mutual savings banks, and thus has eliminated the asset
category of 'qualifying real property loans' in former Code Section 593(d) for
taxable years beginning after December 31, 1995. The requirement in the SBJPA of
1996 that such institutions must 'recapture' a portion of their existing bad
debt reserves is suspended if a certain portion of their assets are maintained
in 'residential loans' under Code Section 7701(a)(19)(C)(v), but only if such
loans were made to acquire, construct or improve the related real property and
not for the purpose of refinancing. However, no effort will be made to identify
the portion of the Mortgage Loans of any Series meeting this requirement, and no
representation is made in this regard.
QUALIFICATION AS A REMIC
In order for the REMIC Pool to qualify as a REMIC, there must be ongoing
compliance on the part of the REMIC Pool with the requirements set forth in the
Code. The REMIC Pool must fulfill an asset test, which requires that no more
than a de minimis portion of the assets of the REMIC Pool, as of the close of
the third calendar month beginning after the 'Startup Day' (which for purposes
of this discussion is the date of issuance of the REMIC Certificates) and at all
times thereafter, may consist of assets other than 'qualified mortgages' and
'permitted investments'. The REMIC Regulations provide a safe harbor pursuant to
which the de minimis requirement is met if at all times the aggregate adjusted
basis of the nonqualified assets is less than 1% of the aggregate adjusted basis
of all the REMIC Pool's assets. An entity that fails to meet the safe harbor may
nevertheless demonstrate that it holds no more than a de minimis amount of
nonqualified assets. A REMIC also must provide 'reasonable arrangements' to
prevent its residual interest from being held by 'disqualified organizations'
and must furnish applicable tax information to transferors or agents that
violate this requirement. See 'Taxation of Residual Certificates--Tax-Related
Restrictions on Transfer of Residual Certificates--Disqualified Organizations'.
A qualified mortgage is any obligation that is principally secured by an
interest in real property and that is either transferred to the REMIC Pool on
the Startup Day or is purchased by the REMIC Pool within a three-month period
thereafter pursuant to a fixed price contract in effect on the Startup Day.
Qualified mortgages include whole mortgage loans, such as the Mortgage Loans,
certificates of beneficial interest in a grantor trust that holds mortgage
loans, such as the Mortgage Certificates, regular interests in another REMIC,
such as Mortgage Certificates in a trust as to which a REMIC election has been
made, loans secured by timeshare interests and loans secured by shares held by a
tenant stockholder in a cooperative housing corporation, provided, in general,
(i) the fair market value of the real property security (including buildings and
structural components thereof) is at least 80% of the principal balance of the
related Mortgage Loan or mortgage loan underlying the Mortgage Certificate
either at origination or as of the Startup Day (an original loan-to-value ratio
of not more than 125% with respect to the real property security) or (ii)
substantially all the proceeds of the Mortgage Loan or the underlying mortgage
loan were used to acquire, improve or protect an interest in real property that,
at the origination date, was the only security for the Mortgage Loan or
underlying mortgage loan. If the Mortgage Loan has been substantially modified
other than in connection with a default or reasonably foreseeable default, it
must meet the loan-to-value test in (i) of the preceding sentence as of the date
of the last such modification. A qualified mortgage includes a qualified
replacement mortgage, which is any property that would have been treated as a
qualified mortgage if it were transferred to the REMIC Pool on the Startup Day
and that is received either (i) in exchange for any qualified mortgage within a
three-month period thereafter or (ii) in exchange for a 'defective obligation'
within a two-year period thereafter. A 'defective obligation' includes (i) a
mortgage in default or as to which default is reasonably foreseeable, (ii) a
mortgage as to which a customary representation or warranty made at the time of
transfer to the REMIC Pool has been breached, (iii) a mortgage that was
fraudulently procured by the mortgagor, and (iv) a mortgage that was not in fact
principally secured by real property (but only if such mortgage is disposed of
within 90 days of discovery). A Mortgage Loan that is 'defective' as described
in clause (iv) that is not sold or, if within two years of the Startup Day,
exchanged, within 90 days of discovery, ceases to be a qualified mortgage after
such 90-day period.
The REMIC Regulations provide that obligations secured by interests in
manufactured housing which qualify as 'single family residences' within the
meaning of Code Section 25(e)(10) may be treated as 'qualified mortgages' of a
REMIC. Under
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Code Section 25(e)(10), the term 'single family residence' includes any
manufactured home which has a minimum of 400 square feet of living space and a
minimum width in excess of 102 inches and which is of a kind customarily used at
a fixed location. With respect to each series with respect to which Contracts
are included in a REMIC Pool, the Depositor will represent and warrant that each
of the manufactured homes securing the Contracts meets this definition of
'single family residence'.
Permitted investments include cash flow investments, qualified reserve
assets, and foreclosure property. A cash flow investment is an investment,
earning a return in the nature of interest, of amounts received on or with
respect to qualified mortgages for a temporary period, not exceeding 13 months,
until the next scheduled distribution to holders of interests in the REMIC Pool.
A qualified reserve asset is any intangible property held for investment that is
part of any reasonably required reserve maintained by the REMIC Pool to provide
for payments of expenses of the REMIC Pool or amounts due on the regular or
residual interests in the event of defaults (including delinquencies) on the
qualified mortgages, lower than expected reinvestment returns, prepayment
interest shortfalls and certain other contingencies. The reserve fund will be
disqualified if more than 30% of the gross income from the assets in such fund
for the year is derived from the sale or other disposition of property held for
less than three months, unless required to prevent a default on the regular
interests caused by a default on one or more qualified mortgages. A reserve fund
must be reduced 'promptly and appropriately' as payments on the Mortgage Loans
are received. Foreclosure property is real property acquired by the REMIC Pool
in connection with the default or imminent default of a qualified mortgage and
generally not held beyond the close of the third calendar year beginning after
the year in which such property is acquired with an extension that may be
granted by the Internal Revenue Service (the 'Service').
In addition to the foregoing requirements, the various interests in a REMIC
Pool also must meet certain requirements. All of the interests in a REMIC Pool
must be either of the following: (i) one or more classes of regular interests or
(ii) a single class of residual interests on which distributions, if any, are
made pro rata. A regular interest is an interest in a REMIC Pool that is issued
on the Startup Day with fixed terms, is designated as a regular interest, and
unconditionally entitles the holder to receive a specified principal amount (or
other similar amount), and provides that interest payments (or other similar
amounts), if any, at or before maturity either are payable based on a fixed rate
or a qualified variable rate, or consist of a specified, nonvarying portion of
the interest payments on qualified mortgages. Such a specified portion may
consist of a fixed number of basis points, a fixed percentage of the total
interest, or a fixed or qualified variable or inverse variable rate on some or
all of the qualified mortgages minus a different fixed or qualified variable
rate. The specified principal amount of a regular interest that provides for
interest payments consisting of a specified, nonvarying portion of interest
payments on qualified mortgages may be zero. A residual interest is an interest
in a REMIC Pool other than a regular interest that is issued on the Startup Day
and that is designated as a residual interest. An interest in a REMIC Pool may
be treated as a regular interest even if payments of principal with respect to
such interest are subordinated to payments on other regular interests or the
residual interest in the REMIC Pool, and are dependent on the absence of
defaults or delinquencies on qualified mortgages or permitted investments, lower
than reasonably expected returns on permitted investments, unanticipated
expenses incurred by the REMIC Pool or prepayment interest shortfalls.
Accordingly, the Regular Certificates of a series will constitute one or more
classes of regular interests, and the Residual Certificates with respect to that
series will constitute a single class of residual interests on which
distributions are made pro rata.
If an entity, such as the REMIC Pool, fails to comply with one or more of
the ongoing requirements of the Code for REMIC status during any taxable year,
the Code provides that the entity will not be treated as a REMIC for such year
and thereafter. In this event, an entity with multiple classes of ownership
interests may be treated as a separate association taxable as a corporation
under Treasury regulations, and the Regular Certificates may be treated as
equity interests therein. The Code, however, authorizes the Treasury Department
to issue regulations that address situations where failure to meet one or more
of the requirements for REMIC status occurs inadvertently and in good faith, and
disqualification of the REMIC Pool would occur absent regulatory relief.
Investors should be aware, however, that the Conference Committee Report to the
Tax Reform Act of 1986 (the '1986 Act') indicates that the relief may be
accompanied by sanctions, such as the imposition of a corporate tax on all or a
portion of the REMIC Pool's income for the period of time in which the
requirements for REMIC status are not satisfied.
TAXATION OF REGULAR CERTIFICATES
General
In general, interest, original issue discount and market discount on a
Regular Certificate will be treated as ordinary income to a holder of the
Regular Certificate (the 'Regular Certificateholder') as they accrue, and
principal payments on a Regular Certificate will be treated as a return of
capital to the extent of the Regular Certificateholder's basis in the Regular
Certificate allocable thereto (other than accrual market discount not yet
reported as income). Regular Certificateholders must use the accrual method of
accounting with regard to Regular Certificates, regardless of the method of
accounting otherwise used by such Regular Certificateholders.
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Original Issue Discount
Accrual Certificates will be, and other Classes of Regular Certificates may
be, issued with 'original issue discount' within the meaning of Code Section
1273(a). Holders of any Class of Regular Certificates having original issue
discount generally must include original issue discount in ordinary income for
federal income tax purposes as it accrues, in accordance with the constant yield
method that takes into account the compounding of interest, in advance of
receipt of the cash attributable to such income. The following discussion is
based in part on temporary and final Treasury regulations issued on February 2,
1994 (the 'OID Regulations'), as amended on June 14, 1996, under Code Sections
1271 through 1273 and 1275 and in part on the provisions of the 1986 Act.
Regular Certificateholders should be aware, however, that the OID Regulations do
not adequately address certain issues relevant to prepayable securities, such as
the Regular Certificates. To the extent such issues are not addressed in such
regulations, it is anticipated that the Trustee will apply the methodology
described in the Conference Committee Report to the 1986 Act. No assurance can
be provided that the Service will not take a different position as to those
matters not currently addressed by the OID Regulations. Moreover, the OID
Regulations include an anti-abuse rule allowing the Service to apply or depart
from the OID Regulations where necessary or appropriate to ensure a reasonable
tax result in light of the applicable statutory provisions. A tax result will
not be considered unreasonable under the anti-abuse rule in the absence of a
substantial effect on the present value of a taxpayer's tax liability. Investors
are advised to consult their own tax advisors as to the discussion herein and
the appropriate method for reporting interest and original issue discount with
respect to the Regular Certificates.
Each Regular Certificate (except to the extent described below with respect
to a Regular Certificate on which principal is distributed by random lot
('Random Lot Certificates')) will be treated as a single installment obligation
for purposes of determining the original issue discount includible in a Regular
Certificateholder's income. The total amount of original issue discount on a
Regular Certificate is the excess of the 'stated redemption price at maturity'
of the Regular Certificate over its 'issue price'. The issue price of a Class of
Regular Certificates offered pursuant to this Prospectus generally is the first
price at which a substantial amount of Regular Certificates of that Class is
sold to the public (excluding bond houses, brokers and underwriters). Although
unclear under the OID Regulations, the Depositor intends to treat the issue
price of a Class as to which there is no substantial sale as of the issue date
or that is retained by the Depositor as the fair market value of that Class as
of the issue date. The issue price of a Regular Certificate also includes the
amount paid by an initial Regular Certificateholder for accrued interest that
relates to a period prior to the issue date of the Regular Certificate, unless
the Regular Certificateholder elects on its federal income tax return to exclude
such amount from the issue price and to recover it on the first Distribution
Date. The stated redemption price at maturity of a Regular Certificate always
includes the original principal amount of the Regular Certificate, but generally
will not include distributions of stated interest if such interest distributions
constitute 'qualified stated interest'. Under the OID Regulations, qualified
stated interest generally means interest payable at a single fixed rate or a
qualified variable rate (as described below) provided that such interest
payments are unconditionally payable at intervals of one year or less during the
entire term of the Regular Certificate. Because there is no penalty or default
remedy in the case of nonpayment of interest with respect to a Regular
Certificate, it is possible that no interest on any Class of Regular
Certificates will be treated as qualified stated interest. However, except as
provided in the following three sentences or in the applicable Prospectus
Supplement, because the underlying Mortgage Loans provide for remedies in the
event of default, it is anticipated that the Trustee will treat interest with
respect to the Regular Certificates as qualified stated interest. Distributions
of interest on an Accrual Certificate, or on other Regular Certificates with
respect to which deferred interest will accrue, will not constitute qualified
stated interest, in which case the stated redemption price at maturity of such
Regular Certificates includes all distributions of interest as well as principal
thereon. Likewise, the Depositor intends to treat an 'interest only' class, or a
class on which interest is substantially disproportionate to its principal
amount (a so-called 'super-premium' class) as having no qualified stated
interest. Where the interval between the issue date and the first Distribution
Date on a Regular Certificate is shorter than the interval between subsequent
Distribution Dates, the interest attributable to the additional days will be
included in the stated redemption price at maturity.
Under a de minimis rule, original issue discount on a Regular Certificate
will be considered to be zero if such original issue discount is less than 0.25%
of the stated redemption price at maturity of the Regular Certificate multiplied
by the weighted average maturity of the Regular Certificate. For this purpose,
the weighted average maturity of the Regular Certificate is computed as the sum
of the amounts determined by multiplying the number of full years (i.e.,
rounding down partial years) from the issue date until each distribution is
scheduled to be made by a fraction, the numerator of which is the amount of each
distribution included in the stated redemption price at maturity of the Regular
Certificate and the denominator of which is the stated redemption price at
maturity of the Regular Certificate. The Conference Committee Report to the 1986
Act provides that the schedule of such distributions should be determined in
accordance with the assumed rate of prepayment of the Mortgage Loans (the
'Prepayment Assumption') and the anticipated reinvestment rate, if any, relating
to the Regular Certificates. The Prepayment Assumption with respect to a Series
of Regular Certificates will be set forth in the related Prospectus Supplement.
Holders generally must report de
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minimis OID pro rata as principal payments are received, and such income will be
capital gain if the Regular Certificate is held as a capital asset. However,
under the OID Regulations, Regular Certificateholders may elect to accrue all de
minimis original issue discount as well as market discount and market premium
under the constant yield method. See 'Election to Treat All Interest Under the
Constant Yield Method'.
A Regular Certificateholder generally must include in gross income for any
taxable year the sum of the 'daily portions,' as defined below, of the original
issue discount on the Regular Certificate accrued during an accrual period for
each day on which it holds the Regular Certificate, including the date of
purchase but excluding the date of disposition. It is anticipated that the
Trustee will treat the monthly period ending on the day before each Distribution
Date as the accrual period. With respect to each Regular Certificate, a
calculation will be made of the original issue discount that accrues during each
successive full accrual period (or shorter period from the date of original
issue) that ends on the day before the related Distribution Date on the Regular
Certificate. The Conference Committee Report to the 1986 Act states that the
rate of accrual of original issue discount is intended to be based on the
Prepayment Assumption. Other than as discussed below with respect to a Random
Lot Certificate, the original issue discount accruing in a full accrual period
would be the excess, if any, of (i) the sum of (a) the present value of all of
the remaining distributions to be made on the Regular Certificate as of the end
of that accrual period that are included in the Regular Certificate's stated
redemption price at maturity and (b) the distributions made on the Regular
Certificate during the accrual period that are included in the Regular
Certificate's stated redemption price at maturity, over (ii) the adjusted issue
price of the Regular Certificate at the beginning of the accrual period. The
present value of the remaining distributions referred to in the preceding
sentence is calculated based on (i) the yield to maturity of the Regular
Certificate at the issue date, (ii) events (including actual prepayments) that
have occurred prior to the end of the accrual period and (iii) the Prepayment
Assumption. For these purposes, the adjusted issue price of a Regular
Certificate at the beginning of any accrual period equals the issue price of the
Regular Certificate, increased by the aggregate amount of original issue
discount with respect to the Regular Certificate that accrued in all prior
accrual periods and reduced by the amount of distributions included in the
Regular Certificate's stated redemption price at maturity that were made on the
Regular Certificate in such prior periods. The original issue discount accruing
during any accrual period (as determined in this paragraph) will then be divided
by the number of days in the period to determine the daily portion of original
issue discount for each day in the period. With respect to an initial accrual
period shorter than a full accrual period, the daily portions of original issue
discount must be determined according to an appropriate allocation under any
reasonable method.
Under the method described above, the daily portions of original issue
discount required to be included in income by a Regular Certificateholder
generally will increase to take into account prepayments on the Regular
Certificates as a result of prepayments on the Mortgage Loans that exceed the
Prepayment Assumption, and generally will decrease (but not below zero for any
period) if the prepayments are slower than the Prepayment Assumption. An
increase in prepayments on the Mortgage Loans with respect to a Series of
Regular Certificates can result in both a change in the priority of principal
payments with respect to certain Classes of Regular Certificates and either an
increase or decrease in the daily portions of original issue discount with
respect to such Regular Certificates.
In the case of a Random Lot Certificate, It is anticipated that the Trustee
will determine the yield to maturity of such Certificate based upon the
anticipated payment characteristics of the Class as a whole under the Prepayment
Assumption. In general, the original issue discount accruing on each Random Lot
Certificate in a full accrual period would be its allocable share of the
original issue discount with respect to the entire Class, as determined in
accordance with the preceding paragraph. However, in the case of a distribution
in retirement of the entire unpaid principal balance of any Random Lot
Certificate (or portion of such unpaid principal balance), (a) the remaining
unaccrued original issue discount allocable to such Certificate (or to such
portion) will accrue at the time of such distribution, and (b) the accrual of
original issue discount allocable to each remaining Certificate of such Class
(or the remaining unpaid principal balance of a partially redeemed Random Lot
Certificate after a distribution of principal has been received) will be
adjusted by reducing the present value of the remaining payments on such Class
and the adjusted issue price of such Class to the extent attributable to the
portion of the unpaid principal balance thereof that was distributed. The
Depositor believes that the foregoing treatment is consistent with the 'pro rata
prepayment' rules of the OID Regulations, but with the rate of accrual of
original issue discount determined based on the Prepayment Assumption for the
Class as a whole. Investors are advised to consult their tax advisors as to this
treatment.
Acquisition Premium
A purchaser of a Regular Certificate at a price greater than its adjusted
issue price but less than its stated redemption price at maturity will be
required to include in gross income the daily portions of the original issue
discount on the Regular Certificate reduced pro rata by a fraction, the
numerator of which is the excess of its purchase price over such adjusted issue
price and the denominator of which is the excess of the remaining stated
redemption price at maturity over the adjusted issue price. Alternatively,
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such a subsequent purchaser may elect to treat all such acquisition premium
under the constant yield method, as described below under the heading 'Election
to Treat All Interest Under the Constant Yield Method'.
Variable Rate Regular Certificates
Regular Certificates may provide for interest based on a variable rate.
Under the OID Regulations, interest is treated as payable at a variable rate if,
generally, (i) the issue price does not exceed the original principal balance by
more than a specified amount and (ii) the interest compounds or is payable at
least annually at current values of (a) one or more 'qualified floating rates',
(b) a single fixed rate and one or more qualified floating rates, (c) a single
'objective rate', or (d) a single fixed rate and a single objective rate that is
a 'qualified inverse floating rate'. A floating rate is a qualified floating
rate if variations in the rate can reasonably be expected to measure
contemporaneous variations in the cost of newly borrowed funds, where such rate
is subject to a fixed multiple that is greater than 0.65 but not more than 1.35.
Such rate may also be increased or decreased by a fixed spread or subject to a
fixed cap or floor, or a cap or floor that is not reasonably expected as of the
issue date to affect the yield of the instrument significantly. An objective
rate is any rate (other than a qualified floating rate) that is determined using
a single fixed formula and that is based on objective financial or economic
information, provided that such information is not (i) within the control of the
issuer or a related party or (ii) unique to the circumstances of the issuer or a
related party. A qualified inverse floating rate is a rate equal to a fixed rate
minus a qualified floating rate that inversely reflects contemporaneous
variations in the cost of newly borrowed funds; an inverse floating rate that is
not a qualified inverse floating rate may nevertheless be an objective rate. A
Class of Regular Certificates may be issued under this Prospectus that does not
have a variable rate under the foregoing rules, for example, a Class that bears
different rates at different times during the period it is outstanding such that
it is considered significantly 'front-loaded' or 'back-loaded' within the
meaning of the OID Regulations. It is possible that such a Class may be
considered to bear 'contingent interest' within the meaning of the OID
Regulations. The OID Regulations, as they relate to the treatment of contingent
interest, are by their terms not applicable to Regular Certificates. However, if
final regulations dealing with contingent interest with respect to Regular
Certificates apply the same principles as the OID Regulations, such regulations
may lead to different timing of income inclusion that would be the case under
the OID Regulations. Furthermore, application of such principles could lead to
the characterization of gain on the sale of contingent interest Regular
Certificates as ordinary income. Investors should consult their tax advisors
regarding the appropriate treatment of any Regular Certificate that does not pay
interest at a fixed rate or variable rate as described in this paragraph.
Under the REMIC Regulations, a Regular Certificate (i) bearing a rate that
qualifies as a variable rate under the OID Regulations that is tied to current
values of a variable rate (or the highest, lowest or average of two or more
variable rates, including a rate based on the average cost of funds of one or
more financial institutions), or a positive or negative multiple of such a rate
(plus or minus a specified number of basis points), or that represents a
weighted average of rates on some or all of the Mortgage Loans, including such a
rate that is subject to one or more caps or floors, or (ii) bearing one or more
such variable rates for one or more periods or one or more fixed rates for one
or more periods, and a different variable rate or fixed rate for other periods,
qualifies as a regular interest in a REMIC. Accordingly, unless otherwise
indicated in the applicable Prospectus Supplement, it is anticipated that the
Trustee will treat Regular Certificates that qualify as regular interests under
this rule in the same manner as obligations bearing a variable rate for original
issue discount reporting purposes.
The amount of original issue discount with respect to a Regular Certificate
bearing a variable rate of interest will accrue in the manner described above
under 'Original Issue Discount' with the yield to maturity and future payments
on such Regular Certificate generally to be determined by assuming that interest
will be payable for the life of the Regular Certificate based on the initial
rate (or, if different, the value of the applicable variable rate as of the
pricing date) for the relevant Class. Unless otherwise specified in the
applicable Prospectus Supplement, it is anticipated that the Trustee will treat
such variable interest as qualified stated interest, other than variable
interest on an interest-only or super-premium Class, which will be treated as
non-qualified stated interest includible in the stated redemption price at
maturity. Ordinary income reportable for any period will be adjusted based on
subsequent changes in the applicable interest rate index.
Although unclear under the OID Regulations, it is anticipated that the
Trustee will treat Regular Certificates bearing an interest rate that is a
weighted average of the net interest rates on Mortgage Loans or Mortgage
Certificates having fixed or adjustable rates, as having qualified stated
interest. In the case of adjustable rate Mortgage Loans, the applicable index
used to compute interest on the Mortgage Loans in effect on the pricing date (or
possibly the issue date) will be deemed to be in effect beginning with the
period in which the first weighted average adjustment date occurring after the
issue date occurs. Adjustments will be made in each accrual period either
increasing or decreasing the amount or ordinary income reportable to reflect the
actual Pass-Through Rate on the Regular Certificates.
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Deferred Interest
Under the OID Regulations, all interest on a Regular Certificate as to
which there may be Deferred Interest is includible in the stated redemption
price at maturity thereof. Accordingly, any Deferred Interest that accrues with
respect to a Class of Regular Certificates may constitute income to the holders
of such Regular Certificates prior to the time distributions of cash with
respect to such Deferred Interest are made.
Market Discount
A purchaser of a Regular Certificate also may be subject to the market
discount rules of Code Section 1276 through 1278. Under these Code sections and
the principles applied by the OID Regulations in the context of original issue
discount, 'market discount' is the amount by which the purchaser's original
basis in the Regular Certificate (i) is exceeded by the then-current principal
amount of the Regular Certificate or (ii) in the case of a Regular Certificate
having original issue discount, is exceeded by the adjusted issue price of such
Regular Certificate at the time of purchase. Such purchaser generally will be
required to recognize ordinary income to the extent of accrued market discount
on such Regular Certificate as distributions includible in the stated redemption
price at maturity thereof are received, in an amount not exceeding any such
distribution. Such market discount would accrue in a manner to be provided in
Treasury regulations and should take into account the Prepayment Assumption. The
Conference Committee Report to the 1986 Act provides that until such regulations
are issued, such market discount would accrue either (i) on the basis of a
constant interest rate, (ii) in the ratio of stated interest allocable to the
relevant period to the sum of the interest for such period plus the remaining
interest as of the end of such period, or (iii) in the case of a Regular
Certificate issued with original issue discount, in the ratio of original issue
discount accrued for the relevant period to the sum of the original issue
discount accrued for such period plus the remaining original issue discount as
of the end of such period. Such purchaser also generally will be required to
treat a portion of any gain on a sale or exchange of the Regular Certificate as
ordinary income to the extent of the market discount accrued to the date of
disposition under one of the foregoing methods, less any accrued market discount
previously reported as ordinary income as partial distributions in reduction of
the stated redemption price at maturity were received. Such purchaser will be
required to defer deduction of a portion of the excess of the interest paid or
accrued on indebtedness incurred to purchase or carry a Regular Certificate over
the interest distributable thereon. The deferred portion of such interest
expense in any taxable year generally will not exceed the accrued market
discount on the Regular Certificate for such year. Any such deferred interest
expense is, in general, allowed as a deduction not later than the year in which
the related market discount income is recognized or the Regular Certificate is
disposed of. As an alternative to the inclusion of market discount in income on
the foregoing basis, the Regular Certificateholder may elect to include market
discount in income currently as it accrues on all market discount instruments
acquired by such Regular Certificateholder in that taxable year or thereafter,
in which case the interest deferral rule will not apply. See 'Election to Treat
All Interest Under the Constant Yield Method' below regarding an alternative
manner in which such election may be deemed to be made.
Market discount with respect to a Regular Certificate will be considered to
be zero if such market discount is less than 0.25% of the remaining stated
redemption price at maturity of such Regular Certificate multiplied by the
weighted average maturity of the Regular Certificate (determined as described
above in the third paragraph under 'Original Issue Discount') remaining after
the date of purchase. It appears that de minimis market discount would be
reported in a manner similar to de minimis original issue discount. See
'Original Issue Discount' above. Treasury regulations implementing the market
discount rules have not yet been issued, and therefore investors should consult
their own tax advisors regarding the application of these rules. Investors
should also consult Revenue Procedure 92-67 concerning the elections to include
market discount in income currently and to accrue market discount on the basis
of the constant yield method.
Premium
A Regular Certificate purchased at a cost greater than its remaining stated
redemption price at maturity generally is considered to be purchased at a
premium. If the Regular Certificateholder holds such Regular Certificate as a
'capital asset' within the meaning of Code Section 1221, the Regular
Certificateholder may elect under Code Section 171 to amortize such premium
under the constant yield method. Final Treasury Regulations issued under Code
Section 171 do not by their terms apply to prepayable debt instruments such as
the Regular Certificates. However, the Conference Committee Report to the 1986
Act indicates a Congressional intent that the same rules that will apply to the
accrual of market discount on installment obligations will also apply to
amortizing bond premium under Code Section 171 on installment obligations such
as the Regular Certificates, although it is unclear whether the alternatives to
the constant yield method described above under 'Market Discount' are available.
Amortizable bond premium will be treated as an offset to interest income on a
Regular Certificate rather than as a separate deduction item. See
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'Election to Treat All Interest Under the Constant Yield Method' below regarding
an alternative manner in which the Code Section 171 election may be deemed to be
made.
Election to Treat All Interest Under the Constant Yield Method
A holder of a debt instrument such as a Regular Certificate may elect to
treat all interest that accrues on the instrument using the constant yield
method, with none of the interest being treated as qualified stated interest.
For purposes of applying the constant yield method to a debt instrument subject
to such an election, (i) 'interest' includes stated interest, original issue
discount, de minimis original issue discount, market discount and de minimis
market discount, as adjusted by any amortizable bond premium or acquisition
premium and (ii) the debt instrument is treated as if the instrument were issued
on the holder's acquisition date in the amount of the holder's adjusted basis
immediately after acquisition. It is unclear whether, for this purpose, the
initial Prepayment Assumption would continue to apply or if a new prepayment
assumption as of the date of the holder's acquisition would apply. A holder
generally may make such an election on an instrument by instrument basis or for
a class or group of debt instruments. However, if the holder makes such an
election with respect to a debt instrument with amortizable bond premium or with
market discount, the holder is deemed to have made elections to amortize bond
premium or to report market discount income currently as it accrues under the
constant yield method, respectively, for all debt instruments acquired by the
holder in the same taxable year or thereafter. The election is made on the
holder's federal income tax return for the year in which the debt instrument is
acquired and is irrevocable except with the approval of the Service. Investors
should consult their own tax advisors regarding the advisability of making such
an election.
SALE OR EXCHANGE OF REGULAR CERTIFICATES
If a Regular Certificateholder sells or exchanges a Regular Certificate,
the Regular Certificateholder will recognize gain or loss equal to the
difference, if any, between the amount received and its adjusted basis in the
Regular Certificate. The adjusted basis of a Regular Certificate generally will
equal the cost of the Regular Certificate to the seller, increased by any
original issue discount or market discount previously included in the seller's
gross income with respect to the Regular Certificate and reduced by amounts
included in the stated redemption price at maturity of the Regular Certificate
that were previously received by the seller, by any amortized premium and by any
recognized losses.
Except as described above with respect to market discount, and except as
provided in this paragraph, any gain or loss on the sale or exchange of a
Regular Certificate realized by an investor who holds the Regular Certificate as
a capital asset will be capital gain or loss and will be long-term, or
short-term depending on whether the Regular Certificate has been held for the
applicable capital gain holding period. Such gain will be treated as ordinary
income (i) if a Regular Certificate is held as part of a 'conversion
transaction' as defined in Code Section 1258(c), up to the amount of interest
that would have accrued on the Regular Certificateholder's net investment in the
conversion transaction at 120% of the appropriate applicable Federal rate under
Code Section 1274(d) in effect at the time the taxpayer entered into the
transaction minus any amount previously treated as ordinary income with respect
to any prior distribution of property that was held as a part of such
transaction, (ii) in the case of a non-corporate taxpayer, to the extent such
taxpayer has made an election under Code Section 163(d)(4) to have net capital
gains taxed as investment income at ordinary rates, or (iii) to the extent that
such gain does not exceed the excess, if any, of (a) the amount that would have
been includible in the gross income of the holder if its yield on such Regular
Certificate were 110% of the applicable Federal rate as of the date of purchase,
over (b) the amount of income actually includible in the gross income of such
holder with respect to the Regular Certificate. In addition, gain or loss
recognized from the sale of a Regular Certificate by certain banks or thrift
institutions will be treated as ordinary income or loss pursuant to Code Section
582(c). Generally, short-term capital gains of certain non-corporate taxpayers
are subject to the same tax rate as the ordinary income of such taxpayers
(39.6%) for property held for not more than one year, and long-term capital
gains of such taxpayers are subject to a maximum tax rate of 20% for property
held for more than one year. The maximum tax rate for corporations is the same
with respect to both ordinary income and capital gains.
Treatment of Losses
Holders of Regular Certificates will be required to report income with
respect to Regular Certificates on the accrual method of accounting, without
giving effect to delays or reductions in distributions attributable to defaults
or delinquencies on the Mortgage Loans allocable to a particular class of
Regular Certificates, except to the extent it can be established that such
losses are uncollectible. Accordingly, the holder of a Regular Certificate may
have income, or may incur a diminution in cash flow as a result of a default or
delinquency, but may not be able to take a deduction (subject to the discussion
below) for the corresponding loss until a subsequent taxable year. In this
regard, investors are cautioned that while they may generally cease to accrue
interest income
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if it reasonably appears that the interest will be uncollectible, the Internal
Revenue Service may take the position that original issue discount must continue
to be accrued in spite of its uncollectibility until the debt instrument is
disposed of in a taxable transaction or becomes worthless in accordance with the
rules of Code Section 166. Under Code Section 166, it appears that holders of
Regular Certificates that are corporations or that otherwise hold the Regular
Certificates in connection with a trade or business should in general be allowed
to deduct as an ordinary loss any such loss sustained during the taxable year on
account of any such Regular Certificates becoming wholly or partially worthless,
and that, in general, holders of Regular Certificates that are not corporations
and do not hold the Regular Certificates in connection with a trade or business
will be allowed to deduct as a short-term capital loss any loss with respect to
principal sustained during the taxable year on account of a portion of any class
or subclass of such Regular Certificates becoming wholly worthless. Although the
matter is not free from doubt, non-corporate holders of Regular Certificates
should be allowed a bad debt deduction at such time as the principal balance of
any class or subclass of such Regular Certificates is reduced to reflect losses
resulting from any liquidated Mortgage Loans. The Service, however, could take
the position that non-corporate holders will be allowed a bad debt deduction to
reflect such losses only after all Mortgage Loans remaining in the Trust Fund
have been liquidated or such class of Regular Certificates has been otherwise
retired. The Service could also assert that losses on the Regular Certificates
are deductible based on some other method that may defer such deductions for all
holders, such as reducing future cash flow for purposes of computing original
issue discount. This may have the effect of creating 'negative' original issue
discount which would be deductible only against future positive original issue
discount or otherwise upon termination of the Class. Holders of Regular
Certificates are urged to consult their own tax advisors regarding the
appropriate timing, amount and character of any loss sustained with respect to
such Regular Certificates. While losses attributable to interest previously
reported as income should be deductible as ordinary losses by both corporate and
non-corporate holders the Service may take the position that losses attributable
to accrued original issue discount may only be deducted as capital losses in the
case of non-corporate holders who do not hold Regular Certificates in connection
with a trade or business. Special loss rules are applicable to banks and thrift
institutions, including rules regarding reserves for bad debts. Such taxpayers
are advised to consult their tax advisors regarding the treatment of losses on
Regular Certificates.
TAXATION OF RESIDUAL CERTIFICATES
TAXATION OF REMIC INCOME
Generally, the 'daily portions' of REMIC taxable income or net loss will be
includible as ordinary income or loss in determining the federal taxable income
of holders of Residual Certificates ('Residual Certificateholders'), and will
not be taxed separately to the REMIC Pool. The daily portions of REMIC taxable
income or net loss of a Residual Certificateholder are determined by allocating
the REMIC Pool's taxable income or net loss for each calendar quarter ratably to
each day in such quarter and by allocating such daily portion among the Residual
Certificateholders in proportion to their respective holdings of Residual
Certificates in the REMIC Pool on such day. REMIC taxable income is generally
determined in the same manner as the taxable income of an individual using the
accrual method of accounting, except that (i) the limitations on deductibility
of investment interest expense and expenses for the production of income do not
apply, (ii) all bad loans will be deductible as business bad debts and (iii) the
limitation on the deductibility of interest and expenses related to tax-exempt
income will apply. The REMIC Pool's gross income, includes interest, original
issue discount income and market discount income, if any, on the Mortgage Loans
(reduced by amortization of any premium on the Mortgage Loans), plus issue
premium on Regular Certificates, plus income on reinvestment of cash flows and
reserve assets, plus any cancellation of indebtedness income upon allocation of
realized losses to the Regular Certificates. The REMIC Pool's deductions include
interest and original issue discount expense on the Regular Certificates,
servicing fees on the Mortgage Loans, other administrative expenses of the REMIC
Pool and realized losses on the Mortgage Loans. The requirement that Residual
Certificateholders report their pro rata share of taxable income or net loss of
the REMIC Pool will continue until there are no Certificates of any class of the
related series outstanding.
The taxable income recognized by a Residual Certificateholder in any
taxable year will be affected by, among other factors, the relationship between
the timing of recognition of interest and original issue discount or market
discount income or amortization of premium with respect to the Mortgage Loans,
on the one hand, and the timing of deductions for interest (including original
issue discount) or income from amortization of issue premium on the Regular
Certificates, on the other hand. In the event that an interest in the Mortgage
Loans is acquired by the REMIC Pool at a discount, and one or more of such
Mortgage Loans is prepaid, the Residual Certificateholder may recognize taxable
income without being entitled to receive a corresponding amount of cash because
(i) the prepayment may be used in whole or in part to make distributions in
reduction of principal on the Regular Certificates and (ii) the discount on the
Mortgage Loans which is includible in income may exceed the deduction allowed
upon such distributions on those Regular Certificates on account of any
unaccrued original issue discount relating to those Regular Certificates. When
there is more than one class of Regular Certificates that distribute principal
sequentially, this mismatching of income and deductions is
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particularly likely to occur in the early years following issuance of the
Regular Certificates when distributions in reduction of principal are being made
in respect of earlier classes of Regular Certificates to the extent that such
classes are not issued with substantial discount or are issued at a premium. If
taxable income attributable to such a mismatching is realized, in general,
losses would be allowed in later years as distributions on the later classes of
Regular Certificates are made. Taxable income may also be greater in earlier
years than in later years as a result of the fact that interest expense
deductions, expressed as a percentage of the outstanding principal amount of
such a series of Regular Certificates, may increase over time as distributions
in reduction of principal are made on the lower yielding classes of Regular
Certificates, whereas to the extent that the REMIC Pool includes fixed rate
Mortgage Loans, interest income with respect to any given Mortgage Loan will
remain constant over time as a percentage of the outstanding principal amount of
that loan. Consequently, Residual Certificateholders must have sufficient other
sources of cash to pay any federal, state or local income taxes due as a result
of such mismatching or unrelated deductions against which to offset such income,
subject to the discussion of 'excess inclusions' below under 'Limitations on
Offset or Exemption of REMIC Income'. The timing of such mismatching of income
and deductions described in this paragraph, if present with respect to a series
of Certificates, may have a significant adverse effect upon the Residual
Certificateholder's after-tax rate of return. In addition, a Residual
Certificateholder's taxable income during certain periods may exceed the income
reflected by such Residual Certificateholder for such periods in accordance with
generally accepted accounting principles. Investors should consult their own
accountants concerning the accounting treatment of their investment in Residual
Certificates.
BASIS AND LOSSES
The amount of any net loss of the REMIC Pool that may be taken into account
by the Residual Certificateholder is limited to the adjusted basis of the
Residual Certificate as of the close of the quarter (or time of disposition of
the Residual Certificate if earlier), determined without taking into account the
net loss for the quarter. The initial adjusted basis of a purchaser of a
Residual Certificate is the amount paid for such Residual Certificate. Such
adjusted basis will be increased by the amount of taxable income of the REMIC
Pool reportable by the Residual Certificateholder and will be decreased (but not
below zero), first, by a cash distribution from the REMIC Pool and, second, by
the amount of loss of the REMIC Pool reportable by the Residual
Certificateholder. Any loss that is disallowed on account of this limitation may
be carried over indefinitely with respect to the Residual Certificateholder as
to whom such loss was disallowed and may be used by such Residual
Certificateholder only to offset any income generated by the same REMIC Pool.
A Residual Certificateholder will not be permitted to amortize directly the
cost of its Residual Certificate as an offset to its share of the taxable income
of the related REMIC Pool. However, that taxable income will not include cash
received by the REMIC Pool that represents a recovery of the REMIC Pool's basis
in its assets. Such recovery of basis by the REMIC Pool will have the effect of
amortization of the issue price of the Residual Certificates over their life.
However, in view of the possible acceleration of the income of Residual
Certificateholders described above under 'Taxation of REMIC Income', the period
of time over which such issue price is effectively amortized may be longer than
the economic life of the Residual Certificates.
A Residual Certificate may have a negative value if the net present value
of anticipated tax liabilities exceeds the present value of anticipated cash
flows. The REMIC Regulations appear to treat the issue price of such a residual
interest as zero rather than such negative amount for purposes of determining
the REMIC Pool's basis in its assets. The preamble to the REMIC Regulations
states that the Service may provide future guidance on the proper tax treatment
of payments made by a transferor of such a residual interest to induce the
transferee to acquire the interest, and Residual Certificateholders should
consult their own tax advisors in this regard.
Further, to the extent that the initial adjusted basis of a Residual
Certificateholder (other than an original holder) in the Residual Certificate is
greater that the corresponding portion of the REMIC Pool's basis in the Mortgage
Loans, the Residual Certificateholder will not recover a portion of such basis
until termination of the REMIC Pool unless future Treasury regulations provide
for periodic adjustments to the REMIC income otherwise reportable by such
holder. The REMIC Regulations currently in effect do not so provide. See
'Treatment of Certain Items of REMIC Income and Expense--Market Discount' below
regarding the basis of Mortgage Loans to the REMIC Pool and 'Sale or Exchange of
a Residual Certificate' below regarding possible treatment of a loss upon
termination of the REMIC Pool as a capital loss.
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Treatment of Certain Items of REMIC Income and Expense
Although the Depositor intends to compute REMIC income and expense in
accordance with the Code and applicable regulations, the authorities regarding
the determination of specific items of income and expense are subject to
differing interpretations. The Depositor makes no representation as to the
specific method that the Trustee will use for reporting income with respect to
the Mortgage Loans and expenses with respect to the Regular Certificates, and
different methods could result in different timing of reporting of taxable
income or net loss to Residual Certificateholders or differences in capital gain
versus ordinary income.
Original Issue Discount. Generally, the REMIC Pool's deductions for
original issue discount will be determined in the same manner as original issue
discount income on Regular Certificates as described above under 'Taxation of
Regular Certificates-- Original Issue Discount' and '--Variable Rate Regular
Certificates', without regard to the de minimis rule described therein, and
'--Premium'.
Deferred Interest. Any Deferred Interest that accrues with respect to any
adjustable rate Mortgage Loans held by the REMIC Pool will constitute income to
the REMIC Pool and will be treated in a manner similar to the Deferred Interest
that accrues with respect to Regular Certificates as described above under
'Taxation of Regular Certificates--Deferred Interest'.
Market Discount. The REMIC Pool will have market discount income in
respect of Mortgage Loans if, in general, the basis of the REMIC Pool allocable
to such Mortgage Loans is exceeded by their unpaid principal balances. The REMIC
Pool's basis in such Mortgage Loans is generally the fair market value of the
Mortgage Loans immediately after the transfer thereof to the REMIC Pool. The
REMIC Regulations provide that such basis is equal in the aggregate to the issue
prices of all regular and residual interests in the REMIC Pool (or the fair
market value thereof at the Closing Date, in the case of a retained Class). In
respect of Mortgage Loans that have market discount to which Code Section 1276
applies, the accrued portion of such market discount would be recognized
currently as an item of ordinary income in a manner similar to original issue
discount. Market discount income generally should accrue in the manner described
above under 'Taxation of Regular Certificates--Market Discount'.
Premium. Generally, if the basis of the REMIC Pool in the Mortgage Loans
exceeds the unpaid principal balances thereof, the REMIC Pool will be considered
to have acquired such Mortgage Loans at a premium equal to the amount of such
excess. As stated above, the REMIC Pool's basis in Mortgage Loans is the fair
market value of the Mortgage Loans, based on the aggregate of the issue prices
(or the fair market value of retained Classes) of the regular and residual
interests in the REMIC Pool immediately after the transfer thereof to the REMIC
Pool. In a manner analogous to the discussion above under 'Taxation of Regular
Certificates--Premium', a REMIC Pool that holds a Mortgage Loan as a capital
asset under Code Section 1221 may elect under Code Section 171 to amortize
premium on whole mortgage loans or mortgage loans underlying MBS that were
originated after September 27, 1985 or on Agency Securities, or Private
Mortgage-Backed Securities that are REMIC regular interests under the constant
yield method. Amortizable bond premium will be treated as an offset to interest
income on the Mortgage Loans, rather than as a separate deduction item. To the
extent that the mortgagors with respect to the Mortgage Loans are individuals,
Code Section 171 will not be available for premium on Mortgage Loans (including
underlying mortgage loans) originated on or prior to September 27, 1985. Premium
with respect to such Mortgage Loans may be deductible in accordance with a
reasonable method regularly employed by the holder thereof. The allocation of
such premium pro rata among principal payments should be considered a reasonable
method; however, the Service may argue that such premium should be allocated in
a different manner, such as allocating such premium entirely to the final
payment of principal.
Limitations on Offset or Exemption of REMIC Income
A portion or all of the REMIC taxable income includible in determining the
federal income tax liability of a Residual Certificateholder will be subject to
special treatment. That portion, referred to as the 'excess inclusion', is equal
to the excess of REMIC taxable income for the calendar quarter allocable to a
Residual Certificate over the daily accruals for such quarterly period of (i)
120% of the long-term applicable Federal rate that would have applied to the
Residual Certificate (if it were a debt instrument) on the Startup Day under
Code Section 1274(d), multiplied by (ii) the adjusted issue price of such
Residual Certificate at the beginning of such quarterly period. For this
purpose, the adjusted issue price of a Residual Certificate at the beginning of
a quarter is the issue price of the Residual Certificate, plus the amount of
such daily accruals of REMIC income described in this paragraph for all prior
quarters, decreased by any distributions made with respect to such Residual
Certificate prior to the beginning of such quarterly period. Accordingly, the
portion of the REMIC Pool's taxable income that will be treated as excess
inclusions will be a larger portion of such income as the adjusted issue price
of the Residual Certificates diminishes.
The portion of a Residual Certificateholder's REMIC taxable income
consisting of the excess inclusions generally may not be offset by other
deductions, including net operating loss carryforwards, on such Residual
Certificateholder's return. However, net
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operating loss carryovers are determined without regard to excess inclusion
income. Further, if the Residual Certificateholder is an organization subject to
the tax on unrelated business income imposed by Code Section 511, the Residual
Certificateholder's excess inclusions will be treated as unrelated business
taxable income of such Residual Certificateholder for purposes of Code Section
511. In addition, REMIC taxable income is subject to 30% withholding tax with
respect to certain persons who are not U.S. Persons (as defined below under
'Tax-Related Restrictions on Transfer of Residual Certificates--Foreign
Investors'), and the portion thereof attributable to excess inclusions is not
eligible for any reduction in the rate of withholding tax (by treaty or
otherwise). See 'Taxation of Certain Foreign Investors--Residual Certificates'
below. Finally, if a real estate investment trust or a regulated investment
company owns a Residual Certificate, a portion (allocated under Treasury
regulations yet to be issued) of dividends paid by the real estate investment
trust or a regulated investment company could not be offset by net operating
losses of its shareholders, would constitute unrelated business taxable income
for tax-exempt shareholders, and would be ineligible for reduction of
withholding to certain persons who are not U.S. Persons. The SBJPA of 1996 has
eliminated the special rule permitting Section 593 institutions ('thrift
institutions') to use net operating losses and other allowable deductions to
offset their excess inclusion income from Residual Certificates that have
'significant value' within the meaning of the REMIC Regulations, effective for
taxable years beginning after December 31, 1995, except with respect to Residual
Certificates continuously held by thrift institutions since November 1, 1995.
In addition, the SBJPA of 1996 provides three rules for determining the
effect of excess inclusions on the alternative minimum taxable income of a
Residual Holder. First, alternative minimum taxable income for a Residual Holder
is determined without regard to the special rule, discussed above, that taxable
income cannot be less than excess inclusions. Second, a Residual Holder's
alternative minimum taxable income for a taxable year cannot be less than the
excess inclusions for the year. Third, the amount of any alternative minimum tax
net operating loss deduction must be computed without regard to any excess
inclusions. These rules are effective for taxable years beginning after December
31, 1986, unless a Residual Holder elects to have such rules apply only to
taxable years beginning after August 20, 1996.
Tax-Related Restrictions on Transfer of Residual Certificates
Disqualified Organizations. If any legal or beneficial interest in a
Residual Certificate is transferred to a Disqualified Organization (as defined
below), a tax would be imposed in an amount equal to the product of (i) the
present value of the total anticipated excess inclusions with respect to such
Residual Certificate for periods after the transfer and (ii) the highest
marginal federal income tax rate applicable to corporations. The REMIC
Regulations provide that the anticipated excess inclusions are based on actual
prepayment experience to the date of the transfer and projected payments based
on the Prepayment Assumption. The present value rate equals the applicable
Federal rate under Code Section 1274(d) as of the date of the transfer for a
term ending with the last calendar quarter in which excess inclusions are
expected to accrue. Such a tax generally would be imposed on the transferor of
the Residual Certificate, except that where such transfer is through an agent
(including a broker, nominee or other middleman) for a Disqualified
Organization, the tax would instead be imposed on such agent. However, a
transferor of a Residual Certificate would in no event be liable for such tax
with respect to a transfer if the transferee furnishes to the transferor an
affidavit that the transferee is not a Disqualified Organization and, as of the
time of the transfer, the transferor does not have actual knowledge that such
affidavit is false. The tax also may be waived by the Treasury Department if the
Disqualified Organization promptly disposes of the residual interest and the
transferor pays income tax at the highest corporate rate on the excess
inclusions for the period the Residual Certificate is actually held by the
Disqualified Organization.
In addition, if a 'Pass-Through Entity' (as defined below) has excess
inclusion income with respect to a Residual Certificate during a taxable year
and a Disqualified Organization is the record holder of an equity interest in
such entity, then a tax is imposed on such entity equal to the product of (i)
the amount of excess inclusions on the Residual Certificate that are allocable
to the interest in the Pass-Through Entity during the period such interest is
held by such Disqualified Organization, and (ii) the highest marginal federal
corporate income tax rate. Such tax would be deductible from the ordinary gross
income of the Pass-Through Entity for the taxable year. The Pass-Through Entity
would not be liable for such tax if it has received an affidavit from such
record holder that it is not a Disqualified Organization or stating such
holder's taxpayer identification number and, during the period such person is
the record holder of the Residual Certificate, the Pass-Through Entity does not
have actual knowledge that such affidavit is false.
For taxable years beginning on or after January 1, 1998, if an 'electing
large partnership' holds a Residual Certificate, all interests in the electing
large partnership are treated as held by Disqualified Organizations for purposes
of the tax imposed upon a Pass-Through Entity by Section 860E(c) of the Code. An
exception to this tax, otherwise available to a Pass-Through Entity that is
furnished certain affidavits by record holders of interests in the entity and
that does not know such affidavits are false, is not available to an electing
large partnership.
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For these purposes, (i) 'Disqualified Organization' means the United
States, any state or political subdivision thereof, any foreign government, any
international organization, any agency or instrumentality of any of the
foregoing (provided, that such term does not include an instrumentality if all
of its activities are subject to tax and a majority of its board of directors is
not selected by any such governmental entity), any cooperative organization
furnishing electric energy or providing telephone service to persons in rural
areas as described in Code Section 1381(a)(2)(C), and any organization (other
than a farmers' cooperative described in Code Section 521) that is exempt from
taxation under the Code unless such organization is subject to the tax on
unrelated business income imposed by Code Section 511, (ii) 'Pass-Through
Entity' means any regulated investment company, real estate investment trust,
common trust fund, partnership, trust or estate and certain corporations
operating on a cooperative basis. Except as may be provided in Treasury
regulations, any person holding an interest in a Pass-Through Entity as a
nominee for another will, with respect to such interest, be treated as a
Pass-Through Entity and (iii) an 'electing large partnership' means any
partnership having more than 100 members during the preceding tax year (other
than certain service partnerships and commodity pools), which elect to apply
simplified reporting provisions under the Code.
The Agreement with respect to a series of Certificates will provide that no
legal or beneficial interest in a Residual Certificate may be transferred unless
(i) the proposed transferee provides to the transferor and the Trustee an
affidavit providing its taxpayer identification number and stating that such
transferee is the beneficial owner of the Residual Certificate, is not a
Disqualified Organization and is not purchasing such Residual Certificates on
behalf of a Disqualified Organization (i.e., as a broker, nominee or middleman
thereof), and (ii) the transferor provides a statement in writing to the
Depositor and the Trustee that it has no actual knowledge that such affidavit is
false. Moreover, the Agreement will provide that any attempted or purported
transfer in violation of these transfer restrictions will be null and void and
will vest no rights in any purported transferee. Each Residual Certificate with
respect to a series will bear a legend referring to such restrictions on
transfer, and each Residual Certificateholder will be deemed to have agreed, as
a condition of ownership thereof, to any amendments to the related Agreement
required under the Code or applicable Treasury regulations to effectuate the
foregoing restrictions. Information necessary to compute an applicable excise
tax must be furnished to the Service and to the requesting party within 60 days
of the request, and the Depositor or the Trustee may charge a fee for computing
and providing such information.
Noneconomic Residual Interests. The REMIC Regulations would disregard
certain transfers of Residual Certificates, in which case the transferor would
continue to be treated as the owner of the Residual Certificates and thus would
continue to be subject to tax on its allocable portion of the net income of the
REMIC Pool. Under the REMIC Regulations, a transfer of a 'noneconomic residual
interest' (as defined below) to a Residual Certificateholder (other than a
Residual Certificateholder who is not a U.S. Person, as defined below under
'Foreign Investors') is disregarded for all federal income tax purposes if a
significant purpose of the transferor is to impede the assessment or collection
of tax. A residual interest in a REMIC (including a residual interest with a
positive value at issuance) is a 'noneconomic residual interest' unless, at the
time of the transfer, (i) the present value of the expected future distributions
on the residual interest at least equals the product of the present value of the
anticipated excess inclusions and the highest corporate income tax rate in
effect for the year in which the transfer occurs, and (ii) the transferor
reasonably expects that the transferee will receive distributions from the REMIC
at or after the time at which taxes accrue on the anticipated excess inclusions
in an amount sufficient to satisfy the accrued taxes. The anticipated excess
inclusions and the present value rate are determined in the same manner as set
forth above under 'Disqualified Organizations'. The REMIC Regulations explain
that a significant purpose to impede the assessment or collection of tax exists
if the transferor, at the time of the transfer, either knew or should have known
that the transferee would be unwilling or unable to pay taxes due on its share
of the taxable income of the REMIC. A safe harbor is provided if (i) the
transferor conducted, at the time of the transfer, a reasonable investigation of
the financial condition of the transferee and found that the transferee
historically had paid its debts as they came due and found no significant
evidence to indicate that the transferee would not continue to pay its debts as
they came due in the future, and (ii) the transferee represents to the
transferor that it understands that, as the holder of the noneconomic residual
interest, the transferee may incur tax liabilities in excess of cash flows
generated by the interest and that the transferee intends to pay taxes
associated with holding the residual interest as they become due. The Agreement
with respect to each series of Certificates will require the transferee of a
Residual Certificate to certify to the matters in the preceding sentence as part
of the affidavit described above under the heading 'Disqualified Organizations'.
The transferor must have no actual knowledge or reason to know that such
statements are false.
Foreign Investors. The REMIC Regulations provide that the transfer of a
Residual Certificate that has 'tax avoidance potential' to a 'foreign person'
will be disregarded for all federal tax purposes. This rule appears intended to
apply to a transferee who is not a 'U.S. Person' (as defined below), unless such
transferee's income is effectively connected with the conduct of a trade or
business within the United States. A Residual Certificate is deemed to have tax
avoidance potential unless, at the time of the transfer, (i) the future value of
expected distributions equals at least 30% of the anticipated excess inclusions
after the transfer, and (ii) the transferor reasonably expects that the
transferee will receive sufficient distributions from the REMIC Pool at or after
the
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time at which the excess inclusions accrue and prior to the end of the next
succeeding taxable year for the accumulated withholding tax liability to be
paid. If the non-U.S. Person transfers the Residual Certificate back to a U.S.
Person, the transfer will be disregarded and the foreign transferor will
continue to be treated as the owner unless arrangements are made so that the
transfer does not have the effect of allowing the transferor to avoid tax on
accrued excess inclusions.
The Prospectus Supplement relating to a series of Certificates may provide
that a Residual Certificate may not be purchased by or transferred to any person
that is not a U.S. Person or may describe the circumstances and restrictions
pursuant to which such a transfer may be made. The term 'U.S. Person' means a
citizen or resident of the United States, a corporation, partnership (except to
the extent provided in applicable Treasury regulations) or other entity created
or organized in or under the laws of the United States or any political
subdivision thereof, an estate that is subject to U.S. federal income tax
regardless of the source of its income, or a trust if a court within the United
States is able to exercise primary supervision over the administration of such
trust, and one or more such U.S. Persons have the authority to control all
substantial decisions of such trust (or, to the extent provided in applicable
Treasury regulations, certain trusts in existence on August 20, 1996 which are
eligible to elect to be treated as U.S. Persons).
Sale or Exchange of a Residual Certificate
Upon the sale or exchange of a Residual Certificate, the Residual
Certificateholder will recognize gain or loss equal to the excess, if any, of
the amount realized over the adjusted basis (as described above under 'Taxation
of Residual Certificates--Basis and Losses') of such Residual Certificateholder
in such Residual Certificate at the time of the sale or exchange. In addition to
reporting the taxable income of the REMIC Pool, a Residual Certificateholder
will have taxable income to the extent that any cash distribution to it from the
REMIC Pool exceeds such adjusted basis on that Distribution Date. Such income
will be treated as gain from the sale or exchange of the Residual Certificate.
It is possible that the termination of the REMIC Pool may be treated as a sale
or exchange of a Residual Certificateholder's Residual Certificate, in which
case, if the Residual Certificateholder has an adjusted basis in such Residual
Certificateholder's Residual Certificate remaining when its interest in the
REMIC Pool terminates, and if such Residual Certificateholder holds such
Residual Certificate as a capital asset under Code Section 1221, then such
Residual Certificateholder will recognize a capital loss at that time in the
amount of such remaining adjusted basis.
Any gain on the sale of a Residual Certificate will be treated as ordinary
income (i) if a Residual Certificate is held as part of a 'conversion
transaction' as defined in Code Section 1258(c), up to the amount of interest
that would have accrued on the Residual Certificateholder's net investment in
the conversion transaction at 120% of the appropriate applicable Federal rate in
effect at the time the taxpayer entered into the transaction minus any amount
previously treated as ordinary income with respect to any prior disposition of
property that was held as a part of such transaction or (ii) in the case of a
non-corporate taxpayer, to the extent such taxpayer has made an election under
Code Section 163(d)(4) to have net capital gains taxed as investment income at
ordinary income rates. In addition, gain or loss recognized from the sale of a
Residual Certificate by certain banks or thrift institutions will be treated as
ordinary income or loss pursuant to Code Section 582(c).
The Conference Committee Report to the 1986 Act provides that, except as
provided in Treasury regulations yet to be issued, the wash sale rules of Code
Section 1091 will apply to dispositions of Residual Certificates where the
seller of the Residual Certificate, during the period beginning six months
before the sale or disposition of the Residual Certificate and ending six months
after such sale or disposition, acquires (or enters into any other transaction
that results in the application of Section 1091) any residual interest in any
REMIC or any interest in a 'taxable mortgage pool' (such as a non-REMIC owner
trust) that is economically comparable to a Residual Certificate.
Mark to Market Regulations
Prospective purchasers of the Residual Certificates should also be aware
that on January 3, 1995, the Service issued final regulations (the 'Mark to
Market Regulations') under Code Section 475 relating to the requirement that a
securities dealer mark to market securities held for sale to customers. This
mark-to-market requirement applies to all securities of a dealer, except to the
extent that the dealer has specifically identified a security as held for
investment. The Mark to Market Regulations provide that, for purposes of this
mark-to-market requirement, a Residual Certificate is not treated as a security
and thus may not be marked to market. The Mark to Market Regulations apply to
all Residual Certificates acquired on or after January 4, 1995.
TAXES THAT MAY BE IMPOSED ON THE REMIC POOL
Prohibited Transactions
Income from certain transactions by the REMIC Pool, called prohibited
transactions, will not be part of the calculation of income or loss includible
in the federal income tax returns of Residual Certificateholders, but rather
will be taxed directly to the REMIC Pool at a 100% rate. Prohibited transactions
generally include (i) the disposition of a qualified mortgage other than for
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(a) substitution within two years of the Startup Day for a defective (including
a defaulted) obligation (or repurchase in lieu of substitution of a defective
(including a defaulted) obligation at any time) or for any qualified mortgage
within three months of the Startup Day, (b) foreclosure, default or imminent
default of a qualified mortgage, (c) bankruptcy or insolvency of the REMIC Pool
or (d) a qualified (complete) liquidation, (ii) the receipt of income from
assets that are not the type of mortgages or investments that the REMIC Pool is
permitted to hold, (iii) the receipt of compensation for services or (iv) the
receipt of gain from disposition of cash flow investments other than pursuant to
a qualified liquidation. Notwithstanding (i) and (iv), it is not a prohibited
transaction to sell REMIC Pool property to prevent a default on Regular
Certificates as a result of a default on qualified mortgages or to facilitate a
clean-up call (generally, an optional termination to save administrative costs
when no more than a small percentage of the Certificates is outstanding). The
REMIC Regulations indicate that the modification of a Mortgage Loan generally
will not be treated as a disposition if it is occasioned by a default or
reasonably foreseeable default, an assumption of the Mortgage Loan, the waiver
of a due-on-sale or due-on-encumbrance clause or the conversion of an interest
rate by a mortgagor pursuant to the terms of a convertible adjustable rate
Mortgage Loan.
Contributions to the REMIC Pool After the Startup Day
In general, the REMIC Pool will be subject to a tax at a 100% rate on the
value of any property contributed to the REMIC Pool after the Startup Day.
Exceptions are provided for cash contributions to the REMIC Pool (i) during the
three months following the Startup Day, (ii) made to a qualified reserve fund by
a Residual Certificateholder, (iii) in the nature of a guarantee, (iv) made to
facilitate a qualified liquidation or clean-up call and (v) as otherwise
permitted in Treasury regulations yet to be issued.
Net Income from Foreclosure Property
The REMIC Pool will be subject to federal income tax at the highest
corporate rate on 'net income from foreclosure property', determined by
reference to the rules applicable to real estate investment trusts. Generally,
property acquired by deed in lieu of foreclosure would be treated as
'foreclosure property' for a period not exceeding the close of the third
calendar year beginning after the year in which the REMIC Pool acquired such
property, with a possible extension. Net income from foreclosure property
generally means gain from the sale of a foreclosure property that is inventory
property and gross income from foreclosure property other than qualifying rents
and other qualifying income for a real estate investment trust.
It is not anticipated that the REMIC Pool will receive income or
contributions subject to tax under the preceding three paragraphs, except as
described in the applicable Prospectus Supplement with respect to net income
from foreclosure property on a commercial or multifamily residential property
that secured a Mortgage Loan. In addition, unless otherwise disclosed in the
applicable Prospectus Supplement, it is not anticipated that any material state
income or franchise tax will be imposed on a REMIC Pool.
LIQUIDATION OF THE REMIC POOL
If a REMIC Pool adopts a plan of complete liquidation, within the meaning
of Code Section 860F(a)(4)(A)(i), which may be accomplished by designating in
the REMIC Pool's final tax return a date on which such adoption is deemed to
occur, and sells all of its assets (other than cash) within a 90-day period
beginning on the date of the adoption of the plan of liquidation, the REMIC Pool
will not be subject to the prohibited transaction rules on the sale of its
assets, provided that the REMIC Pool credits or distributes in liquidation all
of the sale proceeds plus its cash (other than amounts retained to meet claims)
to holders of Regular Certificates and Residual Certificateholders within the
90-day period.
ADMINISTRATIVE MATTERS
The REMIC Pool will be required to maintain its books on a calendar year
basis and to file federal income tax returns for federal income tax purposes in
a manner similar to a partnership. The form for such income tax return is Form
1066, U.S. Real Estate Mortgage Investment Conduit Income Tax Return. The
Trustee will be required to sign the REMIC Pool's returns. Treasury regulations
provide that, except where there is a single Residual Certificateholder for an
entire taxable year, the REMIC Pool will be subject to the procedural and
administrative rules of the Code applicable to partnerships, including the
determination by the Service of any adjustments to, among other things, items of
REMIC income, gain, loss, deduction or credit in a unified administrative
proceeding. The Residual Certificateholder owning the largest percentage
interest in the Residual Certificates will be obligated to act as 'tax matters
person', as defined in applicable Treasury regulations, with respect to the
REMIC Pool. Each Residual Certificateholder will be deemed, by acceptance of
such Residual Certificates, to have agreed (i) to the appointment of the tax
matters person as provided in the preceding sentence and (ii) to the irrevocable
designation of the Trustee as agent for performing the functions of the tax
matters person.
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LIMITATIONS ON DEDUCTION OF CERTAIN EXPENSES
An investor who is an individual, estate or trust will be subject to
limitation with respect to certain itemized deductions described in Code Section
67, to the extent that such itemized deductions, in the aggregate, do not exceed
2% of the investor's adjusted gross income. In addition, Code Section 68
provides that itemized deductions otherwise allowable for a taxable year of an
individual taxpayer will be reduced by the lesser of (i) 3% of the excess, if
any, of adjusted gross income over $100,000 ($50,000 in the case of a married
individual filing a separate return) (subject to annual adjustments for
post-1991 inflation) or (ii) 80% of the amount of itemized deductions otherwise
allowable for such year. In the case of a REMIC Pool, such deductions may
include deductions under Code Section 212 for the Servicer Fee and all
administrative and other expenses relating to the REMIC Pool, any similar fees
paid to the issuer or guarantor of the Agency Certificates or the Private MBS or
Contracts, or any similar expenses allocated to the REMIC Pool with respect to a
regular interest it holds in another REMIC. Such investors who hold REMIC
Certificates either directly or indirectly through certain pass-through entities
may have their pro rata share of such expenses allocated to them as additional
gross income, but may be subject to such limitation on deductions. In addition,
such expenses are not deductible at all for purposes of computing the
alternative minimum tax, and may cause such investors to be subject to
significant additional tax liability. Temporary Treasury regulations provide
that the additional gross income and corresponding amount of expenses generally
are to be allocated entirely to the holders of Residual Certificates in the case
of a REMIC Pool that would not qualify as a fixed investment trust in the
absence of a REMIC election. However, such additional gross income and
limitation on deductions will apply to the allocable portion of such expenses to
holders of Regular Certificates, as well as holders of Residual Certificates,
where such Regular Certificates are issued in a manner that is similar to
pass-through certificates in a fixed investment trust. In general, such
allocable portion will be determined based on the ratio that a REMIC
Certificateholder's income, determined on a daily basis, bears to the income of
all holders of Regular Certificates and Residual Certificates with respect to a
REMIC Pool. As a result, individuals, estates or trusts holding REMIC
Certificates (either directly or indirectly through a grantor trust,
partnership, S corporation, REMIC, or certain other pass-through entities
described in the foregoing temporary Treasury regulations) may have taxable
income in excess of the interest income at the pass-through rate on Regular
Certificates that are issued in a single Class or otherwise consistently with
fixed investment trust status or in excess of cash distributions for the related
period on Residual Certificates. Unless otherwise indicated in the applicable
Prospectus Supplement, all such expenses will be allocable to the Residual
Certificates.
TAXATION OF CERTAIN FOREIGN INVESTORS
Regular Certificates
Interest, including original issue discount, distributable to Regular
Certificateholders who are non-resident aliens, foreign corporations, or other
Non-U.S Persons (as defined below), will be considered 'portfolio interest' and,
therefore, generally will not be subject to 30% United States withholding tax,
provided that such Non-U.S. Person (i) is not a '10-percent shareholder' within
the meaning of Code Section 871(h)(3)(B) or a controlled foreign corporation
described in Code Section 881(c)(3)(C) and (ii) provides the Trustee, or the
person who would otherwise be required to withhold tax from such distributions
under Code Section 1441 or 1442, with an appropriate statement, signed under
penalties of perjury, identifying the beneficial owner and stating, among other
things, that the beneficial owner of the Regular Certificate is a Non-U.S.
Person. If such statement, or any other required statement, is not provided, 30%
withholding will apply unless reduced or eliminated pursuant to an applicable
tax treaty or unless the interest on the Regular Certificate is effectively
connected with the conduct of a trade or business within the United States by
such Non-U.S. Person. In the latter case, such Non-U.S. Person will be subject
to United States federal income tax at regular rates. Prepayment Premiums
distributable to Regular Certificateholders who are Non-U.S. Persons may be
subject to 30% United States withholding tax. Investors who are Non-U.S. Persons
should consult their own tax advisors regarding the specific tax consequences to
them of owning a Regular Certificate. The term 'Non-U.S. Person' means any
person who is not a U.S. Person.
The IRS recently issued final regulations (the 'New Regulations') which
would provide alternative methods of satisfying the beneficial ownership
certification requirement described above. The New Regulations are effective
January 1, 2000, although valid withholding certificates that are held on
December 31, 1999, remain valid until the earlier of December 31, 2000 or the
due date of expiration of the certificate under the rules as currently in
effect. The New Regulations would require, in the case of Regular Certificates
held by a foreign partnership, that (x) the certification described above be
provided by the partners rather than by the foreign partnership and (y) the
partnership provide certain information, including a United States taxpayer
identification number. A look-through rule would apply in the case of tiered
partnerships. Non-U.S. Persons should consult their own tax advisors concerning
the application of the certification requirements in the New Regulations.
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Residual Certificates
The Conference Committee Report to the 1986 Act indicates that amounts paid
to Residual Certificateholders who are Non-U.S. Persons are treated as interest
for purposes of the 30% (or lower treaty rate) United States withholding tax.
Treasury regulations provide that amounts distributed to Residual
Certificateholders may qualify as 'portfolio interest', subject to the
conditions described in 'Regular Certificates' above, but only to the extent
that (i) the Mortgage Loans (including mortgage loans underlying MBS) were
issued after July 18, 1984 and (ii) the Trust Fund or segregated pool of assets
therein (as to which a separate REMIC election will be made), to which the
Residual Certificate relates, consists of obligations issued in 'registered
form' within the meaning of Code Section 163(f)(1). Generally, whole mortgage
loans will not be, but MBS and regular interests in another REMIC Pool will be,
considered obligations issued in registered form. Furthermore, a Residual
Certificateholder will not be entitled to any exemption from the 30% withholding
tax (or lower treaty rate) to the extent of that portion of REMIC taxable income
that constitutes an 'excess inclusion'. See 'Taxation of Residual
Certificates--Limitations on Offset or Exemption of REMIC Income'. If the
amounts paid to Residual Certificateholders who are Non-U.S. Persons are
effectively connected with the conduct of a trade or business within the United
States by such Non-U.S. Persons, 30% (or lower treaty rate) withholding will not
apply. Instead, the amounts paid to such Non-U.S. Persons will be subject to
United States federal income tax at regular rates. If 30% (or lower treaty rate)
withholding is applicable, such amounts generally will be taken into account for
purposes of withholding only when paid or otherwise distributed (or when the
Residual Certificate is disposed of) under rules similar to withholding upon
disposition of debt instruments that have original issue discount. See
'Tax-Related Restrictions on Transfer of Residual Certificates--Foreign
Investors' above concerning the disregard of certain transfers having 'tax
avoidance potential'. Investors who are Non-U.S. Persons should consult their
own tax advisors regarding the specific tax consequences to them of owning
Residual Certificates.
BACKUP WITHHOLDING
Distributions made on the Regular Certificates, and proceeds from the sale
of the Regular Certificates to or through certain brokers, may be subject to a
'backup' withholding tax under Code Section 3406 of 31% on 'reportable payments'
(including interest distributions, original issue discount, and, under certain
circumstances, principal distributions) unless the Regular Certificateholder
complies with certain reporting and/or certification procedures, including the
provision of its taxpayer identification number to the Trustee, its agent or the
broker who effected the sale of the Regular Certificate, or such
Certificateholder is otherwise an exempt recipient under applicable provisions
of the Code. Any amounts to be withheld from distribution on the Regular
Certificates would be refunded by the Service or allowed as a credit against the
Regular Certificateholder's federal income tax liability. The New Regulations
change certain of the rules relating to certain presumptions currently available
relating to information reporting and backup withholding. Non-U.S. Persons are
urged to contact their own tax advisors regarding the application to them of
backup withholding and information reporting.
REPORTING REQUIREMENTS
Reports of accrued interest, original issue discount and information
necessary to compute the accrual of any market discount on the Regular
Certificates will be made annually to the Service and to individuals, estates,
non-exempt and non-charitable trusts, and partnerships who are either holders of
record of Regular Certificates or beneficial owners who own Regular Certificates
through a broker or middleman as nominee. All brokers, nominees and all other
non-exempt holders of record of Regular Certificates (including corporations,
non-calendar year taxpayers, securities or commodities dealers, real estate
investment trusts, investment companies, common trust funds, thrift institutions
and charitable trusts) may request such information for any calendar quarter by
telephone or in writing by contacting the person designated in Service
Publication 938 with respect to a particular series of Regular Certificates.
Holders through nominees must request such information from the nominee.
The Service's Form 1066 has an accompanying Schedule Q, Quarterly Notice to
Residual Interest Holders of REMIC Taxable Income or Net Loss Allocation.
Treasury regulations require that Schedule Q be furnished by the REMIC Pool to
each Residual Certificateholder by the end of the month following the close of
each calendar quarter (41 days after the end of a quarter under proposed
Treasury regulations) in which the REMIC Pool is in existence.
Treasury regulations require that, in addition to the foregoing
requirements, information must be furnished quarterly to Residual
Certificateholders, furnished annually, if applicable, to holders of Regular
Certificates, and filed annually with the Service concerning Code Section 67
expenses (see 'Limitations on Deduction of Certain Expenses' above) allocable to
such holders. Furthermore, under such regulations, information must be furnished
quarterly to Residual Certificateholders, furnished annually to holders of
Regular Certificates, and filed annually with the Service concerning the
percentage of the REMIC Pool's assets meeting the qualified asset tests
described above under 'Status of REMIC Certificates'.
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FEDERAL INCOME TAX CONSEQUENCES FOR CERTIFICATES
AS TO WHICH NO REMIC ELECTION IS MADE
STANDARD CERTIFICATES
General
In the event that no election is made to treat a Trust Fund (or a
segregated pool of assets therein) with respect to a series of Certificates that
are not designated as 'Stripped Certificates', as described below, as a REMIC
(Certificates of such a series hereinafter referred to as 'Standard
Certificates'), in the opinion of Cadwalader, Wickersham & Taft, tax counsel to
the Depositor, the Trust Fund will be classified as a grantor trust under
subpart E, Part 1 of subchapter J of the Code and not as an association taxable
as a corporation or a 'taxable mortgage pool' within the meaning of Code Section
7701(i). Where there is no fixed retained yield with respect to the Mortgage
Loans underlying the Standard Certificates, the holder of each such Standard
Certificate (a 'Standard Certificateholder') in such series will be treated as
the owner of a pro rata undivided interest in the ordinary income and corpus
portions of the Trust Fund represented by its Standard Certificate and will be
considered the beneficial owner of a pro rata undivided interest in each of the
Mortgage Loans, subject to the discussion below under 'Recharacterization of
Servicing Fees'. Accordingly, the holder of a Standard Certificate of a
particular series will be required to report on its federal income tax return
its pro rata share of the entire income from the Mortgage Loans represented by
its Standard Certificate, including interest at the coupon rate on such Mortgage
Loans, original issue discount (if any), prepayment fees, assumption fees, and
late payment charges received by the Master Servicer, in accordance with such
Standard Certificateholder's method of accounting. A Standard Certificateholder
generally will be able to deduct its share of the Servicing Fee and all
administrative and other expenses of the Trust Fund in accordance with its
method of accounting, provided that such amounts are reasonable compensation for
services rendered to that Trust Fund. However, investors who are individuals,
estates or trusts who own Standard Certificates, either directly or indirectly
through certain pass-through entities, will be subject to limitation with
respect to certain itemized deductions described in Code Section 67, including
deductions under Code Section 212 for the Servicing Fee and all such
administrative and other expenses of the Trust Fund, to the extent that such
deductions, in the aggregate, do not exceed two percent of an investor's
adjusted gross income. In addition, Code Section 68 provides that itemized
deductions otherwise allowable for a taxable year of an individual taxpayer will
be reduced by the lesser of (i) 3% of the excess, if any, of adjusted gross
income over $100,000 ($50,000 in the case of a married individual filing a
separate return) (subject to adjustments for inflation), or (ii) 80% of the
amount of itemized deductions otherwise allowable for such year. As a result,
such investors holding Standard Certificates, directly or indirectly through a
pass-through entity, may have aggregate taxable income in excess of the
aggregate amount of cash received on such Standard Certificates with respect to
interest at the pass-through rate on such Standard Certificates. In addition,
such expenses are not deductible at all for purposes of computing the
alternative minimum tax, and may cause such investors to be subject to
significant additional tax liability. Moreover, where there is fixed retained
yield with respect to the Mortgage Loans underlying a series of Standard
Certificates or where the Servicing Fee is in excess of reasonable servicing
compensation, the transaction will be subject to the application of the
'stripped bond' and 'stripped coupon' rules of the Code, as described below
under 'Stripped Certificates' and 'Recharacterization of Servicing Fees',
respectively.
Tax Status
In the opinion of Cadwalader, Wickersham & Taft, tax counsel to the
Depositor, Standard Certificates will have the following status for federal
income tax purposes:
1. A Standard Certificate owned by a 'domestic building and loan
association' within the meaning of Code Section 7701(a)(19) will be
considered to represent 'loans secured by an interest in real property'
within the meaning of Code Section 7701(a)(19)(C)(v), provided that the
real property securing the Mortgage Loans represented by that Standard
Certificate is of the type described in such section of the Code.
2. A Standard Certificate owned by a real estate investment trust will
be considered to represent 'real estate assets' within the meaning of Code
Section 856(c)(4)(A) to the extent that the assets of the related Trust
Fund consist of qualified assets, and interest income on such assets will
be considered 'interest on obligations secured by mortgages on real
property' to such extent within the meaning of Code Section 856(c)(3)(B).
3. A Standard Certificate owned by a REMIC will be considered to
represent an 'obligation . . . which is principally secured by an interest
in real property' within the meaning of Code Section 860G(a)(3)(A) to the
extent that the assets of the related Trust Fund consist of 'qualified
mortgages' within the meaning of Code Section 860G(a)(3).
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4. A Certificate owned by a 'financial asset securitization investment
trust' within the meaning of Code Section 860L(c) will be considered to
represent 'permitted assets' within the meaning of Code Section 860L(c) to
the extent that the assets of the Trust Estate consist of 'debt
instruments' or other permitted assets within the meaning of Code Section
860L(c).
Premium and Discount
Standard Certificateholders are advised to consult with their tax advisors
as to the federal income tax treatment of premium and discount arising either
upon initial acquisition of Standard Certificates or thereafter.
Premium. The treatment of premium incurred upon the purchase of a Standard
Certificate will be determined generally as described above under 'Federal
Income Tax Consequences for REMIC Certificates--Taxation of Residual
Certificates-- Premium'.
Original Issue Discount. The original issue discount rules will be
applicable to a Standard Certificateholder's interest in those Mortgage Loans as
to which the conditions for the application of those sections are met. Rules
regarding periodic inclusion of original issue discount income are applicable to
mortgages of corporations originated after May 27, 1969, mortgages of
noncorporate mortgagors (other than individuals) originated after July 1, 1982,
and mortgages of individuals originated after March 2, 1984. Under the OID
Regulations, such original issue discount could arise by the charging of points
by the originator of the mortgages in an amount greater than a statutory de
minimis exception, including a payment of points currently deductible by the
borrower under applicable Code provisions or, under certain circumstances, by
the presence of 'teaser rates' on the Mortgage Loans.
Original issue discount must generally be reported as ordinary gross income
as it accrues under a constant interest method that takes into account the
compounding of interest, in advance of the cash attributable to such income.
Unless indicated otherwise in the applicable Prospectus Supplement, no
prepayment assumption will be assumed for purposes of such accrual. However,
Code Section 1272 provides for a reduction in the amount of original issue
discount includible in the income of a holder of an obligation that acquires the
obligation after its initial issuance at a price greater than the sum of the
original issue price and the previously accrued original issue discount, less
prior payments of principal. Accordingly, if such Mortgage Loans acquired by a
Standard Certificateholder are purchased at a price equal to the then unpaid
principal amount of such Mortgage Loans, no original issue discount attributable
to the difference between the issue price and the original principal amount of
such Mortgage Loans (i.e., points) will be includible by such holder.
Market Discount. Standard Certificateholders also will be subject to the
market discount rules to the extent that the conditions for application of those
sections are met. Market discount on the Mortgage Loans will be determined and
will be reported as ordinary income generally in the manner described above
under 'Federal Income Tax Consequences for REMIC Certificates--Taxation of
Regular Certificates--Market Discount', except that the ratable accrual methods
described therein will not apply. Rather, the holder will accrue market discount
pro rata over the life of the Mortgage Loans, unless the constant yield method
is elected. Unless indicated otherwise in the applicable Prospectus Supplement,
no prepayment assumption will be assumed for purposes of such accrual.
Recharacterization of Servicing Fees
If the Servicing Fee paid to the Master Servicer were deemed to exceed
reasonable servicing compensation, the amount of such excess would represent
neither income nor a deduction to Certificateholders. In this regard, there are
no authoritative guidelines for federal income tax purposes as to either the
maximum amount of servicing compensation that may be considered reasonable in
the context of this or similar transactions or whether, in the case of the
Standard Certificate, the reasonableness of servicing compensation should be
determined on a weighted average or loan-by-loan basis. If a loan-by-loan basis
is appropriate, the likelihood that such amount would exceed reasonable
servicing compensation as to some of the Mortgage Loans would be increased.
Service guidance indicates that a servicing fee in excess of reasonable
compensation ('excess servicing') will cause the Mortgage Loans to be treated
under the 'stripped bond' rules. Such guidance provides safe harbors for
servicing deemed to be reasonable and requires taxpayers to demonstrate that the
value of servicing fees in excess of such amounts is not greater than the value
of the services provided.
Accordingly, if the Service's approach is upheld, a servicer who receives a
servicing fee in excess of such amounts would be viewed as retaining an
ownership interest in a portion of the interest payments on the Mortgage Loans.
Under the rules of Code Section 1286, the separation of ownership of the right
to receive some or all of the interest payments on an obligation from the right
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to receive some or all of the principal payments on the obligation would result
in treatment of such Mortgage Loans as 'stripped coupons' and 'stripped bonds'.
Subject to the de minimis rule discussed below under '--Stripped Certificates',
each stripped bond or stripped coupon could be considered for this purpose as a
non-interest bearing obligation issued on the date of issue of the Standard
Certificates, and the original issue discount rules of the Code would apply to
the holder thereof. While Standard Certificateholders would still be treated as
owners of beneficial interests in a grantor trust for federal income tax
purposes, the corpus of such trust could be viewed as excluding the portion of
the Mortgage Loans the ownership of which is attributed to the Master Servicer,
or as including such portion as a second class of equitable interest. Applicable
Treasury regulations treat such an arrangement as a fixed investment trust,
since the multiple classes of trust interests should be treated as merely
facilitating direct investments in the trust assets and the existence of
multiple classes of ownership interests is incidental to that purpose. In
general, such a recharacterization should not have any significant effect upon
the timing or amount of income reported by a Standard Certificateholder, except
that the income reported by a cash method holder may be slightly accelerated.
See 'Stripped Certificates' below for a further description of the federal
income tax treatment of stripped bonds and stripped coupons.
Sale or Exchange of Standard Certificates
Upon sale or exchange of a Standard Certificate, a Standard
Certificateholder will recognize gain or loss equal to the difference between
the amount realized on the sale and its aggregate adjusted basis in the Mortgage
Loans and the other assets represented by the Standard Certificate. In general,
the aggregate adjusted basis will equal the Standard Certificateholder's cost
for the Standard Certificate, increased by the amount of any income previously
reported with respect to the Standard Certificate and decreased by the amount of
any losses previously reported with respect to the Standard Certificate and the
amount of any distributions received thereon. Except as provided above with
respect to market discount on any Mortgage Loans, and except for certain
financial institutions subject to the provisions of Code Section 582(c), any
such gain or loss would be capital gain or loss if the Standard Certificate was
held as a capital asset. However, gain on the sale of a Standard Certificate
will be treated as ordinary income (i) if a Standard Certificate is held as part
of a 'conversion transaction' as defined in Code Section 1258(c), up to the
amount of interest that would have accrued on the Standard Certificateholder's
net investment in the conversion transaction at 120% of the appropriate
applicable Federal rate in effect at the time the taxpayer entered into the
transaction minus any amount previously treated as ordinary income with respect
to any prior disposition of property that was held as a part of such transaction
or (ii) in the case of a non-corporate taxpayer, to the extent such taxpayer has
made an election under Code Section 163(d)(4) to have net capital gains taxed as
investment income at ordinary income rates. Long-Term Capital gains of certain
non-corporate taxpayers generally are subject to a lower maximum tax rate (20%)
than ordinary income or short-term capital gains of such taxpayers (39.6%) for
property held for more than one year. The maximum tax rate for corporations is
the same with respect to both ordinary income and capital gains.
STRIPPED CERTIFICATES
General
Pursuant to Code Section 1286, the separation of ownership of the right to
receive some or all of the principal payments on an obligation from ownership of
the right to receive some or all of the interest payments results in the
creation of 'stripped bonds' with respect to principal payments and 'stripped
coupons' with respect to interest payments. For purposes of this discussion,
Certificates that are subject to those rules will be referred to as 'Stripped
Certificates'.
The Certificates will be subject to those rules if (i) the Depositor or any
of its affiliates retains (for its own account or for purposes of resale), in
the form of fixed retained yield or otherwise, an ownership interest in a
portion of the payments on the Mortgage Loans, (ii) the Master Servicer is
treated as having an ownership interest in the Mortgage Loans to the extent it
is paid (or retains) servicing compensation in an amount greater than reasonable
consideration for servicing the Mortgage Loans (see 'Standard
Certificates--Recharacterization of Servicing Fees' above) and (iii)
Certificates are issued in two or more classes or subclasses representing the
right to non-pro-rata percentages of the interest and principal payments on the
Mortgage Loans.
In general, a holder of a Stripped Certificate will be considered to own
'stripped bonds' with respect to its pro rata share of all or a portion of the
principal payments on each Mortgage Loan and/or 'stripped coupons' with respect
to its pro rata share of all or a portion of the interest payments on each
Mortgage Loan, including the Stripped Certificate's allocable share of the
servicing fees paid to the Master Servicer, to the extent that such fees
represent reasonable compensation for services rendered. See discussion above
under 'Standard Certificates--Recharacterization of Servicing Fees'. Although
not free from doubt, for purposes of reporting to Stripped Certificateholders,
the servicing fees will be allocated to the Stripped Certificates in proportion
to the respective entitlements to distributions of each class (or subclass) of
Stripped Certificates for the related period or periods. The
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holder of a Stripped Certificate generally will be entitled to a deduction each
year in respect of the servicing fees, as described above under 'Standard
Certificates--General', subject to the limitation described therein.
Code Section 1286 treats a stripped bond or a stripped coupon as an
obligation issued at an original issue discount on the date that such stripped
interest is purchased. Although the treatment of Stripped Certificates for
federal income tax purposes is not clear in certain respects at this time,
particularly where such Stripped Certificates are issued with respect to a
Mortgage Pool containing variable-rate Mortgage Loans, in the opinion of
Cadwalader, Wickersham & Taft, tax counsel to the Depositor, (i) the Trust Fund
will be treated as a grantor trust under subpart E, Part 1 of subchapter J of
the Code and not as an association taxable as a corporation or a 'taxable
mortgage pool' within the meaning of Code Section 7701(i), and (ii) each
Stripped Certificate should be treated as a single installment obligation for
purposes of calculating original issue discount and gain or loss on disposition.
This treatment is based on the interrelationship of Code Section 1286, Code
Sections 1272 through 1275, and the OID Regulations. While under Code Section
1286 computations with respect to Stripped Certificates arguably should be made
in one of the ways described below under 'Taxation of Stripped
Certificates--Possible Alternative Characterizations,' the OID Regulations
state, in general, that two or more debt instruments issued by a single issuer
to a single investor in a single transaction should be treated as a single debt
instrument for original issue discount purposes. The Agreement requires that the
Trustee make and report all computations described below using this aggregate
approach, unless substantial legal authority requires otherwise.
Furthermore, Treasury regulations issued December 28, 1992 provide for the
treatment of a Stripped Certificate as a single debt instrument issued on the
date it is purchased for purposes of calculating any original issue discount. In
addition, under these regulations, a Stripped Certificate that represents a
right to payments of both interest and principal may be viewed either as issued
with original issue discount or market discount (as described below), at a de
minimis original issue discount, or, presumably, at a premium. This treatment
suggests that the interest component of such a Stripped Certificate would be
treated as qualified stated interest under the OID Regulations. Further, these
final regulations provide that the purchaser of such a Stripped Certificate will
be required to account for any discount as market discount rather than original
issue discount if either (i) the initial discount with respect to the Stripped
Certificate was treated as zero under the de minimis rule, or (ii) no more than
100 basis points in excess of reasonable servicing is stripped off the related
Mortgage Loans. Any such market discount would be reportable as described under
'Federal Income Tax Consequences for REMIC Certificates--Taxation of Regular
Certificates --Market Discount,' without regard to the de minimis rule therein,
assuming that a prepayment assumption is employed in such computation.
Status of Stripped Certificates
No specific legal authority exists as to whether the character of the
Stripped Certificates, for federal income tax purposes, will be the same as that
of the Mortgage Loans. Although the issue is not free from doubt, in the opinion
of Cadwalader, Wickersham & Taft, tax counsel to the Depositor, Stripped
Certificates owned by applicable holders should be considered to represent 'real
estate assets' within the meaning of Code Section 856(c)(4)(A), 'obligation[s]
principally secured by an interest in real property' within the meaning of Code
Section 860G(a)(3)(A), and 'loans secured by an interest in real property'
within the meaning of Code Section 7701(a)(19)(C)(v), and interest (including
original issue discount) income attributable to Stripped Certificates should be
considered to represent 'interest on obligations secured by mortgages on real
property' within the meaning of Code Section 856(c)(3)(B), provided that in each
case the Mortgage Loans and interest on such Mortgage Loans qualify for such
treatment. The application of such Code provisions to Buy-Down Mortgage Loans is
uncertain. See 'Standard Certificates--Tax Status' above.
Taxation of Stripped Certificates
Original Issue Discount. Except as described above under 'General', each
Stripped Certificate will be considered to have been issued at an original issue
discount for federal income tax purposes. Original issue discount with respect
to a Stripped Certificate must be included in ordinary income as it accrues, in
accordance with a constant interest method that takes into account the
compounding of interest, which may be prior to the receipt of the cash
attributable to such income. Based in part on the OID Regulations and the
amendments to the original issue discount sections of the Code made by the 1986
Act, the amount of original issue discount required to be included in the income
of a holder of a Stripped Certificate (referred to in this discussion as a
'Stripped Certificateholder') in any taxable year likely will be computed
generally as described above under 'Federal Income Tax Consequences for REMIC
Certificates--Taxation of Regular Certificates-- Original Issue Discount' and
'--Variable Rate Regular Certificates'. However, with the apparent exception of
a Stripped Certificate issued with de minimis original issue discount as
described above under 'General', the issue price of a Stripped Certificate will
be the purchase price paid by each holder thereof, and the stated redemption
price at maturity will include the aggregate amount of the payments to be made
on the Stripped Certificate to such Stripped Certificateholder, presumably under
the Prepayment Assumption.
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If the Mortgage Loans prepay at a rate either faster or slower than that
under the Prepayment Assumption, a Stripped Certificateholder's recognition of
original issue discount will be either accelerated or decelerated and the amount
of such original issue discount will be either increased or decreased depending
on the relative interests in principal and interest on each Mortgage Loan
represented by such Stripped Certificateholder's Stripped Certificate. While the
matter is not free from doubt, the holder of a Stripped Certificate should be
entitled in the year that it becomes certain (assuming no further prepayments)
that the holder will not recover a portion of its adjusted basis in such
Stripped Certificate to recognize an ordinary loss equal to such portion of
unrecoverable basis.
As an alternative to the method described above, the fact that some or all
of the interest payments with respect to the Stripped Certificates will not be
made if the Mortgage Loans are prepaid could lead to the interpretation that
such interest payments are 'contingent' within the meaning of the OID
Regulations. The OID Regulations, as they relate to the treatment of contingent
interest, are by their terms not applicable to prepayable securities such as the
Stripped Certificates. However, if final regulations dealing with contingent
interest with respect to the Stripped Certificates apply the same principles as
the OID Regulations, such regulations may lead to different timing of income
inclusion that would be the case under the OID Regulations. Furthermore,
application of such principles could lead to the characterization of gain on the
sale of contingent interest Stripped Certificates as ordinary income. Investors
should consult their tax advisors regarding the appropriate tax treatment of
Stripped Certificates.
Sale or Exchange of Stripped Certificates. Sale or exchange of a Stripped
Certificate prior to its maturity will result in gain or loss equal to the
difference, if any, between the amount received and the Stripped
Certificateholder's adjusted basis in such Stripped Certificate, as described
above under 'Federal Income Tax Consequences for REMIC Certificates-- Taxation
of Regular Certificates--Sale or Exchange of Regular Certificates'. To the
extent that a subsequent purchaser's purchase price is exceeded by the remaining
payments on the Stripped Certificates, such subsequent purchaser will be
required for federal income tax purposes to accrue and report such excess as if
it were original issue discount in the manner described above. It is not clear
for this purpose whether the assumed prepayment rate that is to be used in the
case of a Stripped Certificateholder other than an original Stripped
Certificateholder should be the Prepayment Assumption or a new rate based on the
circumstances at the date of subsequent purchase.
Purchase of More Than One Class of Stripped Certificates. Where an
investor purchases more than one class of Stripped Certificates, it is currently
unclear whether for federal income tax purposes such classes of Stripped
Certificates should be treated separately or aggregated for purposes of the
rules described above.
Possible Alternative Characterizations. The characterizations of the
Stripped Certificates discussed above are not the only possible interpretations
of the applicable Code provisions. For example, the Stripped Certificateholder
may be treated as the owner of (i) one installment obligation consisting of such
Stripped Certificate's pro rata share of the payments attributable to principal
on each Mortgage Loan and a second installment obligation consisting of such
Stripped Certificate's pro rata share of the payments attributable to interest
on each Mortgage Loan, (ii) as many stripped bonds or stripped coupons as there
are scheduled payments of principal and/or interest on each Mortgage Loan or
(iii) a separate installment obligation for each Mortgage Loan, representing the
Stripped Certificate's pro rata share of payments of principal and/or interest
to be made with respect thereto. Alternatively, the holder of one or more
classes of Stripped Certificates may be treated as the owner of a pro rata
fractional undivided interest in each Mortgage Loan to the extent that such
Stripped Certificate, or classes of Stripped Certificates in the aggregate,
represent the same pro rata portion of principal and interest on each such
Mortgage Loan, and a stripped bond or stripped coupon (as the case may be),
treated as an installment obligation or contingent payment obligation, as to the
remainder. Final regulations issued on December 28, 1992 regarding original
issue discount on stripped obligations make the foregoing interpretations less
likely to be applicable. The preamble to those regulations states that they are
premised on the assumption that an aggregation approach is appropriate for
determining whether original issue discount on a stripped bond or stripped
coupon is de minimis, and solicits comments on appropriate rules for aggregating
stripped bonds and stripped coupons under Code Section 1286.
Because of these possible varying characterizations of Stripped
Certificates and the resultant differing treatment of income recognition,
Stripped Certificateholders are urged to consult their own tax advisors
regarding the proper treatment of Stripped Certificates for federal income tax
purposes.
REPORTING REQUIREMENTS AND BACKUP WITHHOLDING
The Trustee will furnish, within a reasonable time after the end of each
calendar year, to each Standard Certificateholder or Stripped Certificateholder
at any time during such year, such information (prepared on the basis described
above) as the Trustee deems to be necessary or desirable to enable such
Certificateholders to prepare their federal income tax returns. Such information
will include the amount of original issue discount accrued on Certificates held
by persons other than Certificateholders exempted
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from the reporting requirements. The amounts required to be reported by the
Trustee may not be equal to the proper amount of original issue discount
required to be reported as taxable income by a Certificateholder, other than an
original Certificateholder that purchased at the issue price. In particular, in
the case of Stripped Certificates, unless provided otherwise in the applicable
Prospectus Supplement, such reporting will be based upon a representative
initial offering price of each class of Stripped Certificates. The Trustee will
also file such original issue discount information with the Service. If a
Certificateholder fails to supply an accurate taxpayer identification number or
if the Secretary of the Treasury determines that a Certificateholder has not
reported all interest and dividend income required to be shown on his federal
income tax return, 31% backup withholding may be required in respect of any
reportable payments, as described above under 'Federal Income Tax Consequences
for REMIC Certificates--Backup Withholding'.
TAXATION OF CERTAIN FOREIGN INVESTORS
To the extent that a Certificate evidences ownership in Mortgage Loans that
are issued on or before July 18, 1984, interest or original issue discount paid
by the person required to withhold tax under Code Section 1441 or 1442 to
nonresident aliens, foreign corporations, or other Non-U.S. Persons generally
will be subject to 30% United States withholding tax, or such lower rate as may
be provided for interest by an applicable tax treaty. Accrued original issue
discount recognized by the Standard Certificateholder or Stripped
Certificateholder on original issue discount recognized by the Standard
Certificateholder or Stripped Certificateholders on the sale or exchange of such
a Certificate also will be subject to federal income tax at the same rate.
Treasury regulations provide that interest or original issue discount paid
by the Trustee or other withholding agent to a Non-U.S. Person evidencing
ownership interest in Mortgage Loans issued after July 18, 1984 will be
'portfolio interest' and will be treated in the manner, and such persons will be
subject to the same certification requirements, described above under 'Federal
Income Tax Consequences for REMIC Certificates--Taxation of Certain Foreign
Investors--Regular Certificates'.
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ERISA CONSIDERATIONS
GENERAL
The Employee Retirement Income Security Act of 1974, as amended ('ERISA'),
and Section 4975 of the Code impose certain requirements on employee benefit
plans and on certain other retirement plans and arrangements, including
individual retirement accounts, Keogh plans, collective investment funds,
insurance company separate accounts, and some insurance company general accounts
in which such plans, accounts or arrangements are invested, which are subject to
ERISA and the Code (all of which are hereinafter referred to for purposes of
this discussion as 'Plans') and on persons who are fiduciaries with respect to
such Plans. The following is a general discussion of such requirements, and
certain applicable exceptions to and administrative exemptions from such
requirements.
Before purchasing any Offered Certificates, a Plan fiduciary should consult
with its counsel and determine whether there exists any prohibition to such
purchase under the requirements of ERISA, whether any prohibited transaction
class-exemption or any individual administrative prohibited transaction
exemption (as described below) applies, including whether the appropriate
conditions set forth therein would be met, or whether any statutory prohibited
transaction exemption is applicable, and further should consult the applicable
Prospectus Supplement relating to such Series of Certificates.
CERTAIN REQUIREMENTS UNDER ERISA
General
In accordance with ERISA's general fiduciary standards, before investing in
a Certificate a Plan fiduciary should determine whether to do so is permitted
under the governing Plan instruments and is appropriate for the Plan in view of
its overall investment policy and the composition and diversification of its
portfolio. A Plan fiduciary should especially consider the ERISA requirement of
investment prudence and the sensitivity of the return on the Certificates to the
rate of principal repayments (including voluntary prepayments by the mortgagors
and involuntary liquidations) on the Mortgage Loans, as discussed in 'Yield
Considerations' herein.
Parties in Interest/Disqualified Persons
Other provisions of ERISA (and corresponding provisions of the Code)
prohibit certain transactions involving the assets of a Plan and persons who
have certain specified relationships to the Plan (so-called 'parties in
interest' within the meaning of ERISA or 'disqualified persons' within the
meaning of the Code, including, in both cases, Plan fiduciaries). The Depositor,
Master Servicer or the Trustee or certain affiliates thereof, might be
considered or might become 'parties in interest' or 'disqualified persons' with
respect to a Plan. If so, the acquisition or holding of Certificates by or on
behalf of such Plan could be considered to give rise to a 'prohibited
transaction' within the meaning of ERISA and the Code unless an administrative
exemption described below or some other exemption is available. Special caution
should be exercised before the assets of a Plan are used to purchase a
Certificate if, with respect to such assets, the Depositor, the Master Servicer
or the Trustee or an affiliate thereof, either: (a) has investment discretion
with respect to the investment of such assets of such Plan; or (b) has authority
or responsibility to give, or regularly gives investment advice with respect to
such assets for a fee and pursuant to an agreement or understanding that such
advice will serve as a primary basis for investment decisions with respect to
such assets and that such advice will be based on the particular investment
needs of the Plan.
Delegation of Fiduciary Duty
Further, if the assets included in a Trust Fund were deemed to constitute
Plan assets, it is possible that a Plan's investment in the Certificates might
be deemed to constitute a delegation, under ERISA, of the duty to manage Plan
assets by the fiduciary deciding to invest in the Certificates, and certain
transactions involved in the operation of the Trust Fund might be deemed to
constitute prohibited transactions under ERISA and the Code. Neither ERISA nor
the Code define the term 'plan assets.'
The U.S. Department of Labor (the 'Department') has published final
regulations (the 'Regulations') concerning whether or not a Plan's assets would
be deemed to include an interest in the underlying assets of an entity (such as
a Trust Fund) for purposes of the reporting and disclosure and general fiduciary
responsibility provisions of ERISA, as well as for the prohibited transaction
provisions of ERISA and the Code, if the Plan acquires an 'equity interest'
(such as a Certificate) in such an entity.
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Certain exceptions are provided in the Regulations whereby an investing
Plan's assets would be deemed merely to include its interest in the Certificates
instead of being deemed to include an interest in the assets of a Trust Fund.
However, the Depositor cannot predict in advance, nor can there be any
continuing assurance, whether such exceptions may be met, because of the factual
nature of certain of the rules set forth in the Regulations. For example, one of
the exceptions in the Regulations states that the underlying assets of an entity
will not be considered 'plan assets' if less than 25% of the value of all
classes of equity interests are held by 'benefit plan investors,' which are
defined as Plans, IRAs, and employee benefit plans not subject to ERISA (for
example, governmental plans). However, this exception is tested immediately
after each acquisition of an equity interest in the entity whether upon initial
issuance or in the secondary market.
ADMINISTRATIVE EXEMPTIONS
Several underwriters of mortgage-backed securities have applied for and
obtained individual administrative ERISA prohibited transaction exemptions which
can only apply to the purchase and holding of mortgage-backed securities which,
among other conditions, are sold in an offering with respect to which such
underwriter serves as the sole or a managing underwriter, or as a selling or
placement agent. If such an exemption might be applicable to a Series of
Certificates, the related Prospectus Supplement will refer to such possibility,
as well as provide a summary of the conditions to the applicability.
GOVERNMENTAL PLANS
A governmental plan as defined in Section 3 (32) of ERISA is not subject to
ERISA, or Code Section 4975. However, such a governmental plan may be subject to
a federal, state, or local law, which is, to a material extent, similar to the
provisions of ERISA or Code Section 4975 ('Similar Law'). A fiduciary of a
governmental plan should make its own determination as to the need for and the
availability of any exemptive relief under Similar Law.
UNRELATED BUSINESS TAXABLE INCOME; RESIDUAL CERTIFICATES
The purchase of a Residual Certificate by any employee benefit plan
qualified under Code Section 401(a) and exempt from taxation under Code Section
501(a), including most varieties of ERISA Plans, may give rise to 'unrelated
business taxable income' as described in Code Sections 511-515 and 860E.
Further, prior to the purchase of Residual Certificates, a prospective
transferee may be required to provide an affidavit to a transferor that it is
not, nor is it purchasing a Residual Certificate on behalf of, a 'Disqualified
Organization,' which term as defined above includes certain tax-exempt entities
not subject to Code Section 511 including certain governmental plans, as
discussed above under the caption 'Federal Income Tax Consequences-- Federal
Income Tax Consequences for REMIC Certificates--Taxation of Residual
Certificates--Tax-Related Restrictions on Transfer of Residual
Certificates--Disqualified Organizations.'
Due to the complexity of these rules and the penalties imposed upon persons
involved in prohibited transactions, it is particularly important that potential
investors who are Plan fiduciaries consult with their counsel regarding the
consequences under ERISA of their acquisition and ownership of Certificates.
The sale of Certificates to an employee benefit plan is in no respect a
representation by the Depositor or the Underwriter that this investment meets
all relevant legal requirements with respect to investments by plans generally
or by any particular plan, or that this investment is appropriate for plans
generally or for any particular plan.
LEGAL INVESTMENT
The Prospectus Supplement for each Series of Offered Certificates will
specify which, if any, of the Classes of Offered Certificates will constitute
'mortgage related securities' for purposes of the Secondary Mortgage Market
Enhancement Act of 1984, as amended ('SMMEA'). The appropriate characterization
of those Offered Certificates not qualifying as 'mortgage related securities'
('Non-SMMEA Certificates') under various legal investment restrictions, and thus
the ability of investors subject to these restrictions to purchase such
Certificates, may be subject to significant interpretive uncertainties.
Accordingly, investors whose investment authority is subject to legal
restrictions should consult their own legal advisors to determine whether and to
what extent the Non-SMMEA Certificates constitute legal investments for them.
Generally, only Classes of Offered Certificates that (i) are rated in one
of the two highest rating categories by one or more Rating Agencies and (ii) are
part of a Series evidencing interests in a Trust Fund consisting of loans
secured by first liens on Mortgaged Properties and originated by certain types
of Originators as specified in SMMEA, will be 'mortgage related securities' for
purposes of SMMEA. As 'mortgage related securities,' such Classes will
constitute legal investments for persons, trusts,
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corporations, partnerships, associations, business trusts and business entities
(including, but not limited to, state-chartered depositary institutions and
insurance companies, as well as trustees and state government employee
retirement systems) created pursuant to or existing under the laws of the United
States or of any state (including the District of Columbia and Puerto Rico)
whose authorized investments are subject to state regulation to the same extent
that, under applicable law, obligations issued by or guaranteed as to principal
and interest by the United States or any agency or instrumentality thereof
constitute legal investments for such entities. Pursuant to SMMEA, a number of
states enacted legislation, on or before the October 3, 1991 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' to include, in relevant part, Offered
Certificates satisfying the rating, first lien 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. Accordingly, the investors affected by such legislation
will be authorized to invest in Offered Certificates qualifying as 'mortgage
related securities' only to the extent provided in such legislation.
SMMEA also amended the legal investment authority of federally-chartered
depository institutions as follows: federal savings and loan associations and
federal savings banks may invest in, sell or otherwise deal in 'mortgage related
securities' without limitation as to the percentage of their assets represented
thereby, federal credit unions may invest in such securities, and national banks
may purchase such securities for their own account without regard to the
limitations generally applicable to investment securities set forth in 12 U.S.C.
Section 24 (Seventh), subject in each case to such regulations as the applicable
federal regulatory authority may prescribe. In this connection, the Office of
the Comptroller of the Currency (the 'OCC') has amended 12 C.F.R. Part 1 to
authorize national banks to purchase and sell for their own account, without
limitation as to a percentage of the bank's capital and surplus (but subject to
compliance with certain general standards in 12 C.F.R. Section 1.5) concerning
'safety and soundness' and retention of credit information, certain 'Type IV
securities,' defined in 12 C.F.R. Section 1.2(l) to include certain 'commercial
mortgage-related securities' and 'residential mortgage-related securities.' As
so defined, 'commercial mortgage-related security' and 'residential
mortgage-related security' mean, in relevant part, 'mortgage related security'
within the meaning of SMMEA, provided that, in the case of a 'commercial
mortgage-related security,' it 'represents ownership of a promissory note or
certificate of interest or participation that is directly secured by a first
lien on one or more parcels of real estate upon which one or more commercial
structures are located and that is fully secured by interests in a pool of loans
to numerous obligors.' In the absence of any rule or administrative
interpretation by the OCC defining the term 'numerous obligors,' no
representation is made as to whether any Class of Offered Certificates will
qualify as 'commercial mortgage-related securities,' and thus as 'Type IV
securities,' for investment by national banks. The Nation Credit Union
Administration (the 'NCUA') has adopted rules, codified at 12 C.F.R. Part 703,
which permit federal credit unions to invest in certain 'mortgage related
securities' under limited circumstances, other than stripped mortgage related
securities, residual interests in mortgage related securities, and commercial
mortgage related securities, unless the credit union has obtained written
approval from the NCUA to participate in the 'investment pilot program'
described in 12 C.F.R. Section 703.140.
All depository institutions considering an investment in the Offered
Certificates should review the 'Supervisory Policy Statement on Investment
Securities and End-User Derivatives Activities' (the '1998 Policy Statement') of
the Federal Financial Institutions Examination Council (the 'FFIEC'), which has
been adopted by the Board of Governors of the Federal Reserve System, the
Federal Deposit Insurance Corporation, the OCC and the Office of Thrift
Supervision, effective May 26, 1998, and the NCUA, effective October 1, 1998.
The 1998 Policy Statement set 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. Until October 1, 1998, federal credit unions will
still be subject to the FFIEC's now-superseded 'Supervisory Policy Statement on
Securities Activities' dated January 28, 1992, as adopted by the NCUA with
certain modifications, which prohibited depository institutions from investing
in certain 'high-risk mortgage securities,' except under limited circumstances,
and set forth certain investment practices deemed to be unsuitable for regulated
institutions.
Institutions whose investment activities are subject to regulation by
federal or state authorities should review rules, policies and guidelines
adopted from time to time by such authorities before purchasing any Offered
Certificates, as certain Series, Classes
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or subclasses may be deemed unsuitable investments, or may otherwise be
restricted, under such rules, policies or guidelines (in certain instances
irrespective of SMMEA).
The foregoing does not take into consideration the applicability of
statutes, rules, regulations, orders, guidelines or agreements generally
governing investments made by a particular investor, including, but not limited
to, 'prudent investor' provisions, percentage-of-assets limits, provisions which
may restrict or prohibit investment in securities which are not 'interest
bearing' or 'income paying,' and, with regard to any Offered Certificates issued
in book-entry form, provisions which may restrict or prohibit investments in
securities which are issued in book-entry form.
Except as to the status of certain Classes of Offered Certificates
identified in the Prospectus Supplement as 'mortgage related securities,' no
representation is made as to the proper characterization of the Offered
Certificates for legal investment purposes, financial institution regulatory
purposes, or other purposes, or as to the ability of particular investors to
purchase any Offered Certificates under applicable legal investment
restrictions. The uncertainties described 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 regulations, regulatory capital requirements or review by
regulatory authorities should consult with their legal advisors in determining
whether and to what extent the Offered Certificates 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 Certificates offered hereby and by the Prospectus Supplement will be
offered in Series through one or more of the various methods described below.
The Prospectus Supplement for each Series of Certificates will describe the
method of offering being utilized for that Series, the public offering or
purchase price of the Certificates and the net proceeds to the Depositor from
such sale. If so specified in the Prospectus Supplement, one or more Classes of
Certificates may be offered for sale only outside of the United States and only
to non-U.S. persons and foreign branches of U.S. banks (or in such other manner
and to such other persons as may be specified therein) and will not be offered
hereby.
The Certificates will be offered through the following methods from time to
time and that offerings may be made concurrently through more than one of these
methods or that an offering of a particular Series of Certificates may be made
through any combination of these methods:
1. Negotiated firm commitment underwriting and public reoffering by
underwriters;
2. Placements by the Depositor to institutional investors through
affiliated or unaffiliated dealers or agents; and
3. Direct placements by the Depositor to institutional investors.
If underwriters are used in a sale of any Certificates, such Certificates
will be acquired by the underwriters for their own account and may be resold.
The distribution of the Certificates may be effected from time to time in one or
more transactions, including negotiated transactions, at a fixed public offering
price or at varying prices to be determined at the time of sale or at the time
of commitment therefor. If so specified in the related Prospectus Supplement,
the Certificates will be distributed in a firm commitment underwriting, subject
to the terms and conditions of the underwriting agreement, by Nomura Securities
International, Inc. ('Nomura') acting as underwriter with other underwriters, if
any, named therein. Capco America Securitization Corporation, the Depositor, is
a wholly-owned subsidiary of The Capital Company of America LLC ('Capital
America'). Nomura and Capital America are both wholly-owned subsidiaries of
Nomura Holding America Inc. See 'The Depositor' herein.
In connection with the sale of the Certificates, underwriters, dealers or
placement agents may receive compensation from the Depositor or from purchasers
of the Certificates in the form of discounts, concessions or commissions.
Underwriters, agents and dealers participating in the distributions of the
Certificates may be deemed to be underwriters in connection with such
Certificates, and any discounts or commissions received by them from the Issuer
and any profit on the resale of the Certificates by them may be deemed to be
underwriting discounts and commissions under the Securities Act of 1933, as
amended (the '1933 Act').
Any sales by the Depositor directly to investors, whether using an
affiliated or other placement agent or otherwise, may be made from time to time
in one or more transactions, including negotiated transactions, at a fixed
offering price or at varying prices to be determined at the time of sale or the
time of commitment therefor. The Prospectus Supplement with respect to any
Series of
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Certificates offered other than through underwriters will contain information
regarding the nature of such offering and any agreements to be entered into
between the Depositor and dealers or purchasers of the Certificates for such
Series.
The underwriting agreement pertaining to a sale of a series of Certificates
will provide that the obligations of Nomura and any underwriters will be subject
to certain conditions precedent, that the underwriters will be obligated to
purchase all such Certificates if any are purchased, and that the Depositor will
indemnify Nomura and any underwriters against certain civil liabilities,
including liabilities under the 1933 Act, or will contribute to payments Nomura
and any underwriters may be required to make in respect thereof.
In the ordinary course of business, Nomura 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.
All or part of any Class of Certificates may be reacquired by the Depositor
or acquired by an affiliate of the Depositor in a secondary market transaction
or from an affiliate (including Nomura). Such Certificates may then be included
in a trust fund, the beneficial ownership of which will be evidenced by one or
more classes of mortgage-backed certificates, including subsequent series of
Certificates offered pursuant to this Prospectus and a Prospectus Supplement.
Purchasers of Certificates, including dealers, may, depending on the facts
and circumstances of such purchases, be deemed to be 'underwriters' within the
meaning of the Securities Act of 1933 in connection with reoffers and sales by
them of Certificates. Holders of Certificates should consult with their legal
advisors in this regard prior to any such reoffer or sale.
If and to the extent required by applicable law or regulation, this
Prospectus will be used by Nomura in connection with offers and sales related to
market-making transactions in Certificates previously offered hereunder in
transactions in which Nomura acts as principal. Nomura may also act as agent in
such transactions. Sales may be made at negotiated prices determined at the time
of sale.
LEGAL MATTERS
The legality of the Certificates of each Series, including certain federal
income tax consequences with respect thereto, will be passed upon for the
Depositor by Cadwalader, Wickersham & Taft, New York, New York.
FINANCIAL INFORMATION
A new Trust Fund will be formed with respect to each series of Certificates
and no Trust Fund will engage in any business activities or have any assets or
obligations prior to the issuance of the related series of Certificates.
Accordingly, no financial statements with respect to any Trust Fund will be
included in this Prospectus or in the related Prospectus Supplement.
RATING
It is a condition to the issuance of any class of Offered Certificates that
they shall have been rated not lower than investment grade, that is, in one of
the four highest categories, by a Rating Agency.
Ratings on mortgage pass-through certificates address the likelihood of
receipt by certificateholders of all distributions on the underlying mortgage
loans. These ratings address the structural, legal and issuer-related aspects
associated with such certificates, the nature of the underlying mortgage loans
and the credit quality of the guarantor, if any. Ratings on mortgage
pass-through certificates do not represent any assessment of the likelihood of
principal prepayments by mortgagors or of the degree by which such prepayments
might differ from those originally anticipated. As a result, certificateholders
might suffer a lower than anticipated yield, and, in addition, holders of
stripped interest certificates in extreme cases might fail to recoup their
initial investments.
A security rating is not a recommendation to buy, sell or hold securities
and may be subject to revision or withdrawal at any time by the assigning rating
organization. Each security rating should be evaluated independently of any
other security rating.
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INDEX OF PRINCIPAL DEFINITIONS
<TABLE>
<CAPTION>
PAGE(S) ON WHICH TERM IS
TERM DEFINED IN THE PROSPECTUS
- ---- -------------------------
<S> <C>
1933 Act.............................................. 86
1986 Act.............................................. 62
Accrual Certificates.................................. 10
Accrued Certificate Interest.......................... 30
ADA................................................... 59
ARM Loans............................................. 22
Bankruptcy Code....................................... 54
BIF................................................... 37
Book-Entry Certificates............................... 29
Capital America....................................... 86
Cash Flow Agreements.................................. 1
Cede.................................................. 2, 34
Certificate Balance................................... 10, 31
Certificateholders.................................... 2, 19
Certificates.......................................... 8
Code.................................................. 11, 60
Collection Account.................................... 9, 24
Collection Period..................................... 30
Commercial Loans...................................... 20
Commercial Properties................................. 8, 20
Commission............................................ 2
Cooperatives.......................................... 20
Covered Trust......................................... 17
CPR................................................... 26
Credit Support........................................ 1, 9, 24
Crime Control Act..................................... 59
Cut-off Date.......................................... 10
Debt Service Coverage Ratio........................... 20
Definitive Certificates............................... 29, 34
Department............................................ 83
Determination Date.................................... 29
Disqualified Organization............................. 72, 84
Distribution Date..................................... 10
DTC................................................... 2, 34
EDGAR................................................. 2
Equity Participations................................. 23
ERISA................................................. 11, 83
Exchange Act.......................................... 2
FDIC.................................................. 37
FHA................................................... 22
HUD................................................... 22
Indirect Participants................................. 34
Insurance Proceeds.................................... 37
L/C Bank.............................................. 47
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
PAGE(S) ON WHICH TERM IS
TERM DEFINED IN THE PROSPECTUS
- ---- -------------------------
<S> <C>
Liquidation Proceeds.................................. 37
Loan-to-Value Ratio................................... 21
Lock-out Date......................................... 23
Lock-out Period....................................... 23
Master Servicer....................................... 8
MBS................................................... 23
MBS Agreement......................................... 23
MBS Issuer............................................ 23
MBS Servicer.......................................... 23
MBS Trustee........................................... 23
Mortgage Asset Seller................................. 20
Mortgage Assets....................................... 1, 20
Mortgage Loans........................................ 1, 8, 20, 60
Mortgage Notes........................................ 20
Mortgage Rate......................................... 8, 22
Mortgaged Properties.................................. 8
Mortgages............................................. 20
Multifamily Loans..................................... 20
Multifamily Properties................................ 8, 20
NCUA.................................................. 58, 85
Net Leases............................................ 21
Net Operating Income.................................. 20
Nomura................................................ 86
Non-SMMEA Certificates................................ 84
Nonrecoverable Advance................................ 31
Offered Certificates.................................. 1
OID Regulations....................................... 63
Originator............................................ 20
Participants.......................................... 34
Pass-Through Entity................................... 71, 72
Pass-Through Rate..................................... 10
Permitted Investments................................. 37
Plan.................................................. 11
Prepayment Assumption................................. 63
Prepayment Premium.................................... 23
Random Lot Certificates............................... 63
Rating Agency......................................... 12
Record Date........................................... 29
Regular Certificateholder............................. 62
Regular Certificates.................................. 60, 76
Regulations........................................... 83
Related Proceeds...................................... 31
Relief Act............................................ 58
REMIC................................................. 11, 60
REMIC Certificates.................................... 60
REMIC Pool............................................ 60
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
PAGE(S) ON WHICH TERM IS
TERM DEFINED IN THE PROSPECTUS
- ---- -------------------------
<S> <C>
REMIC Regulations..................................... 60
REO Account........................................... 38
Residual Certificateholders........................... 68
Residual Certificates................................. 60
RICO.................................................. 59
SAIF.................................................. 37
Senior Certificates................................... 10, 28
Service............................................... 62
Similar Law........................................... 84
SMMEA................................................. 84
SPA................................................... 26
Special Servicer...................................... 8, 39
Standard Certificateholder............................ 77
Standard Certificates................................. 77
Stripped Certificateholder............................ 80
Stripped Certificates................................. 77, 79
Stripped Interest Certificates........................ 10
Stripped Principal Certificates....................... 10
Sub-Servicer.......................................... 39
Sub-Servicing Agreement............................... 39
Subordinate Certificates.............................. 10, 28
Title V............................................... 58
Title VIII............................................ 58
Treasury.............................................. 60
Trust Assets.......................................... 2
Trust Fund............................................ 1
Trustee............................................... 8
U.S. Person........................................... 72, 73
UCC................................................... 48
Value................................................. 21
Voting Rights......................................... 19
Warranting Party...................................... 36
Web................................................... 2
</TABLE>
90
