<PAGE>
Filed pursuant to Rule 424(b)(5)
Registration Statement File No. 333-53859
The information in this prospectus supplement is not complete and may be
changed. We may not sell these securities until we deliver a final prospectus
supplement and prospectus. This prospectus supplement and prospectus are not an
offer to sell these securities and are not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
Subject to Completion. Dated March 1, 1999.
Prospectus Supplement to Prospectus dated March 1, 1999
$2,107,801,000 (Approximate)
COMMERCIAL MORTGAGE ASSET TRUST ("CMAT")
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 1999-C1
------------------------------------------------------------------------
Asset Securitization Corporation (the "Depositor") will establish the
"Trust Fund." The Trust Fund will issue the seven classes of "Offered
Certificates" described in the table below, together with eleven additional
classes of "Private Certificates." The Private Certificates are subordinated to,
and some will provide credit enhancement for, the Offered Certificates. The
Private Certificates are not being offered by this Prospectus Supplement.
The Assets of the Trust Fund will include a pool of 230 fixed-rate mortgage
loans with original terms to maturity of generally not more than thirty years
secured by first liens on 268 commercial and multifamily residential properties.
The mortgage pool will have an "Initial Pool Balance" of approximately
$2,374,987,404. The characteristics of such mortgage loans and the related
mortgaged properties are more fully described in 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 March 1,
1999.
You should carefully consider the risk factors beginning on page S-31 of
this Prospectus Supplement and on page 11 of the Prospectus.
------------------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER REGULATORY
BODY HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
------------------------------------
<TABLE>
<CAPTION>
Approximate Initial Assumed Final
Offered Initial Certificate Pass-Through Ratings Distribution
Certificates Balance Rate Description (Moody's/S&P) CUSIP No. Date(8)
- --------------- ------------------- ------------ ------------------ ------------- --------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Class A-1(1)... $400,000,000 % Fixed Rate Aaa/AAA December 17, 2007
Class A-2(1)... $930,000,000 % (2) Aaa/AAA June 17, 2012
Class A-3(1)... $368,115,000 % (3) Aaa/AAA April 17, 2013
Class B........ $106,875,000 % (4) Aa2/AA July 17, 2013
Class C........ $130,624,000 % (5) A2/A August 17, 2013
Class D........ $136,562,000 % (6) Baa2/BBB October 17, 2013
Class E........ $ 35,625,000 % (7) Baa3/BBB- October 17, 2013
</TABLE>
(footnotes to table on page S-2)
------------------------------------
Goldman, Sachs & Co., Lehman Brothers Inc., Donaldson, Lufkin & Jenrette
Securities Corporation and Nomura Securities International, Inc. (collectively,
the "Underwriters") will purchase the Offered Certificates from the Depositor,
subject to the satisfaction of certain conditions. Goldman, Sachs & Co. and
Lehman Brothers Inc. will act as co-lead managers and joint bookrunners with
respect to the Offered Certificates. Each Underwriter intends to sell its
allocation of the Offered Certificates from time to time in individually
negotiated transactions or otherwise at varying prices to be determined at the
time of sale. The Depositor expects to receive proceeds from the sale of the
Offered Certificates of approximately % of the initial aggregate
principal balance thereof as of the date on which the Certificates are issued,
plus accrued interest from March 11, 1999 as described in this Prospectus
Supplement, before deducting expenses payable by the Depositor. The Underwriters
expect to deliver the Offered Certificates in book-entry form only through the
facilities of The Depository Trust Company against payment in New York, New York
on or about March 23, 1999.
Co-Lead Managers and Joint Bookrunners
GOLDMAN, SACHS & CO. LEHMAN BROTHERS
------------------------------------
DONALDSON, LUFKIN & JENRETTE NOMURA SECURITIES INTERNATIONAL, INC.
SECURITIES CORPORATION
------------------------------------
Prospectus Supplement dated , 1999.
<PAGE>
[INSIDE FRONT COVER, PANEL 1]
Commercial Mortgage Asset Trust (CMAT)
Commercial Mortgage Pass-Through Certificates, Series 1999-C1
[ANNOTATED MAP OF THE UNITED STATES OMITTED]
The following graphic material is included in the paper and electronic
versions of this Prospectus Supplement.
The inside front cover contains a map of the contiguous United States and
Hawaii showing the concentration of the Mortgaged Properties in the pool by
state as follows:
State Number of Properties Value Percentage of Total
- ----- -------------------- ----- -------------------
Alabama 2 $6,623,089 0.3%
Arkansas 1 $1,578,108 0.1%
Arizona 6 $96,464,755 4.1%
California 36 $456,845,900 19.2%
Colorado 1 $1,867,731 0.1%
Connecticut 1 $15,275,478 0.6%
D.C. (Washington) 2 $22,884,581 1.0%
Delaware 1 $7,295,906 0.3%
Florida 6 $36,972,811 1.6%
Georgia 1 $80,770,298 3.4%
Hawaii 1 $30,343,508 1.3%
Illinois 16 $152,497,140 6.4%
Indiana 2 $40,599,626 1.7%
Iowa 7 $78,228,268 3.3%
Kentucky 3 $9,742,198 0.4%
Louisiana 7 $22,674,449 1.0%
Maine 5 $12,736,837 0.5%
Maryland 13 $58,868,957 2.5%
Massachusetts 1 $3,068,325 0.1%
Michigan 26 $269,470,263 11.3%
Minnesota 11 $62,119,639 2.6%
Missouri 3 $8,972,397 0.4%
Montana 1 $2,682,784 0.1%
Nebraska 2 $2,683,330 0.1%
Nevada 4 $85,799,200 3.6%
New Hampshire 2 $10,877,324 0.5%
New Jersey 4 $24,481,507 1.0%
New Mexico 5 $24,052,645 1.0%
New York 11 $191,456,838 8.1%
North Carolina 8 $43,174,807 1.8%
Ohio 15 $120,213,547 5.1%
Oregon 6 $47,596,576 2.0%
Pennsylvania 4 $29,868,951 1.3%
South Carolina 5 $8,914,092 0.4%
South Dakota 1 $3,839,898 0.2%
Tennessee 3 $4,436,435 0.2%
Texas 17 $85,842,981 3.6%
Vermont 1 $1,478,164 0.1%
Virginia 20 $182,935,663 7.7%
Washington 2 $4,351,943 0.2%
West Virginia 2 $11,612,826 0.5%
Wisconsin 3 $12,787,628 0.5%
The map described is color coded, indicating areas of concentration of the
Initial Pool Balance. California and Michigan are coded as containing the
greatest concentration of properties (10.1%-20%); Illinois, New York, Ohio, and
Virginia are coded as containing the second largest concentration of properties
(5.1%-10%); Arizona, Florida, Georgia, Indiana, Iowa, Minnesota, Nevada, North
Carolina, Oregon and Texas contain the third largest concentration of properties
(5.0%-1.1%); the remaining states are coded as containing less than or equal to
1%.
[PIE CHART OMITTED]
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 (43.7%), Office (26.1%), Multifamily (14.3%), Hotel
(8.0%), Industrial (4.1%), Healthclub (2.8%), Mobile Home Park (0.6%).
<PAGE>
[INSIDE FRONT COVER, PANELS 2 and 3]
There are photographs of certain Mortgaged Properties explained on
the inside front cover as follows:
Baldwin Complex: Cincinnati, OH. The photograph shows an aerial view of
the nine-story unit.
Atlanta Marriott: Atlanta, Georgia. The picture shows the well-lit,
high-rise hotel building from a parking lot view.
Park LaBrea: Los Angeles, California. The picture shows the property
from a distance, depicting its green and white surface and tree-lined
street below. A parking lot, visible in the picture, provides parking
for tenants.
Laurel Park Place Mall: Livonia, Michigan. The photograph depicts the
mall flanked by trees and flowers from the view of the parking lot.
Lighthouse Place (Prime Retail III): Michigan City, Indiana. The
picture shows the entrance amidst a well-lit street.
The Source: Westbury, New York. The picture shows the facade of the
mall, whose establishments include Virgin megastore and Nordstrom.
DDR/DDA Ahwatukee Foothills Towne Center; Phoenix, Arizona. The picture
depicts the mall entrance, lined with trees, from the parking lot. The
parking lot, visible in the picture, provides parking for patrons.
Pointe Plaza: Gross Pointe, Michigan. The picture shows a view of the
complex entrance in midday, visible through the foliage.
Soho Grand Hotel: New York, NY. The picture shows an evening view of the
elegant brick structure. The building is well-lit with two adjacent
buildings in partial view.
Brewery Park II Office Building: Detroit, Michigan. The photograph
depicts the brick edifice from a distance, overlooking the highway.
Springfield Mall: Springfield, Virginia. The photograph depicts the
inside of the structure, complete with foliage and escalators.
College Square Mall (Iowa Malls): Cedar Falls, Iowa. The picture shows
the inside of the mall, complete with a fountain flanked with potted
plants. Retail stores surround the fountain.
<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 Rate on the Class A-2 Certificates will be equal to
%; provided, however, that such Pass-Through Rate will not exceed
the Weighted Average Net Mortgage Pass-Through Rate for the related
Distribution Date (as described under "Description of the Offered
Certificates--Distributions" in this Prospectus Supplement).
(3) The Pass-Through Rate on the Class A-3 Certificates will be equal to
%; provided, however that such Pass-Through Rate will not exceed the
Weighted Average Net Mortgage Pass-Through Rate for the related Distribution
Date.
(4) The Pass-Through Rate on the Class B Certificates will be equal to
%; provided, however that such Pass-Through Rate will not exceed the
Weighted Average Net Mortgage Pass-Through Rate for the related Distribution
Date.
(5) The Pass-Through Rate on the Class C Certificates will be equal to
%; provided, however that such Pass-Through Rate will not exceed the
Weighted Average Net Mortgage Pass-Through Rate for the related Distribution
Date.
(6) The Pass-Through Rate on the Class D Certificates will be equal to
%; provided, however that such Pass-Through Rate will not exceed the
Weighted Average Net Mortgage Pass-Through Rate for the related Distribution
Date.
(7) The Pass-Through Rate on the Class E Certificates will be equal to
%; provided, however that such Pass-Through Rate will not exceed the
Weighted Average Net Mortgage Pass-Through Rate for the related Distribution
Date.
(8) The "Assumed Final Distribution Date" with respect to any Class of
Certificates is the Distribution Date on which the final payment of
principal would occur for such Class of Certificates assuming (i) a 0% CPR
(as defined herein under "Prepayment and Yield Consideration--Weighted
Average Life of Offered Certificates"); (ii) each ARD Loan prepays in full
on its respective Anticipated Repayment Date (i) and (iii) the Mortgage Loan
Assumptions (as defined herein under "Prepayment and Yield
Considerations--Weighted Average Life of the Offered Certificates"). The
actual performance and experience of the Mortgage Loans will likely differ
from such assumptions. See "Prepayment and Yield Considerations" herein. The
Rated Final Distribution Date is January 17, 2032.
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 March 1, 1999 (the "Prospectus"), which provides general
information, some of which may not apply to the Offered Certificates; and
(b) this prospectus supplement dated March 1, 1999 (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-168 in this
Prospectus Supplement. Capitalized terms used in the Prospectus are defined
under the caption "Index of Principal Definitions" beginning on page 90 in the
Prospectus.
------------------------
S-2
<PAGE>
The Depositor has filed with the Securities and Exchange Commission (the
"SEC") a registration statement (of which this Prospectus Supplement forms a
part) under the Securities Act of 1933, as amended (the "Securities Act"), with
respect to the Offered Certificates. This Prospectus Supplement and the
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 SEC 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 HEREOF, 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 and the Prospectus, 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. See "Underwriting" 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 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 Underwriters will purchase the Offered Certificates from the Depositor,
subject to the satisfaction of certain conditions. Each Underwriter intends to
sell its allocation of the Offered Certificates from time to time in
individually negotiated transactions or otherwise at varying prices to be
determined at the time of sale.
------------------------
The Underwriters are offering the Offered Certificates subject to prior
sale and the Underwriters' right to reject orders in whole or in part, 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 or, in the case of the Offered
Certificates sold in offshore transactions to non-United States persons, Cedel
Bank, Societe Anonyme and The Euroclear System in Europe, on or about March 23,
1999.
There is currently no secondary market for the Offered Certificates. As
described in this Prospectus Supplement, 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 "Underwriting" in this Prospectus
Supplement.
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
Table of Contents............................................. S-4
Executive Summary............................................. S-7
Summary of Prospectus Supplement.............................. S-10
Relevant Parties............................................ S-10
Important Dates and Periods................................. S-12
Overview of the Certificates................................ S-13
The Certificates: Structural Summary........................ S-17
The Mortgage Loans: Collateral Overview..................... S-21
Risk Factors and Other Special Considerations................. S-31
Risks Related to the Mortgage Loans......................... S-31
Risks Related to the Certificates........................... S-53
Description of the Mortgage Pool.............................. S-57
General..................................................... S-57
Security for the Mortgage Loans............................. S-58
The Mortgage Loan Program--Underwriting Standards........... S-59
Premium Loans............................................... S-60
CMAT Pari Passu Notes....................................... S-61
Credit Tenant Loans......................................... S-63
Dual Amortization Loans..................................... S-68
Special Notes............................................... S-69
Certain Terms and Conditions of the Mortgage Loans.......... S-69
Significant Mortgage Loans.................................. S-74
The DDR/DRA Loan and Properties.......................... S-75
The Park LaBrea Loan and Property........................ S-77
The Source Retail Loan and Property...................... S-80
Prime Retail III Pool Loan and Properties................ S-82
The Springfield Mall Loan and Property................... S-85
Atlanta Marriott Hotel Loan and Property................. S-88
Iowa Malls Retail Loan and Properties.................... S-90
Additional Mortgage Loan Information........................ S-93
Changes in Mortgage Pool Characteristics.................... S-103
Description of the Offered Certificates....................... S-104
General..................................................... S-104
Distributions............................................... S-105
Realized Losses............................................. S-113
Prepayment Interest Shortfalls.............................. S-114
<CAPTION>
PAGE
-----
<S> <C>
Subordination............................................... S-115
Appraisal Reductions........................................ S-115
Delivery, Form and Denomination............................. S-116
Book-Entry Registration..................................... S-116
Definitive Certificates..................................... S-119
Transfers and Exchanges; Transfer Restrictions.............. S-119
Notices..................................................... S-120
Prepayment and Yield Considerations........................... S-120
Yield....................................................... S-120
Rated Final Distribution Date............................... S-122
Weighted Average Life of Offered Certificates............... S-122
Price/Yield Tables.......................................... S-127
The Mortgage Loan Sellers................................... S-131
Recent Developments......................................... S-131
The Pooling and Servicing Agreement........................... S-131
General..................................................... S-131
Assignment of the Mortgage Loans............................ S-131
Representations and Warranties; Repurchase.................. S-132
Servicing of the Mortgage Loans; Collection of Payments..... S-135
Advances.................................................... S-136
Accounts.................................................... S-137
Withdrawals from the Collection Account..................... S-139
Enforcement of "Due-on-Sale" and "Due-on-Encumbrance"
Clauses.................................................. S-140
Inspections................................................. S-140
Insurance Policies.......................................... S-141
Evidence as to Compliance................................... S-142
Certain Matters Regarding the Depositor, the Servicer and
the Special Servicer..................................... S-142
Events of Default........................................... S-144
Rights upon Event of Default................................ S-144
Amendment................................................... S-145
Voting Rights............................................... S-146
Realization upon Mortgage Loans............................. S-146
Modifications............................................... S-149
Optional Termination........................................ S-150
The Trustee................................................. S-151
Duties of the Trustee....................................... S-152
</TABLE>
S-4
<PAGE>
<TABLE>
<CAPTION>
PAGE
-----
The Fiscal Agent............................................ S-152
<S> <C>
Duties of the Fiscal Agent.................................. S-152
The Servicer................................................ S-152
Servicing Compensation and Payment of Expenses.............. S-153
Special Servicing........................................... S-153
Servicer and Special Servicer Permitted to Buy
Certificates............................................. S-155
Reports to Certificateholders; Available Information........ S-156
Certain Legal Aspects of Mortgage Loans For Mortgaged
Properties Located in California, Michigan, New York,
Virginia, Illinois and Ohio................................. S-159
California............................................... S-159
<CAPTION>
PAGE
-----
<S> <C>
Michigan................................................. S-159
New York................................................. S-160
Virginia................................................. S-160
Illinois................................................. S-160
Ohio..................................................... S-160
Use of Proceeds............................................. S-161
Certain Federal Income Tax
Consequences............................................. S-161
Certain ERISA Considerations................................ S-162
Legal Investment............................................ S-165
Legal Matters............................................... S-165
Rating...................................................... S-166
Underwriting................................................ S-166
Index of Significant Definitions............................ S-168
</TABLE>
INDEX OF TABLES
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Certificate Summary ........................................ S-7
Mortgage Loan Sellers ...................................... S-11
Originators ................................................ S-11
Assumed Final Distribution Date ............................ S-12
The Offered Certificates--Certificate
Balances and Pass-Through Rates ............................ S-13
The Private Certificates--Certificate
Balances and Pass-Through Rates ............................ S-14
Ratings .................................................... S-17
General Characteristics .................................... S-21
Cut-off Date Principal Balances ............................ S-24
Significant State Concentration ............................ S-25
Debt Service Coverage Ratios ............................... S-25
LTV Ratios ................................................. S-25
PTV Ratios ................................................. S-26
Mortgage Loans by Property Type ............................ S-26
Maturity Date or Anticipated Repayment
Date by Year ............................................. S-26
Security for the Mortgage Loans ............................ S-27
Overview of Lock-out Periods ............................... S-30
Cut-off Date Principal Balances and
Concentration of Mortgage Loans .......................... S-34
Cross-Collateralized Mortgage Loans ........................ S-41
Mezzanine Debt ............................................. S-43
Preferred Equity Investments in Borrowers
and Affiliates ........................................... S-43
Weighted Average Remaining Term to
Maturity or Anticipated Repayment Date
for Mortgage Loans Secured by Various
Property Types ........................................... S-44
<CAPTION>
PAGE
-----
<S> <C>
Amortization Characteristics of the Notes.. S-48
The Common Equity Loans .................................... S-53
Security for the Mortgage Loans ............................ S-58
Premium Loans .............................................. S-61
Total Pari Passu Loans ..................................... S-63
Credit Tenant Loans ........................................ S-65
Amortization Characteristics of the Notes.. S-70
General Mortgage Loan Characteristics ...................... S-93
Range of Debt Service Coverage Ratios.. S-97
Range of Loan-to-Value Ratios .............................. S-97
Range of Loan-to-Value Ratios at Earlier
of Anticipated Repayment Date or
Maturity ................................................ S-97
Mortgaged Properties by State .............................. S-98
Range of Years Built ....................................... S-99
Cut-off Date Principal Balance by Property
Type .................................................... S-100
Range of Cut-off Date Principal Balances.. S-101
Range of Anticipated Remaining Terms.. S-101
Range of Months Remaining to Maturity.. S-101
Range of Anticipated Years of Repayment.. S-102
Range of Mortgage Rates .................................... S-102
Range of Remaining Lock-out Periods ........................ S-103
Percentage of Initial Certificate Balance
Outstanding at the Respective CPR for
the Class A-1 Certificates .............................. S-123
Percentage of Initial Certificate Balance
Outstanding at the Respective CPR for
the Class A-2 Certificates .............................. S-124
</TABLE>
S-5
<PAGE>
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Percentage of Initial Certificate Balance
Outstanding at the Respective CPR for
the Class A-3 Certificates .............................. S-124
Percentage of Initial Certificate Balance
Outstanding at the Respective CPR for
the Class B Certificates ................................ S-125
Percentage of Initial Certificate Balance
Outstanding at the Respective CPR for
the Class C Certificates ................................ S-125
Percentage of Initial Certificate Balance
Outstanding at the Respective CPR for
the Class D Certificates ................................ S-126
Percentage of Initial Certificate Balance
Outstanding at the Respective CPR for
the Class E Certificates ................................ S-126
Pre-Tax Yield to Maturity (CBE), Weighted
Average Life, First Principal Payment
Date, Last Principal Payment Date for
the Class A-1 Certificates at the
Specified CPRs .......................................... S-127
Pre-Tax Yield to Maturity (CBE), Weighted
Average Life, First Principal Payment
Date, Last Principal Payment Date for
the Class A-2 Certificates at the
Specified CPRs .......................................... S-128
<CAPTION>
PAGE
-----
<S> <C>
Pre-Tax Yield to Maturity (CBE), Weighted
Average Life, First Principal Payment
Date, Last Principal Payment Date for
the Class A-3 Certificates at the
Specified CPRs .......................................... S-128
Pre-Tax Yield to Maturity (CBE), Weighted
Average Life, First Principal Payment
Date, Last Principal Payment Date for
the Class B Certificates at the Specified
CPRs .................................................... S-129
Pre-Tax Yield to Maturity (CBE), Weighted
Average Life, First Principal Payment
Date, Last Principal Payment Date for
the Class C Certificates at the Specified
CPRs .................................................... S-129
Pre-Tax Yield to Maturity (CBE), Weighted
Average Life, First Principal Payment
Date, Last Principal Payment Date for
the Class D Certificates at the Specified
CPRs .................................................... S-130
Pre-Tax Yield to Maturity (CBE), Weighted
Average Life, First Principal Payment
Date, Last Principal Payment Date for
the Class E Certificates at the Specified
CPRs .................................................... S-130
</TABLE>
INDEX OF ANNEXES
<TABLE>
<CAPTION>
PAGE
------
<S> <C>
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
Structural and Collateral Term Sheet........................ Annex E
Form of Trustee Reports..................................... Annex F
Form of Servicing Reports................................... Annex G
</TABLE>
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.
Approx. CERTIFICATE SUMMARY
Approx. % of
$ of Credit
Total Support
- ------ -------
16.84% 28.50% Class X* Class A-1** $400,000,000 (Aaa/AAA)
39.16% 28.50% $2,374,987,404 Class A-2** $930,000,000 (Aaa/AAA)
15.50% 28.50% (approx.) Class A-3** $368,115,000 (Aaa/AAA)
4.50% 24.00% (Notional) Class B** $106,875,000 (Aa2/AA)
5.50% 18.50% (Aaa/AAAr) Class C** $130,624,000 (A2/A)
5.75% 12.75% Class D** $136,562,000 (Baa2/BBB)
1.50% 11.25% Class E** $35,625,000 (Baa3/BBB-)
2.25% 9.00% Class F* $53,437,000 (Ba1/BB+)
2.50% 6.50% Class G* $59,375,000 (Ba2/BB)
1.00% 5.50% Class H* $23,750,000 (Ba3/BB-)
1.25% 4.25% Class J* $29,687,000 (B1/NR)
1.75% 2.50% Class K* $41,562,000 (B2/NR)
0.75% 1.75% Class L* $17,813,000 (B3/NR)
1.75% NA Class M-1* and $41,561,404 (NR/NR)
Class M-2* (approx. $1,000)
*Certificates Not Offered Hereby
**Offered Certificates
Rating Agencies (Moody's/S&P)
S-7
<PAGE>
<TABLE>
<CAPTION>
WEIGHTED
INITIAL AGGREGATE APPROX. INITIAL AVG.
RATINGS CERTIFICATE BALANCE % OF PASS-THROUGH LIFE(1) PRINCIPAL
CLASS (MOODY'S/S&P) OR NOTIONAL AMOUNT TOTAL DESCRIPTION RATE (YRS) WINDOW(1)
<S> <C> <C> <C> <C> <C>
Offered Certificates
A-1 (Aaa/AAA) $ 400,000,000 16.84% Fixed Rate % 5.58 4/99-12/07
A-2 (Aaa/AAA) $ 930,000,000 39.16% (2) % 10.06 12/07-6/12
A-3 (Aaa/AAA) $ 368,115,000 15.50% (3) % 13.90 6/12-4/13
B (Aa2/AA) $ 106,875,000 4.50% (4) % 14.22 4/13-7/13
C (A2/A) $ 130,624,000 5.50% (5) % 14.37 7/13-8/13
D (Baa2/BBB) $ 136,562,000 5.75% (6) % 14.48 8/13-10/13
E (Baa3/BBB-) $ 35,625,000 1.50% (7) % 14.57 10/13-10/13
Non-Offered Private Certificates(8)
X Aaa/AAAr $ 2,374,987,404 NA Variable Rate IO % (9) 4/99-6/20
F Ba1/BB+ $ 53,437,000 2.25% Fixed Rate % 14.63 10/13-11/13
G Ba2/BB $ 59,375,000 2.50% Fixed Rate % 14.72 11/13-12/13
H Ba3/BB- $ 23,750,000 1.00% Fixed Rate % 14.73 12/13-12/13
J B1/NR $ 29,687,000 1.25% Fixed Rate % 14.77 12/13-1/14
K B2/NR $ 41,562,000 1.75% Fixed Rate % 15.32 1/14-9/15
L B3/NR $ 17,813,000 0.75% Fixed Rate % 17.34 9/15-5/17
M-1 and Not Rated $ 41,562,404 1.75% Fixed Rate % 19.49 5/17-6/20
M-2
</TABLE>
(1) Assuming (i) a 0% CPR (as defined herein under "Prepayment and Yield
Considerations--Weighted Average Life of Offered Certificates"), (ii) each
ARD Loan pays in full on its Anticipated Repayment Date (as defined under
"The Mortgage Loans: Collateral Overview--The Mortgage Pool--General
Characteristics" in this Prospectus Supplement) and (iii) the Mortgage Loan
Assumptions (as defined herein under "Prepayment and Yield
Considerations--Weighted Average Life of the Offered Certificates"). See
"Prepayment and Yield Considerations" in this Prospectus Supplement.
(2) The Pass-Through Rate on the Class A-2 Certificates will be equal to %;
provided, however, that such Pass-Through Rate will not exceed the Weighted
Average Net Mortgage Pass-Through Rate for the related Distribution Date (as
described under "Description of the Offered Certificates--Distributions" in
this Prospectus Supplement).
(3) The Pass-Through Rate on the Class A-3 Certificates will be equal to %;
provided, however, that such Pass-Through Rate will not exceed the Weighted
Average Net Mortgage Pass-Through Rate for the related Distribution Date.
(4) The Pass-Through Rate on the Class B Certificates will be equal to %;
provided, however, that such Pass-Through Rate will not exceed the Weighted
Average Net Mortgage Pass-Through Rate for the related Distribution Date.
(5) The Pass-Through Rate on the Class C Certificates will be equal to %;
provided, however, that such Pass-Through Rate will not exceed the Weighted
Average Net Mortgage Pass-Through Rate for the related Distribution Date.
S-8
<PAGE>
(6) The Pass-Through Rate on the Class D Certificates will be equal to %;
provided, however, that such Pass-Through Rate will not exceed the Weighted
Average Net Mortgage Pass-Through Rate for the related Distribution Date.
(7) The Pass-Through Rate on the Class E Certificates will be equal to %;
provided, however, that such Pass-Through Rate will not exceed the Weighted
Average Net Mortgage Pass-Through Rate for the related Distribution Date.
(8) Not offered by this Prospectus Supplement.
(9) The weighted average life of the Class X Certificates is determined by
(i) multiplying the amount of each allocation in reduction of Notional
Amount 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
Amount referred to in clause (i). Average life data is for illustrative
purposes only, as the Class X Certificates are not entitled to any
distributions of principal and do not have an average life.
S-9
<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 CAREFULLY READ THIS PROSPECTUS
SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS IN FULL. Capitalized terms used and
not otherwise defined in this Prospectus Supplement have the respective meanings
assigned to them in 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........... Asset Securitization Corporation, a Delaware corporation
and a subsidiary of The Capital Company of America LLC, a
Delaware limited liability company ("CCA"). The Depositor
is also affiliated with Nomura Securities International,
Inc. ("NSI"), the Mortgage Loan Sellers and the originators
of the Mortgage Loans. See "The Depositor" in the
Prospectus.
SERVICER............ First Union National Bank, a national banking association
(the "Servicer" or "First Union"). Although the Servicer
may employ agents, including sub-servicers, the Servicer
will remain liable for its servicing obligations under the
Pooling and Servicing Agreement. See "The Pooling and
Servicing Agreement--The Servicer" in this Prospectus
Supplement.
See "Risk Factors and Other Special Considerations--Risks
Related to the Certificates--Servicer or Special Servicer
May Purchase Certificates; Conflicts of Interest," "--Risks
Related to the Mortgage Loans--Risks Related to Conflicts
of Interest" and "The Pooling and Servicing Agreement--The
Servicer" in this Prospectus Supplement.
SPECIAL SERVICER.... Lennar Partners, Inc., a Florida corporation (the "Special
Servicer"). See "Risk Factors and Other Special
Considerations--Risks Related to the Certificates--
Servicer or Special Servicer May Purchase Certificates;
Conflicts of Interest" and "The Pooling and Servicing
Agreement--Special Servicing" in this Prospectus Supplement
and "Description of the Agreements--Special Servicers" 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........ Goldman, Sachs & Co. ("Goldman Sachs"), Lehman Brothers
Inc. ("Lehman"), Donaldson, Lufkin & Jenrette Securities
Corporation ("DLJ") and NSI (collectively with Goldman
Sachs, Lehman and DLJ, the "Underwriters"). Goldman Sachs
and Lehman will act as co-lead managers and joint
bookrunners with respect to the Offered Certificates. See
"Underwriting" in this Prospectus Supplement.
</TABLE>
S-10
<PAGE>
<TABLE>
<S> <C>
THE MORTGAGE LOAN
SELLERS........... CCA and Short-Term Asset Receivable Trust ("START"), a
single purpose Delaware business trust, which is wholly
owned by Nomura Holding America Inc., a Delaware
corporation ("NHA"). CCA and START are collectively
referred to herein as the "Mortgage Loan Sellers." Both of
the Mortgage Loan Sellers are affiliates of NSI and the
Depositor. All of the Mortgage Loans were sold or
contributed to the Depositor as shown on the following
table:
</TABLE>
<TABLE>
<CAPTION>
MORTGAGE LOAN % OF INITIAL NUMBER OF
SELLERS POOL BALANCE MORTGAGE LOANS
---------------- --------------- --------------
<S> <C> <C> <C>
CCA............. 80.9% 218
START........... 19.1% 12
</TABLE>
<TABLE>
<S> <C>
In connection with its sale or contribution of Mortgage
Loans, each Mortgage Loan Seller will make certain
representations and warranties to the Depositor regarding
its respective Mortgage Loans and may be required to
repurchase one or more of its respective Mortgage Loans in
connection with any uncured breach of such a representation
or warranty, as described in this Prospectus Supplement
under "The Pooling and Servicing Agreement--Representations
and Warranties; Repurchase." NHA, THE DIRECT PARENT OF
START AND THE INDIRECT PARENT OF CCA, WILL BE REQUIRED TO
PURCHASE ANY MORTGAGE LOAN THAT START OR CCA IS REQUIRED TO
REPURCHASE BUT FAILS TO REPURCHASE IN CONNECTION WITH A
BREACH OF REPRESENTATIONS AND WARRANTIES.
See "The Mortgage Loan Sellers--Recent Developments"
herein.
ORIGINATORS......... CCA; Nomura Asset Capital Corporation, a Delaware
corporation ("NACC") and an affiliate of CCA, the Depositor
and NSI and Bloomfield Acceptance Company, LLC, a Michigan
limited liability company that is not an affiliate of CCA,
the Depositor or NSI ("Bloomfield," and together with CCA
and NACC, the "Originators").
As of June 26, 1998, NACC 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. NACC continues to be the
100% parent of CCA. Solely for purposes of this Prospectus
Supplement, references to "NACC/CCA" mean "NACC" prior to
June 26, 1998 and "CCA" on and after June 26, 1998.
All of the Mortgage Loans were originated by NACC/CCA or
Bloomfield, as shown in the following table:
</TABLE>
<TABLE>
<CAPTION>
% OF INITIAL NUMBER OF
ORIGINATORS POOL BALANCE MORTGAGE LOANS
------------- --------------- --------------
<S> <C> <C> <C>
NACC/CCA..... 99.7% 227
Bloomfield... 0.3% 3
</TABLE>
S-11
<PAGE>
IMPORTANT DATES AND PERIODS
<TABLE>
<S> <C>
CUT-OFF DATE........ March 11, 1999.
CLOSING DATE........ On or about March 23, 1999.
DISTRIBUTION DATE... The 17th day of each month or, if the 17th day is not a
Business Day, the following Business Day. The first
Distribution Date will be April 19, 1999.
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. Each Interest
Accrual Period is assumed to consist of 30 days.
</TABLE>
<TABLE>
<CAPTION>
ASSUMED FINAL
DISTRIBUTION ASSUMED FINAL
DATE.............. CLASS DISTRIBUTION DATE
------------------------------------------ -------------------
<S> <C> <C>
Class A-1
December 17, 2007
Class A-2
June 17, 2012
Class A-3
April 17, 2013
Class B
July 17, 2013
Class C
August 17, 2013
Class D
October 17, 2013
Class E
October 17, 2013
</TABLE>
<TABLE>
<S> <C>
The "Assumed Final Distribution Date" with respect to any
Class of Certificates is the Distribution Date on which the
final payment of principal would occur for such Class of
Certificates assuming (i) a 0% CPR (as defined herein under
"Prepayment and Yield Considerations--Weighted Average Life
of Offered Certificates"); (ii) each ARD Loan pays in full
on its respective Anticipated Repayment Date; and (iii) the
Mortgage Loan Assumptions (as defined herein under
"Prepayment and Yield Considerations--Weighted Average Life
of Offered Certificates"). The actual performance and
experience of the Mortgage Loans will likely differ from
such assumptions. See "Prepayment and Yield Considerations"
herein.
RATED FINAL
DISTRIBUTION
DATE.............. January 17, 2032.
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 of 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 Mortgage Loans secured by the
Accor Credit Tenant Property, the Dairy Mart Credit Tenant
Properties and the Dictaphone Credit Tenant Property, each
of which has a Due Date on the 1st day of the month, the
Due Date is the 11th day of the month (or if such 1st day
or 11th day is not a business day, either the following
business day or the first preceding business day).
</TABLE>
S-12
<PAGE>
OVERVIEW OF THE CERTIFICATES
<TABLE>
<S> <C>
THE OFFERED
CERTIFICATES--
CERTIFICATE
BALANCES AND
PASS-THROUGH
RATES............. The Depositor is offering the following seven classes
(each, a "Class") of Commercial Mortgage Asset Trust
("CMAT") Commercial Mortgage Pass- Through Certificates
(collectively, the "Offered Certificates") to you as part
of Series 1999-C1. Each Class of Offered Certificates will
have the approximate aggregate initial Certificate Balance
as set forth below, subject to an aggregate variance of
plus or minus 5%, and will accrue interest at an annual
rate (the "Pass-Through Rate") as set forth below:
</TABLE>
<TABLE>
<CAPTION>
APPROXIMATE INITIAL CERTIFICATE PASS-THROUGH
CLASS BALANCE OR NOTIONAL AMOUNT RATE
------------- ------------------------------- -------------
<S> <C> <C>
Class A-1.... $ 400,000,000 %
Class A-2.... $ 930,000,000 (1)
Class A-3.... $ 368,115,000 (2)
Class B...... $ 106,875,000 (3)
Class C...... $ 130,624,000 (4)
Class D...... $ 136,562,000 (5)
Class E...... $ 35,625,000 (6)
</TABLE>
----------------------------------------------
(1) The Pass-Through Rate on the Class A-2
Certificates will be equal to %; provided,
however, that such Pass-Through Rate will not
exceed the Weighted Average Net Mortgage Pass-
Through Rate for the related Distribution Date
as described under "Description of the Offered
Certificates--Distributions" in this Prospectus
Supplement.
(2) The Pass-Through Rate on the Class A-3
Certificates will be equal to %; provided,
however, that such Pass-Through Rate will not
exceed the Weighted Average Net Mortgage Pass-
Through Rate for the related Distribution Date.
(3) The Pass-Through Rate for the Class B
Certificates will be equal to %; provided,
however, that such Pass-Through Rate will not
exceed the Weighted Average Net Mortgage Pass-
Through Rate for the related Distribution Date.
(4) The Pass-Through Rate for the Class C
Certificates will be equal to %; provided,
however, that such Pass-Through Rate will not
exceed the Weighted Average Net Mortgage Pass-
Through Rate for the related Distribution Date.
(5) The Pass-Through Rate for the Class D
Certificates will be equal to %; provided,
however, that such Pass-Through Rate will not
exceed the Weighted Average Net Mortgage Pass-
Through Rate for the related Distribution Date.
(6) The Pass-Through Rate for the Class E
Certificates will be equal to %; provided,
however, that such Pass-Through Rate will not
exceed the Weighted Average Net Mortgage Pass-
Through Rate for the related Distribution Date.
S-13
<PAGE>
<TABLE>
<S> <C>
THE PRIVATE
CERTIFICATES--
CERTIFICATE
BALANCES AND
PASS-THROUGH
RATES............. In addition to the Offered Certificates, the Commercial
Mortgage Pass-Through Certificates Series 1999-C1 will also
include the following 11 Classes of Certificates
(collectively, the "Private Certificates" and, together
with the Offered Certificates, the "Certificates"). None of
the Private Certificates is being offered to you by this
Prospectus Supplement. The Private Certificates will have
the approximate aggregate initial Certificate Balance or
Notional Amount set forth below, subject to a variance of
plus or minus 5%, and will accrue interest at the
Pass-Through Rates as set forth below.
</TABLE>
<TABLE>
<CAPTION>
APPROXIMATE INITIAL
CERTIFICATE BALANCE INITIAL
CLASS OR NOTIONAL AMOUNT PASS-THROUGH RATE
---------------- ------------------- -----------------
<S> <C> <C> <C>
Class X(1)(2)... $ 2,374,987,404 %
Class F......... $ 53,437,000 %
Class G......... $ 59,375,000 %
Class H......... $ 23,750,000 %
Class J......... $ 29,687,000 %
Class K......... $ 41,562,000 %
Class L......... $ 17,813,000 %
Class M-1....... $ 41,561,404 %
Class M-2....... $ 1,000 %
Class R......... (3) (3)
Class LR........ (3) (3)
(1) The notional amount ("Notional Amount") of the Class X
Certificates will equal the sum of the Certificate
Balances of the Class A-1, Class A-2, Class A-3, Class
B, Class C, Class D, Class E, Class F, Class G, Class
H, Class J, Class K, Class L, Class M-1 and Class M-2
Certificates (collectively, the "Sequential
Certificates") outstanding from time to time.
(2) The Pass-Through Rate for the Class X Certificates is
the rate for the Distribution Date occurring in April
1999. 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 equal the excess, if any, of the weighted
average of the interest rates on the Mortgage Loans
(net of the rates applicable to the calculations of
certain fees and other amounts as described in this
Prospectus Supplement) over the weighted average of
the Pass-Through Rates of the Sequential Certificates.
(3) The Class R and Class LR Certificates will not have a
Certificate Balance, a Notional Amount or a
Pass-Through Rate.
</TABLE>
<TABLE>
<S> <C>
DENOMINATIONS....... The Offered Certificates will be issuable in book-entry
form, in minimum denominations of $10,000 initial
Certificate Principal Amount and integral multiples of $1
in excess thereof.
CLEARANCE AND
SETTLEMENT........ You will 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 or the Trustee, with the consent
of the Underwriters, may elect to terminate the book-entry
system through DTC with respect to all or any portion of
any Class of the Offered Certificates.
</TABLE>
S-14
<PAGE>
<TABLE>
<S> <C>
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.
OPTIONAL
TERMINATION....... Certain specified persons may terminate the Trust Fund 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............ The Trustee will elect to treat designated portions of the
Trust Fund, exclusive of the Excess Interest and the
Default Interest (each as defined in this Prospectus
Supplement), 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 any REO Properties, and the "Upper-Tier
REMIC," which holds interests in the Lower-Tier REMIC. The
Offered Certificates will represent "regular interests" in
the Upper-Tier REMIC and (other than in the case of the
Class A-1 Certificates) a right to receive distributions of
Excess Interest. The Class R Certificate will be the
residual interest in the Upper-Tier REMIC, and the
Class LR Certificate will be 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 on the
Offered Certificates in accordance with the accrual method
of accounting even if you are otherwise on the cash method.
It is anticipated that the Class Certificates
will and the Class Certificates will not be
issued with original issue discount for federal income tax
purposes.
For a further 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--REMIC
Certificates" in the Prospectus.
Although not entirely free from doubt, it is anticipated
that any Prepayment Premiums allocable to your Offered
Certificates, if any, will be ordinary income to you, as a
Certificateholder, as such amounts accrue to the Trust
Fund. See "Description of the Offered
Certificates--Distributions" in this Prospectus Supplement.
ERISA............... Subject to important considerations described under
"Certain ERISA Considerations" in this Prospectus
Supplement, if you are the fiduciary of any retirement plan
or other employee benefit plan or arrangement subject to
ERISA or Section 4975 of the Code, generally you can buy
the following Classes of Offered Certificates:
o Class A-1
o Class A-2
o Class A-3
However, transfers of the Offered Certificates to any such
plan or arrangement are subject to the restrictions
described in this Prospectus Supplement under "Certain
ERISA Considerations." A fiduciary of any retirement plan
or other employee benefit plan or arrangement should review
carefully with its legal advisors whether the purchase or
holding of any Class of Offered Certificates could give
rise to a transaction that is not permitted under
applicable law or whether there exists any statutory or
administrative exemption applicable to an investment. This
Prospectus Supplement describes several exemptions that may
be available, including the prohibited transaction
exemption granted by the United States Department of Labor
to Goldman Sachs, Lehman, DLJ and NSI described in this
Prospectus Supplement under "Certain ERISA
</TABLE>
S-15
<PAGE>
<TABLE>
<S> <C>
Considerations." If you use insurance company general
account funds to purchase Offered Certificates, you should
consider the availability of Section III of Prohibited
Transaction Class Exemption 95-60 (60 Fed. Reg. 35925,
July 12, 1995) issued by the U.S. Department of Labor. See
"Certain ERISA Considerations" and "Description of the
Offered Certificates--Transfers and Exchanges; Transfer
Restrictions" in this Prospectus Supplement and "ERISA
Considerations" in the Prospectus.
SMMEA............... The following Classes of Offered Certificates will
constitute "mortgage related securities" within the meaning
of the Secondary Mortgage Market Enhancement Act of 1984,
as amended ("SMMEA"), for so long as such Certificates
continue to be rated "Aa2/AA" or higher:
o Class A-1
o Class A-2
o Class A-3
o Class B
See "Legal Investment" in this Prospectus Supplement.
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
o Loan Payoff Notification Report
The Distribution Date Statement is 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." Forms of the reports listed
above are included as Annexes F and G to this Prospectus
Supplement.
A copy of the Pooling and Servicing Agreement will be filed
under Form 8-K ("Form 8-K") with the 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 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, to the extent available, 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.
</TABLE>
S-16
<PAGE>
<TABLE>
<S> <C>
DEAL
INFORMATION/ANALYTICS... Certain information concerning the Mortgage Loans and the
Offered Certificates will be available following the
Closing Date from the following services:
o Bloomberg, L.P.
o the Trustee's website at www.lnbabs.com
o the Servicer's website at www.firstunion.com
RATINGS............. It is a condition to the issuance of the Offered
Certificates that they be rated as follows:
RATINGS
CLASS (MOODY'S/S&P)
----- -------------
A-1....................................... Aaa/AAA
A-2....................................... Aaa/AAA
A-3....................................... Aaa/AAA
B......................................... Aa2/AA
C......................................... A2/A
D......................................... Baa2/BBB
E......................................... Baa3/BBB-
</TABLE>
<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
or Excess Interest. See "Description of the Mortgage
Pool--Certain Terms and Conditions of the Mortgage Loans"
and "Description of the Offered Certificates--
Distributions" in this Prospectus Supplement.
For a description of the limitations of the ratings of the
Offered Certificates, see "Rating" in this Prospectus
Supplement.
A security rating is not a recommendation to buy, sell or
hold securities and may be subject to revision or
withdrawal at any time by the assigning rating
organization. Any such revision, if negative, or withdrawal
of a rating could have a material adverse effect on the
value and marketability of 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>
THE CERTIFICATES: STRUCTURAL SUMMARY
DISTRIBUTIONS
<TABLE>
<S> <C>
A. GENERAL........ Distributions of interest and principal will be made to the
holders of the various Classes of Certificates entitled
thereto, sequentially based upon their relative seniority
as generally depicted in the chart under "Subordination"
below. See "Description of the Offered
Certificates--Distributions--Payment Priorities" in this
Prospectus Supplement.
B. DISTRIBUTIONS
OF INTEREST.... Each Class of Certificates (other than the Class R and
Class LR Certificates) will bear interest. In the case of
each such Class, such interest will accrue during each such
Interest Accrual Period based upon:
o the Pass-Through Rate for such Class for the related
Distribution Date;
</TABLE>
S-17
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<S> <C>
o the Certificate Balance or Notional Amount, as the case
may be, of such Class as of the commencement of such
Interest Accrual Period (reductions in a Certificate
Balance that occur on any Distribution Date are deemed
to occur as of the first day of such Interest Accrual
Period for purposes of the accrual of interest); and
o the assumption that each year consists of twelve 30-day
months.
On each Distribution Date, subject to available funds and
the payment priorities described in this Prospectus
Supplement, you will be entitled to receive your
proportionate share of all unpaid distributable interest
accrued in respect of your Class of Offered Certificates
through the end of the related Interest Accrual Period.
See "Description of the Offered Certificates--
Distributions--Default Interest,"
"--Distributions--Excess Interest,"
"--Distributions--Payment Priorities" and "--Realized
Losses" in this Prospectus Supplement.
C. DISTRIBUTIONS OF
PRINCIPAL......... In general, subject to available funds and the payment
priorities described in this Prospectus Supplement, the
Holders of each of the Class A-1, Class A-2, Class A-3,
Class B, Class C, Class D, Class E, Class F, Class G,
Class H, Class J, Class K, Class L, Class M-1 and
Class M-2 Certificates (collectively, the "Sequential
Certificates") will be entitled to receive an aggregate
amount of principal over time equal to the related
Certificate Balance. However, the Pooling and Servicing
Agreement will require the Trustee to make such
distributions of principal in a specified sequential order
such that:
o No distributions of principal will be made to the
Holders of any Class of Private Certificates until the
Certificate Balance of each Class of Offered
Certificates is reduced to zero.
o No distributions of principal will be made to the
Holders of the Class B, Class C, Class D or Class E
Certificates until, in the case of each such Class, the
Certificate Balance of each more senior Class of Offered
Certificates is reduced to zero.
o No distributions of principal will be made to the
Holders of the Class A-2 or Class A-3 Certificates until
either:
(i) the Certificate Balance of the Class A-1 Certificates
is reduced to zero and, in the case of the Class A-3
Certificates, the Certificate Balance of the Class
A-2 Certificates is reduced to zero; or
(ii) because of losses on the Mortgage Loans and/or
certain default-related or other unanticipated
expenses of the Trust, the Certificate Balances of
the Class B, Class C, Class D, Class E, Class F,
Class G, Class H, Class J, Class K, Class L, Class
M-1 and Class M-2 Certificates (collectively, the
"Subordinate Sequential Certificates") have been
reduced to zero (in which case, any distributions of
principal on the Class A-1, Class A-2 and Class A-3
Certificates will be made on a pro rata basis).
o In general, unless and until the Certificate Balances of
the Classes of the Subordinate Sequential Certificates
have been reduced to zero because of losses on the
Mortgage Loans and/or certain default-related or other
unanticipated expenses of the Trust Fund, all payments
(or advances in lieu thereof) and other collections of
principal received in respect of the Mortgage Loans will
be applied to make distributions of principal on the
Class A-1 Certificates prior to being applied to making
any distributions of principal on the Class A-2
Certificates.
</TABLE>
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o In general, unless and until the Certificate Balances of
the Classes of the Subordinate Sequential Certificates
have been reduced to zero because of losses on the
Mortgage Loans and/or certain default-related or other
unanticipated expenses of the Trust Fund, all payments
(or advances in lieu thereof) and other collections of
principal received in respect of the Mortgage Loans will
be applied to make distributions of principal on the
Class A-1 and Class A-2 Certificates prior to being
applied to making any distributions of principal on the
Class A-3 Certificates.
The aggregate distributions of principal to be made on the
respective Classes of Sequential Certificates on any
Distribution Date will be a function of:
o the amounts of all scheduled payments of principal due
(or, with respect to any delinquent Balloon Payment, the
Assumed Scheduled Payment deemed due) on the Mortgage
Loans during the related Collection Period that are
either received as of such Collection Period or advanced
by the Servicer, and
o the amounts of any prepayments and other unscheduled
collections of previously unadvanced principal in
respect of the Mortgage Loans that are received during
the related Collection Period.
See "Description of the Offered Certificates--
Distributions--Payment Priorities" in this Prospectus
Supplement.
D. DISTRIBUTIONS OF
EXCESS INTEREST.. Any interest collected on an ARD Loan after its Anticipated
Repayment Date in excess of interest at the Mortgage Rate
for such loan will be distributed to the Holders of the
Classes of Sequential Certificates (other than the
Class A-1 Certificates) pro rata in accordance with the
initial Certificate Balances of such Classes. Pursuant to
the terms of each ARD Loan, interest in excess of interest
at the Mortgage Rate for each such loan is not collected
until all other amounts due under such ARD Loan have been
paid in full. See "Description of the Offered
Certificates--Distributions--Excess Interest" in this
Prospectus Supplement.
E. DISTRIBUTIONS OF
PREPAYMENT
PREMIUMS......... Any prepayment premium and/or yield maintenance charge
(including, in the case of any Premium Loan, the
unamortized portion of the premium as described under
"Description of the Mortgage Pool--Premium Loans" in this
Prospectus Supplement) collected in respect of a Mortgage
Loan will be distributed, in the amounts and priorities
described in this Prospectus Supplement, to the Holders of
one or more of the Class X, Class A-1, Class A-2 and Class
A-3 Certificates. The holders of the Class A-1, Class A-2,
Class A-3 and Class X Certificates will not be entitled to
receive any prepayment premiums after the Certificate
Balances or Notional Amount thereof have been reduced to
zero. Any prepayment premiums remaining following the
distributions described above shall be distributed to
holders of the Private Certificates in accordance with the
Pooling and Servicing Agreement. See "Description of the
Offered Certificates--Distributions--Prepayment Premiums"
in this Prospectus Supplement. However, because all of the
Mortgage Loans are locked out from prepayment, it is
unlikely that any prepayment premiums or yield maintenance
charges will be received by the Trust Fund.
</TABLE>
S-19
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<S> <C>
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.
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.
---------------------------------------
| Class A-1, Class A-2, Class A-3 |
| and Class X |
---------------------------------------
|
-----------
| Class B |
-----------
|
-----------
| Class C |
-----------
|
-----------
| Class D |
-----------
|
-----------
| Class E |
-----------
|
---------------------------------------------
| Certain Classes of Private Certificates |
---------------------------------------------
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 Fund;
(iv) shortfalls resulting from a reduction of a Mortgage
Loan's interest rate by a bankruptcy court;
(v) shortfalls resulting from other unanticipated or
default-related expenses of the Trust Fund incurred
with respect to the Mortgage Loans; or
(vi) shortfalls in Mortgage Loan interest as a result of
the timing of prepayments on Mortgage Loans (net of,
in the case of non-Specially Serviced Mortgaged
Loans, the Servicer's servicing fee payable on the
</TABLE>
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related Distribution Date and certain other items
allocable to cover such shortfalls).
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 (and Assumed Scheduled Payments in the case of
defaulted Balloon Loans) 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 a P&I Advance only if it
determines that such advance will be recoverable from the
proceeds of the related Mortgage Loan. With respect to the
CMAT Pari Passu Notes (as described below under "Total Pari
Passu Loans"), the Servicer will only be required to
advance delinquent Monthly Payments due on the Notes
included in the Trust Fund.
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.
THE MORTGAGE LOANS: COLLATERAL OVERVIEW
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 the Notes);
o Annex B (Characteristics of the Mortgaged Properties);
and
o Annex C (Characteristics of the Premium Loans).
</TABLE>
<TABLE>
<S> <C> <C>
A. GENERAL
CHARACTERISTICS(1)... Initial Pool Balance(2)..................... $2,374,987,404
Number of Mortgage Loans.................... 230
% of Initial Pool Balance Represented by
Largest Mortgage Loan..................... 6.6%
Number of Mortgaged Properties.............. 268
Number of Notes(3).......................... 234
Average Cut-off Date Principal Balance...... $10,326,032
Weighted Average Mortgage Rate.............. 7.701%
Weighted Average Remaining Term to the
Earlier of Maturity or Anticipated
Repayment Date............................ 150 mos.
</TABLE>
S-21
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<S> <C> <C>
Number of ARD Notes and % of Initial Pool
Balance Represented by ARD Notes(4)....... 209/82.3%
Number of Fully Amortizing Notes (other than
ARD Notes) and % of Initial Pool Balance
Represented by Fully Amortizing Notes
(other than ARD Notes).................... 7/1.6%
Number of Balloon Notes and % of Initial
Pool Balance Represented by Balloon
Notes..................................... 18/16.1%
Number of Premium Loans and % of Initial
Pool Balance Represented by Premium
Loans..................................... 52/38.9%
Number of Credit Tenant Loans and % of
Initial Pool Balance Represented by Credit
Tenant Loans.............................. 17/5.2%
Number of CMAT Pari Passu Notes and % of
Initial Pool Balance Represented by CMAT
Pari Passu Notes.......................... 14/22.4%
Number of Lead Lender CMAT Pari Passu
Notes(5) and % of Initial Pool Balance
Represented by Lead Lender CMAT Pari Passu
Notes..................................... 6/2.9%
Number of Co-Lender CMAT Pari Passu Notes(6)
and % of Initial Pool Balance Represented
by Co-Lender CMAT Pari Passu Notes........ 8/19.5%
Weighted Average Original Premium of all
Mortgage Loans............................ 3.3%
Weighted Average DSCR(7)(8)................. 1.49
Weighted Average LTV as of Cut-off
Date(8)................................... 68.1%
Weighted Average PTV as of Cut-off
Date(8)(9)................................ 70.4%
Weighted Average Anticipated Repayment Date
LTV/PTV(8)................................ 55.4%
</TABLE>
----------------------------------------------
(1) Unless otherwise indicated, 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) Includes CMAT Pari Passu Notes (as defined below
under "--Total Pari Passu Loans") and Special
Notes (as defined in this Prospectus Supplement
under "Description of the Mortgage Pool--Special
Notes").
(4) An "ARD Note" is a Note evidencing an ARD Loan
that substantially amortizes by its stated
maturity date (the "Maturity Date"), but
provides for an "Anticipated Repayment Date"
following which, if the borrower does not prepay
the Mortgage Loan in full on or prior to such
date, the interest rate that accrues on such ARD
Loan will increase and the borrower will be
required to deposit excess cash flow from the
Mortgaged Property into a lock box account
controlled by the Servicer and apply such cash
flow to pay principal on the ARD Loan. See
"Description of the Mortgage Pool--Certain Terms
and Conditions of the Mortgage Loans--Excess
Interest" in this Prospectus Supplement.
(5) "Lead Lender CMAT Pari Passu Notes" are CMAT
Pari Passu Notes with respect to which the
Trustee will act as lead lender under the terms
of the related co-lender agreement for the Total
Pari Passu Loan.
(6) "Co-Lender CMAT Pari Passu Notes" are CMAT Pari
Passu Notes with respect to which the trustee of
the related CCA-CMBS Transaction will act as
lead lender under the terms of the related
co-lender agreement for the Total Pari Passu
Loan.
(7) 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").
(8) Credit Tenant Loans are excluded from
calculation.
(9) 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, if any, as of the
Cut-off Date, divided by the Appraised Value of
the related Mortgaged Property. See "Description
of the Mortgage Pool--Premium Loans" in this
Prospectus Supplement.
S-22
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B. RESERVES....... Capital Replacement and Furniture, Fixture and Equipment
("FF&E") Reserves. A licensed engineer inspected each
Mortgaged Property (other than the Credit Tenant
Properties) and such engineer estimated the annual amount
that will be required to maintain such Mortgaged Property
on an ongoing 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.
Deferred Maintenance Reserves. An engineer also estimated
the amount required to correct any deferred maintenance for
each Mortgaged Property (other than Credit Tenant
Properties). The Originator generally required the related
borrower to post reserves of 100% to 125% of the engineer's
recommended amount if the work was not completed prior to
the closing of the Mortgage Loan unless the engineer's
recommended amount was considered insignificant by the
Originator.
Tenant Improvement and Leasing Commission Reserves. The
Originator required reserves for tenant improvement and
leasing commissions on 59.1% of the Retail Properties,
66.7% of the Office Properties and 75.9% of the Industrial
Properties (each by Cut-off Date Principal Balance). Such
reserves were either reserved at closing, required on an
ongoing 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 98.7% of the
Mortgage Loans, excluding Credit Tenant Loans (by Cut-off
Date Principal Balance) require reserves for real estate
taxes.
Insurance Reserves. Approximately 98.7% of the Mortgage
Loans, excluding Credit Tenant Leases (by Cut-off Date
Principal Balance) require reserves for insurance.
Seasonality Reserves. Certain of the Mortgage Loans
secured by hotels have seasonality reserves which serve to
capture revenues during peak periods of occupancy, which
revenues will be available to pay debt service during
slower periods.
C. LOCK BOXES....... 70.5% of the Mortgage Loans (by Cut-off Date Principal
Balance) have hard lock boxes. 9.0% of the Mortgage Loans
(by Cut-off Date Principal Balance) have soft lock boxes.
A hard lock box is one under which the tenants at a
Mortgaged Property deposit rents directly into an account
controlled by the lender. The hard lock boxes in place with
respect to certain Mortgage Loans specify that amounts
deposited therein are remitted to the related borrowers on
a daily basis until certain trigger events have occurred.
Such trigger events include, generally, among other things,
that an event of default under the related Mortgage Loan
has occurred or a certain percentage of rents has not been
remitted to the hard lock box by the tenants of the related
Mortgaged Property. The operation of such trigger events
may result in amounts being remitted to borrowers during a
Collection Period preceding the occurrence or discovery of
a trigger event that would not have been remitted had daily
remittances to the borrower not been permitted. The
occurrence of the Anticipated Repayment Date, if any, under
the ARD Loans is a trigger event under the related hard
lock boxes, after which the related borrowers will not be
entitled to daily remittances therefrom. A soft lock box is
one under which the
</TABLE>
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borrower or property manager at a Mortgaged Property
receives rents from tenants and then deposits such rents
into an account controlled by the lender. 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 "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 in this Prospectus
Supplement with respect to the Mortgage Loans is
provided on an approximate basis.
o Certain statistical information set forth in this
Prospectus Supplement 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.
o The 17 Credit Tenant Loans (as defined in this
Prospectus Supplement under "Description of the Mortgage
Pool--Credit Tenant Loans") were excluded from the
calculation of Weighted Average DSCR.
o The Credit Tenant Loans were excluded from the
aggregation of LTV and PTV in the LTV Ratio Table and
the PTV Ratio Table, but are instead included in a
separate row on such tables.
o The DSCR for any Dual Amortization Loan which is
included in the "Debt Service Coverage Ratios" table
below is based on the longer amortization term for such
Dual Amortization Loan. See "Risk Factors and Other
Special Considerations--Risks Related to the
Certificates--Risks Associated with Dual Amortization
Loans" in this Prospectus Supplement.
See "Description of the Mortgage Pool--Changes in Mortgage
Pool Characteristics" in this Prospectus Supplement.
</TABLE>
<TABLE>
<CAPTION>
E. CUT-OFF DATE NUMBER OF
PRINCIPAL RANGE OF CUT-OFF DATE % OF INITIAL MORTGAGE
BALANCES........ PRINCIPAL BALANCES POOL BALANCE LOANS
------------------------- ------------ ------------
<S> <C> <C> <C>
Less than $2,500,000..... 4.4% 67
$2,500,000-4,999,999..... 11.3% 73
$5,000,000-7,499,999..... 8.1% 30
$7,500,000-9,999,999..... 3.2% 9
$10,000,000-19,999,999... 12.4% 23
$20,000,000-29,999,999... 9.4% 9
$30,000,000-39,999,999... 11.6% 8
$40,000,000-59,999,999... 7.7% 4
$60,000,000-79,999,999... 6.2% 2
$80,000,000-99,999,999... 7.9% 2
$100,000,000-156,000,000... 17.7% 3
</TABLE>
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<CAPTION>
F. SIGNIFICANT NUMBER OF
STATE % OF INITIAL MORTGAGED
CONCENTRATION... STATE POOL BALANCE PROPERTIES
------------------------- ------------ ------------
<S> <C> <C> <C>
California............... 19.2% 36
Michigan................. 11.3% 26
New York................. 8.1% 11
Virginia................. 7.7% 20
Illinois................. 6.4% 16
Ohio..................... 5.1% 15
</TABLE>
<TABLE>
<CAPTION>
G. DEBT SERVICE
COVERAGE RATIOS NUMBER OF
(AS OF THE % OF INITIAL MORTGAGE
CUT-OFF DATE)... DSCR(1) POOL BALANCE LOANS
------------------------- ------------ ------------
<S> <C> <C> <C>
1.000-1.099.............. 0.2% 1
1.100-1.199.............. 7.6% 12
1.200-1.299.............. 29.4% 56
1.300-1.399.............. 18.6% 45
1.400-1.499.............. 7.6% 36
1.500-1.599.............. 6.4% 18
1.600-1.699.............. 3.4% 14
1.700-1.799.............. 10.4% 14
1.800-1.899.............. 1.0% 5
1.900-1.999.............. 7.1% 5
2.000-2.099.............. 0.2% 2
Greater than 2.100....... 3.2% 5
CTLs..................... 5.2% 17
</TABLE>
<TABLE>
<S> <C>
------------------------
(1) The 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").
</TABLE>
<TABLE>
<CAPTION>
H. LTV RATIOS (AS NUMBER OF
OF THE CUT-OFF RANGE OF LOAN-TO-VALUE % OF INITIAL MORTGAGE
DATE)........... RATIOS(1) POOL BALANCE LOANS
------------------------- ------------ ------------
<S> <C> <C> <C>
Less than 40.00%......... 0.3% 2
40.00%-49.99%............ 2.6% 9
50.00%-59.99%............ 11.1% 27
60.00%-64.99%............ 15.8% 32
65.00%-69.99%............ 28.8% 49
70.00%-74.99%............ 21.3% 45
75.00%-79.99%............ 12.1% 42
80.00%-89.99%............ 1.8% 6
90.00%-94.99%............ 1.1% 1
CTLs..................... 5.2% 17
</TABLE>
<TABLE>
<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.
</TABLE>
S-25
<PAGE>
<TABLE>
<CAPTION>
I. PTV RATIOS (AS RANGE OF NUMBER OF
OF THE CUT-OFF PROCEEDS-TO-VALUE % OF INITIAL MORTGAGE
DATE).............. RATIOS(1) POOL BALANCE LOANS
------------------------- ------------ ------------
<S> <C> <C> <C>
Less than 40.00%......... 0.3% 2
40.00%-49.99%............ 1.0% 8
50.00%-59.99%............ 8.0% 25
60.00%-69.99%............ 35.8% 65
70.00%-79.99%............ 43.0% 105
80.00%-90.99%............ 6.7% 8
CTLs..................... 5.2% 17
</TABLE>
<TABLE>
<S> <C>
------------------------
(1) The "Proceeds-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.
</TABLE>
<TABLE>
<CAPTION>
J. MORTGAGE LOANS NUMBER OF
BY PROPERTY % OF INITIAL MORTGAGED
TYPE............ PROPERTY TYPE(1) POOL BALANCE PROPERTIES
------------------------- ------------ ------------
<S> <C> <C> <C>
Retail................... 39.6% 88
Office................... 26.1% 60
Multifamily.............. 14.3% 55
Hotel.................... 8.0% 33
Industrial............... 4.1% 15
Factory Outlet Centers... 4.1% 5
Health Club.............. 2.8% 2
Mobile Home.............. 0.6% 8
Healthcare............... 0.4% 2
</TABLE>
<TABLE>
<S> <C>
------------------------
(1) Credit Tenant Loans are included within the
appropriate property type.
</TABLE>
<TABLE>
<CAPTION>
K. MATURITY DATE OR
ANTICIPATED
REPAYMENT DATE % OF INITIAL NUMBER OF
BY YEAR......... YEAR(1) POOL BALANCE NOTES
------------------------- ------------ ------------
<S> <C> <C> <C>
2005..................... 6.6% 1
2007..................... 0.4% 1
2008..................... 17.2% 41
2009..................... 15.2% 40
2010..................... 3.4% 1
2011..................... 0.2% 4
2012..................... 4.4% 3
2013..................... 44.6% 111
2014..................... 2.1% 9
2015..................... 0.5% 1
2017..................... 0.1% 1
2018..................... 4.1% 10
2019..................... 0.5% 7
2020..................... 0.7% 4
</TABLE>
<TABLE>
<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.
</TABLE>
<TABLE>
<S> <C>
L. DELINQUENCY
STATUS AS OF
THE CUT-OFF
DATE........... As of the Cut-off Date there have been no delinquencies of
30 days or more with respect to any Mortgage Loans since
origination.
</TABLE>
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<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.
</TABLE>
<TABLE>
<CAPTION>
% OF INITIAL NUMBER OF
POOL MORTGAGED
INTEREST OF BORROWER BALANCE(1) PROPERTIES
-------------------------- ------------- ---------
<S> <C> <C> <C>
Fee Simple Estate(2)...... 95.6% 257
Leasehold Estate(3)....... 4.4% 11
</TABLE>
<TABLE>
<S> <C>
------------------------
(1) Based on the Cut-off Date Principal Balance of the
Mortgage Loan or, for any Pool Loan, the Cut-off Date
Allocated Loan Amount of the related Mortgaged
Property.
(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.
</TABLE>
<TABLE>
<S> <C>
PREMIUM LOANS....... 52 Mortgage Loans, which represent 38.9% of the Initial
Pool Balance, are "Premium Loans." 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 such premium,
the borrower agreed to pay an above market interest rate on
the Mortgage Loan. In the event of an involuntary
prepayment, the borrower is required to repay the
unamortized portion of the premium as an obligation secured
by the related mortgage separate from any obligation of the
borrower to pay a yield maintenance premium. The
unamortized portion of the premium, while subordinate in
repayment to principal and interest on the Mortgage Loan,
is secured by a first lien on the respective Mortgaged
Property. See "Risk Factors and Other Special
Considerations--Risks Related to the Mortgage Loans--Risks
Relating to Premium Loans," "Description of the Mortgage
Pool--Premium Loans" and Annex C in this Prospectus
Supplement.
TOTAL PARI PASSU
LOANS............. 13 Mortgage Loans, representing 22.4% of the Initial Pool
Balance, each consist of one of two or more pari passu
first priority mortgage loans represented by one of two or
more notes (each such note owned by the Trust Fund being
referred to in this Prospectus Supplement as a "CMAT Pari
Passu Note" and each such note not owned by the Trust Fund
being referred to in this Prospectus Supplement as an
"Other Pari Passu Note"), each originated by CCA and each
secured by a Mortgage on the same Mortgaged Property or
Mortgaged Properties. The CMAT Pari Passu Note or Notes and
the related Other Pari Passu Note or Notes are referred to
herein collectively as the "Total Pari Passu Loan." Each
Other Pari Passu Note has been deposited into a separate
trust fund created in connection with a commercial
mortgage-backed securitization of an affiliate of the
Depositor (a "CCA-CMBS Transaction") and the holder of such
Other Pari Passu Note is the trustee under such CCA-CMBS
Transaction.
With respect to each CMAT Pari Passu Note or Notes, the
Trustee will be party to a co-lender agreement with the
trustee of the applicable CCA-CMBS Transaction. Under the
terms of the co-lender agreement with respect to each CMAT
Pari Passu Note, the Trustee will be named as either lead
lender or co-lender.
A table indicating for each CMAT Pari Passu Note whether
the Trustee is the lead lender or co-lender is set forth in
this Prospectus Supplement under "Description of the
Mortgage Pool--Pari Passu Loans."
All amounts received in respect of any CMAT Pari Passu Note
and the related Other Pari Passu Note will be allocated
between such notes pro rata in accordance with the amounts
due thereunder. However, a CMAT Pari Passu Note or CMAT
Pari Passu Notes and the related Other Pari Passu Note or
Other Pari Passu Notes may not amortize on the same
schedule. With respect to the Credit Tenant Loans
</TABLE>
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<TABLE>
<S> <C>
that are represented by CMAT Pari Passu Notes, the CMAT
Pari Passu Notes are Balloon Notes which provide for
payments of interest only for a fixed period of time
following the Cut-off Date and then begin to amortize. The
related Other Pari Passu Notes are fully amortizing notes.
In the event of the occurrence and continuance of an event
of default under any such Credit Tenant Loan, all amounts
received in respect thereof that are allocable to principal
will be applied pro rata in accordance with the outstanding
principal balances of the related notes without regard to
the amortization schedules thereof. With respect to Credit
Tenant Loans with respect to which the Trustee is the lead
lender, the Trustee will have the ability to exercise any
rights or powers of the lender under the loan documents,
including acceleration thereof and foreclosure on the
related Mortgaged Property.
The Trustee will be the mortgagee of record with respect to
the Total Pari Passu Loans as to which it is lead lender,
and the trustee of the applicable CCA-CMBS Transaction of
which the Other Pari Passu Note is a part will be the
mortgagee of record with respect to the Total Pari Passu
Loans as to which the Trustee is the co-lender.
The Servicer will make all servicing decisions with respect
to the Total Pari Passu Loans as to which the Trustee is
the lead lender and the Special Servicer will specially
service any such Total Pari Passu Loans in the event that
they become Specially Serviced Mortgage Loans. With respect
to the Total Pari Passu Loans as to which the Trustee is
the co-lender, the servicer and special servicer acting on
behalf of the applicable other CCA-CMBS Transaction of
which the Other Pari Passu Note is a part will make all
servicing decisions and the Special Servicer will not have
the ability to direct any foreclosure or work out of such
Pari Passu Loans.
The Servicer and the servicers of other CCA-CMBS
Transactions will be required to service the Total Pari
Passu Loans as to which they are lead lenders for the
benefit of the holders of the related CMAT Pari Passu Note
(or CMAT Pari Passu Notes) and Other Pari Passu Note (or
Other Pari Passu Notes) with a view to maximizing recovery
to all such holders.
CREDIT TENANT
LOANS............. 17 Mortgage Loans, which represent 5.2% of the Initial Pool
Balance, are "Credit Tenant Loans." Credit Tenant Loans are
Mortgage Loans with respect to which the related Mortgaged
Property is subject to a net lease obligation of a tenant,
which possesses, or whose parent or affiliate that
guarantees the lease obligations possesses, a long-term
unsecured debt rating of no less than "B-" (or an
equivalent rating) by one or more of the Rating Agencies or
"NAIC2" by the National Association of Insurance
Commissioners (except for the tenant of the Dairy Mart
Credit Tenant Leases, which has an unpublished rating) and
the scheduled monthly payments under such lease are
sufficient to pay in full and on a timely basis all
scheduled payments (other than Balloon Payments) under the
related Mortgage Loan. With respect to the Credit Tenant
Loans that require a payment of principal on the Maturity
Date in excess of its constant Monthly Payment (the
"Balloon Loans"), the related borrowers have obtained
residual value insurance policies that require the insurer,
in certain circumstances, to pay an amount not in excess of
the insured value of the related Mortgaged Property (equal
to the amount of the Balloon Payment on the related Credit
Tenant Loan). See "Risk Factors and Other Special
Considerations--Risks Related to the Mortgage Loans--Credit
Tenant Loans Have Special Risks," "--Reliance on Credit
Quality of Credit Tenants and Guarantors Have Special
Risks," "--Reliance on Residual Value Insurance Policies
Has Special Risks" and "Description of the Mortgage Pool--
Credit Tenant Loans" in this Prospectus Supplement.
DUAL AMORTIZATION
LOANS............. 16 Mortgage Loans, which represent 2.8% of the Initial Pool
Balance, are "Dual Amortization Loans." Dual Amortization
Loans provide for two amortization schedules, one longer
and one shorter. The related borrower must apply all net
cash flow from the related Mortgaged Property to pay (to
the maximum extent
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
possible) the relatively larger monthly payments required
by the shorter amortization schedule. However, the related
borrower will not be in default, and the lender may not
accelerate the Dual Amortization Loan, unless the borrower
fails to make monthly payments in accordance with the
longer amortization schedule despite using all such net
cash flow. Instead, in the event the borrower fails to make
payments consistent with the shorter amortization schedule
on any Due Date, all cash flow from the related Mortgaged
Property on future Due Dates deposited into the lender
controlled lock box in excess of current debt service on
the loan is applied to make payments due under the shorter
amortization schedule. If the cash flow from the Mortgaged
Property is sufficient to return the Mortgage Loan to
performance on the shorter schedule and continue on such
schedule for three sequential Due Dates, future excess
property cash flow is released to the borrower. See "Risk
Factors and Other Special Considerations--Risks Related to
the Certificates--Risks Associated with Dual Amortization
Loans" and "Description of the Mortgage Pool--Dual
Amortization Loans" in this Prospectus Supplement.
PAYMENT TERMS....... All of the Mortgage Loans provide for monthly scheduled
payments of principal and interest or, in certain cases,
interest only. 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 (other than the Park LaBrea Loan, which is fixed until
March 1, 2000 and then the interest rate is increased for
the remaining term of such Mortgage Loan), except as
otherwise noted below.
ARD Loans accrue interest generally at 500 basis points
above the Mortgage Rate beginning on a specified date (that
is, the "Anticipated Repayment Date") if such ARD Loans are
not paid in full on or before such date, except as noted
below. See "Description of the Mortgage Pool--Certain Terms
and Conditions of the Mortgage Loans--Excess Interest" in
this Prospectus Supplement. The holder of the Class LR
Certificate, or if it declines, the holder of 100% of the
most subordinate Class of Sequential Certificates, has the
right, but not the obligation, to purchase the ARD Loans
from the Trust Fund on the Anticipated Repayment Date
(subject to certain conditions specified in the Pooling and
Servicing Agreement). As used in this Prospectus
Supplement, 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 in this
Prospectus Supplement as "Excess Interest." Prior to the
Anticipated Repayment Date, borrowers under ARD Notes for
which a hard lock box is not already in place 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. See "--The Mortgage
Loans--Collateral Overview--Lock Boxes" above. 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
generally 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.
See "Description of the Mortgage Pool--Certain Terms and
Conditions of the Mortgage Loans--Excess Interest" in this
Prospectus Supplement.
</TABLE>
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<PAGE>
<TABLE>
<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.............. 75 months
Maximum Remaining Lock-out Period............. 251 months
Weighted Average Remaining Lock-out Period.... 146 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.
DEFEASANCE.......... All of the Mortgage Loans permit the applicable borrower at
any time after a specified date, which is generally two
years from the Closing Date, to obtain a release of a
Mortgaged Property from the lien of the related Mortgage,
subject to certain conditions. Those conditions include,
among other things, that the borrower pay an amount
sufficient to purchase direct, non-callable obligations of
the United States of America that will provide payments
equal to the scheduled payments due on the Mortgage Loan,
or the defeased amount thereof in the case of a partial
defeasance.
See "Description of the Mortgage Pool--Certain Terms and
Conditions of the Mortgage Loans--Property Releases" in
this Prospectus Supplement.
</TABLE>
S-30
<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 "Risk Factors."
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.
98.9% of the Mortgage Loans were originated within 18 months prior to the
Cut-off Date. No loan was originated more than 21 months prior to the Cut-off
Date. Consequently, the majority of the Mortgage Loans do not have a long
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 and repayments of such Mortgage Loans are dependent upon the cash flow
of the related Mortgaged Property. Even the liquidation value of a commercial
property is determined, in substantial part, by the capitalization of the
property's cash flow. The Mortgage Loans are secured by the following
income-producing property types:
o anchored and unanchored retail properties;
o office buildings;
o multifamily residential housing;
o full and limited service hotels;
o factory outlet centers;
o industrial properties;
o health club facilities;
o mobile home parks; and
o nursing homes;
o healthcare facilities.
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 new construction;
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.
S-31
<PAGE>
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.
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
and 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 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
default.
PROPERTY VALUE MAY BE ADVERSELY AFFECTED EVEN WHEN CURRENT OPERATING INCOME
IS NOT. The value of any Mortgaged Property may decline over the term of the
related Mortgage Loan. 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 changes in consumer preferences;
o economic changes;
o changes in 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 may depend 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
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<PAGE>
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 further
complicate management of 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. 6.3% of the Mortgage
Loans, by Cut-off Date Principal Balance, are secured by single tenant
properties; 55.5% of such single-tenant Mortgage Loans, by Cut-off Date
Principal Balance, are also Credit Tenant Loans. 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. There can be no
assurance that any tenant will renew its lease.
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 and that particular business or industry is
affected.
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.
o Expiration of Major Tenant Leases. Repayment of the Mortgage Loans,
particularly those secured by retail, industrial 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
on 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, may adversely affect the income produced
by a Mortgaged Property. Under the United States 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). There can be no assurance that any tenant will not file a petition in
bankruptcy.
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<PAGE>
HomePlace Stores Inc. and Montgomery Ward, each a major tenant of one or
more Retail Properties, have each filed bankruptcy under Chapter 11 of the
United States Bankruptcy Code--
o On January 8, 1998, HomePlace Stores Inc., a major tenant in four of
the six DDR/DRA Retail Properties, with an aggregate 211,125 square
feet of the DDR/DRA Retail Properties' leaseable square footage
representing 8% of the DDR/DRA Retail Properties total annual rent,
filed under Chapter 11 of the United States Code in the United
States Bankruptcy Court for the District of Delaware. Developers
Diversified Realty Corporation, the DDR/DRA Retail Property Manager,
has master leased all of the retail space occupied by HomePlace and
remains liable for all rental obligations under the master lease.
o In July 1997, Montgomery Ward Holding Corp., an anchor tenant in the
Springfield Mall Retail Property (which owns its space and therefore
pays no rent) with an aggregate 180,841 square feet of leaseable
square footage, filed under Chapter 11 of the United States Code in
the United States Bankruptcy Court for the District of Delaware. In
a filing with the SEC on Form 8-K dated February 1, 1999, MW Corp.
announced that it and its wholly-owned subsidiary, Montgomery Ward &
Co., Incorporated, have reached agreement with their creditors'
committee and will emerge from Chapter 11 protection in mid-1999.
o To date, HomePlace Stores Inc. has not rejected or affirmed its
leases with respect to the related Mortgaged Properties and
Montgomery Ward has not decided to close its store.
LOAN CONCENTRATION ENTAILS RISKS. In general, concentrations in a mortgage
pool in which one or more loans 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 $10,326,032. The following table sets forth Cut-off
Date Principal Balances for the seven largest Mortgage Loans. In total, the
seven largest Mortgage Loans have Cut-off Date Principal Balances that
represent, in the aggregate, approximately 35% of the Cut-off Date Principal
Balance.
CUT-OFF DATE PRINCIPAL BALANCES AND CONCENTRATION OF MORTGAGE LOANS
<TABLE>
<CAPTION>
CUT-OFF DATE
MORTGAGE LOAN PRINCIPAL BALANCE
- ------------------------------------------------------------------------------------------------- -----------------
<S> <C>
DDR/DRA Loan..................................................................................... $ 156,000,000
Park LaBrea Loan................................................................................. $ 140,613,989(1)
Source Retail Loan............................................................................... $ 124,000,000
Prime Retail III Pool Loan....................................................................... $ 97,878,360(2)
Springfield Mall Loan............................................................................ $ 90,394,069(3)
Atlanta Marriott Hotel Loan...................................................................... $ 80,770,298(4)
Iowa Malls Loan.................................................................................. $ 65,875,608
<CAPTION>
% OF INITIAL
MORTGAGE LOAN POOL BALANCE
- ------------------------------------------------------------------------------------------------- ------------
<S> <C>
DDR/DRA Loan..................................................................................... 6.6%
Park LaBrea Loan................................................................................. 5.9%
Source Retail Loan............................................................................... 5.2%
Prime Retail III Pool Loan....................................................................... 4.1%
Springfield Mall Loan............................................................................ 3.8%
Atlanta Marriott Hotel Loan...................................................................... 3.4%
Iowa Malls Loan.................................................................................. 2.8%
</TABLE>
- ------------------
(1) The Cut-off Date Principal Balance for the Total Park LaBrea Loan is
$281,227,978. Only the CMAT Pari Passu 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 Park
LaBrea Loan and Property" in this Prospectus Supplement.
(2) The Cut-off Date Principal Balance for the Total Prime Retail III Pool Loan
is $163,130,601. Only the CMAT Pari Passu 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--Prime Retail
III Pool Loan and Properties" in this Prospectus Supplement.
(3) The Cut-off Date Principal Balance of the Total Springfield Mall Loan is
$180,788,138. Only the CMAT Pari Passu 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
Springfield Mall Loan and Property" in this Prospectus Supplement.
(4) The Cut-off Date Principal Balance for the Total Atlanta Marriott Hotel Loan
is $161,540,595. Only the CMAT Pari Passu 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--Atlanta
Marriott Hotel Loan and Property" in this Prospectus Supplement.
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 preceding table.
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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 Mortgaged Properties are located throughout 41 states and the District
of Columbia. The following states have concentrations of 5% or greater as listed
below:
<TABLE>
<CAPTION>
CUT-OFF DATE PRINCIPAL
BALANCE OF MORTGAGE LOANS % OF INITIAL
STATE SECURED BY PROPERTIES IN STATE(1) POOL BALANCE
- -------------------------------------------- --------------------------------- ------------
<S> <C> <C>
California.................................. $ 456,845,900 19.2%
Michigan.................................... $ 269,470,263 11.3%
New York.................................... $ 191,456,838 8.1%
Virginia.................................... $ 182,935,663 7.7%
Illinois.................................... $ 152,497,140 6.4%
Ohio........................................ $ 120,213,547 5.1%
</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, Michigan, New York, Virginia, Illinois and
Ohio, see "Certain Legal Aspects of Mortgage Loans for Mortgaged Properties
Located in California, Michigan, New York, Virginia, Illinois and Ohio" in this
Prospectus Supplement.
RISKS RELATED TO PROPERTY INSPECTIONS. Licensed engineers inspected all of
the Mortgaged Properties (except the Mortgaged Properties securing the Credit
Tenant 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 SPECIAL RISKS. 43.7% of the Mortgage Loans, based
on Initial Pool Balance, are secured by Retail Properties (including Factory
Outlet Centers). See "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
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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. 79.9% of the Mortgage Loans secured by Retail
Properties, based on Initial Pool Balance, are "anchored" Retail Properties,
3.9% are secured by "quasi-anchored" Retail Properties (including Factory Outlet
Center Properties) and 6.8% are secured by "unanchored" Retail Properties
(including Factory Outlet Center Properties). The remaining 9.4% are secured by
Retail Properties that are Factory Outlet Centers. A "quasi-anchored" Retail
Property is a Retail Property which has a national or large regional tenant that
attracts customers to the property but that is not large enough to be considered
an anchor tenant.
Consequently, the economic performance of an "anchored" Retail Property or
a "quasi-anchored" Retail Property will be adversely affected by various
factors, including:
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;
o the cessation of the business of a self-owned anchor or of an anchor
tenant (notwithstanding its continued payment of rent);
o a shift in shopping patterns or loss of an anchor tenant's ability
to attract shoppers; or
o a co-tenancy clause in the leases and/or operating agreements of
other tenants which permits those tenants to cease operating their
stores if the anchor tenant ceases operations at the same location.
Such risks may be increased if revenue is dependent on a single-tenant.
3.8% of the Retail Properties (including Factory Outlet Center Properties), by
Cut-off Date Principal Balance, are secured by single-tenant properties, 77.7%
of which, based on the Initial Pool Balance, are Credit Tenant Loans. See
"Description of the Mortgage Pool--Credit Tenant 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.
OFFICE PROPERTIES HAVE SPECIAL RISKS. 26.1% of the Mortgage Loans, by
Cut-off Date Principal 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 for
certain statistical information on the Office Properties and Office Loans. A
number of 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;
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
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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.
5.5% of the Mortgage Loans secured by Office Properties, by Cut-off Date
Principal Balance, are secured by single-tenant properties. 44.7% of such
single-tenant Office Properties, by Cut-off Date Principal Balance, secure
Credit Tenant Loans. See "Description of the Mortgage Pool--Credit Tenant Loans"
in this Prospectus Supplement.
MULTIFAMILY PROPERTIES HAVE SPECIAL RISKS. 14.3% of the Mortgage Loans, by
Cut-off Date Principal 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 for certain statistical information on the Multifamily Properties and
Multifamily Loans. 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).
o 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.
HOTEL PROPERTIES HAVE SPECIAL RISKS. 8.0% of the Mortgage Loans, by
Cut-off Date Principal Balance, are secured by full service hotels, limited
service hotels or motels. 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. The Hotel Properties include 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. 21.3% of the Hotel Loans, by Cut-off Date Principal Balance, are
Credit Tenant Loans where the credit tenant's obligations under the related
credit lease are guaranteed by ACCOR, a French corporation ("Accor"), which has
a long-term unsecured debt rating of "BBB" by S&P.
Various factors may adversely affect the economic performance of a hotel,
including:
o adverse economic or 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;
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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.
o 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, but termination for failure to comply with certain
requirements of the franchise agreement due to financial distress may be
enforceable. Franchise agreements for certain of the Mortgaged Properties may
terminate prior to the related Maturity Date. 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.
CREDIT TENANT LOANS HAVE SPECIAL RISKS. 5.2% of the Mortgage Loans, by
Cut-off Date Principal Balance, are Credit Tenant Loans. The Credit Tenant Loans
(except for the Credit Tenant Loan made in connection with the Dairy Mart Credit
Tenant Leases, which has a tenant that has an unpublished rating) benefit from
net lease obligations (a "Credit Tenant Lease") of a publicly or privately rated
tenant or guarantor. In reliance on such ratings, the Credit Tenant 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 Tenant Lease, the related borrower may not be able to re-let the
Mortgaged Property for sufficiently high rent to support debt service on the
related Credit Tenant Loan or funds received in liquidation of such Mortgaged
Property may not be sufficient to satisfy the borrower's obligations under such
Credit Tenant Loan. See "Description of the Mortgage Pool--Credit Tenant Loans"
in this Prospectus Supplement.
The Credit Tenant Loan relating to the Mortgaged Properties identified on
Annex B hereto as the Accor-M-6-Penvest I (the "Accor Credit Tenant Loan"), the
Credit Tenant Loan relating to the Mortgaged Property identified on
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Annex B as the Bentley Mills Distribution Facility (the "Bentley Mills Credit
Tenant Loan") and the Credit Tenant Loan relating to the Mortgaged Properties
identified as Circuit City-East Lansing, Circuit City-Frederick, Circuit
City-Green Bay and Circuit City-Harper Woods on Annex B hereto (collectively,
the "Circuit City Credit Tenant Loan") are also Pari Passu Loans, in which the
CMAT Pari Passu Notes are interest-only Balloon Notes with ten-year terms and
the related Other Pari Passu Notes have an amortization schedule that fully
amortizes its principal balance. However, in the event of the occurrence of a
continuing event of default under any such Credit Tenant Loan, all amounts
received in respect thereof that are allocable to principal will be applied pro
rata in accordance with the outstanding principal balances of the related notes
without regard to the amortization schedules thereof. See "Description of the
Mortgage Pool--Credit Tenant Loans" in this Prospectus Supplement.
Any rating assigned to a credit tenant or guarantor, as applicable, by a
rating agency or NAIC will reflect only such rating agency's or NAIC's
assessment of the long-term unsecured debt obligations of such entity. Such
rating is not an assessment of the likelihood that the Credit Tenant Leases will
not be terminated (pursuant to their terms or otherwise), that the Credit Tenant
Loans will not be prepaid, 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 Tenant Loan, monthly payments are dependent
upon the payment of monthly rent and other payments due from the related credit
tenant or guarantor. A downgrade in the credit rating of a credit tenant or
guarantor may have a related adverse effect on the rating of your Certificates
even if there is no default under the related Credit Tenant Loan. See "Rating"
in this Prospectus Supplement.
If a credit tenant or guarantor defaults on its obligation to make monthly
payments or other payments due under a Credit Tenant Lease or the related
guaranty, as the case may be, the borrower under the related Credit Tenant Loan
may not have the ability to make the required payments on such Credit Tenant
Loan. If a payment default on a Credit Tenant Loan occurs, the Special Servicer
may be entitled to foreclose upon or otherwise realize upon the related
Mortgaged Property to recover amounts due under the Credit Tenant Loan, and will
also be entitled (as successor to the borrower), after appointment of a receiver
or purchase of the property at foreclosure, 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 Tenant Loan has occurred and no recovery is available
from the related borrower or the credit tenant or guarantor, it is unlikely that
the Special Servicer will be able to recover in full the amounts then due under
such Credit Tenant Loan.
o The Ability of Credit Tenants to Reject Credit Tenant Leases in a
Bankruptcy. To the extent that any of the tenants of properties which are
subject to Credit Tenant Loans were to become a debtor in a bankruptcy
proceeding under the Bankruptcy Code, such lessee or its bankruptcy trustee
could reject the lease. If a lease were rejected, rental payments thereunder
would terminate as to the related property, thereby leaving the owner without a
source of rental payments to support its debt service and other obligations
under the applicable Credit Tenant Loans and with a claim for damages as a
source of payment of amounts due under such lease under section 502(b)(6) of the
Bankruptcy Code. A claim by a lessor for damages resulting from the rejection by
a debtor of a lease of real property (or rejection of a guarantee of a lease
upon the bankruptcy of a guarantor) is limited to an amount equal to the rent
reserved under the lease, without acceleration, for the greater of one year or
15 percent (but not more than three years) of the remaining term of the lease,
plus rent already due but unpaid. There can be no assurance that any such claim
for damages (or any recovery on the underlying mortgaged real estate) would be
sufficient to provide for the repayment of amounts then due under the lease.
o Reliance on Residual Value Insurance Policies Has Special Risks. The
Credit Tenant Loans (other than the Credit Tenant Loan relating to the Mortgaged
Properties identified on Annex B hereto as Perry Judd's-Strasburg, Perry
Judd's-Pikesville and Perry Judd's-Mt. Jackson (the "Perry Judd's Credit Tenant
Loans") and the Credit Tenant Loan relating to the Mortgaged Property identified
on Annex B hereto as Value City-Irvington (the "Value City Credit Tenant Loan")
are loans that require a payment of principal on the Maturity Date that is
materially in excess of its constant Monthly Payment and which do not fully
amortize over their terms.
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The related borrowers have obtained residual value insurance policies ("RVI
Policies") that require the insurer, in the event that a liquidation of the
related Mortgaged Property is required in connection with a default in the
balloon payment, to pay an amount equal to the amount of any deficiency between
the proceeds of the sale of such Mortgaged Property and the lesser of:
(i) the insured value of the Mortgaged Property and
(ii) any indebtedness remaining under the Credit Tenant Loan which is
not paid by the borrower, or if the sale of such Mortgaged
Property does not take place, to pay the full amount of the
remaining indebtedness under the Credit Tenant Loan that is not
paid by the borrower,
but not in excess of the insured value of the Mortgaged Property. The "insured
value" of a Credit Tenant Property is typically the amount of the Balloon
Payment due on the related Credit Tenant Loan. The RVI Policies were issued by
R.V.I. America Insurance Company ("R.V.I. America") and Financial Structures
Limited ("FSL"). As of the Cut-off Date, R.V.I. America had a claims paying
rating or financial strength rating of "A" by S&P and "AA-" by Duff & Phelps
Credit Rating Co. FSL does not have a claims paying rating or financial strength
rating from a national rating agency; however, the RVI Policies issued by FSL
have been reinsured with Royal Indemnity Company, which as of the Cut-off Date
had a claims paying ratings or financial strength ratings of "AA-" by "S&P."
EACH RVI POLICY CONTAINS CERTAIN EXCLUSIONS TO COVERAGE. See "Description
of the Mortgage Pool--Credit Tenant Loans" in this Prospectus Supplement. The
reinsurance by Royal Indemnity Company for each RVI Policy issued by FSL is
subject to the same exclusions from coverage. Generally, a claim for payment
under an RVI Policy must be filed no more than one year and no less than
10 days prior to the policy termination date (which is after the date on which
the Ballon Payment is due on the related Credit Tenant Loan). No RVI Policy
requires that the related Credit Tenant Property be sold prior to payment of the
claim. However, if the related Credit Tenant Property has not been sold by the
date the claim is paid in accordance with the procedures, if any, set forth in
the related RVI Policy, then the related Credit Tenant Property and any other
collateral securing the related Credit Note will be transferred to the related
RVI policy insurer.
Distributions in respect of your Certificates may be reduced if there is a
failure of the RVI Policy insurer to pay under the terms of its policy. In
addition, a downgrade in the claims paying rating or financial strength rating
of the insurer under an RVI Policy may have a related adverse effect on the
rating of your Certificates, even if there is no default under the related
Credit Tenant Loan. See "Rating" in this Prospectus Supplement.
For a more complete description of the Credit Tenant Loans, see
"Description of the Mortgage Pool--Credit Tenant Loans" in this Prospectus
Supplement.
RISKS RELATED TO BORROWERS THAT ARE NOT SPECIAL PURPOSE ENTITIES. 2 of the
borrowers, under Mortgage Loans representing 1.7% 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 made by a borrower
that 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, neither 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 affiliated 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 troubled 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, Trustee's and Fiscal
Agent's respective obligations to make Advances) for an indefinite period on all
of the related Mortgage Loans.
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There are 16 pairs and 9 groups of 3 to 12 Mortgage Loans that were made to
affiliated borrowers which are not cross-collateralized or cross-defaulted. None
of such pairs or groups of Mortgage Loans to affiliated borrowers represents
more than approximately 4.0% of the Initial Pool Balance. 10.2% of the Mortgage
Loans to affiliated borrowers that are not cross-collateralized or
cross-defaulted, by Cut-off Date Principal Balance, are Credit Tenant Loans.
RISKS RELATED TO LIMITATIONS ON ENFORCEABILITY OF CROSS-
COLLATERALIZATION. 15 of the Mortgage Loans, representing approximately 18.5%
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.
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 Mortgage 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 benefit to it from the
cross-collateralization. If a court were to conclude that the granting of the
liens was an avoidable fraudulent conveyance, that court could nullify the lien
or mortgage effecting the cross-collateralization and nullify or subordinate all
or part of the pertinent Mortgage Loan to existing or future indebtedness of
that borrower. The court could also allow the borrower to recover payments it
made pursuant to the avoided cross-collateralization.
CROSS-COLLATERALIZED MORTGAGE LOANS
<TABLE>
<CAPTION>
CUT-OFF DATE
MORTGAGE LOAN PRINCIPAL BALANCE
- --------------------------------------------------------------------------------------------- -----------------
<S> <C>
DDR/DRA Loan................................................................................. $ 156,000,000
Prime Retail III Pool Loan................................................................... $ 97,878,360
Iowa Malls Loan.............................................................................. $ 65,875,608
Accor-M-Six-Penvest I Loan................................................................... $ 40,320,670
Morgantown Mall and Commons Retail Loan...................................................... $ 11,612,825
Loretto/Playhouse Loan....................................................................... $ 11,471,268
South Park & Pierre Malls Loan............................................................... $ 10,141,269
Sterling Inn & Sterling Commons Loan......................................................... $ 10,023,746
Spring Properties, Inc Loan.................................................................. $ 9,045,839
Windridge Apartments Loan.................................................................... $ 6,422,895
Beechwood Apts. and The Oaks Apts Loan....................................................... $ 5,970,915
First Hill Apartments Loan................................................................... $ 4,351,942
Country Lane Corporation Loan................................................................ $ 4,179,466
Baton Rouge Multi Family Portfolio Loan...................................................... $ 3,285,116
Brentwood/Pontchartrain Apts. Loan........................................................... $ 2,734,621
<CAPTION>
NUMBER OF CROSS-
COLLATERALIZED
MORTGAGE LOAN PROPERTIES
- --------------------------------------------------------------------------------------------- ----------------
<S> <C>
DDR/DRA Loan................................................................................. 6
Prime Retail III Pool Loan................................................................... 4
Iowa Malls Loan.............................................................................. 4
Accor-M-Six-Penvest I Loan................................................................... 15
Morgantown Mall and Commons Retail Loan...................................................... 2
Loretto/Playhouse Loan....................................................................... 2
South Park & Pierre Malls Loan............................................................... 2
Sterling Inn & Sterling Commons Loan......................................................... 2
Spring Properties, Inc Loan.................................................................. 2
Windridge Apartments Loan.................................................................... 2
Beechwood Apts. and The Oaks Apts Loan....................................................... 2
First Hill Apartments Loan................................................................... 2
Country Lane Corporation Loan................................................................ 3
Baton Rouge Multi Family Portfolio Loan...................................................... 2
Brentwood/Pontchartrain Apts. Loan........................................................... 2
</TABLE>
AUTHORITY TO INCUR ADDITIONAL DEBT ENTAILS RISKS. Certain Mortgage Loans
permit the borrower to incur additional indebtedness other than in the ordinary
course of business. For instance, each of the Mortgage Loans made to the
borrowers affiliated with BGK (which have a collective Cut-off Date Principal
Balance of $64,641,950, representing approximately 2.2% of the Initial Pool
Balance) permits the related borrower to incur debt, in an amount up to 5% of
the outstanding principal balance of such loan which indebtedness shall be
subordinate to the respective Mortgage Loans and not secured by the respective
Mortgaged Property.
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Additionally, the Atlanta Marriott Hotel Loan (which has a Cut-off Date
Principal Balance of $80,770,298, representing approximately 3.4% of the Initial
Pool Balance) permits the Atlanta Marriott Borrower after February 2000 to incur
debt that (a) must be unsecured or secured by the Mortgaged Property or any
other assets of the borrower and that (b) must be expressly subordinate in right
of payment to the Atlanta Marriott Hotel Loan, subject to the following
conditions:
(i) the DSCR for the Atlanta Marriott Hotel Loan on the date of issuance
of the debt is at least 2.0x; and
(ii) the Rating Agencies confirm that such action will not cause a
downgrade, qualification or withdrawal of the then current ratings on
any Class of Certificates.
See "Description of the Mortgage Pool--Significant Mortgage Loans--The
Atlanta Marriott Hotel Loan and Property" in this Prospectus Supplement.
Substantially all of the Mortgage Loans also permit the related borrower to
incur limited indebtedness in the ordinary course of business (however, such
additional indebtedness is generally required to be paid within 60 to 90 days).
When a borrower (or its constituent members) has one or more other outstanding
loans (even if they are subordinate or mezzanine loans), the Trust Fund may be
subjected to additional risk because 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.
The DDR/DRA Retail Loan permits the DDR/DRA Retail Borrower to incur
unsecured debt to a partner of the DDR/DRA Retail Borrower that is expressly
subordinate in right of payment to the DDR/DRA Retail Loan. This debt may only
be incurred as a result of a capital call under the DDR/DRA Retail Borrower
partnership agreement which is not funded by one or more partners and results in
the funding partners contributing more than their pro rata share of such call.
Additionally, if the borrower 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 default to a junior lender leads to a bankruptcy
petition being filed by or against the borrower, 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 a
junior lender with a lien on the Mortgaged Property may also operate to stay
foreclosure by the Trust Fund.
See "Certain Additional Risks Related to Mezzanine Financings" below and
"Certain Legal Aspects of Mortgage Loans--Subordinate Financing" in the
Prospectus.
CERTAIN ADDITIONAL RISKS RELATED TO MEZZANINE FINANCINGS. Certain lenders,
including NACC/CCA, have made loans in connection with certain Mortgage Loans to
the direct parents of the related 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. Such mezzanine debt is secured by a pledge of equity in the borrower
or by property other than the Mortgaged Property. However, the existence of this
other indebtedness could adversely affect the financial viability of such
borrower or the value of the equity in the borrower held by the sponsoring
entities of the 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 may have rights similar to those of a
Preferred Interest Holder (as defined below under "Certain 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.
S-42
<PAGE>
MEZZANINE DEBT
<TABLE>
<CAPTION>
CUT-OFF DATE MEZZANINE HOLDER OF
PRINCIPAL DEBT MEZZANINE COMBINED
MORTGAGE LOAN BALANCE BALANCE(1) DEBT(2) SECURED(3) LTV(4)
- ------------------------------------------------ ------------ ------------ ---------------- ---------- --------
<S> <C> <C> <C> <C> <C>
Park LaBrea Loan(5)(6).......................... $140,613,989 $ 33,500,000 Other Yes 76.8%
Iowa Malls Loan(6)(7)........................... $ 65,875,608 $ 6,759,940 NACC/CCA Yes NA(8)
Springfield Mall Loan(5)(6)..................... $ 90,394,069 $102,500,000(9) Borrower; Other No 75.4%
</TABLE>
- ------------------
(1) Initial principal balance.
(2) 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.
(3) As used above, "secured" means secured by a pledge of a partnership or other
equity interest, rather than a direct interest in the Mortgaged Property.
(4) "Combined LTV" means "LTV" as defined in this Prospectus Supplement, but
adding the original principal balance of the mezzanine debt to the
numerator.
(5) The holder of the mezzanine debt is not permitted to exercise its remedies
prior to the Anticipated Repayment Date, in the case of ARD Loans, or
Maturity Date, in the case of all other Mortgage Loans, for the related
Mortgage Loan.
(6) See "Description of the Mortgage Pool--Significant Mortgage Loans--The Park
LaBrea Loan and Property," "--Springfield Mall Loan and Properties" and
"--Iowa Malls Loan and Properties" in this Prospectus Supplement.
(7) Generally, the holder of the mezzanine debt is not permitted to exercise its
remedies prior to the Anticipated Repayment Date or the date provided on
which the related Mortgage Loan is paid in full, provided that the holder of
the mezzanine debt may exercise its remedies earlier to either such date
such holder has obtained (i) confirmation from the Rating Agencies to the
effect that such action will not cause a downgrade, qualification or
withdrawal of the then current ratings on any Class of Certificates and
(ii) a non-consolidation opinion with respect to the borrowers under the
related Mortgage Loan.
(8) NACC is currently the holder of a 25% equity interest in the mezzanine
borrower; therefore the debt is owed to an affiliate.
(9) $100,000,000 is owed to an entity affiliated with the borrower; $2,500,000
is owed to an unaffiliated entity. Only the $2,500,000 owed to the
unaffiliated entity is included in the LTV.
CERTAIN RISKS RELATED TO PREFERRED EQUITY INVESTMENTS. Certain affiliates
of NACC and/or CCA (each, a "Preferred Interest Holder") have acquired a
preferred equity interest in 10 borrowers and 2 direct parents of borrowers with
respect to Mortgage Loans (the "Preferred Equity Loans"), which represents
approximately 3.8% of the Initial Pool Balance, as set forth in the following
table:
PREFERRED EQUITY INVESTMENTS IN BORROWERS AND AFFILIATES
<TABLE>
<CAPTION>
CUT-OFF DATE INITIAL
PRINCIPAL PREFERRED EQUITY
MORTGAGE LOAN BALANCE INVESTMENT
- ------------------------------------------------------------------------------------------------- ------------ ----------------
<S> <C> <C>
Airport Plaza Loan............................................................................... $ 30,406,423 $1,000,000
Dunkirk Market Center Loan....................................................................... $ 7,698,157 $ 600,000
Sea Cliff Office Park Loan....................................................................... $ 7,397,077 $2,156,434
Horizon Corporate Office Building Loan........................................................... $ 6,887,779 $ 250,000
College View Towers & Apts Loan.................................................................. $ 6,641,748 $ 500,000
One Congressional Place Loan..................................................................... $ 6,595,293 $1,689,778
Fairbanks Village Plaza Loan..................................................................... $ 6,287,121 $ 290,000
Lincoln Office Loan.............................................................................. $ 5,167,980 $ 260,000
Victory Center Loan.............................................................................. $ 4,846,570 $ 320,000
Centreville Plaza Loan........................................................................... $ 3,324,928 $ 270,000
1430 N. Dearborn Loan............................................................................ $ 2,189,050 $ 125,000
1504 N. Dearborn Loan............................................................................ $ 2,039,797 $ 100,000
</TABLE>
Preferred equity is similar to mezzanine financing in that it provides
additional funds for the borrower without further encumbering the property, and
without necessarily granting the Preferred Interest Holder a share in the
increased value of the borrower. The existence of preferred equity held by the
Preferred Interest Holder may adversely affect the financial viability of the
related borrower or the value in the equity of the borrower held by the
sponsoring entities of the 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.
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<PAGE>
See "Risks Relating to Conflicts of Interest--Conflicts between the Trust
Fund and Affiliates of the Depositor" below. For a description of the Preferred
Interest 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. Among other things, the independent contractor
would not be permitted to perform construction work on the Mortgaged Property
unless such construction generally was at least 10% complete at the time default
on the related Mortgage Loan becomes imminent. In addition, 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 Foreclosure or the Sale of
Defaulted Loans" in this Prospectus Supplement and "Federal Income Tax
Consequences--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 of
properties (see "--Geographic Concentration Entails Risks" above) and 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 OR ANTICIPATED REPAYMENT DATE
FOR MORTGAGE LOANS SECURED BY VARIOUS PROPERTY TYPES
<TABLE>
<CAPTION>
WEIGHTED AVERAGE
REMAINING TERM TO
EARLIER OF MATURITY
% OF DATE OR ANTICIPATED
CUT-OFF DATE PRINCIPAL REPAYMENT
PROPERTY TYPE BALANCE DATE (MONTHS)
- ------------------------------------ ------------------------- ----------------------
<S> <C> <C>
Retail Properties................... 39.6% 142
Office Properties................... 26.1% 157
Multifamily Properties.............. 14.3% 158
Hotel Properties(1)................. 8.0% 157
Industrial Properties............... 4.1% 168
Factory Outlet Center Properties.... 4.1% 112
Health Club Properties.............. 2.8% 146
Mobile Home Park Properties......... 0.6% 145
Healthcare Properties............... 0.4% 176
</TABLE>
- ------------------------
(1) 21% of the Hotel Properties 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 hazardous or
toxic substances. For example, certain laws impose
S-44
<PAGE>
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.
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 RCRA,
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 lender
liability protection has important conditions and limitations and that liability
for cleanup of petroleum contamination may be governed by state law, which may
not provide for any specific protection for secured creditors.
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 24 months preceding the Cut-off Date (with the
exception of the assessments done on the Mortgaged Properties known as Santa
Monica Business Park and Best of the West Shopping Center, in which cases the
assessments were done within 32 months preceding the Cut-off Date). With respect
to Mortgaged Properties representing 16.1% of the Initial Pool Balance (by
Allocated Loan Amount), 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, abandoned wells, leaks and spills from nearby
off-site and on-site chemical and petroleum storage tanks. 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.
There may be material environmental liabilities with respect to certain
Mortgaged Properties. Moreover, future laws, ordinances or regulations could
impose material environmental liability or the current environmental condition
of the Mortgaged Properties could be adversely affected by tenants or by the
condition of land or operations in the vicinity of the Mortgaged Properties
(such as underground storage tanks). Other responsible parties with respect to
any adverse environmental condition at a Mortgaged Property may not have
sufficient funds to remediate the problem.
o Risks Related to Lead. 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
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<PAGE>
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.
At several of the Mortgaged Properties, lead has been detected in the water
through sampling by environmental consultants. Although lead found at these
Mortgaged Properties is not expected to present a significant risk as long as
the related Mortgaged Property continues to be properly managed, the related
borrowers have agreed to establish and maintain operations and maintenance or
abatement programs and/or have 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 lead in the
water.
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 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 Radon. At several of the Mortgaged Properties, elevated
radon levels have been detected through sampling by environmental consultants.
Although radon levels found at these Mortgaged Properties are not expected to
present a significant risk, reserves have been established and the related
borrowers have agreed to future testing and potential mitigation systems.
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 radon levels.
o Risks Related to ACMs. At several of the Mortgaged 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 have agreed to establish and maintain operations and
maintenance or abatement programs and/or have 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 Special 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 Mortgaged Property known as Kittery Outlet
Village (which represents 0.3% of the Initial Pool Balance, by Allocated Loan
S-46
<PAGE>
Amount), part of the collateral for the Prime Retail III Pool Loan, a fuel oil
underground storage tank was reportedly removed in 1997; however, an
environmental site assessment was not conducted at that time. As a result, it is
currently unknown whether soil contamination exists on the Mortgaged Property.
The environmental consultant recommended further investigation. The Prime Retail
III Pool Borrower obtained a pollution liability insurance policy with
$5,000,000 aggregate coverage and a $100,000 deductible per incident covering
such borrower, subject to various exclusions, for certain environmental clean-up
costs and other liabilities at such Mortgaged Property. See "Description of the
Mortgage Pool--Significant Mortgage Loans--Prime Retail III Pool Loan and
Properties--Environmental Considerations" in this Prospectus Supplement.
The Mortgaged Property securing the Mortgage Loan known as 125 County Line
Road (which has a Cut-off Date Principal Balance of $22,588,653, or
approximately 1.0% of the Initial Pool Balance) was previously owned and
operated by Fisher & Porter ("FP"), the related borrowers' largest tenant. FP is
a wholly-owned subsidiary of Elsag-Bailey ("E-B"), which has a credit rating of
"Ba1" by Moody's. In its business, FP used certain oils and solvents which
contaminated both on-site and off-site groundwater. The United States
Environmental Protection Agency ("EPA") and FP entered into a consent decree in
1984 with respect to required remedial action. The EPA, which reserved the right
to re-evaluate the site every five years, has issued a proposal, that is not yet
final, that no further action be required. Under the terms of its lease, FP has
indemnified the borrower and any mortgagee against any costs and expenses
associated with the contamination, and E-B has guaranteed FP's indemnification
in an amount not to exceed $1,000,000.
With respect to three Mortgaged Properties (which secure Mortgage Loans
representing 0.4% of the Initial Pool Balance by Allocated Loan Amount),
Phase II investigations have identified environmental impacts, the full extent
or magnitude of which have not been fully defined. For two of such Mortgaged
Properties (Community Shopping Center and Ponderosa) where dry cleaning tenants
have been in place for an extended period of time, chlorinated solvent
contamination has been identified and no environmental reserves have been
specified. In the case of the Streator Industrial Facility, reserves may be
insufficient to fund proper clean-up of various environmental issues identified
with respect to the related 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.
RISKS RELATING TO EARTHQUAKE, FLOOD AND HURRICANES. The Mortgaged
Properties may suffer casualty losses due to risks associated with acts of
nature, including earthquakes, floods and hurricanes, for which certain
Mortgaged Properties may not be adequately insured. 45 Mortgaged Properties,
representing approximately 22% of the Initial Pool Balance, have had seismic
risk analysis completed in many cases, the scope of such analyses are not in
accordance with industry standard and as a result may underestimate the severity
of property damage and reconstruction costs. Approximately 39% of such
properties currently have seismic insurance in place. In addition, certain areas
of the country have recently, and may in the future, experience hurricanes
and/or floods and, consequently, certain of the Mortgaged Properties may
experience damage as a result thereof.
There is no assurance that borrowers will be able to maintain adequate
insurance covering all potential risks, or that if the Mortgaged Properties
sustain damage they will be able to be completely restored. Moreover, if
construction or any major repairs are required, changes in laws may materially
affect the borrower's ability to effect such reconstruction or major repairs or
may materially increase the cost thereof. As a result of any of the foregoing,
the amount available to make distributions on the Certificates could be reduced.
BORROWER MAY BE UNABLE TO MAKE A BALLOON PAYMENT OR PREPAY AN ARD LOAN. 18
of the Notes ("Balloon Notes"), representing 16.1% of the Initial Pool Balance,
provide for substantial payments of principal ("Balloon Payments") due at their
Maturity Dates unless previously prepaid. 209 of the Notes ("ARD Notes"),
representing 82.3% of the Initial Pool Balance, have Anticipated Repayment Dates
(which operate as effective Maturity Dates), and have substantial amounts of
principal outstanding on such date. See "Amortization Characteristics of the
Notes" below. 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. There can be no assurance that any
borrower under a Balloon Loan or an ARD Loan will have the ability to repay the
remaining principal balances on the relevant date. The ability of such a
borrower to pay off its Mortgage Loan on the Maturity Date or Anticipated
Repayment Date, as applicable, will typically depend upon its
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<PAGE>
ability either to refinance the Mortgage Loan or to sell the related Mortgaged
Property at a price sufficient to permit the borrower to make the payment. This
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........................ 82.3% 209
Balloon Notes(1)................. 16.1% 18
Fully Amortizing Notes (other
than the ARD Notes)............ 1.6% 7
</TABLE>
- ------------------------
(1) A "Balloon Note" is a Note that provides for Monthly Payments requiring
payment of interest only or an amortization schedule at least 12 months
longer than the remaining stated term of such Mortgage Loan, such that
substantial amounts of principal are due and payable on the respective
Maturity Date, unless prepaid prior to the Maturity Date.
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 (in particular, a
Balloon 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 (other than
certain Credit Tenant Loans, which permit the assumption thereof by an affiliate
of the Credit Tenant in connection with a purchase of their related Mortgaged
Property by the Credit Tenant) contain due-on-sale clauses, each of which
permits the lender to accelerate the maturity of the Mortgage Loan if, with
limited exception, the borrower sells, transfers or conveys the related
Mortgaged Property or its interest in the Mortgaged Property without the consent
of the lender. Foreclosure by the lender on a mezzanine loan will not result in
enforcement of the due-on-sale clause of the related Mortgage Loan. 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 PREMIUM LOANS. 52 of the Mortgage Loans, which represent
38.9% of the Cut-off Date Principal Balance, are Premium Loans. "Premium Loans,"
which are more fully described in this Prospectus
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<PAGE>
Supplement under "Description of the Mortgage Pool--Premium Loans," are Mortgage
Loans under which the related borrower received additional proceeds in excess of
the principal balance of the Mortgage Loan (such excess, a "Premium") in
exchange for agreeing to pay an above-market interest rate on the Mortgage Loan
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. Under the related
loan documents, in the event of a prepayment (which may occur as a result of an
involuntary prepayment 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 yield
maintenance premium intended to compensate the lender for loss of interest and
is expressly undertaken by the borrower in consideration for its receipt of the
Premium.
In analyzing the risk of default on Premium Loans, investors should take
into account the PTV and the "amortization" of Premium. Set forth below is a
comparison of PTVs and DSCRs for Premium Loans with LTVs and DSCRs of the other
Mortgage Loans (exclusive of Credit Tenant Loans).
<TABLE>
<CAPTION>
NUMBER PREMIUM LOANS OTHER MORTGAGE LOANS(1)
- --------------------------------------------------------------------------------- ------------- -----------------------
<S> <C> <C>
Number and % of Initial Pool Balance............................................. 52/38.9% 178/61.1%
Maximum PTV/LTV as of the Cut-off Date (1)....................................... 82.4% 90.4%
Minimum PTV/LTV as of the Cut-off Date(1)........................................ 53.5% 25.7%
Weighted Average PTV/LTV as of the Cut-off Date (1).............................. 72.8% 68.7%
Maximum DSCR as of the Cut-off Date(1)........................................... 2.43 3.75
Minimum DSCR as of the Cut-off Date (1).......................................... 1.17 1.05
Weighted Average DSCR as of the Cut-off Date (1)................................. 1.35 1.58
</TABLE>
- ------------------------
(1) Exclusive of Credit Tenant Loans.
In addition, the legal characterization of a Return of Premium under state
law is unclear. If it is treated like other prepayment premiums, there may be
certain limitations on the enforceability of such premium in certain
jurisdictions, especially in the case of involuntary prepayments. See "Certain
Legal Aspects of the Mortgage Loans--Default Interest, Prepayment Charges and
Prepayments" in the Prospectus. Furthermore, if a borrower perceives that it can
default on its Premium Loan and avoid its obligation to repay the Return of
Premium Amount, it may be more likely to default in order to get a market rate
of interest under a new mortgage loan. Any increase in defaults on the Mortgage
Loans will have the effect of accelerating the amortization of the Classes of
Certificates to which the related liquidation proceeds are distributed, 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" in this Prospectus Supplement.
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 are secured by 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. With respect to 95.0% of the Initial Pool Balance (by
Allocated Loan Amount), such appraisals were obtained within 18 months prior to
the Cut-off Date. None is dated more than 24 months prior to the Cut-off Date.
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 a
Mortgaged Property under a distress or liquidation sale. Information regarding
the appraised values of the Mortgaged Properties as of the Cut-
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off Date is presented under "Description of the Mortgage Pool" in this
Prospectus Supplement for illustrative purposes only.
RISKS ASSOCIATED WITH GROUND LEASES. 11 of the Mortgaged Properties,
representing security for approximately 4.4% 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 (breach and vacate
the premises) 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 may not
be able to succeed to the lessee/borrower's position under the lease unless 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 it is possible that the Trustee could be deprived of its security
interest in the leasehold estate, notwithstanding lender protection provisions
contained in the lease or 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 RELATED TO LITIGATION.
o Atlanta Marriott Litigation. On December 12, 1997 in the United States
District Court for the Northern District of Georgia (the "Georgia Federal
Court") and on January 5, 1998 in the Court of Chancery of the State of Delaware
(the "Delaware Chancery Court"), certain limited partners of Atlanta Marriott II
Marquis Limited Partnership ("AMM II"), the transferor of the real property
interest in the Atlanta Marriott Hotel Property to HMA Realty Limited
Partnership (the "Atlanta Marriott Borrower"), filed two purported class action
and derivative lawsuits. These lawsuits were filed in connection with the merger
of Atlanta Marriott Marquis Limited Partnership ("AMM I") with and into AMM II
(the "Merger"), and they allege, among other things, that the defendants (which
do not include the Atlanta Marriott Borrower) violated their fiduciary duties in
connection with the Merger and that the defendants breached the AMM I
partnership agreement by agreeing to transfer the Atlanta Marriott Hotel
Property for inadequate consideration and by agreeing to terminate the ground
lease, which action plaintiffs allege will deprive them of their sole source of
distributions. Such lawsuits seek, among other things, monetary damages,
rescission of the Merger and rescission of all transactions consummated in
connection with the Merger, including rescission of the transfer of the land to
the Atlanta Marriott Borrower and the termination of the ground lease. Although
the complaints could be amended, there are no allegations that the Atlanta
Marriott Hotel Loan is unfair
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or its terms improper. If a court were to rescind the transfer of the land and
reinstate the ground lease, the land would be transferred to AMM II (or a
recreated AMM I) and would be subject to the reinstated ground lease to Ivy
Street Hotel Limited Partnership ("Ivy Street"). If this were to occur, the
Trustee's lien on both the fee and leasehold interests most likely would not be
impaired.
In a filing with the Securities and Exchange Commission on Form 8-K dated
December 31, 1997, Marquis Corporation, the general partner of AMM II, stated
that it believes that the allegations asserted in the lawsuits are without merit
and that Marquis Corporation intends to defend the lawsuits vigorously. On
January 16, 1998, Marquis Corporation filed an answer and motion to dismiss in
the Delaware Chancery Court. No date for a hearing on the motion to dismiss has
been scheduled as of the Cut-off Date. On March 6, 1998, Marquis Corporation
filed a motion to dismiss in the Georgia Federal Court and on November 13, 1998,
the Georgia Federal Court granted such motion in part and dismissed all federal
securities claims against the defendants. No trial date has been scheduled for
the remaining state law claims as of the Cut-off Date. AMM II has also advised
the Depositor that the litigation is not expected to have a material adverse
effect on the business, financial condition or results of operations of itself,
Ivy Street or the Atlanta Marriott Borrower. Ivy Street has also advised the
Depositor to the same effect with respect to itself and the Atlanta Marriott
Borrower, and the Atlanta Marriott Borrower has made the same statement with
respect to itself.
The lawsuits were filed in connection with the Merger on December 31, 1997,
of AMM I, a publicly-traded limited partnership, with the consent of a majority
of the limited partners not affiliated with its general partner, with and into
AMM II, a newly-formed publicly-traded limited partnership. (References to "AMM"
will mean AMM I at all times prior to the Merger and AMM II at all times from
and after the Merger.) AMM II was formed and organized to succeed to AMM I's
interest in Ivy Street, an entity owned 80% by AMM and 20% by entities
unaffiliated with AMM. Prior to the financing for the Atlanta Marriott Hotel
Loan (the "NACC/Marriott Financing"), Ivy Street owned the improvements that
constitute the Atlanta Marriott Hotel Property and leased the land from AMM.
Contemporaneously with the NACC/Marriott Financing, AMM II transferred the land
and Ivy Street transferred the leasehold interest in the Atlanta Marriott Hotel
Property to the Atlanta Marriott Borrower, which is owned 99% by Ivy Street and
1% by a wholly owned subsidiary of Ivy Street and the ground lease was
terminated. Host Marriott Corporation ("Host Marriott"), a publicly traded
corporation, is the parent of Marriott Marquis Corporation ("Marquis
Corporation") which is the general partner of AMM. By way of an indirect capital
contribution from Host Marriott, the Atlanta Marriott Borrower received from Ivy
Street a capital contribution of $75,000,000. At the time of the Merger, the
Atlanta Marriott Hotel Property was encumbered by a mortgage in the amount of
$199,000,000. That mortgage was refinanced by the proceeds of the Atlanta
Marriott Hotel Loan and a portion of the capital contribution.
Host Marriott has agreed to indemnify the Atlanta Marriott Borrower and the
Trustee for any costs or expenses that either entity may incur as a result of
the litigation. Further, three title insurance policies issued by three national
title insurance companies in favor of the Trustee provide coverage for any loss
due to an impairment of the Atlanta Marriott Borrower's title to the Atlanta
Marriott Hotel Property. Additionally, AMM II and Ivy Street have agreed to
subject any interest they may acquire in the Atlanta Marriott Hotel Property to
a mortgage identical to the Atlanta Marriott Mortgage and to become special
purpose entities if they acquire any direct interest in the Atlanta Marriott
Hotel Property, as a result of the litigation. However, no assurance can be
given that such actions will or could be taken or that you, as a
Certificateholder, will not suffer delays or a loss as a result of the
litigation. For a description of the Atlanta Marriott Hotel Loan, see
"Description of the Mortgage Pool--Significant Mortgage Loans--Atlanta Marriott
Hotel Loan and Property" in this Prospectus Supplement.
o Other 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. There can be no assurance that such litigation will not
have a material adverse effect on the distributions to your Certificates.
RISKS RELATED TO LOANS TO BGK EQUITIES, INC. 11 Mortgage Loans,
representing approximately 2.2% of the Initial Pool Balance, were made to
limited partnerships, the general partner of which is BGK Equities, Inc.
("BGK"). See "Loans to Affiliated Borrowers Entail Risks" above. According to
information prepared by BGK and delivered to the Originators in connection with
origination of such Mortgage Loans, Edward M. Gilbert, the current President of
BGK, plead guilty in 1964 and 1967 to devising a scheme to defraud and to obtain
money by false pretenses and
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grand larceny in connection therewith. In addition, in 1981 he was convicted of
conspiracy and fraud in trading in stock on the NYSE and was sentenced to four
years in prison.
RISKS RELATED TO THE BORROWER UNDER THE SPRINGFIELD MALL LOAN. Meshulam
Riklis ("Riklis") is the majority owner of the limited partnership that owns 99%
of the borrower under the Springfield Mall Loan, which represents 3.8% of the
Initial Pool Balance. The following is based on published reports. Riklis was
formerly the chairman and CEO of McCrory Corp. ("McCrory") both before and
during insolvency proceedings involving McCrory. In 1997, a federal bankruptcy
judge accepted the bid of a company controlled by Riklis to purchase all of the
assets of McCrory, for a purchase price that yielded 18 cents on the dollar to
administrative creditors (i.e., professionals who worked on the bankruptcy).
Unsecured creditors received nothing. Riklis also controlled E-II Holdings
("E-II"), a company that was engaged in the manufacture of Samsonite luggage
among other endeavors. E-II was also the subject of insolvency proceedings and
Riklis was accused by the E-II investors of having wrongfully impaired E-II by
moving significant assets from E-II to McCrory and other Riklis-controlled
entities. McCrory settled a claim brought by the E-II investors. In the 1970s,
the SEC charged Riklis with using the assets of Rapid American, then a public
company, to help pay off $60 million in personal debts. The matter was settled
in 1979 by a consent decree in which Riklis neither admitted nor denied the
charges.
SERVICING TOTAL PARI PASSU LOANS. 14 of the Mortgage Loans, representing
22.4% of the Initial Pool Balance, are represented by CMAT Pari Passu Notes.
Each CMAT Pari Passu Note is one of two or more pari passu first priority Notes.
With respect to each CMAT Pari Passu Note, one Other Pari Passu Note exists
which was originated by NACC/CCA and secured by a mortgage on the same Mortgaged
Property or Mortgaged Properties as the applicable CMAT Pari Passu Note. The
CMAT Pari Passu Notes are being deposited in this Trust Fund.
With respect to each CMAT Pari Passu Note, the Trustee will be a party to a
co-lender agreement with the owner of the related Other Pari Passu Note (which
is the trustee of a separate commercial mortgage-backed securitization of an
affiliate of NACC/CCA). Under the terms of the co-lender agreement with respect
to each CMAT Pari Passu Note, the Trustee will be named as either lead lender or
co-lender.
With respect to the CMAT Pari Passu Notes as to which the trustee of
another securitization is the lead lender, the servicer and special servicer of
the other transaction will make all servicing decisions with respect to such
Mortgage Loans and the Special Servicer will not have the ability to direct any
foreclosure or work out of such Mortgage Loans. For a further description of
Total Pari Passu Loans, see "Description of the Mortgage Pool--CMAT Pari Passu
Notes" in this Prospectus Supplement.
RISKS RELATED 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 Servicer or Special Servicer and the Trust
Fund. The Depositor has been advised by each of 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 or Special Servicer, respectively,
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.
o Conflicts Between the Trust Fund and Affiliates of the Depositor. 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. Specifically:
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(i) An affiliate of NACC/CCA has acquired a preferred equity interest
in certain of the borrowers or their affiliates, which are the borrowers
(or affiliates) with respect to 12 Mortgage Loans which represent
approximately 3.8% of the Initial Pool Balance (see "--Certain Risks
Related to Preferred Equity Investments" above); and
(ii) An affiliate of NACC/CCA has an equity interest in the borrower
or an affiliate of the borrower with respect to 2 Mortgage Loans (the
"Common Equity Loans") which represent approximately 3.5% of the Initial
Pool Balance.
o Conflicts Between Trust Fund and The Common Equity Holder. An affiliate
of NACC/CCA (the "Common Equity Holder") owns a common equity ownership interest
in certain borrowers or the direct parents of borrowers with respect to the
Common Equity Loans, as set forth below. Pursuant to the terms of the related
borrowers' or parents' limited partnership or operating agreements, as
applicable, payments to the Common Equity Holder will generally be made prior to
payments to nonaffiliated members or partners, and the Common 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 Common Equity Holder and its affiliates.
THE COMMON EQUITY LOANS
<TABLE>
<CAPTION>
CUT-OFF DATE
MORTGAGE LOAN PRINCIPAL BALANCE
- ----------------------------------------------------------------------------------------------------------- -----------------
<S> <C>
Iowa Malls Loans........................................................................................... $65,875,608
Peru Mall Loans............................................................................................ $17,730,768
</TABLE>
The aggregate Cut-off Date Principal Balance for the 2 Mortgage Loans
described above (the "Common Equity Loans") represents approximately 3.5% of the
Initial Pool Balance.
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 current or former 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.
RISKS RELATED TO THE CERTIFICATES
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 reflected in (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
Mortgage Loans had been prepaid in full (except for any distribution of any
Prepayment Premium that would otherwise be payable with respect to a default or
prepayment by the borrower). No representation is made as to the anticipated
rate of prepayments (voluntary or involuntary) on the Mortgage Loans. See
"Description of the Offered Certificates--Prepayment and Yield Considerations"
in this Prospectus Supplement.
RISKS RELATED TO YIELD. The yield on your Certificates, particularly a
subordinate Certificate, will be sensitive to the timing of prepayments,
repurchases or purchases of Mortgage Loans, and the magnitude of losses on the
Mortgage Loans due to liquidations. 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
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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 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 of Servicer and Others to
Receive Interest on Advances Is Senior to Your Right to Receive Distributions"
below. Although any such shortfalls may be made up on 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
"Description of the Offered Certificates--Prepayment and Yield Considerations"
in this Prospectus Supplement.
RISKS ASSOCIATED WITH DUAL AMORTIZATION LOANS. 16 of the Mortgage Loans,
which represent 2.8% of the Initial Pool Balance, are "Dual Amortization Loans."
For each of these loans, standard underwriting criteria may have required an
amortization schedule longer than that which was preferred by the borrower. In
order to accommodate the borrower, the Dual Amortization Loans provide the
borrower with two amortization schedules. The borrower is required to make
payments sufficient to amortize the Dual Amortization Loan over the shorter of
the two amortization schedules. Failure of the borrower to make payments
consistent with the shorter amortization schedule does not result in a default
under the Dual Amortization Loan. Instead, in the event the borrower fails to
make payments consistent with the shorter amortization schedule on any Due Date,
all excess cash flow from the related Mortgaged Property on future Due Dates is
kept from the borrower in a lock box account and used to make payments due under
the shorter amortization schedule. If the cash flow from the Mortgaged Property
is sufficient to make such payments for three sequential Due Dates, future
excess property cash flow is released to the borrower. Dual Amortization Loans
are not in payment default unless the borrower fails to make payments in
accordance with the longer amortization schedule, and such loans may not be
accelerated or foreclosed upon as a result of the failure of the borrower to
make the relatively larger payments required by the shorter amortization
schedules. DSCRs disclosed herein with respect to the Dual Amortization Loans
are calculated based on such Mortgage Loans' longer amortization schedules.
However, the tables set forth in this Prospectus Supplement under "Description
of the Offered Certificates--Prepayment and Yield Considerations--Weighted
Average Life of the Offered Certificates" assume that the Dual Amortization
Loans will amortize in accordance with the shorter amortization schedules.
Failure of the Dual Amortization Loans to amortize in accordance with the
shorter amortization schedules may result in the extension of the lives of some
Classes of Certificates and may adversely affect the yields to maturity of any
such Classes purchased at a discount. For a further description of Dual
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Amortization Loans, see "Description of the Mortgage Pool--Dual Amortization
Loans" in this Prospectus Supplement.
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.
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 "--Different Timing of Mortgage
Loan Amortization Poses Certain Risks" above and "Description of the Offered
Certificates--Prepayment and Yield Considerations--Weighted Average Life of
Offered Certificates" in this Prospectus Supplement.
RIGHT OF SERVICER AND OTHERS 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 Trustee or the Fiscal Agent, as
applicable, will be entitled to receive interest on unreimbursed Advances at the
time such Advances are made until 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
is incurred, up to (but excluding) the date on which such amounts are recovered.
The 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 delays in distributions on, or 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 delays in distributions on, or 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 the Certificates of any Class. 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 the case of the Special
Servicer, the rights of the Directing Holder (if the Special Servicer is the
purchaser of the Class M-1 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. In
addition, the Directing Holders can replace the Special Servicer.
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, consent to or approve, 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 the Depositor 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 United States securities exchange. Lack of liquidity could result in a
precipitous drop in the market value of your Certificates. In addition, the
market value of
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<PAGE>
your Certificates at any time may be affected by many factors, including then
prevailing interest rates, the spreads over the applicable U.S. Treasury rate
for commercial mortgage-backed securities, and the volatility of commercial
mortgage-backed securities and fixed income securities generally. 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 B, Class C, Class D and
Class E Certificates are, in each case, equal to the lesser of a certain fixed
rate and the Weighted Average Net Mortgage Pass-Through Rate 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, the Weighted
Average Net Mortgage Rate will fluctuate over the lives of such Classes of
Certificates. See "Description of the Offered Certificates--Prepayment and Yield
Considerations--Yield" in this Prospectus Supplement.
RISKS RELATED TO THE YEAR 2000
o General. The Depositor is aware of the issues associated with the
programming code in existing computer systems as the year 2000 approaches. The
"year 2000 problem" is pervasive and complex; virtually every computer operation
will be affected in some way by the rollover of the two digit year value to 00.
The issue is whether computer systems will properly recognize date-sensitive
information when the year changes to 2000. Systems that do not properly
recognize such information could generate erroneous data or cause a system to
fail.
The Depositor has been advised by the Servicer and the Trustee that they
are committed to either (i) implementing modifications to their respective
existing systems to the extent required to cause them to be year 2000 compliant
or (ii) acquiring computer systems that are year 2000 compliant, in each case
prior to January 1, 2000. However, neither the Depositor nor any affiliate of
the Depositor has made any independent investigation of the computer systems of
the Servicer or the Trustee. In the event that computer problems arise out of a
failure of such efforts to be completed on time, or in the event that the
computer systems of the Servicer or the Trustee are not fully year 2000
compliant, the resulting disruptions in the collection or accounting of receipts
on the Mortgage Loans could adversely affect distributions on the Certificates.
o The Depository Trust Company. DTC has informed members of the financial
community that it has developed and is implementing a program so that its
systems, as the same relate to the timely payment of distributions (including
principal and interest payments) to securityholders, book-entry deliveries, and
settlement of trades within DTC, continue to function appropriately on and after
January 1, 2000. This program includes a technical assessment and a remediation
plan, each of which is complete. Additionally, DTC's plan includes a testing
phase, which is expected to be completed within appropriate timeframes.
However, DTC's ability to perform properly its services is also dependent
upon other parties, including, but not limited to, its participating
organizations (through which Certificateholders will hold their Offered
Certificates), as well as the computer systems of third-party service providers.
DTC has informed the financial community that it is contacting (and will
continue to contact) third-party vendors from whom DTC acquires services to:
(i) impress upon them the importance of such services being year 2000 compliant
and (ii) determine the extent of their efforts with respect to remediation of
year 2000 problems with (and, as appropriate, testing of) their services. In
addition, DTC has stated that it is in the process of developing such
contingency plans as it deems appropriate.
If problems associated with the year 2000 issue were to occur with respect
to DTC and the services described above, distributions to Certificateholders
could be delayed or otherwise adversely affected.
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<PAGE>
DESCRIPTION OF THE MORTGAGE POOL
GENERAL
The assets of Commercial Mortgage Asset Trust ("CMAT" or the "Trust Fund")
consist of 230 fixed-rate mortgage loans (each, a "Mortgage Loan" and,
collectively, the "Mortgage Pool") secured by first liens on 268 multifamily and
commercial properties (the "Mortgaged Properties"). The Mortgage Pool has an
aggregate principal balance as of the Cut-off Date of approximately
$2,374,987,404 (the "Initial Pool Balance"), subject to a variance of plus or
minus 5%. All numerical information provided in this Prospectus Supplement 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 in this Prospectus Supplement 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 real property constituting (i) a retail
property (a "Retail Property," and any Mortgage Loan secured thereby, a "Retail
Loan"), (ii) an office property (an "Office Property," and any Mortgage Loan
secured thereby, an "Office Loan"), (iii) an apartment building or complex
consisting of five or more rental units (a "Multifamily Property," and any
Mortgage Loan secured thereby, a "Multifamily 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 industrial property (an
"Industrial Property," and any Mortgage Loan secured thereby, an "Industrial
Loan"), (vi) a factory outlet center property (a "Factory Outlet Center
Property," and any Mortgage Loan secured thereby, a "Factory Outlet Center
Loan"), (vii) a health club facility (each, a "Health Club Property" and any
Mortgage Loan secured thereby, a "Health Club 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 hospital, a nursing home or a congregate
care facility (each, a "Healthcare Property," and any Mortgage Loan secured
thereby, a "Healthcare Loan"). Certain statistical information relating to the
various types of Mortgaged Properties is set forth below under "--Additional
Mortgage Information--Cut-off Date Principal Balance by Property Type."
15 of the Mortgage Loans (the "Pool Loans"), representing 18.5% of the
Initial Pool Balance, 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--Loan 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.
The Mortgage Loans were generally underwritten in accordance with the
underwriting criteria described below under "--The Mortgage Loan
Program--Underwriting Standards." The Depositor will purchase the Mortgage Loans
on or before the Closing Date from the Mortgage Loan Sellers pursuant to
Mortgage Loan Purchase and Sale Agreements (each, a "Mortgage Loan Purchase and
Sale Agreement") to be dated as of the Cut-off Date. Each Mortgage Loan Seller
will be obligated under its Mortgage Loan Purchase and Sale Agreement to
repurchase a Mortgage Loan in the event of a material breach of a representation
or warranty of a Mortgage Loan Seller with respect to such Mortgage Loan as
described under "The Pooling and Servicing Agreement--
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Representations and Warranties; Repurchase" herein. NHA, the direct parent of
START and the indirect parent of CCA, will be required to purchase any Mortgage
Loan that START or CCA is required, but fails, to repurchase in connection with
a breach of representations and warranties. The Depositor will assign the
Mortgage Loans, together with the Depositor's rights and remedies against the
Mortgage Loan Sellers in respect of breaches of representations or warranties
regarding the Mortgage Loans, to LaSalle National Bank, as Trustee, for the
benefit of the Certificateholders, pursuant to the Pooling and Servicing
Agreement. First Union National Bank, in its capacity as Servicer, will service
the Mortgage Loans pursuant to the Pooling and Servicing Agreement. The
Depositor will make no representations or warranties with respect to the
Mortgage Loans and will have no obligation to repurchase or replace Mortgage
Loans with deficient documentation or which are otherwise defective. Each
Mortgage Loan Seller will sell its Mortgage Loans without recourse, and,
accordingly, will have no obligations with respect to the Certificates other
than pursuant to the limited representations, warranties and covenants made by
it to the Depositor and assigned by the Depositor to the Trustee for the benefit
of the Certificateholders. See "The Pooling and Servicing Agreement--Assignment
of the Mortgage Loans" herein and "Description of the
Agreements--Representations and Warranties; Repurchases" in the Prospectus.
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"). See "Description of the Mortgage
Pool--Certain Terms and Conditions of the Mortgage Loans--Escrows" in this
Prospectus Supplement.
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
subject to any Permitted Encumbrances (as defined below), as set forth on the
following table:
SECURITY FOR THE MORTGAGE LOANS
<TABLE>
<CAPTION>
NUMBER OF
% OF INITIAL MORTGAGED
INTEREST OF BORROWER ENCUMBERED POOL BALANCE(1) PROPERTIES
- ----------------------------------------------------------------------------------------------- --------------- ---------
<S> <C> <C>
Fee Simple Estate(2)........................................................................... 95.6% 257
Leasehold Estate(3)(4)......................................................................... 4.4 11
----- ---
Total.......................................................................................... 100% 268
----- ---
----- ---
</TABLE>
- ------------------------
(1) Based on the Cut-off Date Principal Balance or Cut-off Date Allocated Loan
Amount of the related Mortgaged Property.
(2) 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.
(3) Leasehold estates are marked on Annex B with an "*".
(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.
Each Mortgage constitutes a first lien on the borrower's interest in 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 applicable Mortgage Loan
Seller in connection with the purchase or origination of the related Mortgage
Loan and (iii) such other
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exceptions and encumbrances on Mortgaged Properties as are reflected in the
related title insurance policies (collectively, "Permitted Encumbrances").
THE MORTGAGE LOAN PROGRAM--UNDERWRITING STANDARDS
Each Mortgage Loan was originated by NACC/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 NACC/CCA in connection with the purchase or origination of
each of the Mortgage Loans, as described below.
NACC/CCA purchased the Mortgage Loans that it did not originate pursuant to
a purchase and sale agreement with Bloomfield.
NACC/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
NACC/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, Factory Outlet Center
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 and Factory Outlet Center 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, (x) in the case of the Retail Properties, Industrial Properties and
Office Properties (other than such properties securing a Credit Tenant Loan),
subtracting from net operating income an assumed allowance for tenant
improvements and leasing commissions and (xi) in the case of the Credit Tenant
Loans, assuming the Net Cash Flow is equal to the rental obligations of the
tenants under the Credit Tenant Leases for the term of the Credit Tenant Loan.
"Net Cash Flow" reflects the calculations and adjustments used by NACC/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 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 in this Prospectus Supplement, 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
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initiatives and compliance with governmental regulations, and various other
events, conditions and circumstances, many of which are beyond the control of
the Depositor, 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 in this Prospectus Supplement 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 NACC/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 NACC/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 Mortgage Loan Information"
below. In connection with the underwriting, net operating income was based upon
information provided by the borrower and neither the Depositor nor NACC/CCA
makes any representation as to the accuracy of such information; provided,
however, that, with respect to certain of the Mortgage Loans, NACC/CCA or the
borrower engaged independent accountants to review or perform certain procedures
to verify such information.
Each Originator caused 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 55 of the Mortgaged Properties representing, in the aggregate,
63.2% of the Initial Pool Balance, excluding the portion of the Initial Pool
Balance representing Credit Tenant 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 NACC/CCA as part of its underwriting procedures.
PREMIUM LOANS
52 of the Mortgage Loans, which represent 38.9% of the Initial Pool
Balance, are "Premium Loans." A lender that makes a Premium Loan advances to the
borrower at closing an amount in excess of the principal balance of such Premium
Loan (such excess amount, the "Premium"); 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 an above-market rate of interest on the
Premium Loan. The "excess" interest generated by the spread of the higher rate
over a market rate (the "Base Interest Rate") is sufficient to "amortize" the
Premium over the term of the loan or, in the case of an ARD Loan, the loan term
through the Anticipated Repayment Date. The Premium Loan borrower is not
required to repay the Premium as part of principal. However, the borrower is
required to pay a Prepayment Premium to compensate the Trust Fund for the
unamortized portion of the Premium (a "Return of Premium Amount") upon any
prepayment of the loan (generally by reason of default, casualty or
condemnation). See "Risk Factors and Other Special Considerations--Risks
Relating to Enforceability of Premium Loans," "Description of the Mortgage
Pool--Certain Terms and Conditions of the Mortgage Loans--Prepayment Provisions"
in this Prospectus Supplement and "Certain Legal Aspects of Mortgage
Loans--Default Interest, Prepayment Charges and Prepayments" in the Prospectus.
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With respect to Premium Loans, (i) loan-to-value ratio ("LTV") means the
principal amount as of the Cut-off Date 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 principal amount as of the
Cut-off Date of such loan plus the unamortized portion of the Premium as of the
Cut-off Date, 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 Mortgage Loans, exclusive of the Premium) as of the
respective dates of origination (including Mortgage Loans that were originated
at par) is 3.3% and the weighted average of the Premiums at which the Premium
Loans were originated is 8.6%, with a range of 2.9% to 15.0%.
For the characteristics of each Premium Loan, see Annex A and Annex C.
PREMIUM LOANS
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED
AVERAGE AVERAGE WEIGHTED AVERAGE
CUT-OFF CUT-OFF AVERAGE WEIGHTED CUT-OFF DATE WEIGHTED
RANGE OF PREMIUMS NUMBER DATE DATE ARD AVERAGE PRINCIPAL AVERAGE
AS A % OF ORIGINAL LOAN BALANCE OF NOTES LTV PTV LTV/PTV DSCR BALANCE PREMIUM(1)
- ------------------------------------------------ -------- -------- -------- -------- -------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
less than 5.0%.................................. 3 69.5% 71.8% 56.0% 1.32 $ 52,694,729 3.3%
5.0--9.9%....................................... 32 66.9% 73.1% 55.6% 1.36 $ 19,041,781 9.5%
10.0--15.0%..................................... 19 65.7% 72.6% 53.1% 1.32 $ 8,237,784 10.6%
Total/Weighted Average.......................... 54 67.2% 72.8% 55.2% 1.35 $ 17,109,558 8.6%
<CAPTION>
AGGREGATE
CUT-OFF DATE
RANGE OF PREMIUMS PRINCIPAL
AS A % OF ORIGINAL LOAN BALANCE BALANCE
- ------------------------------------------------ ------------
<S> <C>
less than 5.0%.................................. $158,084,187
5.0--9.9%....................................... $608,336,992
10.0--15.0%..................................... $156,517,904
Total/Weighted Average.......................... $923,916,127
</TABLE>
- ------------------------
(1) Premium as of the date of origination as a percentage of the original
principal balance.
CMAT PARI PASSU NOTES
13 of the Mortgage Loans, representing 22.4% of the Initial Pool Balance,
are each represented by one of two or more notes which collectively constitute a
"Total Pari Passu Loan." Each such Mortgage Loan is represented by one or more
notes which are owned by the Trust Fund (collectively, the "CMAT Pari Passu
Note"). With respect to each CMAT Pari Passu Note, another note (an "Other Pari
Passu Note") was also originated by NACC/CCA and secured by a mortgage on the
same Mortgaged Property or Mortgaged Properties as the CMAT Pari Passu Note and
was previously deposited into a separate commercial mortgage-backed
securitization of an affiliate of CCA (a "CCA-CMBS Transaction").
With respect to each Total Pari Passu Loan, the Trustee will be party to a
co-lender agreement with the trustee of the CCA-CMBS Transaction into which the
related Other Pari Passu Note was deposited. The Trustee will either be named as
lead lender (the "Lead Lender"), in which case the trustee of the other CCA-CMBS
Transaction will be named as the co-lender (the "Co-Lender"), or the Trustee
will be named as co-lender, in which case the trustee of the other CCA-CMBS
Transaction will be named as lead lender.
All amounts received in respect of any Total Pari Passu Loan (other than
Credit Tenant Loans) will be allocated between the applicable CMAT Pari Passu
Note and the related Other Pari Passu Note pro rata in accordance with the
amounts due thereunder. However, a CMAT Pari Passu Note and the related Other
Pari Passu Note may not amortize on the same schedule. With respect to the
Credit Tenant Loans which are represented by CMAT Pari Passu Notes, such CMAT
Pari Passu Notes are interest-only Balloon Notes for ten years and the Other
Pari Passu Notes are fully amortizing. The holder of the Balloon Note will not
receive principal until 114 months from the Cut-off Date, except that in the
event of the occurrence of a continuing event of default under any such Credit
Tenant Loan, all amounts received in respect thereof that are allocable to
principal will be applied pro rata in accordance with the outstanding principal
balances of the related notes without regard to the amortization schedules
thereof. In the event that such event of default is cured and a Credit Tenant is
performing under a lease with respect to the related Mortgaged Property which
lease provides sufficient rent to make all required payments of principal and
interest under the related Mortgage Loan, then the original amortization
schedules can be restored if the Rating Agencies confirm that such restoration
will not cause a downgrade, qualification or withdrawal of the then current
ratings assigned to any Class of Certificates. As Lead Lender, the Trustee will
have the ability to exercise any rights or powers of the lead lender under the
loan documents, including
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acceleration of the applicable Total Pari Passu Loans and foreclosure on the
related Mortgaged Property or Mortgaged Properties.
The Trustee will be the mortgagee of record with respect to the Total Pari
Passu Loans as to which it is Lead Lender, and the trustee of the applicable
other CCA-CMBS Transaction of which the Other Pari Passu Note is a part will be
the mortgagee of record with respect the Total Pari Passu Loan as to which the
Trustee is the Co-Lender, in each case on behalf of the holders of both the CMAT
Pari Passu Note and the related Other Pari Passu Note.
The Servicer will make all servicing decisions with respect to the CMAT
Pari Passu Notes and the Other Pari Passu Note or Other Pari Passu Notes as to
which the Trustee is the Lead Lender and the Special Servicer will specially
service any such CMAT Pari Passu Notes and the Other Pari Passu Note or Other
Pari Passu Notes in the event that they become Specially Serviced Mortgage
Loans. The Servicer, the Trustee or Fiscal Agent will be required to make all
Property Advances with respect to Total Pari Passu Loans as to which the Trustee
is the Lead Lender, but will be entitled to certain reimbursement from the
servicer for the applicable CCA-CMBS transaction. The Servicer will only be
required to make P&I Advances with respect to the amounts due on the CMAT Pari
Passu Notes.
The servicer and special servicer acting on behalf of the holder of the
applicable other CCA-CMBS Transaction of which the Other Pari Passu Note is a
part will make all servicing decisions with respect to the CMAT Pari Passu Notes
and the Other Pari Passu Note or Other Pari Passu Notes as to which the Trustee
is the Co-Lender, and neither the Special Servicer nor the Directing Holders
will have the ability to direct any foreclosure or workout of such CMAT Pari
Passu Notes and the Other Pari Passu Note. Such servicer will be required to
make full Property Advances on each such Total Pari Passu Loan, but will be
entitled to immediate reimbursement from the Servicer. Any such reimbursement by
the Servicer in respect of CMAT Pari Passu Notes as to which the Trustee is the
Co-Lender will be treated as a Property Advance. The servicer on behalf of the
Lead Lender will be required to make Property Advances irrespective of the
Co-Lender's compliance with such reimbursement requirements. With respect to all
Advances, the Lead Lender's determination as to recoverability will bind the Co-
Lender. See "The Pooling and Servicing Agreement--Advances" in this Prospectus
Supplement.
In either case the Servicer or the servicer on behalf of the holder of the
related Other Pari Passu Note will be required to service for the benefit of the
holders of the related CMAT Pari Passu Note and the holder of the Other Pari
Passu Note with a view to maximizing recovery to all such holders.
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The following table indicates, for each CMAT Pari Passu Note, whether the
Trustee will be Lead Lender or Co-Lender:
TOTAL PARI PASSU LOANS
<TABLE>
<CAPTION>
CMAT PARI PRINCIPAL
PASSU NOTE BALANCE
CUT-OFF DATE OF OTHER
PRINCIPAL % OF INITIAL PARI PASSU LEAD OR
MORTGAGE LOAN BALANCE POOL BALANCE NOTE(S) CO-LENDER
- ------------------------------------------------- --------------- ------------ --------------- --------------
<S> <C> <C> <C> <C>
Park LaBrea Loan................................. $ 140,613,989 5.9% $ 140,613,989 Co-Lender(1)
Prime Retail III Pool Loan....................... $ 97,878,360 4.1% $ 65,252,240 Co-Lender(2)
Springfield Mall Loan............................ $ 90,394,069 3.8% $ 90,394,069 Co-Lender(1)
Atlanta Marriott Hotel Loan...................... $ 80,770,298 3.4% $ 80,770,298 Co-Lender(1)
Accor Credit Tenant Loan......................... $ 40,320,671 1.7% $ 9,211,548 Lead Lender(3)
Airport Industrial Loan.......................... $ 30,343,508 1.3% $ 39,190,240 Co-Lender(2)
Circuit City Credit Tenant Loan.................. $ 15,718,312 0.7% $ 2,899,555 Lead Lender(3)
Soho Grand Hotel Loan............................ $ 11,940,271 0.5% $ 47,761,083 Co-Lender(2)
Bentley-Mills Credit Tenant Loan................. $ 11,685,718 0.5% $ 3,238,037 Lead Lender(3)
Morgantown Mall and Commons Retail Loan.......... $ 11,612,826 0.5% $ 46,451,303 Co-Lender(2)
</TABLE>
- ------------------------
(1) The Lead Lender is the trustee under the D6 Securitization, under which the
Mortgage Loans are serviced by AMRESCO Services, L.P. ("ASLP") and, if
necessary, specially serviced by BancOne Mortgage Capital Markets, LLC. In
the event that ASLP is removed as servicer of any Other Pari Passu Note as
to which the Trustee is the Co-Lender, then any successor servicer of such
Other Pari Passu Note would also act as Servicer of the CMAT Pari Passu Note
contained in the Trust Fund.
(2) The Lead Lender is the trustee under the D7 Securitization under which the
Total Pari Passu Loans are serviced by The Capital Company of America Client
Services LLC (the "CCA Servicer") and, if necessary, specially serviced by
AMRESCO Management, Inc. In the event that the CCA Servicer is removed as
servicer of any Other Pari Passu Note as to which the Trustee is the
Co-Lender, then any successor servicer of such Other Pari Passu Note would
also act as Servicer of the CMAT Pari Passu Note contained in the Trust
Fund.
(3) The Lead Lender is the Trustee under this securitization and the Co-Lender
is the trustee under the D7 Securitization. The Servicer will make all
servicing decisions with respect to the Total Pari Passu Loans and the
Special Servicer will specially service any such Total Pari Passu Loans in
the event that they become Specially Serviced Mortgage Loans.
CREDIT TENANT LOANS
17% of the Mortgage Loans (the "Credit Tenant Loans"), representing 5.2% of
the Initial Pool Balance, are secured by Mortgages on Mortgaged Properties
("Credit Tenant Properties") that are, in each case, subject to a net lease
obligation (a "Credit Tenant Lease") of a tenant (a "Credit Tenant"), which
possesses, or whose parent or affiliate that guarantees the lease obligations (a
"Guarantor") possesses, a long-term unsecured debt rating of no less than "B-"
(or an equivalent rating) from one or both of the Rating Agencies or "NAIC2"
from the National Association of Insurance Commissioners ("NAIC") (except for
the tenant of the Dairy Mart Credit Tenant Leases, which has an unpublished
rating). Scheduled monthly payments under each Credit Tenant 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 Tenant Loan
(except for any Balloon Payment due on such loan). None of the Credit Tenant
Loans are Premium Loans. See "Risk Factors and Other Special
Considerations--Risks Related to the Mortgage Loans--Credit Tenant Loans Have
Special Risks" in this Prospectus Supplement.
All of the Credit Tenant 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
Tenant Property (except for the Credit Tenant Lease relating to the Mortgaged
Property identified on Annex B hereto as Value City-Irvington (the "Value City
Credit Tenant Lease") under which the related Credit Tenant may terminate the
related Credit Tenant Lease upon a full or partial condemnation that would be
substantially and materially adverse to the related Credit Tenant's business
operations, provided that during such Credit Tenant Lease's Primary Term, the
related Credit Tenant makes an offer to purchase the related Credit Tenant
Property). However,
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under each of the Credit Tenant Leases, the related Credit Tenant is permitted
to terminate (or, in certain cases, permitted to offer to terminate) the related
Credit Tenant Lease only upon certain condemnation or casualty events as long as
the related Credit Tenant purchases the related Credit Tenant Property for an
amount not less than that required to pay the outstanding principal balance of
the Mortgage Loan plus accrued interest (except for the renewal terms of the
Circuit City Credit Tenant Leases, during which the related Credit Tenant may
freely terminate the related Credit Tenant Lease upon an event of casualty or
condemnation and except for the Value City Credit Tenant Lease which does not
provide for a purchase option in the event of a casualty). If such offer is
rejected by the related borrower, the related Credit Tenant Lease will remain in
effect. In addition, in the case of the Accor Credit Tenant Lease, in the event
of a casualty or condemnation, the related Credit Tenant may offer to substitute
the Credit Tenant Property with a new property which the Credit Tenant intends
to operate as a motel upon the satisfaction of certain conditions specified in
the Credit Lease, including confirmation from each Rating Agency that such
substitution would not cause a downgrade, qualification or withdrawal of the
then current ratings assigned to any Class of Certificates. If such offer is
rejected, the related Credit Tenant Lease will remain in effect.
Certain of the Credit Tenant Loans (as identified on the following chart)
are a portion of a larger loan (each such larger loan, the "Total Credit Tenant
Loan"), consisting of two notes (referred to in this Prospectus Supplement as
the "CMAT Pari Passu Note" and the "Other Pari Passu Note"), each originated by
CCA. With respect to the Credit Tenant Loans, each CMAT Pari Passu Note is being
deposited in this Trust Fund and each Other Pari Passu Note has been deposited
in a securitization sponsored by an affiliate of the Depositor, the Commercial
Mortgage Pass-Through Certificates, Series 1998-D7 (the "D7 Securitization").
See "Risk Factors and Other Special Considerations--Risks Related to the
Mortgage Loans--Servicing Total Pari Passu Loans" in this Prospectus Supplement.
Each of the related Other Pari Passu Notes has an amortization schedule that
fully amortizes its principal balance within 120 months of September 11, 1998.
The related CMAT Pari Passu Notes require payments of interest only for the
first 114 months following the Cut-off Date, and thereafter, if the related
Other Pari Passu Notes have fully amortized in accordance with their
amortization schedules, the related CMAT Pari Passu Notes will receive all of
the remaining principal payable with respect to the Total Credit Tenant Loan.
The aggregate Cut-off Date Principal Balance of the Credit Tenant Loans is
$123,192,849, which represents 5.2% of the Initial Pool Balance. The aggregate
principal balance of the Total Credit Tenant Loans as of the Cut-off Date is
$138,541,989. Unless otherwise specified, references in this Prospectus
Supplement to Credit Tenant Loans that are evidenced by CMAT Pari Passu Notes
refer only to the portion of the Total Credit Tenant Loan and the related CMAT
Pari Passu Note deposited in this Trust Fund. Proceeds and losses will be
applied pro rata between the CMAT Pari Passu Note and the related Other Pari
Passu Notes. See "CMAT Pari Passu Notes" herein and "Risk Factors and Other
Special Considerations--Risks Related to the Mortgage Loans--Servicing Total
Pari Passu Loans" in this Prospectus Supplement.
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CREDIT TENANT LOANS
<TABLE>
<CAPTION>
TOTAL CREDIT
TENANT LOAN
CUT-OFF DATE BALLOON
CUT-OFF DATE PRINCIPAL BALLOON PAYMENT/RVI
PROPERTY NAME PRINCIPAL BALANCE BALANCE(1) BALANCE POLICY
- --------------------------------- ----------------- ----------------- ----------- -----------
<S> <C> <C> <C> <C>
Accor-M-Six-Penvest I............ $40,320,671(3) $49,532,219 $10,102,684 Yes
Circuit City-East Lansing........ $ 3,742,455(3) $ 4,432,825 $ 1,802,547 Yes
Circuit City-Frederick........... $ 3,742,455(3) $ 4,432,825 $ 1,802,547 Yes
Circuit City-Green Bay........... $ 3,742,455(3) $ 4,432,825 $ 1,802,547 Yes
Circuit City-Harper Woods........ $ 4,490,947(3) $ 5,319,391 $ 2,163,059 Yes
Bentley Mills Distribution
Facility....................... $11,685,718(3) $14,923,755 $ 4,476,311 Yes
Dairy Mart-Rootstown............. $ 1,048,231 $ 1,048,231 $ 296,793 Yes
Dairy Mart-Salem................. $ 865,241 $ 865,241 $ 278,247 Yes
Dairy Mart-Ontario............... $ 1,375,173 $ 1,375,173 $ 396,822 Yes
Dairy Mart-Grove City............ $ 1,343,994 $ 1,343,994 $ 369,841 Yes
Dairy Mart-Amelia................ $ 1,422,318 $ 1,422,318 $ 382,596 Yes
Dairy Mart-Liberty Westchester... $ 1,305,778 $ 1,305,778 $ 337,923 Yes
Dictaphone....................... $15,275,478 $15,275,478 $ 3,483,925 Yes
Perry Judd's-Strasburg........... $11,582,366 $11,582,366 -- No
Perry Judd's-Pikesville.......... $10,768,722 $10,768,722 -- No
Perry Judd's-Mt. Jackson......... $ 2,829,895 $ 2,829,895 -- No
Value City-Irvington............. $ 7,650,951 $ 7,650,951 -- No
<CAPTION>
TENANT/LEASE
PROPERTY NAME GUARANTOR RATING(2)
- --------------------------------- ---------------------------- -------
<S> <C> <C>
Accor-M-Six-Penvest I............ Accor NA/BBB
Circuit City-East Lansing........ Circuit City Stores, Inc. NAIC2
Circuit City-Frederick........... Circuit City Stores, Inc. NAIC2
Circuit City-Green Bay........... Circuit City Stores, Inc. NAIC2
Circuit City-Harper Woods........ Circuit City Stores, Inc. NAIC2
Bentley Mills Distribution
Facility....................... Interface, Inc. Ba1/BB+
Dairy Mart-Rootstown............. Dairy Mart Convenience (4)
Stores, Inc.
Dairy Mart-Salem................. Dairy Mart Convenience (4)
Stores, Inc.
Dairy Mart-Ontario............... Dairy Mart Convenience (4)
Stores, Inc.
Dairy Mart-Grove City............ Dairy Mart Convenience (4)
Stores, Inc.
Dairy Mart-Amelia................ Dairy Mart Convenience (4)
Stores, Inc.
Dairy Mart-Liberty Westchester... Dairy Mart Convenience (4)
Stores, Inc.
Dictaphone....................... Dictaphone Corporation NA/B-
Perry Judd's-Strasburg........... Perry Judd's Holdings, Inc. NA/B+
Perry Judd's-Pikesville.......... Perry Judd's Holdings, Inc. NA/B+
Perry Judd's-Mt. Jackson......... Perry Judd's Holdings, Inc. NA/B+
Value City-Irvington............. Value City Department NAIC1
Stores, Inc.
</TABLE>
- ------------------
(1) Only the Cut-off Date Principal Balance of the Credit Tenant Loan is
included in the Mortgage Pool. The remaining amount of the Total Credit
Tenant Loan is not included in the Trust Fund.
(2) Long-term unsecured debt rating of Moody's/S&P or claims-paying ability of
NAIC.
(3) CMAT Pari Passu Note.
(4) Unpublished rating.
Each of the Credit Tenant Leases (except for the Circuit City Credit Tenant
Leases and the Value City Credit Tenant Lease) has a primary lease term (the
"Primary Term") which expires on or after the Maturity Date of the related Total
Credit Tenant Loan. The Primary Term of each Circuit City Credit Tenant Lease
expires 11 days before the Maturity Date of the Circuit City credit tenant loans
(the "Circuit City Credit Tenant Loans"). The Primary Term of the Value City
Credit Tenant Lease expires nine days before the Maturity Date of the Value City
Credit Tenant Loan. The Credit Tenant Loans in this Mortgage Pool are scheduled
to be repaid (except for the Balloon Payments and except for the last regular
payment due under the Value City Credit Tenant Loan) from the scheduled payment
of rent under the related Credit Tenant Leases (the "Monthly Rental Payments")
made during the Primary Term of such Credit Tenant Lease. With respect to 13 of
the Credit Tenant Loans, representing 4.5% of the Initial Pool Balance, the rent
due under the related Credit Tenant Lease increases during the Primary Term of
such Credit Tenant Lease, and such increase will be applied in its entirety to
pay the scheduled payment of principal and interest owed with respect to the
related Credit Tenant Loan.
Most of the Credit Tenant Loans (as identified in the chart above) are
Balloon Loans. In order to minimize the risks associated with the related
Balloon Payments, each of the related borrowers has obtained an RVI Policy. The
RVI Policies, issued by R.V.I. America and FSL, indemnify the insureds against
any loss incurred as a result of a decline in the value of the related Credit
Tenant Properties upon sale of such property as a result of changes in market
conditions. Upon the maturity of a Credit Tenant Loan, if the related Credit
Tenant Property cannot be sold or the proceeds from the disposition of such
property are insufficient to repay the indebtedness secured by such Credit
Tenant Property, the insurer will be required to pay an amount equal to such
remaining indebtedness, up to
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the insured value of the Mortgaged Property. The "insured value" of a Credit
Tenant Property is typically the amount of the Balloon Payment due on the
related Credit Tenant Loan. The premium for each RVI Policy was fully paid at
the time of the issuance of such policy and such policy is non-cancelable. The
Trustee is a named insured of each RVI Policy. Each RVI Policy issued by R.V.I.
America relating to the Credit Tenant Lease relating to the Mortgaged Properties
identified on Annex B hereto as Accor-M-Six-Penvest I (the "Accor Credit Tenant
Lease," and such Mortgaged Properties, the "Accor Credit Tenant Lease
Properties"), the Credit Tenant Lease relating to the Mortgaged Property
identified on Annex B hereto as the Bentley Mills Distribution Facility (the
"Bentley Mills Credit Tenant Lease"), the Credit Tenant Leases relating to the
Mortgaged Properties identified on Annex B hereto as Dairy Mart-Rootstown
(Convest I), Dairy Mart-Salem (Convest II), Dairy Mart-Ontario (Convest III),
Dairy Mart-Grove City (Convest IV), Dairy Mart-Amelia (Convest V) and Dairy
Mart-Liberty Westchester (Convest VI) (collectively, the "Dairy Mart Credit
Tenant Leases") and the Credit Tenant Lease relating to the Mortgaged Property
identified on Annex B hereto as Dictaphone (the "Dictaphone Credit Tenant
Lease") contains certain exclusions to coverage, including (i) the modification,
amendment, waiver or termination of the note evidencing the Credit Tenant Loan
without the consent of R.V.I. America and (ii) the sale, assignment or other
transfer of the Credit Tenant Property to a person other than the named loss
payee (or an affiliate) pursuant to a foreclosure or similar proceeding without
the consent of R.V.I. America. Each RVI Policy issued by FSL relating to the
Credit Tenant Leases relating to the Mortgaged Properties identified on Annex B
hereto as Circuit City-East Lansing, Circuit City-Frederick, Circuit City-Green
Bay and Circuit City-Harper Woods (collectively, the "Circuit City Credit Tenant
Leases") contains certain exclusions to coverage, including (i) the continuance
of an event of default (under the related Credit Tenant Lease) by the Credit
Tenant as of the lease termination date, or a termination of the Credit Tenant
Lease prior to the lease termination date; (ii) the sale or transfer of all or a
substantial part of the Credit Tenant Property, or an interest in the
entity(ies) which own, directly or indirectly, the Credit Tenant Property, on or
prior to the lease termination date without the prior written consent of FSL
(which consent will not be unreasonably withheld, conditioned or delayed);
(iii) the Credit Tenant Property not being in compliance with the certain
property return conditions as of the lease termination date; (iv) the written
amendment or written modification of the Credit Tenant Lease without the prior
written consent of FSL (which consent will not be unreasonably withheld,
conditioned or delayed); (v) the additional named insured shall have consented
to any modifications or additions to the Credit Tenant Property where such
consent is required under the Credit Tenant Loan without the prior written
consent of FSL (which consent of FSL will not be unreasonably withheld,
conditioned or delayed); (vi) the assignment of the interest of the Credit
Tenant, or its permitted successors or assigns, in the Credit Tenant Lease which
was consented to by the additional named insured without the prior written
consent of FSL (which consent will not be unreasonably withheld, conditioned or
delayed); (vii) the mortgage on the Credit Tenant Property shall not be in full
force and effect as a lien on the Credit Tenant Property on the lease
termination date; and (viii) the Credit Tenant has become the subject of a
bankruptcy or insolvency proceeding and has rejected (or is deemed to have
rejected) its obligations under the Credit Tenant Lease. Each RVI Policy issued
by FSL has been reinsured by Royal Indemnity Company, subject to the same
exclusions from coverage.
Generally, a claim for payment under an RVI Policy must be filed no more
than one year and no less than 10 days prior to the policy termination date
(which is after the date on which the Balloon Payment is due on the related
Credit Tenant Loan). No RVI Policy requires that the related Credit Tenant
Property be sold prior to payment of the claim. However, if the related Credit
Tenant Property has not been sold by the date the claim is paid in accordance
with the procedures, if any, set forth in the related RVI Policy, then the
related Credit Tenant Property and any other collateral securing the related
Credit Note will be transferred to the related RVI Policy insurer. See "Risk
Factors and Other Special Considerations--Risks Related to the Mortgage
Loans--Borrower May Be Unable to Make a Balloon Payment or Prepay an ARD Loan"
and "--Credit Tenant Loans Have Special Risks--Reliance on Residual Value
Insurance Policies Has Special Risks" in this Prospectus Supplement.
Generally, each Credit Tenant Loan provides that if the related Credit
Tenant has defaulted in the performance of any covenant or agreement of the
related Credit Tenant Lease and remains in default beyond the applicable notice
and grace periods, then the lender may have the right as successor to the
related borrower, or may require the related borrower or, in the case of the
Circuit City Credit Tenant Loan, the related borrower has covenanted either
(i) to exercise any of its rights under such Credit Tenant Lease or (ii) to
terminate such Credit Tenant Lease. A default under a Credit Tenant Lease will
constitute a default under the related Credit Tenant Loan.
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<PAGE>
Each borrower under a Credit Tenant Loan has assigned to the lender of the
related Credit Tenant Loan, as security for such borrower's obligations
thereunder, such borrower's rights under the related Credit Tenant Leases and
its rights to all income and profits to be derived from the operation and
leasing of the related Credit Tenant 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 Tenant Lease and an assignment of the right
to receive all Monthly Rental Payments due under the related Credit Tenant
Lease. Repayment of the Credit Tenant Loans (other than Balloon Payments) and
other obligations of the borrowers will be funded from such Monthly Rental
Payments (except for the Balloon Payments). Notwithstanding the foregoing, the
borrowers will remain liable for all obligations under the Credit Tenant Loans
(subject to the non-recourse provisions thereof).
Each Credit Tenant Lease generally provides that the related Credit Tenant
must pay all real property taxes and assessments levied or assessed against the
related Credit Tenant Property, and all charges for utility services, insurance
and other operating expenses incurred in connection with the operation of such
Credit Tenant Property. The Monthly Rental Payments are deposited directly into
a Lock Box Account controlled by the Servicer. Although each Credit Tenant Lease
requires the Credit Tenant to fulfill its payment and maintenance obligations
during the term of the Credit Tenant Lease, in some cases the Credit Tenant has
not covenanted to operate the related Credit Tenant Property for the term of the
Credit Tenant Lease, and the Credit Tenant may at any time cease actual
operations at the Credit Tenant Property, but it remains obligated to continue
to meet all of its obligations under the Credit Tenant Lease.
The Circuit City Credit Tenant Leases, the Dictaphone Credit Tenant Lease,
the Dairy Mart Credit Tenant Leases, the Value City Credit Tenant Lease and the
Accor Credit Tenant Lease permit the related Credit Tenant, at its own expense,
and generally without the consent of the borrower (except in certain cases with
respect to certain material alterations), to make such alterations and construct
additional buildings or improvements on the Credit Tenant 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 and except in certain
cases, material alterations will require consent of the related borrower. Such
actions, if undertaken by the Credit Tenant, will not affect the Credit Tenant's
obligations under the Credit Tenant Lease.
The Accor Credit Tenant Lease provides that the Credit Tenant may offer to
purchase or substitute the related Accor Credit Tenant Properties under certain
specified circumstances, including economic obsolescence of an Accor Credit
Tenant Property. Such offers may be rejected by the landlord and are also
subject to certain other conditions set forth in the Accor Credit Tenant Lease.
In addition, the Accor Credit Tenant Lease provides that the Credit Tenant has
an unrestricted right to substitute two of the Accor Credit Tenant Properties
for other properties which the Credit Tenant intends to operate as a motel upon
the satisfaction of certain conditions specified in the Credit Lease, including
confirmation from each Rating Agency that such substitution would not cause a
downgrade, qualification or withdrawal of the then current ratings assigned to
any Class of Certificates. Such offers may be rejected by the landlord, in which
case the Credit Tenant Lease will remain in effect. In the event of a
substitution, the substituted property is required to have a fair market value
at least equal to that of the replaced property. Under the Accor Credit Tenant
Lease, the Credit Tenant also has an option to purchase the Accor Credit Tenant
Properties during certain specified periods during the primary term of the
leases for an amount not less than that required to pay the outstanding
principal balance of the Mortgage Loan. Upon purchase of the Mortgaged Property
by the Credit Tenant, the respective Credit Tenant Loan becomes fully due and
payable, subject to the defeasance provisions of the related Credit Tenant Loan.
Under the Value City Credit Tenant Lease, the current Credit Tenant is
deemed to have made an irrevocable offer to purchase the related Mortgaged
Property at a purchase price sufficient to pay the outstanding principal balance
of the related Credit Tenant Loan in full if its shareholder equity falls below
$125,000,000. If this offer is rejected by both the landlord and the lender, the
Value City Credit Tenant Lease will remain in effect. Otherwise, the offer to
purchase will be accepted. The Value City Credit Tenant also has the right to
substitute other premises for the existing Mortgaged Property in the event of
economic obsolescence. The landlord and the lender cannot unreasonably reject
the substitution and the substituted premises must be of equal value.
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<PAGE>
Each of the Dictaphone Credit Tenant Lease and the Credit Tenant Leases
relating to the Mortgaged Properties identified as Perry Judd's-Strasburg, Perry
Judd's-Pikesville and Perry Judd's-Mt. Jackson on Annex B hereto (collectively,
the "Perry Judd's Credit Tenant Leases") provides that as long as the current
Credit Tenant remains the Credit Tenant and no event of default under the Credit
Tenant Lease has occurred and is continuing, the current Credit Tenant has the
right of first refusal to purchase the Mortgaged Property should the landlord
intend to sell such property. Upon purchase of the Mortgaged Property by the
Credit Tenant, the respective Credit Tenant Loan becomes fully due and payable,
subject to the defeasance provisions of the related Credit Tenant Loan. However,
the respective Credit Tenant Lease will remain in effect if the Mortgaged
Property is conveyed to a separate single-purpose entity meeting all the
requirements relating to the borrower under the related Credit Tenant Loan, such
entity assumes all obligations under the related Mortgage and related Credit
Tenant Lease and the Rating Agencies have confirmed that such transfer would not
cause a downgrade, qualification or withdrawal of the then current ratings
assigned to any Class of Certificates.
The Dairy Mart Credit Tenant Leases provide that the Credit Tenant may
offer to purchase the related Dairy Mart Credit Tenant Property in the event
that the Credit Tenant desires to merge or consolidate with another entity, or
sell or otherwise dispose of all or substantially all of its assets, other than
as permitted under the Dairy Mart Credit Tenant Lease, for an amount not less
than that required to pay the outstanding principal balance of the Credit Tenant
Loan plus a make whole premium. The landlord may reject this offer, in which
event the related Credit Tenant Lease will remain in effect.
At the end of the term of a Credit Tenant Lease, a Credit Tenant generally
is obligated to surrender the Credit Tenant 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.
DUAL AMORTIZATION LOANS
The Mortgage Loans secured by Mortgaged Properties identified on Annex B as
Holiday Inn Express-TN, Kaleidoscope Shopping Center, MSP Associates Industrial
Complex, Sleep Inn Richmond, South Park & Pierre Malls, Watterson City, Autumn
Ridge Apts., Brentwood/Pontchartrain Apts., Countryside SC, Dillen Products,
Ponderosa Shopping Center, Princess City Plaza, Professional Building East,
Rivers Bend S/C, Streator Industrial Facility and Pleasant Valley Marketplace,
which Mortgage Loans collectively represent 2.8% of the Initial Pool Balance,
are "Dual Amortization Loans." For each of these loans, standard underwriting
criteria may have required an amortization schedule longer than that which was
preferred by the borrower. In order to accommodate the borrower, the Dual
Amortization Loans provide the borrower with two amortization schedules. The
borrower is required to make payments sufficient to amortizes the Dual
Amortization Loan over the shorter of the two amortization schedules. However,
failure of the borrower to make payments consistent with the shorter
amortization schedule does not result in a default under the Dual Amortization
Loan. Instead, in the event the borrower fails to make payments consistent with
the shorter amortization schedule on any Due Date, all excess cash flow from the
related Mortgaged Property on future Due Dates is kept in a lock box account
controlled by the lender and used to make payments due under the shorter
amortization schedule. If the cash flow from the Mortgaged Property is
sufficient to make such payments for three consecutive Due Dates and amortizes
the Dual Amortization Loan to the level consistent with the shorter amortization
schedule, future excess property cash flow is released to the borrower. Dual
Amortization Loans are not in payment default unless the borrower fails to make
payments in accordance with the longer amortization schedule, and such loans may
not be accelerated or foreclosed upon as a result of the failure of the borrower
to make the relatively larger payments required by the shorter amortization
schedules. The shorter amortization schedule is used for the assumptions made in
compiling the numerical data contained throughout this Prospectus Supplement,
except for DSCR calculations, for which the longer amortization schedule is
used. See "Risk Factors and Other Special Considerations--Risks Related to the
Certificates--Risks Associated with Dual Amortization Loans" in this Prospectus
Supplement.
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<PAGE>
SPECIAL NOTES
The Mortgage Loans secured by Mortgaged Properties identified on Annex B as
609 A Street and 1000 50th Avenue (which collectively represent 1.0% of the
Initial Pool Balance) are each evidenced by two Notes, both of which have been
deposited in the Mortgage Pool and one of which (the "Special Note") fully
amortizes on a schedule that is shorter than the amortization schedule of the
other such note. The amortization schedule of the Special Note is based on
"excess" Mortgaged Property cash flow not included in Net Cash Flow for such
Mortgaged Property. Each Special Note 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 0.1% of
the Initial Pool Balance. The source of the "excess" cash flow with respect to
the Special Note for the 1000 50th Avenue Loan is generated by the difference
between underwritten taxes and actual taxes being paid pursuant to a tax
abatement. The source of the "excess" cash flow with respect to the Special Note
for the 609 A Street Loan is generated by the difference between the
underwritten amount and the actual amount of rental income from the above market
rent under a lease to a creditworthy tenant. See "--Additional Mortgage Loan
Information" below.
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, then either the
preceding or succeeding business day (except for the Accor Credit Tenant Loan,
the Mortgage Loan secured by the Mortgaged Properties relating to the Dairy Mart
Credit Tenant Leases and the Mortgage Loan secured by the Mortgaged Properties
relating to the Dictaphone Credit Tenant Leases, each of which provide for
Monthly Payments on the first day of each month, or if the first day is not a
business day, the next business day). None of the Mortgage Loans have 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, except in the case of the
Park LaBrea Loan, which is fixed until March 1, 2000 and then the interest rate
is increased for the 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 after their respective Anticipated Repayment Dates. As
used in this Prospectus Supplement, the term "Mortgage Rate" does not include
the Excess Rate.
Excess Interest. 209 of the Notes, representing approximately 82.3% of the
Initial Pool Balance, are notes which bear interest at their respective Mortgage
Rates until, or within three months after, their respective Anticipated
Repayment Date (an "ARD Note," and the related Mortgage Loan, an "ARD Loan").
Commencing within three months after the respective Anticipated Repayment Date,
each such Note will bear interest at a fixed per annum rate (the "Revised Rate")
generally equal to the greater of (i) the sum of the Mortgage Rate plus,
generally, 500 basis points or (ii) the sum of the then current applicable
Treasury rate plus, generally, 500 basis points (or with respect to the Mortgage
Loans known as the Park LaBrea Loan, the Prime Retail III Pool Loan, the
Springfield Mall Loan, the Atlanta Marriott Hotel Loan, the Airport Industrial
Loan, the Soho Grand Hotel Loan and the Morgantown Mall and Commons Retail Loan,
generally, their respective Mortgage Rate plus 200 basis points). 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
(the "Excess 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
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<PAGE>
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 the
Monthly Debt Service Payment, (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 in this Prospectus Supplement 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 holders of the Class LR Certificates do not exercise
their option, the holders of 100% of the Percentage Interests in the most
subordinate Class of Certificates then outstanding (not including the Class M-2
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, the
Balloon Loans provide for monthly payments of interest only or for monthly
payments of interest and principal based on amortization schedules at least 12
months longer than their original terms, thereby leaving substantial principal
amounts due and payable on their respective Maturity Dates, unless previously
prepaid. The remaining Mortgage Loans have remaining amortization terms that are
generally the same as their respective remaining terms to maturity.
AMORTIZATION CHARACTERISTICS OF THE NOTES
<TABLE>
<CAPTION>
% OF
CUT-OFF DATE
TYPE OF NOTE PRINCIPAL BALANCE NUMBER OF NOTES
- --------------------------------------------------------------------------------------- ----------------- ---------------
<S> <C> <C>
ARD Notes.............................................................................. 82.3% 209
Balloon Mortgage Notes................................................................. 16.1% 18
Fully Amortizing Notes (other than ARD Notes).......................................... 1.6% 7
</TABLE>
Prepayment Provisions. Each Mortgage Loan prohibits voluntary prepayment
during a period (a "Lock-out Period") ending on a date ranging from
approximately 75 months to 251 months after the Cut-off Date. The weighted
average Lock-out Period remaining from the Cut-off Date for the Mortgage Loans
is approximately 146 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 the 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--Risks Related to the
Certificates--Risks Related to Yield" and "--Risks Related to Prepayments" in
this Prospectus Supplement. Generally, the Lock-out Periods for the Balloon and
ARD Loans expire on, or one to six months prior to, their respective Anticipated
Repayment Dates or, with respect to Balloon Loans, Maturity Dates, and the
Lock-out Periods for the fully amortizing Mortgage Loans (other 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
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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 state 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 Servicer cannot apply such funds to such a
prepayment unless the Servicer has first received the consent of the Special
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. A "Business Day" is any
day, other than a Saturday, Sunday or a day on which banking institutions in
Delaware, Florida, Georgia, Illinois, Maryland, New York, North Carolina or
Texas are authorized or obligated by law, executive order or governmental decree
to close.
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 any 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 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 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 (through the Anticipated Repayment Date for ARD Loans, plus the 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 (iv) 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.
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In general, a successor borrower established or designated by the Servicer
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 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
Tenant 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 Tenant 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,
and, in general, upon receipt of confirmation from the Rating Agencies that such
action will not cause a downgrade, qualification or withdrawal of the then
current ratings assigned to any Class of Certificates, 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 Mortgage Loans 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 or 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 DSCR 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. 15 of
the Mortgage Loans (the "Pool Loans"), representing 18.5% 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
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<PAGE>
Other Special Considerations--Risks Related to the Mortgage Loans--Risks Related
to 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 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. In general, under the terms of the preferred equity or the related
Mortgage Loan, 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, other than, in certain cases,
payments to borrower affiliates and property managers, 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, generally 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, other trigger
events, or trigger dates 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
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expressly subject to the right of the lender to terminate and replace such
manager. If the Preferred Interest Holder is entitled to terminate a manager at
a time when the lender 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 does not affect any right
that the lender 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 lender 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 lender 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.
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 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.
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THE DDR/DRA LOAN AND PROPERTIES
The Loan. The largest Mortgage Loan in the Mortgage Pool (the "DDR/DRA
Retail Loan") was originated by CCA on September 15, 1998, had an original
principal balance and has a Cut-off Date Principal Balance of $156,000,000,
which represents approximately 6.6% of the Initial Pool Balance. The DDR/DRA
Retail Loan is secured by Mortgages encumbering the fee interests in six retail
properties (each, a "DDR/DRA Retail Property"), located in Arizona, Minnesota,
Texas and Oregon.
<TABLE>
<S> <C> <C>
Cut-off Date Principal % of Initial Pool Balance:
Balance: $156,000,000
Origination Date: September 15, 1998 Maturity Date:
Loan Type: Balloon Property Type:
Premium Loan: No No. of Properties:
CMAT Pari Passu Note: No
Monthly Payment: $863,200.00(1) Location of Properties:
Interest Rate: 6.64% Appraised Value (combined):
Amortization Term: Interest Only Square Feet (combined):
Debt Constant: 6.64% Year Built/Renovated:
DSCR: 2.00 Cut-off Date Principal
Balance/SF:
Cut-off Date LTV: 64.3% Fee or Leasehold:
Borrower Special Purpose Yes, with independent director and Major Tenants:
Entity: non-consolidation opinion
Lock Box: Hard(2) Occupancy:
Cut-off Date Principal 6.6%
Origination Date: October 11, 2005
Loan Type: Anchored Retail
Premium Loan: 6
CMAT Pari Passu Note:
Monthly Payment: Arizona, Minnesota, Texas and Oregon.
Interest Rate: $242,500,000; see below
Amortization Term: 1,977,129
Debt Constant: See "The Property" below.
DSCR:
$79
Cut-off Date LTV: Fee
Borrower Special Purpose See "The Property" below.
Entity:
Lock Box: See "The Property" below.
</TABLE>
- ------------------
(1) Assuming a 30-day month.
(2) In the absence of certain trigger events, funds deposited in the Lock Box
are remitted to the borrower on a daily basis. See "The Pooling and
Servicing Agreement--Accounts--Lock Box Accounts" in this Prospectus
Supplement.
The Borrower. DDRA Community Centers Five, L.P. (the "DDR/DRA Retail
Borrower") is a special purpose Delaware limited partnership with DD Community
Centers Five, Inc., an Ohio corporation, and GT Retail Corp., a Delaware
corporation, as general partners, and Developers Diversified Realty Corporation,
an Ohio corporation, DRA Growth and Income Fund, LLC, a Delaware limited
liability company, and DT CCV, Limited Partnership, a Delaware limited
partnership, as limited partners.
Payment Terms; Prepayment Terms; Defeasance. The DDR/DRA Retail Loan is an
interest-only Balloon Loan that matures on October 11, 2005 (the "DDR/DRA Retail
Maturity Date"). The DDR/DRA Retail Borrower is required to make Monthly
Payments of interest at an interest rate of 6.64% per annum through and
including the DDR/DRA Retail Maturity Date. Voluntary prepayment is prohibited
until the third month preceding the DDR/DRA Retail Maturity Date. However, on or
after March 15, 2001, the DDR/DRA Retail Borrower may defease all or any portion
of the DDR/DRA Retail Loan upon the satisfaction of certain conditions specified
in the loan documents, including confirmation from each Rating Agency that such
defeasance would not cause a downgrade, qualification or withdrawal of the then
current ratings assigned to any Class of Certificates. In addition, the DDR/DRA
Retail Borrower may obtain the release of an individual property by defeasing a
portion of the DDR/DRA Retail Loan equal to 115% (for each of the DDR/DRA Retail
Properties other than that known as Ahwatukee Foothills Town Center) or 125%
(for the DDR/DRA Retail Property known as Ahwatukee Foothills Town Center) of
the Allocated Loan Amount. See "Certain Terms and Conditions of the Mortgage
Loans--Property Releases" above.
Lock Box; Reserve Accounts; Financial Statements. The DDR/DRA Retail
Borrower has entered into a lock box agreement whereby all rent from the DDR/DRA
Retail Property 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
DDR/DRA Retail Borrower has also established Reserve Accounts, including a
monthly capital reserve account and an ongoing tax and insurance reserve
account. See "Certain Terms and Conditions of the Mortgage Loans--Escrows" above
and "The Pooling and Servicing Agreement--Accounts--Cash Collateral Accounts" in
this Prospectus Supplement. The DDR/DRA
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Retail Borrower is required to furnish audited financial statements within
90 days following the end of each of its fiscal years.
The Property Manager. The DDR/DRA Retail Properties are managed by
Developers Diversified Realty Corporation, an Ohio corporation (the "DDR/DRA
Retail Property Manager"), a limited partner of the DDR/DRA Retail Borrower. The
DDR/DRA Retail Property Manager is paid a fee of 3.5% of gross income from
rental tenants at the DDR/DRA Retail Properties, as well as a leasing fee of 5%
of net base rents relating to new leases obtained after the acquisition of the
DDR/DRA Retail Properties, which fees are subordinate to debt service. The
lender may terminate the DDR/DRA Retail Property Manager (i) during the
existence of an event of default under the DDR/DRA Retail Loan and (ii)
following the occurrence of an event or circumstance which would permit the
DDR/DRA Retail Borrower to terminate its management agreement with the DDR/DRA
Retail Property Manager.
The Property. The DDR/DRA Retail Properties consist of six retail power
centers located in Arizona, Minnesota, Texas and Oregon. The portfolio includes
gross leaseable area ("GLA") of 1,977,129 square feet which as of January 28,
1999 was approximately 99% leased. The properties were appraised as of the date
and for the amounts set forth below.
<TABLE>
<CAPTION>
PROPERTY ALLOCATED
NAME/ # OF SQUARE LOAN APPRAISED NET CASH %
LOCATION FEET YEAR BUILT AMOUNT VALUE FLOW LEASED(1)
<S> <C> <C> <C> <C> <C> <C>
Ahwatukee 550,665 1996 $48,444,049 $76,000,000(2) $6,425,928 100%
Foothills
Towne Center/
Phoenix, AZ
Maple Grove 250,436 1996 $18,058,492 $25,000,000(3) $2,191,248 100%
Crossing/
Maple Grove, MN
East Chase 235,027 1997 $18,529,305 $24,500,000(4) $2,348,896 100%
Market Shopping
Center/Fort
Worth, TX
Tanasbourne 307,811 1995 $26,450,394 $45,000,000(4) $3,884,684 98%
Towne Center,
Hillsborough, OR
Arrowhead 354,680 1994 $23,333,514 $40,000,000(5) $3,333,091 100%
Crossing/
Peoria, AZ
Eagan 278,510 1996 $21,184,246 $32,000,000(6) $2,788,253 99%
Promenade/
Eagen, MN
<CAPTION>
PROPERTY
NAME/
LOCATION MAJOR TENANTS
<S> <C>
Ahwatukee Smith's Food and Drugs,
Foothills AMC Theaters,
Towne Center/ Steinmart,
Phoenix, AZ HomePlace,(7) Babies 'R
Us, Barnes & Noble,
OfficeMax
Maple Grove HomePlace,(7) Kohl's,
Crossing/ Old Navy, Pet Food
Maple Grove, MN Warehouse, Barnes &
Noble
East Chase Toys 'R Us, MJ Design,
Market Shopping United Artists
Center/Fort Theatres, PetSmart, Old
Worth, TX Navy
Tanasbourne Haggen's Foods,
Towne Center, HomePlace,(7) Office
Hillsborough, OR Depot, Barnes & Noble,
PetCo
Arrowhead Oshmans, Circuit City,
Crossing/ CompUSA, TJ Maxx,
Peoria, AZ Linens N Things,
Staples, Barnes & Noble
Eagan Byerly's, HomePlace,(7)
Promenade/ Barnes & Noble, Office
Eagen, MN Max, Michael's, Old
Navy, TJ Maxx
</TABLE>
- ------------------------
(1) As of January 28, 1999.
(2) As of September 28, 1998.
(3) As of September 10, 1998.
(4) As of October 13, 1998.
(5) As of September 21, 1998.
(6) As of September 1, 1998.
(7) On January 8, 1998, HomePlace Stores Inc. and certain of its affiliates, a
major tenant in four of the six DDR/DRA Retail Properties, with an aggregate
211,125 square feet of the DDR/DRA Retail Properties' leaseable square
footage and representing 8% of the DDR/DRA Retail Properties total annual
rent, filed under Chapter 11 of Title 11 of the United States Code in the
United States Bankruptcy Court for the District of Delaware. Developers
Diversified Realty Corporation, the DDR/DRA Retail Property Manager, has
master leased all of the retail space occupied by HomePlace and remains
liable for all rental obligations under the master lease. See "Risk Factors
and Other Special Considerations--Risks Related to the Mortgage
Loans--Certain Additional Risks Relating to Tenants--Tenant Bankruptcy
Entails Risks" in this Prospectus Supplement.
S-76
<PAGE>
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.
THE PARK LABREA LOAN AND PROPERTY
The Loan. The second largest Mortgage Loan in the Mortgage Pool (the "Park
LaBrea Loan") was originated by NACC on January 13, 1998 (the "Park LaBrea
Closing Date"), had an original principal balance of $142,781,905 and has a
Cut-off Date Principal Balance of $140,613,989, which represents approximately
5.9% of the Initial Pool Balance. The Park LaBrea Loan is evidenced by a CMAT
Pari Passu Note (the "Park LaBrea Note") that is cross-collateralized and
cross-defaulted with an Other Pari Passu Note (the "Other Park LaBrea Note") in
an equal amount (the aggregate indebtedness represented by such two notes being
referred to in this Prospectus Supplement as the "Total Park LaBrea Loan"). The
Total Park LaBrea Loan had an original principal balance of $285,563,810 and has
a principal balance as of the Cut-off Date of $281,227,978. The Total Park
LaBrea Loan is secured by a fee Mortgage encumbering a multifamily property (the
"Park LaBrea Multifamily Property") located in Los Angeles, California.
<TABLE>
<S> <C> <C> <C>
Cut-off Date Principal Balance: $140,613,989 % of Initial Pool Balance: 5.9%
Origination Date: January 13, 1998 Maturity Date: March 11, 2028
Loan Type: ARD Property Type: Multifamily
Premium Loan: Yes(1) No. of Properties: 1
CMAT Pari Passu Note: Yes
Monthly Payment: $906,843.05 (through and including Location of Property: Los Angeles, CA
March 11, 2000)(2)
$1,050,047.16 (from and including
April 11, 2000)
Interest Rate: 7.739% (through March 10, 2000)
8.000% (beginning March 11, 2000) Appraised Value: $410,000,000
(as of 11/23/97)
Amortization Term: 360 months Units: 4,226
Debt Constant: 8.96% Year Built/Renovated: 1944-51/1995
DSCR: 1.33x Total Cut-off Date $66,547
Principal Balance/
Unit:
Cut-off Date LTV: 68.6% Fee or Leasehold: Fee
Anticipated Repayment Date: March 11, 2013 Occupancy: 98% (as of 12/31/98)
ARD Balance: $113,401,002 Lock Box: Soft
ARD LTV/PTV: 55.3%
Borrower Special Purpose Entity: Yes, with an independent director
and a non-consolidation opinion
</TABLE>
- ------------------------
(1) See "--The Premium" below for additional information regarding the Premium.
(2) Based on a 30-day month. Payments through March 11, 2000 are interest only;
the borrower prepaid $2,167,916 representing the principal amortization
payments from April 11, 1998 through March 11, 2000.
The Other Park LaBrea Note was included in the securitization sponsored by
an affiliate of the Depositor, Commercial Mortgage Pass-Through Certificates,
Series 1998-D6 (the "D6 Securitization"). The trustee under the D6
Securitization is the Lead Lender with respect to the Total Park LaBrea Loan and
the servicer under the D6 Securitization will therefore make all servicing
decisions with respect to the Total Park LaBrea Loan. In the event servicing of
the Other Park LaBrea Note is transferred to another servicer, the servicing for
the Total Park LaBrea Loan will be transferred to such other servicer. See "Risk
Factors and Other Special Considerations--Risks Related to the Mortgage
Loans--Servicing Total Pari Passu Loans" in this Prospectus Supplement and
"--Total Pari Passu Loans" above.
S-77
<PAGE>
The Premium. The Total Park LaBrea Loan is a Premium Loan. The chart below
contains significant information regarding this aspect of the Total Park LaBrea
Loan.
<TABLE>
<CAPTION>
BASE
TOTAL FUNDED PREMIUM PREMIUM % OF INTEREST CUT-OFF DATE CUT-OFF DATE ARD
AMOUNT AMOUNT MORTGAGE LOAN RATE LTV PTV LTV/PTV
- ------------ ---------- ------------- -------- ------------ ------------ -------
<S> <C> <C> <C> <C> <C> <C>
$147,500,000 $4,718,095 3.3% 7.378% 68.6% 70.9% 55.3%
</TABLE>
See "Premium Loans" above for additional information regarding Premium
Loans.
The Borrower. Prime/Park LaBrea Holdings, L.P. (the "Park LaBrea
Borrower") is a special purpose California limited partnership with PLBGP, L.P.
(the "Park LaBrea General Partner"), a special purpose California limited
partnership, as the sole general partner of the Park LaBrea Borrower, and
Prime/Park LaBrea Investment, L.P. (the "Park LaBrea Limited Partner") as the
sole limited partner of the Park LaBrea Borrower. The sole general partner of
the Park LaBrea General Partner is PLBGP, Inc., a special purpose Delaware
corporation, all of the stock of which is owned by Prime/Park LaBrea, LLC, a
California limited liability company ("Park LaBrea LLC"), which is also the sole
limited partner of the Park LaBrea General Partner. Starwood Financial Trust, a
publicly traded REIT, holds a 25% membership interest in the Park LaBrea LLC
which it acquired from Atlantic Preferred 2 LLC, a New York limited liability
company ("Atlantic LLC") and an affiliate of Lazard Freres Real Estate Fund,
L.P. ("Lazard"). Such interest will terminate when a mezzanine financing in the
amount of $33,500,000 (the "Park LaBrea Mezzanine Loan"), made on January 12,
1998 from Lazard to the Park LaBrea Limited Partner and Park LaBrea LLC, is
repaid in full and the capital contribution of Atlantic LLC has been returned in
accordance with the operating agreement for the Park LaBrea LLC. The Park LaBrea
Mezzanine Loan is secured by pledges of the partnership interest in the Park
LaBrea Limited Partner and membership interests in Park LaBrea LLC. Starwood
Financial Trust ("Starwood") as successor to Lazard, has entered into a
subordination and standstill agreement with the lender pursuant to which
Starwood is not permitted to exercise its remedies under the Park LaBrea
Mezzanine Loan before the earlier of (i) March 11, 2013 (the "Park LaBrea ARD")
and (ii) the repayment in full of the Park LaBrea Loan. See "Risk Factors and
Other Special Considerations--Risks Related to the Mortgage Loans--Certain Risks
Related to Mezzanine Financings" in this Prospectus Supplement.
Payment Terms; Prepayment Terms; Defeasance. The Park LaBrea Loan
amortizes over 360 months and matures on March 11, 2028 (the "Park LaBrea
Maturity Date"). On the Park LaBrea Closing Date, the Park LaBrea Borrower
prepaid $2,167,916, which amount equals amortization payments due on the Park
LaBrea Loan from April 11, 1998 through and including March 11, 2000. The Park
LaBrea Borrower is required to pay interest only at 7.739% per annum from the
Park LaBrea Closing Date through and including March 11, 2000. Commencing on
April 11, 2000, Monthly Payments on the Park LaBrea Loan will be $1,050,047,
which amount is based on a 360-month amortization schedule and an interest rate
of 8.00%. The interest rate will increase on the Park LaBrea ARD to the Mortgage
Rate plus 2.00%. See "Certain Terms and Conditions of the Mortgage Loans--Excess
Interest" above. Additional payment and prepayment terms are as set forth in
Annex A hereto. Voluntary prepayment is prohibited until the date that is six
months prior to the Park LaBrea ARD, whereupon the Park LaBrea Loan is freely
prepayable on any Due Date or with interest through such date. Defeasance is not
permitted prior to March 31, 2001. Thereafter, prior to the date that is six
months prior to the Park LaBrea ARD, all or any portion of the Park LaBrea Loan
may be defeased upon the satisfaction of certain conditions specified in the
loan documents including confirmation from each Rating Agency 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" above.
Lock Box; Reserve Accounts; Financial Statements. The Park LaBrea Borrower
has entered into a lock box agreement pursuant to which all rent from the Park
LaBrea Multifamily Property is required to be deposited upon collection by the
Park LaBrea Borrower or the Park LaBrea Property Manager (as defined below) into
a Lock Box Account controlled by the Servicer. See "The Pooling and Servicing
Agreement--Accounts--Lock Box Accounts" in this Prospectus Supplement. The Park
LaBrea Borrower has also established Reserve Accounts, including an
S-78
<PAGE>
ongoing tax reserve account, an ongoing capital reserve account and an insurance
reserve account. See "Certain Terms and Conditions of the Mortgage
Loans--Escrows" above and "The Pooling and Servicing Agreement--Accounts--Cash
Collateral Accounts" in this Prospectus Supplement. The Park LaBrea Borrower is
required to furnish audited financial statements within 90 days following the
end of its fiscal year.
The Property Manager. The Park LaBrea Multifamily Property is managed by
PLB Management, LLC (the "Park LaBrea Property Manager"), an entity controlled
by the principals of the Park LaBrea Borrower. The Park LaBrea Property Manager
is paid a management fee of 1.5% of the gross revenue of the Park LaBrea
Multifamily Property. Such management fee is subordinate to debt service.
Additionally, the Park LaBrea Borrower pays directly many of the expenses that
are typically paid by a property manager. The lender may terminate the Park
LaBrea Property Manager upon an event of default under the Park LaBrea Loan.
The Property. The Park LaBrea Multifamily Property is a residential
development in the City of Los Angeles and is the largest apartment complex west
of the Mississippi River. It consists of 4,226 apartment units, with a total
rentable area of approximately 4,166,929 square feet contained in 26 two-story
garden apartment buildings (constructed between 1943 and 1951, with one-
to-four-bedroom units ranging in size from 658 square feet to 2,184 square feet)
and 18 twelve-story apartment towers (constructed between 1950 and 1951, with
studio and one- to four-bedroom apartments, ranging in size from 488 square feet
to 2,984 square feet). There is a total of 5,100 parking spaces, or
approximately 1.2 spaces per unit. The Park LaBrea Multifamily Property
underwent an $11,000,000 renovation in 1995. The Park LaBrea Multifamily
Property is located within Los Angeles' Miracle Mile District, within one mile
of Beverly Hills, eight miles from the central business district and four miles
from Century City. The Park LaBrea Multifamily Property has on-site amenities
including a bank, fitness center, dry cleaners, swimming pools, tennis courts,
laundry facilities, private putting green, in-house repair service, 24-hour
security and landscaping. As of December 31, 1998, the Park LaBrea Multifamily
Property was 98% occupied and, as of November 23, 1997, the appraised value was
$410,000,000.
See "Risk Factors and Other Special Considerations--Risks Related to the
Mortgage Loans--Risks Associated with Commercial and Multifamily Lending
Generally" and "--Multifamily Properties Have Special Risks" for a discussion of
certain matters associated with multifamily properties. Although the Park LaBrea
Property is located in an earthquake risk area, it is not located within a
geologic zone where rupture is likely to occur from active or potentially active
earthquake faults as identified by any federal, state or local governmental
agency. Two independent seismic studies and PML analyses found a Probable
Maximum Loss ("PML") with respect to the Park LaBrea Property between 5.9% and
7.0% of the building construction cost. PML is defined as the loss from
earthquake ground shaking that has a 10% probability of being exceeded in
50 years (a 500-year recurrence interval). The 1994 earthquake in the area
caused limited damage to only a few of the 222 buildings on the Park LaBrea
Property (which was documented and repaired) and remained substantially below
the PML levels indicated in the PML analysis reports. Under the terms of the
Park LaBrea Loan, the borrower is not required to maintain earthquake insurance.
S-79
<PAGE>
THE SOURCE RETAIL LOAN AND PROPERTY
The Loan. The third largest Mortgage Loan in the Mortgage Pool (the
"Source Retail Loan") was originated by CCA on November 6, 1998 (the "Source
Closing Date"), had an original principal balance of $124,000,000 and has a
Cut-off Date Principal Balance of $124,000,000, which represents approximately
5.2% of the Initial Pool Balance. The Source Retail Loan is secured by a
Mortgage encumbering a fee interest in a retail property (the "Source Retail
Property") located in Westbury, New York.
<TABLE>
<S> <C> <C> <C>
Cut-off Date Principal $124,000,000 % of Initial Pool Balance: 5.2%
Balance:
Origination Date: November 6, 1998 Maturity Date: March 11, 2009
Loan Type: Balloon Property Type: Anchored Retail
Premium Loan: No No. of Properties: 1
CMAT Pari Passu Note: No
Monthly Payment: $687,166.67(1) Location of Property: Westbury, NY
Interest Rate: 6.65% Appraised Value: $178,000,000 (as of
4/24/98)
Amortization Term: Interest Only Square Feet: 521,486
Debt Constant: 6.65% Year Built/Renovated: 1997
DSCR: 1.74 Cut-off Date Principal
Balance/SF: $238
Cut-off Date LTV: 69.7% Fee or Leasehold: Fee
Borrower Special Purpose Yes, with Major Tenants: Circuit City,
Entity: independent Nordstrom Rack,
director and ABC Home, Off Saks
non-consolidation Fifth
opinion Avenue, Old Navy,
Loehmann's
Lock Box: Hard(2) Occupancy 98% (as of 12/31/98)
</TABLE>
- ------------------------
(1) Based on a 30-day month.
(2) In the absence of certain trigger events, funds deposited in the Lock Box
Account are remitted to the borrower on a daily basis. See "The Pooling and
Servicing Agreement--Accounts--Lock Box Accounts" in this Prospectus
Supplement.
The Borrower. W&S Associates, L.P. (the "Source Retail Borrower") is a
special purpose New York limited partnership with (i) SPG Source, Inc., a
special purpose Delaware corporation, as general partner, and (ii) Simon
Property Group, L.P. ("Simon Group"), a Delaware limited partnership,
Simon/Rosche Westbury Associates, L.P. , a Delaware limited partnership, and
Westbury Property Investment Company, a New York general partnership, as limited
partners.
Payment Terms; Prepayment Terms; Defeasance. The Source Retail Loan is an
interest-only Balloon Loan that matures on March 11, 2009 (the "Source Retail
Maturity Date"). The Source Retail Borrower is required to make Monthly Payments
of interest based on an interest rate of 6.65% per annum through and including
the Source Retail Maturity Date. On the Source Retail Maturity Date, the Source
Retail Borrower also will be required to make a Balloon Payment of principal.
Voluntary prepayment is prohibited until the Source Retail Maturity Date.
However, on or after March 2001, the Source Retail Borrower may defease the
entire Source Retail Loan, upon the satisfaction of certain conditions specified
in the loan documents, including confirmation from each Rating Agency 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" above.
Lock Box; Reserve Accounts; Financial Statements. The Source Retail
Borrower has entered into a lock box agreement whereby all rent from the Source
Retail Property 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
Source Retail Borrower has also established Reserve Accounts, including a
monthly capital reserve account, a monthly rollover reserve account, an ongoing
tax and insurance reserve account and, after an event of default under the
related loan documents, an operating expense reserve account. See "Certain Terms
and Conditions of the Mortgage Loans--Escrows" above and "The Pooling and
S-80
<PAGE>
Servicing Agreement--Accounts--Cash Collateral Accounts" in this Prospectus
Supplement. The Source Retail Borrower is required to furnish audited financial
statements within 110 days following the end of its fiscal year.
The Property Manager. The Source Retail Property is managed by M.S.
Management Associates, Inc. (doing business as "Simon Management Company") (the
"Source Retail Property Manager"), an entity controlled by the principals of the
Source Retail Borrower. The Source Retail Property Manager is paid a fee of 5%
of gross revenue of the Source Retail Property which fee is subordinate to debt
service. The lender may terminate the Source Retail Property Manager upon an
event of default under the Source Retail Loan or if the DSCR is less than 1.10
to 1.0 for the then trailing 12 months, unless the Source Retail Property
Manager is an affiliate of Simon Group, in which case a termination is only
permitted upon an event of default under the Source Retail Loan.
The Property. The Source Retail Property consists of an enclosed,
two-story retail mall built in 1997 with 521,486 square feet of GLA. The Source
Retail Property is a discount-oriented mall located in Nassau County, New York.
It is shadow anchored by the Fortunoff department store (210,798 square feet of
GLA) located on 1.45 acres of land owned by Fortunoff and not securing the
Source Retail Loan as well as Circuit City (45,674 square feet of GLA),
Nordstrom Rack (48,461 square feet of GLA), Off Saks Fifth Avenue (35,545 square
feet of GLA), Old Navy (41,025 square feet of GLA) and ABC Home (46,402 square
feet of GLA). Other major tenants at the Source Retail Property include ABC
Carpet, Cheesecake Factory, Data Vision, Loehmann's, Rainforest Cafe and Virgin
Megastore. Adjacent to the Source Retail Property are the Roosevelt Raceway
Center, which is anchored by Target and Home Depot Expo, and Price Club Plaza,
which is anchored by Price Costco, Super K, Marshall's, Border's Books and
Sports Authority. Roosevelt Field Mall, which is owned by an affiliate of the
Source Retail Borrower, is located a mile away from the Source Retail Property
and is anchored by Macy's, Nordstrom's, Bloomingdale's, Stern's and J.C. Penney.
The Source Retail Property has a total of 3,750 parking spaces. As of
December 31, 1998, the Source Retail Property was 98% leased. As of April 24,
1998 the appraised value was $178,000,000.
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-81
<PAGE>
PRIME RETAIL III POOL LOAN AND PROPERTIES
The Loan. The fourth largest Mortgage Loan in the Mortgage Pool (the
"Prime Retail III Pool Loan") was originated by CCA on June 15, 1998, had an
original principal balance of $98,304,700 and has a Cut-off Date Principal
Balance of $97,878,360, which represents approximately 4.1% of the Initial Pool
Balance. The Prime Retail III Pool Loan is evidenced by two CMAT Pari Passu
Notes, each of which is cross-collateralized and cross-defaulted with the other.
The aggregate indebtedness, in the aggregate principal amount of $163,841,167,
represented by two CMAT Pari Passu Notes (collectively, the "Prime Note") and an
Other Pari Passu Note (the "Other Prime Note") is referred to in this Prospectus
Supplement as the "Total Prime Retail III Pool Loan." The Total Prime Retail III
Pool Loan is secured by two fee Mortgages and three fee and leasehold Mortgages
(the "Prime Retail Mortgages") encumbering five retail properties (the "Prime
Retail Properties"), which are located in California, Indiana, Maine and New
York.
<TABLE>
<S> <C> <C> <C>
Cut-off Date Principal $97,878,360 % of Initial Pool Balance: 4.1%
Balance:
Origination Date: June 15, 1998 Maturity Date: July 11, 2028
Loan Type: ARD Property Type: Retail/Factory Outlet
Centers
Premium Loan: Yes(1) No. of Properties: 5
CMAT Pari Passu Note: Yes
Monthly Payment: $748,922.22 Location of Properties: Indiana, Maine, New
York and California
Interest Rate: 8.40% Aggregate Appraised Value: $285,900,000(2);
Amortization Term: 360 months
Debt Constant: 9.14% Total Square Feet: 1,593,172
DSCR: 1.54(2) Year Built/Renovated: 1984-1995/1995-1997(3)
Cut-off Date LTV/PTV: 57.1%(2) Cut-off Date Principal $102
Balance/SF:
Anticipated Repayment Date: July 11, 2008 Fee or Leasehold: 2 Fee and 3 Fee and
Leasehold(4)
ARD Balance: $88,779,243.54 Major Tenants/SF/Lease See Chart Below(5)
Expiration Date:
ARD LTV/PTV: 51.8% Occupancy: 98%(5) (as of 2/16/99)
Borrower Special Purpose Yes, with an Lock Box: Hard
Entity: independent
director and a
non-consolidation
opinion.
</TABLE>
- ------------------
(1) See "The Premium" below for additional information regarding the Premium.
(2) For Total Prime Retail III Pool Loan.
(3) For additional information, see "The Properties" below.
(4) The properties that comprise the Mortgaged Property located in the state of
California are encumbered by a fee Mortgage and a fee and leasehold
Mortgage.
(5) See "The Properties" below for additional information regarding major
tenants.
The Other Prime Note was transferred to an affiliate of the Depositor and
included in the D7 Securitization. The trustee under the D7 Securitization will
be the Lead Lender with respect to the Total Prime Retail III Pool Loan and the
servicer under the D7 Securitization will therefore make all servicing decisions
with respect to the Total Prime Retail III Pool Loan. See "Risk Factors and
Other Special Considerations--Risks Related to the Mortgage Loans--Servicing
Total Pari Passu Loans" in this Prospectus Supplement and "--CMAT Pari Passu
Notes" above.
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<PAGE>
The Premium. The Prime Retail III Pool Loan is a Premium Loan. The chart
below contains significant information regarding this aspect of the Prime Retail
III Pool Loan.
<TABLE>
<CAPTION>
PREMIUM % OF BASE
TOTAL FUNDED PREMIUM MORTGAGE INTEREST CUT-OFF DATE CUT-OFF DATE ARD
AMOUNT AMOUNT LOAN RATE LTV PTV LTV/PTV
- ------------- ---------- ------------ ----------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
$108,000,000 $9,695,300 9.7% 6.99% 57.1% 62.4% 51.8%
</TABLE>
See "--Premium Loans" above for additional information regarding Premium
Loans.
Payment Terms; Prepayment Terms; Defeasance. The Prime Retail III Pool Loan
amortizes over 360 months and matures on July 11, 2028 (the "Prime Retail III
Pool Maturity Date"). The Prime Retail Pool Borrower is required to make Monthly
Payments of $748,922, which amount is based on a 360-month amortization schedule
and an interest rate of 8.40% per annum, until July 11, 2008 (the "Prime Retail
ARD"). On the Prime Retail ARD the interest rate will increase to the Mortgage
Rate plus 2.00% (unless the Other Prime Note is repurchased from the related
CCA-CMBS Transaction as provided herein, in which case the rate may increase by
a greater amount). See "Certain Terms and Conditions of the Mortgage
Loans--Excess Interest" above. Voluntary prepayment is prohibited until the
third month preceding the Prime Retail ARD. However, the Prime Retail Pool
Borrower may defease all or any portion of the Prime Retail III Pool Loan at any
time on or after March 2001 through the Prime Retail ARD upon 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" above.
The Borrower. The borrower under the Prime Retail III 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 limited 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
entity constituting the Prime Retail Pool Borrower is an affiliate of Prime
Retail, Inc. ("Prime"), a publicly traded REIT. The proceeds of the Prime Retail
III 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. Prior to the Prime Retail ARD, the Prime Retail
Pool Borrower may replace any of the Prime Retail 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.
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 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
"Certain Terms and Conditions of the Mortgage Loans--Escrows" above 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
its fiscal year.
The Property Manager. The Prime Retail Properties are managed, without a
formal management agreement, by Prime Retail, L.P. (the "Prime Retail 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 Property Manager was
established to manage retail factory outlets. The fees payable to the Prime
Retail 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 III Pool Loan. The lender may terminate the Prime Retail
Property Manager (or any other property manager of any Prime Retail Property)
upon an event of default under the Prime Retail III Pool Loan or if the DSCR
falls below 1.15:1.00.
S-83
<PAGE>
The Properties. The Prime Retail Pool Properties consist of five retail
properties as follows: The Outlet Village of Kittery, located in Kittery, Maine;
The Prime Outlets at Gilroy Phases I, II and V, located in Gilroy, California;
The Prime Outlets at Gilroy Phases III and IV, also located in Gilroy,
California (together with The Prime Outlets at Gilroy Phases I, II and V, "The
Prime Outlets at Gilroy Property"); The Prime Outlets at Michigan City, located
in Michigan City (Lighthouse Place), 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 131,345 square feet to
492,915 square feet. Collectively, as of February 16, 1999, the centers are
approximately 98% leased.
<TABLE>
<CAPTION>
# OF YEAR ALLOCATED
SQUARE BUILT/ LOAN APPRAISED NET CASH % MAJOR
PROPERTY NAME FEET RENOVATED AMT.(1) VALUE FLOW LEASED(2) TENANTS
<S> <C> <C> <C> <C> <C> <C> <C>
Finger Lakes 391,830 1994 $22,558,600 $ 59,000,000(3) $4,953,974 98% VF Factory Outlet
Outlet Center Liz Claiborne
Reebok
Kittery Outlet 131,345 1910(4) $ 6,719,815 $ 30,000,000(5) $1,988,485 100% Old Navy
Village /1995 Ralph Lauren
J. Crew
Lighthouse Place 492,915 1987/1997 $28,008,835 $ 81,500,000(6) $6,425,113 97% Spiegel Inc.
Eddie Bauer
J. Crew
Prime Outlets at 271,875 1989/1995 $18,521,535 $ 59,500,000(7) $4,393,764 97% Nike
Gilroy I, II and V Gap
Prime Outlets at 305,207 1989/1995 $22,069,515 $ 55,900,000(7) 5,235,433 97% VF Factory Outlet
Gilroy III and IV Esprit Direct
<CAPTION>
MAJOR
TENANTS
1997
PROPERTY NAME SALES PSF
<S> <C>
Finger Lakes $ 310
Outlet Center $ 202
$ 400
Kittery Outlet $ 358
Village $ 1,413
$ 983
Lighthouse Place $ 196
$ 495
$ 408
Prime Outlets at $ 689
Gilroy I, II and V $ 559
$ 244
Prime Outlets at $ 442
Gilroy III and IV
</TABLE>
- ------------------
(1) Cut-off Date Principal Balance.
(2) As of February 16, 1999.
(3) As of April 15, 1998.
(4) A portion of the outlet is an historic farm house built in 1910.
(5) As of May 1, 1998.
(6) As of March 18, 1998.
(7) As of April 1, 1998.
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 unless the
related Prime Retail Pool Borrower elects not to renew such lease).
A material portion of the Prime Retail Pool Property known as The Prime
Outlets at Gilroy Phases 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 such Prime Retail Pool Property is subject to two ground leases
between the Prime Retail Pool Co-tenant, as lessor, and the Prime Retail Pool
Borrower, as lessee, that expire in 2092 and 2093, respectively, and contain
purchase options, subject to certain conditions, for the Prime Retail Pool
Borrower to purchase the Prime Retail Pool Co-tenant's interest in such Prime
Retail Pool Property and for the Prime Retail Pool Co-tenant to sell such
interest to the Prime Retail Pool Borrower.
In addition, another Prime Retail 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, the ground lessor has pledged its fee interest to the lender as
additional security for the Total Prime Retail III Pool Loan and the Prime
Retail Pool Borrower will hold a fee interest on the Maturity Date of the Prime
Retail III Pool Loan, the interest in this Mortgaged Property is considered a
fee interest.
S-84
<PAGE>
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.
Environmental Considerations. With respect to the Mortgaged Property known
as 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 exists on the
Mortgaged Property. The environmental consultant recommended further
investigation. The Prime Retail Pool Borrower obtained a pollution liability
insurance policy from American International Specialty Lines Insurance Company
with $5,000,000 aggregate coverage and a $100,000 deductible per incident,
covering such Mortgaged Property, and naming lender as an additional insured.
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," "--Factory Outlet Center Properties Have Special Risks" and
"--Retail Properties Have Specific Risks" in this Prospectus Supplement for a
discussion of certain matters associated with retail properties and factory
outlet properties.
THE SPRINGFIELD MALL LOAN AND PROPERTY
The Loan. The fifth largest Mortgage Loan in the Mortgage Pool (the
"Springfield Mall Loan") was originated by NACC on March 19, 1998 (the
"Springfield Mall Closing Date"), had an original principal balance of
$90,931,704 and and has a Cut-off Date Principal Balance of $90,394,069, which
represents approximately 3.8% of the Initial Pool Balance. The Springfield Mall
Loan is evidenced by a CMAT Pari Passu Note (the "Springfield Mall Note") that
is cross-collateralized and cross-defaulted with an Other Pari Passu Note (the
"Other Springfield Mall Note") in an equal amount (the aggregate indebtedness
represented by such two notes being referred to in this Prospectus Supplement as
the "Total Springfield Mall Loan"). The Total Springfield Mall Loan had an
original principal balance of $181,863,408 and is secured by a fee and leasehold
Mortgage encumbering a retail property (the "Springfield Mall Retail Property"),
located in Springfield, Virginia.
<TABLE>
<S> <C> <C> <C>
Cut-off Date Principal $90,394,069 % of Initial Pool Balance: 3.8%
Balance:
Origination Date: March 19, 1998 Maturity Date: April 11, 2028
Loan Type: ARD Property Type: Anchored Retail
Premium Loan: Yes(1) No. of Properties: 1
CMAT Pari Passu Note: Yes
Monthly Payment: $699,186.13 Location of Property: Springfield, VA
Interest Rate: 8.50% Appraised Value: $243,000,000 (as of 1/5/98)
Amortization Term: 360 months Square Feet: 1,415,660
Debt Constant: 9.23% Year Built/Renovated: 1973/1991
DSCR: 1.20 Total Cut-off Date
Principal Balance/SF: $128
Cut-off Date LTV: 74.4% Fee or Leasehold: Fee
Anticipated Repayment Date: April 11, 2013 Major Tenants: Macy's, Montgomery
Ward(2), JC Penney
ARD Balance: $74,247,772 Occupancy: 94% (as of 2/10/99)
ARD LTV: 61.1% Lock Box: Hard(3)
Borrower Special Yes, with
PurposeEntity: independent
director and
non-consolidation
opinion
</TABLE>
- ------------------------
(1) See "The Premium" below for additional information regarding the Premium.
(2) In July, 1997, Montgomery Ward Holding Corp. ("MW Corp.") and certain of
its affiliates, an anchor tenant in the Springfield Mall Retail Property,
filed under Chapter 11 of Title 11 of the United States Code in the United
States Bankruptcy Court for the District of Delaware. In a filing with the
SEC on Form 8-K dated February 1, 1999, MW Corp. announced that it and its
wholly-owned subsidiary Montgomery Ward & Co., Incorporated, have reached
agreement with the Creditors' Committee and will emerge from Chapter 11
protection in mid-1999.
(3) In the absence of certain trigger events, funds deposited in the Lock Box
are remitted to the borrower on a daily basis. See "The Pooling and
Servicing Agreement--Accounts--Lock Box Accounts" in this Prospectus
Supplement.
S-85
<PAGE>
The Other Springfield Mall Note was transferred to an affiliate of the
Depositor and included in the D6 Securitization. The trustee under the D6
Securitization will be the Lead Lender with respect to the Total Springfield
Mall Loan and the servicer under the D6 Securitization will therefore make all
servicing and special servicing decisions with respect to the Total Springfield
Mall Loan. In the event servicing of the Other Springfield Mall Note is
transferred to another servicer, the servicing for the Total Springfield Mall
Loan will be transferred to such servicer. See "Risk Factors and Other Special
Considerations--Risks Related to the Mortgage Loans--Servicing Total Pari Passu
Loans" in this Prospectus Supplement and "--CMAT Pari Passu Notes" above.
The Premium. The Springfield Mall Loan is a Premium Loan. The chart below
contains significant information regarding this aspect of the Springfield Mall
Loan.
<TABLE>
<CAPTION>
PREMIUM % OF BASE
TOTAL FUNDED PREMIUM MORTGAGE INTEREST CUT-OFF DATE CUT-OFF DATE ARD
AMOUNT AMOUNT LOAN RATE LTV PTV LTV/PTV
- ------------- ---------- ------------ -------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
$99,500,000 $8,568,296 9.4% 7.405% 74.4% 81.2% 61.1%
</TABLE>
See "Premium Loans" above for additional information regarding Premium
Loans.
The Borrower. Franconia Two, L.P. (the "Springfield Mall Borrower") is a
special-purpose Virginia limited partnership with Franconia GP Corporation (the
"Springfield Mall GP"), a special-purpose Virginia corporation, as general
partner, and Franconia Associates ("Franconia"), a Virginia general partnership,
as limited partner. Franconia owns 100% of the stock of the Springfield Mall GP
but does not have voting rights with respect to the Springfield Mall GP.
Instead, Franconia's stock will be voted by Fischer Reese Associates, Inc., a
Delaware corporation (the "Springfield Mall Property Manager"), pursuant to a
voting trust agreement between the Springfield Mall Property Manager and
Franconia. The majority owner of Franconia is Meshulam Riklis ("Riklis"). On
March 19, 1998, The Chase Manhattan Bank ("Chase") made a loan to Riklis and
Franconia (the "Springfield Borrower") in the amount of $2,500,000 (the "Chase
Loan"), on an unsecured basis. The Chase Loan matures on March 31, 2002 and
requires the Springfield Borrower to make monthly principal amortization
payments of $53,083.33. On March 19, 1998, World Wide Computer Partnership, L.P.
("World Wide"), a Delaware limited partnership controlled by Riklis and
affiliated with the Springfield Mall Borrower, made a loan to Franconia in the
amount of $88,304,864.60, which may be increased to $100,000,000 (the "World
Wide Loan"), on an unsecured basis. The World Wide Loan amended, consolidated,
restated and replaced in their entirety promissory notes made by Franconia
beginning in 1980 to fund the cost of tenant improvements, buyouts of leases and
construction costs. Principal and interest payments are not due under the World
Wide Loan until April 1, 2029 (the "World Wide Maturity Date"). Thus, Franconia
has no payment obligations under the World Wide Loan until the World Wide
Maturity Date, which is almost a year after the stated maturity date for the
Springfield Mall Loan. The World Wide Loan may not be transferred or pledged and
is subordinate to the Springfield Mall Loan. See "Risk Factors and Other Special
Considerations--Risks Related to the Mortgage Loans--Certain Additional Risks
Related to Mezzanine Financings" and "Risk Factors and Other Special
Considerations--Risks Related to the Mortgage Loans--Risks Related to the
Borrower Under the Springfield Mall Loan" in this Prospectus Supplement.
Payment Terms; Prepayment Terms; Defeasance. The Springfield Mall Loan
amortizes over 360 months and matures on April 11, 2028 (the "Springfield Mall
Maturity Date"). The Springfield Mall Borrower is required to make Monthly
Payments of $699,186.13, which amount is based on a 360-month amortization
schedule and an interest rate of 8.50% per annum, to April 11, 2013 (the
"Springfield Mall ARD"). On the Springfield Mall ARD, the interest rate will
increase to the Mortgage Rate plus 2.00% (unless the Other Springfield Note is
repurchased from the related CCA-CMBS Transaction as provided herein, in which
case the rate may increase by a greater amount.) See "Certain Terms and
Conditions of the Mortgage Loans--Excess Interest" above. Voluntary prepayment
is prohibited until the Springfield Mall ARD. However, on or after March 19,
2002 through the Springfield Mall ARD, all or any portion of the Springfield
Mall Loan may be defeased upon the satisfaction of certain conditions specified
in the loan documents. See "Certain Terms and Conditions of the Mortgage
Loans--Property Releases" above. Payment of the Springfield Mall Loan has been
guaranteed by Riklis, up to an amount by which the unpaid principal balance of
the Springfield Mall Loan exceeds the sum of (i) 75% of the fair market value of
the Springfield Mall Retail Property and (ii) 75% of the fair market value of
the ground leased parcel (see "The Ground Lease" below), as of a date six months
prior to the Springfield Mall Maturity Date (or earlier, if the Springfield Mall
Loan has been accelerated).
S-86
<PAGE>
Lock Box; Reserve Accounts; Financial Statements. The Springfield Mall
Borrower has entered into a lock box agreement whereby all rent from the
Springfield Mall Retail Property 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 Borrower has also established Reserve Accounts, including an
up-front deferred maintenance reserve account and monthly reserves for tax and
insurance, replacements, tenant improvements and leasing commissions, ground
lease rent and transaction payments. See "Certain Terms and Conditions of the
Mortgage Loans--Escrows" above and "The Pooling and Servicing
Agreement--Accounts--Cash Collateral Accounts" in this Prospectus Supplement.
The Springfield Mall Borrower is required to furnish audited financial
statements within 90 days following the end of its fiscal year.
The Property Manager. The Springfield Mall Retail Property is managed by
the Springfield Mall Property Manager, an entity that controls the Springfield
Mall GP pursuant to the voting trust agreement (as described above in the
section entitled "The Borrower"). The Springfield Mall Property Manager is paid
a management fee equal to $68,000 per month, provided, however, that so long as
net operating income is no greater than $20,500,000, the management fee will not
exceed 5.5% of the base rent, the percentage rent and income received from
tenants or specialty leasing of the Springfield Mall Retail Property minus the
greater of (i) $100,000 and (ii) the actual cost of on-site leasing personnel.
In addition, the Springfield Mall Property Manager is entitled to an incentive
fee of 4% of the amount by which net operating income (as defined in the loan
documents) of the Springfield Mall Retail Property exceeds $20,500,000. The
management fee and the incentive fee are subordinate to debt service. The lender
may terminate the Springfield Mall Property Manager upon an event of default
under the Springfield Mall Loan or if the DSCR falls below 1.0, provided that
there is a grace period for termination of one year if the DSCR has fallen to
1.0 as a result of a material casualty or a default by Macy's or a material
casualty to the land owned by either JC Penney or Montgomery Ward, so long as
the Springfield Mall Property Manager is either pursuing (or using its best
efforts to cause JC Penney or Montgomery Ward to pursue) restoration or
endeavoring to replace Macy's as an anchor tenant.
The Property. The Springfield Mall Retail Property is located at the
intersection of I-95 and Franconia Road in Springfield, Virginia. It is a super
regional enclosed mall with two outparcel stores located on 78.57 acres. The
Springfield Mall Retail Property is anchored by Macy's, Montgomery Ward and JC
Penney. Each of the anchors owns the store it operates. The Macy's store is
built on land leased from the Springfield Mall Borrower. Although Montgomery
Ward is currently in bankruptcy, the store's sales are approximately $200 per
square foot, which is higher than its national average. Major tenants at the
Springfield Mall Retail Property are shown in the chart below. Average in-line
store sales are over $260 per square foot. The Springfield Mall Retail Property
has a total of 8,377 parking spaces. As of February 10, 1999, the Springfield
Mall Retail Property was 94% leased and as of January 5, 1998 the appraised
value was $243,000,000.
<TABLE>
<CAPTION>
MAJOR TENANTS-
SALES PER
MAJOR TENANTS # OF SQUARE FEET SF(1) LEASE EXPIRATION
- ----------------------------------------------------- ---------------- ----------------- -----------------
<S> <C> <C> <C>
Macy's............................................... 252,245 $ 168(1996) July 31, 2022
Montgomery Ward...................................... 180,841 $ 200(1996) February 28, 2023
JC Penney............................................ 209,144 $ 263(1996) February 28, 2023
General Cinema 1-10.................................. 64,510 $ 114(1997) December 31, 2010
Sports Authority..................................... 42,987 $ 232(1997) January 31, 2003
Modell's Sporting Goods.............................. 21,180 $ 148(1997) December 31, 2005
Linens N Things...................................... 19,776 $ 177(1997) December 31, 2008
</TABLE>
- ------------------
(1) For the year indicated.
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.
The Ground Lease. A small portion of the parking for the Springfield Mall
Retail Property (consisting of 465 parking spaces) is located on 4.4 acres of
land leased to the Springfield Mall Borrower pursuant to a ground lease that
expires on October 21, 2010, and is renewable for three successive terms of
twenty years each. Even without the ground leased parcel, the Springfield Mall
Retail Property would have parking spaces in excess of local zoning
requirements. See "Risk Factors and Other Special Considerations--Risks Related
to The Mortgage Loans--Risks Associated with Ground Leases" for a discussion of
certain matters associated with ground leases.
S-87
<PAGE>
ATLANTA MARRIOTT HOTEL LOAN AND PROPERTY
The Loan. The sixth largest Mortgage Loan included in the Trust Fund is the
Mortgage Loan secured by the Mortgaged Property known as the Atlanta Marriott
Hotel Property (the "Atlanta Marriott Hotel Loan"). The Atlanta Marriott Hotel
Loan was originated by NACC on January 30, 1998, had an original principal
balance of $82,000,000 and has a Cut-off Date Principal Balance of $80,770,298,
which represents approximately 3.4% of the Initial Pool Balance. The Atlanta
Marriott Total Hotel Loan is evidenced by a CMAT Pari Passu Note (the "Atlanta
Marriott Note") that is cross-collateralized and cross-defaulted with an Other
Pari Passu Note (the "Other Atlanta Marriott Note") in an equal amount (the
aggregate indebtedness represented by such two Notes being referred to in this
Prospectus Supplement as the "Total Atlanta Marriott Hotel Loan"). The Total
Atlanta Marriott Hotel Loan had an original principal balance of $164,000,000.
The Total Atlanta Marriott Hotel Loan is secured by a fee mortgage (the "Atlanta
Marriott Mortgage"), encumbering a hotel located at 265 Peachtree Center Avenue
in Atlanta, Georgia (the "Atlanta Marriott Hotel Property").
<TABLE>
<S> <C> <C> <C>
Cut-off Date Principal $80,770,298 % of Initial Pool Balance: 3.4%
Balance:
Origination Date: January 30, 1998 Maturity Date: February 11, 2023
Loan Type: ARD Property Type: Hotel
Premium Loan: No No. of Properties: 1
CMAT Pari Passu Note: Yes
Monthly Payment: $600,649.08 Location of Property: Atlanta, GA
Interest Rate: 7.40% Appraised Value: $288,000,000 (as of
11/17/97)
Amortization Term: 300 months Rooms: 1,671
Debt Constant: 8.80% Year Built/Renovated: 1985/1997
DSCR: 1.77 Total Cut-off Date $96,673
Principal Balance/Room:
LTV: 56.1% Fee or Leasehold: Fee
Anticipated Repayment Date: February 11, 2010 Franchise: Marriott
ARD Balance: $61,585,234 Occupancy: 67% (as of twelve
months ending 1/1/99)
ARD LTV: 42.8% Lock Box: Springing
Borrower Special Purpose Yes, with an
Entity: independent
director and a
non-consolidation
opinion
</TABLE>
The Other Atlanta Marriott Note was transferred to an affiliate of the
Depositor and included in the securitization of an affiliate of CCA known as the
D6 Securitization. The trustee under the D6 Securitization will be the Lead
Lender with respect to the Total Atlanta Marriott Hotel Loan and the servicer
under the D6 Securitization will therefore make all servicing and special
servicing decisions with respect to the Total Atlanta Marriott Hotel Loan. In
the event servicing of the Other Atlanta Marriott Note is transferred to another
servicer, the servicing for the Total Atlanta Marriott Hotel Loan will be
transferred to such other servicer. See "Risk Factors and Other Special
Considerations--Risks Related to the Mortgage Loans--Servicing Total Pari Passu
Loans in this Prospectus Supplement" and "--CMAT Pari Passu Notes" above.
The Borrower. HMA Realty Limited Partnership (the "Atlanta Marriott
Borrower") is a special-purpose limited partnership, the only asset of which is
the Atlanta Marriott Hotel Property. HMA-GP, Inc., a Delaware corporation and
the general partner of the Atlanta Marriott Borrower, is a special-purpose
corporation limited in purpose to acting as general partner of the Atlanta
Marriott Borrower and an indirect subsidiary of Host Marriott Corporation, a
Delaware corporation ("Host Marriott"). The Atlanta Marriott Hotel Loan permits
the Atlanta Marriott Borrower, after February 2000, to incur debt that is
expressly subordinate in right of payment to the Atlanta Marriott Hotel Loan,
provided (i) the DSCR for the Atlanta Marriott Hotel Loan on the date of
issuance of the debt is at least 2.0 and (ii) the Rating Agencies confirm that
such action will not cause a downgrade, qualification or withdrawal of the then
current ratings on any Class of Certificates. See "Risk Factors and Other
Special Considerations--Risks Related to the Mortgage Loans--Certain Additional
Risks Related to Mezzanine Financings" in this Prospectus Supplement. Certain
affiliates of the Atlanta Marriott Borrower are involved in a litigation related
to the Atlanta
S-88
<PAGE>
Marriott Hotel Property. See "Risk Factors and Other Special
Considerations--Risks Related to the Mortgage Loans--Risks Related to
Litigation" in this Prospectus Supplement.
Payment Terms; Prepayment Terms; Defeasance. The Atlanta Marriott Hotel
Loan amortizes over 300 months and matures on February 11, 2023. The Atlanta
Marriott Borrower is required to make Monthly Payments of approximately
$600,649, which amount is based on a 300-month amortization schedule and an
interest rate of 7.40% per annum, until February 11, 2010 (the "Atlanta Marriott
ARD"). On the Atlanta Marriott ARD the interest rate increases to the Mortgage
Rate plus 2.00% (unless the Other Atlanta Marriott Note is repurchased from the
related CCA-CMBS Transaction as provided herein, in which case the rate may
increase by a greater amount). See "Certain Terms and Conditions of the Mortgage
Loans--Excess Interest" above. Voluntary prepayment is prohibited until the
Atlanta Marriott ARD. However, on or after February 12, 2001 through the Atlanta
Marriott ARD, all of the Atlanta Marriott Hotel Loan may be defeased upon the
satisfaction of certain conditions specified in the loan documents, including
confirmation from each Rating Agency 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" above.
Lock Box; Reserve Accounts; Financial Statements. No lock box is required
to be maintained under the Atlanta Marriott Hotel Loan prior to the occurrence
of a "Marriott Lock Box Event," which occurs if (a) (i) the Atlanta Marriott
Hotel Property is not managed by the Marriott Property Manager, (ii) the
Marriott Property Manager is not Marriott International, Inc. ("MI") or a
subsidiary of MI, or (iii) (A) the S&P rating of long-term unsecured debt of MI
(the "MI Rating") is not at least "A-" and the debt service account established
with respect to the Atlanta Marriott Hotel Loan contains less than one month of
debt service or (B) S&P's MI Rating is "BBB+" and the debt service reserve
account established with respect to the Atlanta Marriott Hotel Loan contains
less than two months of debt service and (C) in either case, the Atlanta
Marriott Borrower does not fund the shortfall within 15 days' notice to such
effect from the Servicer and (b) the Servicer notifies the Atlanta Marriott
Borrower and the Atlanta Marriott Property Manager that a lock box account is
required to be put in effect. See "The Pooling and Servicing
Agreement--Accounts--Lock-Box Accounts" in this Prospectus Supplement. The
Atlanta Marriott Borrower has established an up-front deferred maintenance
reserve account and an ongoing capital expenditure reserve account. The Atlanta
Marriott Borrower has also established an ongoing tax and insurance reserve
account, which accounts will not be required to be maintained if the MI Rating
has been upgraded to at least "A-." A debt service reserve in the amount of two
months' debt service must be maintained if the MI Rating is "A-" or better,
which reserve must be increased to three months' debt service if the MI Rating
is "BBB+." After the institution of a lock box account, two months' debt service
reserve must be maintained. See "Certain Terms and Conditions of the Mortgage
Loans--Escrows" above and "The Pooling and Servicing Agreement--Accounts--Cash
Collateral Accounts" in this Prospectus Supplement. The Atlanta Marriott
Borrower is required to furnish audited financial statements within 120 days
following the end of its fiscal year.
The Property Manager. New Marriott MI, Inc. ("New Marriott"), the property
manager for the Atlanta Marriott Hotel Property (the "Atlanta Marriott Property
Manager"), is a subsidiary of MI. The Atlanta Marriott Property Manager is paid
a management fee of 3% of the gross revenue of the Atlanta Marriott Hotel
Property. In addition, the Atlanta Marriott Property Manager is entitled to an
annual incentive fee of 20% of the available annual cash flow (as defined in the
loan documents) of the Atlanta Marriott Hotel Property. Such management fee is
subordinate to debt service. Upon the occurrence of an event of default under
the Atlanta Marriott Hotel Loan, the lender may exercise all rights of the
Atlanta Marriott Borrower to terminate the Atlanta Marriott Property Manager.
The Property. The Atlanta Marriott Hotel Property, the largest convention
hotel in Atlanta, Georgia, opened in 1985. The Atlanta Marriott Hotel Property
is an atrium-style, convention-oriented facility with 1,671 guest rooms,
including 69 suites, 5 restaurants, 2 lounges, an indoor-outdoor pool, health
club and full business services. The 51-story property operates under a
long-term management agreement with the Marriott Property Manager. Renovations
of the hotel's guest rooms and guest suites were completed in 1998. As of
November 17, 1997, the appraised value of the hotel was $288,000,000. The hotel
had a 67% occupancy and an average daily room rate of $132.50 for the 12-month
period ended January 1, 1999.
See "Risk Factors and Other Special Considerations--Risk Related to the
Mortgage Loans--Hotel Properties Have Special Risks" in this Prospectus
Supplement for a discussion of certain other matters associated with hotel
S-89
<PAGE>
properties and "--Risks Related to Litigation" in this Prospectus Supplement for
a discussion of certain litigation issues that relate to the Atlanta Marriott
Hotel Loan.
IOWA MALLS LOAN AND PROPERTIES
The Loan. The seventh largest Mortgage Loan in the Mortgage Pool (the "Iowa
Malls Loan") was originated by CCA on June 29, 1998 with an original principal
balance of $61,500,000 and re-sized on December 18, 1998 with an amended
principal balance of $65,972,760. The Iowa Malls Loan has a Cut-off Date
Principal Balance of $65,875,608, which represents approximately 2.8% of the
Initial Pool Balance. The Iowa Malls Loan was made to four special-purpose
entity borrowers (see "The Borrower" below) on a joint and several basis and is
secured by four Mortgages, each encumbering a fee interest in a retail property
(each, an "Iowa Malls Property") located in Iowa.
<TABLE>
<S> <C> <C> <C>
Cut-off Date Principal $65,875,608 % of Initial Pool Balance: 2.8%
Balance:
Origination Date: June 29, Maturity Date: January 11, 2029
1998/December 18,
1998
Loan Type: ARD Property Type: Anchored Retail
Premium Loan: No No. of Properties: 4
Total Pari Passu Loan: No
Monthly Payment: $502,605.33 Location of Properties: Cedar Falls, Iowa;
Ames, Iowa; West
Burlington, Iowa;
Marshalltown, Iowa
Interest Rate: 8.40% Appraised Value $84,700,000 (as of
(combined): 3/20/98)
Amortization Term: 360 months Square Fee (combined): 1,595,765
Debt Constant: 9.14% Year Built/Renovated: See "The Properties"
below.
DSCR: 1.28 Cut-off Date Principal $41
Balance/SF:
Cut-off Date LTV: 77.8% Fee or Leasehold: Fee
Anticipated Repayment Date: January 11, 2009 Major Tenants: See "The Properties"
below.
ARD Balance: $59,550,185 Occupancy: See "The Properties"
below.
ARD LTV: 70.3% Lock Box: Hard
Borrower Special Purpose Yes, with
Entity: independent
director and
non-consolidation
opinion
</TABLE>
The Borrower. The Borrower under the Iowa Malls Loan consists of four
special-purpose entities (collectively, the "Iowa Malls Borrower") as follows:
Westland Mall Associates LLC, Marshall Town Center Associates LLC, College
Square Mall Associates LLC and North Grand Mall Associates LLC, each a Delaware
limited liability company. One percent of the interest in each Iowa Malls
Borrower is held by Iowa Malls Financing Corp., a Delaware corporation (the
"Iowa Malls Managing Member"), and 99% of the interest in each Iowa Malls
Borrower is held by Iowa Investment Fund LLC, a Delaware limited liability
company (the "Iowa Malls Regular Member"). The Iowa Malls Regular Member
consists of LH Iowa Mall Investors, LLC, a Delaware limited liability company
(an affiliate of the Iowa Malls Property Manager; see "The Property Manager"
below) (25% interest) and Partnership Acquisition Trust XXI, a Delaware business
trust wholly owned by NACC (75% interest). CCA currently has outstanding a loan,
to the Iowa Malls Regular Member (the "Iowa Mezzanine Borrower" and such loan,
the "Iowa Mezzanine Loan"), which as of the Cut-off Date is in the principal
amount of $6,759,490 secured by, among other things, a pledge of the membership
interests of LH Iowa Mall Investors, LLC, in the Iowa Malls Regular Member. CCA
may make further advances to the Iowa Mezzanine Borrower from time to time. See
"Risk Factors and Other Special Considerations--Risks Related to the Mortgage
Loans--Certain Additional Risks Related to Mezzanine Financings" and "--Risks
Related to Conflicts of Interest--The Common Equity Loans" in this Prospectus
Supplement.
S-90
<PAGE>
Payment Terms; Prepayment Terms; Defeasance. The Iowa Malls Loan amortizes
over 360 months and matures on January 11, 2029 (the "Iowa Malls Maturity
Date"). The Iowa Malls Borrower is required to make Monthly Payments of
$502,605.33, reflecting an interest rate of 8.40% per annum, until January 11,
2009 (the "Iowa Malls ARD"), on which date the interest rate will be increased
to the greater of (i) the rate on such date borne by U.S. Treasuries with
maturities comparable to the remaining term of the Iowa Malls Loan, plus 5% per
annum, and (ii) 13.40% per annum. See "Certain Terms and Conditions of the
Mortgage Loans--Excess Interest" above. Voluntary prepayment is prohibited prior
to the Iowa Malls ARD. However, from the second anniversary of the Closing Date
of the Certificates through the Iowa Malls ARD, the Iowa Malls Borrower may
defease all or any portion of the Iowa Malls Loan, upon the satisfaction of
certain conditions specified in the loan documents, including confirmation from
each Rating Agency that such defeasance would not cause a downgrade,
qualification or withdrawal of the then current ratings assigned to any Class of
Certificates. In addition, the Iowa Malls Borrower may obtain the release of an
individual property by defeasing a portion of the Iowa Malls Loan equal to 125%
of the Allocated Loan Amount if the DSCR for the remaining properties is then
less than 1.45 to 1.0 (or 100% of the Allocated Loan Amount if the DSCR for the
remaining properties is then 1.45 to 1.0 or greater). Certain other property
releases are also allowed. See "Certain Terms and Conditions of the Mortgage
Loans--Property Releases" above.
Lock Box; Reserve Accounts; Financial Statements. The Iowa Malls Borrower
has entered into lock box agreements whereby all rent from each Iowa Malls
Property 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 Iowa
Malls Borrower has also established Reserve Accounts, including up-front
reserves relating to deferred maintenance and monthly reserves for operating
expenses, taxes, insurance, capital expenses and lease rollover. See "Certain
Terms and Conditions of the Mortgage Loans--Escrows" above and "The Pooling and
Servicing Agreement--Accounts--Cash Collateral Accounts" in this Prospectus
Supplement. The Iowa Malls Borrower is required to furnish audited financial
statements within 90 days following the end of each of its fiscal years.
Environmental Issues. The environmental reserve was established to cover
asbestos maintenance programs and file reviews or Phase II environmental
assessments on certain of the Iowa Malls Properties after completion of off-site
remediation or remediation being conducted by a tenant at the related Iowa Malls
Property. See "Risk Factors and Other Special Considerations--Risks Related to
the Mortgage Loans--Environmental Risks Related to the Mortgaged Properties" in
this Prospectus Supplement.
The Property Manager. Each of the Iowa Malls Properties is managed by
Landau & Heyman of Iowa Inc., an Iowa corporation (the "Iowa Malls Property
Manager"), an entity affiliated with the Iowa Malls Borrower. The Iowa Malls
Property Manager is the managing and leasing agent for each of the Iowa Malls
Properties and has been in the business of operating, developing, leasing and
managing retail properties since 1933. Currently, it owns a portfolio of
approximately 4,000,000 square feet of retail properties and it manages and
leases a portfolio of approximately 6,100,000 square feet of retail property.
The Iowa Malls Property Manager is paid a fee of 3% of gross revenue of each of
the Iowa Malls Properties, which fee is subordinate to debt service. The lender
may direct the borrower to terminate the Iowa Malls Property Manager upon the
occurrence and continuance of an event of default under the Iowa Malls Loan.
S-91
<PAGE>
The Properties. The Iowa Malls Properties consist of four retail malls
located in the central and southeastern portions of Iowa. The portfolio includes
gross leaseable area ("GLA") of 1,595,765 square feet, of which, as of
December 22, 1998, approximately 96% was leased. The Mortgaged Property was
appraised, as of March 20, 1998, for $84,700,000 million.
<TABLE>
<CAPTION>
PROPERTY NAME/ # SQUARE YEAR BUILT/ ALLOCATED APPRAISED NET CASH
LOCATION FEET RENOVATED LOAN AMT. VALUE(1) FLOW % LEASED(2)
<S> <C> <C> <C> <C> <C> <C>
College Square 562,659 1967/1987 $30,425,937 $36,800,000 $3,015,164 94%
Mall/Cedar Falls
North Grand Mall/Ames 352,064 1971/1991 $18,414,036 $23,000,000 $2,597,730 98%
Westland 342,365 1972/NA $10,118,783 $14,400,000 $1,086,097 100%
Mall/Burlington
Marshall Town Center/ 347,330 1972/NA $ 6,916,852 $10,500,000 $1,011,404 98%
Marshalltown
<CAPTION>
PROPERTY NAME/
LOCATION MAJOR TENANT
<S> <C>
College Square Younkers, Von Maur,
Mall/Cedar Falls WalMart, Hy-Vee Foods
North Grand Mall/Ames JC Penney, Younkers,
Sears
Westland JC Penney, Younkers
Mall/Burlington
Marshall Town Center/ JC Penney, Younkers
Marshalltown
</TABLE>
- ------------------
(1) As of March 20,1998.
(2) As of December 22, 1998.
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.
The Iowa Malls Properties may under certain circumstances be sold to third
parties in which case the Iowa Malls Loan would be divided between the property
sold and the properties not sold on the basis of the properties' relative net
operating incomes. The separate loans would not be cross-defaulted or
cross-collateralized, but one of the requirements of the sale is that the DSCR
for each of the separated loan groups be 1.45 to 1.0 or greater.
S-92
<PAGE>
ADDITIONAL MORTGAGE LOAN INFORMATION
GENERAL MORTGAGE LOAN CHARACTERISTICS
(AS OF CUT-OFF DATE, UNLESS OTHERWISE INDICATED)
<TABLE>
<S> <C>
Initial Pool Balance(1)................................................................................. $ 2,374,987,404
Number of Mortgage Loans................................................................................ 230
Number of Notes (including CMAT Pari Passu Notes and Special Notes)..................................... 234
Number of CMAT Pari Passu Notes......................................................................... 14
Number of Mortgaged Properties.......................................................................... 268
Average Cut-off Date Principal Balance.................................................................. $ 10,326,032
Number of Premium Loans................................................................................. 52
Aggregate Cut-off Date Principal Balance of Premium Loans............................................... $ 923,939,084
Number of Credit Tenant Loans........................................................................... 17
Aggregate Cut-off Date Principal Balance of Credit Tenant Loans......................................... $ 123,192,849
Weighted Average Mortgage Rate.......................................................................... 7.701%
Range of Mortgage Rates................................................................................. 6.32%-10.631%
Weighted Average Remaining Term to the Earlier of Maturity or Anticipated
Repayment Date (mos).................................................................................. 150
Range of Remaining Terms to the Earlier of Maturity or Anticipated Repayment Date (mos)................. 79 to 255
Weighted Average Original Amortization Term (mos)....................................................... 336
Range of Original Amortization Terms (mos).............................................................. 110 to 360
Weighted Average Net Cash Flow DSCR(2).................................................................. 1.49
Range of Net Cash Flow DSCRs(2)......................................................................... 1.05 - 3.75
Weighted Average LTV as of Cut-off Date(3).............................................................. 68.1%
Weighted Average PTV as of Cut-off Date(3).............................................................. 71.8%
Range of LTVs(3)........................................................................................ 25.7%-90.4%
Range of PTVs(3)........................................................................................ 25.7%-90.4%
Weighted Average Anticipated Repayment Date LTV/PTV(3).................................................. 55.4%
Percentage of Initial Pool Balance made up of:
ARD Loans............................................................................................. 82.3%
Balloon Loans......................................................................................... 16.1%
Fully Amortizing Loans (other than ARD Loans)......................................................... 1.6%
</TABLE>
- ------------------
(1) Subject to a permitted variance of plus or minus 5%.
(2) Excluding Credit Tenant Loans.
(3) Excluding Credit Tenant Loans.
The tables, Annex A, Annex B and Annex C set forth certain information with
respect to the Mortgage Loans and Mortgaged Properties. The statistics in the
following tables, Annex A, Annex B and Annex C 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 this Prospectus Supplement, unless otherwise
specified:
(1) "Net Cash Flow" or "NCF" is defined under "The Mortgage Loan
Program--Underwriting Standards" above. See also "Special Notes" 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 in this Prospectus Supplement, "DSCR" means Net Cash Flow DSCR. The
Credit Tenant Loans were excluded from weighted average calculations.
S-93
<PAGE>
(4) "Annual Debt Service" means the Monthly Payment as of the Cut-off Date
(as defined in this Prospectus Supplement) multiplied by twelve. For purposes of
determining Net Cash Flow DSCR and NOI DSCR with respect to a CMAT Pari Passu
Note, DSCR was calculated giving effect to the debt service for the related
Other Pari Passu Note.
(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 a CMAT Pari Passu Note, LTV was calculated giving effect to the
related Other Pari Passu Note(s) secured by the related Mortgaged Property. The
Credit Tenant Loans were excluded from the weighted average calculations.
(7) "PTV" or "Proceeds-to-Value Ratio" for any Mortgage Loan is equal to
the sum of the Premium funded at closing of such loan amortized through the
Cut-off Date and the Cut-off Date Principal Balance divided by the Appraised
Value of the related Mortgaged Property. The Credit Tenant Loans were excluded
from the weighted average calculations.
(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 Anticipated Repayment Date 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. The Credit
Tenant Loans were excluded from the weighted average calculations.
(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 Period 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 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
S-94
<PAGE>
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, for any Mortgage Loan,
the Cut-off Date Principal Balance divided by the applicable unit of measure.
(15) "Monthly Payment" means, for any Mortgage Loan, the current monthly
debt service payable on the related Mortgage Loan.
(16) "Maturity Date" means the maturity date of the Mortgage Loan as stated
in the related Note or Loan Agreement.
(17) "Anticipated Repayment Date" or "ARD" means, for ARD 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.
(18) "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.
(19) "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.
(20) "Appraised Value" or "Value" means, for each of the Mortgaged
Properties, the appraised value of such property as determined by an appraisal
thereof prepared by an appraiser who is a member of the Appraisal Institute of
America (an "MAI appraiser") not more than 24 months prior to the origination
date of the related Mortgage Loan. See "Risk Factors and Other Special
Considerations--Risks Related to the Mortgage Loans--Limitations of Appraisals"
in this Prospectus Supplement.
(21) "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.
(22) "Year Built/Renovated" means the year in which the respective
Mortgaged Property was built and/or renovated.
(23) "Units" and "Type" mean the number of units in the respective
Mortgaged Property and the type of such units, respectively.
(24) "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.
(25) "Underwritten Occupancy" or "U/W Occupancy" means the occupancy rate
used in determining Net Cash Flow.
(26) "Tenant 1," "Tenant 2" and "Tenant 3" (each a "Tenant") mean, with
respect to the Office Properties and Retail Properties (including Factory Outlet
Center 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 (including
Factory Outlet Center Properties), such Tenants may be viewed as anchor tenants.
On Annex B, an asterisk next to a Tenant means that the space occupied by such
Tenant is not owned by the related borrower.
S-95
<PAGE>
(27) "% of Total SF" means the square feet leased to Tenant as a percentage
of the total square feet of the Mortgaged Property.
(28) "Lease Expiration Date" means the year in which a Tenant's lease is
scheduled to expire.
(29) "Audit/Agreed Upon Procedures Upfront" refers to 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.
(30) "Audit/Agreed Upon Procedures Forward" refers to Mortgaged Properties
for which annual independent accountant audits or specified procedures are
required throughout the term of the Mortgage Loan.
(31) "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.
(32) "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.
(33) "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.
Unless otherwise indicated, references to the "Retail Properties" in this
Prospectus Supplement do not include Factory Outlet Centers.
The asterisks on Annex A and Annex B have the following meanings: (i) an
asterisk under the heading "Property Name" on Annex B means a Mortgaged Loan is
secured, or partially secured, by a leasehold estate; (ii) an asterisk next to
the name of a Tenant on Annex B means that the space occupied by the Tenant is
not owned by the related borrower; and (iii) an asterisk under the heading
"Mortgage Rate" on Annex A means a Mortgage Loan accruing interest on the basis
of the actual number of days elapsed and a 360-day year.
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 Cut-off Date Principal Balances used in this Prospectus
Supplement 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. All numerical information provided in this
Prospectus Supplement 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 in this Prospectus Supplement 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 "Changes in Mortgage Pool
Characteristics" below.
The information set forth in the tables in this Prospectus Supplement,
Annex A, Annex B and Annex C with respect to Weighted Average DSCR, Weighted
Average Net Cash Flow DSCR, Weighted Average NOI DSCR, Weighted Average LTV and
Weighted Average PTV is calculated, unless otherwise specified, excluding the
Credit Tenant Loans. See "Risk Factors and Other Special Considerations--Credit
Tenant Loans Have Special Risks" in this Prospectus Supplement and "Credit
Tenant Loans" above. The information set forth in the tables in this Prospectus
Supplement, Annex A, Annex B and Annex C with respect to the Balloon/ARD Balance
for each of the Dual Amortization Loans is calculated on the assumption that all
scheduled monthly payments (based on the shorter amortization schedule) are
made. See "Risk Factors and Other Special Considerations--Risks Related to the
Certificates--Risks Associated with Dual Amortization Loans" in this Prospectus
Supplement and "--Dual Amortization Loans" above.
S-96
<PAGE>
RANGE OF DEBT SERVICE COVERAGE RATIOS
<TABLE>
<CAPTION>
PERCENT BY
AGGREGATE WEIGHTED
NUMBER OF AGGREGATE CUT-OFF WEIGHTED AVERAGE WEIGHTED
CUT-OFF DATE LOANS OR CUT-OFF DATE DATE AVERAGE ANTICIPATED AVERAGE WEIGHTED
DEBT SERVICE POOL PRINCIPAL PRINCIPAL MORTGAGE REMAINING AMORTIZATION AVERAGE
COVERAGE RATIO LOANS BALANCE BALANCE RATE TERM TERM DSCR
- ---------------------------------------- --------- -------------- ---------- -------- ----------- ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
1-1.1................................... 1 $ 3,781,591 0.2% 7.150% 174 226 1.05
1.1-1.2................................. 12 179,558,674 7.6 8.240% 158 355 1.19
1.2-1.3................................. 56 697,758,028 29.4 8.212% 156 349 1.25
1.3-1.4................................. 45 440,602,580 18.6 7.566% 151 338 1.35
1.4-1.5................................. 36 179,874,333 7.6 7.469% 160 344 1.44
1.5-1.6................................. 18 151,364,531 6.4 8.056% 128 346 1.54
1.6-1.7................................. 14 79,917,888 3.4 7.088% 142 311 1.65
1.7-1.8................................. 14 246,499,706 10.4 6.973% 129 311 1.75
1.8-1.9................................. 5 23,507,356 1.0 8.074% 134 286 1.86
1.9-2................................... 5 168,220,371 7.1 6.687% 84 322 1.99
2-2.1................................... 2 4,928,813 0.2 7.453% 173 264 2.08
Greater than 2.10....................... 5 75,780,683 3.2 7.593% 173 331 2.89
CTL..................................... 17 123,192,849 5.2 7.669% 231 268 1.00
--- -------------- ---- ------ --- ---- ----
Total/Wtd. Avg.......................... 230 $2,374,987,404 100% 7.701% 150 336 1.49
--- -------------- ----
--- -------------- ----
<CAPTION>
WEIGHTED
AVERAGE
ANTICIPATED
CUT-OFF DATE WEIGHTED REPAYMENT
DEBT SERVICE AVERAGE DATE
COVERAGE RATIO LTV LTV/PTV
- ---------------------------------------- -------- -----------
<S> <C> <C>
1-1.1................................... 59.1% 23.6%
1.1-1.2................................. 72.9% 60.0%
1.2-1.3................................. 71.4% 57.6%
1.3-1.4................................. 69.9% 53.8%
1.4-1.5................................. 68.4% 52.6%
1.5-1.6................................. 59.6% 49.7%
1.6-1.7................................. 66.6% 49.6%
1.7-1.8................................. 64.3% 57.2%
1.8-1.9................................. 50.2% 35.3%
1.9-2................................... 63.6% 62.5%
2-2.1................................... 53.7% 25.5%
Greater than 2.10....................... 62.0% 45.3%
CTL..................................... 98.5% NA
---- -----
Total/Wtd. Avg.......................... 68.1% 55.4%
</TABLE>
RANGE OF LOAN-TO-VALUE RATIOS
<TABLE>
<CAPTION>
PERCENT BY
AGGREGATE WEIGHTED WEIGHTED
NUMBER OF AGGREGATE CUT-OFF WEIGHTED AVERAGE AVERAGE
LOANS OR CUT-OFF DATE DATE AVERAGE ANTICIPATED ORIGINAL WEIGHTED WEIGHTED
RANGE OF LOAN- POOL PRINCIPAL PRINCIPAL MORTGAGE REMAINING AMORTIZATION AVERAGE AVERAGE
TO-VALUE RATIOS LOANS BALANCE BALANCE RATE TERM TERM DSCR LTV
- ---------------------- --------- -------------- ---------- -------- ----------- ------------ -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Less than 40%......... 2 $ 6,911,112 0.3% 7.871% 149 326 2.69 32.2%
40.00%-49.99%......... 9 61,009,467 2.6 8.094% 166 310 2.21 48.6%
50.00%-59.99%......... 27 264,614,487 11.1 7.894% 126 324 1.64 56.1%
60.00%-64.99%......... 32 374,067,532 15.8 7.217% 125 341 1.64 63.4%
65.00%-69.99%......... 49 684,620,049 28.8 7.752% 152 341 1.41 68.2%
70.00%-74.99%......... 45 506,262,990 21.3 8.046% 164 348 1.28 72.6%
75.00%-79.99%......... 42 286,241,845 12.1 7.480% 133 344 1.32 77.9%
80.00%-84.99%......... 6 42,204,861 1.8 7.541% 143 355 1.29 80.9%
85.00%-95.99%......... 1 25,862,212 1.1 6.510% 174 360 3.70 90.4%
CTL................... 17 123,192,849 5.2 7.669% 231 268 1.00 98.5%
--- -------------- ---- ------ --- ---- ---- ----
Total/Wtd. Avg........ 230 $2,374,987,404 100% 7.701% 150 336 1.49 68.1%
--- -------------- ----
--- -------------- ----
<CAPTION>
WEIGHTED
AVERAGE
ANTICIPATED
REPAYMENT
RANGE OF LOAN- DATE MINIMUM MAXIMUM
TO-VALUE RATIOS LTV/PTV DSCR DSCR
- ---------------------- ----------- ------- -------
<S> <C> <C> <C>
Less than 40%......... 25.1% 1.88 3.75
40.00%-49.99%......... 34.5% 1.24 2.43
50.00%-59.99%......... 45.0% 1.05 2.10
60.00%-64.99%......... 55.4% 1.17 2.00
65.00%-69.99%......... 56.2% 1.19 1.80
70.00%-74.99%......... 56.9% 1.17 1.79
75.00%-79.99%......... 62.6% 1.14 1.70
80.00%-84.99%......... 67.5% 1.21 1.39
85.00%-95.99%......... 68.0% 3.70 3.70
CTL................... NA 1.00 1.00
----- ----- -----
Total/Wtd. Avg........ 55.4% 1.05 3.75
</TABLE>
RANGE OF LOAN-TO-VALUE RATIOS AT EARLIER OF ANTICIPATED REPAYMENT DATE OR
MATURITY
<TABLE>
<CAPTION>
PERCENT BY
AGGREGATE WEIGHTED WEIGHTED
NUMBER OF AGGREGATE CUT-OFF WEIGHTED AVERAGE AVERAGE
LOANS OR CUT-OFF DATE DATE AVERAGE ANTICIPATED ORIGINAL WEIGHTED WEIGHTED
RANGE OF LOAN- POOL PRINCIPAL PRINCIPAL MORTGAGE REMAINING AMORTIZATION AVERAGE AVERAGE
TO-VALUE RATIOS LOANS BALANCE BALANCE RATE TERM TERM DSCR LTV
- ---------------------- --------- -------------- ---------- -------- ----------- ------------ -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Less than 10%......... 13 $ 63,545,198 2.7% 7.667% 220 224 1.37 71.2%
10.00%-19.99%......... 3 47,569,925 2.0 7.087% 222 266 2.31 51.5%
20.00%-29.99%......... 22 88,330,321 3.7 7.769% 190 253 1.53 62.5%
30.00%-39.99%......... 16 80,753,456 3.4 8.017% 187 314 2.19 50.6%
40.00%-49.99%......... 45 343,664,039 14.5 7.467% 153 319 1.53 62.1%
50.00%-59.99%......... 79 964,872,065 40.6 8.086% 157 353 1.34 67.5%
60.00%-69.99%......... 47 696,864,943 29.3 7.244% 121 354 1.61 72.5%
70.00%-79.99%......... 5 89,387,457 3.8 8.002% 118 360 1.31 78.6%
--- -------------- ---- -------- --- ---- ---- ----
Total/Wtd. Average.... 230 $2,374,987,404 100% 7.701% 150 336 1.49 68.1%
--- -------------- ----
--- -------------- ----
<CAPTION>
WEIGHTED
AVERAGE
ANTICIPATED
REPAYMENT
RANGE OF LOAN- DATE MINIMUM MAXIMUM
TO-VALUE RATIOS LTV/PTV DSCR DSCR
- ---------------------- ----------- ------- -------
<S> <C> <C> <C>
Less than 10%......... 0.9% 1.14 2.04
10.00%-19.99%......... 19.7% 1.29 3.75
20.00%-29.99%......... 27.1% 1.05 1.92
30.00%-39.99%......... 34.8% 1.24 2.43
40.00%-49.99%......... 45.9% 1.18 1.99
50.00%-59.99%......... 55.2% 1.15 1.80
60.00%-69.99%......... 65.3% 1.17 3.70
70.00%-79.99%......... 70.4% 1.28 1.43
----- ----- -----
Total/Wtd. Average.... 55.4% 1.05 3.75
</TABLE>
S-97
<PAGE>
MORTGAGED PROPERTIES BY STATE
<TABLE>
<CAPTION>
PERCENT
BY
AGGREGATE
AGGREGATE CUT-OFF
CUT-OFF DATE DATE
PRINCIPAL PRINCIPAL WEIGHTED WEIGHTED
NUMBER BALANCE/ BALANCE/ WEIGHTED AVERAGE AVERAGE
OF ALLOCATED ALLOCATED AVERAGE ANTICIPATED ORIGINAL WEIGHTED WEIGHTED
MORTGAGED LOAN LOAN MORTGAGE REMAINING AMORTIZATION AVERAGE AVERAGE
STATE PROPERTIES AMOUNT AMOUNT RATE TERM TERM DSCR LTV
- -------------------- --------- -------------- --------- -------- ----------- ------------ -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CA.................. 36 $ 456,845,900 19.2% 7.670% 154 345 1.51 67.6%
MI.................. 26 269,470,263 11.3 8.081% 163 354 1.29 71.8%
NY.................. 11 191,456,838 8.1 7.093% 125 341 1.69 66.3%
VA.................. 20 182,935,663 7.7 7.942% 176 329 1.29 71.6%
IL.................. 16 152,497,140 6.4 7.758% 140 313 1.68 61.7%
OH.................. 15 120,213,547 5.1 8.090% 177 345 1.24 72.2%
AZ.................. 6 96,464,755 4.1 6.926% 98 360 1.83 67.7%
TX.................. 17 85,842,981 3.6 7.304% 137 325 1.57 64.6%
NV.................. 4 85,799,200 3.6 8.371% 168 354 1.32 69.5%
GA.................. 1 80,770,298 3.4 7.400% 131 300 1.77 56.1%
IA.................. 7 78,228,268 3.3 8.326% 123 345 1.28 77.0%
MN.................. 11 62,119,639 2.6 7.134% 97 353 1.75 65.3%
MD.................. 13 58,868,957 2.5 7.837% 186 315 1.56 62.1%
OR.................. 6 47,596,576 2.0 7.348% 121 357 1.72 63.5%
NC.................. 8 43,174,807 1.8 7.850% 168 305 1.43 67.8%
IN.................. 2 40,599,626 1.7 8.211% 132 323 1.48 61.1%
FL.................. 6 36,972,811 1.6 7.340% 145 332 1.31 72.4%
HI.................. 1 30,343,508 1.3 7.070% 114 348 1.35 79.0%
PA.................. 4 29,868,951 1.3 8.070% 171 344 1.28 67.9%
NJ.................. 4 24,481,507 1.0 7.202% 194 322 1.53 70.7%
NM.................. 5 24,052,645 1.0 8.099% 115 360 1.43 68.2%
DC.................. 2 22,884,581 1.0 7.585% 171 324 1.32 72.5%
LA.................. 7 22,674,449 1.0 7.748% 178 332 1.40 72.2%
CT.................. 1 15,275,478 0.6 8.450% 230 291 NA NA
WI.................. 3 12,787,628 0.5 7.862% 161 352 1.42 74.8%
ME.................. 5 12,736,837 0.5 7.781% 142 360 1.55 65.6%
WV.................. 2 11,612,826 0.5 6.890% 114 360 1.39 79.5%
NH.................. 2 10,877,324 0.5 8.298% 171 360 1.26 71.3%
KY.................. 3 9,742,198 0.4 7.275% 175 256 1.45 71.8%
MO.................. 3 8,972,397 0.4 8.466% 161 294 1.58 61.9%
SC.................. 5 8,914,092 0.4 7.256% 160 298 1.51 62.4%
DE.................. 1 7,295,906 0.3 8.000% 117 360 1.25 74.1%
AL.................. 2 6,623,089 0.3 6.881% 132 360 1.43 75.6%
TN.................. 3 4,436,435 0.2 6.821% 190 224 1.47 69.5%
WA.................. 2 4,351,943 0.2 6.780% 118 360 1.40 64.5%
SD.................. 1 3,839,898 0.2 7.250% 175 180 1.36 71.4%
MA.................. 1 3,068,325 0.1 9.200% 176 275 1.49 61.4%
NE.................. 2 2,683,330 0.1 7.368% 173 337 1.46 72.7%
MT.................. 1 2,682,784 0.1 7.030% 230 264 NA NA
CO.................. 1 1,867,731 0.1 7.080% 178 360 1.59 62.3%
AR.................. 1 1,578,108 0.1 7.030% 230 264 NA NA
VT.................. 1 1,478,164 0.1 8.940% 170 240 NA NA
--- -------------- ----- ------ --- ---- ---- ----
Total/Wtd. Avg...... 268 $2,374,987,404 100% 7.701% 150 336 1.49 68.1%
--- -------------- -----
--- -------------- -----
<CAPTION>
WEIGHTED
AVERAGE
ANTICIPATED
REPAYMENT
DATE MIN MAX
STATE LTV/PTV DSCR DSCR
- -------------------- ----------- ---- ----
<S> <C> <C> <C>
CA.................. 54.7% 1.17 3.70
MI.................. 58.9% 1.19 2.04
NY.................. 62.6% 1.22 2.10
VA.................. 52.6% 1.20 1.90
IL.................. 48.2% 1.19 2.43
OH.................. 55.7% 1.18 1.29
AZ.................. 64.2% 1.21 2.00
TX.................. 55.8% 1.23 2.00
NV.................. 56.3% 1.21 1.48
GA.................. 42.8% 1.77 1.77
IA.................. 64.4% 1.23 1.50
MN.................. 61.8% 1.15 2.00
MD.................. 45.6% 1.05 3.75
OR.................. 58.0% 1.27 2.00
NC.................. 45.4% 1.22 1.92
IN.................. 44.9% 1.37 1.54
FL.................. 57.1% 1.19 1.59
HI.................. 66.5% 1.35 1.35
PA.................. 52.9% 1.21 1.99
NJ.................. 54.3% 1.36 1.69
NM.................. 61.3% 1.23 1.64
DC.................. 49.9% 1.23 1.33
LA.................. 50.7% 1.23 1.79
CT.................. NA NA NA
WI.................. 65.6% 1.40 1.43
ME.................. 54.5% 1.46 1.60
WV.................. 69.5% 1.39 1.39
NH.................. 58.1% 1.20 1.52
KY.................. 32.9% 1.29 1.60
MO.................. 40.6% 1.50 1.66
SC.................. 50.0% 1.30 1.71
DE.................. 66.3% 1.25 1.25
AL.................. 64.0% 1.40 1.50
TN.................. 12.1% 1.14 1.70
WA.................. 55.8% 1.40 1.40
SD.................. 1.4% 1.36 1.36
MA.................. 38.1% 1.49 1.49
NE.................. 53.5% 1.38 1.60
MT.................. NA NA NA
CO.................. 47.6% 1.59 1.59
AR.................. NA NA NA
VT.................. 27.0% 1.79 1.79
----- ---- ----
Total/Wtd. Avg...... 55.4% 1.05 3.75
</TABLE>
S-98
<PAGE>
RANGE OF YEARS BUILT
<TABLE>
<CAPTION>
PERCENT
BY
AGGREGATE AGGREGATE
CUT-OFF CUT-OFF
DATE DATE
PRINCIPAL PRINCIPAL WEIGHTED WEIGHTED
BALANCE/ BALANCE/ WEIGHTED AVERAGE AVERAGE
NUMBER ALLOCATED ALLOCATED AVERAGE ANTICIPATED ORIGINAL WEIGHTED
OF MORTGAGED LOAN LOAN MORTGAGE REMAINING AMORTIZATION AVERAGE
RANGE OF YEARS BUILT PROPERTIES AMOUNT AMOUNT RATE TERM TERM DSCR
- --------------------- ------------ -------------- --------- -------- ----------- ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
Pre-1921............. 9 $ 77,981,972 3.3% 8.150% 167 343 1.35
1922-1931............ 8 85,690,176 3.6 7.787% 150 354 1.31
1932-1941............ 4 22,088,428 .9 7.949% 194 282 1.40
1942-1951............ 5 167,750,767 7.1 8.026% 168 358 1.33
1952-1961............ 7 51,503,821 2.2 8.102% 174 321 1.38
1962-1971............ 44 238,582,489 10.0 7.734% 150 339 1.44
1972-1981............ 62 464,291,655 19.5 7.837% 161 330 1.59
1982-1991............ 77 746,423,667 31.4 7.700% 147 339 1.39
1992-1998............ 52 520,674,427 21.9 7.331% 129 323 1.67
---- -------------- ----- ------ --- ---- ----
Total/Wtd. Avg....... 268 $2,374,987,404 100% 7.701% 150 336 1.49
---- -------------- -----
---- -------------- -----
<CAPTION>
WEIGHTED
AVERAGE
ANTICIPATED
WEIGHTED REPAYMENT
AVERAGE DATE
RANGE OF YEARS BUILT LTV LTV/PTV
- --------------------- -------- -----------
<S> <C> <C>
Pre-1921............. 62.9% 51.7%
1922-1931............ 71.4% 59.4%
1932-1941............ 63.2% 47.3%
1942-1951............ 68.3% 55.0%
1952-1961............ 65.5% 51.9%
1962-1971............ 69.7% 56.4%
1972-1981............ 69.9% 54.4%
1982-1991............ 67.7% 53.9%
1992-1998............ 66.7% 58.8%
---- -----
Total/Wtd. Avg....... 68.1% 55.4%
</TABLE>
S-99
<PAGE>
CUT-OFF DATE PRINCIPAL BALANCE BY PROPERTY TYPE
<TABLE>
<CAPTION>
PERCENT BY WEIGHTED
AGGREGATE CUT- AGGREGATE AVERAGE
OFF DATE CUT-OFF DATE CUT-OFF
PRINCIPAL PRINCIPAL DATE WEIGHTED WEIGHTED
NUMBER OF BALANCE/ BALANCE/ PRINCIPAL AVERAGE AVERAGE
MORTGAGED ALLOCATED LOAN ALLOCATED NUMBER BALANCE MORTGAGE REMAINING
PROPERTY TYPE PROPERTIES AMOUNT LOAN AMOUNT OF UNITS PER UNIT RATE TERM
- --------------------------------- --------- -------------- ------------ ---------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
RETAIL
Anchored....................... 51 $ 726,877,270 30.6% 9,313,879 124 7.540% 134
Mall........................... 3 101,892,082 4.3 2,113,713 121 8.325% 163
Factory Outlet................. 5 97,878,360 4.1 1,593,172 104 8.400% 112
Quasi-Anchored................. 8 40,161,298 1.7 560,007 101 8.092% 199
Unanchored..................... 20 63,250,441 2.7 912,949 97 7.439% 155
Convenient Stations............ 6 7,360,735 0.3 372,782 84 7.520% 239
--- -------------- ---- ---------- ------ ----- -----
TOTAL RETAIL................... 93 1,037,420,187 43.7 14,866,502 119 7.713% 139
OFFICE
Office......................... 51 532,362,864 22.4 7,016,864 91 7.801% 158
Medical Office................. 9 87,283,571 3.7 767,631 154 7.804% 153
--- -------------- ---- ---------- ------ ----- -----
TOTAL OFFICE................... 60 619,646,435 26.1 7,784,495 100 7.802% 157
MULTIFAMILY...................... 55 338,959,580 14.3 11,439 46,279 7.643% 158
HOTEL
Full Service................... 5 110,487,055 4.7 2,792 92,052 7.553% 128
Limited Service................ 28 78,864,964 3.3 2,837 34,139 7.422% 198
--- -------------- ---- ---------- ------ ----- -----
TOTAL HOTEL.................... 33 189,352,018 8.0 5,629 67,931 7.498% 157
INDUSTRIAL....................... 15 98,441,003 4.1 3,732,475 56 7.563% 168
HEALTH CLUB...................... 2 66,315,488 2.8 586,900 143 7.825% 146
MOBILE HOME PARK................. 8 14,828,946 0.6 1,089 16,243 7.008% 145
HEALTHCARE
Assisted Living................ 1 6,872,718 0.3 132 52,066 7.610% 176
Nursing........................ 1 3,151,029 0.1 62 50,823 7.610% 176
--- -------------- ---- ---------- ------ ----- -----
TOTAL HEALTHCARE............... 2 10,023,747 0.4 194 51,675 7.610% 176
--- -------------- ---- ----- -----
TOTAL/WTD. AVG................... 268 $2,374,987,404 100% 7.701% 150
--- -------------- ----
--- -------------- ----
<CAPTION>
WEIGHTED
WEIGHTED AVERAGE
AVERAGE ANTICIPATED
ORIGINAL WEIGHTED WEIGHTED REPAYMENT
AMORTIZATION MIN MAX AVERAGE AVERAGE DATE
PROPERTY TYPE TERM DSCR DSCR DSCR LTV LTV/PTV
- --------------------------------- ------------ ---- ---- -------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
RETAIL
Anchored....................... 343 1.05 3.75 1.55 69.0% 59.4%
Mall........................... 360 1.20 1.54 1.22 74.5% 61.6%
Factory Outlet................. 360 1.54 1.54 1.54 57.1% 51.8%
Quasi-Anchored................. 342 1.25 1.95 1.41 68.3% 54.5%
Unanchored..................... 322 1.20 1.99 1.48 65.2% 51.1%
Convenient Stations............ 283 NA NA NA NA NA
---- ---- ---- ---- ------ -----
TOTAL RETAIL................... 345 1.05 3.75 1.51 68.2% 58.3%
OFFICE
Office......................... 344 1.17 3.70 1.42 68.6% 54.8%
Medical Office................. 349 1.21 2.30 1.35 70.6% 57.6%
---- ---- ---- ---- ------ -----
TOTAL OFFICE................... 345 1.17 3.70 1.41 68.9% 55.2%
MULTIFAMILY...................... 354 1.15 1.92 1.36 72.1% 57.4%
HOTEL
Full Service................... 299 1.49 1.86 1.75 55.2% 42.6%
Limited Service................ 259 1.36 2.10 1.63 62.3% 32.1%
---- ---- ---- ---- ------ -----
TOTAL HOTEL.................... 282 1.36 2.10 1.72 57.1% 39.9%
INDUSTRIAL....................... 291 1.24 2.04 1.43 72.1% 52.1%
HEALTH CLUB...................... 289 1.66 2.43 2.08 56.9% 41.5%
MOBILE HOME PARK................. 333 1.37 1.60 1.49 74.3% 58.0%
HEALTHCARE
Assisted Living................ 300 1.72 1.72 1.72 71.6% 46.4%
Nursing........................ 300 1.72 1.72 1.72 71.6% 46.4%
---- ---- ---- ---- ------ -----
TOTAL HEALTHCARE............... 300 1.72 1.72 1.72 71.6% 46.4%
---- ---- ---- ---- ------ -----
TOTAL/WTD. AVG................... 336 1.05 3.75 1.49 68.1% 55.4%
</TABLE>
S-100
<PAGE>
RANGE OF CUT-OFF DATE PRINCIPAL BALANCES
<TABLE>
<CAPTION>
PERCENT BY
AGGREGATE WEIGHTED WEIGHTED
NUMBER AGGREGATE CUT-OFF WEIGHTED AVERAGE AVERAGE
OF LOANS CUT-OFF DATE DATE AVERAGE ANTICIPATED ORIGINAL WEIGHTED
RANGE OF CUT-OFF DATE OR POOL PRINCIPAL PRINCIPAL MORTGAGE REMAINING AMORTIZATION AVERAGE
PRINCIPAL BALANCES LOANS BALANCE BALANCE RATE TERM TERM DSCR
- ------------------------------------ -------- -------------- ---------- -------- ----------- ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
Less Than $2,500,000................ 67 $ 104,923,423 4.4% 7.526% 162 317 1.48
2,500,000-4,999,999................. 73 268,204,820 11.3 7.457% 162 323 1.49
5,000,000-7,499,999................. 30 191,470,967 8.1 7.601% 149 348 1.41
7,500,000-9,999,999................. 9 76,926,763 3.2 7.923% 159 332 1.34
10,000,000-19,999,999............... 23 295,205,483 12.4 7.900% 162 315 1.35
20,000,000-29,999,999............... 9 223,569,247 9.4 7.411% 143 337 1.59
30,000,000-39,999,999............... 8 276,228,170 11.6 8.063% 165 348 1.46
40,000,000-59,999,999............... 4 182,926,205 7.7 8.159% 181 337 1.25
65,000,000-82,499,999............... 2 146,645,906 6.2 7.849% 125 327 1.55
90,000,000-99,999,999............... 2 188,272,430 7.9 8.448% 139 360 1.37
122,500,000-156,000,000............. 3 420,613,989 17.7 7.098% 121 360 1.70
---- -------------- ---- ------ --- ---- ----
Total/Wtd. Avg...................... 230 $2,374,987,404 100% 7.701% 150 336 1.49
---- -------------- ----
---- -------------- ----
<CAPTION>
WEIGHTED
AVERAGE
ANTICIPATED
WEIGHTED REPAYMENT
RANGE OF CUT-OFF DATE AVERAGE DATE
PRINCIPAL BALANCES LTV LTV/PTV
- ------------------------------------ -------- -----------
<S> <C> <C>
Less Than $2,500,000................ 66.7% 46.7%
2,500,000-4,999,999................. 67.4% 48.3%
5,000,000-7,499,999................. 69.2% 54.8%
7,500,000-9,999,999................. 68.7% 56.1%
10,000,000-19,999,999............... 70.5% 52.7%
20,000,000-29,999,999............... 70.6% 57.1%
30,000,000-39,999,999............... 67.2% 53.4%
40,000,000-59,999,999............... 69.6% 57.2%
65,000,000-82,499,999............... 65.8% 55.1%
90,000,000-99,999,999............... 65.4% 56.2%
122,500,000-156,000,000............. 67.3% 62.9%
---- -----
Total/Wtd. Avg...................... 68.1% 55.4%
</TABLE>
RANGE OF ANTICIPATED REMAINING TERMS
<TABLE>
<CAPTION>
PERCENT BY
AGGREGATE WEIGHTED WEIGHTED
AGGREGATE CUT-OFF WEIGHTED AVERAGE AVERAGE
RANGE OF ANTICIPATED NUMBER CUT-OFF DATE DATE AVERAGE ANTICIPATED ORIGINAL WEIGHTED
REMAINING TERMS OF PRINCIPAL PRINCIPAL MORTGAGE REMAINING AMORTIZATION AVERAGE
(IN MONTHS) NOTES BALANCE BALANCE RATE TERM TERM DSCR
- ------------------------------------ -------- -------------- ---------- -------- ----------- ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
72-83............................... 1 $ 156,000,000 6.6% 6.640% 79 NA 2.00
96-107.............................. 2 12,458,876 0.5 8.189% 105 311 1.30
108-119............................. 76 636,960,994 26.8 7.616% 116 342 1.40
120-131............................. 5 210,795,028 8.9 7.009% 124 301 1.75
132-143............................. 3 3,196,848 0.1 10.360% 142 354 1.34
144-155............................. 1 1,676,949 0.1 7.010% 153 360 1.36
156-167............................. 5 162,595,840 6.8 8.454% 165 355 1.25
168-179............................. 118 1,051,476,747 44.3 7.930% 173 342 1.45
192-203............................. 1 11,685,718 0.5 7.880% 192 235 NA
216-227............................. 1 1,330,172 0.1 7.290% 219 230 1.14
228-239............................. 17 111,091,921 4.7 7.601% 233 259 1.30
252-263............................. 4 15,718,312 0.7 7.640% 255 333 NA
---- -------------- ---- ------ --- ---- ------
Total/Wtd. Avg...................... 234 $2,374,987,404 100% 7.701% 150 336 1.49
---- -------------- ----
---- -------------- ----
<CAPTION>
WEIGHTED
AVERAGE
ANTICIPATED
RANGE OF ANTICIPATED WEIGHTED REPAYMENT
REMAINING TERMS AVERAGE DATE
(IN MONTHS) LTV LTV/PTV
- ------------------------------------ -------- -----------
<S> <C> <C>
72-83............................... 64.3% 64.3%
96-107.............................. 69.2% 59.9%
108-119............................. 68.7% 59.4%
120-131............................. 63.7% 58.4%
132-143............................. 51.6% 43.4%
144-155............................. 76.2% 61.8%
156-167............................. 70.3% 57.4%
168-179............................. 68.7% 51.5%
192-203............................. NA NA
216-227............................. 78.2% 0.0%
228-239............................. 74.9% 4.3%
252-263............................. NA NA
---- -----
Total/Wtd. Avg...................... 68.1% 55.4%
</TABLE>
RANGE OF MONTHS REMAINING TO MATURITY
<TABLE>
<CAPTION>
PERCENT BY
AGGREGATE WEIGHTED WEIGHTED
AGGREGATE CUT-OFF WEIGHTED AVERAGE AVERAGE
RANGE OF REMAINING NUMBER CUT-OFF DATE DATE AVERAGE ANTICIPATED ORIGINAL WEIGHTED
TERMS TO OF PRINCIPAL PRINCIPAL MORTGAGE REMAINING AMORTIZATION AVERAGE
MATURITY (IN MONTHS) NOTES BALANCE BALANCE RATE TERM TERM DSCR
- ------------------------------------ -------- -------------- ---------- -------- ----------- ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
72-83............................... 1 $ 156,000,000 6.6% 6.640% 79 NA 2.00
96-107.............................. 1 1,997,339 0.1 7.450% 106 110 1.47
108-119............................. 1 3,475,401 0.1 7.240% 114 300 1.48
120-131............................. 1 124,000,000 5.2 6.650% 120 NA 1.74
168-179............................. 2 8,639,799 0.4 7.864% 175 341 1.28
192-203............................. 1 11,685,718 0.5 7.880% 192 235 NA
216-227............................. 2 5,111,763 0.2 7.186% 186 227 1.07
228-239............................. 23 120,314,524 5.1 7.655% 220 255 1.62
240-251............................. 1 5,046,569 0.2 7.550% 118 252 1.36
252-263............................. 4 15,718,312 0.7 7.640% 255 333 NA
264-275............................. 2 32,891,001 1.4 7.205% 122 276 1.64
276-287............................. 3 89,428,964 3.8 7.480% 133 300 1.74
288-299............................. 40 185,328,220 7.8 7.645% 164 280 1.70
300-311............................. 13 109,940,720 4.6 7.279% 125 312 1.27
312-323............................. 6 26,538,027 1.1 7.693% 160 336 1.39
324-335............................. 4 44,877,827 1.9 7.002% 168 336 1.38
336-347............................. 10 262,238,577 11.0 8.236% 159 354 1.28
348-359............................. 119 1,171,755,443 49.3 7.948% 152 359 1.41
---- -------------- ---- ------ --- ---- ----
Total/Wtd. Avg...................... 234 $2,374,987,404 100% 7.701% 150 336 1.49
---- -------------- ----
---- -------------- ----
<CAPTION>
WEIGHTED
AVERAGE
ANTICIPATED
RANGE OF REMAINING WEIGHTED REPAYMENT
TERMS TO AVERAGE DATE
MATURITY (IN MONTHS) LTV LTV/PTV
- ------------------------------------ -------- -----------
<S> <C> <C>
72-83............................... 64.3% 64.3%
96-107.............................. 73.6% 49.4%
108-119............................. 73.2% 59.4%
120-131............................. 69.7% 69.7%
168-179............................. 79.6% 62.1%
192-203............................. NA NA
216-227............................. 64.1% 17.4%
228-239............................. 60.2% 22.2%
240-251............................. 69.6% 50.2%
252-263............................. NA NA
264-275............................. 65.8% 49.5%
276-287............................. 56.2% 42.5%
288-299............................. 62.9% 35.1%
300-311............................. 67.6% 54.3%
312-323............................. 65.2% 48.7%
324-335............................. 67.5% 50.2%
336-347............................. 70.8% 57.6%
348-359............................. 69.8% 57.9%
---- -----
Total/Wtd. Avg...................... 68.1% 55.4%
S-101
<PAGE>
RANGE OF ANTICIPATED YEARS OF REPAYMENT
</TABLE>
<TABLE>
<CAPTION>
PERCENT BY
AGGREGATE WEIGHTED WEIGHTED
AGGREGATE CUT-OFF WEIGHTED AVERAGE AVERAGE
NUMBER CUT-OFF DATE DATE AVERAGE ANTICIPATED ORIGINAL WEIGHTED
OF PRINCIPAL PRINCIPAL MORTGAGE REMAINING AMORTIZATION AVERAGE
YEAR NOTES BALANCE BALANCE RATE TERM TERM DSCR
- ------------------------------------- ------ -------------- ---------- -------- ----------- ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
2005................................. 1 $ 156,000,000 6.6% 6.640% 79 NA 2.00
2007................................. 1 10,461,537 0.4 8.330% 105 349 1.27
2008................................. 41 408,678,259 17.2 7.693% 115 342 1.42
2009................................. 40 360,304,804 15.2 7.221% 119 339 1.50
2010................................. 1 80,770,298 3.4 7.400% 131 300 1.77
2011................................. 4 4,873,797 0.2 9.207% 146 356 1.35
2012................................. 3 104,715,744 4.4 8.494% 164 360 1.24
2013................................. 111 1,060,102,918 44.6 7.984% 172 344 1.44
2014................................. 9 49,253,924 2.1 7.302% 178 312 1.43
2015................................. 1 11,685,718 0.5 7.880% 192 235 NA
2017................................. 1 1,330,172 0.1 7.290% 219 230 1.14
2018................................. 10 98,183,104 4.1 7.629% 232 258 1.30
2019................................. 7 12,908,817 0.5 7.383% 239 265 1.29
2020................................. 4 15,718,312 0.7 7.640% 255 333 NA
---- -------------- ---- ------ --- ---- ----
Total/Wtd. Avg....................... 234 $2,374,987,404 100% 7.701% 150 336 1.49
---- -------------- ----
---- -------------- ----
<CAPTION>
WEIGHTED
AVERAGE
ANTICIPATED
WEIGHTED REPAYMENT
AVERAGE DATE
YEAR LTV LTV/PTV
- ------------------------------------- -------- -----------
<S> <C> <C>
2005................................. 64.3% 64.3%
2007................................. 68.4% 61.9%
2008................................. 66.7% 57.9%
2009................................. 70.9% 64.3%
2010................................. 56.1% 42.8%
2011................................. 60.1% 49.7%
2012................................. 71.3% 58.7%
2013................................. 68.6% 52.2%
2014................................. 68.9% 41.6%
2015................................. NA NA
2017................................. 78.2% 0.0%
2018................................. 73.1% 6.3%
2019................................. 78.1% 0.9%
2020................................. NA NA
---- -----
Total/Wtd. Avg....................... 68.1% 55.4%
</TABLE>
RANGE OF MORTGAGE RATES
<TABLE>
<CAPTION>
PERCENT BY
AGGREGATE WEIGHTED WEIGHTED
AGGREGATE CUT-OFF WEIGHTED AVERAGE AVERAGE
NUMBER CUT-OFF DATE DATE AVERAGE ANTICIPATED ORIGINAL WEIGHTED
RANGE OF OF PRINCIPAL PRINCIPAL MORTGAGE REMAINING AMORTIZATION AVERAGE
MORTGAGE RATES NOTES BALANCE BALANCE RATE TERM TERM DSCR
- ------------------------------------- ------ -------------- ---------- -------- ----------- ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
6.2500- 6.4999...................... 5 $ 15,150,984 0.6% 6.424% 126 336 1.65
6.5000- 6.7499...................... 13 391,267,105 16.5 6.633% 115 346 1.90
6.7500- 6.9999...................... 18 91,569,901 3.9 6.889% 129 341 1.40
7.0000- 7.2499...................... 53 321,221,189 13.5 7.080% 156 319 1.48
7.2500- 7.4999...................... 38 248,589,900 10.5 7.382% 150 303 1.55
7.5000- 7.7499...................... 23 70,891,572 3.0 7.590% 184 299 1.54
7.7500- 7.9999...................... 12 91,633,797 3.9 7.860% 148 310 1.37
8.0000- 8.2499...................... 12 284,885,133 12.0 8.054% 166 358 1.32
8.2500- 8.4999...................... 25 385,849,005 16.2 8.385% 150 347 1.35
8.5000- 8.7499...................... 24 402,709,865 17.0 8.501% 164 352 1.37
8.7500- 8.9999...................... 3 46,684,508 2.0 8.816% 161 348 1.23
9.0000- 9.2499...................... 1 3,068,325 0.1 9.200% 176 275 1.49
9.2500- 9.4999...................... 1 12,043,639 0.5 9.253% 171 360 1.28
9.5000- 9.7499...................... 1 4,127,476 0.2 9.500% 174 300 1.50
10.2500-10.4999...................... 3 3,196,848 0.1 10.360% 142 354 1.34
10.5000-10.7599...................... 2 2,098,158 0.1 10.631% 129 323 1.18
---- -------------- ---- ------ --- ---- ----
Total/Wtd. Avg....................... 234 $2,374,987,404 100% 7.701% 150 336 1.49
---- -------------- ----
---- -------------- ----
<CAPTION>
WEIGHTED
AVERAGE
ANTICIPATED
WEIGHTED REPAYMENT
RANGE OF AVERAGE DATE
MORTGAGE RATES LTV LTV/PTV
- ------------------------------------- -------- -----------
<S> <C> <C>
6.2500- 6.4999...................... 67.1% 50.9%
6.5000- 6.7499...................... 69.2% 64.2%
6.7500- 6.9999...................... 72.4% 59.9%
7.0000- 7.2499...................... 69.2% 51.9%
7.2500- 7.4999...................... 63.3% 43.3%
7.5000- 7.7499...................... 66.0% 42.7%
7.7500- 7.9999...................... 71.9% 53.9%
8.0000- 8.2499...................... 69.4% 56.0%
8.2500- 8.4999...................... 67.3% 57.8%
8.5000- 8.7499...................... 67.4% 55.2%
8.7500- 8.9999...................... 69.8% 58.1%
9.0000- 9.2499...................... 61.4% 38.1%
9.2500- 9.4999...................... 66.9% 56.5%
9.5000- 9.7499...................... 60.7% 43.3%
10.2500-10.4999...................... 51.6% 43.4%
10.5000-10.7599...................... 54.0% 45.9%
---- -----
Total/Wtd. Avg....................... 68.1% 55.4%
</TABLE>
S-102
<PAGE>
RANGE OF REMAINING LOCK-OUT PERIODS
<TABLE>
<CAPTION>
PERCENT BY
AGGREGATE WEIGHTED WEIGHTED
REMAINING AGGREGATE CUT-OFF WEIGHTED AVERAGE AVERAGE WEIGHTED WEIGHTED
LOCK-OUT NUMBER CUT-OFF DATE DATE AVERAGE ANTICIPATED ORIGINAL AVERAGE AVERAGE WEIGHTED
PERIOD OF PRINCIPAL PRINCIPAL REMAINING REMAINING AMORTIZATION REMAINING MORTGAGE AVERAGE
(IN MONTHS) NOTES BALANCE BALANCE LOCKOUT TERM TERM TERM RATE DSCR
- -------------- ------ -------------- ---------- ---------- ----------- ------------ ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
72- 83....... 1 $ 156,000,000 6.6% 75 79 NA 79% 6.640% 2.00%
96-107....... 5 26,654,275 1.1 103 110 321 291% 7.981% 1.32%
108-119....... 74 746,765,595 31.4 114 117 342 301% 7.452% 1.46%
120-131....... 4 86,795,028 3.7 130 131 301 287% 7.521% 1.76%
132-143....... 3 3,196,848 0.1 141 142 354 322% 10.360% 1.34%
144-155....... 2 13,535,591 0.6 151 158 360 341% 8.267% 1.23%
156-167....... 42 473,100,432 19.9 163 169 350 340% 8.087% 1.35%
168-179....... 80 729,113,513 30.7 171 174 340 337% 7.936% 1.48%
180-191....... 1 11,685,718 0.5 191 192 235 192% 7.880% NA
204-215....... 1 1,330,172 0.1 212 219 230 219% 7.290% 1.14%
216-227....... 1 40,320,671 1.7 226 230 264 230% 7.030% NA
228-239....... 16 70,771,250 3.0 232 234 256 246% 7.926% NA
240-251....... 4 15,718,312 0.7 251 255 333 255% 7.640% NA
---- -------------- ---- ---- --- ---- ---- ------ ----
Total/Wtd.
Avg.......... 234 $2,374,987,404 100% 146 150 336 301% 7.701% 1.49%
---- -------------- ----
---- -------------- ----
<CAPTION>
WEIGHTED
AVERAGE
REMAINING ANTICIPATED
LOCK-OUT WEIGHTED REPAYMENT
PERIOD AVERAGE DATE
(IN MONTHS) LTV LTV/PTV
- -------------- -------- -----------
<S> <C> <C>
72- 83....... 64.3% 64.3%
96-107....... 69.2% 59.5%
108-119....... 68.9% 61.1%
120-131....... 55.2% 42.2%
132-143....... 51.6% 43.4%
144-155....... 80.1% 65.9%
156-167....... 68.6% 53.6%
168-179....... 68.9% 51.2%
180-191....... NA NA
204-215....... 78.2% 0.0%
216-227....... NA NA
228-239....... NA 4.3%
240-251....... NA NA
---- -----
Total/Wtd.
Avg.......... 68.1% 55.4%
</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
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 in this Prospectus Supplement.
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-103
<PAGE>
DESCRIPTION OF THE OFFERED CERTIFICATES
GENERAL
The Certificates will be issued pursuant to the Pooling and Servicing
Agreement and will consist of eighteen Classes to be designated as the
Class A-1 Certificates, the Class A-2 Certificates, the Class A-3 Certificates,
the Class X Certificates, the Class B Certificates, the Class C Certificates,
the Class D Certificates, the Class E Certificates, the Class F Certificates,
the Class G Certificates, the Class H Certificates, the Class J Certificates,
the Class K Certificates, the Class L Certificates, the Class M-1 Certificates,
the Class M-2 Certificates, the Class R Certificates and the Class LR
Certificates. Only the Class A-1 Certificates, the Class A-2 Certificates, the
Class A-3 Certificates, the Class B Certificates, the Class C Certificates, the
Class D Certificates and the Class E Certificates (the "Offered Certificates")
are offered hereby. The Class X Certificates, the Class F Certificates, the
Class G Certificates, the Class H Certificates, the Class J Certificates, the
Class K Certificates, the Class L Certificates, the Class M-1 Certificates, the
Class M-2 Certificates, the Class R Certificates and the Class LR Certificates
(the "Private Certificates") are not offered hereby. The Classes of Certificates
other than the Class X, Class R and Class LR Certificates are sometimes referred
to in this Prospectus Supplement 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"); (iii) such funds or assets as from time to time are deposited in the
Collection Account, the Distribution Account, the Interest Reserve Account, the
Excess Interest Distribution Account and any account established in connection
with REO Properties (an "REO Account"); (iv) the rights of the lender under all
insurance policies with respect to the Mortgage Loans; (v) the Depositor's
rights and remedies under the Mortgage Loan Purchase and Sale Agreements; and
(vi) 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 Certificates (other than the Class R and Class LR 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 amount (the "Notional Amount") as
applicable to such Class.
The Class A-1, Class A-2, Class A-3, Class B, Class C, Class D and Class E
Certificates will have initial Certificate Balances of $400,000,000,
$930,000,000, $368,115,000, $106,875,000, $130,624,000, $136,562,000 and
$35,625,000, respectively. The Class F, Class G, Class H, Class J, Class K and
Class L Certificates will have initial Certificate Balances of $53,437,000,
$59,375,000, $23,750,000, $29,687,000, $41,562,000 and $17,813,000,
respectively. The Class M-1 and Class M-2 Certificates will have initial
Certificate Balances, in the aggregate, of approximately $41,562,404. The
Class X Certificates will have an initial Notional Amount equal to
$2,374,987,404, which is equal to the initial aggregate Certificate Balance of
the Sequential Certificates.
The Class R and Class LR Certificates will not have a Certificate Balance
or a Notional Amount.
The Certificate Balance of any Class of Sequential 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 below under "Distributions--Payment Priorities."
The respective Certificate Balance of each Class of Sequential Certificates will
in each case be reduced by amounts actually distributed thereon that are
allocable to principal and by any Realized Losses (as defined in this Prospectus
Supplement) allocated to such Class of Certificates. The Notional Amount of the
Class X Certificates will equal the aggregate Certificate Balance of the
Sequential Certificates outstanding from time to time. The Notional Amount of
the Class X Certificates will be reduced to the extent of all reductions in the
Certificate Balances of the respective Classes of the Sequential Certificates.
S-104
<PAGE>
DISTRIBUTIONS
Method, Timing and Amount. Distributions on the Certificates will be made
on the 17th day of each month beginning on April 19, 1999 (each, a "Distribution
Date"), provided that if the 17th day of a month is not a Business Day, then the
Distribution Date shall be the following Business 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
April 19, 1999, 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 (b) otherwise 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 or Notional Amount thereof has been
reduced to zero) of such Certificate at the office of the Trustee, as 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 Amount, 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 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 "Interest Reserve 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 close of business on the Business Day prior to the related
Servicer Remittance Date and (v) amounts remitted by the Servicer to the
Collection Account in respect of Prepayment Interest Shortfalls (as described
under "Prepayment Interest Shortfalls" below), but excluding the following:
(a) amounts permitted to be used to reimburse the Servicer, the Trustee or
the Fiscal Agent, as applicable, for previously unreimbursed Advances and
interest thereon as described in this Prospectus Supplement 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" in this Prospectus Supplement), 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 as described in this Prospectus Supplement, 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
S-105
<PAGE>
to the Pooling and Servicing Agreement in respect of various items as provided
in the Pooling and Servicing Agreement;
(f) Prepayment Premiums;
(g) Default Interest;
(h) Excess Interest;
(i) Prepayment Interest Excesses to the extent not used to offset
Prepayment Interest Shortfalls;
(j) Interest Reserve Amounts;
(k) 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
(l) 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 excluding any Balloon Payment (but
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 NHA 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 in this Prospectus Supplement) 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 the 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.
S-106
<PAGE>
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 or
a Balloon Payment.
"Excess Interest" with respect to each of the Mortgage Loans that has a
Revised Rate, is 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, is 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 Sequential 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 Accrual Period).
The "Interest Accrual Amount" with respect to any Distribution Date and the
Class X 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 Amount of such Class (provided, that for interest accrual
purposes any distributions in reduction of the Certificate Balances of the
Sequential Certificates that constitute the Notional Amount of the Class X
Certificates or reductions in such Certificate Balances 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 Accrual Period). Calculations of interest due in respect of the
Certificates will be made on the basis of a 360-day year consisting of twelve
30-day months.
"Appraisal Reduction Amount" is the amount described below under "Appraisal
Reductions."
"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. 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 plus Trustee Fees) 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-1 Certificates
is a per annum rate equal to %. The Pass-Through Rate on the Class A-2,
Class A-3, Class B, Class C, Class D and Class E Certificates is a per annum
rate equal to %, %, %, %, % and %, respectively,
in each case subject to a maximum rate equal to the Weighted Average Net
Mortgage Pass-Through Rate. The Pass-Through Rate on the Class X Certificates is
a per annum rate equal to the Weighted Average Net Mortgage Pass-Through Rate
minus the Weighted Average Pass-Through Rate on the Sequential Certificates. The
Pass-Through Rate on the Class F, Class G, Class H, Class J, Class K, Class L,
Class M-1 and Class M-2 Certificates is a per annum rate equal to %. The
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 X Certificates, with respect to any Interest
Accrual Period, is the fraction (expressed as a percentage), the numerator of
which is the sum of the products obtained by multiplying, with respect to each
Class of Sequential
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Certificates, (i) the Pass-Through Rate for such Class and (ii) the Certificate
Balance of such Class as of the first day of such Interest Accrual Period, and
the denominator of which is the sum of the Certificate Balances of the Classes
of Sequential Certificates as of the first day of such Interest Accrual Period
(provided, in each case, any reductions in Certificate Balance as a result of
distributions of principal 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 fraction (expressed as a percentage) (a) the numerator of which is
the sum of the products obtained by multiplying, for each Mortgage Loan,
(i) the Net Mortgage Pass-Through Rate of such Mortgage Loan and (ii) the Stated
Principal Balance of such Mortgage Loan as of the day next preceding such
Distribution Date and (b) the denominator of which is the sum of the Stated
Principal Balances of all such Mortgage Loans as of the day next preceding such
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 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 (each, an "Actual/360 Loan") for any Interest Accrual Period will be an
annual rate generally equal to a fraction (expressed as a percentage), the
numerator of which is twelve (12) times the aggregate amount of interest accrued
in respect of such Actual/360 Loan during such Interest Accrual Period and the
denominator of which is the Stated Principal Balance of such Actual/360 Loan as
of the last day of such Interest Accrual Period; provided that for purposes of
calculating the numerator of the fraction described above, the aggregate amount
of interest accrued in respect of such Actual/360 Loan during such Interest
Accrual Period will, when the accrual of interest occurs during the calendar
months of December (except in a year preceding a leap year) and January, be
decreased by the amount of any Interest Reserve Amounts to be transferred to the
Interest Reserve Account in respect of such Actual/360 Loan in the following
calendar month and will, when the accrual of interest occurs during the calendar
month of February, be increased by the Interest Reserve Amounts to be
transferred from the Interest Reserve Account in respect of such Actual/360 Loan
in the following calendar month.
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 (other than
Balloon Payments) which are due on the Mortgage Loans on or (to the extent not
previously advanced) before the related Due Date and are either received with
respect to the relevant Collection Period or advanced for such Distribution
Date;
(ii) the principal component of all Assumed Scheduled Payments, as
applicable, which are due or deemed due, as the case may be, on or (to the
extent not previously advanced) before the related Due Date and are either
received with respect to the relevant Collection Period or advanced for such
Distribution Date;
(iii) 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";
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(iv) the portion of Unscheduled Payments allocable to principal of any
Mortgage Loan which was liquidated during the related Collection Period;
(v) all Balloon Payments and, 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;
(vi) to the extent not included in the preceding clause (iv) or (v), all
other Principal Prepayments received in the related Collection Period; and
(vii) 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; except that, in the case of clauses (i) through (vii), net of any
related outstanding P&I Advances allocable to principal.
The "Assumed Scheduled Payment" with respect to any Mortgage Loan that is
delinquent in respect of its Balloon Payment (including any REO Mortgage Loan as
to which the Balloon Payment would have been past due) is an amount equal to the
sum of (a) the principal portion of the Monthly Payment that would have been due
on such Mortgage Loan on the related Due Date based on the constant payment
required by the related Note or the original amortization schedule thereof (as
calculated with interest at the related Mortgage Rate), if applicable, assuming
such Balloon Payment has not become due after giving effect to any modification,
and (b) interest on the Stated Principal Balance of such Mortgage Loan at the
applicable Net Mortgage Pass-Through Rate.
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 holders of the
Class A-1, Class A-2, Class A-3 and Class X Certificates, up to an amount equal
to the aggregate Interest Accrual Amounts of such Classes;
(ii) Second, pro rata, to the holders of the Class A-1, Class A-2,
Class A-3 and Class X 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 holders of the Class A-1 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 holders of the Class A-2 Certificates, in reduction of
the Certificate Balance thereof, an amount equal to the Principal Distribution
Amount less the portion of the Principal Distribution Amount distributed
pursuant to all prior clauses, until the Certificate Balance thereof is reduced
to zero;
(v) Fifth, to the holders of the Class A-3 Certificates, in reduction of
the Certificate Balance thereof, an amount equal to the Principal Distribution
Amount less the portion of the Principal Distribution Amount distributed
pursuant to all prior clauses, until the Certificate Balance thereof is reduced
to zero;
(vi) Sixth, pro rata, to the holders of the Class A-1, Class A-2 and Class
A-3 Certificates, 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;
(vii) Seventh, to the holders of the Class B Certificates in respect of
interest, up to an amount equal to the Interest Accrual Amount of such Class;
(viii) Eighth, to the holders of the Class B Certificates in respect of
interest, up to an amount equal to the unpaid Interest Shortfalls previously
allocated to such Class;
(ix) Ninth, to the holders of the Class B Certificates, in reduction of the
Certificate Balance thereof, an amount equal to the Principal Distribution
Amount, less the portion of the Principal Distribution Amount distributed
pursuant to all prior clauses, until the Certificate Balance of such Class is
reduced to zero;
(x) Tenth, to the holders of the Class B Certificates, 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;
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(xi) Eleventh, to the holders of the Class C Certificates in respect of
interest, up to an amount equal to the Interest Accrual Amount of such Class;
(xii) Twelfth, to the holders of the Class C Certificates in respect of
interest, up to an amount equal to the unpaid Interest Shortfalls previously
allocated to such Class;
(xiii) Thirteenth, to the holders of the Class C Certificates in reduction
of the Certificate Balance thereof, an amount equal to the Principal
Distribution Amount, less the portion of the Principal Distribution Amount
distributed pursuant to all prior clauses, until the Certificate Balance of such
Class is reduced to zero;
(xiv) Fourteenth, to the holders of the Class C Certificates, 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;
(xv) Fifteenth, to the holders of the Class D Certificates in respect of
interest, up to an amount equal to the Interest Accrual Amount of such Class;
(xvi) Sixteenth, to the holders of the Class D Certificates in respect of
interest, up to an amount equal to the unpaid Interest Shortfalls previously
allocated to such Class;
(xvii) Seventeenth, to the holders of the Class D Certificates, in
reduction of the Certificate Balance thereof, an amount equal to the Principal
Distribution Amount, less the portion of the Principal Distribution Amount
distributed pursuant to all prior clauses, until the Certificate Balance of such
Class is reduced to zero;
(xviii) Eighteenth, to the holders of the Class D Certificates, 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;
(xix) Nineteenth, to the holders of the Class E Certificates in respect of
interest, up to an amount equal to the Interest Accrual Amount of such Class;
(xx) Twentieth, to the holders of the Class E Certificates in respect of
interest, up to an amount equal to the unpaid Interest Shortfalls previously
allocated to such Class;
(xxi) Twenty-first, to the holders of the Class E Certificates in reduction
of the Certificate Balance thereof, an amount equal to the Principal
Distribution Amount, less the portion of the Principal Distribution Amount
distributed pursuant to all prior clauses, until the Certificate Balance of such
Class is reduced to zero;
(xxii) Twenty-second, to the holders of the Class E Certificates, 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;
(xxiii) Twenty-third, to the holders of the Class F Certificates in respect
of interest, up to an amount equal to the Interest Accrual Amount of such Class;
(xxiv) Twenty-fourth, to the holders of the Class F Certificates in respect
of interest, up to an amount equal to the unpaid Interest Shortfalls previously
allocated to such Class;
(xxv) Twenty-fifth, to the holders of the Class F Certificates, in
reduction of the Certificate Balance thereof, an amount equal to the Principal
Distribution Amount, less the portion of the Principal Distribution Amount
distributed pursuant to all prior clauses, until the Certificate Balance of such
Class is reduced to zero;
(xxvi) Twenty-sixth, to the holders of the Class F Certificates, 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;
(xxvii) Twenty-seventh, to the holders of the Class G Certificates in
respect of interest, up to an amount equal to the Interest Accrual Amount of
such Class;
(xxviii) Twenty-eighth, to the holders of the Class G Certificates in
respect of interest, up to an amount equal to the unpaid Interest Shortfalls
previously allocated to such Class;
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(xxix) Twenty-ninth, to the holders of the Class G Certificates, in
reduction of the Certificate Balance thereof, an amount equal to the Principal
Distribution Amount, less the portion of the Principal Distribution Amount
distributed pursuant to prior clauses, until the Certificate Balance of such
Class is reduced to zero;
(xxx) Thirtieth, to the holders of the Class G Certificates, 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;
(xxxi) Thirty-first, to the holders of the Class H Certificates in respect
of interest, up to an amount equal to the Interest Accrual Amount of such Class;
(xxxii) Thirty-second, to the holders of the Class H Certificates in
respect of interest, up to an amount equal to the unpaid Interest Shortfalls
previously allocated to such Class;
(xxxiii) Thirty-third, to the holders of the Class H Certificates, in
reduction of the Certificate Balance thereof, an amount equal to the Principal
Distribution Amount, less the portion of the Principal Distribution Amount
distributed pursuant to all prior clauses, until the Certificate Balance of such
Class is reduced to zero;
(xxxiv) Thirty-fourth, to the holders of the Class H Certificates, 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;
(xxxv) Thirty-fifth, to the holders of the Class J Certificates in respect
of interest, up to an amount equal to the Interest Accrual Amount of such Class;
(xxxvi) Thirty-sixth, to the holders of the Class J Certificates in respect
of interest, up to an amount equal to the unpaid Interest Shortfalls previously
allocated to such Class;
(xxxvii) Thirty-seventh, to the holders of the Class J Certificates, in
reduction of the Certificate Balance thereof, an amount equal to the Principal
Distribution Amount, less the portion of the Principal Distribution Amount
distributed pursuant to all prior clauses, until the Certificate Balance of such
Class is reduced to zero;
(xxxviii) Thirty-eighth, to the holders of the Class J Certificates, 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;
(xxxix) Thirty-ninth, to the holders of the Class K Certificates in respect
of interest, up to an amount equal to the Interest Accrual Amount of such Class;
(xl) Fortieth, to the holders of the Class K Certificates in respect of
interest, up to an amount equal to the unpaid Interest Shortfalls previously
allocated to such Class;
(xli) Forty-first, to the holders of the Class K Certificates, in reduction
of the Certificate Balance thereof, an amount equal to the Principal
Distribution Amount, less the portion of the Principal Distribution Amount
distributed pursuant to all prior clauses, until the Certificate Balance of such
Class is reduced to zero;
(xlii) Forty-second, to the holders of the Class K Certificates, 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;
(xliii) Forty-third, to the holders of the Class L Certificates in respect
of interest, up to an amount equal to the aggregate Interest Accrual Amounts of
such Classes;
(xliv) Forty-fourth, to the holders of the Class L Certificates in respect
of interest, up to an amount equal to the aggregate unpaid Interest Shortfalls
previously allocated to such classes;
(xlv) Forty-fifth, to the holders of the Class L Certificates in reduction
of the Certificate Balance thereof, an amount equal to the Principal
Distribution Amount, less the portion of the Principal Distribution Amount
distributed pursuant to all prior clauses, until the Certificate Balance of each
such Class is reduced to zero;
(xlvi) Forty-sixth, to the holders of the Class L Certificates, 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;
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(xlvii) Forty-seventh, pro rata, to the holders of the Class M-1 and
Class M-2 Certificates in respect of interest, up to an amount equal to the
aggregate Interest Accrual Amounts of such Classes;
(xlviii) Forty-eighth, pro rata, to the holders of the Class M-1 and
Class M-2 Certificates in respect of interest, up to an amount equal to the
aggregate unpaid Interest Shortfalls previously allocated to such Classes;
(xlix) Forty-ninth, pro rata, based on Certificate Balance, to the holders
of the Class M-1 and Class M-2 Certificates in reduction of the Certificate
Balances thereof, an amount equal to the Principal Distribution Amount, less the
portion 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 holders of the Class M-1 and Class M-2
Certificates, 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;
(li) Fifty-first, to the holders of the Class R and Class LR Certificates
to the extent provided in the Pooling and Servicing Agreement.
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-1, Class A-2 and Class A-3 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-1,
Class A-2 and Class A-3 Certificates has been reduced to zero.
Prepayment Premiums. On each Distribution Date, Prepayment Premiums (which
will include any Return of Premium Amount, as described in this Prospectus
Supplement under "Description of the Mortgage Pool--The Mortgage Loan
Program--Underwriting Standards" but will not include the portion of the
Repurchase Price relating to the Return of Premium Amount for any Premium Loan
that is repurchased from the Trust Fund, as described in this Prospectus
Supplement 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), as follows:
(A) to the extent that such Prepayment Premium is paid with respect to a
Mortgage Loan that is not a Premium Loan, then the amount of such Prepayment
Premium will be distributed on the related Distribution Date to the holders of
the Class A-1, Class A-2, Class A-3, Class B, Class C, Class D and Class E
Certificates in an amount up to, in the case of each such Class, the product of
(a) such Prepayment Premium, (b) the Discount Rate Fraction for such Class and
(c) the Principal Allocation Fraction of such Class. The "Discount Rate
Fraction" for any such Class of Certificates is equal to a fraction (not greater
than 1.0 or less than zero) the numerator of which is equal to the excess, if
any, of (x) the Pass-Through Rate for such Class of Certificates over (y) the
Discount Rate (as defined below), and the denominator of which is equal to the
excess, if any, of (x) the Net Mortgage Pass-Through Rate over (y) the Discount
Rate. With respect to any Distribution Date and each such Class of Certificates,
the "Principal Allocation Fraction" is a fraction, the numerator of which is the
portion, if any, of the Principal Distribution Amount allocated to such Class of
Certificates for such Distribution Date, and the denominator of which is the
entire Principal Distribution Amount for such Distribution Date. The portion of
the Prepayment Premium remaining, if any, after the payment of the amount
calculated as described above will be distributed to the holders of the Class X
Certificates. The "Discount Rate" means the yield (compounded monthly) on the
U.S. Treasury issue (primary issue) with a maturity date closest to the Assumed
Final Distribution Date of such Class. In the event that there are two such U.S.
Treasury issues (a) with the same coupon, the issue with the lower yield will be
utilized, and (b) with maturity dates equally close to the Assumed Final
Distribution Date, the issue with the earliest maturity date will be utilized;
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(B) to the extent that such Prepayment Premium is paid with respect to a
Premium Loan that has a Base Interest Rate, net of the Servicing Fee Rate (the
"Net Base Rate") equal to or lower than the Pass-Through Rate in effect on such
Distribution Date for the Class of Offered Certificates that received
distributions in reduction of its Certificate Balance on such Distribution Date
(the "Reference Pass-Through Rate"), then the amount of such Prepayment Premium
will be distributed to the Class X Certificates; provided that if more than one
Class of Offered Certificates receives distributions in reduction of Certificate
Balance on such Distribution Date, the Reference Pass-Through Rate will be the
weighted average of the Pass-Through Rates for such Classes for such
Distribution Date; and
(C) to the extent that such Prepayment Premium is paid with respect to a
Premium Loan that has a Net Base Rate higher than the Reference Pass-Through
Rate for such Distribution Date, then the amount of such Prepayment Premium will
be allocated between the Class X Certificates and the Class or Classes of
Offered Certificates that received distributions in reduction of Certificate
Balance on such Distribution Date in the following proportions: to the Class X
Certificates a fraction of such Prepayment Premium the numerator of which is the
excess of the Net Mortgage Pass-Through Rate of the related Mortgage Loan over
the Net Base Rate and the denominator of which is the excess of the Net Mortgage
Pass-Through Rate of the related Mortgage Loan over the Net Base Rate; and the
balance to the Class or Classes of Offered Certificates receiving distributions
in reduction of Certificate Balance on such Distribution Date, pro rata in
accordance with the amounts by which their Certificate Balances were so reduced.
In all clauses above, Prepayment Premiums will only be distributed on a
Distribution Date (i) if the respective Certificate Balance or Notional Amount
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 (iv) shall be distributed to holders of the
Private Certificates in accordance with the Pooling and Servicing Agreement.
In the event that any Premium Loan is the subject of a repurchase in
connection with a breach of a representation or warranty, the portion of the
related Repurchase Price relating to the Return of Premium Amount for the
Premium Loan that is so repurchased (as described in this Prospectus Supplement
under "The Pooling and Servicing Agreement--Representations and Warranties;
Repurchase"), to the extent applicable Lock-out Periods are still in effect,
will be distributed to the holders of the Class X Certificates.
The holders of a majority Percentage Interest of the Class LR Certificates
or the most subordinate Class of Certificates outstanding (other than the Class
M-2 Certificates) will have the limited right, but not the obligation, 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.
Excess Interest. On each Distribution Date, Excess Interest received in
the related Collection Period will be distributed solely to the holders of the
Classes of Sequential Certificates (other than the Class A-1 Certificates), pro
rata, based on their respective initial Certificate Balances.
REALIZED LOSSES
The Certificate Balances 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 in this Prospectus Supplement, 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 after giving effect to
reductions made on such Distribution Date. Except as described in the next
sentence, any such Realized Losses will be applied to the Classes of
Certificates (in reduction of their Certificate Balances) in the following
order, until the Certificate Balance of each is reduced to zero: first, to the
Private Certificates (other than the Class X, Class R and Class LR
Certificates), second, to the Class E Certificates, third, to the Class D
Certificates, fourth to the Class C Certificates, fifth, to the Class B
Certificates and finally, pro rata, to the Class A-1, Class A-2 and Class A-3
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
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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
(including 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, a
forgiveness of principal of a Mortgage Loan as described under "The Pooling and
Servicing Agreement--Modifications" in this Prospectus Supplement or otherwise
or Prepayment Interest Shortfalls (to the extent that any such Prepayment
Interest Shortfalls (other than those associated with Specially Serviced
Mortgage Loans) have not been offset by (x) any Prepayment Interest Excess
collected in the related Collection Period), as described under "The Pooling and
Servicing Agreement--Modifications," in this Prospectus Supplement or otherwise,
(y) the Servicing Fee attributable to all Mortgage Loans for the related
Collection Period (not including the portion of the Servicing Fee attributable
to the Trustee) and (z) 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 (together with losses on the Mortgage Loans)
result in Realized Losses.
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 and Assumed Scheduled Payment deemed due on such Mortgage
Loan after the Cut-off Date, to the extent received or advanced and distributed
to holders of the Certificates or applied to certain other payments required
under the Pooling and Servicing Agreement on or 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 received and distributed to holders of the
Certificates or applied to certain other payments required under the Pooling and
Servicing Agreement on or before such date of determination and (iii) any
principal forgiven by the Special Servicer and other principal losses realized
with respect to such Mortgage Loan as of the end of the Collection Period for
the most recent Distribution Date coinciding with or preceding such date of
determination, each as described in this Prospectus Supplement 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 Stated 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 and any principal advanced
on such Mortgage Loan to the extent received and distributed to holders of the
Certificates or applied to certain other payments required under the Pooling and
Servicing Agreement on or before such date of determination. The Stated
Principal Balance of a Specially Serviced Mortgage Loan or an REO 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.
With respect to Total Pari Passu Loans, losses will be applied pro rata
between the CMAT Pari Passu Note contained in the Trust Fund and the related
Other Pari Passu Note (or Other Pari Passu Notes, as applicable).
PREPAYMENT INTEREST SHORTFALLS
The Servicer will deposit from its own funds any Prepayment Interest
Shortfalls resulting from prepayments on Mortgage Loans other than Specially
Serviced Mortgage Loans 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 (not including the portion of the Servicing Fee
attributable to the Trustee) attributable to all Mortgage Loans for the related
Collection Period, the investment income accruing on the related Principal
Prepayment (other than Specially Serviced Mortgage Loans) for such related
Collection Period and any Prepayment Interest Excess for the Collection Period.
Any Prepayment Interest Shortfalls in excess of such amounts will be allocated
as part of Realized Losses. "Prepayment Interest Excess" means any interest that
accrues on a prepayment on a Mortgage Loan after the Due Date and before the
following Servicer Remittance Date. Any Prepayment Interest Excess in excess of
any Prepayment Interest Shortfall 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-1, Class A-2, Class A-3 and Class X Certificates against losses
associated with delinquent and defaulted Mortgage Loans and Prepayment Interest
Shortfalls, the rights of the holders of the Class B, Class C, Class D and Class
E 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-1, Class A-2,
Class A-3 and Class X Certificates. The Class B Certificates will be likewise
protected by the subordination of the Class C, Class D and Class E Certificates
and certain of the Private Certificates. The Class C Certificates will be
likewise protected by the subordination of the Class D and Class E Certificates
and certain of the Private Certificates. The Class D Certificates will be
likewise protected by the subordination of the Class E Certificates and certain
of the Private Certificates. The Class E 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 Offered Certificates to receive on any Distribution Date the amounts of
interest and principal distributable in respect of such Certificates on such
date prior to any distribution being made on such Distribution Date in respect
of any Classes of Certificates subordinate thereto, and (ii) by the allocation
of Realized Losses (as defined in this Prospectus Supplement), first, to certain
of the Private Certificates, second to the Class E Certificates, third, to the
Class D Certificates, fourth, to the Class C Certificates, fifth to the Class B
Certificates, and finally, pro rata, to the Class A-1, Class A-2 and Class A-3
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.
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, (vii) upon a default in the payment of a Balloon
Payment or (viii) any other event which, in the discretion of the Special
Servicer and of which the Special 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), (vii) and
(viii), 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 a Property
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). Within 60 days after the Appraisal Reduction Event,
the Special Servicer will be required to obtain an independent MAI appraisal
(the cost of which shall constitute a Property Advance). If no independent MAI
appraisal has been received within 60 days after the first Distribution Date as
of which an Appraisal Reduction Event has occurred in respect of any Mortgage
Loan, the Appraisal Reduction Amount for such Mortgage Loan (the "Servicer's
Appraisal Estimate") will be 30% of the Stated Principal Balance of such
Mortgage Loan as of the date of the related Appraisal Reduction Event. 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, in minimum denominations of $10,000 initial Certificate Balance
and integral multiples of $1.00 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 and Definitive Certificates." 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 in this Prospectus Supplement 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 in any Class of Offered
Certificates evidenced by a particular Certificate of such Class 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
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positions in customers' securities accounts in the Depositaries' names on the
books of DTC. DTC is a limited purpose trust company organized under the New
York Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code and a "clearing
agency" registered pursuant to Section 17A of the Securities Exchange Act of
1934, as amended. DTC was created to hold securities for its Participants and to
facilitate the clearance and settlement of securities transactions between
Participants through electronic computerized book-entries, thereby eliminating
the need for physical movement of certificates. Participants include securities
brokers and dealers, banks, trust companies and clearing corporations. Indirect
access to the DTC system also is available to others such as banks, brokers,
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 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 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.
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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 nor the Trustee will have any liability for any aspect of the records
relating to or payments made on account of beneficial ownership interests in the
Offered Certificates held by Cede & Co., as nominee for DTC, or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests.
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 Underwriters. Indirect access to Cedel is also
available to others, such as banks, brokers, dealers and trust companies that
clear through or maintain a custodial relationship with a 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
Underwriters. Indirect access to the Euroclear system is also available to other
firms that clear through or maintain a custodial relationship with a Euroclear
Participant, either directly or indirectly.
The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it is
regulated and examined by the Board of Governors of the Federal Reserve System
and the New York State Banking Department, as well as 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.
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The information in this Prospectus Supplement 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, with
the consent of the Underwriters, 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 is required to notify
all affected Certificateholders (through DTC and related DTC Participants) of
the availability of Definitive Certificates through DTC. Upon delivery of
Definitive Certificates, the Trustee, the Certificate Registrar, and the
Servicer will recognize the holders of such Definitive Certificates as holders
under the Pooling and Servicing Agreement ("Holders of Definitive
Certificates"). 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 of a Definitive Certificate 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.
TRANSFERS AND EXCHANGES; TRANSFER RESTRICTIONS
In the event that holders of the Offered Certificates become entitled to
receive Definitive Certificates under the circumstances described under
"Definitive Certificates" above, then (in the case of the Subordinated Offered
Certificates, subject to the restrictions on transfer described in the
immediately succeeding paragraph), upon and after the issuance of such
Definitive Certificates, the Offered Certificates may be presented or
surrendered for registration of transfer or exchange (in authorized
denominations of $10,000 initial Certificate Balance for the Offered
Certificates and in multiples of $1 Certificate Balance in excess thereof) at
the offices of the Certificate Registrar. Every such Offered Certificate
presented or surrendered for transfer or exchange will (if so required by the
Certificate Registrar) be duly endorsed by, or be accompanied by a written
instrument in the form satisfactory to the Certificate Registrar duly executed
by the holder thereof or his attorney duly authorized in writing. No service
charge will be imposed for any transfer or exchange of such Offered
Certificates, but the Trustee or the Certificate Registrar may require payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any transfer or exchange of such Offered
Certificates. Prior to due presentment for registration of transfer, the
Depositor, the Servicer, the Special Servicer, the Trustee, the Fiscal Agent,
the Certificate Registrar and any agent of any of them may treat the person in
whose name any Offered Certificate is registered as the owner of such Offered
Certificate for the purpose of receiving distributions thereon and for all
purposes whatsoever, and none of them will be affected by notice to the
contrary.
In the event that holders of the Subordinated Offered Certificates become
entitled to receive Definitive Certificates under the circumstances described
under "Definitive Certificates" above, 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 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
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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.
NOTICES
Any notice or communication to holders of the Offered Certificates will be
in writing and delivered in person or mailed by first class mail, postage
prepaid, addressed to the holders at their respective addresses as they appear
on the Certificate Registrar maintained under the Pooling and Servicing
Agreement and shall be sufficient if so mailed within the time prescribed. If a
notice or communication is given in the manner provided above, it is duly given,
whether or not received by the addressees. Any such notice 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 in such newspaper
is made.
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 of the Mortgage Loans by the Mortgage Loan
Sellers or NHA due to missing or defective documentation or breaches of
representations and warranties with respect to such Mortgage Loans as described
in this Prospectus Supplement 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 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, may affect the Pass-Through Rates of the Class A-2,
Class A-3, Class B, Class C, Class D and Class E Certificates, to the extent
that the Pass-Through Rates thereof are equal to the lesser of a certain fixed
rate of interest and the Weighted Average Net Mortgage Pass-Through Rate on any
Distribution Date, and therefore the yield on such Classes.
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 will
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generally occur only in connection with a default on a Mortgage Loan and the
liquidation of the related Mortgaged Property or a reduction in the principal
balance of a Mortgage Loan by a bankruptcy court.
Because the ability of a borrower to make a Balloon Payment will depend
upon its ability either to refinance the Mortgage Loan or to sell the related
Mortgaged Property, there is a risk that a borrower may default at the Maturity
Date. In connection with a default on the Balloon Payment, the Special Servicer
may agree to extend the Maturity Date thereof as described under "The Pooling
and Servicing Agreement--Realization Upon Mortgage Loans." In the case of any
such default, recovery of proceeds may be delayed until, among other things,
work-outs are negotiated, foreclosures are completed or bankruptcy proceedings
are resolved. In addition, the Directing Holders (as defined below) may instruct
the Special Servicer to delay the commencement of any foreclosure proceedings
under certain conditions described in this Prospectus Supplement.
Certificateholders are not entitled to receive distributions of Monthly Payments
or the Balloon Payment when due except to the extent they are either covered by
a P&I Advance or actually received. Consequently, any defaulted Monthly Payment
for which no such P&I Advance is made and a defaulted Balloon Payment will tend
to extend the weighted average lives of the Certificates, whether or not a
permitted extension of the due date of the related Mortgage Loan has been
effected.
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 75 to 251
months following the Cut-off Date. The weighted average Lock-out Period for the
Mortgage Loans is approximately 146 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" in this
Prospectus Supplement. 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
S-121
<PAGE>
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 (or, in the case of certain Mortgage Loans, the first) 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" in this Prospectus Supplement, 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
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" is the Distribution Date occurring
three years after the latest 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, Balloon Payments,
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 will be
distributed to the Certificates 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 "25% CPR," "50% CPR," "75% CPR" and "100% PP"
assume that prepayments on the Mortgage Loans are made at those levels of CPR
following the expiration of any Lock-out Period until 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 in this Prospectus
Supplement 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 based on the following
assumptions (the "Mortgage Loan Assumptions"): (i) each Mortgage Loan will pay
principal and/or
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<PAGE>
interest in accordance with its terms and scheduled payments will be timely
received on the 11th day of each month; (ii) none of the Mortgage Loans will be
repurchased as described under "The Pooling and Servicing
Agreement--Representations and Warranties; Repurchase" in this Prospectus
Supplement; (iii) none of the Depositor, the Servicer, the Special Servicer or
the Class LR Certificateholders will exercise the right to cause early
termination of the Trust Fund; (iv) the Servicing Fee Rate and the Trustee Fee
for each Distribution Date is an aggregate amount equal to a per annum rate of
0.052% on the Stated Principal Balance of the Mortgage Loans as of the date next
preceding such Distribution Date; (v) the date of determination of weighted
average life is March 23, 1999; (vi) each Dual Amortization Loan will amortize
based upon the shorter amortization schedule for such Dual Amortization Loans;
(vii) the characteristics of the Mortgage Loans are as described in Annex A to
this Prospectus Supplement; (viii) the Trust Fund does not incur any unusual or
extraordinary expenses; (ix) the Certificates are settled on March 23, 1999;
(x) distributions on the Certificates are made on the 17th day (each assumed to
be a Business Day) of each month, commencing in April 1999; (xi) there are no
casualties or condemnations on any of the Mortgaged Properties; (xii) the
Pass-Through Rate for the Class A-1 Certificates remains constant at 6.485%;
(xiii) the Pass-Through Rate for the Class A-2 Certificates remains constant at
6.760%; (xiv) the Pass-Through Rate for the Class A-3 Certificates remains
constant at 7.035%; (xv) the Pass-Through Rate for the Class B Certificates
remains constant at 7.330%; (xvi) the Pass-Through Rate for the Class C
Certificates remains constant at 7.625%; (xvii) the Pass-Through Rate for the
Class D Certificates remains constant at 7.495%; (xviii) the Pass-Through Rate
for the Class E Certificates remains constant at 7.495%, (xix) the Pass-Through
Rates for each of Class F, Class G, Class H, Class J, Class K, Class L, Class
M-1 and Class M-2 Certificates remains constant at 6.485%; and (xx) that no
Return of Premium Amounts are collected with respect to the Premium Loans. These
assumptions are collectively referred to as 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 March of each of the years indicated, at the indicated CPRs.
PERCENTAGE OF INITIAL CERTIFICATE BALANCE
OUTSTANDING AT THE RESPECTIVE CPR FOR THE CLASS A-1 CERTIFICATES
<TABLE>
<CAPTION>
CLASS A-1
---------------------------------------------------------
100%
DISTRIBUTION DATE(1) 0% CPR 25% CPR 50% CPR 75% CPR PP(3)
- --------------------------------------------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Initial Percentage................................. 100% 100% 100% 100% 100%
March 17, 2000..................................... 95% 95% 95% 95% 95%
March 17, 2001..................................... 90% 90% 90% 90% 90%
March 17, 2002..................................... 84% 84% 84% 84% 84%
March 17, 2003..................................... 78% 78% 78% 78% 78%
March 17, 2004..................................... 71% 71% 71% 71% 71%
March 17, 2005..................................... 63% 63% 63% 63% 63%
March 17, 2006..................................... 16% 16% 16% 16% 16%
March 17, 2007..................................... 7% 7% 7% 7% 7%
March 17, 2008..................................... 0% 0% 0% 0% 0%
Weighted Average Life (years)(2)................... 5.58 5.57 5.57 5.56 5.47
First Principal Payment Date....................... Apr-1999 Apr-1999 Apr-1999 Apr-1999 Apr-1999
Last Principal Payment Date........................ Dec-2007 Dec-2007 Dec-2007 Nov-2007 Oct-2007
</TABLE>
- ------------------
(1) Assuming that the 17th day of each of the months indicated is the
Distribution Date occurring in such month.
(2) The weighted average life of the Class A-1 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
Certificate Balance referred to in clause (i).
(3) "PP" means 100% of each loan prepays when it becomes freely payable.
S-123
<PAGE>
PERCENTAGE OF INITIAL CERTIFICATE BALANCE
OUTSTANDING AT THE RESPECTIVE CPR FOR THE CLASS A-2 CERTIFICATES
<TABLE>
<CAPTION>
CLASS A-2
---------------------------------------------------------
100%
DISTRIBUTION DATE(1) 0% CPR 25% CPR 50% CPR 75% CPR PP(3)
- --------------------------------------------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Initial Percentage................................. 100% 100% 100% 100% 100%
March 17, 2000..................................... 100% 100% 100% 100% 100%
March 17, 2001..................................... 100% 100% 100% 100% 100%
March 17, 2002..................................... 100% 100% 100% 100% 100%
March 17, 2003..................................... 100% 100% 100% 100% 100%
March 17, 2004..................................... 100% 100% 100% 100% 100%
March 17, 2005..................................... 100% 100% 100% 100% 100%
March 17, 2006..................................... 100% 100% 100% 100% 100%
March 17, 2007..................................... 100% 100% 100% 100% 100%
March 17, 2008..................................... 98% 98% 98% 98% 97%
March 17, 2009..................................... 21% 21% 21% 21% 21%
March 17, 2010..................................... 10% 10% 10% 10% 10%
March 17, 2011..................................... 6% 6% 6% 6% 6%
March 17, 2012..................................... 2% 2% 2% 2% 1%
March 17, 2013..................................... 0% 0% 0% 0% 0%
Weighted Average Life (years)(2)................... 10.06 10.05 10.04 10.03 9.95
First Principal Payment Date....................... Dec-2007 Dec-2007 Dec-2007 Nov-2007 Oct-2007
Last Principal Payment Date........................ Jun-2012 Jun-2012 Jun-2012 Jun-2012 Jun-2012
</TABLE>
- ------------------
(1) Assuming that the 17th 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).
(3) "PP" means 100% of each loan prepays when it becomes freely prepayable.
PERCENTAGE OF INITIAL CERTIFICATE BALANCE
OUTSTANDING AT THE RESPECTIVE CPR FOR THE CLASS A-3 CERTIFICATES
<TABLE>
<CAPTION>
CLASS A-3
---------------------------------------------------------
100%
DISTRIBUTION DATE(1) 0% CPR 25% CPR 50% CPR 75% CPR PP(3)
- ------------------------------------------------ --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Initial Percentage.............................. 100% 100% 100% 100% 100%
March 17, 2000.................................. 100% 100% 100% 100% 100%
March 17, 2001.................................. 100% 100% 100% 100% 100%
March 17, 2002.................................. 100% 100% 100% 100% 100%
March 17, 2003.................................. 100% 100% 100% 100% 100%
March 17, 2004.................................. 100% 100% 100% 100% 100%
March 17, 2005.................................. 100% 100% 100% 100% 100%
March 17, 2006.................................. 100% 100% 100% 100% 100%
March 17, 2007.................................. 100% 100% 100% 100% 100%
March 17, 2008.................................. 100% 100% 100% 100% 100%
March 17, 2009.................................. 100% 100% 100% 100% 100%
March 17, 2010.................................. 100% 100% 100% 100% 100%
March 17, 2011.................................. 100% 100% 100% 100% 100%
March 17, 2012.................................. 100% 100% 100% 100% 100%
March 17, 2013.................................. 17% 16% 15% 12% 0%
March 17, 2014.................................. 0% 0% 0% 0% 0%
Weighted Average Life (years)(2)................ 13.90 13.88 13.85 13.82 13.63
First Principal Payment Date.................... Jun-2012 Jun-2012 Jun-2012 Jun-2012 Jun-2012
Last Principal Payment Date..................... Apr-2013 Apr-2013 Apr-2013 Apr-2013 Mar-2013
</TABLE>
- ------------------
(1) Assuming that the 17th 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).
(3) "PP" means 100% of each loan prepays when it becomes freely prepayable.
S-124
<PAGE>
PERCENTAGE OF INITIAL CERTIFICATE BALANCE
OUTSTANDING AT THE RESPECTIVE CPR FOR THE CLASS B CERTIFICATES
<TABLE>
<CAPTION>
CLASS B
----------------------------------------------------------------
DISTRIBUTION DATE(1) 0% CPR 25% CPR 50% CPR 75% CPR 100% PP(3)
- -------------------------------------------------------- ---------- ---------- --------- --------- ----------
<S> <C> <C> <C> <C> <C>
Initial Percentage...................................... 100% 100% 100% 100% 100%
March 17, 2000.......................................... 100% 100% 100% 100% 100%
March 17, 2001.......................................... 100% 100% 100% 100% 100%
March 17, 2002.......................................... 100% 100% 100% 100% 100%
March 17, 2003.......................................... 100% 100% 100% 100% 100%
March 17, 2004.......................................... 100% 100% 100% 100% 100%
March 17, 2005.......................................... 100% 100% 100% 100% 100%
March 17, 2006.......................................... 100% 100% 100% 100% 100%
March 17, 2007.......................................... 100% 100% 100% 100% 100%
March 17, 2008.......................................... 100% 100% 100% 100% 100%
March 17, 2009.......................................... 100% 100% 100% 100% 100%
March 17, 2010.......................................... 100% 100% 100% 100% 100%
March 17, 2011.......................................... 100% 100% 100% 100% 100%
March 17, 2012.......................................... 100% 100% 100% 100% 100%
March 17, 2013.......................................... 100% 100% 100% 100% 69%
March 17, 2014.......................................... 0% 0% 0% 0% 0%
Weighted Average Life (years)(2)........................ 14.22 14.19 14.16 14.13 14.04
First Principal Payment Date............................ Apr-2013 Apr-2013 Apr-2013 Apr-2013 Mar-2013
Last Principal Payment Date............................. Jul-2013 Jul-2013 Jun-2013 Jun-2013 Apr-2013
</TABLE>
- ------------------
(1) Assuming that the 17th day of each of the months indicated is the
Distribution Date occurring in such month.
(2) The weighted average life of the Class B 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).
(3) "PP" means 100% of each loan prepays when it becomes freely prepayable.
PERCENTAGE OF INITIAL CERTIFICATE BALANCE
OUTSTANDING AT THE RESPECTIVE CPR FOR THE CLASS C CERTIFICATES
<TABLE>
<CAPTION>
CLASS C
--------------------------------------------------------------
DISTRIBUTION DATE(1) 0% CPR 25% CPR 50% CPR 75% CPR 100% PP(3)
- ----------------------------------------------------------- --------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C>
Initial Percentage......................................... 100% 100% 100% 100% 100%
March 17, 2000............................................. 100% 100% 100% 100% 100%
March 17, 2001............................................. 100% 100% 100% 100% 100%
March 17, 2002............................................. 100% 100% 100% 100% 100%
March 17, 2003............................................. 100% 100% 100% 100% 100%
March 17, 2004............................................. 100% 100% 100% 100% 100%
March 17, 2005............................................. 100% 100% 100% 100% 100%
March 17, 2006............................................. 100% 100% 100% 100% 100%
March 17, 2007............................................. 100% 100% 100% 100% 100%
March 17, 2008............................................. 100% 100% 100% 100% 100%
March 17, 2009............................................. 100% 100% 100% 100% 100%
March 17, 2010............................................. 100% 100% 100% 100% 100%
March 17, 2011............................................. 100% 100% 100% 100% 100%
March 17, 2012............................................. 100% 100% 100% 100% 100%
March 17, 2013............................................. 100% 100% 100% 100% 100%
March 17, 2014............................................. 0% 0% 0% 0% 0%
Weighted Average Life (years)(2)........................... 14.37 14.35 14.33 14.29 14.11
First Principal Payment Date............................... Jul-2013 Jul-2013 Jun-2013 Jun-2013 Apr-2013
Last Principal Payment Date................................ Aug-2013 Aug-2013 Aug-2013 Jul-2013 May-2013
</TABLE>
- ------------------
(1) Assuming that the 17th day of each of the months indicated is the
Distribution Date occurring in such month.
(2) The weighted average life of the Class C 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).
(3) "PP" means 100% of each loan prepays when it becomes freely prepayable.
S-125
<PAGE>
PERCENTAGE OF INITIAL CERTIFICATE BALANCE
OUTSTANDING AT THE RESPECTIVE CPR FOR THE CLASS D CERTIFICATES
<TABLE>
<CAPTION>
CLASS D
-------------------------------------------------------------
100%
DISTRIBUTION DATE(1) 0% CPR 25% CPR 50% CPR 75% CPR PP(3)
- --------------------------------------------------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Initial Percentage....................................... 100% 100% 100% 100% 100%
March 17, 2000........................................... 100% 100% 100% 100% 100%
March 17, 2001........................................... 100% 100% 100% 100% 100%
March 17, 2002........................................... 100% 100% 100% 100% 100%
March 17, 2003........................................... 100% 100% 100% 100% 100%
March 17, 2004........................................... 100% 100% 100% 100% 100%
March 17, 2005........................................... 100% 100% 100% 100% 100%
March 17, 2006........................................... 100% 100% 100% 100% 100%
March 17, 2007........................................... 100% 100% 100% 100% 100%
March 17, 2008........................................... 100% 100% 100% 100% 100%
March 17, 2009........................................... 100% 100% 100% 100% 100%
March 17, 2010........................................... 100% 100% 100% 100% 100%
March 17, 2011........................................... 100% 100% 100% 100% 100%
March 17, 2012........................................... 100% 100% 100% 100% 100%
March 17, 2013........................................... 100% 100% 100% 100% 100%
March 17, 2014........................................... 0% 0% 0% 0% 0%
Weighted Average Life (years)(2)......................... 14.48 14.46 14.45 14.43 14.21
First Principal Payment Date............................. Aug-2013 Aug-2013 Aug-2013 Jul-2013 May-2013
Last Principal Payment Date.............................. Oct-2013 Sep-2013 Sep-2013 Sep-2013 Jul-2013
</TABLE>
- ------------------
(1) Assuming that the 17th day of each of the months indicated is the
Distribution Date occurring in such month.
(2) The weighted average life of the Class D 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).
(3) "PP" means 100% of each loan prepays when it becomes freely prepayable.
PERCENTAGE OF INITIAL CERTIFICATE BALANCE
OUTSTANDING AT THE RESPECTIVE CPR FOR THE CLASS E CERTIFICATES
<TABLE>
<CAPTION>
CLASS E
-------------------------------------------------------------
100%
DISTRIBUTION DATE(1) 0% CPR 25% CPR 50% CPR 75% CPR PP(3)
- --------------------------------------------------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Initial Percentage....................................... 100% 100% 100% 100% 100%
March 17, 2000........................................... 100% 100% 100% 100% 100%
March 17, 2001........................................... 100% 100% 100% 100% 100%
March 17, 2002........................................... 100% 100% 100% 100% 100%
March 17, 2003........................................... 100% 100% 100% 100% 100%
March 17, 2004........................................... 100% 100% 100% 100% 100%
March 17, 2005........................................... 100% 100% 100% 100% 100%
March 17, 2006........................................... 100% 100% 100% 100% 100%
March 17, 2007........................................... 100% 100% 100% 100% 100%
March 17, 2008........................................... 100% 100% 100% 100% 100%
March 17, 2009........................................... 100% 100% 100% 100% 100%
March 17, 2010........................................... 100% 100% 100% 100% 100%
March 17, 2011........................................... 100% 100% 100% 100% 100%
March 17, 2012........................................... 100% 100% 100% 100% 100%
March 17, 2013........................................... 100% 100% 100% 100% 100%
March 17, 2014........................................... 0% 0% 0% 0% 0%
Weighted Average Life (years)(2)......................... 14.57 14.56 14.51 14.48 14.32
First Principal Payment Date............................. Oct-2013 Sep-2013 Sep-2013 Sep-2013 Jul-2013
Last Principal Payment Date.............................. Oct-2013 Oct-2013 Oct-2013 Sep-2013 Jul-2013
</TABLE>
- ------------------
(1) Assuming that the 17th day of each of the months indicated is the
Distribution Date occurring in such month.
(2) The weighted average life of the Class E 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).
(3) "PP" means 100% of each loan prepays when it becomes freely prepayable.
S-126
<PAGE>
PRICE/YIELD TABLES
The tables set forth below show the corporate bond equivalent ("CBE")
yield, weighted average life (as described under "--Weighted Average Life of the
Offered Certificates" above) and the period during which principal payments
would be received with respect to each Class of Offered Certificates under the
Mortgage Loan Assumptions. Purchase prices set forth below for each Class of
Offered Certificates are expressed in 32nds (i.e., 99.16 means 99 16/32%) as a
percentage of the initial Certificate Balance of such Class of Certificates,
before adding accrued interest.
The yields set forth in the following tables were calculated by determining
the monthly discount rates which, when applied to the assumed stream of cash
flows to be paid on each Class of Offered Certificates, would cause the
discounted present value of such assumed stream of cash flows as of the Closing
Date to equal the assumed purchase prices, plus accrued interest at the
applicable Pass-Through Rate as described in the Mortgage Loan Assumptions, from
and including March 11, 1999 to but excluding the Closing Date, and converting
such monthly rates to semi-annual corporate bond equivalent rates. Such
calculation does not take into account variations that may occur in the interest
rates at which investors may be able to reinvest funds received by them as
reductions of the Certificate Balances of such Classes of Offered Certificates
and consequently does not purport to reflect the return on any investment in
such Classes of Offered Certificates when such reinvestment rates are
considered.
PRE-TAX YIELD TO MATURITY (CBE), WEIGHTED AVERAGE LIFE, FIRST PRINCIPAL PAYMENT
DATE,
LAST PRINCIPAL PAYMENT DATE FOR THE CLASS A-1 CERTIFICATES AT THE SPECIFIED CPRS
<TABLE>
<CAPTION>
0% CPR DURING LOCKOUT--OTHERWISE AT INDICATED CPR
----------------------------------------------------------------
ASSUMED PRICE (32NDS) 0% CPR 25% CPR 50% CPR 75% CPR 100% PP*
- -------------------------------------------------------- ----------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
99.08.................................................. 6.718% 6.718% 6.718% 6.719% 6.720%
99.13.................................................. 6.683% 6.683% 6.683% 6.683% 6.685%
99.18.................................................. 6.647% 6.648% 6.648% 6.648% 6.649%
99.23.................................................. 6.612% 6.612% 6.612% 6.612% 6.613%
99.28.................................................. 6.577% 6.577% 6.577% 6.577% 6.577%
100.01.................................................. 6.542% 6.542% 6.542% 6.542% 6.541%
100.06.................................................. 6.507% 6.507% 6.507% 6.507% 6.506%
100.11.................................................. 6.472% 6.472% 6.472% 6.472% 6.470%
100.16.................................................. 6.437% 6.437% 6.437% 6.437% 6.435%
100.21.................................................. 6.402% 6.402% 6.402% 6.402% 6.400%
100.26.................................................. 6.367% 6.367% 6.367% 6.367% 6.364%
100.31.................................................. 6.333% 6.333% 6.332% 6.332% 6.329%
101.04.................................................. 6.298% 6.298% 6.298% 6.297% 6.294%
101.09.................................................. 6.264% 6.263% 6.263% 6.263% 6.259%
101.14.................................................. 6.229% 6.229% 6.229% 6.228% 6.224%
101.19.................................................. 6.195% 6.195% 6.194% 6.194% 6.189%
101.24.................................................. 6.161% 6.160% 6.160% 6.159% 6.154%
Weighted Average Life (years)....................... 5.58 5.57 5.57 5.56 5.47
First Principal Payment Date........................ Apr-1999 Apr-1999 Apr-1999 Apr-1999 Apr-1999
Last Principal Payment Date......................... Dec-2007 Dec-2007 Dec-2007 Nov-2007 Oct-2007
</TABLE>
- ------------------
* "PP" means 100% of each loan prepays when it becomes freely prepayable.
S-127
<PAGE>
PRE-TAX YIELD TO MATURITY (CBE), WEIGHTED AVERAGE LIFE, FIRST PRINCIPAL PAYMENT
DATE,
LAST PRINCIPAL PAYMENT DATE FOR THE CLASS A-2 CERTIFICATES AT THE SPECIFIED CPRS
<TABLE>
<CAPTION>
0% CPR DURING LOCKOUT--OTHERWISE AT INDICATED CPR
------------------------------------------------------------------
ASSUMED PRICE (32NDS) 0% CPR 25% CPR 50% CPR 75% CPR 100% PP*
- ----------------------------------------------------- ------------ ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
99.24............................................... 6.875% 6.875% 6.875% 6.875% 6.875%
99.29............................................... 6.853% 6.853% 6.853% 6.853% 6.853%
100.02............................................... 6.831% 6.831% 6.831% 6.831% 6.831%
100.07............................................... 6.809% 6.809% 6.809% 6.809% 6.809%
100.12............................................... 6.787% 6.787% 6.787% 6.787% 6.787%
100.17............................................... 6.765% 6.765% 6.765% 6.765% 6.764%
100.22............................................... 6.743% 6.743% 6.743% 6.743% 6.742%
100.27............................................... 6.721% 6.721% 6.721% 6.721% 6.720%
101.00............................................... 6.700% 6.700% 6.699% 6.699% 6.698%
101.05............................................... 6.678% 6.678% 6.678% 6.677% 6.676%
101.10............................................... 6.656% 6.656% 6.656% 6.656% 6.655%
101.15............................................... 6.634% 6.634% 6.634% 6.634% 6.633%
101.20............................................... 6.613% 6.613% 6.613% 6.612% 6.611%
101.25............................................... 6.591% 6.591% 6.591% 6.591% 6.589%
101.30............................................... 6.570% 6.570% 6.569% 6.569% 6.567%
102.03............................................... 6.548% 6.548% 6.548% 6.548% 6.546%
102.08............................................... 6.527% 6.527% 6.526% 6.526% 6.524%
Weighted Average Life (years).................... 10.06 10.05 10.04 10.03 9.95
First Principal Payment Date..................... Dec-2007 Dec-2007 Dec-2007 Nov-2007 Oct-2007
Last Principal Payment Date...................... Jun-2012 Jun-2012 Jun-2012 Jun-2012 Jun-2012
</TABLE>
- ------------------
* "PP" means 100% of each loan prepays when it becomes freely prepayable.
PRE-TAX YIELD TO MATURITY (CBE), WEIGHTED AVERAGE LIFE, FIRST PRINCIPAL PAYMENT
DATE,
LAST PRINCIPAL PAYMENT DATE FOR THE CLASS A-3 CERTIFICATES AT THE SPECIFIED CPRS
<TABLE>
<CAPTION>
0% CPR DURING LOCKOUT--OTHERWISE AT INDICATED CPR
----------------------------------------------------------------
ASSUMED PRICE (32NDS) 0% CPR 25% CPR 50% CPR 75% CPR 100% PP*
- -------------------------------------------------------- ---------- ---------- --------- --------- ----------
<S> <C> <C> <C> <C> <C>
99.24.................................................. 7.154% 7.154% 7.154% 7.154% 7.155%
99.29.................................................. 7.136% 7.136% 7.136% 7.136% 7.136%
100.02.................................................. 7.118% 7.118% 7.118% 7.118% 7.118%
100.07.................................................. 7.100% 7.100% 7.100% 7.100% 7.099%
100.12.................................................. 7.082% 7.082% 7.082% 7.082% 7.081%
100.17.................................................. 7.064% 7.064% 7.064% 7.064% 7.063%
100.22.................................................. 7.046% 7.046% 7.046% 7.045% 7.045%
100.27.................................................. 7.028% 7.028% 7.028% 7.027% 7.027%
101.00.................................................. 7.010% 7.010% 7.010% 7.009% 7.008%
101.05.................................................. 6.992% 6.992% 6.992% 6.992% 6.990%
101.10.................................................. 6.974% 6.974% 6.974% 6.974% 6.972%
101.15.................................................. 6.956% 6.956% 6.956% 6.956% 6.954%
101.20.................................................. 6.939% 6.938% 6.938% 6.938% 6.936%
101.25.................................................. 6.921% 6.921% 6.920% 6.920% 6.918%
101.30.................................................. 6.903% 6.903% 6.903% 6.902% 6.900%
102.03.................................................. 6.886% 6.885% 6.885% 6.885% 6.883%
102.08.................................................. 6.868% 6.868% 6.867% 6.867% 6.865%
Weighted Average Life (years)....................... 13.90 13.88 13.85 13.82 13.63
First Principal Payment Date........................ Jun-2012 Jun-2012 Jun-2012 Jun-2012 Jun-2012
Last Principal Payment Date......................... Apr-2013 Apr-2013 Apr-2013 Apr-2013 Mar-2013
</TABLE>
- ------------------
* "PP" means 100% of each loan prepays when it becomes freely prepayable.
S-128
<PAGE>
PRE-TAX YIELD TO MATURITY (CBE), WEIGHTED AVERAGE LIFE, FIRST PRINCIPAL PAYMENT
DATE,
LAST PRINCIPAL PAYMENT DATE FOR THE CLASS B CERTIFICATES AT THE SPECIFIED CPRS
<TABLE>
<CAPTION>
0% CPR DURING LOCKOUT--OTHERWISE AT INDICATED CPR
----------------------------------------------------------------
ASSUMED PRICE (32NDS) 0% CPR 25% CPR 50% CPR 75% CPR 100% PP*
- -------------------------------------------------------- ---------- ---------- --------- --------- ----------
<S> <C> <C> <C> <C> <C>
99.24.................................................. 7.458% 7.458% 7.458% 7.458% 7.458%
99.29.................................................. 7.439% 7.439% 7.439% 7.439% 7.439%
100.02.................................................. 7.421% 7.421% 7.421% 7.421% 7.421%
100.07.................................................. 7.403% 7.403% 7.403% 7.403% 7.403%
100.12.................................................. 7.385% 7.385% 7.385% 7.385% 7.384%
100.17.................................................. 7.367% 7.367% 7.367% 7.366% 7.366%
100.22.................................................. 7.349% 7.349% 7.348% 7.348% 7.348%
100.27.................................................. 7.331% 7.330% 7.330% 7.330% 7.330%
101.00.................................................. 7.313% 7.312% 7.312% 7.312% 7.312%
101.05.................................................. 7.295% 7.294% 7.294% 7.294% 7.294%
101.10.................................................. 7.277% 7.277% 7.276% 7.276% 7.275%
101.15.................................................. 7.259% 7.259% 7.258% 7.258% 7.257%
101.20.................................................. 7.241% 7.241% 7.240% 7.240% 7.239%
101.25.................................................. 7.223% 7.223% 7.223% 7.222% 7.222%
101.30.................................................. 7.205% 7.205% 7.205% 7.204% 7.204%
102.03.................................................. 7.188% 7.187% 7.187% 7.187% 7.186%
102.08.................................................. 7.170% 7.170% 7.169% 7.169% 7.168%
Weighted Average Life (yrs.).......................... 14.22 14.19 14.16 14.13 14.04
First Principal Payment Date.......................... Apr-2013 Apr-2013 Apr-2013 Apr-2013 Mar-2013
Last Principal Payment Date........................... Jul-2013 Jul-2013 Jun-2013 Jun-2013 Apr-2013
</TABLE>
- ------------------
* "PP" means 100% of each loan prepays when it becomes freely prepayable.
PRE-TAX YIELD TO MATURITY (CBE), WEIGHTED AVERAGE LIFE, FIRST PRINCIPAL PAYMENT
DATE,
LAST PRINCIPAL PAYMENT DATE FOR THE CLASS C CERTIFICATES AT THE SPECIFIED CPRS
<TABLE>
<CAPTION>
0% CPR DURING LOCKOUT--OTHERWISE AT INDICATED CPR
------------------------------------------------------------
ASSUMED PRICE (32NDS) 0% CPR 25% CPR 50% CPR 75% CPR 100% PP*
- ----------------------------------------------------------- -------- -------- --------- --------- ----------
<S> <C> <C> <C> <C> <C>
99.24..................................................... 7.762% 7.762% 7.762% 7.762% 7.762%
99.29..................................................... 7.743% 7.743% 7.743% 7.743% 7.743%
100.02..................................................... 7.725% 7.725% 7.725% 7.725% 7.724%
100.07..................................................... 7.706% 7.706% 7.706% 7.706% 7.706%
100.12..................................................... 7.688% 7.688% 7.688% 7.688% 7.687%
100.17..................................................... 7.670% 7.669% 7.669% 7.669% 7.669%
100.22..................................................... 7.651% 7.651% 7.651% 7.651% 7.650%
100.27..................................................... 7.633% 7.633% 7.633% 7.633% 7.632%
101.00..................................................... 7.615% 7.615% 7.614% 7.614% 7.613%
101.05..................................................... 7.596% 7.596% 7.596% 7.596% 7.595%
101.10..................................................... 7.578% 7.578% 7.578% 7.578% 7.577%
101.15..................................................... 7.560% 7.560% 7.560% 7.560% 7.558%
101.20..................................................... 7.542% 7.542% 7.542% 7.541% 7.540%
101.25..................................................... 7.524% 7.524% 7.524% 7.523% 7.522%
101.30..................................................... 7.506% 7.506% 7.506% 7.505% 7.504%
102.03..................................................... 7.488% 7.488% 7.488% 7.487% 7.485%
102.08..................................................... 7.470% 7.470% 7.470% 7.469% 7.467%
Weighted Average Life (years)............................ 14.37 14.35 14.33 14.29 14.11
First Principal Payment Date............................. Jul-2013 Jul-2013 Jun-2013 Jun-2013 Apr-2013
Last Principal Payment Date.............................. Aug-2013 Aug-2013 Aug-2013 Jul-2013 May-2013
</TABLE>
- ------------------
* "PP" means 100% of each loan prepays when it becomes freely prepayable.
S-129
<PAGE>
PRE-TAX YIELD TO MATURITY (CBE), WEIGHTED AVERAGE LIFE, FIRST PRINCIPAL PAYMENT
DATE,
LAST PRINCIPAL PAYMENT DATE FOR THE CLASS D CERTIFICATES AT THE SPECIFIED CPRS
<TABLE>
<CAPTION>
0% CPR DURING LOCKOUT--OTHERWISE AT INDICATED CPR
---------------------------------------------------------------
ASSUMED PRICE (32NDS) 0% CPR 25% CPR 50% CPR 75% CPR 100% PP*
- -------------------------------------------------------- ---------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C>
91.20................................................... 8.638% 8.639% 8.639% 8.640% 8.649%
91.28................................................... 8.605% 8.606% 8.606% 8.607% 8.615%
92.04................................................... 8.572% 8.573% 8.573% 8.574% 8.582%
92.12................................................... 8.539% 8.540% 8.541% 8.541% 8.549%
92.20................................................... 8.507% 8.507% 8.508% 8.509% 8.516%
92.28................................................... 8.474% 8.475% 8.475% 8.476% 8.483%
93.04................................................... 8.442% 8.443% 8.443% 8.444% 8.451%
93.12................................................... 8.410% 8.410% 8.411% 8.412% 8.418%
93.20................................................... 8.378% 8.378% 8.379% 8.379% 8.386%
93.28................................................... 8.346% 8.346% 8.347% 8.347% 8.354%
94.04................................................... 8.314% 8.314% 8.315% 8.315% 8.321%
94.12................................................... 8.282% 8.283% 8.283% 8.284% 8.289%
94.20................................................... 8.251% 8.251% 8.251% 8.252% 8.257%
94.28................................................... 8.219% 8.220% 8.220% 8.220% 8.226%
95.04................................................... 8.188% 8.188% 8.188% 8.189% 8.194%
95.12................................................... 8.157% 8.157% 8.157% 8.158% 8.162%
95.20................................................... 8.125% 8.126% 8.126% 8.126% 8.131%
Weighted Average Life (years)......................... 14.48 14.46 14.45 14.43 14.21
First Principal Payment Date.......................... Aug-2013 Aug-2013 Aug-2013 Jul-2013 May-2013
Last Principal Payment Date........................... Oct-2013 Sep-2013 Sep-2013 Sep-2013 Jul-2013
</TABLE>
- ------------------
* "PP" means 100% of each loan prepays when it becomes freely prepayable.
PRE-TAX YIELD TO MATURITY (CBE), WEIGHTED AVERAGE LIFE, FIRST PRINCIPAL PAYMENT
DATE,
LAST PRINCIPAL PAYMENT DATE FOR THE CLASS E CERTIFICATES AT THE SPECIFIED CPRS
<TABLE>
<CAPTION>
0% CPR DURING LOCKOUT--OTHERWISE AT INDICATED CPR
---------------------------------------------------------------
ASSUMED PRICE (32NDS) 0% CPR 25% CPR 50% CPR 75% CPR 100% PP*
- -------------------------------------------------------- ---------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C>
84.08................................................... 9.666% 9.667% 9.670% 9.672% 9.685%
84.16................................................... 9.629% 9.630% 9.633% 9.635% 9.647%
84.24................................................... 9.592% 9.593% 9.596% 9.598% 9.610%
85.00................................................... 9.555% 9.556% 9.559% 9.561% 9.573%
85.08................................................... 9.519% 9.519% 9.522% 9.524% 9.536%
85.16................................................... 9.482% 9.483% 9.486% 9.488% 9.499%
85.24................................................... 9.446% 9.447% 9.449% 9.451% 9.463%
86.00................................................... 9.410% 9.410% 9.413% 9.415% 9.426%
86.08................................................... 9.374% 9.374% 9.377% 9.379% 9.390%
86.16................................................... 9.338% 9.339% 9.341% 9.343% 9.354%
86.24................................................... 9.302% 9.303% 9.306% 9.307% 9.318%
87.00................................................... 9.267% 9.267% 9.270% 9.272% 9.282%
87.08................................................... 9.231% 9.232% 9.234% 9.236% 9.246%
87.16................................................... 9.196% 9.197% 9.199% 9.201% 9.211%
87.24................................................... 9.161% 9.162% 9.164% 9.166% 9.175%
88.00................................................... 9.126% 9.127% 9.129% 9.131% 9.140%
88.08................................................... 9.091% 9.092% 9.094% 9.096% 9.105%
Weighted Average Life (years)......................... 14.57 14.56 14.51 14.48 14.32
First Principal Payment Date.......................... Oct-2013 Sep-2013 Sep-2013 Sep-2013 Jul-2013
Last Principal Payment Date........................... Oct-2013 Oct-2013 Oct-2013 Sep-2013 Jul-2013
</TABLE>
- ------------------
* "PP" means 100% of each loan prepays when it becomes freely prepayable.
S-130
<PAGE>
THE MORTGAGE LOAN SELLERS
The Mortgage Loan Sellers will be Short-Term Asset Receivable Trust
("START"), a special purpose Delaware business trust and a wholly-owned
subsidiary of NHA, and The Capital Company of America LLC ("CCA"), a Delaware
limited liability company. CCA is the parent of the Depositor and an affiliate
of NSI.
Affiliates of CCA have been involved in a total of 26 offerings of
commercial mortgage-backed securities from June 1993 through September 1998
totaling over $15 billion in initial principal amount. The mortgage loans
included in these offerings were predominantly originated directly by CCA.
RECENT DEVELOPMENTS
On October 22, 1998, Nomura Securities Co., Ltd. ("NSC"), the ultimate
parent of CCA, NACC (CCA's parent) and NHA (NACC's parent), reported that its
consolidated after-tax losses for the six-month period ending September 30, 1998
was $1,504,000,000 and NHA reported it had incurred a pre-tax loss of
$1,160,000,000 for the same period. Approximately $566,000,000 of that loss was
attributable to mark-to-market losses in the value of CCA's assets. Since
September 25, 1998, NSC has made equity and subordinated debt investments in NHA
in an aggregate amount of approximately $3 billion. Of that amount,
approximately $428 million was invested in CCA as equity capital.
Market uncertainty and volatility have had, and may continue to have,
further significant adverse impact on the financial condition of CCA and NHA.
There can be no assurance that either CCA or NHA will not experience further
losses. In addition, in the event further losses occur, NSC has not committed to
make additional capital contributions to NHA and NHA has not committed to make
additional capital contributions to CCA.
As described under "The Pooling and Servicing Agreement--Representations
and Warranties; Repurchase," NHA will be required to repurchase any Mortgage
Loan which any of the Mortgage Loan Sellers is required to repurchase but fails
to repurchase in connection with a breach of its representations and warranties.
On December 11, 1998, CCA announced that it will not undertake any new loan
commitments. CCA also has announced that it will shortly close its regional
offices and that it will be consolidating and centralizing its activities in New
York. As a result of its termination of loan origination activities, a
significant number of employees primarily related to these activities are being
terminated. These employees represent a substantial majority of CCA's staff.
THE POOLING AND SERVICING AGREEMENT
GENERAL
The Certificates will be issued pursuant to a Pooling and Servicing
Agreement to be dated as of March 11, 1999 (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 in this Prospectus Supplement 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 Asset Securitization Corporation, 2 World Financial Center, Building B, New
York, New York 10281-1198. A copy of the Pooling and Servicing Agreement will be
filed under 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 will be available 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.
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 a copy to the
Servicer and the Special Servicer), with respect to each Mortgage Loan, certain
documents and instruments including, among other things, the following:
S-131
<PAGE>
(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;
(xi) the original lender's title insurance policy (or marked commitments to
insure); (xii) the RVI Policies; and (xiii) the co-lender agreements related to
the Total Pari Passu Loans. 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
Mortgage Loans along with 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 START and the Depositor, START will
assign the representations and warranties made by NHA with respect to such
Mortgage Loans and will, itself, make certain of the representations and
warranties as of the Closing Date. In the Mortgage Loan Purchase and Sale
Agreement between CCA and the Depositor, CCA will make certain representations
and warranties (subject to certain exceptions specified in the Mortgage Loan
Purchase and Sale Agreement), as of the Closing Date (unless otherwise
specified) with respect to each Mortgage Loan. Such representations and
warranties will include those listed below. NHA, the direct parent of START and
the indirect parent of CCA, will be required to purchase any Mortgage Loans that
START or CCA is required to repurchase but fails to repurchase in connection
with a breach of representations and warranties.
(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 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 certain specified matters);
(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 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;
(v) 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);
(vi) Each related Mortgage is a valid and enforceable first lien on the
related Mortgaged Property and such Mortgaged Property (subject to certain
specified matters) 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);
S-132
<PAGE>
(vii) The lien of each related Mortgage is insured by an American Land
Title Association 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;
(viii) The proceeds of such Mortgage Loan have been fully disbursed and
there is no requirement for future advances thereunder;
(ix) 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;
(x) 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;
(xi) 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 for deposit with the Servicer and identified as such with appropriate
detail;
(xii) 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;
(xiii) Such Mortgage Loan has not been 30 days or more delinquent since
origination and as of the Cut-off Date was not delinquent;
(xiv) The mortgage loan schedule which is an exhibit to the Pooling and
Servicing Agreement is complete and accurate in all respects;
(xv) 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;
(xvi) The Mortgage File that is being conveyed to the Trustee is materially
complete; and
(xvii) Each Mortgaged Property (a) is located on or adjacent to a dedicated
road, or has access to an irrevocable easement permitting ingress and egress,
(b) is served by public utilities, water and sewer (or septic facilities),
(c) is a separate tax parcel (or has reserved funds sufficient to cover taxes
for the entire tax parcel), and
S-133
<PAGE>
(d) except with respect to certain of the Accor Credit Tenant Properties, has
parking as required under applicable law.
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) or
(xiii), and (b) any breach of any representation or warranty contained in
clauses (x), (xii), (xiv), (xv), (xvi) and (xvii) 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 the "Repurchase Price," which
is 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
outstanding 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 any outstanding 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 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, the Servicer and the Special 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. NHA will be required
to purchase any Mortgage Loan that START or CCA is required, but fails, to
repurchase in connection with any breach of representations and warranties.
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.
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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 (subject to the servicing
by servicers for Lead Lenders of CMAT Pari Passu Notes on which the Trustee is
Co-Lender), 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 giving due
consideration to customary and usual standards and practices of prudent
institutional commercial mortgage lenders servicing their own loans and to the
maximization of the recovery on such Mortgage Loans on a net present value basis
or (b) 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 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; or (v) the ownership,
or servicing or management for others, by the Servicer or Special Servicer of
any other loans or property (other than Other Pari Passu Notes); (the "Servicing
Standard").
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 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 or Balloon 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
Servicer cannot apply such funds to such a prepayment unless the Servicer has
first received the consent of the Special 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. See "Description of the Mortgage Pool--Certain Terms and Conditions of
the Mortgage Loans--Prepayment Provisions" in this Prospectus Supplement. 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 Special Servicer may elect to extend
a Mortgage Loan (subject to conditions described in this Prospectus Supplement)
notwithstanding its decision to foreclose on certain of the Mortgaged
Properties.
The Pooling and Servicing Agreement provides that with respect to all
Mortgage Loans that provide that the holder of the related Note may apply
amounts received thereunder (including, without limitation, liquidation
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proceeds) against principal, interest and any other sums due in the order as the
holder shall determine, the Servicer shall apply amounts received in respect of
such Mortgage Loans (after using such amounts to reimburse the Servicer, the
Trustee or the Fiscal Agent for any Advances that are made with respect to such
Mortgage Loan): (i) first to interest (other than Excess Interest or Default
Interest) due thereunder; (ii) next to principal; (iii) next to Default Interest
due thereunder, which is payable to the Servicer; (iv) next to Prepayment
Premiums (excluding Return of Premium Amounts) due thereunder; (v) then to any
Excess Interest due thereunder; (vi) then to reimburse any litigation or other
expenses incurred in collecting any such amounts received in respect of such
Mortgage Loan; (vii) then to any Return of Premium Amounts due thereunder; and
(viii) finally to any other sums due thereunder.
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 Balloon Payments, Excess Interest or Default
Interest. The amount required to be advanced in respect of a Mortgage Loan that
is delinquent in respect of its Balloon Payment is the Assumed Scheduled Payment
(as defined herein under "Description of the Offered
Certificates--Distributions") of such Mortgage Loan. 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 to P&I Advances, the Servicer will also be obligated (subject
to the limitations described in this Prospectus Supplement) 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. Both the Trustee and the
Fiscal Agent will be entitled to rely conclusively on any non-recoverability
determination of the Servicer. See "The Trustee" and "The Fiscal Agent" below.
The 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 Trustee and the Fiscal Agent will each be entitled to
receive interest on Advances at a per annum rate equal to the Prime Rate (as
defined in this Prospectus Supplement) (the "Advance Rate"),
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compounded monthly, as of each Servicer Remittance Date accrued on the amount of
such Advance from the date made to but not including the date of reimbursement
and the Servicer will be authorized to pay itself, 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 an 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 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
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 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 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 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 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 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 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).
ACCOUNTS
Lock Box Accounts. Under Mortgage Loans representing 70.5% 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 9.0% 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). Certain of the Mortgage Loans provide that amounts deposited
into the Lock Box Account are remitted to the borrower on a daily basis until
certain trigger events have occurred. Such trigger events include, generally,
among other things, an event of default under the related Mortgage Loan or the
failure of a specified percentage of rents to be remitted to the Lock Box
Account by the tenants of the related Mortgaged Property. The operation of such
trigger events may result in amounts being remitted to borrowers during a
Collection Period preceding the occurrence or discovery of a trigger event that
would not have been remitted had daily remittances to the borrower not been
permitted. 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.
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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 within 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 Available
Funds, Prepayment Premiums and 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 in this
Prospectus Supplement. See "Description of the Offered
Certificates--Distributions" in this Prospectus Supplement.
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 Servicer Remittance
Date occurring in February and on any Servicer Remittance Date occurring in any
January which occurs in a year that is not a leap year, the Servicer will be
required to withdraw from the Collection Account and deposit into the Interest
Reserve Account with respect to each Actual/360 Loan an amount equal to one
day's interest accrued at a per annum rate equal to 31/30 of the Mortgage Rate
(minus the Servicing Fee and the Trustee Fee) on the Stated Principal Balance,
as of the last day of the immediately preceding Interest Accrual Period, of the
Mortgage Loan, to the extent a Monthly Payment or P&I Advance is made in respect
thereof (all amounts so deposited in any consecutive January (if applicable) and
February with respect to any Actual/360 Loan ("Interest Reserve Amounts"). On
each Servicer Remittance Date occurring in March, the Servicer will be required
to withdraw from the Interest Reserve Account an amount equal to the Interest
Reserve Amounts from the preceding January (if applicable) and February, if any,
and deposit such amount into the Collection Account for inclusion in the
Available Funds for the related Distribution Date.
The Trustee will also establish and maintain one or more accounts, which
may be maintained as subaccounts of the Distribution Account, for each of the
"Upper-Tier Distribution Account" and the "Excess Interest Distribution
Account," each in the name of the Trustee for the benefit of the holders of the
Certificates.
The Cash Collateral Accounts, Collection Account, the Distribution Account,
the Upper-Tier Distribution Account, the Interest Reserve Account and the Excess
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 and the Collection Account. Each of the Cash
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Collateral Account, Collection Account, any REO Account, the Distribution
Account, the Upper-Tier Distribution Account, the Interest Reserve Account and
the Excess Interest Distribution Account and 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 "A-1" by S&P 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 "Aa3" by Moody's and "AA" by S&P) (or, if such depository
institution or trust company does not have a short-term unsecured debt rating of
"A-1" by S&P, the long-term unsecured debt obligations of which are rated at
least "A" by S&P) 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"). 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 will be paid to the Mortgage Loan Seller
as compensation for arranging for ongoing 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 Excess Interest Distribution Account an
amount equal to the Excess Interest received in the related Collection Period,
if any, and (C) 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 Trustee or the Fiscal Agent, as applicable, for
Advances made by any of them and 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 above 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, Special
Servicing Fee, Work Out Fee, Liquidation 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. In the case of any Mortgage
Loan other than a Specially Serviced Mortgage Loan, the Servicer will be
responsible for notifying the Special Servicer of any breach of any
"due-on-sale" or "due-on-encumbrance" clause of which it has knowledge. The
Special Servicer 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 Special Servicer
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 Special Servicer determines that granting such consent would be likely to
result in an equal to or greater recovery, the Special Servicer 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 Special Servicer's regular commercial
mortgage origination or servicing standards and criteria and the terms of the
related Mortgage and (b) the Special Servicer 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) 2% of the
total aggregate Stated Principal Balances of the Mortgage Loans and
(y) $30,000,000, and is not one of the then 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 Special Servicer
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 Special Servicer
(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) (i) is required to inspect each Mortgaged Property (other than
a Mortgaged Property securing a Credit Tenant Loan) 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, (b) less than $2,000,000 at least once every
24 months, and (c) with respect to a Mortgaged Property securing a Credit Tenant
Loan, at least once every 36 months, in each case, such period commencing in
June 1999 provided, however, that in the event the Trustee notifies the Servicer
that the long-term unsecured debt rating of the Credit Tenant or Guarantor with
respect to the Credit Tenant Loan is downgraded by a full letter rating since
origination by either Rating Agency, then such Mortgaged Property or Mortgaged
Properties securing such Credit Tenant Loan shall be inspected within six months
of such downgrade and, thereafter, at least once every 36 months and (ii) if the
Mortgage Loan (a) becomes a "Specially Serviced Mortgage Loan," (b) is
delinquent for 60 days or (c) except with respect to Credit Tenant Loans, has a
debt service coverage ratio of less than 1.0 or, with respect to the Credit
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Tenant Loans, the related Credit Tenant has defaulted, 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
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 Servicer
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, 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 Tenant 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,
and to advance amounts in order to 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, and direct the Servicer to Advance amounts in order to 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 whether such
failure to maintain is the result of 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.
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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, 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 preceeding paragraphs. 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.
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 March 15 of each
year, beginning March 15, 2000, a statement to the effect that such firm has
examined certain documents and records relating to the servicing of similar
mortgage loans under similar agreements for the prior calendar year 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 The Federal
Home Loan Mortgage Corporation ("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 March 15 of
each year, beginning March 15, 2000, 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 in all
material respects throughout the preceding year or, if there has been a material
default, specifying each material 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 may not otherwise resign from its obligations and duties as
Servicer thereunder, except upon the determination that performance of its
duties is no longer
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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 has assumed the
obligations of the Servicer under the Pooling and Servicing Agreement. The
Special Servicer has the right to resign at any time provided that (i) a willing
successor thereto has been found, (ii) each of the Rating Agencies confirms in
writing that the successor's appointment will not result in a withdrawal,
qualification or downgrade of the current ratings then assigned to any Class of
Certificates, (iii) the resigning party pays all costs and expenses in
connection with such transfer and (iv) the successor accepts appointment prior
to the effectiveness of such resignation. 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, or 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. Additionally, the Pooling and
Servicing Agreement provides that neither the Servicer nor the Special Servicer
nor any director, officer, employee or agent of either will be under any
liability for, nor be responsible for, any action or decision by a servicer or
special servicer or a Lead Lender (if the Trustee is not the Lead Lender) in
servicing the related CMAT Pari Passu Notes, and the Servicer and the Special
Servicer and, any such director, officer, employee or agent shall be indemnified
and held harmless for any loss, liability or expense incurred in connection
therewith.
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 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 or Special Servicer may be merged or
consolidated, or any person resulting from any merger or consolidation to which
the Servicer or Special Servicer is a party, or any person
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succeeding to the business of the Servicer or Special Servicer (which may be
limited to its commercial mortgage servicing business), will be the successor of
the Servicer or Special Servicer under the Pooling and Servicing Agreement, and
shall be deemed to have assumed all of the liabilities and obligations of the
Servicer or Special Servicer, as applicable, 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 or Interest
Reserve 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 (or sixty (60) days,
so long as the Servicer is in good faith diligently pursuing a cure) 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) one or more ratings
assigned by either Rating Agency to the Certificates has been qualified,
downgraded or withdrawn, or otherwise made the subject of a "negative" credit
watch as a result of the Servicer continuing to act as Servicer hereunder; or
(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
either of the Rating Agencies for mortgage pools similar to the Mortgage Pool.
Upon the occurrence of an Event of Default described in clause (vi) of the
previous sentence, the Servicer will have the right to appoint a successor
servicer, subject to the written approval of the Rating Agencies.
Events of Default of the Special Servicer under the Pooling and Servicing
Agreement include the items specified in clauses (i), (ii), (iv), (v) or (vi)
above (but not the last sentence of the preceding sentence) 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,
as applicable, under the Pooling and Servicing Agreement and in and to the Trust
Fund. Notwithstanding the foregoing, upon any termination of the Servicer or the
Special Servicer under the Pooling and Servicing Agreement the Servicer or the
Special Servicer will continue to be entitled to receive all accrued and unpaid
servicing compensation through the date of termination and the Servicer will be
entitled to receive 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 "Aa2" by Moody's and "AA" by S&P or if the Rating Agencies do not 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
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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 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
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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.
VOTING RIGHTS
The "Voting Rights" assigned to each Class shall be (a) 0% in the case of
the Class R and Class LR Certificates, (b) 1% in the case of the Class X
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 X Certificates will be reduced to zero on the Distribution Date on which
no Classes other than the Class M-1 and Class M-2 Certificates are outstanding,
(c) in the case of the Class A-1, Class A-2, Class A-3, Class B, Class C,
Class D, Class E, Class F, Class G, Class H, Class J, Class K, Class L,
Class M-1 and Class M-2 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 X
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 for voting purposes; 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 than 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 X 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, (iii) a default in the payment of a
Balloon Payment or (iv) the date on which the Special Servicer, consistent with
the Servicing Standard, requests an Updated Appraisal (as defined below), 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 up to three one-year extensions of the
Specially Serviced Mortgage Loan; provided, however, that no such extension
extends the final Maturity Date to a date that is (a) more than two years after
the Final Distribution Date or (b) less than ten years prior to the expiration
of a ground lease with respect to a material portion of a Mortgaged Property
securing such Mortgage Loan; and provided, further, 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, and (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
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would result from a foreclosure; provided, further, that, if, after notice, the
Directing Holders direct the Special Servicer not to extend, the Special
Servicer will not extend. The "Directing Holders" are Holders of Certificates
representing greater than 50% of the Voting Rights of the most subordinate Class
or Classes of Certificates then outstanding representing a minimum of 1.0% of
the aggregate initial Certificate Balances of all Classes of Certificates (or if
the Certificate Balance of such Class or Classes has been reduced to less than
25% of its initial Certificate Balance, the holders of the next most subordinate
Class). For the purpose of determining the most subordinate Class of
Certificates outstanding in order to identify the Directing Holder, (i) the
Class A-1, Class A-2, Class A-3 and Class X Certificates collectively and
(ii) the Class M-1 and Class M-2 Certificates together, will, in each case, be
treated as one Class.
Under certain circumstances the Special Servicer may modify the terms of
Specially Serviced Mortgage Loans as described below under "Modifications."
Material Defaults; Foreclosure. Upon the occurrence of a material default
under a Specially Serviced Mortgage Loan, the Special Servicer may, consistent
with the Servicing Standard, 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."
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 Servicer as a
Property Advance based upon notice from the Special Servicer.
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
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behalf of the Trustee), must administer such Mortgaged Property so that it
qualifies at all times as "foreclosure property" within the meaning of Code
Section 860G(a)(8). The Pooling and Servicing Agreement also requires that any
such Mortgaged Property be managed and operated by an "independent contractor,"
within the meaning of applicable Treasury regulations, who furnishes or renders
services to the tenants of such Mortgaged Property. Among other things, the
independent contractor will not be permitted to perform construction work on the
Mortgaged Property unless such construction was at least 10% completed when
default on the related Mortgage Loan became imminent. Generally, 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--REMIC Certificates" and "--Taxes That May Be
Imposed on the REMIC Pool--Net Income from Foreclosure Property" in the
Prospectus.
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 a Total Pari Passu Loan as to which the Trustee is not
the Lead Lender) 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
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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 in this Prospectus Supplement, 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 the Directing Holders, 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) the Special Servicer may not extend the date
on which any Balloon Payment is scheduled to be due on any Specially Serviced
Mortgage Loan except as described above under "--Realization upon Mortgage
Loans;" (iii) the Special Servicer may not permit any borrower to pledge
additional 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
(iv) the Special Servicer may 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 such action is consistent
with the Servicing Standard and likely to produce a greater recovery, on a
present value basis, than would a foreclosure. For purposes of determining the
amount of principal which the Special Servicer may forgive pursuant to clause
(iii) above, the most subordinate Class will include the next subordinate Class
(determined as provided in the preceding sentence) provided that Directing
Holders 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.
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, subject to
the provisions under "--Realization upon Mortgage Loans," above, and provided
that such modification or amendment does not extend the final Maturity Date to a
date that is (a) less than three years before the Rated Final Distribution Date
or (b) less than ten years prior to the expiration of a ground lease with
respect to a material portion of a Mortgaged Property securing such Mortgage
Loan.
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Any payment of interest, which is deferred as described in this Prospectus
Supplement 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.
Except as otherwise provided in this section and under "--Realization upon
Mortgage Loans" above, the Special Servicer or the Servicer may not modify any
term of a Mortgage Loan (a) unless such modification (i) would not be
"significant" as such term is defined in Treasury Regulation
Sections 1.860G-2(b) 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. 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.
OPTIONAL TERMINATION
The Depositor and, if the Depositor does not exercise the option, the
Special Servicer and, if neither the Depositor nor the Special Servicer
exercises its option, the Servicer and, if the Depositor, the Special Servicer
or the Servicer do not exercise their respective option, the holders of the
Class LR Certificates (who represent more than a 50% Percentage Interest of the
Class LR Certificates), will have the option to purchase, at the purchase price
specified in this Prospectus Supplement, all of the Mortgage Loans and all REO
Property remaining in the Trust Fund, and will 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 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 interest), 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 M-2 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,
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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, CMAT 1999-C1.
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").
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 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.
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DUTIES OF THE TRUSTEE
The Trustee (except for the information under the first paragraph of "The
Trustee") 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 and Interest Reserve
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 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.
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, 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 SERVICER
First Union National Bank, in its capacity as servicer under the Pooling
and Servicing Agreement (in such capacity, the "Servicer"), will be responsible
for servicing the Mortgage Loans (other than Specially Serviced Mortgage Loans
and REO Properties). Although the Servicer is authorized to employ agents,
including sub-servicers, to directly service the Mortgage Loans for which it is
responsible, the Servicer will remain liable for its servicing obligations under
the Pooling and Servicing Agreement. With respect to the Total Pari Passu Loans
as to which the Trustee is not the Lead Lender, the servicer for the related
Other Pari Passu Note will service the related Total Pari Passu Loan. See
"Description of the Mortgage Pool--Pari Passu Loans" in this Prospectus
Supplement.
The Servicer is a wholly owned subsidiary of First Union Corporation. The
Servicer's principal servicing offices are located at Charlotte Plaza, 23rd
floor, 201 South College Street, Charlotte, North Carolina 28288-1075. As of
September 30, 1998, the Servicer and its affiliates were responsible for
servicing approximately 3,522 commercial
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and multifamily loans, totaling approximately $16.6 billion in aggregate
outstanding principal amounts, including loans securitized in mortgage-backed
securitization transactions.
The information concerning the Servicer set forth in this Prospectus
Supplement has been provided by the 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. The Servicer (except for the information under this heading) will make
no representations as to the validity or sufficiency of the Pooling and
Servicing Agreement, the Certificates, the Mortgage Loans, this Prospectus
Supplement or related documents.
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 Collection Period
equal to one-twelfth of the product of (i) 0.052% (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 investment income earned on amounts on
deposit in certain collateral accounts, escrow accounts and 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, certain of the
assumption and modification fees on the Mortgage Loans, as applicable, loan
service transaction fees, Net Default Interest, Prepayment Interest Excess in
excess of any Prepayment Interest Shortfalls, 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 in this
Prospectus Supplement), including all fees of any subservicers retained by it.
SPECIAL SERVICING
Lennar Partners, Inc., a Florida corporation, a subsidiary of LNR Property
Corporation, will initially be appointed as special servicer (the "Special
Servicer") to, among other things, oversee the resolution of Mortgage Loans
that, in general, are in default or as to which default is imminent (other than
Mortgage Loans related to CMAT Pari Passu Notes as to which the Trustee is not
the Lead Lender) and act as disposition manager of REO Properties. See
"Description of the Mortgage Pool--CMAT Pari Passu Notes" in this Prospectus
Supplement. With respect to Total Pari Passu Loans as to which the Trustee is
not the Lead Lender, if the related CMAT Pari Passu Loan becomes a Specially
Serviced Mortgage Loan, the special servicer for the related Other Pari Passu
Note will service such Total Pari Passu Loan for so long as it is being
specially serviced. See "Description of the Mortgage Pool--Pari Passu Loans" in
this Prospectus Supplement.
The principal offices of the Special Servicer are located at 760 N.W. 107th
Avenue, Miami, Florida 33172, and its telephone number is (305) 485-2000. As of
November 30, 1998, the Special Servicer and its affiliates were managing a
portfolio including over 10,000 assets in most states with an original face
value of over $35 billion, most of which are commercial real estate assets.
Included in this managed portfolio are $28 billion of commercial real estate
assets representing 49 securitization transactions, for which the Special
Servicer is the master servicer or special servicer. The Special Servicer
(except for the information under this paragraph) will make no representations
as to the validity or sufficiency of the Pooling and Servicing Agreement, the
Certificates, the
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Mortgage Loans, this Prospectus Supplement or related documents. The foregoing
information concerning the Special Servicer has been provided by it.
Accordingly, neither the Depositor nor either of the Underwriters makes 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 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-1, Class A-2 and
Class X Certificates collectively, and the Class M-1 and Class M-2 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 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); (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); (vii) the
Special Servicer proposes to commence foreclosure or other work out
arrangements; or (viii) such borrower has failed to make a Balloon Payment as
and when due, unless the Servicer reasonably believes that the Balloon Payment
will be paid within ninety days of its Due Date; provided, however, that a
Mortgage Loan will cease to be a Specially Serviced Mortgage Loan (each such
Mortgage Loan that is no longer a Specially Serviced Mortgage Loan being a
"Corrected 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 work out 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 Tenant Loans after the related Other Pari Passu 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:
The Special Servicing Fee. In general, the "Special Servicing Fee" will
o be earned in respect of each and every Specially Serviced Mortgage
Loan, if any, and each and every REO Mortgage Loan, if any,
o be computed on the basis of a 360-day year consisting of twelve
30-day months (except in the case of partial periods, when it will
be computed on the basis of the actual number of days elapsed in
such period and a 360-day year) and accrue at 0.25% per annum (the
"Special Servicing Fee Rate") on the same principal amount as
interest periodically accrues or is deemed to accrue, as the case
may be, in respect of each Specially Serviced Mortgage Loan or REO
Mortgage Loan, if any, and
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o be payable monthly from general collections on all the Mortgage
Loans and any REO Properties on deposit in the Collection Account
from time to time.
The Work Out Fee.
The Special Servicer will, in general, be entitled to receive a Work
Out Fee with respect to each Corrected Mortgage Loan. As to each Corrected
Mortgage Loan, with limited exceptions, the "Work Out Fee" will be payable
out of, and will be calculated by application of a "Work Out Fee Rate" of
1.0% to, each collection of interest (other than Default Interest and
Excess Interest), principal (including scheduled payments, prepayments and
Balloon Payments at maturity) and Prepayment Premiums received on such
Mortgage Loan for so long as it remains a Corrected Mortgage Loan. The Work
Out Fee with respect to any Corrected Mortgage Loan will cease to be
payable if such loan again becomes a Specially Serviced Mortgage Loan or if
the related Mortgaged Property becomes an REO Property. Nevertheless, a new
Work Out Fee will become payable if and when such Mortgage Loan again
becomes a Corrected Mortgage Loan. If the Special Servicer is terminated
(other than for cause) or resigns, it shall retain the right to receive any
and all Work Out Fees payable with respect to Mortgage Loans that became
Corrected Mortgage Loans during the period that it acted as Special
Servicer and remained Corrected Mortgage Loans at the time of such
termination or resignation. The successor Special Servicer will not be
entitled to any portion of such Work Out Fees.
The Liquidation Fee.
The Special Servicer will be entitled to receive a "Liquidation Fee"
with respect to each Specially Serviced Mortgage Loan as to which the
Special Servicer obtains a full or discounted payoff from the related
borrower and, except as otherwise described below, with respect to any
Specially Serviced Mortgage Loan or REO Property as to which the Special
Servicer receives any liquidation proceeds. As to each such Specially
Serviced Mortgage Loan and REO Property, the Liquidation Fee will be
payable from, and will be calculated by application of a "Liquidation Fee
Rate" of 1.0% to, the related payment or proceeds (other than any portion
thereof that represents a recovery of Default Interest or Excess Interest).
Notwithstanding anything to the contrary described above, no Liquidation
Fee will be payable based on, or out of, liquidation proceeds received in
connection with:
o the repurchase of any Mortgage Loan by a Mortgage Loan Seller or
NHA for a breach of representation or warranty so long as such
repurchase occurs within the 180-day cure period (See
"--Representations and Warranties; Repurchases" above in this
Prospectus Supplement);
o the purchase of any Specially Serviced Mortgage Loan or REO
Property by the Special Servicer (see "--Realization upon
Mortgage Loans" above); or
o the purchase of all of the Mortgage Loans and REO Properties by
the Depositor, the Special Servicer, the Servicer or the holders
of the Class LR Certificates representing greater than a 50%
Percentage Interest of the Class LR Certificates in connection
with the optional termination of the Trust Fund (see "--Optional
Termination" in this Prospectus Supplement).
The Special Servicer will be entitled to additional Servicing Compensation
in the form of (i) certain of the assumption fees with respect to the Mortgage
Loans, (ii) certain extension fees and modification fees on or with respect to
any Mortgage Loans, and (iii) any income earned on deposits in the REO Accounts.
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.
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REPORTS TO CERTIFICATEHOLDERS; AVAILABLE INFORMATION
Trustee Reports
Based on information provided in monthly reports (a form of which is
attached as Annex F to this Prospectus Supplement) 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, the Underwriters, each Rating Agency 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; (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 an REO
Property during the preceding calendar month, the Stated Principal
Balance and unpaid principal balance of such Mortgage Loan as 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, 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, 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 Trustee and the
Fiscal Agent; and (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.
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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 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 (714) 282-5518 and requesting statement number 400 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 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, the Special Servicer, each Underwriter, each Rating Agency and, if
requested, any potential investor in the Certificates, on each Distribution
Date, the following seven reports (forms of which are attached as Annex G to
this Prospectus Supplement):
(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.
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(g) A "Loan Payoff Notification Report" setting forth, among other things,
any Mortgage Loan for which written notice of pay-off has been received by the
Servicer.
The Servicer may make available each month via the Servicer's internet
website, initially located at www.firstunion.com, (i) to any interested party,
the Delinquent Loan Status Report, the Historical Loan Modification Report, the
Historical Loss Estimate Report, the REO Status Report, the Loan Payoff
Notification Report, the CSSA loan setup file and the CSSA Loan File, and, as a
convenience for interested parties (and not in furtherance of the distribution
thereof under the securities laws) the Prospectus and this Prospectus
Supplement, and (ii) to any holder or Certificate Owner of an Offered
Certificate or any person identified to the Trustee as a prospective transferee
of an Offered Certificate or any interest therein, the Rating Agencies, the
Underwriters and to any of the parties to the Pooling and Servicing Agreement
(collectively, the "Privileged Persons"), with the use of a password provided by
the Servicer to such Privileged Person upon receipt by the Servicer from such
person of a certification in the form attached to the Pooling and Servicing
Agreement, the Watch List, the Comparative Financial Status Report and the CSSA
property file; provided, however, that the Rating Agencies, the Underwriters and
the parties to the Pooling and Servicing Agreement will not be required to
provide such certification. For assistance with the Servicer's internet website,
investors may call (800) 326-1334.
The Trustee will provide Certificateholders with a written copy of the
standard CSSA loan file and CSSA property file 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 two Business Days prior to the Servicer
Remittance Date. Absent manifest error, none of the Servicer, the Special
Servicer or the Trustee shall be responsible for the accuracy or completeness of
any information supplied to it by a borrower or third party that is included in
any reports, statements, materials or information prepared or provided by the
Servicer, the Special Servicer or the Trustee, as applicable.
The Servicer is also required to deliver to the Trustee the following
materials:
(a) Annually, on or before June 30 of each year, commencing with June 30,
1999, with respect to each Mortgaged Property and REO Property, an "Operating
Statement Analysis Report" 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 from 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, the Special Servicer, each Underwriter and each Rating Agency
promptly after its receipt thereof. Upon request, any Certificateholder and any
potential 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
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recalculate any of the amounts and other information stated therein (and the
reports delivered by the Servicer or the Special 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 or the Special 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.
CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS FOR MORTGAGED PROPERTIES
LOCATED IN CALIFORNIA, MICHIGAN, NEW YORK, VIRGINIA, ILLINOIS AND OHIO
The following discussion contains summaries of certain legal aspects of the
Mortgage Loans or portions of Mortgage Loans secured by parcels in California
(approximately 19.2% of the Initial Pool Balance), Michigan (approximately 11.3%
of the Initial Pool Balance), New York (approximately 8.1% of the Initial Pool
Balance), Virginia (approximately 7.7% of the Initial Pool Balance), Illinois
(approximately 6.4% of the Initial Pool Balance), and Ohio (approximately 5.1%
of the Cut-off Date Principal 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.
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.
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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.
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.
VIRGINIA
Foreclosure of the lien of a deed of trust in Virginia typically and most
efficiently is accomplished by a non-judicial trustee's sale under a power of
sale provision in the deed of trust. Judicial foreclosure also can be, but
seldom is, used. In a non-judicial foreclosure, public notice of the trustee's
sale, containing certain information, must be given for the time period
prescribed in the deed of trust, but subject to statutory minimums. After such
notice, the trustee may sell the real estate. In a judicial foreclosure, after
notice to all interested parties, a full hearing and judgment in favor of the
lienholder, the court orders a foreclosure sale to be conducted by a sheriff or
court-appointed commissioner in chancery. In either type of foreclosure sale,
the borrower has no right to redeem the property. A deficiency judgment for a
recourse loan may be obtained. Further, under Virginia law, under certain
circumstances and for certain time periods, a lienholder has the statutory right
to obtain a court-appointed receiver, either with or without notice of the
borrower, to collect, protect and disburse the real property's rents and
revenues, and otherwise to maintain and preserve the real property, pursuant to
the court's instructions.
ILLINOIS
Mortgage loans in Illinois are generally secured by mortgages on the real
estate. Foreclosure of a mortgage is accomplished only by judicial proceedings;
there is no private power of sale under Illinois law. The common law remedy of
strict foreclosure is still available in Illinois. Foreclosure is regulated by
statute and is subject to the court's equitable powers. Generally, a mortgagee
may obtain, where applicable, and seek to recover, a deficiency judgment. A
mortgagor has a statutory right of redemption which, as to mortgagors of
non-residential real estate, may be waived. A mortgagor also has a statutory
right of reinstatement which may be granted only once in any given five year
period. The right of reinstatement allows a mortgagor, whose loan has been
accelerated due to a default, to cure said default (by paying principal amount
due, including costs, expenses, attorneys' fees and other fees, but excluding
the portion of principal which would not have been due in absence of
acceleration) within ninety days from the date the court obtains jurisdiction
over the mortgagor. The reinstatement right cannot be waived by the mortgagor.
Illinois statutes also provide priority to certain tax liens over the lien of
previously recorded mortgages.
OHIO
Under Ohio law, foreclosure of a mortgage can occur only through judicial
process. There is no private power of sale or strict foreclosure available in
Ohio. Foreclosure is regulated by statute and is subject to the court's
equitable powers. Mortgagees may sue both on the note and mortgage
simultaneously and generally may recover a deficiency judgment unless the
mortgage loan is nonrecourse. Mortgagors have a nonwaivable statutory right of
redemption and the statutes further provide that the real estate generally
cannot be sold in foreclosure for less than two-thirds of its appraised value.
Mortgagors have no right of reinstatement. Ohio statutes also provide for
priority liens for unpaid real estate taxes over the lien of a previously
recorded mortgage.
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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.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following summary and the discussion in the Prospectus under the
heading "Federal Income Tax Consequences--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, the REO 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-1, Class A-2, Class A-3, Class X,
Class B, Class C, Class D, Class E, Class F, Class G, Class H, Class J, Class K,
Class L, Class M-1 and Class M-2 Certificates (the "Regular Certificates"),
which will represent 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.
In addition, the Class A-2, Class A-3, Class B, Class C, Class D, Class E,
Class F, Class G, Class H, Class J, Class K, Class L, Class M-1 and Class M-2
Certificates will represent pro rata undivided beneficial interests in
designated portions of the Excess Interest and the related portions of the
Excess Interest Distribution Account, which portion of the Trust Fund will be
treated as part of a grantor trust for federal income tax purposes. Although
holders of these Classes of Certificates will be required to allocate their
purchase price between their interests in the regular interests in the
Upper-Tier REMIC and their beneficial interests in Excess Interest based on the
relative fair market values of each, it is anticipated that the rights to Excess
Interest will have negligible value as of the Closing Date. Excess Interest
actually collected on the Mortgage Loans will be distributed on the Certificates
as and to the extent described in this Prospectus Supplement. Excess Interest
represents the right to certain stripped coupons on the related Mortgage Loans.
It is not entirely clear under the Code when Excess Interest should be taxed to
the Certificateholders. Because the receipt of Excess Interest is uncertain and
would occur only if the related Mortgage Loan is outstanding after the interest
rate thereon increases after its Anticipated Repayment Date, for federal income
tax reporting purposes, the Trustee will report Excess Interest as income to the
Certificateholders entitled thereto only upon its actual receipt. The IRS may
nevertheless seek to require that an assumed amount of Excess Interest be
included in distributions projected to be made on the Certificates and that
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taxable income be reported based on the projected constant yield to maturity of
the Certificates, including such projected Excess Interest prior to its actual
receipt. It is possible that such accrual prior to actual receipt would not
commence until after the related Anticipated Repayment Date. If such projected
Excess Interest were not actually received, presumably the Certificateholder
would be allowed to claim a deduction or reduction in gross income at the time
such unpaid Excess Interest had been projected to be received. You should
consider consulting your own tax advisors concerning the treatment of Excess
Interest.
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 and 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 14.3%,
approximately 0.6% and approximately 0.4%, 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 Certificates will not be issued with original issue discount for
federal income tax purposes. See "Federal Income Tax Consequences" and "REMIC
Certificates--Taxation of Regular Certificates--Premium" in the Prospectus.
For purposes of accruing original issue discount, determining whether such
original issue discount is de minimis and amortizing any premium, the Prepayment
Assumption will be 0% CPR, with all ARD Loans prepaying in full on their related
Anticipated Repayment Dates. No representation is made as to the rate, if any,
at which the Mortgage Loans will actually prepay.
Prepayment Premiums actually collected on the Mortgage Loans will be
distributed to certain Classes of Certificates as and to the extent described in
this Prospectus Supplement. It is not entirely clear under the Code when the
amount of a Prepayment Premium should be taxed to the Certificateholder. For
federal income tax reporting purposes, Prepayment Premiums will be treated as
income to the Certificateholders only after the Servicer's actual receipt
thereof. The IRS may nevertheless seek to require that an assumed amount of
Prepayment Premiums be included in distributions projected to be made on the
Certificates and that taxable income be reported based on the projected constant
yield to maturity of the Certificates, including such projected prepayment prior
to their actual receipt. If such projected Prepayment Premiums were not actually
received, presumably the Certificateholder would be allowed to claim a deduction
or reduction in gross income at the time such unpaid Prepayment Premiums had
been projected to be received. Moreover, it appears that Prepayment Premiums are
to be treated as ordinary income rather than capital gain. The correct
characterization of such income is not entirely clear, however, and you should
consider consulting your own tax advisors concerning the treatment of Prepayment
Premiums.
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 States or any political subdivision thereof or is a
foreign estate or trust, see "Federal Income Tax Consequences" and "REMIC
Certificates--Taxation of Certain Foreign Investors--REMIC Regular Certificates"
in the Prospectus.
CERTAIN ERISA CONSIDERATIONS
The purchase by or transfer to a retirement plan or other employee benefit
plan or 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
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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 and Exchanges; Transfer
Restrictions" in this Prospectus Supplement. Accordingly, except as specifically
referenced in this Prospectus Supplement, 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 Goldman Sachs, Lehman, DLJ and NSI individual prohibited transaction
exemptions (each, a "PTE") as follows: PTE 89-88 (54 Fed. Reg. 42,581
(October 17, 1989), (as amended, 55 Fed. Reg. 48,939 (November 23, 1990), PTE
91-14 (56 Fed. Reg. 74,113 (February 22, 1991), PTE 90-83 (55 Fed. Reg. 50,210
(December 5, 1990) and PTE 93-32 (58 Fed. Reg. 28,623 (May 14, 1993) (the
"Exemptions"), 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 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-1, Class A-2 and Class A-3 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 Moody's, S&P, Fitch IBCA, Inc. ("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 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, as amended (the "Securities Act").
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;
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(b) certificates in such other investment pools must have been rated
in one of the three highest rating categories of Moody's, S&P, 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, the Special 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 Depositor believes 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 Depositor or which it 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 availability of any exemptive relief
under any Similar Law. See "Description of the Offered Certificates--Transfer
and Exchanges; 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.
Section III of Prohibited Transaction Class Exemption 95-60 ("PTCE 95-60")
exempts from the application of the prohibited transaction provisions of
Sections 406(a), 406(b) and 407(a) of ERISA and Section 4975 of the Code
transactions in connection with the servicing, management and operations of a
trust (such as the Trust) in which an insurance company general account has an
interest as a result of its acquisition of certificates issued by the trust,
provided that certain conditions are satisfied. If these conditions are met,
insurance company general accounts would be allowed to purchase certain Classes
of Certificates (such as the Class B, Class C, Class D and Class E Certificates)
that do not meet the requirements of the Exemption solely because they (a) are
subordinated to other Classes of Certificates in the Trust or (b) have not
received a rating at the time of the purchase in one of the three highest rating
categories from DCR, Fitch, Moody's and S&P. All other conditions of the
Exemptions would have to be satisfied in order for PTCE 95-60 to be available.
Before purchasing Class B, Class C, Class D or Class E
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Certificates, an insurance company general account seeking to rely on Section
III of PTCE 95-60 should itself confirm that all applicable conditions and other
requirements have been satisfied.
BECAUSE THE CLASS B, CLASS C, CLASS D, AND CLASS E (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 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 AND EXCHANGES; 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 Offered Certificates rated in the category of "AAA" or "AA"
(or the equivalent) by at least one Rating Agency will constitute "mortgage
related securities" for purposes of the Secondary Mortgage Market Enhancement
Act of 1984, as amended.
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.
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.
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RATING
It is a condition to the issuance of the Offered Certificates that (i) the
Class A-1, Class A-2 and Class A-3 Certificates be rated "Aaa" by Moody's
Investors Service, Inc. ("Moody's") and "AAA" by Standard & Poor's Rating
Services ("S&P", and together with Moody's, the "Rating Agencies"), (ii) the
Class B Certificates be rated "Aa2" by Moody's and "AA" by S&P, (iii) the
Class C Certificates be rated "A2" by Moody's and "A" by S&P, (iv) the Class D
Certificates be rated "Baa2" by Moody's and "BBB" by S&P and (v) the Class E
Certificates be rated "Baa3" by Moody's and "BBB-" by S&P. The Rated Final
Distribution Date of each Class of Offered Certificates is January 17, 2032.
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 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. Also, a security rating does not
represent any assessment of the yield to maturity that investors may experience
in the event of delinquencies or rapid prepayments of the Mortgage Loans
(including both voluntary and involuntary prepayments). In general, the ratings
thus address credit risk and not prepayment risk. See "Risk Factors and Other
Special Considerations" in this Prospectus Supplement and "Yield Considerations"
in the Prospectus. With respect to the Credit Tenant Loans, a downgrade in the
credit rating of the related Credit Tenants or Guarantors or in the claims
paying rating of any insurer under a residual value insurance policy may have a
related adverse affect on the rating of the Offered Certificates.
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.
UNDERWRITING
The Depositor and the underwriters for the offering (the "Underwriters")
named below have entered into an underwriting agreement with respect to the
Offered Certificates. Subject to certain conditions, each Underwriter has
severally agreed to purchase the Certificate Balance of Offered Certificates
indicated in the following table:
<TABLE>
<CAPTION>
CERTIFICATE BALANCE OF OFFERED CERTIFICATES
--------------------------------------------------------------------
Underwriters Class A-1 Class A-2 Class A-3 Class B Class C Class D
- --------------------------------------------------- --------- --------- --------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Goldman, Sachs & Co................................ $ $ $ $ $ $
Lehman Brothers Inc................................ $ $ $ $ $ $
Donaldson, Lufkin & Jenrette Securities
Corporation...................................... $ $ $ $ $ $
Nomura Securities International, Inc............... $ $ $ $ $ $
----- ----- ----- ----- ----- -----
Total............................................ $ $ $ $ $ $
----- ----- ----- ----- ----- -----
----- ----- ----- ----- ----- -----
<CAPTION>
Underwriters Class E
- --------------------------------------------------- -------
<S> <C>
Goldman, Sachs & Co................................ $
Lehman Brothers Inc................................ $
Donaldson, Lufkin & Jenrette Securities
Corporation...................................... $
Nomura Securities International, Inc............... $
-----
Total............................................ $
-----
-----
</TABLE>
Goldman, Sachs & Co. and Lehman Brothers Inc. will act as co-lead managers and
joint bookrunners with respect to the Offered Certificates. See "Description of
Offered Certificates--Transfer Restrictions" in this Prospectus Supplement.
Each Underwriter intends to sell its allocation of the Offered Certificates
from time to time in individually negotiated transactions or otherwise at
varying prices to be determined at the time of sale. Offered Certificates sold
by the Underwriters to the public will initially be offered at the initial
public offering price set forth on the cover of this Prospectus Supplement (the
"Offering"). Any Offered Certificates sold by the Underwriters to securities
dealers
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may be sold at a discount from the initial public offering price of up to %
of the Certificate Balance of the Offered Certificates. Any such securities
dealers may resell any Offered Certificates purchased from the Underwriters to
certain other brokers or dealers at a discount from the initial public offering
price of up to % of the Certificate Balance of the Offered Certificates. If
all the Offered Certificates are not sold at the initial offering price, the
Underwriters may change the offering price and the other selling terms.
The Offered Certificates are a new issue of securities with no established
trading market. The Depositor has been advised by the Underwriters that the
Underwriters intend to make a market in the Offered Certificates but are not
obligated to do so and may discontinue market making at any time without notice.
No assurance can be given as to the liquidity of the trading market for the
Offered Certificates.
In connection with the Offering, the Underwriters may purchase and sell the
Offered Certificates in the open market. These transactions may include short
sales, stabilizing transactions and purchases to cover positions created by
short sales. Short sales involve the sale by the Underwriters of a greater
number of Offered Certificates than they are required to purchase in the
Offering. Stabilizing transactions consist of certain bids or purchases made for
the purpose of preventing or retarding a decline in the market price of the
Offered Certificates while the Offering is in progress.
The Underwriters also may impose a penalty bid. This occurs when a
particular Underwriter repays to the Underwriters a portion of the underwriting
discount received by it because the representatives have repurchased Offered
Certificates sold by or for the account of such Underwriter in stabilizing or
short covering transactions.
These activities by the Underwriters may stabilize, maintain or otherwise
affect the market price of the Offered Certificates. As a result, the price of
the Offered Certificates may be higher than the price that otherwise might exist
in the open market. If these activities are commenced, they may be discontinued
by the Underwriters at any time. These transactions may be effected in the
over-the-counter market or otherwise.
The Depositor estimates that its share of the total expenses of the
Offering, excluding underwriting discounts and commissions, will be
approximately $ .
An affiliate of the Depositor has agreed to indemnify the several
Underwriters against certain liabilities, including liabilities under the
Securities Act.
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 (as amended).
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 Securities and Exchange Law of Japan.
Lehman owns a common equity interest in the borrower with respect to a
Mortgage Loan secured by the Mortgaged Property identified as Dearborn Atrium on
Annex B hereto, which represents approximately 0.4% of the Initial Pool Balance.
S-167
<PAGE>
INDEX OF SIGNIFICANT DEFINITIONS
<TABLE>
<S> <C>
A
Accor..................................................S-37
Accor Credit Tenant Lease..............................S-66
Accor Credit Tenant Lease Properties...................S-66
Accor Credit Tenant Loan...............................S-38
accredited investor...................................S-163
ACMs...................................................S-45
Actual On-going Capital Reserve........................S-96
Actual/360 Loan.......................................S-108
ADA....................................................S-50
Advance Rate..........................................S-136
Advances..............................................S-136
all risk...............................................S-73
Allocated Loan Amount..................................S-94
AMM....................................................S-51
AMM I..................................................S-50
AMM II.................................................S-50
Amortization...........................................S-95
anchor tenant..........................................S-36
anchored...............................................S-36
Ann....................................................S-94
Annual Debt Service....................................S-94
Anticipated Remaining Term.............................S-95
Anticipated Repayment Date.................S-22, S-29, S-95
Anticipated Repayment Date LTV/PTV.....................S-94
Appraisal Reduction Amount...............S-21, S-107, S-115
Appraisal Reduction Event.......................S-21, S-115
Appraised Value........................................S-95
ARD....................................................S-95
ARD Loan...............................................S-69
ARD Note...................................S-22, S-47, S-69
ASLP...................................................S-63
Assumed Final Distribution Date...................S-2, S-12
Assumed Scheduled Payment.............................S-109
Atlanta Marriott ARD...................................S-89
Atlanta Marriott Borrower........................S-50, S-88
Atlanta Marriott Hotel Loan............................S-88
Atlanta Marriott Hotel Property........................S-88
Atlanta Marriott Mortgage..............................S-88
Atlanta Marriott Note..................................S-88
Atlanta Marriott Property Manager......................S-89
Atlantic LLC...........................................S-78
Audit/Agreed Upon Procedures Forward...................S-96
Audit/Agreed Upon Procedures Upfront...................S-96
Available Funds.......................................S-105
B
Balloon Loans..........................................S-28
Balloon Note.....................................S-47, S-48
Balloon Payments.......................................S-47
Base Interest Rate.....................................S-60
Bentley Mills Credit Tenant Lease......................S-66
Bentley Mills Credit Tenant Loan.......................S-39
BGK....................................................S-51
Bloomfield.............................................S-11
Bloomfield Purchase Agreement.........................S-134
Bondable Leases........................................S-63
Business Day...........................................S-71
C
Cash Collateral Accounts..............................S-138
CBE...................................................S-127
CCA.......................................S-10, S-11, S-131
CCA Servicer...........................................S-63
CCA-CMBS Transaction.............................S-27, S-61
Cedel..................................................S-14
Cedel Participants....................................S-118
CERCLA.................................................S-45
Certificate Balance...................................S-104
Certificate Owners....................................S-119
Certificate Registrar.................................S-116
Certificateholder.....................................S-116
Certificates...........................................S-14
Chase..................................................S-86
Chase Loan.............................................S-86
Circuit City Credit Tenant Leases......................S-66
Circuit City Credit Tenant Loan..................S-39, S-65
Class..................................................S-13
clearing agency.......................................S-117
clearing corporation..................................S-117
Closing Date...........................................S-12
CMAT......................................Cover, S-13, S-57
CMAT Pari Passu Note.......................S-27, S-61, S-64
Co-Lender..............................................S-61
Co-Lender CMAT Pari Passu Notes........................S-22
Code..................................................S-119
Collateral Substitution Deposit........................S-71
Collection Account....................................S-138
Collection Period...............................S-12, S-106
Combined LTV...........................................S-43
Common Equity Holder...................................S-53
Common Equity Loans....................................S-53
Constant Prepayment Rate..............................S-122
Cooperative...........................................S-118
Corrected Mortgage Loan...............................S-154
CPR...................................................S-122
Credit Tenant..........................................S-63
Credit Tenant Lease..............................S-38, S-63
Credit Tenant Loans........................S-28, S-63, S-96
Credit Tenant Properties...............................S-63
Cross-Indemnified Party...............................S-151
Cross-Indemnifying Party..............................S-151
Crossover Date........................................S-112
Cut-off Date...........................................S-12
Cut-off Date Allocated Loan Amount.....................S-95
Cut-off Date Principal Balance...................S-24, S-95
</TABLE>
S-168
<PAGE>
<TABLE>
<S> <C>
Cut-off Date Principal Balance/Unit....................S-95
D
D6 Securitization......................................S-77
D7 Securitization......................................S-64
Dairy Mart Credit Tenant Leases........................S-66
DCR...................................................S-163
DDR/DRA Retail Borrower................................S-75
DDR/DRA Retail Loan....................................S-75
DDR/DRA Retail Maturity Date...........................S-75
DDR/DRA Retail Property................................S-75
DDR/DRA Retail Property Manager........................S-76
Default Interest......................................S-106
Default Rate..........................................S-107
Defeasance Lock-out Period.............................S-71
Defeasance Option......................................S-71
Definitive Certificate.........................S-116, S-120
Delaware Chancery Court................................S-50
Delinquency...........................................S-107
Department............................................S-163
Depositaries..........................................S-116
Depositor.............................................Cover
Dictaphone Credit Tenant Lease.........................S-66
Directing Holders.....................................S-147
Discount Rate.........................................S-112
Discount Rate Fraction................................S-112
Distribution Account..................................S-138
Distribution Date...............................S-12, S-105
Distribution Date Statement...........................S-156
DLJ....................................................S-10
DSCR.............................................S-22, S-93
DTC....................................................S-14
Dual Amortization Loans....................S-28, S-54, S-68
Due Date...............................................S-12
E
E-11...................................................S-52
E-B....................................................S-47
Eligible Bank.........................................S-139
EPA....................................................S-47
ERISA..........................................S-119, S-162
Euroclear..............................................S-14
Euroclear Operator....................................S-118
Euroclear Participants................................S-118
Event of Default......................................S-144
Excess Cash Flow.......................................S-70
Excess Interest...........................S-29, S-69, S-107
Excess Interest Distribution Account..................S-138
Excess Rate.....................................S-69, S-107
Exemptions............................................S-163
F
Factory Outlet Center Loan.............................S-57
Factory Outlet Center Property.........................S-57
FF&E...................................................S-23
FHLMC.................................................S-142
Final Recovery Determination..........................S-156
First Union............................................S-10
Fiscal Agent....................................S-10, S-152
Fitch.................................................S-163
Fixed Voting Rights Percentage........................S-146
foreclosure property..................................S-148
Form 8-K.................................S-16, S-103, S-131
FP.....................................................S-47
Franconia..............................................S-86
FSA...................................................S-167
FSL....................................................S-40
G
Georgia Federal Court..................................S-50
GLA........................................S-76, S-92, S-96
Goldman Sachs..........................................S-10
Guarantor..............................................S-63
H
Health Club Loan.......................................S-57
Health Club Property...................................S-57
Healthcare Loan........................................S-57
Healthcare Property....................................S-57
Holders of Definitive Certificates....................S-119
Horizon................................................S-83
Host Marriott....................................S-51, S-88
Hotel Loan.............................................S-57
Hotel Property.........................................S-57
I
Imp TTM................................................S-94
Indirect Participants.................................S-117
Industrial Loan........................................S-57
Industrial Property....................................S-57
Initial Pool Balance............................Cover, S-57
Interest Accrual Amount...............................S-107
Interest Accrual Period.........................S-12, S-107
Interest Reserve Account..............................S-138
Interest Reserve Amounts.......................S-105, S-138
Interest Shortfall....................................S-107
Iowa Malls ARD.........................................S-91
Iowa Malls Borrower....................................S-90
Iowa Malls Loan........................................S-90
Iowa Malls Managing Member.............................S-90
Iowa Malls Maturity Date...............................S-91
Iowa Malls Property....................................S-90
Iowa Malls Property Manager............................S-91
Iowa Malls Regular Member..............................S-90
Iowa Mezzanine Borrower................................S-90
Iowa Mezzanine Loan....................................S-90
Ivy Street.............................................S-51
J
judicial action........................................S-49
</TABLE>
S-169
<PAGE>
<TABLE>
<S> <C>
L
Lazard.................................................S-78
Lead Lender............................................S-61
Lead Lender CMAT Pari Passu Notes......................S-22
Lease Expiration Date..................................S-96
Lehman.................................................S-10
Liquidation Fee.......................................S-155
Liquidation Fee Rate..................................S-155
Loan-to-Value Ratio..............................S-25, S-94
Lock Box Accounts.....................................S-137
Lock-out Period..................................S-30, S-70
Lower-Tier Regular Interests..........................S-161
Lower-Tier REMIC................................S-15, S-161
LTV........................................S-43, S-61, S-94
LUSTs..................................................S-46
M
MAI Appraiser..........................................S-95
Marquis Corporation....................................S-51
Marriott Lock Box Event................................S-89
Maturity Date....................................S-22, S-95
McCrory................................................S-52
Merger.................................................S-50
MI.....................................................S-89
MI Rating..............................................S-89
Mobile Home Park Loan..................................S-57
Mobile Home Park Property..............................S-57
Monthly Debt Service Payment.....................S-29, S-69
Monthly Mortgage Loan Payments.........................S-73
Monthly Operating Expenses.............................S-73
Monthly Payment...........................S-69, S-95, S-106
Monthly Rental Payments................................S-65
Moody's...............................................S-166
Mortgage...............................................S-58
Mortgage Loan..........................................S-57
Mortgage Loan Assumptions......................S-122, S-123
Mortgage Loan Purchase and Sale Agreement..............S-57
Mortgage Loan Sellers..................................S-11
Mortgage Pass-Through Rate............................S-108
Mortgage Pool..........................................S-57
Mortgage Rate.........................................S-108
mortgage related securities.....................S-16, S-165
Mortgaged Properties...................................S-57
Most Recent NOI........................................S-94
Multifamily Loan.......................................S-57
Multifamily Property...................................S-57
MW Corp................................................S-85
N
NACC...................................................S-11
NACC/CCA...............................................S-11
NACC/Marriott Financing................................S-51
NAIC...................................................S-63
NCF....................................................S-93
Net Base Rate.........................................S-113
Net Cash Flow....................................S-59, S-93
Net Cash Flow DSCR.....................................S-93
Net Default Interest..................................S-106
Net Mortgage Pass-Through Rate........................S-108
Net REO Proceeds......................................S-106
New Marriott...........................................S-89
NHA....................................................S-11
NOI DSCR...............................................S-94
Note...................................................S-58
Notional Amount.................................S-14, S-104
NSC...................................................S-131
NSI....................................................S-10
O
Occupancy..............................................S-95
Offered Certificates.....................Cover, S-13, S-104
Offering..............................................S-167
Office Loan............................................S-57
Office Property........................................S-57
operator........................................S-45, S-147
Original Loan Balance..................................S-95
Originators......................................S-11, S-59
Other Atlanta Marriott Note............................S-88
Other Pari Passu Note......................S-27, S-61, S-64
Other Park LaBrea Note.................................S-77
Other Prime Note.......................................S-82
Other Springfield Mall Note............................S-85
owner...........................................S-45, S-147
P
P&I Advance.....................................S-21, S-136
Park LaBrea ARD........................................S-78
Park LaBrea Borrower...................................S-78
Park LaBrea Closing Date...............................S-77
Park LaBrea General Partner............................S-78
Park LaBrea Limited Partner............................S-78
Park LaBrea LLC........................................S-78
Park LaBrea Loan.......................................S-77
Park LaBrea Maturity Date..............................S-78
Park LaBrea Mezzanine Loan.............................S-78
Park LaBrea Multifamily Property.......................S-77
Park LaBrea Note.......................................S-77
Park LaBrea Property Manager...........................S-79
Participants..........................................S-116
Pass-Through Rate........................S-13, S-104, S-107
Percentage Interest...................................S-105
Permitted Encumbrances.................................S-59
Permitted Investments.................................S-139
permitted non-conforming use...........................S-50
Perry Judd's Credit Tenant Loans.......................S-39
Perry Judd's Credit Tenant Leases......................S-68
Plan...........................................S-120, S-162
plan assets...........................................S-165
PML....................................................S-79
Pool Loan..................................S-24, S-57, S-72
</TABLE>
S-170
<PAGE>
<TABLE>
<S> <C>
Pooling and Servicing Agreement.......................S-131
Preferred Equity Loans.................................S-43
Preferred Interest Holder..............................S-43
Premium..........................................S-49, S-60
Premium Loans..................S-27, S-49, S-60, S-78, S-86
Prepayment Assumptions................................S-122
Prepayment Interest Excess............................S-114
Prepayment Interest Shortfall.........................S-107
Prepayment Premium...............................S-30, S-70
Primary Term...........................................S-65
Prime..................................................S-83
Prime Note.............................................S-82
Prime Rate............................................S-137
Prime Retail ARD.......................................S-83
Prime Retail III Pool Loan.............................S-82
Prime Retail III Pool Maturity Date....................S-83
Prime Retail Mortgages.................................S-82
Prime Retail Pool Borrower.............................S-83
Prime Retail Pool Co-tenant............................S-84
Prime Retail Properties................................S-82
Prime Retail Property Manager..........................S-83
Principal Allocation Fraction.........................S-112
Principal Distribution Amount.........................S-108
Principal Prepayments.................................S-106
Private Certificates.....................Cover, S-14, S-104
Privileged Persons....................................S-158
Proceeds-to-Value Ratio................................S-94
Property Advances.....................................S-136
Prospectus..............................................S-2
Prospectus Supplement...................................S-2
PTCE 95-60............................................S-164
PTE...................................................S-163
PTV........................................S-22, S-61, S-94
Q
qualified mortgage....................................S-134
quasi-anchored.........................................S-36
R
R.V.I. America.........................................S-40
Rated Final Distribution Date...................S-12, S-122
Rating Agencies.......................................S-166
RCRA...................................................S-45
Realized Loss.........................................S-113
Record Date.....................................S-12, S-105
Reference Pass-Through Rate...........................S-113
Regular Certificates..................................S-161
Release Date...........................................S-71
Remaining Lock-out.....................................S-95
REMIC...........................................S-15, S-161
REMIC Regulations.....................................S-161
rents from real property........................S-44, S-148
REO Account...........................................S-104
REO Mortgage Loan.....................................S-109
REO Property..........................................S-104
Repurchase Price......................................S-134
Reserve Accounts.......................................S-58
Restricted Group......................................S-164
Retail Loan............................................S-57
Retail Property........................................S-57
Return of Premium Amount.........................S-49, S-60
Revised Rate...........................................S-69
Riklis...........................................S-52, S-86
Rules.................................................S-117
RVI Policies...........................................S-40
S
S&P.............................................S-40, S-166
SEC..............................................S-3, S-131
Securities Act...................................S-3, S-163
SEL.....................................................S-3
Senior Offered Certificates...........................S-163
Sequential Certificates...................S-14, S-18, S-104
Servicer........................................S-10, S-152
Servicer Remittance Date..............................S-136
Servicer's Appraisal Estimate.........................S-115
Servicing Compensation................................S-153
Servicing Fee.........................................S-153
Servicing Fee Rate....................................S-153
Servicing Standard....................................S-135
Similar Law...........................................S-162
Simon Group............................................S-80
SMMEA..................................................S-16
Source Closing Date....................................S-80
Source Retail Borrower.................................S-80
Source Retail Loan.....................................S-80
Source Retail Maturity Date............................S-80
Source Retail Property.................................S-80
Source Retail Property Manager.........................S-81
Special Note...........................................S-69
Special Servicer................................S-10, S-153
Special Servicing Fee.................................S-154
Special Servicing Fee Rate............................S-154
Specially Serviced Mortgage Loan...............S-140, S-154
Springfield Borrower...................................S-86
Springfield Mall ARD...................................S-86
Springfield Mall Borrower..............................S-86
Springfield Mall Closing Date..........................S-85
Springfield Mall GP....................................S-86
Springfield Mall Loan..................................S-85
Springfield Mall Maturity Date.........................S-86
Springfield Mall Note..................................S-85
Springfield Mall Property Manager......................S-86
Springfield Mall Retail Property.......................S-85
START...........................................S-11, S-131
Starwood...............................................S-78
Stated Principal Balance..............................S-114
Subordinate Sequential Certificates....................S-18
Subordinated Offered Certificates.....................S-165
</TABLE>
S-171
<PAGE>
<TABLE>
<S> <C>
T
Tenant.................................................S-95
Terms and Conditions..................................S-118
Total Atlanta Marriott Hotel Loan......................S-88
Total Credit Tenant Loan...............................S-64
Total Park LaBrea Loan.................................S-77
Total Pari Passu Loans...........................S-21, S-27
Total Prime Retail III Pool Loan.......................S-82
Total Springfield Mall Loan............................S-85
Treasury Regulations..................................S-161
Trust Fund......................................Cover, S-57
Trust REMICs..........................................S-161
Trustee.........................................S-10, S-152
Trustee Fee...........................................S-151
TTM....................................................S-94
Type...................................................S-95
U
U/W Occupancy..........................................S-95
unanchored.............................................S-36
Underwriters.............................Cover, S-10, S-166
Underwritten NOI.......................................S-93
Underwritten Occupancy.................................S-95
Underwritten On-going Capital Reserves.................S-96
Units..................................................S-95
Unscheduled Payments..................................S-106
Updated Appraisal.....................................S-146
Upper-Tier Distribution Account.......................S-138
Upper-Tier REMIC................................S-15, S-161
V
Value..................................................S-95
Value City Credit Tenant Lease.........................S-63
Value City Credit Tenant Loan..........................S-39
Voting Rights.........................................S-146
W
Weighted Average Net Mortgage
Pass-Through Rate...................................S-108
Weighted Average Pass-Through Rate....................S-107
Work Out Fee..........................................S-155
Work Out Fee Rate.....................................S-155
World Wide.............................................S-86
World Wide Loan........................................S-86
World Wide Maturity Date...............................S-86
Y
Year Built/Renovated...................................S-95
</TABLE>
S-172
<PAGE>
[This page intentionally left blank]
<PAGE>
<TABLE>
<CAPTION>
Annex A: Characteristics of the Notes in the Pool
Loan Loan Cut-off Date Principal Monthly
# Loan Name Type Balance Payment
- --------- ---- ------- -------
<S> <C> <C> <C> <C>
1 DDR/DRA JV Balloon $156,000,000 $ 863,200.00
2 Park LaBrea Hyper $140,613,989 (1) ** $1,050,047.16
3 The Source Balloon $124,000,000 $ 687,166.67
4 Prime Retail III Hyper $ 81,565,300 ** $ 624,101.85
4 Prime Retail III Hyper $ 16,313,060 ** $ 124,820.37
5 Springfield Mall Hyper $ 90,394,069 ** $ 699,186.13
6 Atlanta Marriott Hyper $ 80,770,298 $ 600,649.08
7 Iowa Malls Hyper $ 65,875,608 $ 502,605.33
8 Laurel Mall Hyper $ 53,588,156 ** $ 415,495.63
9 Baldwin Complex Hyper $ 48,875,113 ** $ 366,801.13
10 Accor-M-Six Penvest I Balloon $ 40,320,671 $ 236,211.93
11 Best of the West Shopping Cntr Hyper $ 40,142,266 $ 319,560.76
12 Hunter's Square Hyper $ 39,854,911 ** $ 305,108.26
13 Point Plaza Hyper $ 39,268,946 ** $ 304,471.67
14 East Bank Club Hyper $ 36,492,811 ** $ 296,287.24
15 Showplace Hyper $ 36,468,858 ** $ 281,208.12
16 Stephanie Street Hyper $ 32,653,816 $ 243,293.54
17 Winchester Center Hyper $ 30,738,896 ** $ 234,661.81
18 Airport Plaza Hyper $ 30,406,423 $ 201,092.77
19 Airport Industrial Hyper $ 30,343,508 $ 206,421.87
20 Lakeshore Athletic Club Hyper $ 29,822,676 $ 218,975.77
21 Renaissance Center Hyper $ 28,906,669 ** $ 223,123.56
22 Santa Monica Business Park Hyper $ 25,862,212 $ 164,508.71
23 Brewery Park II Hyper $ 25,775,402 $ 185,585.05
24 Robertson Plaza Hyper $ 25,003,107 $ 168,680.02
25 Olympic Plaza Office Building Hyper $ 24,281,498 $ 170,709.81
26 125 County Line Rd. Hyper $ 22,588,653 ** $ 174,447.46
27 Castlepark Hyper $ 20,917,181 $ 139,713.52
28 Two Century Center Hyper $ 20,411,849 $ 147,847.15
29 609 H Street Hyper $ 17,938,302 $ 127,050.72
29 609 H Street Fully $ 1,997,339 $ 25,774.23
30 Cobb Theatre/Main St. Plaza Hyper $ 17,737,830 $ 127,591.64
31 Peru Mall Hyper $ 17,730,768 $ 130,419.61
32 UCLA Medical Office. Hyper $ 17,500,921 $ 116,617.28
33 Dictaphone Corporation Balloon $ 15,275,478 $ 120,741.67
34 Wild Basin Office Hyper $ 13,444,814 ** $ 104,174.00
35 Princess City Plaza Hyper $ 12,590,791 $ 91,335.65
36 Westside South Shopping Center Hyper $ 12,303,485 ** $ 95,065.91
37 Highpoint Hyper $ 12,043,639 ** $ 99,507.00
38 Oak Brook Business Center/CLTV Hyper $ 11,948,399 $ 86,544.68
39 Soho Grand Hotel Hyper $ 11,940,271 ** $ 96,694.49
40 Highlands I Hyper $ 11,858,641 $ 91,802.28
41 Bentley Mills Distribution Facility Balloon $ 11,685,718 $ 76,736.22
42 Morgantown Mall and Commons Hyper $ 11,612,826 $ 76,780.59
43 Perry Judd's - Strasburg Fully $ 11,582,366 $ 85,806.33
44 Lorretto/Playhouse Hyper $ 6,828,136 ** $ 52,651.15
44 Lorretto/Playhouse Hyper $ 4,643,132 ** $ 35,802.78
45 Centerpark One Office Building Hyper $ 11,248,709 ** $ 83,797.00
46 Petersilie Portfolio Hyper $ 11,070,193 $ 79,732.96
47 Angel Park Apt Hyper $ 10,828,449 ** $ 79,895.25
48 Perry Judd's - Pikesville Fully $ 10,768,722 $ 79,778.60
49 Dearborn Atrium Hyper $ 10,461,537 $ 80,142.66
50 South Park & Pierre Malls Hyper $ 10,141,269 $ 74,449.11
51 Sterling Inn & Sterling Commons Hyper $ 10,023,747 $ 75,362.26
52 Western Marquette Hyper $ 9,319,356 ** $ 71,905.99
53 Holiday Inn Shoreline-Corpus Hyper $ 9,145,155 $ 65,493.95
54 Spring Properties, Inc. Hyper $ 9,045,840 ** $ 69,158.80
55 Plaza Palm Center Hyper $ 8,942,665 $ 63,195.33
56 City Plaza Hyper $ 8,884,560 ** $ 68,675.94
57 400 - 450 Country Club Drive Hyper $ 8,564,742 ** $ 64,635.32
58 Dunkirk Market Center Hyper $ 7,698,157 ** $ 59,542.90
59 Swan Park Apts. Balloon $ 7,675,338 $ 56,231.71
60 Value City - Irvington Fully $ 7,650,951 $ 60,437.50
61 Green Bay Plaza Hyper $ 7,477,333 $ 52,184.54
62 Sea Cliff Office Park Hyper $ 7,397,077 ** $ 56,081.23
63 Sheffield Square Hyper $ 7,392,796 ** $ 57,041.11
64 Woodmill Apartments Hyper $ 7,295,906 ** $ 53,704.86
65 Mall and Starview Gardens Hyper $ 7,251,308 $ 49,452.74
66 Park Shelton Apartments Hyper $ 7,100,000 (2) $ 45,938.14
67 Liberty Park Center Hyper $ 7,065,211 ** $ 53,337.22
68 Santa Monica Medical Plaza Hyper $ 6,958,836 $ 47,278.47
69 Lumber Exchange Hyper $ 6,943,833 ** $ 53,577.01
70 Horizon Corporate Office Building Hyper $ 6,887,779 ** $ 53,241.21
71 Willowlake Center Hyper $ 6,847,104 ** $ 52,120.56
72 Washington Square Plaza Hyper $ 6,729,969 $ 45,319.27
<CAPTION>
Balloon/Anticipated Anticipated
Loan Repayment Date Repayment Maturity
# Balance Date Date Rate
- ------- ---- ---- ----
<S> <C> <C> <C> <C>
1 $156,000,000 11-Oct-05 11-Oct-05 6.640%*
2 $113,401,002 11-Mar-13 11-Mar-28 8.000%*
3 $124,000,000 11-Mar-09 11-Mar-09 6.650%*
4 $ 73,982,703 11-Jul-08 11-Jul-28 8.400%*
4 $ 14,796,541 11-Jul-08 11-Jul-28 8.400%*
5 $ 74,247,772 11-Apr-13 11-Apr-28 8.500%*
6 $ 61,585,234 11-Feb-10 11-Feb-23 7.400%*
7 $ 59,550,185 11-Jan-09 11-Jan-29 8.400%*
8 $ 44,095,547 11-Dec-12 11-Dec-27 8.500%*
9 $ 39,589,919 11-Jul-13 11-Jul-28 8.190%*
10 $ 10,102,684 1-May-18 1-May-18 7.030%
11 $ 33,369,431 11-Jan-13 11-Jan-28 8.798%*
12 $ 32,544,148 11-Aug-13 11-Aug-28 8.410%*
13 $ 32,312,844 11-Dec-12 11-Dec-27 8.500%*
14 $ 25,154,186 11-Jun-13 11-Jun-23 8.500%*
15 $ 29,922,631 11-Sep-13 11-Sep-28 8.500%*
16 $ 26,106,114 11-Mar-13 11-Oct-27 8.050%*
17 $ 25,045,400 11-Jul-13 11-Jul-28 8.370%*
18 $ 21,608,758 11-Dec-13 11-Dec-26 6.690%*
19 $ 26,287,816 11-Sep-08 11-Sep-27 7.070%*
20 $ 22,788,494 11-Nov-08 11-Nov-21 7.000%*
21 $ 23,689,433 11-Aug-13 11-Aug-28 8.500%*
22 $ 19,442,442 11-Sep-13 11-Sep-28 6.510%*
23 $ 22,980,913 11-Dec-08 11-Nov-28 7.780%*
24 $ 19,292,758 11-Oct-13 11-Oct-28 7.100%*
25 $ 19,490,970 11-Feb-09 11-Apr-24 6.950%*
26 $ 17,804,757 11-Dec-13 11-Aug-27 8.420%*
27 $ 18,316,947 11-Oct-08 11-Oct-28 7.000%*
28 $ 16,940,432 11-Nov-08 11-Nov-24 7.375%*
29 $ 13,362,021 11-Jan-14 11-May-27 7.450%*
29 $ 17,685 11-Jan-08 11-Jan-08 7.450%*
30 $ 13,090,661 11-Jan-13 11-Oct-25 7.440%*
31 $ 15,808,780 11-Jan-09 11-Sep-28 7.980%*
32 $ 14,175,290 11-Jan-09 11-Feb-25 6.520%*
33 $ 3,483,925 1-May-18 1-May-18 8.450%
34 $ 11,007,880 11-Mar-13 11-Mar-28 8.500%*
35 $ 5,315,704 11-Jan-14 11-Oc0-28 7.790%*
36 $ 10,027,840 11-Sep-13 11-Jun-28 8.500%*
37 $ 10,173,589 11-Jun-13 11-Jun-28 9.253%*
38 $ 9,916,349 11-Nov-08 11-Nov-24 7.375%*
39 $ 10,038,665 11-Sep-08 11-Sep-23 8.500%*
40 $ 9,773,332 11-Jun-12 11-Jun-27 8.445%*
41 $ 4,476,311 11-Mar-15 11-Mar-15 7.880%
42 $ 10,148,043 11-Sep-08 11-Sep-28 6.890%*
43 $ - 11-Aug-18 11-Aug-18 8.295%
44 $ 6,196,521 11-Oct-08 11-Oct-28 8.500%*
44 $ 4,213,634 11-Oct-08 11-Oct-28 8.500%*
45 $ 9,070,065 11-Sep-13 11-Sep-28 8.120%*
46 $ 6,987,531 11-Dec-13 11-Sep-23 7.130%*
47 $ 8,644,595 11-Sep-13 11-Jun-28 8.000%*
48 $ - 11-Aug-18 11-Aug-18 8.295%
49 $ 9,467,631 11-Dec-07 11-Sep-27 8.330%*
50 $ 201,716 11-Oct-13 11-Oct-23 7.250%*
51 $ 6,499,658 11-Nov-13 11-Aug-23 7.610%*
52 $ 8,461,217 11-Sep-08 11-Sep-28 8.500%*
53 $ 7,315,304 11-Jan-09 11-Oct-23 7.080%*
54 $ 7,377,304 11-Sep-13 11-Sep-28 8.400%*
55 $ 7,395,703 11-Nov-08 11-Jan-25 7.130%*
56 $ 7,312,314 11-Apr-13 11-May-28 8.500%*
57 $ 6,954,565 11-Jul-13 11-Jul-28 8.250%*
58 $ 5,491,832 11-Nov-13 11-Jan-25 8.150%*
59 $ 6,143,079 11-Oct-13 11-Oct-13 7.950%*
60 $ - 11-Oct-18 11-Oct-18 7.300%
61 $ 6,596,494 11-Jan-09 11-Nov-28 7.450%*
62 $ 6,659,686 11-Dec-08 11-Sep-28 8.309%*
63 $ 6,012,044 11-Dec-13 11-Sep-28 8.500%*
64 $ 6,527,998 11-Dec-08 11-Oct-28 8.000%*
65 $ 5,586,787 11-Sep-13 11-Jun-28 7.180%*
66 $ 6,227,896 11-Oct-08 11-Oct-28 6.500%*
67 $ 6,380,700 11-Sep-08 11-Sep-28 8.263%*
68 $ 5,351,163 11-Oct-13 11-Jul-28 7.150%*
69 $ 6,304,435 11-Sep-08 11-Sep-28 8.500%*
70 $ 5,618,669 11-Aug-13 11-May-28 8.500%*
71 $ 5,510,487 11-Dec-13 11-Sep-28 8.340%*
72 $ 5,675,746 11-Feb-09 11-Dec-26 6.875%*
</TABLE>
Annex A-1
<PAGE>
<TABLE>
<CAPTION>
Annex A: Characteristics of the Notes in the Pool
Anticipated
Loan Non-Level Additional Remaining
# Loan Name Amort. Amort. Amort. Seasoning Term
- --------- ----- ----- ------ --------- ----
<S> <C> <C> <C> <C> <C> <C>
1 DDR/DRA JV 0 5 79
2 Park LaBrea 360 13 168
3 The Source 0 4 120
4 Prime Retail III 360 8 112
4 Prime Retail III 360 8 112
5 Springfield Mall 360 11 169
6 Atlanta Marriott 300 13 131
7 Iowa Malls 360 2 118
8 Laurel Mall 360 15 165
9 Baldwin Complex 360 8 172
10 Accor-M-Six Penvest I 264 Yes 10 230
11 Best of the West Shopping Cntr 350 3 166
12 Hunter's Square 360 7 173
13 Point Plaza 360 15 165
14 East Bank Club 300 9 171
15 Showplace 360 6 174
16 Stephanie Street 360 17 168
17 Winchester Center 360 8 172
18 Airport Plaza 336 3 177
19 Airport Industrial 348 6 114
20 Lakeshore Athletic Club 276 4 116
21 Renaissance Center 360 7 173
22 Santa Monica Business Park 360 6 174
23 Brewery Park II 360 3 117
24 Robertson Plaza 360 5 175
25 Olympic Plaza Office Building 305 4 119
26 125 County Line Rd. 347 6 177
27 Castlepark 360 5 115
28 Two Century Center 312 4 116
29 609 H Street 342 4 178
29 609 H Street 110 4 106
30 Cobb Theatre/Main St. Plaza 336 17 166
31 Peru Mall 356 2 118
32 UCLA Medical Office. 316 5 118
33 Dictaphone Corporation 291 Yes 9 230
34 Wild Basin Office 358 12 168
35 Princess City Plaza 360 240 5 178
36 Westside South Shopping Center 360 9 174
37 Highpoint 360 9 171
38 Oak Brook Business Center/CLTV 312 4 116
39 Soho Grand Hotel 300 6 114
40 Highlands I 360 21 159
41 Bentley Mills Distribution Facility 235 Yes 11 192
42 Morgantown Mall and Commons 360 6 114
43 Perry Judd's - Strasburg 239 Yes 6 233
44 Lorretto/Playhouse 360 5 115
44 Lorretto/Playhouse 360 5 115
45 Centerpark One Office Building 360 6 174
46 Petersilie Portfolio 300 6 177
47 Angel Park Apt 360 9 174
48 Perry Judd's - Pikesville 239 Yes 6 233
49 Dearborn Atrium 349 8 105
50 South Park & Pierre Malls 300 180 5 175
51 Sterling Inn & Sterling Commons 300 7 176
52 Western Marquette 360 6 114
53 Holiday Inn Shoreline-Corpus 300 5 118
54 Spring Properties, Inc. 360 6 174
55 Plaza Palm Center 316 6 116
56 City Plaza 360 10 169
57 400 - 450 Country Club Drive 360 8 172
58 Dunkirk Market Center 317 7 176
59 Swan Park Apts. 360 5 175
60 Value City - Irvington 240 Yes 5 235
61 Green Bay Plaza 360 4 118
62 Sea Cliff Office Park 360 6 117
63 Sheffield Square 360 6 177
64 Woodmill Apartments 360 5 117
65 Mall and Starview Gardens 360 9 174
66 Park Shelton Apartments 360 5 115
67 Liberty Park Center 360 6 114
68 Santa Monica Medical Plaza 360 8 175
69 Lumber Exchange 360 6 114
70 Horizon Corporate Office Building 360 10 173
71 Willowlake Center 358 6 177
72 Washington Square Plaza 336 3 119
<CAPTION>
Balloon/
Anticipated
Loan Remaining Cut-off Date Repayment
# Lockout DSCR LTV Date LTV
- ------- ---- --- -----------
<S> <C> <C> <C> <C>
1 75 2.00 64.3% 64.3%
2 161 1.33 68.6% 55.3%
3 119 1.74 69.7% 69.7%
4 108 1.54 57.1% 51.8%
4 108 1.54 57.1% 51.8%
5 168 1.20 74.4% 61.1%
6 130 1.77 56.1% 42.8%
7 117 1.28 77.8% 70.3%
8 161 1.27 68.6% 56.5%
9 171 1.27 70.8% 57.4%
10 226 1.00 96.9% 19.8%
11 165 1.21 69.6% 57.8%
12 169 1.21 72.5% 59.2%
13 161 1.21 72.1% 59.3%
14 170 2.43 49.3% 34.0%
15 173 1.29 63.4% 52.0%
16 167 1.48 65.3% 52.2%
17 168 1.27 72.3% 58.9%
18 176 1.40 64.8% 46.1%
19 113 1.35 79.0% 66.5%
20 112 1.66 66.3% 50.6%
21 169 1.18 70.3% 57.6%
22 173 3.70 90.4% 68.0%
23 116 1.29 77.8% 69.3%
24 174 1.37 62.5% 48.2%
25 115 1.22 65.1% 52.3%
26 170 1.21 66.7% 52.6%
27 114 1.17 74.7% 65.4%
28 115 1.39 60.0% 49.8%
29 175 1.32 73.6% 49.4%
29 103 1.47 73.6% 49.4%
30 159 1.35 66.1% 48.8%
31 117 1.38 67.7% 60.3%
32 115 1.25 77.8% 63.0%
33 229 1.00 109.1% 24.9%
34 164 1.26 66.7% 54.6%
35 171 1.37 69.9% 29.5%
36 167 1.30 70.3% 57.3%
37 170 1.28 66.9% 56.5%
38 115 1.31 62.6% 51.9%
39 113 1.86 51.5% 43.3%
40 152 1.21 80.7% 66.5%
41 191 1.00 97.5% 29.3%
42 113 1.39 79.5% 69.5%
43 232 1.00 96.5% 0.0%
44 114 1.23 72.1% 65.5%
44 114 1.23 72.1% 65.5%
45 173 1.27 69.4% 56.0%
46 170 1.43 74.3% 46.9%
47 167 1.25 80.2% 64.0%
48 232 1.00 99.7% 0.0%
49 98 1.27 68.4% 61.9%
50 174 1.36 71.4% 1.4%
51 169 1.72 71.6% 46.4%
52 113 1.46 70.6% 64.1%
53 111 1.58 54.3% 43.4%
54 173 1.42 60.4% 49.3%
55 109 1.19 79.8% 66.0%
56 168 1.20 72.8% 59.9%
57 171 1.32 64.4% 52.3%
58 169 1.26 69.4% 49.5%
59 172 1.29 80.0% 64.0%
60 234 1.00 98.1% 0.0%
61 115 1.43 79.5% 70.2%
62 110 1.26 55.2% 49.7%
63 173 1.41 62.1% 50.5%
64 114 1.25 74.1% 66.3%
65 167 1.69 66.5% 51.3%
66 111 1.39 80.7% 70.8%
67 107 1.35 67.9% 61.4%
68 168 2.30 47.7% 36.7%
69 113 1.22 59.9% 54.3%
70 166 1.20 68.2% 55.6%
71 170 1.21 72.5% 58.3%
72 112 1.35 76.0% 64.1%
</TABLE>
Annex A-2
<PAGE>
<TABLE>
<CAPTION>
Annex A: Characteristics of the Notes in the Pool
Loan Loan Cut-off Date Principal Monthly
# Loan Name Type Balance Payment
- --------- ---- ------- -------
<S> <C> <C> <C> <C>
73 Hawaiian Garden Center Hyper $ 6,671,845 $ 43,233.62
74 Shorebird Apartments Hyper $ 6,652,570 $ 44,193.45
75 College View Towers & Apts. Hyper $ 6,641,748 ** $ 49,063.56
76 One Congressional Place Hyper $ 6,595,293 ** $ 49,534.47
77 Windridge Apartments Hyper $ 6,422,896 $ 41,620.43
78 Flatbush Building Hyper $ 6,371,725 $ 40,284.14
79 Fairbanks Village Plaza Hyper $ 6,287,121 ** $ 48,547.69
80 Eagle Ridge Townhomes Hyper $ 6,181,996 $ 43,989.89
81 Red Oak Hyper $ 6,076,097 $ 40,706.43
82 Beechwood Apts.and The Oaks Apts. Hyper $ 5,970,915 $ 40,740.86
83 510 at Metropark Hyper $ 5,650,202 $ 38,401.49
84 Green Oaks Park Hotel Hyper $ 5,563,007 $ 41,785.02
85 Dillen Products Hyper $ 5,548,082 $ 40,296.97
86 Lincoln Office Hyper $ 5,167,980 ** $ 39,947.50
87 Hamtramck Town Center Hyper $ 5,160,179 $ 34,491.02
88 Pine Tree Plaza Hyper $ 5,064,079 $ 40,582.75
89 Ponderosa Shopping Center Hyper $ 5,051,512 $ 36,045.74
90 Crabtree Fairfield Inn Hyper $ 5,046,569 $ 40,247.16
91 Eagle View Apartments Hyper $ 4,980,155 $ 33,164.45
92 Hampton Inn and Suites Hyper $ 4,957,060 $ 41,201.80
93 Oaks of Flagridge Apartments Hyper $ 4,951,325 $ 32,248.30
94 Victory Center Hyper $ 4,846,614 ** $ 37,473.57
95 Millers Outpost Village Hyper $ 4,732,094 $ 37,429.56
96 Dove Building Hyper $ 4,667,601 $ 32,606.00
97 Pleasant Valley Marketplace Hyper $ 4,640,202 $ 34,214.54
98 Plumtree Apartments Hyper $ 4,639,237 ** $ 34,173.01
99 Back Bay Center Hyper $ 4,630,212 $ 29,820.59
100 Lexington Plaza SC Hyper $ 4,560,470 $ 31,054.56
101 Foundry Wharf Business Park Hyper $ 4,519,094 $ 33,600.81
102 Circuit City-Harper Woods Balloon $ 4,490,947 $ 28,592.36
103 Pear Tree Place Hyper $ 4,442,998 ** $ 34,288.26
104 1000 South Avenue Hyper $ 3,429,852 $ 23,371.50
104 1000 South Avenue Balloon $ 964,461 $ 10,409.58
105 First Hill Apartments Hyper $ 4,351,943 $ 28,430.94
106 Site 5 Hyper $ 4,302,721 ** $ 33,211.65
107 Derby Run Hyper $ 4,292,988 $ 30,734.69
108 Watterson City Hyper $ 4,264,714 $ 32,202.73
109 Rivers Bend S/C Hyper $ 4,209,593 $ 30,038.12
110 Country Lane Corporation Hyper $ 4,179,466 $ 27,661.20
111 Amsterdam Gardens Apts. Hyper $ 4,177,720 $ 28,253.67
112 Hampton Inn-Chesterfield Hyper $ 4,127,476 ** $ 36,308.06
113 College Plaza South Hyper $ 4,036,932 $ 27,271.93
114 Riviera Mobile Home Park Hyper $ 3,983,191 $ 25,811.12
115 Circle Plaza Hyper $ 3,929,046 $ 26,571.90
116 Crenshaw Plaza Hyper $ 3,926,572 $ 31,805.76
117 Crossroads Shopping Center Hyper $ 3,809,261 $ 24,936.14
118 Embassy Plaza Hyper $ 3,789,082 ** $ 30,714.15
119 Loews Centerpark Theatre Hyper $ 3,781,591 $ 25,793.65
120 Days Inn-Oceanside Hyper $ 3,749,340 $ 27,749.75
121 Circuit City-East Lansing Balloon $ 3,742,455 $ 23,826.96
122 Circuit City-Frederick Balloon $ 3,742,455 $ 23,826.96
123 Circuit City-Green Bay Balloon $ 3,742,455 $ 23,826.96
124 Cathedral Village Hyper $ 3,738,207 $ 25,581.61
125 222-228 West 125th St. Hyper $ 3,734,242 $ 24,197.92
126 Medi-Park Hyper $ 3,688,061 $ 24,915.10
127 650 Academy Hyper $ 3,654,787 $ 27,174.43
128 Archway 60 Hyper $ 3,580,576 $ 25,074.62
129 List Industries Hyper $ 3,483,254 $ 25,298.24
130 Hollinswood Shopping Center Hyper $ 3,482,284 $ 24,042.57
131 Casitas MHP Balloon $ 3,475,401 $ 25,275.70
132 Best Western-Cooperstown Hyper $ 3,465,641 $ 25,933.03
133 Countryside SC Hyper $ 3,429,672 $ 25,456.30
134 Heritage Medical Office Hyper $ 3,394,752 ** $ 26,250.10
135 Glade Points Shopping Center Hyper $ 3,389,308 $ 23,193.99
136 Centreville Plaza Hyper $ 3,324,928 ** $ 26,576.39
137 Stonybrook S/C Hyper $ 3,312,229 $ 21,984.00
138 Baton Rouge Multi Family Portfolio Hyper $ 3,285,116 $ 20,555.34
139 State Road Plaza Hyper $ 3,258,985 ** $ 25,181.46
140 Streator Industrial Facility Hyper $ 3,214,271 $ 23,701.01
141 Best Western Rancho Cucamongo Hyper $ 3,207,243 $ 26,103.10
142 University Place Ctr. Hyper $ 3,187,109 $ 21,075.20
143 Franklin Beck Office Hyper $ 3,182,836 $ 21,418.78
144 SL-Larchmont Hyper $ 3,182,276 $ 22,298.80
145 HK Market Hyper $ 3,182,210 $ 21,909.78
146 Whitman Villa Hyper $ 3,106,961 $ 21,275.63
<CAPTION>
Balloon/Anticipated Anticipated
Loan Repayment Date Repayment Maturity
# Balance Date Date Rate
- ------- ---- ---- -----
<S> <C> <C> <C> <C>
73 $ 5,012,750 11-Jan-14 11-Oct-28 6.700%*
74 $ 5,064,716 11-Sep-13 11-Jun-28 6.915%*
75 $ 5,307,894 11-Jul-13 11-Apr-28 8.000%*
76 $ 5,923,378 11-Dec-08 11-Sep-28 8.207%*
77 $ 4,839,405 11-Dec-13 11-Oct-28 6.700%*
78 $ 5,480,213 11-Dec-08 11-Oct-28 6.460%*
79 $ 5,122,872 11-Oct-13 11-Jul-28 8.500%*
80 $ 5,481,015 11-Jan-09 11-Nov-28 7.650%*
81 $ 5,324,866 11-Oct-08 11-Oct-28 7.030%*
82 $ 4,604,451 11-Jul-13 11-Apr-28 7.170%*
83 $ 4,342,681 11-Nov-13 11-Aug-28 7.160%*
84 $ 4,563,520 11-Sep-08 11-Sep-23 7.610%*
85 $ 63,619 11-Jan-19 11-Oct-23 7.200%*
86 $ 4,215,750 11-Aug-13 11-May-28 8.500%*
87 $ 3,942,197 11-Aug-13 11-May-28 6.970%*
88 $ 4,621,950 11-Dec-08 11-Sep-28 8.920%*
89 $ 2,054,044 11-Dec-13 11-Oct-23 7.000%*
90 $ 3,642,376 11-Jan-09 11-Nov-19 7.550%*
91 $ 4,342,799 11-Dec-08 11-Oct-28 6.970%*
92 $ 2,121,112 11-Dec-13 11-Oct-18 7.800%*
93 $ 4,285,143 11-Jan-09 11-Oct-28 6.750%*
94 $ 3,745,830 11-Oct-13 11-Nov-26 8.360%*
95 $ 3,168,344 11-Apr-13 11-Jan-23 8.120%*
96 $ 3,637,914 11-Aug-13 11-May-28 7.420%*
97 $ 59,397 11-Nov-18 11-Aug-23 7.330%*
98 $ 4,146,727 11-Dec-08 11-Sep-28 8.000%*
99 $ 3,995,184 11-Jan-09 11-Oct-28 6.640%*
100 $ 3,997,651 11-Jan-09 11-Nov-28 7.200%*
101 $ 2,915,827 11-Jul-13 11-Apr-23 7.430%*
102 $ 2,163,059 11-Jun-20 11-Jun-20 7.640%
103 $ 3,510,539 11-Dec-13 11-Oct-28 8.420%*
104 $ 2,641,019 11-Oct-13 11-Jul-28 7.180%*
104 $ 17,260 11-Oct-13 11-Oct-13 7.180%*
105 $ 3,769,478 11-Jan-09 11-Oct-28 6.780%*
106 $ 3,526,143 11-Aug-13 11-Aug-28 8.500%*
107 $ 2,702,734 11-Nov-13 11-Aug-23 7.050%*
108 $ 1,200,114 11-Sep-13 11-Jun-23 7.520%*
109 $ 1,711,706 11-Dec-13 11-Oct-23 7.000%*
110 $ 3,170,890 11-Dec-13 11-Sep-28 6.900%*
111 $ 3,229,953 11-Aug-13 11-Aug-28 7.110%*
112 $ 2,945,844 11-Sep-13 11-Jun-23 9.500%*
113 $ 3,543,218 11-Nov-08 11-Nov-28 7.120%*
114 $ 3,442,566 11-Jan-09 11-Oct-28 6.700%*
115 $ 3,013,025 11-Nov-13 11-Aug-28 7.110%*
116 $ 3,084,705 11-Nov-09 11-Aug-22 8.350%*
117 $ 3,306,792 11-Dec-08 11-Oct-28 6.800%*
118 $ 2,694,002 11-Sep-13 11-Apr-24 8.600%*
119 $ 1,507,356 11-Sep-13 11-Jul-17 7.150%*
120 $ 2,405,714 11-Dec-13 11-Sep-23 7.440%*
121 $ 1,802,547 11-Jun-20 11-Jun-20 7.640%
122 $ 1,802,547 11-Jun-20 11-Jun-20 7.640%
123 $ 1,802,547 11-Jun-20 11-Jun-20 7.640%
124 $ 3,275,996 11-Feb-09 11-Nov-28 7.250%*
125 $ 2,805,644 11-Jan-14 11-Oct-28 6.700%*
126 $ 3,237,013 11-Nov-08 11-Nov-28 7.120%*
127 $ 2,974,436 11-Jul-08 11-Apr-23 7.430%*
128 $ 2,959,258 11-Oct-08 11-Jan-25 7.030%*
129 $ 2,805,342 11-Jan-09 11-Nov-23 7.250%*
130 $ 2,695,668 11-Nov-13 11-Aug-28 7.320%*
131 $ 2,820,577 11-Sep-08 11-Sep-08 7.240%*
132 $ 2,242,957 11-Sep-13 11-Jun-23 7.530%*
133 $ 1,421,040 11-Jul-13 11-Apr-23 7.320%*
134 $ 2,734,536 11-Oct-13 11-Feb-28 8.480%*
135 $ 2,970,237 11-Feb-09 11-Nov-28 7.250%*
136 $ 2,341,097 11-Nov-13 11-May-24 8.450%*
137 $ 2,269,360 11-Dec-13 11-Jan-26 6.610%*
138 $ 2,812,481 11-Jan-09 11-Oct-28 6.360%*
139 $ 2,613,689 11-Oct-13 11-Jul-28 8.460%*
140 $ 1,320,737 11-Dec-13 11-Sep-23 7.350%*
141 $ 1,332,391 11-Sep-13 11-Jun-18 7.420%*
142 $ 2,774,091 11-Dec-08 11-Oct-28 6.900%*
143 $ 2,455,350 11-Aug-13 11-Aug-28 7.060%*
144 $ 2,615,492 11-Oct-08 11-Oct-24 7.000%*
145 $ 2,603,985 11-Dec-08 11-Jan-25 6.850%*
146 $ 2,397,748 11-Oct-13 11-Jul-28 7.230%*
</TABLE>
Annex A-3
<PAGE>
<TABLE>
<CAPTION>
Annex A: Characteristics of the Notes in the Pool
Anticipated
Loan Non-Level Additional Remaining
# Loan Name Amort. Amort. Amort. Seasoning Term
- --------- ------ ------ ------ --------- ----
<S> <C> <C> <C> <C> <C> <C>
73 Hawaiian Garden Center 360 5 178
74 Shorebird Apartments 360 9 174
75 College View Towers & Apts. 360 11 172
76 One Congressional Place 360 6 117
77 Windridge Apartments 360 5 177
78 Flatbush Building 360 5 117
79 Fairbanks Village Plaza 360 8 175
80 Eagle Ridge Townhomes 360 4 118
81 Red Oak 360 5 115
82 Beechwood Apts.and The Oaks Apts. 360 11 172
83 510 at Metropark 360 7 176
84 Green Oaks Park Hotel 300 6 114
85 Dillen Products 300 240 5 238
86 Lincoln Office 360 10 173
87 Hamtramck Town Center 360 10 173
88 Pine Tree Plaza 360 6 117
89 Ponderosa Shopping Center 300 240 5 177
90 Crabtree Fairfield Inn 252 4 118
91 Eagle View Apartments 360 5 117
92 Hampton Inn and Suites 240 5 177
93 Oaks of Flagridge Apartments 360 5 118
94 Victory Center 340 8 175
95 Millers Outpost Village 300 14 169
96 Dove Building 360 10 173
97 Pleasant Valley Marketplace 300 240 7 236
98 Plumtree Apartments 360 6 117
99 Back Bay Center 360 5 118
100 Lexington Plaza SC 360 4 118
101 Foundry Wharf Business Park 300 11 172
102 Circuit City-Harper Woods 333 9 255
103 Pear Tree Place 348 5 177
104 1000 South Avenue 360 8 175
104 1000 South Avenue 191 Yes 8 175
105 First Hill Apartments 360 5 118
106 Site 5 360 7 173
107 Derby Run 300 7 176
108 Watterson City 300 216 9 174
109 Rivers Bend S/C 300 240 5 177
110 Country Lane Corporation 360 6 177
111 Amsterdam Gardens Apts. 360 7 173
112 Hampton Inn-Chesterfield 300 9 174
113 College Plaza South 360 4 116
114 Riviera Mobile Home Park 360 5 118
115 Circle Plaza 360 7 176
116 Crenshaw Plaza 300 19 128
117 Crossroads Shopping Center 360 5 117
118 Embassy Plaza 310 9 174
119 Loews Centerpark Theatre 226 Yes 6 174
120 Days Inn-Oceanside 300 6 177
121 Circuit City-East Lansing 333 9 255
122 Circuit City-Frederick 333 9 255
123 Circuit City-Green Bay 333 9 255
124 Cathedral Village 360 4 119
125 222-228 West 125th St. 360 5 178
126 Medi-Park 360 4 116
127 650 Academy 300 11 112
128 Archway 60 315 5 115
129 List Industries 300 4 118
130 Hollinswood Shopping Center 360 7 176
131 Casitas MHP 300 6 114
132 Best Western-Cooperstown 300 9 174
133 Countryside SC 300 240 11 172
134 Heritage Medical Office 355 8 175
135 Glade Points Shopping Center 360 4 119
136 Centreville Plaza 310 7 176
137 Stonybrook S/C 327 5 177
138 Baton Rouge Multi Family Portfolio 360 5 118
139 State Road Plaza 354 8 175
140 Streator Industrial Facility 300 240 6 177
141 Best Western Rancho Cucamongo 240 9 174
142 University Place Ctr. 360 5 117
143 Franklin Beck Office 360 7 173
144 SL-Larchmont 312 5 115
145 HK Market 315 5 117
146 Whitman Villa 360 8 175
<CAPTION>
Balloon/
Anticipated
Loan Remaining Cut-off Date Repayment
# Lockout DSCR LTV Date LTV
- ------- ---- --- --------
<S> <C> <C> <C> <C>
73 171 1.46 72.5% 54.5%
74 167 1.62 72.7% 55.4%
75 165 1.24 71.4% 57.1%
76 110 1.17 64.0% 57.5%
77 174 1.70 74.3% 55.9%
78 110 1.71 61.9% 53.2%
79 168 1.21 69.9% 56.9%
80 115 1.20 78.3% 69.4%
81 114 1.35 76.0% 66.6%
82 165 1.42 79.1% 61.0%
83 169 1.36 71.5% 55.0%
84 113 1.63 48.8% 40.0%
85 235 1.29 78.1% 0.9%
86 166 1.19 68.9% 56.2%
87 166 1.80 67.0% 51.2%
88 110 1.23 75.6% 69.0%
89 170 1.28 70.4% 28.6%
90 115 1.36 69.6% 50.2%
91 114 1.40 79.7% 69.5%
92 174 1.58 68.8% 29.5%
93 111 1.37 83.2% 72.0%
94 168 1.35 72.1% 55.7%
95 162 1.25 73.9% 49.5%
96 166 1.29 68.1% 53.1%
97 229 1.26 77.3% 1.0%
98 110 1.21 71.4% 63.8%
99 111 1.43 69.1% 59.6%
100 115 1.20 76.0% 66.6%
101 165 1.38 64.6% 41.7%
102 251 1.00 97.2% 39.5%
103 174 1.19 71.7% 56.6%
104 168 1.43 77.1% 46.6%
104 168 1.23 77.1% 46.6%
105 111 1.40 64.5% 55.8%
106 169 1.22 70.5% 57.8%
107 169 1.60 75.9% 47.8%
108 167 1.29 69.5% 19.5%
109 170 1.32 69.0% 28.1%
110 170 1.60 74.6% 56.6%
111 166 1.54 76.0% 58.7%
112 167 1.50 60.7% 43.3%
113 115 1.64 63.1% 55.4%
114 111 1.37 81.3% 70.3%
115 169 1.49 77.0% 59.1%
116 121 1.88 37.0% 29.1%
117 113 1.35 78.5% 68.2%
118 167 1.23 60.1% 42.8%
119 173 1.05 59.1% 23.6%
120 170 1.56 70.9% 45.5%
121 251 1.00 96.4% 39.2%
122 251 1.00 97.2% 39.5%
123 251 1.00 96.4% 39.2%
124 112 1.95 56.6% 49.6%
125 171 1.78 49.8% 37.4%
126 115 1.53 60.0% 52.6%
127 105 1.19 67.7% 55.1%
128 114 1.23 73.8% 61.0%
129 115 1.32 81.0% 65.2%
130 169 2.20 44.1% 34.1%
131 107 1.48 73.2% 59.4%
132 167 2.10 55.0% 35.6%
133 165 1.83 58.9% 24.4%
134 168 1.32 67.9% 54.7%
135 112 1.31 75.3% 66.0%
136 169 1.29 66.5% 46.8%
137 174 1.25 78.9% 54.0%
138 111 1.79 73.5% 62.9%
139 168 1.30 69.3% 55.6%
140 170 1.82 50.6% 20.8%
141 167 1.92 51.8% 21.5%
142 114 1.46 69.3% 60.3%
143 166 1.47 61.2% 47.2%
144 114 1.41 64.4% 52.9%
145 113 1.25 73.2% 59.9%
146 168 1.52 69.8% 53.9%
</TABLE>
Annex A-4
<PAGE>
<TABLE>
<CAPTION>
Annex A: Characteristics of the Notes in the Pool
Loan Loan Cut-off Date Principal Monthly
# Loan Name Type Balance Payment
- --------- ---- ------- -------
<S> <C> <C> <C> <C>
147 Comfort Inn-Chicopee Hyper $ 3,068,325 ** $ 26,988.15
148 Kimberly Lakes Apartments Hyper $ 3,062,623 ** $ 22,543.84
149 Fairfield Park Hyper $ 2,988,942 $ 21,318.34
150 Pike Park Plaza Hyper $ 2,984,540 $ 20,444.94
151 Stonesthrow Apts. Hyper $ 2,983,801 $ 20,019.56
152 MA Winter Building Hyper $ 2,948,941 ** $ 22,771.03
153 Southport I and II Hyper $ 2,894,021 ** $ 22,377.69
154 Regency Office. Hyper $ 2,884,445 $ 19,410.77
155 Jefferson City Holiday Inn Express Hyper $ 2,851,375 $ 24,094.58
156 Perry Judd's - Mt. Jackson Fully $ 2,829,895 $ 20,964.92
157 Brooklyn Park Shopping Center Hyper $ 2,828,634 $ 21,340.10
158 South Robert Plaza Hyper $ 2,820,181 $ 18,355.33
159 Broadmoor Hyper $ 2,741,127 $ 18,517.98
160 Brentwood/Pontchartrain Apts Hyper $ 2,734,621 $ 20,111.07
161 Embassy Apts. Hyper $ 2,710,736 $ 18,441.67
162 Puente Hills Business Park Hyper $ 2,686,562 $ 19,083.04
163 Mountain Valley Apartments Hyper $ 2,634,380 $ 17,880.38
164 Pine Crest Square Hyper $ 2,392,071 $ 15,967.26
165 Medical Arts Office Bldg. Hyper $ 2,364,357 ** $ 18,257.02
166 Creekside Commons Hyper $ 2,364,213 $ 16,201.69
167 Postal Building Hyper $ 2,347,465 ** $ 17,116.94
168 Gateway Center Hyper $ 2,315,873 $ 16,712.42
169 Strawberry Square. Hyper $ 2,291,120 $ 16,576.87
170 Paseo Verde Hyper $ 2,192,790 ** $ 16,919.06
171 1430 N. Dearborn Hyper $ 2,189,050 $ 15,549.14
172 Holiday Inn - Boulevard Hyper $ 2,184,829 $ 18,333.28
173 Menlo Manor Apts. Hyper $ 2,174,669 $ 15,788.54
174 Arlington Arms Hyper $ 2,168,160 $ 14,837.33
175 1504 N. Dearborn Hyper $ 2,039,797 $ 14,488.97
176 Autumn Ridge Apts. Hyper $ 2,022,864 $ 14,515.14
177 Holiday Inn Express-TN Hyper $ 2,015,822 $ 15,208.01
178 Ward Parkway Hyper $ 1,993,547 $ 13,467.62
179 One Court Street Hyper $ 1,992,764 $ 13,847.60
180 Greenspring Village Professional Hyper $ 1,990,147 $ 13,902.21
181 701 Santa Monica Blvd. Hyper $ 1,949,199 ** $ 15,051.27
182 Econo Lodge--Waldorf Hyper $ 1,922,545 $ 15,732.92
183 Cannon Valley Apts. Hyper $ 1,908,552 $ 12,890.07
184 Econolodge Central Hyper $ 1,883,683 $ 15,656.68
185 414-416 E. Cooper Street Hyper $ 1,867,731 $ 12,575.32
186 Community Shopping Center - Landover Hyper $ 1,839,312 $ 12,711.54
187 Brookfield Apts. Hyper $ 1,837,556 $ 12,960.12
188 Regency Plaza Apts. Hyper $ 1,815,447 $ 12,350.84
189 Blacksburg Square Hyper $ 1,742,252 $ 11,003.71
190 Kenora Park Apartments Hyper $ 1,736,069 $ 10,817.63
191 Kennedy Center Hyper $ 1,676,949 $ 11,221.67
192 Grand Island Hyper $ 1,667,789 $ 11,711.84
193 Sleep Inn Richmond Hyper $ 1,654,548 $ 13,903.73
194 Raintree Apartments Hyper $ 1,642,934 $ 10,548.77
195 Greenway Allen Phase II Hyper $ 1,619,890 $ 11,085.36
196 Nationwide Housing - Cedar Ridge Hyper $ 1,567,840 $ 14,439.73
197 Nationwide Housing - Blue Heron Hyper $ 1,494,709 $ 14,171.28
198 Ore Creek Apartments Hyper $ 1,484,621 $ 10,340.88
199 Best Western/New Englander Inn Hyper $ 1,478,164 $ 13,438.06
200 MSP Associates Industrial Complex Hyper $ 1,463,172 $ 10,861.44
201 Dairy Mart - Amelia Balloon $ 1,422,318 $ 10,082.67
202 Dairy Mart - Ontario Balloon $ 1,375,173 $ 9,703.04
203 Airport Apts. Hyper $ 1,354,368 $ 8,839.02
204 University Square Mall Hyper $ 1,351,987 $ 9,742.72
205 Dairy Mart - Grove City Balloon $ 1,343,994 $ 9,467.83
206 Revco Store Fully $ 1,330,172 $ 11,087.53
207 Dairy Mart - Liberty Westchester Balloon $ 1,305,778 $ 9,186.13
208 Gallant Place Apartments Hyper $ 1,290,996 $ 9,000.94
209 Lafayette Square Apartments Hyper $ 1,195,010 $ 7,783.18
210 Miller East Office Building Hyper $ 1,194,822 $ 8,382.36
211 Morningside Apartments Hyper $ 1,190,438 $ 8,202.40
212 Bella Casa MHP Hyper $ 1,188,136 $ 8,860.09
213 Kaleidoscope Shopping Center Fully $ 1,185,374 $ 9,667.12
214 Weatherbridge Flex Facility Hyper $ 1,185,064 $ 9,667.12
215 Professional Building East Hyper $ 1,184,496 $ 8,642.78
216 Hobbs Plaza Hyper $ 1,127,094 $ 8,489.31
217 The Woods Condominiums Hyper $ 1,096,046 $ 7,638.70
218 Corporate Park I Hyper $ 1,095,156 $ 8,323.07
219 Madison East Apartments Hyper $ 1,090,441 $ 7,662.60
220 Cato Fashion Center Hyper $ 1,087,777 $ 8,036.12
221 Dairy Mart - Rootstown Balloon $ 1,048,231 $ 7,405.78
<CAPTION>
Balloon/Anticipated Anticipated
Loan Repayment Date Repayment Maturity
# Balance Date Date Rate
- ------- ---- ---- ----
<S> <C> <C> <C> <C>
147 $ 1,904,600 11-Nov-13 11-Aug-21 9.200%*
148 $ 2,444,502 11-Dec-13 11-Oct-28 8.000%*
149 $ 2,391,063 11-Feb-09 11-Dec-23 7.060%*
150 $ 2,302,132 11-Nov-13 11-Aug-28 7.240%*
151 $ 2,279,881 11-Nov-13 11-Aug-28 7.030%*
152 $ 2,402,857 11-Oct-13 11-Jul-28 8.500%*
153 $ 2,182,724 11-Nov-13 11-Apr-26 8.300%*
154 $ 2,225,161 11-Aug-13 11-Aug-28 7.060%*
155 $ 1,224,800 11-Aug-13 11-May-18 7.910%*
156 $ - 11-Aug-18 11-Aug-18 8.295%
157 $ 1,837,976 11-Nov-13 11-Aug-23 7.650%*
158 $ 2,438,709 11-Feb-09 11-Nov-28 6.750%*
159 $ 2,405,888 11-Nov-08 11-Nov-28 7.120%*
160 $ 34,250 11-Nov-18 11-Aug-23 7.300%*
161 $ 2,084,379 11-Nov-13 11-Aug-28 7.170%*
162 $ 2,147,146 11-Jan-09 11-Nov-23 7.000%*
163 $ 2,030,657 11-Sep-13 11-Jul-28 7.140%*
164 $ 2,085,932 11-Jan-09 11-Nov-28 7.000%*
165 $ 1,926,526 11-Oct-13 11-Jul-28 8.500%*
166 $ 1,822,375 11-Dec-13 11-Sep-28 7.250%*
167 $ 1,874,908 11-Oct-13 11-Oct-28 7.900%*
168 $ 1,465,012 11-Nov-13 11-Aug-23 7.140%*
169 $ 1,930,707 11-Feb-09 11-Nov-25 7.500%*
170 $ 1,990,874 11-Sep-08 11-Sep-28 8.500%*
171 $ 1,749,527 11-Jan-09 11-Nov-23 7.000%*
172 $ 1,532,894 11-Jan-09 11-Nov-18 7.950%*
173 $ 1,383,272 11-Aug-13 11-May-23 7.170%*
174 $ 1,900,078 11-Feb-09 11-Nov-28 7.250%*
175 $ 1,630,241 11-Jan-09 11-Nov-23 7.000%*
176 $ 815,933 11-Nov-13 11-Aug-23 7.020%*
177 $ - 11-Jan-14 11-Nov-18 6.480%*
178 $ 1,749,737 11-Nov-08 11-Nov-28 7.120%*
179 $ 1,545,876 11-Jan-14 11-Oct-28 7.400%*
180 $ 1,548,800 11-Nov-13 11-Aug-28 7.440%*
181 $ 1,588,245 11-Oct-13 11-Jul-28 8.500%*
182 $ 802,723 11-Oct-13 11-Jul-18 7.520%*
183 $ 1,463,668 11-Oct-13 11-Jul-28 7.090%*
184 $ 806,024 11-Dec-13 11-Oct-18 7.800%*
185 $ 1,428,145 11-Jan-14 11-Oct-28 7.080%*
186 $ 1,618,534 11-Jan-09 11-Nov-28 7.350%*
187 $ 1,438,676 11-Aug-13 11-May-28 7.520%*
188 $ 1,395,961 11-Nov-13 11-Aug-28 7.170%*
189 $ 1,495,383 11-Jan-09 11-Oct-28 6.450%*
190 $ 1,484,611 11-Jan-09 11-Oct-28 6.320%*
191 $ 1,359,835 11-Dec-11 11-Sep-28 7.010%*
192 $ 1,310,257 11-Sep-13 11-Sep-28 7.500%*
193 $ - 11-Sep-13 11-Jun-18 7.700%*
194 $ 1,232,703 11-Dec-13 11-Oct-28 6.610%*
195 $ 1,419,599 11-Feb-09 11-Nov-28 7.250%*
196 $ 1,317,625 11-Jan-11 11-Jan-26 10.360%
197 $ 1,272,313 11-Dec-09 11-Dec-24 10.631%
198 $ 1,155,590 11-Aug-13 11-May-28 7.390%*
199 $ 701,431 11-May-13 11-May-18 8.940%*
200 $ 43,592 11-Jun-13 11-Jul-23 7.270%*
201 $ 382,596 1-Feb-19 1-Feb-19 7.540%
202 $ 396,822 1-Feb-19 1-Feb-19 7.540%
203 $ 1,174,772 11-Dec-08 11-Oct-28 6.770%*
204 $ 853,672 11-Jan-14 11-Oct-23 7.150%*
205 $ 396,841 1-Feb-19 1-Feb-19 7.540%
206 $ - 11-Jun-17 11-Jun-17 7.290%*
207 $ 337,923 1-Feb-19 1-Feb-19 7.430%
208 $ 1,005,317 11-Aug-13 11-May-28 7.400%*
209 $ 1,034,226 11-Jan-09 11-Oct-28 6.750%*
210 $ 753,571 11-Nov-18 11-Sep-28 7.490%*
211 $ 922,059 11-Jul-13 11-Apr-28 7.270%*
212 $ 779,110 11-Jun-13 11-Jun-23 7.490%*
213 $ - 11-Nov-18 11-Nov-18 7.500%*
214 $ 492,951 11-Nov-13 11-Aug-18 7.500%*
215 $ 483,652 11-Nov-13 11-Aug-23 7.210%*
216 $ 1,016,523 11-Nov-08 11-Nov-28 8.250%*
217 $ 965,696 11-Jan-09 11-Oct-28 7.430%*
218 $ 895,801 11-Jan-09 11-Nov-23 7.770%*
219 $ 681,194 11-Jan-14 11-Nov-23 6.880%*
220 $ 699,198 11-Aug-13 11-May-23 7.370%*
221 $ 296,793 1-Feb-19 1-Feb-19 7.540%
</TABLE>
Annex A-5
<PAGE>
<TABLE>
<CAPTION>
Annex A: Characteristics of the Notes in the Pool
Anticipated
Loan Non-Level Additional Remaining
# Loan Name Amort. Amort. Amort. Seasoning Term
- --------- ------ ------ ------ --------- ----
<S> <C> <C> <C> <C> <C> <C>
147 Comfort Inn-Chicopee 275 7 176
148 Kimberly Lakes Apartments 360 5 177
149 Fairfield Park 300 3 119
150 Pike Park Plaza 360 7 176
151 Stonesthrow Apts. 360 7 176
152 MA Winter Building 360 8 175
153 Southport I and II 333 7 176
154 Regency Office. 360 7 173
155 Jefferson City Holiday Inn Express 240 10 173
156 Perry Judd's - Mt. Jackson 239 Yes 6 233
157 Brooklyn Park Shopping Center 300 7 176
158 South Robert Plaza 360 4 119
159 Broadmoor 360 4 116
160 Brentwood/Pontchartrain Apts 300 240 7 236
161 Embassy Apts. 360 7 176
162 Puente Hills Business Park 300 4 118
163 Mountain Valley Apartments 360 8 174
164 Pine Crest Square 360 4 118
165 Medical Arts Office Bldg. 360 8 175
166 Creekside Commons 360 6 177
167 Postal Building 360 5 175
168 Gateway Center 300 7 176
169 Strawberry Square. 324 4 119
170 Paseo Verde 360 6 114
171 1430 N. Dearborn 300 4 118
172 Holiday Inn - Boulevard 240 4 118
173 Menlo Manor Apts. 300 10 173
174 Arlington Arms 360 4 119
175 1504 N. Dearborn 300 4 118
176 Autumn Ridge Apts. 300 240 7 176
177 Holiday Inn Express-TN 240 180 4 178
178 Ward Parkway 360 4 116
179 One Court Street 360 5 178
180 Greenspring Village Professional 360 7 176
181 701 Santa Monica Blvd. 360 8 175
182 Econo Lodge--Waldorf 240 8 175
183 Cannon Valley Apts. 360 8 175
184 Econolodge Central 240 5 177
185 414-416 E. Cooper Street 360 5 178
186 Community Shopping Center - Landover 360 4 118
187 Brookfield Apts. 360 10 173
188 Regency Plaza Apts. 360 7 176
189 Blacksburg Square 360 5 118
190 Kenora Park Apartments 360 5 118
191 Kennedy Center 360 6 153
192 Grand Island 360 6 174
193 Sleep Inn Richmond 240 180 9 174
194 Raintree Apartments 360 5 177
195 Greenway Allen Phase II 360 4 119
196 Nationwide Housing - Cedar Ridge 360 38 142
197 Nationwide Housing - Blue Heron 323 13 129
198 Ore Creek Apartments 360 10 173
199 Best Western/New Englander Inn 240 10 170
200 MSP Associates Industrial Complex 300 180 8 171
201 Dairy Mart - Amelia 281 Yes 6 239
202 Dairy Mart - Ontario 284 Yes 6 239
203 Airport Apts. 360 5 117
204 University Square Mall 300 5 178
205 Dairy Mart - Grove City 285 Yes 6 239
206 Revco Store 230 11 219
207 Dairy Mart - Liberty Westchester 279 Yes 5 239
208 Gallant Place Apartments 360 10 173
209 Lafayette Square Apartments 360 5 118
210 Miller East Office Building 360 6 236
211 Morningside Apartments 360 11 172
212 Bella Casa MHP 300 9 171
213 Kaleidoscope Shopping Center 240 180 4 236
214 Weatherbridge Flex Facility 240 7 176
215 Professional Building East 300 240 7 176
216 Hobbs Plaza 360 4 116
217 The Woods Condominiums 360 5 118
218 Corporate Park I 300 4 118
219 Madison East Apartments 300 4 178
220 Cato Fashion Center 300 10 173
221 Dairy Mart - Rootstown 283 Yes 6 239
<CAPTION>
Balloon/
Anticipated
Loan Remaining Cut-off Date Repayment
# Lockout DSCR LTV Date LTV
- ------- ---- --- --------
<S> <C> <C> <C> <C>
147 169 1.49 61.4% 38.1%
148 174 1.23 74.7% 59.6%
149 116 1.71 54.3% 43.5%
150 169 3.75 25.7% 19.8%
151 169 1.92 53.2% 40.6%
152 168 1.23 65.5% 53.4%
153 169 1.24 68.9% 52.0%
154 166 1.55 65.6% 50.6%
155 166 1.66 64.8% 27.8%
156 232 1.00 97.6% 0.0%
157 169 1.35 65.8% 42.7%
158 112 1.49 75.2% 65.0%
159 115 1.54 60.9% 53.5%
160 229 1.23 79.3% 1.0%
161 169 1.34 78.6% 60.4%
162 115 1.69 51.7% 41.3%
163 167 1.73 66.7% 51.4%
164 115 1.59 72.5% 63.2%
165 168 1.55 63.6% 51.8%
166 170 1.45 69.0% 53.2%
167 174 1.27 63.4% 50.7%
168 169 1.27 70.2% 44.4%
169 112 1.99 57.3% 48.3%
170 113 1.26 68.5% 62.2%
171 114 1.36 75.5% 60.3%
172 114 1.38 49.7% 34.8%
173 166 1.41 77.7% 49.4%
174 116 1.45 76.1% 66.7%
175 114 1.40 78.5% 62.7%
176 169 1.35 75.5% 30.4%
177 171 1.57 58.6% 0.0%
178 115 1.62 60.4% 53.0%
179 171 1.52 64.3% 49.9%
180 169 1.34 62.2% 48.4%
181 168 1.31 51.3% 41.8%
182 168 1.76 56.5% 23.6%
183 168 1.53 77.9% 59.7%
184 174 1.69 67.3% 28.8%
185 171 1.59 62.3% 47.6%
186 115 1.80 63.4% 55.8%
187 166 1.46 76.6% 59.9%
188 169 1.41 74.7% 57.4%
189 111 1.49 72.6% 62.3%
190 111 1.47 78.9% 67.5%
191 146 1.36 76.2% 61.8%
192 170 1.38 75.8% 59.6%
193 167 1.48 64.3% 0.0%
194 174 1.50 63.2% 47.4%
195 112 1.36 73.0% 63.9%
196 141 1.40 51.9% 43.6%
197 128 1.15 59.0% 50.2%
198 166 1.24 76.1% 59.3%
199 163 1.79 56.9% 27.0%
200 164 2.04 50.5% 1.5%
201 238 1.00 98.1% 26.4%
202 238 1.00 98.2% 28.3%
203 114 1.36 79.7% 69.1%
204 171 1.53 55.2% 34.8%
205 238 1.00 99.6% 29.4%
206 212 1.14 78.2% 0.0%
207 238 1.00 98.5% 25.5%
208 166 1.37 68.9% 53.6%
209 111 1.71 72.4% 62.7%
210 233 1.47 71.3% 45.0%
211 165 1.69 66.1% 51.2%
212 164 1.47 61.2% 40.2%
213 235 1.44 43.9% 0.0%
214 169 1.22 67.7% 28.2%
215 169 1.46 65.8% 26.9%
216 115 1.41 60.1% 54.2%
217 111 1.75 66.4% 58.5%
218 114 1.32 71.8% 58.7%
219 175 1.70 79.0% 49.4%
220 166 1.38 74.0% 47.6%
221 238 1.00 95.3% 27.0%
</TABLE>
Annex A-6
<PAGE>
<TABLE>
<CAPTION>
Annex A: Characteristics of the Notes in the Pool
Loan Loan Cut-off Date Principal Monthly
# Loan Name Type Balance Payment
- --------- ---- ------- -------
<S> <C> <C> <C> <C>
222 Clinton Apts. Hyper $ 1,034,819 $ 6,786.95
223 Country Estates MHP Hyper $ 1,015,542 $ 7,342.86
224 Hilltop Center Hyper $ 996,571 $ 6,525.91
225 Overland MHP Hyper $ 987,209 $ 7,176.61
226 Dairy Mart - Salem Balloon $ 865,241 $ 6,056.80
227 Corporate Park III Hyper $ 856,213 $ 6,507.12
228 Nationwide Housing - Raven Court Hyper $ 824,372 $ 7,594.02
229 Nationwide Housing - Country Cove Hyper $ 804,636 $ 7,410.66
230 Nationwide Housing - Meadow Lane Hyper $ 603,449 $ 5,724.02
<CAPTION>
Balloon/Anticipated Anticipated
Loan Repayment Date Repayment Maturity
# Balance Date Date Rate
- ------- ---- ---- ----
<S> <C> <C> <C> <C>
222 $ 781,851 11-Dec-13 11-Sep-28 6.810%*
223 $ 653,862 11-Jul-13 11-Jul-23 7.150%*
224 $ 864,639 11-Jan-09 11-Nov-28 6.810%*
225 $ 638,443 11-Apr-13 11-Apr-23 7.170%*
226 $ 278,247 1-Feb-19 1-Feb-19 7.540%
227 $ 700,355 11-Jan-09 11-Nov-23 7.770%*
228 $ 692,369 11-Jan-11 11-Jan-26 10.360%
229 $ 676,222 11-Jan-11 11-Jan-26 10.360%
230 $ 513,007 11-Dec-09 11-Dec-24 10.631%
</TABLE>
Annex A-7
<PAGE>
<TABLE>
<CAPTION>
Annex A: Characteristics of the Notes in the Pool
Anticipated
Loan Non-Level Additional Remaining
# Loan Name Amort. Amort. Amort. Seasoning Term
- --------- ------ ----- ------ --------- ----
<S> <C> <C> <C> <C> <C> <C>
222 Clinton Apts. 360 6 177
223 Country Estates MHP 300 8 172
224 Hilltop Center 360 4 118
225 Overland MHP 300 11 169
226 Dairy Mart - Salem 289 Yes 6 239
227 Corporate Park III 300 4 118
228 Nationwide Housing - Raven Court 337 14 142
229 Nationwide Housing - Country Cove 360 38 142
230 Nationwide Housing - Meadow Lane 323 13 129
<CAPTION>
Balloon/
Anticipated
Loan Remaining Cut-off Date Repayment
# Lockout DSCR LTV Date LTV
- ------- ---- --- --------
222 170 1.43 79.6% 60.1%
223 165 1.60 67.7% 43.6%
224 115 1.90 55.4% 48.0%
225 162 1.50 71.8% 46.4%
226 238 1.00 96.1% 30.9%
227 114 1.30 68.5% 56.0%
228 141 1.18 58.5% 49.1%
229 141 1.41 44.0% 37.0%
230 128 1.24 41.6% 35.4%
</TABLE>
* Interest is computed based on the actual number of days elapsed in
a 360 day year.
** Indicates premium loans.
(1) The borrower prepaid $2,167,916 on the related closing date which
amount represents 24 months of principal amortization. The borrower
will pay interest only through March 11, 2000. During the interest
only period the rate payable is 7.739% and does not amortize the
premium.
(2) The borrower prepaid $154,609 on the related closing date which amount
represents 24 months of principal amortization. The borrower will pay
interest only through October 11, 2000.
Annex A-8
<PAGE>
[This page intentionally left blank]
<PAGE>
[This page intentionally left blank]
<PAGE>
<TABLE>
<CAPTION>
Annex B
Loan # Asset # Property Name Address
DDR/DRA JV
<S> <C> <C> <C>
1 1 Ahwatukee Foothills Towne Center Ray Road and 48th Street
1 2 Tanasbourne Town Center 185th Street & US-26
1 3 Arrowhead Crossing S. 75th Ave.
1 4 Eagan Promenade Yankee Doodle Road & I-35
1 5 Eastchase Market Eastchase Parkway & I-30
1 6 Maple Grove Crossing SEC Weaver Lk Rd. & Elm Creek Blv.
- ------------------------------------------------------------------------------------------------------------------------------------
2 1 Park LaBrea 6200 West Third Street
3 1 The Source 1504 Old Country Road
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Prime Retail III
<S> <C> <C> <C>
4 1 Lighthouse Place 601 Wabash Street
4 2 Finger Lakes Outlet Center 655 Route 318
4 3 Outlets at Gilroy III and IV 681 Leaversly Road, Suite 175
4 4 Outlets at Gilroy I, II and V 681 Leaversly Road, Suite 175
4 5 Kittery Outlet Village 294 U.S. Route 1
- ------------------------------------------------------------------------------------------------------------------------------------
5 1 Springfield Mall 6500 Sprinfield Mall
6 1 Atlanta Marriott 265 Peachtree Center Avenue
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Iowa Malls
<S> <C> <C> <C>
7 1 College Square Mall 6301 University Avenue
7 2 North Grand Mall 2801 Grand Avenue
7 3 Westland Mall 550 S. Gear Ave.
7 4 Marshall Town Center 2500 S. Center St.
- ------------------------------------------------------------------------------------------------------------------------------------
8 1 Laurel Park Place Mall 37700 Six Mile Road
9 1 Baldwin Complex 625 & 655 Eden Park Dr.
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Accor-M-Six Penvest I
<S> <C> <C> <C>
10 1 294 12733 So Hwy 33
10 2 743 41900 Moreno Dr.
10 3 1108 38300 Grand River Ave.
10 4 1136 8911 State Hwy. 146
10 5 385 820 I-45 South
10 6 406 2800 I-10 Frontage Rd
10 7 586 1800 Harding Hwy
10 8 339 1607 Interstate 45
10 9 1200 105 Jones Road
10 10 290 1540 Hwy 93 South
10 11 554 1289 E. Dubin-Granville
10 12 1069 2324 Austin Parkway
10 13 158 110 West Access Road
10 14 1009 1560 East Fourth Street
10 15 1264 1716 Fayetteville Road
- ------------------------------------------------------------------------------------------------------------------------------------
11 1 Best of the West Shopping Center Lake Mead Boulevard & Rainbow Boulevard
12 1 Hunter's Square 30825 Orchard Lake Road
13 1 Point Plaza 19151 - 19251 Mack Avenue
14 1 East Bank Club 500 North Kingsbury
15 1 Showplace/Galleria Design Center 2 and 101 Henry Adams Street
- ------------------------------------------------------------------------------------------------------------------------------------
16 1 Stephanie Street 543 Stephanie Street
17 1 Winchester Center 1116-1336 S. Rochester Road
18 1 Airport Plaza II 2611 Jefferson Davis Highway
19 1 Airport Industrial 3375 Koapaka Street
20 1 Lakeshore Athletic Club 1320 West Fullerton Ave.
- ------------------------------------------------------------------------------------------------------------------------------------
21 1 Renaissance Center 1350 Euclid Avenue
22 1 Santa Monica Business Park (Ground Lease) 2940-3440 Ocean Park Blvd.
23 1 Brewery Park II Office Building 1155 Brewery Park Ave
24 1 Robertson Plaza 1200 North Robertson Blvd.
25 1 Olympic Plaza 11500 West Olympic Blvd.
- ------------------------------------------------------------------------------------------------------------------------------------
26 1 125 County Line Road 125 East County Line Road
27 1 Castlepark Resort Apartments 2065 College Park
28 1 Two Century Center 1700 E. Golf Road
29 1 609 H Street 609 H Street, NE
30 1 Cobb Theatre/Main St. Plaza 1991 Main Street
- ------------------------------------------------------------------------------------------------------------------------------------
31 1 Peru Mall Rte. 251
32 1 UCLA Medical Office 1245 16th Street
33 1 The Dictaphone Building 3191 Broadbridge Avenue
34 1 Wild Basin Office 108/110 Wild Basin Road
35 1 Princess City Plaza Day Road & Grape Road
- ------------------------------------------------------------------------------------------------------------------------------------
36 1 Westside South Shopping Center 68 Westbank Express
37 1 Highpoint National Furniture Mart 200 South Main Street
38 1 Oak Brook Business Center 2000 York Road
39 1 Soho Grand Hotel 310 West Broadway
40 1 Highlands I 5755 East River road
41 1 The Bentley Mills Building 14641 Don Julian Road
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Morgantown Mall and Commons
<S> <C> <C> <C>
42 1 Morgantown Mall 9500 Mall Road
42 2 Morgantown Commons 9500 Mall Road
- ------------------------------------------------------------------------------------------------------------------------------------
43 1 Perry Judd's - Strasburg 294 Front Royal Road
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Loan # Asset # City State Zip Property Type Year Built/ Renovated
DDR/DRA JV
<S> <C> <C> <C> <C> <C> <C>
1 1 Phoenix AZ 85044 Retail-Anchored 1996
1 2 Hillsboro OR 97006 Retail-Anchored 1995
1 3 Phoenix AZ 85382 Retail-Anchored 1994
1 4 Eagan MN 55121 Retail-Anchored 1996
1 5 Ft. Worth TX 76120 Retail-Anchored 1997
1 6 Maple Grove MN 55369 Retail-Anchored 1996
- -------------------------------------------------------------------------------------------------------------------------------
2 1 Los Angeles CA 90036 Multifamily 1943/1995
3 1 Westbury NY 11590 Retail-Anchored 1997
- -------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Prime Retail III
<S> <C> <C> <C> <C> <C> <C>
4 1 Michigan City IN 46360 Retail-Anchored 1987/1997
4 2 Waterloo NY 13168 Retail-Anchored 1995
4 3 Gilroy CA 95020 Retail-Anchored 1989/1995
4 4 Gilroy CA 95020 Retail-Anchored 1989/1995
4 5 Kittery ME 03911 Retail-Anchored 1984/1995
- -------------------------------------------------------------------------------------------------------------------------------
5 1 Springfield VA 22150 Retail-Anchored 1973/1991
6 1 Atlanta GA 30343 Hotel-Full Service 1985/1997
- -------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Iowa Malls
<S> <C> <C> <C> <C> <C> <C>
7 1 Cedar Falls IA 50613 Retail-Anchored 1969/1987
7 2 Ames IA 50010 Retail-Anchored 1971/1991
7 3 West Burlington IA 52655 Retail-Anchored 1972
7 4 Marshalltown IA 50158 Retail-Anchored 1972
- -------------------------------------------------------------------------------------------------------------------------------
8 1 Livonia MI 48150 Retail-Anchored 1989/1994
9 1 Cincinatti OH 45202 Office 1922/1988
- -------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Accor-M-Six Penvest I
<S> <C> <C> <C> <C> <C> <C>
10 1 Santa Nella CA 95322 Hotel-Ltd. Service 1978/1998
10 2 Temecula CA 92590 Hotel-Ltd. Service 1988/1998
10 3 Farmington Hills MI 48335 Hotel-Ltd. Service 1985/1997
10 4 Baytow000n TX 77520 Hotel-Ltd. Service 1980/1997
10 5 Conroe TX 77304 Hotel-Ltd. Service 1981/1996
10 6 Port Allen LA 70767 Hotel-Ltd. Service 1982/1997
10 7 Lima OH 45804 Hotel-Ltd. Service 1967/1996
10 8 Huntville TX 77340 Hotel-Ltd. Service 1980/1997
10 9 Spartanburg SC 29303 Hotel-Ltd. Service 1990/1998
10 10 Kalispell MT 59901 Hotel-Ltd. Service 1979/1997
10 11 Columbus OH 43229 Hotel-Ltd. Service 1975/1996
10 12 Flint MI 48507 Hotel-Ltd. Service 1988/1997
10 13 Longview TX 75601 Hotel-Ltd. Service 1974/1997
10 14 Ontario CA 91764 Hotel-Ltd. Service 1972/1997
10 15 Van Buren AR 72956 Hotel-Ltd. Service 1974/1997
- -------------------------------------------------------------------------------------------------------------------------------
11 1 Las Vegas NV 89108 Retail-Anchored 1997
12 1 Farmington Hills MI 48334 Retail-Anchored 1981/1996
13 1 Gross Point MI 48236 Office 1990
14 1 Chicago IL 60610 Health Club 1980/1990
15 1 San Francisco CA 94103 Office 1900/1975
- -------------------------------------------------------------------------------------------------------------------------------
16 1 Henderson NV 89009 Retail-Anchored 1996/1997
17 1 Rochester Hills MI 48307 Retail-Anchored 1974/1997
18 1 Crystal City VA 22202 Office 1985
19 1 Honolulu HI 96819 Industrial 1988/1992
20 1 Chicago IL 60614 Health Club 1979/1990
- -------------------------------------------------------------------------------------------------------------------------------
21 1 Cleveland OH 44115 Office 1990
22 1 Santa Monica CA 90405 Office 1980
23 1 Detroit MI 48226 Office 1990
24 1 Los Angeles CA 90048 Office 1965
25 1 Los Angeles CA 90064 Office 1983/1997
- -------------------------------------------------------------------------------------------------------------------------------
26 1 Warminister PA 18974 Office 1945/1998
27 1 San Bernadino CA 92407 Multifamily 1988
28 1 Schaumburg IL 60173 Office 1989
29 1 Washington DC 20002 Office 1988/1994
30 1 Sarasota FL 34320 Retail-Anchored 1986/1996
- -------------------------------------------------------------------------------------------------------------------------------
31 1 Peru IL 61354 Retail-Anchored 1974/1996
32 1 Santa Monica CA 90404 Office 1989/1995
33 1 Stratford CT 06497 Office 1956/1986
34 1 Austin TX 78746 Office 1985/1998
35 1 Mishawaka IN 46544 Retail-Anchored 1997
- -------------------------------------------------------------------------------------------------------------------------------
36 1 Gretna LA 70053 Retail-Anchored 1961/1995
37 1 High Point NC 27261 Retail-Quasi-Anchored 1964/1997
38 1 Oak Brook IL 60521 Office 1959/1987
39 1 New York NY 10013 Hotel-Full Service 1996
40 1 Tucson AZ 85750 Multifamily 1986/1998
41 1 City of Industry CA 91746 Industrial 1967
- -------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Morgantown Mall and Commons
<S> <C> <C> <C> <C> <C> <C>
42 1 Morgantown WV 26505 Retail-Anchored 1990/1997
42 2 Morgantown WV 26505 Retail-Anchored 1991
- -------------------------------------------------------------------------------------------------------------------------------
43 1 Strasburg VA 22657 Industrial 1975/1998
- -------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Cut-off Date Cut-off Date
Principal Principal Balance
Loan # Asset # Units Unit Type Balance /Unit 1997 Revenue
DDR/DRA JV
<S> <C> <C> <C> <C> <C> <C>
1 1 550,665 sf $48,444,049 $88 $7,534,905
1 2 307,811 sf $26,450,394 $86 $2,498,114
1 3 354,680 sf $23,333,514 $66 $4,640,757
1 4 278,510 sf $21,184,246 $76 $1,298,287
1 5 235,027 sf $18,529,305 $79 $2,236,419
1 6 250,436 sf $18,058,492 $72 $3,612,820
--------- ------------ --- -----------
1,977,129 $156,000,000 $79 $21,821,302
- --------------------------------------------------------------------------------------------------------------------------------
2 1 4,226 units $140,613,989 $66,547 $52,134,561
3 1 521,486 sf $124,000,000 $238
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Prime Retail III
<S> <C> <C> <C> <C> <C> <C>
4 1 492,915 sf $28,008,835 $79 $8,289,837
4 2 391,830 sf $22,558,660 $80 $6,766,016
4 3 305,207 sf $22,069,515 $100 $8,095,037
4 4 271,875 sf $18,521,535 $95 $6,793,647
4 5 131,345 sf $6,719,815 $71 $3,350,252
--------- ------------ --- -----------
1,593,172 $97,878,360 $85 $33,294,789
- --------------------------------------------------------------------------------------------------------------------------------
5 1 1,415,660 sf $90,394,069 $128 $31,253,147
6 1 1,671 rooms $80,770,298 $96,673 $85,397,565
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Iowa Malls
<S> <C> <C> <C> <C> <C> <C>
7 1 561,711 sf $30,425,937 $54 $5,802,789
7 2 349,990 sf $18,414,036 $53 $4,424,964
7 3 339,899 sf $10,118,783 $30 $2,853,868
7 4 344,165 sf $6,916,852 $20 $2,731,582
--------- ------------ --- -----------
1,595,765 $65,875,608 $41 $15,813,203
- --------------------------------------------------------------------------------------------------------------------------------
8 1 355,394 sf $53,588,156 $151 $10,295,621
9 1 454,897 sf $48,875,113 $107 $7,677,446
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Accor-M-Six Penvest I
<S> <C> <C> <C> <C> <C> <C>
10 1 111 rooms $3,787,460 $47,391 $1,020,811
10 2 135 rooms $3,550,744 $36,530 $1,033,524
10 3 106 rooms $3,314,028 $43,423 $918,793
10 4 124 rooms $3,156,217 $35,352 $976,419
10 5 123 rooms $3,156,217 $35,639 $1,082,973
10 6 132 rooms $3,156,217 $33,209 $1,081,294
10 7 97 rooms $2,919,501 $41,803 $937,018
10 8 122 rooms $2,761,690 $31,440 $830,644
10 9 124 rooms $2,682,784 $30,049 $944,515
10 10 114 rooms $2,682,784 $32,685 $679,592
10 11 89 rooms $2,209,352 $34,478 $894,696
10 12 107 rooms $2,130,446 $27,654 $816,278
10 13 78 rooms $1,657,014 $29,505 $469,026
10 14 69 rooms $1,578,108 $31,765 $664,827
10 15 94 rooms $1,578,108 $23,317 $589,743
----- ------------ ------- -----------
1,625 $40,320,671 $30,481 $12,940,153
- --------------------------------------------------------------------------------------------------------------------------------
11 1 474,611 sf $40,142,266 $85 $2,882,577
12 1 356,569 sf $39,854,911 $112 $6,589,773
13 1 272,220 sf $39,268,946 $144 $7,547,955
14 1 450,000 sf $36,492,811 $81 $34,383,011
15 1 396,555 sf $36,468,858 $92 $7,319,650
- --------------------------------------------------------------------------------------------------------------------------------
16 1 381,998 sf $32,653,816 $85 $3,596,073
17 1 315,513 sf $30,738,896 $97 $3,147,193
18 1 193,336 sf $30,406,423 $157 $4,942,844
19 1 716,681 sf $30,343,508 $97 $12,288,134
20 1 136,900 sf $29,822,676 $218 $11,799,534
- --------------------------------------------------------------------------------------------------------------------------------
21 1 245,275 sf $28,906,669 $118 $5,306,831
22 1 819,621 sf $25,862,212 $32 $15,618,415
23 1 223,923 sf $25,775,402 $115 $5,505,615
24 1 168,285 sf $25,003,107 $149 $3,641,815
25 1 243,892 sf $24,281,498 $100 $4,266,126
- --------------------------------------------------------------------------------------------------------------------------------
26 1 503,298 sf $22,588,653 $45 $2,662,446
27 1 508 units $20,917,181 $41,176 $3,178,302
28 1 217,931 sf $20,411,849 $94 $5,562,700
29 1 184,566 sf $19,935,641 $108 $4,346,597
30 1 25,653 sf $17,737,830 $691 $2,353,497
- --------------------------------------------------------------------------------------------------------------------------------
31 1 360,675 sf $17,730,768 $49 $3,830,007
32 1 57,457 sf $17,500,921 $305 $2,690,380
33 1 138,112 sf $15,275,478 $111
34 1 138,715 sf $13,444,814 $97 $2,148,118
35 1 171,964 sf $12,590,791 $73
- --------------------------------------------------------------------------------------------------------------------------------
36 1 275,490 sf $12,303,485 $45 $2,414,715
37 1 242,497 sf $12,043,639 $50 $2,918,400
38 1 199,245 sf $11,948,399 $60 $2,546,613
39 1 369 rooms $11,940,271 $161,792 $31,739,899
40 1 426 units $11,858,641 $27,837
41 1 308,596 sf $11,685,718 $48
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Morgantown Mall and Commons
<S> <C> <C> <C> <C> <C> <C>
42 1 542,397 sf $8,756,887 $81 $7,087,483
42 2 230,843 sf $2,855,939 $62 $2,068,814
------- ----------- --- ----------
773,240 $11,612,826 $75 $9,156,297
- --------------------------------------------------------------------------------------------------------------------------------
43 1 339,239 sf $11,582,366 $34
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Most Recent Most Most Recent
Loan # Asset # Period Revenue Recent Period Underwritten Revenue 1997 NOI Period NOI
DDR/DRA JV
<S> <C> <C> <C> <C> <C> <C>
1 1 $9,363,284 9/30/98 $9,220,588 $5,563,865 $6,990,635
1 2 $3,054,759 9/30/98 $4,650,320 $2,037,146 $2,525,869
1 3 $4,755,151 9/30/98 $4,885,094 $3,442,157 $3,427,545
1 4 $3,763,924 9/30/98 $4,044,288 $1,133,365 $2,683,288
1 5 $3,325,531 9/30/98 $3,434,921 $1,573,078 $2,409,393
1 6 $3,823,943 9/30/98 $3,844,963 $2,376,152 $2,317,079
----------- ----------- ----------- -----------
$28,086,592 $30,080,174 $16,125,763 $20,353,809
- -----------------------------------------------------------------------------------------------------------------------------------
2 1 $53,215,262 7/31/98 $54,307,040 $32,890,411 $33,973,368
3 1 $19,280,052 8/31/98 $25,569,359 $10,291,747
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Prime Retail III
<S> <C> <C> <C> <C> <C> <C>
4 1 $8,980,404 6/15/98 $9,137,831 $6,496,068 $7,077,933
4 2 $7,276,089 4/30/98 $7,215,263 $4,984,451 $5,507,573
4 3 $8,064,932 4/30/98 $8,133,121 $5,707,534 $5,685,643
4 4 $6,768,383 4/30/98 $6,825,609 $4,789,968 $4,771,597
4 5 $3,461,856 4/30/98 $3,487,034 $2,249,591 $2,343,616
----------- ----------- ------------ -----------
$34,551,664 $34,798,858 $24,227,612 $25,386,362
- -----------------------------------------------------------------------------------------------------------------------------------
5 1 $31,367,608 6/30/98 $31,521,315 $20,121,191 $20,309,860
6 1 $83,590,184 6/19/98 $83,590,184 $29,775,530 $29,775,530
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Iowa Malls
<S> <C> <C> <C> <C> <C> <C>
7 1 $5,736,572 8/30/98 $5,548,120 $3,702,866 $3,979,724
7 2 $4,548,639 8/30/98 $4,411,052 $2,925,644 $3,123,286
7 3 $2,760,091 8/30/98 $2,609,779 $1,517,322 $1,636,079
7 4 $2,406,830 8/30/98 $2,406,656 $1,156,411 $1,407,761
----------- ----------- ----------- -----------
$15,452,132 $14,975,607 $9,302,243 $10,146,850
- -----------------------------------------------------------------------------------------------------------------------------------
8 1 $10,364,367 6/30/98 $10,486,754 $6,407,896 $6,454,881
9 1 $8,171,071 9/30/98 $8,641,560 $5,658,785 $5,798,935
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Accor-M-Six Penvest I
<S> <C> <C> <C> <C> <C> <C>
10 1 $1,020,811 YE 12/31/1997 $1,020,811 $658,814 $658,814
10 2 $1,033,524 YE 12/31/1997 $1,033,524 $524,777 $524,777
10 3 $918,793 YE 12/31/1997 $918,793 $432,319 $432,319
10 4 $976,419 YE 12/31/1997 $976,419 $425,646 $425,646
10 5 $1,082,973 YE 12/31/1997 $1,082,973 $573,028 $573,028
10 6 $1,081,294 YE 12/31/1997 $1,081,294 $613,440 $613,440
10 7 $937,018 YE 12/31/1997 $937,018 $539,322 $539,322
10 8 $830,644 YE 12/31/1997 $830,644 $410,909 $410,909
10 9 $944,515 YE 12/31/1997 $944,515 $534,561 $534,561
10 10 $679,592 YE 12/31/1997 $679,592 $344,197 $344,197
10 11 $894,696 YE 12/31/1997 $894,696 $406,391 $406,391
10 12 $816,278 YE 12/31/1997 $816,278 $403,688 $403,688
10 13 $469,026 YE 12/31/1997 $469,026 $127,041 $127,041
10 14 $664,827 YE 12/31/1997 $664,827 $291,395 $291,395
10 15 $589,743 YE 12/31/1997 $589,743 $260,701 $260,701
----------- ----------- ----------- -----------
$12,940,153 $12,940,153 $6,546,229 $6,546,229
- -----------------------------------------------------------------------------------------------------------------------------------
11 1 $5,179,720 9/30/98 $5,992,313 $2,294,531 $4,357,988
12 1 $6,536,898 8/31/98 $6,711,820 $4,598,470 $4,548,899
13 1 $7,545,070 6/30/1998 $7,537,327 $4,663,991 $4,695,768
14 1 $36,739,748 6/30/98 $36,739,748 $9,902,583 $10,569,565
15 1 $7,297,000 7/31/98 $7,492,481 $4,817,333 $4,931,000
- -----------------------------------------------------------------------------------------------------------------------------------
16 1 $4,246,723 9/30/98 $5,260,271 $3,174,489 $3,626,609
17 1 $4,655,891 8/31/98 $4,640,939 $2,485,673 $3,817,679
18 1 $5,414,759 9/30/98 $5,311,575 $3,658,324 $4,115,036
19 1 $12,463,073 7/31/98 $12,636,520 $8,284,072 $8,426,488
20 1 $12,239,443 9/8/98 $12,239,443 $5,076,370 $5,230,168
- -----------------------------------------------------------------------------------------------------------------------------------
21 1 $5,442,964 8/31/98 $5,806,688 $3,124,473 $3,320,260
22 1 $15,618,415 12/31/97 $15,618,415 $9,285,897 $9,285,897
23 1 $5,577,643 6/30/98 $5,342,893 $3,394,153 $3,434,939
24 1 $3,935,966 6/30/98 $4,775,618 $2,007,386 $2,260,785
25 1 $4,427,650 7/31/98 $7,830,817 $2,336,239 $2,661,669
- -----------------------------------------------------------------------------------------------------------------------------------
26 1 $2,471,529 7/31/98 $3,395,652 $2,366,830 $2,180,166
27 1 $3,456,701 9/30/98 $3,461,869 $1,834,060 $2,109,394
28 1 $5,542,625 8/31/98 $5,185,495 $3,398,579 $3,728,139
29 1 $4,389,141 8/31/98 $3,644,324 $3,059,507 $3,080,463
30 1 $3,824,058 10/31/98 $3,654,479 $1,628,573 $2,533,595
- -----------------------------------------------------------------------------------------------------------------------------------
31 1 $3,985,277 9/30/98 $4,030,927 $2,435,099 $2,661,145
32 1 $2,738,230 6/30/98 $2,645,851 $2,011,620 $2,076,109
33 1 $1,448,900
34 1 $2,919,950 9/30/98 $2,805,271 $1,112,010 $1,918,712
35 1 $1,339,605 1/98 - 9/98 $2,283,945 $953,663
Annualized
- -----------------------------------------------------------------------------------------------------------------------------------
36 1 $2,327,998 5/31/98 $2,175,577 $1,882,171 $1,753,860
37 1 $3,003,948 7/31/98 $2,870,870 $1,762,023 $2,022,546
38 1 $2,662,560 8/31/98 $2,607,678 $1,648,065 $1,854,075
39 1 $35,063,593 6/30/98 $32,243,552 $13,249,354 $14,922,445
40 1 $2,165,831 6/30/98 $2,197,180 $1,431,806
41 1 $1,300,349
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Morgantown Mall and Commons
<S> <C> <C> <C> <C> <C> <C>
42 1 $7,113,780 6/30/98 $7,121,492 $5,124,721 $5,087,784
42 2 $2,083,669 6/30/98 $2,076,480 $1,916,696 $1,912,476
----------- ----------- ----------- -----------
$9,197,449 $9,197,972 $7,041,417 $7,000,260
- -----------------------------------------------------------------------------------------------------------------------------------
43 1
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Loan # Asset # Underwritten NOI Net Cash Flow NOI DSCR Net Cash Flow DSCR Lock Box
DDR/DRA JV
<S> <C> <C> <C> <C> <C> <C>
1 1 $6,763,724 $6,425,928 2.10 2.00 Hard
1 2 $4,054,901 $3,884,664 2.10 2.00 Hard
1 3 $3,536,922 $3,333,091 2.10 2.00 Hard
1 4 $2,936,587 $2,788,253 2.10 2.00 Hard
1 5 $2,500,482 $2,348,896 2.10 2.00 Hard
1 6 $2,306,214 $2,191,248 2.10 2.00 Hard
----------- ----------- ---- ----
$22,098,830 $20,972,080 2.10 2.00
- -----------------------------------------------------------------------------------------------------------------------------------
2 1 $34,512,032 $33,456,532 1.37 1.33 Soft
3 1 $15,024,724 $14,549,935 1.80 1.74 Hard
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Prime Retail III
<S> <C> <C> <C> <C> <C> <C>
4 1 $7,027,170 $6,425,113 1.66 1.54 Hard
4 2 $5,422,252 $4,953,974 1.66 1.54 Hard
4 3 $5,589,176 $5,235,433 1.66 1.54 Hard
4 4 $4,690,638 $4,393,764 1.66 1.54 Hard
4 5 $2,157,990 $1,988,485 1.66 1.54 Hard
----------- ----------- ---- ----
$24,887,226 $22,996,769 1.66 1.54
- -----------------------------------------------------------------------------------------------------------------------------------
5 1 $20,474,431 $20,068,658 1.22 1.20 Hard
6 1 $29,632,796 $25,453,287 2.06 1.77 Hard
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Iowa Malls
<S> <C> <C> <C> <C> <C> <C>
7 1 $3,522,438 $3,015,164 1.49 1.28 Hard
7 2 $2,868,247 $2,597,730 1.49 1.28 Hard
7 3 $1,351,093 $1,086,097 1.49 1.28 Hard
7 4 $1,236,244 $1,011,404 1.49 1.28 Hard
----------- ----------- ---- ----
$8,978,022 $7,710,395 1.49 1.28
- -----------------------------------------------------------------------------------------------------------------------------------
8 1 $6,584,474 $6,317,503 1.32 1.27 Hard
9 1 $6,256,640 $5,570,862 1.42 1.27 Hard
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Accor-M-Six Penvest I
<S> <C> <C> <C> <C> <C> <C>
10 1 $567,396 $516,356 1.54 1.00 Hard
10 2 $432,253 $380,577 1.54 1.00 Hard
10 3 $350,134 $304,195 1.54 1.00 Hard
10 4 $338,329 $289,508 1.54 1.00 Hard
10 5 $476,427 $422,278 1.54 1.00 Hard
10 6 $516,718 $462,653 1.54 1.00 Hard
10 7 $455,506 $408,655 1.54 1.00 Hard
10 8 $336,607 $295,075 1.54 1.00 Hard
10 9 $450,074 $402,849 1.54 1.00 Hard
10 10 $283,345 $249,366 1.54 1.00 Hard
10 11 $326,382 $281,647 1.54 1.00 Hard
10 12 $330,508 $289,694 1.54 1.00 Hard
10 13 $85,092 $61,641 1.54 1.00 Hard
10 14 $231,907 $198,666 1.54 1.00 Hard
10 15 $207,957 $178,470 1.54 1.00 Hard
----------- ----------- ---- ----
$5,388,635 $4,741,630 1.54 1.00
- -----------------------------------------------------------------------------------------------------------------------------------
11 1 $4,953,938 $4,657,376 1.29 1.21 Hard
12 1 $4,671,929 $4,417,005 1.28 1.21 Hard
13 1 $4,648,724 $4,434,994 1.27 1.21 Hard
14 1 $10,470,095 $8,633,107 2.94 2.43 Hard
15 1 $4,759,277 $4,356,073 1.41 1.29 Hard
- -----------------------------------------------------------------------------------------------------------------------------------
16 1 $4,551,009 $4,315,960 1.56 1.48 Hard
17 1 $3,763,694 $3,567,588 1.34 1.27 Hard
18 1 $3,879,954 $3,383,507 1.61 1.40 Hard
19 1 $8,188,177 $7,665,917 1.44 1.35 Hard
20 1 $4,971,003 $4,359,031 1.89 1.66 Hard
- -----------------------------------------------------------------------------------------------------------------------------------
21 1 $3,555,628 $3,170,662 1.33 1.18 Hard
22 1 $8,910,518 $7,295,286 4.51 3.70 Hard
23 1 $3,188,701 $2,880,447 1.43 1.29 Hard
24 1 $3,157,854 $2,770,474 1.56 1.37 Hard
25 1 $2,901,936 $2,494,020 1.42 1.22 Hard
- -----------------------------------------------------------------------------------------------------------------------------------
26 1 $2,836,282 $2,535,134 1.35 1.21 Hard
27 1 $2,090,291 $1,957,195 1.25 1.17 Soft
28 1 $2,901,251 $2,457,904 1.64 1.39 Hard
29 1 $2,320,674 $2,011,110 1.52 1.33 Hard
30 1 $2,332,896 $2,059,651 1.52 1.35
- -----------------------------------------------------------------------------------------------------------------------------------
31 1 $2,503,001 $2,164,666 1.60 1.38 Hard
32 1 $1,894,401 $1,753,304 1.35 1.25 Hard
33 1 $1,448,900 $1,448,900 1.00 1.00 Hard
34 1 $1,768,479 $1,580,130 1.41 1.26 Hard
35 1 $1,613,596 $1,497,061 1.47 1.37
- -----------------------------------------------------------------------------------------------------------------------------------
36 1 $1,590,071 $1,480,120 1.39 1.30
37 1 $1,743,982 $1,524,666 1.46 1.28 Hard
38 1 $1,688,416 $1,364,565 1.63 1.31 Hard
39 1 $12,426,229 $10,814,051 2.14 1.86 Hard
40 1 $1,414,476 $1,333,776 1.28 1.21 Soft
41 1 $1,300,349 $1,300,349 1.00 1.00 Hard
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Morgantown Mall and Commons
<S> <C> <C> <C> <C> <C> <C>
42 1 $4,904,392 $4,660,705 1.46 1.39 Hard
42 2 $1,823,848 $1,751,450 1.46 1.39 Hard
----------- ----------- ---- ----
$6,728,240 $6,412,155 1.46 1.39
- -----------------------------------------------------------------------------------------------------------------------------------
43 1 $1,029,676 1.00 1.00 Hard
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Balloon/Anticipated Current
Repayment Date Occupancy
Loan # Asset # Value LTV LTV Current Occupancy Period
DDR/DRA JV
<S> <C> <C> <C> <C> <C> <C>
1 1 $76,000,000 64.3% 64.3% 100% 01/28/99
1 2 $45,000,000 64.3% 64.3% 98% 01/28/99
1 3 $40,000,000 64.3% 64.3% 100% 01/28/99
1 4 $32,000,000 64.3% 64.3% 99% 01/28/99
1 5 $24,500,000 64.3% 64.3% 100% 01/28/99
1 6 $25,000,000 64.3% 64.3% 100% 01/28/99
------------ ----- -----
$242,500,000 64.3% 64.3%
- ----------------------------------------------------------------------------------------------------------------------------------
2 1 $410,000,000 68.6% 55.3% 98% 12/31/98
3 1 $178,000,000 69.7% 69.7% 98% 12/31/98
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Prime Retail III
<S> <C> <C> <C> <C> <C> <C>
4 1 $81,500,000 57.1% 51.8% 97% 02/16/99
4 2 $59,000,000 57.1% 51.8% 98% 02/16/99
4 3 $55,900,000 57.1% 51.8% 97% 02/16/99
4 4 $59,500,000 57.1% 51.8% 97% 02/16/99
4 5 $30,000,000 57.1% 51.8% 100% 02/16/99
------------ ----- -----
$285,900,000 57.1% 51.8%
- ----------------------------------------------------------------------------------------------------------------------------------
5 1 $243,000,000 74.4% 61.1% 94% 02/10/99
6 1 $288,000,000 56.1% 42.8% 67% 01/01/99
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Iowa Malls
<S> <C> <C> <C> <C> <C> <C>
7 1 $36,800,000 77.8% 70.3% 94% 12/22/98
7 2 $23,000,000 77.8% 70.3% 98% 12/22/98
7 3 $14,400,000 77.8% 70.3% 100% 12/22/98
7 4 $10,500,000 77.8% 70.3% 98% 12/22/98
------------ ----- -----
$84,700,000 77.8% 70.3%
- ----------------------------------------------------------------------------------------------------------------------------------
8 1 $78,100,000 68.6% 56.5% 96% 10/27/98
9 1 $69,000,000 70.8% 57.4% 93% 01/20/99
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Accor-M-Six Penvest I
<S> <C> <C> <C> <C> <C> <C>
10 1 $4,800,000 96.9% 19.8% 75% YE 12/31/1997
10 2 $4,500,000 96.9% 19.8% 64% YE 12/31/1997
10 3 $4,200,000 96.9% 19.8% 63% YE 12/31/1997
10 4 $4,000,000 96.9% 19.8% 67% YE 12/31/1997
10 5 $4,000,000 96.9% 19.8% 75% YE 12/31/1997
10 6 $4,000,000 96.9% 19.8% 72% YE 12/31/1997
10 7 $3,700,000 96.9% 19.8% 73% YE 12/31/1997
10 8 $3,500,000 96.9% 19.8% 64% YE 12/31/1997
10 9 $3,400,000 96.9% 19.8% 64% YE 12/31/1997
10 10 $3,400,000 96.9% 19.8% 41% YE 12/31/1997
10 11 $2,800,000 96.9% 19.8% 76% YE 12/31/1997
10 12 $2,700,000 96.9% 19.8% 62% YE 12/31/1997
10 13 $2,100,000 96.9% 19.8% 61% YE 12/31/1997
10 14 $2,000,000 96.9% 19.8% 76% YE 12/31/1997
10 15 $2,000,000 96.9% 19.8% 52% YE 12/31/1997
------------ ----- -----
$51,100,000 96.9% 19.8%
- ----------------------------------------------------------------------------------------------------------------------------------
11 1 $57,700,000 69.6% 57.8% 89% 11/01/98
12 1 $55,000,000 72.5% 59.2% 100% 02/04/99
13 1 $54,500,000 72.1% 59.3% 92% 12/18/98
14 1 $74,000,000 49.3% 34.0% 91% 6/30/98
15 1 $57,500,000 63.4% 52.0% 97% 02/24/99
- ----------------------------------------------------------------------------------------------------------------------------------
16 1 $50,000,000 65.3% 52.2% 98% 12/31/98
17 1 $42,500,000 72.3% 58.9% 100% 01/12/99
18 1 $46,900,000 64.8% 46.1% 100% 11/30/98
19 1 $88,000,000 79.0% 66.5% 90% 9/1/98
20 1 $45,000,000 66.3% 50.6% 100% 10/9/98
- ----------------------------------------------------------------------------------------------------------------------------------
21 1 $41,100,000 70.3% 57.6% 89% 6/8/98
22 1 $28,600,000 90.4% 68.0% 81% 2/1/98
23 1 $33,150,000 77.8% 69.3% 93% 11/11/98
24 1 $40,000,000 62.5% 48.2% 94% 12/04/98
25 1 $37,275,000 65.1% 52.3% 80% 9/31/98
- ----------------------------------------------------------------------------------------------------------------------------------
26 1 $33,850,000 66.7% 52.6% 80% 7/31/98
27 1 $28,000,000 74.7% 65.4% 95% 12/22/98
28 1 $34,000,000 60.0% 49.8% 94% 10/1/98
29 1 $27,100,000 73.6% 49.4% 100% 9/1/98
30 1 $26,850,000 66.1% 48.8% 100% 10/31/98
- ----------------------------------------------------------------------------------------------------------------------------------
31 1 $26,200,000 67.7% 60.3% 95% 01/07/99
32 1 $22,500,000 77.8% 63.0% 94% 6/10/98
33 1 $14,000,000 109.1% 24.9% 100% 8/1/98
34 1 $20,150,000 66.7% 54.6% 100% 6/30/98
35 1 $18,000,000 69.9% 29.5% 100% 09/14/98
- ----------------------------------------------------------------------------------------------------------------------------------
36 1 $17,500,000 70.3% 57.3% 87% 6/5/98
37 1 $18,000,000 66.9% 56.5% 100% 7/31/98
38 1 $19,100,000 62.6% 51.9% 94% 9/1/98
39 1 $116,000,000 51.5% 43.3% 94% 6/30/98
40 1 $14,700,000 80.7% 66.5% 80% 01/06/99
41 1 $15,300,000 97.5% 29.3% 100% 6/1/98
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Morgantown Mall and Commons
<S> <C> <C> <C> <C> <C> <C>
42 1 $55,000,000 79.5% 69.5% 93% 7/31/98
42 2 $18,000,000 79.5% 69.5% 98% 6/30/98
------------ ----- -----
$73,000,000 79.5% 69.5%
- ----------------------------------------------------------------------------------------------------------------------------------
43 1 $12,000,000 96.5% 0.0% 100% 8/12/98
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Audit/Agreed Upon Audits/Agreed Upon U/W Ongoing Actual Ongoing
Loan # Asset # U/W Occupancy Procedures Upfront Procedures Forward Capital Reserve Capital Reserve
DDR/DRA JV
<S> <C> <C> <C> <C> <C> <C>
1 1 97% Yes Yes $0.15 $0.15
1 2 98% Yes Yes $0.15 $0.15
1 3 98% Yes Yes $0.15 $0.15
1 4 98% Yes Yes $0.15 $0.15
1 5 98% Yes Yes $0.15 $0.15
1 6 98% Yes Yes $0.15 $0.15
- -----------------------------------------------------------------------------------------------------------------------------------
2 1 95% Yes Yes $250.00 $250.00
3 1 94% Yes Yes $0.15 $0.15
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Prime Retail III
<S> <C> <C> <C> <C> <C> <C>
4 1 95% Yes Yes $0.15 $0.15
4 2 95% Yes Yes $0.15 $0.15
4 3 95% Yes Yes $0.21 $0.39
4 4 95% Yes Yes $0.21 $0.21
4 5 95% Yes Yes $0.37 $0.37
- -----------------------------------------------------------------------------------------------------------------------------------
5 1 88% Yes Yes $0.14 $0.19
6 1 67% Yes Yes 5.00% 5.00%
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Iowa Malls
<S> <C> <C> <C> <C> <C> <C>
7 1 87% Yes Yes $0.20 $0.20
7 2 95% Yes Yes $0.27 $0.27
7 3 95% Yes Yes $0.25 $0.25
7 4 92% Yes Yes $0.15 $0.11
- -----------------------------------------------------------------------------------------------------------------------------------
8 1 91% Yes Yes $0.15 $0.15
9 1 93% Yes Yes $0.25 $0.25
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Accor-M-Six Penvest I
<S> <C> <C> <C> <C> <C> <C>
10 1 75% Yes Yes 0.00% 0.00%
10 2 52% Yes Yes 0.00% 0.00%
10 3 63% Yes Yes 0.00% 0.00%
10 4 67% Yes Yes 0.00% 0.00%
10 5 75% Yes Yes 0.00% 0.00%
10 6 72% Yes Yes 0.00% 0.00%
10 7 73% Yes Yes 0.00% 0.00%
10 8 64% Yes Yes 0.00% 0.00%
10 9 64% Yes Yes 0.00% 0.00%
10 10 41% Yes Yes 0.00% 0.00%
10 11 76% Yes Yes 0.00% 0.00%
10 12 62% Yes Yes 0.00% 0.00%
10 13 61% Yes Yes 0.00% 0.00%
10 14 76% Yes Yes 0.00% 0.00%
10 15 64% Yes Yes 0.00% 0.00%
- -----------------------------------------------------------------------------------------------------------------------------------
11 1 88% Yes Yes $0.15 $0.10
12 1 97% Yes Yes $0.15 $0.15
13 1 91% Yes No $0.19 $0.19
14 1 90% Yes Yes $0.05 $3.59
15 1 92% Yes Yes $0.21 $0.21
- -----------------------------------------------------------------------------------------------------------------------------------
16 1 95% No Yes $0.15 $0.15
17 1 98% Yes Yes $0.15 $0.15
18 1 95% Yes Yes $0.20 $0.20
19 1 90% Yes Yes $0.15 $0.15
20 1 95% Yes Yes $0.05 $0.05
- -----------------------------------------------------------------------------------------------------------------------------------
21 1 89% Yes Yes $0.20 $0.20
22 1 81% No No $0.40 $0.40
23 1 93% Yes Yes $0.20 $0.20
24 1 91% Yes Yes $0.20 $0.20
25 1 80% Yes No $0.20 $0.20
- -----------------------------------------------------------------------------------------------------------------------------------
26 1 80% No No $0.14 $0.14
27 1 91% Yes Yes $262.00 $262.00
28 1 93% No Yes $0.27 $0.27
29 1 92% No No $0.20 $0.20
30 1 95% No No $0.20 $0.20
- -----------------------------------------------------------------------------------------------------------------------------------
31 1 88% Yes Yes $0.39 $0.39
32 1 94% No No $0.46 $0.33
33 1 100% Yes Yes $0.00 $0.00
34 1 95% Yes Yes $0.20 $0.20
35 1 95% No $0.15 $0.15
- -----------------------------------------------------------------------------------------------------------------------------------
36 1 87% No No $0.15 $0.15
37 1 95% No Yes $0.20 $0.20
38 1 93% No Yes $0.55 $0.55
39 1 85% Yes Yes 5.00% 5.00%
40 1 85% Yes Yes $250.00 $250.00
41 1 100% Yes Yes $0.00 $0.00
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Morgantown Mall and Commons
<S> <C> <C> <C> <C> <C> <C>
42 1 82% Yes Yes $0.15 $0.15
42 2 90% Yes Yes $0.15 $0.15
- -----------------------------------------------------------------------------------------------------------------------------------
43 1 100% No Yes $0.00 $0.00
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Lease Expiration
Loan # Asset # Reserve Units Tenant 1 Date % of Total SF
DDR/DRA JV
<S> <C> <C> <C> <C> <C>
1 1 $psf AMC Theater 2021 14%
1 2 $psf Haggens 2021 20%
1 3 $psf Oshman's Superstore 2017 18%
1 4 $psf Byerly's 2016 20%
1 5 $psf MJ Designs 2011 17%
1 6 $psf Kohl's 2016 32%
- ----------------------------------------------------------------------------------------------------------------------------------
2 1 $/unit
3 1 $psf Nordstrom Rack 2013 9%
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Prime Retail III
<S> <C> <C> <C> <C> <C>
4 1 $psf Spiegal Inc. 2006 5%
4 2 $psf VF Factory Outlet 2005 7%
4 3 $psf VF Factory Outlet 2004 8%
4 4 $psf Nike 2005 5%
4 5 $psf Old Navy 2000 16%
- ----------------------------------------------------------------------------------------------------------------------------------
5 1 $psf Macy's 2222 18%
6 1 %revenue
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Iowa Malls
<S> <C> <C> <C> <C> <C>
7 1 $psf Walmart 1999 19%
7 2 $psf JC Penney 2003 30%
7 3 $psf JC Penney 2002 27%
7 4 $psf Menard's 2003 22%
- ----------------------------------------------------------------------------------------------------------------------------------
8 1 $psf Parisian 2014 42%
9 1 $psf Humana 2008 31%
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Accor-M-Six Penvest I
<S> <C> <C> <C> <C> <C>
10 1 %revenue
10 2 %revenue
10 3 %revenue
10 4 %revenue
10 5 %revenue
10 6 %revenue
10 7 %revenue
10 8 %revenue
10 9 %revenue
10 10 %revenue
10 11 %revenue
10 12 %revenue
10 13 %revenue
10 14 %revenue
10 15 %revenue
- ----------------------------------------------------------------------------------------------------------------------------------
11 1 $psf Babies 'R Us 2018 8%
12 1 $psf Bed, Bath & Beyond 2013 14%
13 1 $psf Affiliated Health Services 2020 32%
14 1 $psf
15 1 $psf Kneedler-Fuchere 2007 4%
- ----------------------------------------------------------------------------------------------------------------------------------
16 1 $psf Copelands Sports 2012 13%
17 1 $psf Dick's Sporting Goods 2011 19%
18 1 $psf PRC 2001 45%
19 1 $psf DFS Hawaii 1999 36%
20 1 $psf Lakeshore Athletic Club Lincoln Park, L.P. 2008 100%
- ----------------------------------------------------------------------------------------------------------------------------------
21 1 $psf Meldrum & Fewsmith 2002 18%
22 1 $psf Activision Inc. 2007 12%
23 1 $psf General Motors 2000 43%
24 1 $psf Pacific Theatres 2005 28%
25 1 $psf Delaware Summit Assett Managment 2001 10%
- ----------------------------------------------------------------------------------------------------------------------------------
26 1 $psf Elsag Bailey 2008 79%
27 1 $/unit
28 1 $psf Santa Fe 2001 & 2007 75%
29 1 $psf District of Columbia 2008 101%
30 1 $psf Cobb Theaters 2016 307%
- ----------------------------------------------------------------------------------------------------------------------------------
31 1 $psf Bergner's 2004 24%
32 1 $psf UCLA 1999 26%
33 1 $psf Dictaphone Corporation 2018 100%
34 1 $psf V-Tel 2013 96%
35 1 $psf Bed, Bath, and Beyond 2008 31%
- ----------------------------------------------------------------------------------------------------------------------------------
36 1 $psf Home Depot 2018 37%
37 1 $psf
38 1 $psf Tribune 2003 39%
39 1 %revenue
40 1 $/unit
41 1 $psf Bently Mills 2015 100%
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Morgantown Mall and Commons
<S> <C> <C> <C> <C> <C>
42 1 $psf Elder Beerman 2010 13%
42 2 $psf K-Mart 2021 58%
- ---------------------------------------------------------------------------------------------------------------------------------
43 1 $psf Perry Judd's 2018 100%
- ---------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Lease Expiration
Loan # Asset # Tenant 2 Date % of Total SF Tenant 3
DDR/DRA JV
<S> <C> <C> <C> <C> <C>
1 1 Smith's Food & Drug 2021 11% Homeplace
1 2 Homeplace 2018 17% Office Depot
1 3 Circuit City 2016 12% Linen's N Things
1 4 Homeplace 2017 19% TJMaxx
1 5 United Artists 2012 17% Toys R Us
1 6 Homeplace 2016 21% Gander Mountain
- --------------------------------------------------------------------------------------------------------------------------------
2 1
3 1 ABC Home 2005 9% Circuit City
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Prime Retail III
<S> <C> <C> <C> <C> <C>
4 1 Levi's 2006 3% Bass Company
4 2 Liz Claiborne 2010 3% Reebok
4 3 Springmaid-Wamsutta 2002 4% Espirit Direct
4 4 Gap 2005 4% Reebok
4 5 Lenox 2002 9% Corning/Revere
- --------------------------------------------------------------------------------------------------------------------------------
5 1 JC Penney 2023 15% Montgomery Ward
6 1
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Iowa Malls
<S> <C> <C> <C> <C> <C>
7 1 Younker's 2006 15% Wal-Mart
7 2 Sears 2001 11% Younker's
7 3 Younker's 2008 14% Younker's
7 4 JC Penney 2002 14% Menard's
- --------------------------------------------------------------------------------------------------------------------------------
8 1 Park Place Athletic Club 2014 3% Structure
9 1 KZF Architects 2001 6% Grant Thornton
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Accor-M-Six Penvest I
<S> <C> <C> <C> <C> <C>
10 1
10 2
10 3
10 4
10 5
10 6
10 7
10 8
10 9
10 10
10 11
10 12
10 13
10 14
10 15
- --------------------------------------------------------------------------------------------------------------------------------
11 1 Joanne's Etc 2000 10% Copelands
12 1 Borders Books and Music 2010 10% F&M
13 1 St. John's Hospital & Medical Center 2005 23%
14 1
15 1 Guy Chaddock 2007 3%
- --------------------------------------------------------------------------------------------------------------------------------
16 1 Barnes & Nobles 2011 7% Petsmart
17 1 Star Loek Theater 1999 12% Marshalls
18 1 ROH 2000 9% GSA
19 1 Aramark 2002 7% Hawaiian Airlines
20 1
- --------------------------------------------------------------------------------------------------------------------------------
21 1 Star Bank 2003 14% GSA Hud
22 1
23 1 United American Healthcare 2005 24% GSA - ATF
24 1 New Line Cinema 2003 35% Optimatrix
25 1 XXX Cal Inc. 1999 9% Syska & Hennessey
- --------------------------------------------------------------------------------------------------------------------------------
26 1 AON (Affinity Ins) 2008 12%
27 1
28 1 Motorola 2000 9% Decisions Consultants
29 1
30 1 Sarasota Memorial 2003 232%
- --------------------------------------------------------------------------------------------------------------------------------
31 1 JC Penney 1999 18% Walgreen's
32 1 Dr. Hamrell 1999 12% Dr. Marrs
33 1
34 1
35 1 Dicks 2017 29% Petsmart
- --------------------------------------------------------------------------------------------------------------------------------
36 1 Morris Kirschman 2003 20%
37 1
38 1 SDI Consultants 2001 9% Perkin-Elmer
39 1
40 1
41 1
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Morgantown Mall and Commons
<S> <C> <C> <C> <C> <C>
42 1 Proffitts 2011 16% Sears
42 2 Phar-Mor 2006 18% OfficeMax
- --------------------------------------------------------------------------------------------------------------------------------
43 1
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Lease Expiration
Loan # Asset # Date % of Total SF
DDR/DRA JV
1 1 2012 9%
1 2 2010 10%
1 3 2011 10%
1 4 2007 11%
1 5 2006 13%
1 6 2011 15%
- --------------------------------------------------------------
2 1
3 1 2018 9%
- --------------------------------------------------------------
Prime Retail III
4 1 2004 2%
4 2 2000 2%
4 3 2002 3%
4 4 2000 4%
4 5 2001 8%
- --------------------------------------------------------------
5 1 2023 13%
6 1
- --------------------------------------------------------------
Iowa Malls
7 1 1999 19%
7 2 2002 14%
7 3 2008 14%
7 4 2003 22%
- --------------------------------------------------------------
8 1 2003 3%
9 1 2005 4%
- --------------------------------------------------------------
Accor-M-Six Penvest I
10 1
10 2
10 3
10 4
10 5
10 6
10 7
10 8
10 9
10 10
10 11
10 12
10 13
10 14
10 15
- --------------------------------------------------------------
11 1 2012 8%
12 1 2000 10%
13 1
14 1
15 1
- --------------------------------------------------------------
16 1 2012 7%
17 1 2007 9%
18 1 2002 9%
19 1 2008 10%
20 1
- --------------------------------------------------------------
21 1 2003 11%
22 1
23 1 2003 13%
24 1 2002 7%
25 1 2001 9%
- --------------------------------------------------------------
26 1
27 1
28 1 2002 4%
29 1
30 1
- --------------------------------------------------------------
31 1 1999 3%
32 1 1999 8%
33 1
34 1
35 1 2018 15%
- --------------------------------------------------------------
36 1
37 1
38 1 2003 7%
39 1
40 1
41 1
- --------------------------------------------------------------
Morgantown Mall and Commons
42 1 2005 16%
42 2 2011 10%
- --------------------------------------------------------------
43 1
- --------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
Annex B
Loan # Asset # Property Name Address
Lorretto/Playhouse
<S> <C> <C> <C>
44 1 Loretto Town Center 505 S. Main Street
44 2 Playhouse Square 1220 Huron Road
- -----------------------------------------------------------------------------------------------------------------------------
45 1 Centerpark One Office Building 4041 Powder Mill Road
46 1 Petersilie Portfolio Various Locations
47 1 Angel Park Apt 8440 Westcliff Drive
48 1 Perry Judd's - Pikesville 1323 Greenwood Rd.
49 1 Dearborn Atrium 2143 Michigan Ave.
- -----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
South Park & Pierre Malls
<S> <C> <C> <C>
50 1 South Park Mall 901 11th Street SW
50 2 Pierre Mall 1615 N. Harrison Ave
- -----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Sterling Inn & Sterling Commons
<S> <C> <C> <C>
51 1 Sterling Inn 17797 Lindero
51 2 Sterling Commons 17797 Lindero
- -----------------------------------------------------------------------------------------------------------------------------
52 1 Western Bank Plaza 505 Marquette Ave.
53 1 Holiday Inn Shoreline-Corpus 1102 South Shoreline Blvd.
- -----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Spring Properties, Inc.
<S> <C> <C> <C>
54 1 Symantec Buildings 133, 135, and 175 West Broadway
54 2 Planing Mill 3rd & Lawrence
- -----------------------------------------------------------------------------------------------------------------------------
55 1 Palm Plaza Shopping Center 249-251A Royal Palm Way
56 1 City Plaza 15-55 and 73 Fort Eddy Rd
57 1 400 -450 Country Club Drive 400-450 Country Club Drive
58 1 Dunkirk Market Center 1282-1412 Southern Maryland Blvd
59 1 Swan Park Apts. 1231 Brookview Dr.
- -----------------------------------------------------------------------------------------------------------------------------
60 1 Valley Fair 468 Chancellor Ave
61 1 Green Bay Plaza 1550 West Mason
62 1 Sea Cliff Office Park 2100-2134 Main Street
63 1 Sheffield Square 2835 N. Sheffield Avenue
64 1 Woodmill Apartments 1300 S. Farmview Drive
- -----------------------------------------------------------------------------------------------------------------------------
65 1 Mall & Starview Gardens 250-260 Franklin Turnpike
66 1 Park Shelton Apartments 15 East Kirby
67 1 Liberty Plaza 4310-4340 Genesee Avenue
68 1 Santa Monica Medical Plaza 1260 15th Street
69 1 Lumber Exchange 10 South 5th Street
- -----------------------------------------------------------------------------------------------------------------------------
70 1 Horizon Corporate Office Building 26100 American Drive
71 1 Willow Lake 303 E. Army Trail Road
72 1 Washington Square Plaza 306 S. Washington Blvd.
73 1 Hawaiian Garden Center 12090-12144 Carson St.
74 1 Shorebird Apartments 1362 South Vineyard Avenue
- -----------------------------------------------------------------------------------------------------------------------------
75 1 Collegeview Towers & Apts. 141 Fulton Street
76 1 One Congressional Place 6700 Pacific Coast Highway
- -----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Windridge Apartments
<S> <C> <C> <C>
77 1 Windridge Apartments I 3674 Camelot Drive, S.E.
77 2 Windridge Apartments II 3674 Camelot Drive, S.E.
- -----------------------------------------------------------------------------------------------------------------------------
78 1 3701 14th Ave. 3701 14th Ave.
79 1 Fairbanks Village Plaza 16236 San Dieguito Rd.
80 1 Eagle Ridge Townhomes 2375 Eagle Ridge Drive
81 1 Red Oak Medical Arts Complex 17200/17202 Red Oak Road
- -----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Beechwood Apts.and The Oaks Apts.
<S> <C> <C> <C>
82 1 Beechwood Apts. 7872 Ogden Avenue
82 2 The Oaks Apts. 700 West Little Creek
- -----------------------------------------------------------------------------------------------------------------------------
83 1 510 at Metropark 510 Thornall St.
84 1 Green Oaks Park Hotel 6901 West Feeway
85 1 Dillen Products 16455 & 16460 East High Street
86 1 Lincoln Office Building 26200 American Drive
87 1 Hamtramck Town Center 9023 Joseph Champau Street
- -----------------------------------------------------------------------------------------------------------------------------
88 1 Pine Tree Plaza 1311, 1317 & 1333 Buckeye Avenue
89 1 Ponderosa SC 5701 Yadkin Road
90 1 Fairfield Inn Crabtree 2201 Summit Park Lane
91 1 Eagle View Apartments 1000 Eagle View Drive
92 1 Hampton Inn & Suites 1880 Richmond Road
- -----------------------------------------------------------------------------------------------------------------------------
93 1 Oaks of Flagridge Apartments 127 Plantation Drive West
94 1 Victory Center 200 Arthur Way
95 1 Millers Outpost Village 110-140 Eight Street
96 1 Dove Building 1241 East Hillsdale Blvd.
97 1 Pleasant Valley Marketplace 4221 Pleasant Valley Rd.
- -----------------------------------------------------------------------------------------------------------------------------
98 1 Plumtree Apartments 284 North Carnegie Avenue
99 1 Back Bay Center 2651 Irvine Avenue
100 1 Lexington Plaza 1682-1754 Lexington Avenue, North
101 1 Foundry Wharf Business Park 625 Second Street
102 1 Circuit City-Harper Woods 20570 Kelly Road
- -----------------------------------------------------------------------------------------------------------------------------
103 1 Pear Tree Place 580 South High Street
104 1 1000 South Avenue 1000 South Avenue
- -----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Loan # Asset # City State Zip Property Type Year Built/ Renovated
Lorretto/Playhouse
<S> <C> <C> <C> <C> <C> <C>
44 1 Las Cruces NM 88001 Office 1965/1988
44 2 Cleveland OH 44115 Office 1920/1985
- -------------------------------------------------------------------------------------------------------------------------------
45 1 Calverton MD 20705 Office 1985
46 1 Boone NC 28607 Multifamily 1970/1980
47 1 Las Vegas NV 89128 Multifamily 1987/1997
48 1 Pikesville MD 21208 Industrial 1935/1996
49 1 Dearborn MI 48126 Office 1931/1987
- -------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
South Park & Pierre Malls
<S> <C> <C> <C> <C> <C> <C>
50 1 Spencer IA 51301 Retail-Anchored 1980/1994
50 2 Pierre SD 57501 Retail-Anchored 1980/1993
- -------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Sterling Inn & Sterling Commons
<S> <C> <C> <C> <C> <C> <C>
51 1 Victorville CA 92392 Healthcare 1990
51 2 Victorville CA 92392 Healthcare 1994/1997
- -------------------------------------------------------------------------------------------------------------------------------
52 1 Albuquerque NM 87102 Office 1965/1984
53 1 Corpus Christi TX 78401 Hotel-Full Service 1975/1991
- -------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Spring Properties, Inc.
<S> <C> <C> <C> <C> <C> <C>
54 1 Eugene OR 97401 Office 1956/1993
54 2 Eugene OR 97401 Industrial 1940/1997
- -------------------------------------------------------------------------------------------------------------------------------
55 1 Palm Beach FL 33480 Office 1969/1997
56 1 Concord NH 03301 Retail-Anchored 1994
57 1 Eugene OR 97401 Office 1990/1992
58 1 Dunkirk MD 20754 Retail-Anchored 1993
59 1 Toledo OH 43615 Multifamily 1974/1997
- -------------------------------------------------------------------------------------------------------------------------------
60 1 Irvington NJ 07111 Retail-Unanchored 1872/1963
61 1 Green Bay WI 54304 Retail-Anchored 1968/1997
62 1 Huntington Beach CA 92648 Office 1977/1997
63 1 Chicago IL 60657 Office 1915/1988
64 1 Dover DE 19904 Multifamily 1988/1990
- -------------------------------------------------------------------------------------------------------------------------------
65 1 Mahwah NJ 07430 Multifamily 1970/1995
66 1 Detroit MI 48202 Multifamily 1926/1996
67 1 San Diego CA 92117 Retail-Unanchored 1988
68 1 Santa Monica CA 90404 Office 1973/1998
69 1 Minneapolis MN 55402 Office 1885/1980
- -------------------------------------------------------------------------------------------------------------------------------
70 1 Southfield MI 48034 Office 1988
71 1 Bloomingdale IL 60139 Office 1987
72 1 Royal Oak MI 48067 Office 1927/1988
73 1 Hawaiian Gardens CA 90716 Retail-Anchored 1987/1992
74 1 Mesa AZ 85210 Multifamily 1983/1998
- -------------------------------------------------------------------------------------------------------------------------------
75 1 Poughkeepsie NY 12601 Multifamily 1964/1981
76 1 Long Beach CA 90803 Office 1983
- -------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Windridge Apartments
<S> <C> <C> <C> <C> <C> <C>
77 1 Grand Rapids MI 49596 Multifamily 1970/1992
77 2 Grand Rapids MI 49546 Multifamily 1970/1992
- -------------------------------------------------------------------------------------------------------------------------------
78 1 Brooklyn NY 11218 Industrial 1915/1992
79 1 Rancho Santa Fe CA 92014 Office 1983/1995
80 1 Centerville OH 45459 Multifamily 1986
81 1 Houston TX 77090 Office 1978/1984
- -------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Beechwood Apts.and The Oaks Apts.
<S> <C> <C> <C> <C> <C> <C>
82 1 Norfolk VA 23505 Multifamily 1984/1996
82 2 Norfolk VA 23505 Multifamily 1979/1995
- -------------------------------------------------------------------------------------------------------------------------------
83 1 Edison NJ 08837 Office 1984/1997
84 1 Fort Worth TX 76116 Hotel-Full Service 1965/1996
85 1 Middlefield OH 44062 Industrial 1993/1998
86 1 Southfield MI 48034 Office 1988
87 1 Hamtramck MI 48212 Retail-Anchored 1988/1996
- -------------------------------------------------------------------------------------------------------------------------------
88 1 Ames IA 50010 Retail-Anchored 1997
89 1 Fayetteville NC 28303 Retail-Anchored 1988
90 1 Raleigh NC 27612 Hotel-Ltd. Service 1996
91 1 Birmingham AL 35212 Multifamily 1974/1997
92 1 Williamsburg VA 23185 Hotel-Ltd. Service 1997
- -------------------------------------------------------------------------------------------------------------------------------
93 1 Lake Jackson TX 77566 Multifamily 1985/1994
94 1 Newport News VA 23602 Retail-Anchored 1995
95 1 Upland CA 91786 Retail-Quasi-Anchored 1972/1986
96 1 Foster City CA 94404 Office 1980/1997
97 1 Virginia Beach VA 23454 Retail-Anchored 1988/1996
- -------------------------------------------------------------------------------------------------------------------------------
98 1 San Diego CA 91711 Multifamily 1973/1998
99 1 Costa Mesa CA 92627 Retail-Anchored 1981
100 1 Roseville MN 55113 Retail-Unanchored 1930/1991
101 1 Petaluma CA 94952 Office 1940/1996
102 1 Harper Woods MI 48224 Retail-Quasi-Anchored 1997
- -------------------------------------------------------------------------------------------------------------------------------
103 1 Columbus OH 43215 Office 1980/1994
104 1 Staten Island NY 10314 Office 1993
- -------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Cut-off Date Cut-off Date
Principal Principal Balance
Loan # Asset # Units Unit Type Balance /Unit 1997 Revenue
Lorretto/Playhouse
<S> <C> <C> <C> <C> <C> <C>
44 1 116,895 sf $6,828,136 $58 $1,456,592
44 2 101,204 sf $4,643,132 $46 $1,273,313
------- ----------- --- ----------
218,099 $11,471,269 $53 $2,729,905
- --------------------------------------------------------------------------------------------------------------------------------
45 1 119,901 sf $11,248,709 $94 $2,245,556
46 1 411 units $11,070,193 $26,935 $2,224,855
47 1 248 units $10,828,449 $43,663 $2,092,698
48 1 175,945 sf $10,768,722 $61
49 1 134,763 sf $10,461,537 $78 $2,023,098
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
South Park & Pierre Malls
<S> <C> <C> <C> <C> <C> <C>
50 1 222,307 sf $6,301,371 $28 $1,337,232
50 2 188,028 sf $3,839,898 $20 $977,576
------- ----------- --- ----------
410,335 $10,141,269 $25 $2,314,808
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Sterling Inn & Sterling Commons
<S> <C> <C> <C> <C> <C> <C>
51 1 132 beds $6,872,718 $52,066 $2,849,383
51 2 62 beds $3,151,029 $50,823 $1,586,916
--- ----------- ------- ----------
194 $10,023,747 $51,669 $4,436,299
- --------------------------------------------------------------------------------------------------------------------------------
52 1 226,213 sf $9,319,356 $41 $2,798,231
53 1 368 rooms $9,145,155 $24,851 $7,568,692
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Spring Properties, Inc.
<S> <C> <C> <C> <C> <C> <C>
54 1 151,000 sf $5,427,504 $36 $1,067,214
54 2 105,993 sf $3,618,336 $34 $711,476
------- ---------- --- ----------
256,993 $9,045,840 $35 $1,778,690
- --------------------------------------------------------------------------------------------------------------------------------
55 1 90,000 sf $8,942,665 $99 $1,622,969
56 1 103,805 sf $8,884,560 $86 $1,498,544
57 1 105,792 sf $8,564,742 $81 $1,800,820
58 1 86,289 sf $7,698,157 $89 $1,204,395
59 1 492 units $7,675,338 $15,600 $1,847,292
- --------------------------------------------------------------------------------------------------------------------------------
60 1 145,050 sf $7,650,951 $53
61 1 144,206 sf $7,477,333 $52 $1,346,587
62 1 136,937 sf $7,397,077 $54 $1,665,235
63 1 83,700 sf $7,392,796 $88 $1,928,550
64 1 180 units $7,295,906 $40,533 $1,248,538
- --------------------------------------------------------------------------------------------------------------------------------
65 1 154 units $7,251,308 $47,086 $1,649,835
66 1 262 units $7,100,000 $27,099 $1,770,799
67 1 71,285 sf $7,065,211 $99 $1,271,433
68 1 76,695 sf $6,958,836 $91 $2,122,987
69 1 217,240 sf $6,943,833 $32 $2,593,107
- --------------------------------------------------------------------------------------------------------------------------------
70 1 93,721 sf $6,887,779 $73 $1,579,472
71 1 67,992 sf $6,847,104 $101 $1,411,150
72 1 86,967 sf $6,729,969 $77 $1,494,846
73 1 78,425 sf $6,671,845 $85 $1,146,129
74 1 241 units $6,652,570 $27,604 $1,702,063
- --------------------------------------------------------------------------------------------------------------------------------
75 1 142 units $6,641,748 $46,773 $1,372,319
76 1 73,769 sf $6,595,293 $89 $1,301,560
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Windridge Apartments
<S> <C> <C> <C> <C> <C> <C>
77 1 304 units $5,875,207 $19,326 $1,541,738
77 2 24 units $547,689 $22,820 $171,302
--- ---------- ------- ----------
328 $6,422,896 $19,582 $1,713,040
- --------------------------------------------------------------------------------------------------------------------------------
78 1 477,600 sf $6,371,725 $13 $2,423,452
79 1 58,123 sf $6,287,121 $108 $1,214,707
80 1 205 units $6,181,996 $30,156 $1,195,309
81 1 85,471 sf $6,076,097 $71 $1,530,156
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Beechwood Apts.and The Oaks Apts.
<S> <C> <C> <C> <C> <C> <C>
82 1 136 units $4,007,060 $29,464 $845,548
82 2 86 units $1,963,856 $22,836 $464,995
--- ---------- ------- ----------
222 $5,970,915 $26,896 $1,310,543
- --------------------------------------------------------------------------------------------------------------------------------
83 1 64,787 sf $5,650,202 $87 $1,305,154
84 1 284 rooms $5,563,007 $19,588 $5,717,230
85 1 173,800 sf $5,548,082 $32 $702,499
86 1 71,815 sf $5,167,980 $72 $1,246,440
87 1 93,880 sf $5,160,179 $55 $1,131,230
- --------------------------------------------------------------------------------------------------------------------------------
88 1 70,764 sf $5,064,079 $72
89 1 121,874 sf $5,051,512 $41 $910,679
90 1 125 rooms $5,046,569 $40,373 $2,168,491
91 1 168 units $4,980,155 $29,644 $880,635
92 1 100 rooms $4,957,060 $49,571
- --------------------------------------------------------------------------------------------------------------------------------
93 1 144 units $4,951,325 $34,384 $948,113
94 1 69,000 sf $4,846,614 $70 $788,260
95 1 60,712 sf $4,732,094 $78 $824,159
96 1 39,633 sf $4,667,601 $118 $603,909
97 1 82,807 sf $4,640,202 $56 $916,488
- --------------------------------------------------------------------------------------------------------------------------------
98 1 109 units $4,639,237 $42,562 $922,500
99 1 53,464 sf $4,630,212 $87 $766,153
100 1 90,886 sf $4,560,470 $50 $817,623
101 1 90,725 sf $4,519,094 $50 $988,135
102 1 27,871 sf $4,490,947 $191
- --------------------------------------------------------------------------------------------------------------------------------
103 1 57,059 sf $4,442,998 $78 $888,132
104 1 38,221 sf $4,394,313 $115 $845,729
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Most Recent Most Most Recent
Loan # Asset # Period Revenue Recent Period Underwritten Revenue 1997 NOI Period NOI
Lorretto/Playhouse
<S> <C> <C> <C> <C> <C> <C>
44 1 $1,498,535 6/30/98 $1,497,362 $850,903 $890,056
44 2 $1,371,333 8/31/98 $1,305,129 $730,915 $807,999
---------- ---------- ---------- ----------
$2,869,868 $2,802,491 $1,581,818 $1,698,055
- -----------------------------------------------------------------------------------------------------------------------------------
45 1 $2,305,232 6/30/98 $2,307,957 $1,381,538 $1,487,504
46 1 $2,210,032 4/30/98 $2,223,971 $1,615,630 $1,582,635
47 1 $2,070,432 4/30/98 $2,076,853 $1,312,364 $1,260,719
48 1
49 1 $2,153,601 9/30/98 $2,358,520 $1,237,666 $1,328,721
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
South Park & Pierre Malls
<S> <C> <C> <C> <C> <C> <C>
50 1 $1,387,219 8/31/98 $1,356,721 $783,525 $913,171
50 2 $956,084 8/31/98 $967,687 $555,649 $585,377
---------- ---------- ---------- ----------
$2,343,303 $2,324,408 $1,339,174 $1,498,548
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Sterling Inn & Sterling Commons
<S> <C> <C> <C> <C> <C> <C>
51 1 $2,919,214 6/30/98 $3,108,396 $1,040,346 $1,085,492
51 2 $1,636,897 6/30/98 $1,618,094 $473,404 $482,875
---------- ---------- ---------- ----------
$4,556,111 $4,726,490 $1,513,750 $1,568,367
- -----------------------------------------------------------------------------------------------------------------------------------
52 1 $2,663,341 7/31/98 $2,726,691 $1,708,550 $1,502,969
53 1 $7,594,206 8/28/98 $7,444,026 $1,898,175 $1,782,767
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Spring Properties, Inc.
<S> <C> <C> <C> <C> <C> <C>
54 1 $1,078,845 6/30/98 $997,156 $927,029 $965,621
54 2 $719,230 6/30/98 $664,771 $618,020 $643,748
---------- ---------- ---------- ----------
$1,798,075 $1,661,927 $1,545,049 $1,609,369
- -----------------------------------------------------------------------------------------------------------------------------------
55 1 $1,713,854 6/30/98 $1,841,937 $872,865 $992,719
56 1 $1,509,750 2/28/98 $1,462,017 $1,108,096 $1,108,096
57 1 $1,811,519 6/30/98 $1,799,710 $1,289,151 $1,259,989
58 1 $1,200,459 6/30/98 $1,255,796 $962,202 $960,231
59 1 $1,840,595 7/31/98 $1,928,402 $1,067,892 $873,268
- -----------------------------------------------------------------------------------------------------------------------------------
60 1 1/0/00
61 1 $1,412,810 7/31/98 $1,355,783 $956,282 $1,075,254
62 1 $1,658,757 6/30/98 $1,937,601 $754,042 $707,904
63 1 $1,901,653 6/30/98 $1,915,729 $1,208,290 $1,177,745
64 1 $1,273,086 6/30/98 $1,247,734 $874,230 $918,684
- -----------------------------------------------------------------------------------------------------------------------------------
65 1 $1,719,559 6/30/98 $1,708,210 $1,067,960 $1,117,056
66 1 $1,767,099 8/31/98 $1,789,908 $764,050 $811,884
67 1 $1,362,964 7/31/98 $1,341,907 $923,599 $1,040,220
68 1 $2,059,164 4/30/98 $2,322,823 $1,489,730 $1,442,676
69 1 $2,908,309 7/31/98 $2,852,283 $939,703 $1,221,600
- -----------------------------------------------------------------------------------------------------------------------------------
70 1 $1,593,909 6/30/98 $1,694,416 $811,126 $827,908
71 1 $1,393,815 6/30/98 $1,320,304 $961,972 $920,648
72 1 $1,492,559 8/31/98 $1,486,180 $869,757 $839,546
73 1 $1,133,665 7/31/98 $1,078,432 $896,706 $897,038
74 1 $1,737,097 4/30/98 $1,645,544 $1,017,915 $1,040,758
- -----------------------------------------------------------------------------------------------------------------------------------
75 1 $1,394,130 8/31/98 $1,334,626 $915,190 $903,987
76 1 $1,313,307 6/30/98 $1,414,466 $763,467 $762,464
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Windridge Apartments
<S> <C> <C> <C> <C> <C> <C>
77 1 $1,602,413 7/31/98 $1,682,329 $734,165 $753,206
77 2 $178,046 7/31/98 $174,612 $106,089 $111,147
---------- ---------- ---------- ----------
$1,780,459 $1,856,941 $840,254 $864,353
- -----------------------------------------------------------------------------------------------------------------------------------
78 1 $2,511,690 6/30/98 $2,494,705 $1,041,385 $1,177,850
79 1 $1,333,471 8/31/98 $1,329,560 $717,418 $829,103
80 1 $1,204,931 8/31/98 $1,237,943 $642,700 $651,892
81 1 $1,557,421 8/31/98 $1,513,779 $812,641 $832,194
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Beechwood Apts.and The Oaks Apts.
<S> <C> <C> <C> <C> <C> <C>
82 1 $843,891 4/30/98 $835,888 $562,202 $566,021
82 2 $470,720 1/30/98 $467,207 $272,019 $270,217
---------- ---------- ---------- ----------
$1,314,611 $1,303,095 $834,221 $836,238
- ------------------------------------------------------------------------------------------------------------------------------------
83 1 $1,363,794 9/30/98 $1,321,428 $736,062 $788,649
84 1 $5,547,645 10/31/98 $5,547,645 $1,404,774 $1,247,172
85 1 $710,749 8/31/98 $764,940 $691,099 $693,017
86 1 $1,279,662 7/31/98 $1,314,460 $645,863 $637,521
87 1 $1,171,351 4/30/98 $1,129,153 $840,131 $868,929
- ------------------------------------------------------------------------------------------------------------------------------------
88 1 $881,566
89 1 $935,202 6/30/98 $898,921 $682,287 $699,871
90 1 $2,227,497 8/31/98 $2,089,501 $853,173 $893,826
91 1 $906,174 7/31/98 $925,349 $602,697 $636,460
92 1 $2,077,032 6/30/98 $2,061,517 $1,073,870
- ------------------------------------------------------------------------------------------------------------------------------------
93 1 $955,612 8/31/98 $980,003 $531,440 $539,277
94 1 $796,916 5/31/98 $817,937 $640,520 $640,495
95 1 $879,264 6/30/98 $866,203 $589,634 $652,426
96 1 $789,696 7/31/98 $818,836 $413,674 $595,371
97 1 $897,533 6/30/98 $826,863 $668,220 $665,589
- ------------------------------------------------------------------------------------------------------------------------------------
98 1 $956,822 9/30/98 $983,270 $497,543 $529,237
99 1 $784,211 8/31/98 $779,532 $580,100 $598,908
100 1 $890,895 8/31/98 $901,533 $465,230 $544,574
101 1 $1,002,544 4/30/98 $1,008,185 $741,590 $748,568
102 1 $466,020
- ------------------------------------------------------------------------------------------------------------------------------------
103 1 $979,420 8/31/98 $968,512 $539,938 $630,304
104 1 $874,960 5/31/98 $855,285 $652,735 $664,944
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Net Cash Flow
Loan # Asset # Underwritten NOI Net Cash Flow NOI DSCR DSCR Lock Box
Lorretto/Playhouse
<S> <C> <C> <C> <C> <C> <C>
44 1 $891,885 $758,364 1.51 1.23 Hard
44 2 $709,266 $548,791 1.51 1.23 Hard
---------- ---------- ---- ----
$1,601,151 $1,307,155 1.51 1.23
- -----------------------------------------------------------------------------------------------------------------------------------
45 1 $1,457,843 $1,277,225 1.45 1.27 Hard
46 1 $1,533,045 $1,367,421 1.60 1.43
47 1 $1,268,059 $1,196,749 1.32 1.25
48 1 $957,343 1.00 1.00 Hard
49 1 $1,399,846 $1,221,949 1.46 1.27 Hard
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
South Park & Pierre Malls
<S> <C> <C> <C> <C> <C> <C>
50 1 $854,229 $741,970 1.61 1.36 Hard
50 2 $581,656 $475,818 1.61 1.36 Hard
---------- ---------- ---- ----
$1,435,885 $1,217,788 1.61 1.36
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Sterling Inn & Sterling Commons
<S> <C> <C> <C> <C> <C> <C>
51 1 $1,173,251 $1,120,451 1.80 1.72
51 2 $455,818 $431,018 1.80 1.72
---------- ---------- ---- ----
$1,629,069 $1,551,469 1.80 1.72
- -----------------------------------------------------------------------------------------------------------------------------------
52 1 $1,536,635 $1,262,018 1.78 1.46 Hard
53 1 $1,612,856 $1,240,655 2.05 1.58
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Spring Properties, Inc.
<S> <C> <C> <C> <C> <C> <C>
54 1 $857,831 $706,326 1.72 1.42 Hard
54 2 $571,888 $470,884 1.72 1.42 Hard
---------- ---------- ---- ----
$1,429,719 $1,177,210 1.72 1.42
- -----------------------------------------------------------------------------------------------------------------------------------
55 1 $1,039,519 $899,229 1.37 1.19
56 1 $1,036,990 $990,065 1.26 1.20 Hard
57 1 $1,178,790 $1,022,937 1.52 1.32 Hard
58 1 $979,478 $900,407 1.37 1.26 Hard
59 1 $1,000,630 $870,058 1.48 1.29
- -----------------------------------------------------------------------------------------------------------------------------------
60 1 $725,250 1.00 1.00 Hard
61 1 $1,003,224 $893,439 1.60 1.43
62 1 $1,017,415 $847,061 1.51 1.26 Hard
63 1 $1,117,731 $965,994 1.63 1.41
64 1 $855,028 $804,174 1.33 1.25 Soft
- -----------------------------------------------------------------------------------------------------------------------------------
65 1 $1,040,805 $1,002,305 1.75 1.69
66 1 $831,950 $766,450 1.51 1.39 Soft
67 1 $970,574 $866,359 1.52 1.35
68 1 $1,579,133 $1,306,988 2.78 2.30
69 1 $1,075,990 $781,982 1.67 1.22 Hard
- -----------------------------------------------------------------------------------------------------------------------------------
70 1 $893,626 $764,272 1.40 1.20 Hard
71 1 $849,225 $759,238 1.36 1.21
72 1 $867,469 $732,214 1.60 1.35
73 1 $838,640 $756,953 1.62 1.46
74 1 $916,987 $856,737 1.73 1.62
- -----------------------------------------------------------------------------------------------------------------------------------
75 1 $767,783 $732,033 1.30 1.24
76 1 $819,790 $697,054 1.38 1.17 Hard
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Windridge Apartments
<S> <C> <C> <C> <C> <C> <C>
77 1 $828,346 $749,306 1.87 1.70
77 2 $105,931 $98,347 1.87 1.70
---------- ---------- ---- ----
$934,277 $847,653 1.87 1.70
- -----------------------------------------------------------------------------------------------------------------------------------
78 1 $1,062,166 $824,236 2.20 1.71
79 1 $797,073 $703,098 1.37 1.21 Hard
80 1 $687,898 $633,983 1.30 1.20
81 1 $774,814 $658,773 1.59 1.35 Hard
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Beechwood Apts.and The Oaks Apts.
<S> <C> <C> <C> <C> <C> <C>
82 1 $529,177 $489,815 1.55 1.42
82 2 $227,732 $203,980 1.55 1.42
---------- ---------- ---- ----
$756,909 $693,795 1.55 1.42
- -----------------------------------------------------------------------------------------------------------------------------------
83 1 $746,833 $626,726 1.62 1.36
84 1 $1,093,039 $815,657 2.18 1.63 Hard
85 1 $697,079 $626,074 1.44 1.29
86 1 $675,801 $572,558 1.41 1.19 Hard
87 1 $800,196 $744,286 1.93 1.80
- -----------------------------------------------------------------------------------------------------------------------------------
88 1 $645,519 $597,256 1.33 1.23
89 1 $646,177 $555,374 1.49 1.28
90 1 $759,415 $654,940 1.57 1.36
91 1 $600,260 $558,260 1.51 1.40
92 1 $882,911 $779,835 1.79 1.58
- -----------------------------------------------------------------------------------------------------------------------------------
93 1 $565,851 $529,612 1.46 1.37 Soft
94 1 $631,407 $608,383 1.40 1.35 Hard
95 1 $619,330 $561,119 1.38 1.25
96 1 $576,509 $504,414 1.47 1.29
97 1 $580,265 $518,779 1.41 1.26
- -----------------------------------------------------------------------------------------------------------------------------------
98 1 $525,215 $497,965 1.28 1.21
99 1 $565,941 $510,835 1.58 1.43
100 1 $535,412 $447,920 1.44 1.20
101 1 $685,767 $555,212 1.70 1.38
102 1 $466,020 $466,020 1.00 1.00 Hard
- -----------------------------------------------------------------------------------------------------------------------------------
103 1 $603,209 $491,552 1.47 1.19
104 1 $450,343 $400,780 1.52 1.39
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Balloon/Anticipated Current
Repayment Date Occupancy
Loan # Asset # Value LTV LTV Current Occupancy Period
Lorretto/Playhouse
<S> <C> <C> <C> <C> <C> <C>
44 1 $9,700,000 72.1% 65.5% 97% 8/31/98
44 2 $6,200,000 72.1% 65.5% 99% 8/31/98
----------- ----- -----
$15,900,000 72.1% 65.5%
- ----------------------------------------------------------------------------------------------------------------------------------
45 1 $16,200,000 69.4% 56.0% 100% 8/21/98
46 1 $14,905,000 74.3% 46.9% 96% 6/10/98
47 1 $13,500,000 80.2% 64.0% 96% 11/12/98
48 1 $10,800,000 99.7% 0.0% 100% 8/12/98
49 1 $15,300,000 68.4% 61.9% 90% 6/30/98
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
South Park & Pierre Malls
<S> <C> <C> <C> <C> <C> <C>
50 1 $8,600,000 71.4% 1.4% 93% 8/21/98
50 2 $5,600,000 71.4% 1.4% 99% 8/31/98
----------- ----- ----
$14,200,000 71.4% 1.4%
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Sterling Inn & Sterling Commons
<S> <C> <C> <C> <C> <C> <C>
51 1 $9,360,000 71.6% 46.4% 90% 6/30/98
51 2 $4,640,000 71.6% 46.4% 77% 6/30/98
----------- ----- ----
$14,000,000 71.6% 46.4%
- ----------------------------------------------------------------------------------------------------------------------------------
52 1 $13,200,000 70.6% 64.1% 87% 9/1/98
53 1 $16,850,000 54.3% 43.4% 54% 8/28/98
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Spring Properties, Inc.
<S> <C> <C> <C> <C> <C> <C>
54 1 $11,125,000 60.4% 49.3% 100% 6/1/98
54 2 $3,850,000 60.4% 49.3% 96% 6/1/98
----------- ----- ----
$14,975,000 60.4% 49.3%
- ----------------------------------------------------------------------------------------------------------------------------------
55 1 $11,200,000 79.8% 66.0% 91% 8/1/98
56 1 $12,200,000 72.8% 59.9% 100% 02/16/99
57 1 $13,300,000 64.4% 52.3% 99% 6/1/98
58 1 $11,100,000 69.4% 49.5% 94% 7/20/98
59 1 $9,600,000 80.0% 64.0% 98% 8/31/98
- ----------------------------------------------------------------------------------------------------------------------------------
60 1 $7,800,000 98.1% 0.0% 100% 10/1/98
61 1 $9,400,000 79.5% 70.2% 90% 8/31/98
62 1 $13,400,000 55.2% 49.7% 96% 7/1/98
63 1 $11,900,000 62.1% 50.5% 92% 7/6/98
64 1 $9,850,000 74.1% 66.3% 99% 8/21/98
- ----------------------------------------------------------------------------------------------------------------------------------
65 1 $10,900,000 66.5% 51.3% 99% 7/15/98
66 1 $8,800,000 80.7% 70.8% 93% 9/24/98
67 1 $10,400,000 67.9% 61.4% 94% 7/16/98
68 1 $14,600,000 47.7% 36.7% 91% 02/03/99
69 1 $11,600,000 59.9% 54.3% 87% 10/1/98
- ----------------------------------------------------------------------------------------------------------------------------------
70 1 $10,100,000 68.2% 55.6% 92% 6/30/98
71 1 $9,450,000 72.5% 58.3% 98% 6/9/98
72 1 $8,860,000 76.0% 64.1% 99% 10/27/98
73 1 $9,200,000 72.5% 54.5% 91% 9/1/98
74 1 $9,150,000 72.7% 55.4% 100% 12/31/98
- ----------------------------------------------------------------------------------------------------------------------------------
75 1 $9,300,000 71.4% 57.1% 99% 9/30/98
76 1 $10,300,000 64.0% 57.5% 94% 8/11/98
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Windridge Apartments
<S> <C> <C> <C> <C> <C> <C>
77 1 $7,800,000 74.3% 55.9% 98% 7/1/98
77 2 $850,000 74.3% 55.9% 92% 7/1/98
----------- ----- ----
$8,650,000 74.3% 55.9%
- ----------------------------------------------------------------------------------------------------------------------------------
78 1 $10,300,000 61.9% 53.2% 100% 8/1/98
79 1 $9,000,000 69.9% 56.9% 100% 9/1/98
80 1 $7,900,000 78.3% 69.4% 91% 8/21/98
81 1 $8,000,000 76.0% 66.6% 94% 9/1/98
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Beechwood Apts.and The Oaks Apts.
<S> <C> <C> <C> <C> <C> <C>
82 1 $5,000,000 79.1% 61.0% 96% 6/30/98
82 2 $2,550,000 79.1% 61.0% 99% 12/23/98
----------- ----- ----
$7,550,000 79.1% 61.0%
- ----------------------------------------------------------------------------------------------------------------------------------
83 1 $7,900,000 71.5% 55.0% 100% 9/1/98
84 1 $11,400,000 48.8% 40.0% 55% 10/31/98
85 1 $7,100,000 78.1% 0.9% 100% 9/25/98
86 1 $7,500,000 68.9% 56.2% 99% 6/30/98
87 1 $7,700,000 67.0% 51.2% 100% 4/30/98
- ----------------------------------------------------------------------------------------------------------------------------------
88 1 $6,700,000 75.6% 69.0% 100% 7/22/98
89 1 $7,175,000 70.4% 28.6% 100% 6/30/98
90 1 $7,250,000 69.6% 50.2% 71% 12/31/98
91 1 $6,250,000 79.7% 69.5% 100% 8/16/98
92 1 $7,200,000 68.8% 29.5% 72% 6/30/98
- ----------------------------------------------------------------------------------------------------------------------------------
93 1 $5,950,000 83.2% 72.0% 99% 8/31/98
94 1 $6,725,000 72.1% 55.7% 100% 6/30/98
95 1 $6,400,000 73.9% 49.5% 87% 7/1/98
96 1 $6,850,000 68.1% 53.1% 100% 7/1/98
97 1 $6,000,000 77.3% 1.0% 93% 7/1/98
- ----------------------------------------------------------------------------------------------------------------------------------
98 1 $6,500,000 71.4% 63.8% 95% 9/30/98
99 1 $6,700,000 69.1% 59.6% 94% 7/31/98
100 1 $6,000,000 76.0% 66.6% 88% 10/12/98
101 1 $7,000,000 64.6% 41.7% 92% 6/30/98
102 1 $5,470,000 97.2% 39.5% 100% 9/1/98
- ----------------------------------------------------------------------------------------------------------------------------------
103 1 $6,200,000 71.7% 56.6% 100% 8/30/98
104 1 $5,700,000 77.1% 46.6% 100% 01/14/99
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Audit/Agreed Upon Audits/Agreed Upon U/W Ongoing Actual Ongoing
Loan # Asset # U/W Occupancy Procedures Upfront Procedures Forward Capital Reserve Capital Reserve
Lorretto/Playhouse
<S> <C> <C> <C> <C> <C> <C>
44 1 93% No Yes $0.20 $0.20
44 2 90% No Yes $0.20 $0.20
- ------------------------------------------------------------------------------------------------------------------------------------
45 1 95% Yes Yes $0.20 $0.20
46 1 89% No No $402.00 $402.00
47 1 89% No No $288.00 $287.54
48 1 100% No Yes $0.00 $0.00
49 1 90% No No $0.20 $0.20
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
South Park & Pierre Malls
<S> <C> <C> <C> <C> <C> <C>
50 1 93% Yes Yes $0.15 $0.15
50 2 95% Yes Yes $0.19 $0.19
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Sterling Inn & Sterling Commons
<S> <C> <C> <C> <C> <C> <C>
51 1 90% No No $400.00 $400.00
51 2 77% No No $400.00 $400.00
- ------------------------------------------------------------------------------------------------------------------------------------
52 1 87% No Yes $0.20 $0.20
53 1 54% No No 5.00% 5.00%
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Spring Properties, Inc.
<S> <C> <C> <C> <C> <C> <C>
54 1 94% Yes Yes $0.20 $0.20
54 2 94% Yes Yes $0.20 $0.20
- ------------------------------------------------------------------------------------------------------------------------------------
55 1 88% No No $0.24 $0.24
56 1 97% No Yes $0.07 $0.15
57 1 99% Yes Yes $0.20 $0.20
58 1 94% No No $0.15 $0.15
59 1 95% No No $265.93 $265.93
- ------------------------------------------------------------------------------------------------------------------------------------
60 1 100% No Yes $0.00 $0.00
61 1 90% No No $0.15 $0.15
62 1 92% No No $0.21 $0.21
63 1 88% No No $0.20 $0.20
64 1 95% No No $282.52 $282.52
- ------------------------------------------------------------------------------------------------------------------------------------
65 1 95% No No $250.00 $250.00
66 1 93% Yes Yes $250.00 $250.00
67 1 94% No No $0.32 $0.32
68 1 86% No No $0.29 $0.29
69 1 87% No yes $0.30 $0.30
- ------------------------------------------------------------------------------------------------------------------------------------
70 1 92% No No $0.21 $0.20
71 1 95% No No $0.20 $0.20
72 1 92% No No $0.20 $0.20
73 1 91% No No $0.15 $0.15
74 1 85% No No $250.00 $250.00
- ------------------------------------------------------------------------------------------------------------------------------------
75 1 95% No No $250.00 $250.00
76 1 90% No No $0.20 $0.20
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Windridge Apartments
<S> <C> <C> <C> <C> <C> <C>
77 1 95% No No $260.00 $250.00
77 2 92% No No $316.00 $250.00
- ------------------------------------------------------------------------------------------------------------------------------------
78 1 93% No No $0.15 $0.15
79 1 94% No No $0.26 $0.26
80 1 91% No No $263.00 $263.00
81 1 92% No Yes $0.20 $0.20
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Beechwood Apts.and The Oaks Apts.
<S> <C> <C> <C> <C> <C> <C>
82 1 95% No No $289.00 $289.43
82 2 91% No No $279.00 $279.43
- ------------------------------------------------------------------------------------------------------------------------------------
83 1 94% No No $0.23 $0.23
84 1 55% Yes Yes 5.00% 5.00%
85 1 95% No No $0.15 $0.15
86 1 94% No No $0.20 $0.20
87 1 98% No No $0.23 $0.23
- ------------------------------------------------------------------------------------------------------------------------------------
88 1 95% No No $0.15 $0.15
89 1 94% No No $0.15 $0.15
90 1 69% No No 5.00% 5.00%
91 1 95% No No $250.00 $250.00
92 1 71% No No 5.00% 5.00%
- ------------------------------------------------------------------------------------------------------------------------------------
93 1 95% No No $252.00 $252.00
94 1 98% No No $0.15 $0.03
95 1 87% No No $0.20 $0.20
96 1 93% No No $0.25 $0.25
97 1 94% No No $0.21 $0.21
- ------------------------------------------------------------------------------------------------------------------------------------
98 1 95% No No $250.00 $250.00
99 1 94% No No $0.15 $0.15
100 1 88% No No $0.21 $0.21
101 1 91% No No $0.19 $0.19
102 1 100% Yes Yes $0.00 $0.00
- ------------------------------------------------------------------------------------------------------------------------------------
103 1 95% No No $0.20 $0.20
104 1 95% No No $0.20 $0.20
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Lease Expiration
Loan # Asset # Reserve Units Tenant 1 Date % of Total SF
Lorretto/Playhouse
<S> <C> <C> <C> <C> <C>
44 1 $psf DEA, SSA, USDA 2009 18%
44 2 $psf
- --------------------------------------------------------------------------------------------------------------------------------
45 1 $psf Cray/Silicon 1999 25%
46 1 $/unit
47 1 $/unit
48 1 $psf Perry Judd's /Port City Press 2018 100%
49 1 $psf National Tech Team 2006 47%
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
South Park & Pierre Malls
<S> <C> <C> <C> <C> <C>
50 1 $psf Shopko 2001 24%
50 2 $psf K-Mart 2011 46%
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Sterling Inn & Sterling Commons
<S> <C> <C> <C> <C> <C>
51 1 $/unit
51 2 $/unit
- -----------------------------------------------------------------------------------------------------------------------------------
52 1 $psf BIA Trust Funds Mgmt 1999 8%
53 1 %revenue
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Spring Properties, Inc.
<S> <C> <C> <C> <C> <C>
54 1 $psf Symatec 2006 100%
54 2 $psf Gold's Gym 2005 18%
- -----------------------------------------------------------------------------------------------------------------------------------
55 1 $psf Merrill Lynch 2002 13%
56 1 $psf Shop N' Save 2013 53%
57 1 $psf Pentagon Federal Credit Union 2001 10%
58 1 $psf Olympus Gym 2006 17%
59 1 $/unit
- --------------------------------------------------------------------------------------------------------------------------------
60 1 $psf Valley Fair Department Store 2018 100%
61 1 $psf TJ Maxx 2004 22%
62 1 $psf Touchstone 2000 11%
63 1 $psf Rush Presbyterian 2000 16%
64 1 $/unit
- --------------------------------------------------------------------------------------------------------------------------------
65 1 $/unit
66 1 $/unit
67 1 $psf SDG&E 2002 13%
68 1 $psf GAMBRO Healthcare 2008 13%
69 1 $psf Lacek Group 2003 14%
- --------------------------------------------------------------------------------------------------------------------------------
70 1 $psf Horizon Corporation 2003 60%
71 1 $psf Glen Oaks 2010 77%
72 1 $psf Paragon Investment Company 2008 21%
73 1 $psf
74 1 $/unit
- --------------------------------------------------------------------------------------------------------------------------------
75 1 $/unit
76 1 $psf Smith Barney 2003 9%
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Windridge Apartments
<S> <C> <C> <C> <C> <C>
77 1 $/unit
77 2 $/unit
- --------------------------------------------------------------------------------------------------------------------------------
78 1 $psf Babyfair 2003 38%
79 1 $psf Law Offices of Charles Limandr 2001 4%
80 1 $/unit
81 1 $psf Red Oak Cardiovascular 2006 41%
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Beechwood Apts.and The Oaks Apts.
<S> <C> <C> <C> <C> <C>
82 1 $/unit
82 2 $/unit
- --------------------------------------------------------------------------------------------------------------------------------
83 1 $psf Conrail Corp 1999 9%
84 1 %revenue
85 1 $psf Dillen Products 2005 100%
86 1 $psf Fulmer & Rudczewicz 2004 49%
87 1 $psf Farmer Jack 2009 59%
- --------------------------------------------------------------------------------------------------------------------------------
88 1 $psf
89 1 $psf Winn Dixie 2008 29%
90 1 %revenue
91 1 $/unit
92 1 %revenue
- --------------------------------------------------------------------------------------------------------------------------------
93 1 $/unit
94 1 $psf Farm Fresh, Inc. 2020 81%
95 1 $psf Millers Outpost 2006 49%
96 1 $psf Class. Hold. 2000 26%
97 1 $psf Food Lion 2008 35%
- --------------------------------------------------------------------------------------------------------------------------------
98 1 $/unit
99 1 $psf Irvine Ranch Market 2009 33%
100 1 $psf Ol Mexico 2006 17%
101 1 $psf Mishi Apparel 2005 17%
102 1 $psf Circuit City 100%
- --------------------------------------------------------------------------------------------------------------------------------
103 1 $psf Northwestern Mutual Life 2004 24%
104 1 $psf Everything Yogurt 2007 22%
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Lease Expiration
Loan # Asset # Tenant 2 Date % of Total SF Tenant 3
Lorretto/Playhouse
<S> <C> <C> <C> <C> <C>
44 1 Stage Stores 2003 15% US Attorney
44 2
- --------------------------------------------------------------------------------------------------------------------------------
45 1 IGES 2003 12%
46 1
47 1
48 1
49 1 Ford Motor Company 2002 17%
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
South Park & Pierre Malls
<S> <C> <C> <C> <C> <C>
50 1 Stage 2006 7% JC Pennys
50 2 JC Pennys 2001 18%
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Sterling Inn & Sterling Commons
<S> <C> <C> <C> <C> <C>
51 1
51 2
- --------------------------------------------------------------------------------------------------------------------------------
52 1 Bureau of Reclamation 2001 8% Western Bank
53 1
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Spring Properties, Inc.
<S> <C> <C> <C> <C> <C>
54 1
54 2 REI 2002 18% Kelly-Goodwin
- --------------------------------------------------------------------------------------------------------------------------------
55 1
56 1 LL Bean 2004 16% Staples, Inc.
57 1 Coopers & Lybrand 1999 11% Dean Witter
58 1 Goodyear Tire 2007 16% CVS
59 1
- --------------------------------------------------------------------------------------------------------------------------------
60 1
61 1 Office Depot 2006 21% Michael Stores
62 1 Telephone Switch Newsletter 2000 11% Geosyntec Consultants
63 1 Five Hospital Elderly 1999 12% The Cue Club
64 1
- --------------------------------------------------------------------------------------------------------------------------------
65 1
66 1
67 1 Hollywood Video 2005 10%
68 1 Santa Monica Bay Physicians 2005 10%
69 1 Tele-Edit 1999 5% MN Monthly Publications
- --------------------------------------------------------------------------------------------------------------------------------
70 1
71 1
72 1
73 1
74 1
- --------------------------------------------------------------------------------------------------------------------------------
75 1
76 1 Diversified Securities 2003 9%
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Windridge Apartments
<S> <C> <C> <C> <C> <C>
77 1
77 2
- --------------------------------------------------------------------------------------------------------------------------------
78 1 Ferdinand Gutman 2002 18%
79 1 Engene Biotechnologies, Inc. 2000 4% Fairbanks Ranch Realty
80 1
81 1 Houston Northwest Family 2001 17%
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Beechwood Apts.and The Oaks Apts.
<S> <C> <C> <C> <C> <C>
82 1
82 2
- --------------------------------------------------------------------------------------------------------------------------------
83 1 Dean Witter 2004 18%
84 1
85 1
86 1 Dow Chemical 2001 38%
87 1 Perry Drugs (Rite Aid) 2009 12%
- --------------------------------------------------------------------------------------------------------------------------------
88 1
89 1 CVS 2000 7% Maxway
90 1
91 1
92 1
- --------------------------------------------------------------------------------------------------------------------------------
93 1
94 1 Chesapeake Bagel
95 1
96 1 Koll Dove 2000 24%
97 1 Eckerds 2008 14%
- --------------------------------------------------------------------------------------------------------------------------------
98 1
99 1 Quorum 2002 10%
100 1 Kings True Value 2001 10% Music Go Round
101 1
102 1
- --------------------------------------------------------------------------------------------------------------------------------
103 1
104 1 Amabile & Erman 2002 20% Maloy Agency
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Lease Expiration
Loan # Asset # Date % of Total SF
Lorretto/Playhouse
44 1 2001 8%
44 2
- ---------------------------------------------------------------
45 1
46 1
47 1
48 1
49 1
- ---------------------------------------------------------------
South Park & Pierre Malls
50 1 8/4/00 23%
50 2
- ---------------------------------------------------------------
Sterling Inn & Sterling Commons
51 1
51 2
- ---------------------------------------------------------------
52 1 2000 6%
53 1
- ---------------------------------------------------------------
Spring Properties, Inc.
54 1
54 2 2004 13%
- ---------------------------------------------------------------
55 1
56 1 2009 16%
57 1 2000 7%
58 1 2003 10%
59 1
- ---------------------------------------------------------------
60 1
61 1 2004 16%
62 1 2006 11%
63 1 2004 10%
64 1
- ---------------------------------------------------------------
65 1
66 1
67 1
68 1
69 1 1999 5%
- ---------------------------------------------------------------
70 1
71 1
72 1
73 1
74 1
- ---------------------------------------------------------------
75 1
76 1
- ---------------------------------------------------------------
Windridge Apartments
77 1
77 2
- ---------------------------------------------------------------
78 1
79 1 1998 5%
80 1
81 1
- ---------------------------------------------------------------
Beechwood Apts.and The Oaks Apts.
82 1
82 2
- ---------------------------------------------------------------
83 1
84 1
85 1
86 1
87 1
- ---------------------------------------------------------------
88 1
89 1 2000 13%
90 1
91 1
92 1
- ---------------------------------------------------------------
93 1
94 1 2000 4%
95 1
96 1
97 1
- ---------------------------------------------------------------
98 1
99 1
100 1 1999 6%
101 1
102 1
- ---------------------------------------------------------------
103 1
104 1 2002 17%
- ---------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
Annex B
Loan # Asset # Property Name Address
First Hill Apartments
<S> <C> <C> <C>
105 1 First Hill Apts. 321 10th Avenue
105 2 Hill House Apartments 400 10th Avenue
- ---------------------------------------------------------------------------------------------------------------------------------
106 1 Site 5 - Sneaker Stadium NWC Atlantic Avenue and Flatbush Avenue at 4th Avenue
107 1 Derby Run Apartments 6600 Outer Loop
108 1 Watterson City Building 1951 Bishop Lane
109 1 Rivers Bend S/C 302-342 East Hundred Road
- ---------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Country Lane Corporation
<S> <C> <C> <C>
110 1 Country Lane Estates 1211 Sebattus Street
110 2 Pleasant View Estates 235 Elm Street
110 3 Stetson Brook Estates 729 Main Street
- ---------------------------------------------------------------------------------------------------------------------------------
111 1 Amsterdam Garden Apts. 3007 Eastern Avenue
112 1 Hampton Inn Chesterfield 16201 Swingley Ridge Road
113 1 College Plaza South 2400 Cerrillos Road
114 1 Riveria MHP 601 N. Hayden Rd.
115 1 Circle Plaza 6716 Blackhorse Pike
- ---------------------------------------------------------------------------------------------------------------------------------
116 1 Crenshaw Plaza 3210-3314 Slauson Boulevard
117 1 Crossraods Shopping Center 2516-2590 Bell Rd.
118 1 Embassy Park Plaza 5002-5006 Westheimer Road
119 1 Loews Centerpark Theatre 4001 Powder Mill Road
120 1 Days Inn-Virginia Beach 1014 Atlantic Avenue
- ---------------------------------------------------------------------------------------------------------------------------------
121 1 Circuit City-East Lansing 2655 Grand River Avenue
122 1 Circuit City-Frederick 5606 Buckeystown Pike
123 1 Circuit City-Green Bay 1940 West Mason Street
124 1 Cathedral Village 69-255 Ramon Road
125 1 222-228 West 125th Street 222-228 West 125th Street
- ---------------------------------------------------------------------------------------------------------------------------------
126 1 BGK - Medi-Park 1901 Medi-Park Drive
127 1 650 Academy 650 Academy Drive
128 1 Archway 60 Office Complex 9321 - 9327 Midlothian Pkwy
129 1 List Industries 401 NW 12th Street
130 1 Hollinswood Shopping Center SE Corner of Patapsco Avenue & Hollins Ferry Road
- ---------------------------------------------------------------------------------------------------------------------------------
131 1 Casitas Mobile Home Estates 3945 Bradford Street
132 1 Best Western-Cooperstown 50 Commons Drive
133 1 Countryside SC 8500 Pineville Matthews Rd.
134 1 Heritage Medical Office 8926 Woodyard Rd.
135 1 Glade Points Shopping Center 3930 Glade Road
- ---------------------------------------------------------------------------------------------------------------------------------
136 1 Centreville Plaza 13830 Lee Highway
137 1 Stonybrook Shopping Center 3615 East Market Road
138 1 River Palms Apartments 1925 North Third Street
139 1 Park Place Apartments 1290 Park Boulevard
140 1 State Road Plaza 8701-8767 S. Ridgeland Ave.
- ---------------------------------------------------------------------------------------------------------------------------------
141 1 Streator Industrial Warehouse Facility 1524 Walnut Street
142 1 Best Western Rancho Cucamongo 8179 Spruce Avenue
143 1 University Place Center 1500 University Blvd.
144 1 Franklin Beck Office 28202 - 28336 Franklin Road
145 1 SL Larchmont 1941-1959 Palmer Avenue
- ---------------------------------------------------------------------------------------------------------------------------------
146 1 HK Market 931 N Pacific Avenue
147 1 Whitman Villa 25455 Whitman Street
148 1 Comfort Inn-Chicopee 450 Memorial Drive
149 1 Kimberly Lakes Apartments 4101 N.E. 13th Avenue
150 1 Fairfield Park 1064 Gardner Road
- ---------------------------------------------------------------------------------------------------------------------------------
151 1 Pike Park Plaza 6512 Baltimore National Park
152 1 Stonesthrow Apts. 3207 Stonesthrow Lane
153 1 MA Winter Building 1436 U Street
154 1 Southport I and II Southlake Blvd.
155 1 Regency Office 27650-27764 Franklin Rd
- ---------------------------------------------------------------------------------------------------------------------------------
156 1 Jefferson City Holiday Inn 1716 Jefferson Street
157 1 Perry Judd's - Mt. Jackson 377 Industrial Park Rd.
158 1 Brooklyn Park Shopping Center 5001 Ritchie Hwy & 11th
159 1 South Robert Plaza 2018 South Robert Street
160 1 Broadmoor Mall 1401 North Turner Street
- ---------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Brentwood/Pontchartrain Apts
<S> <C> <C> <C>
161 1 Pontchartrain Apartments 4520 Ponchartrain Drive
161 2 Brentwood Apartments 901 Old Spanish Trail
- ---------------------------------------------------------------------------------------------------------------------------------
162 1 Embassy Apts. 40 and 42 S. Shaddle
163 1 Puente Hills Business Park 17405-17435 E. Gale Ave.
164 1 Mountain Valley Apartments 1205 South Walton Walker Freeway
165 1 Pine Crest Square 903/959 Cypress Creek Road
166 1 Medical Arts Office Bldg. 2501 Atrium Drive
- ---------------------------------------------------------------------------------------------------------------------------------
167 1 Creekside Commons 1101-65 Weiland Road
168 1 The Postal Building 502-516 SW Third Ave.
169 1 Gateway Center* 6770-6780 Southpoint Parkway
170 1 Strawberry Square Shopping Center 2301-2329 North 29th Street
171 1 Paseo Verde 4150 West Peoria Ave.
- ---------------------------------------------------------------------------------------------------------------------------------
172 1 1430 N. Dearborn 1430 N. Dearborn
173 1 Holiday Inn - Boulevard 3207 N. Boulevard
174 1 Menlo Manor Apts. 2890, 2900 & 2990 Menlo Drive
175 1 Arlington Arms 305-307 W. Cottage Avenu
176 1 1504 N. Dearborn 1504 N. Dearborn
- ---------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Loan # Asset # City State Zip Property Type Year Built/ Renovated
First Hill Apartments
<S> <C> <C> <C> <C> <C> <C>
105 1 Seattle WA 98122 Multifamily 1984/1997
105 2 Seattle WA 98122 Multifamily 1989/1997
- -------------------------------------------------------------------------------------------------------------------------------
106 1 Brooklyn NY 11217 Retail-Anchored 1998
107 1 Louisville KY 40228 Multifamily 1972
108 1 Louisville KY 40218 Office 1965/1996
109 1 Chester VA 23831 Retail-Anchored 1991/1997
- -------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Country Lane Corporation
<S> <C> <C> <C> <C> <C> <C>
110 1 Lewiston ME 04240 Mobile Home Park 1971
110 2 Mechanic Falls ME 04256 Mobile Home Park 1971/1988
110 3 Lewiston ME 04240 Mobile Home Park 1971
- -------------------------------------------------------------------------------------------------------------------------------
111 1 Wyoming MI 49508 Multifamily 1969/1996
112 1 Chesterfield MO 63017 Hotel-Ltd. Service 1997
113 1 Santa Fe NM 87501 Retail-Anchored 1984
114 1 Scottsdale AZ 85257 Mobile Home Park 1963/1998
115 1 Egg Harbor Township NJ 08234 Retail-Quasi-Anchored 1986/1997
- -------------------------------------------------------------------------------------------------------------------------------
116 1 Los Angeles CA 90008 Retail-Anchored 1967/1994
117 1 Auburn CA 95602 Retail-Anchored 1994
118 1 Houston TX 77056 Retail-Unanchored 1985
119 1 Calverton MD 20705 Retail-Anchored 1993
120 1 Virginia Beach VA 23451 Hotel-Ltd. Service 1987/1994
- -------------------------------------------------------------------------------------------------------------------------------
121 1 East Lansing MI 48823 Retail-Quasi-Anchored 1998
122 1 Fredrick MD 21701 Retail-Quasi-Anchored 1997
123 1 Green Bay WI 54303 Retail-Quasi-Anchored 1997
124 1 Cathedral City CA 92234 Retail-Quasi-Anchored 1991
125 1 New York NY 10027 Retail-Unanchored 1929
- -------------------------------------------------------------------------------------------------------------------------------
126 1 Amarillo TX 79106 Office 1970/1992
127 1 Northbrook IL 60062 Office 1975/1987
128 1 Richmond VA 23236 Office 1984
129 1 Deerfield Beach FL 33442 Industrial 1980
130 1 Baltimore MD 21230 Retail-Anchored 1969/1994
- -------------------------------------------------------------------------------------------------------------------------------
131 1 La Verne CA 91750 Mobile Home Park 1972
132 1 Cooperstown NY 13326 Hotel-Ltd. Service 1995
133 1 Charlotte NC 28226 Retail-Unanchored 1976/1995
134 1 Clinton MD 20735 Office 1986/1995
135 1 Colleyville TX 76034 Retail-Unanchored 1998
- -------------------------------------------------------------------------------------------------------------------------------
136 1 Centreville VA 22020 Retail-Unanchored 1991
137 1 York PA 17402 Retail-Anchored 1995
138 1 Baton Rouge LA 70801 Multifamily 1950/1996
139 1 Baton Rouge LA 70806 Multifamily 1964/1996
140 1 Oak Lawn IL 60453 Retail-Anchored 1967/1997
- -------------------------------------------------------------------------------------------------------------------------------
141 1 Streator IL 61364 Industrial 1909/1998
142 1 Rancho Cucamonga CA 91730 Hotel-Ltd. Service 1992
143 1 Langley Park MD 20783 Retail-Unanchored 1959
144 1 Southfield MI 48034 Office 1984
145 1 Larchmont NY 10538 Retail-Unanchored 1939/1988
- -------------------------------------------------------------------------------------------------------------------------------
146 1 Glendale CA 91201 Retail-Anchored 1963/1998
147 1 Hayward CA 94544 Multifamily 1965/1997
148 1 Chicopee MA 01020 Hotel-Full Service 1964/1995
149 1 Oakland Park FL 33334 Multifamily 1969/1974
150 1 Charleston SC 29407 Office 1976/1990
- -------------------------------------------------------------------------------------------------------------------------------
151 1 Catonsville MD 21228 Retail-Anchored 1965/1994
152 1 Durham NC 27713 Multifamily 1979/1998
153 1 Washington DC 20009 Office 1908/1986
154 1 Richmond VA 23236 Industrial 1981
155 1 Southfield MI 48034 Office 1985
- -------------------------------------------------------------------------------------------------------------------------------
156 1 Jefferson City MO 65109 Hotel-Ltd. Service 1995/1997
157 1 Mt. Jackson VA 22842 Industrial 1975/1986
158 1 Baltimore MD 21225 Retail-Unanchored 1970/1998
159 1 West St. Paul MN 55118 Retail-Unanchored 1986/1997
160 1 Hobbs NM 88240 Retail-Anchored 1970/1977
- -------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Brentwood/Pontchartrain Apts
<S> <C> <C> <C> <C> <C> <C>
161 1 Slidell LA 70458 Multifamily 1983
161 2 Slidell LA 70458 Multifamily 1978
- -------------------------------------------------------------------------------------------------------------------------------
162 1 Mundelein IL 60606 Multifamily 1972/1996
163 1 City of Industry CA 91748 Industrial 1978/1996
164 1 Dallas TX 75211 Multifamily 1969/1996
165 1 Fort Lauderdale FL 33334 Retail-Unanchored 1980
166 1 Raleigh NC 27607 Office 1984
- -------------------------------------------------------------------------------------------------------------------------------
167 1 Buffalo Grove IL 60089 Retail-Unanchored 1987
168 1 Portland OR 97201 Office 1900/1989
169 1 Brecksville OH 44141 Office 1988
170 1 Philadelphia PA 19132 Retail-Unanchored 1985/1994
171 1 Phoenix AZ 85029 Office 1986
- -------------------------------------------------------------------------------------------------------------------------------
172 1 Chicago IL 60610 Multifamily 1930/1989
173 1 Richmond VA 23230 Hotel-Ltd. Service 1974/1997
174 1 Carson City NV 89701 Multifamily 1976/1997
175 1 St. Paul MN 55117 Multifamily 1968/1998
176 1 Chicago IL 60610 Multifamily 1928/1989
- -------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Cut-off Date Cut-off Date
Principal Principal Balance
Loan # Asset # Units Unit Type Balance /Unit 1997 Revenue
First Hill Apartments
<S> <C> <C> <C> <C> <C> <C>
105 1 47 units $2,766,830 $58,869 $625,748
105 2 27 units $1,585,113 $58,708 $378,106
---- ---------- ------- ----------
74 $4,351,943 $58,810 $1,003,854
- --------------------------------------------------------------------------------------------------------------------------------
106 1 16,980 sf $4,302,721 $253
107 1 200 units $4,292,988 $21,465 $1,023,047
108 1 78,171 sf $4,264,714 $55
109 1 64,477 sf $4,209,593 $65 $574,161
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Country Lane Corporation
<S> <C> <C> <C> <C> <C> <C>
110 1 255 pads $2,388,266 $9,366 $482,290
110 2 110 pads $1,044,867 $9,499 $150,716
110 3 85 pads $746,333 $8,780 $211,002
---- ---------- ------- ----------
450 $4,179,466 $9,288 $844,008
- --------------------------------------------------------------------------------------------------------------------------------
111 1 270 units $4,177,720 $15,473 $1,102,211
112 1 92 rooms $4,127,476 $44,864
113 1 57,226 sf $4,036,932 $71 $750,802
114 1 208 pads $3,983,191 $19,150 $833,873
115 1 57,254 sf $3,929,046 $69 $690,957
- --------------------------------------------------------------------------------------------------------------------------------
116 1 87,707 sf $3,926,572 $45 $1,464,505
117 1 46,948 sf $3,809,261 $81 $568,491
118 1 30,659 sf $3,789,082 $124 $637,056
119 1 39,125 sf $3,781,591 $97 $400,613
120 1 116 rooms $3,749,340 $32,322 $1,482,205
- --------------------------------------------------------------------------------------------------------------------------------
121 1 27,871 sf $3,742,455 $159
122 1 27,431 sf $3,742,455 $162
123 1 28,380 sf $3,742,455 $156
124 1 87,991 sf $3,738,207 $42 $1,151,059
125 1 17,400 sf $3,734,242 $215 $775,858
- --------------------------------------------------------------------------------------------------------------------------------
126 1 109,072 sf $3,688,061 $34 $1,285,309
127 1 67,713 sf $3,654,787 $54 $613,138
128 1 63,816 sf $3,580,576 $56 $690,661
129 1 94,000 sf $3,483,254 $37
130 1 107,967 sf $3,482,284 $32 $1,097,627
- --------------------------------------------------------------------------------------------------------------------------------
131 1 136 pads $3,475,401 $25,554 $922,133
132 1 62 rooms $3,465,641 $55,897 $1,416,935
133 1 67,825 sf $3,429,672 $51 $689,617
134 1 32,865 sf $3,394,752 $103 $621,681
135 1 32,861 sf $3,389,308 $103
- --------------------------------------------------------------------------------------------------------------------------------
136 1 27,546 sf $3,324,928 $121 $619,653
137 1 65,512 sf $3,312,229 $51 $448,329
138 1 98 units $1,712,242 $17,472 $376,079
139 1 77 units $1,572,874 $20,427 $320,547
140 1 53,968 sf $3,258,985 $60 $713,338
- --------------------------------------------------------------------------------------------------------------------------------
141 1 967,175 sf $3,214,271 $3 $1,126,000
142 1 117 rooms $3,207,243 $27,412 $1,855,301
143 1 28,746 sf $3,187,109 $111 $632,212
144 1 62,365 sf $3,182,836 $51 $827,690
145 1 32,211 sf $3,182,276 $99 $571,726
- --------------------------------------------------------------------------------------------------------------------------------
146 1 24,137 sf $3,182,210 $132
147 1 62 units $3,106,961 $50,112 $542,368
148 1 100 rooms $3,068,325 $30,683 $2,650,273
149 1 95 units $3,062,623 $32,238 $681,020
150 1 67,701 sf $2,988,942 $44 $838,351
- --------------------------------------------------------------------------------------------------------------------------------
151 1 157,223 sf $2,984,540 $19 $1,532,646
152 1 144 units $2,983,801 $20,721 $1,039,005
153 1 32,298 sf $2,948,941 $91 $588,488
154 1 76,172 sf $2,894,021 $38 $517,407
155 1 54,096 sf $2,884,445 $53 $718,318
- --------------------------------------------------------------------------------------------------------------------------------
156 1 70 rooms $2,851,375 $40,734 $1,300,702
157 1 61,704 sf $2,829,895 $46
158 1 54,530 sf $2,828,634 $52 $405,123
159 1 34,202 sf $2,820,181 $82 $588,689
160 1 155,656 sf $2,741,127 $18 $762,275
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Brentwood/Pontchartrain Apts
<S> <C> <C> <C> <C> <C> <C>
161 1 72 units $2,180,711 $30,288 $349,065
161 2 32 units $553,911 $17,310 $161,036
---- ---------- ------- ----------
104 $2,734,621 $26,294 $510,101
- --------------------------------------------------------------------------------------------------------------------------------
162 1 70 units $2,710,736 $38,725 $535,618
163 1 86,635 sf $2,686,562 $31 $552,927
164 1 319 units $2,634,380 $8,258 $1,604,670
165 1 38,513 sf $2,392,071 $62 $521,846
166 1 40,693 sf $2,364,357 $58 $492,759
- --------------------------------------------------------------------------------------------------------------------------------
167 1 23,117 sf $2,364,213 $102 $481,064
168 1 37,357 sf $2,347,465 $63 $494,229
169 1 75,005 sf $2,315,873 $31 $389,436
170 1 67,459 sf $2,291,120 $34 $748,010
171 1 47,427 sf $2,192,790 $46 $372,194
- --------------------------------------------------------------------------------------------------------------------------------
172 1 68 units $2,189,050 $32,192 $432,910
173 1 184 rooms $2,184,829 $11,874 $2,672,581
174 1 73 units $2,174,669 $29,790 $430,305
175 1 140 units $2,168,160 $15,487 $581,563
176 1 49 units $2,039,797 $41,629 $376,897
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Most Recent Most Most Recent
Loan # Asset # Period Revenue Recent Period Underwritten Revenue 1997 NOI Period NOI
First Hill Apartments
<S> <C> <C> <C> <C> <C> <C>
105 1 $643,285 7/31/98 $468,041 $353,166 $382,430
105 2 $380,655 7/31/98 $276,545 $216,037 $234,202
---------- -------- -------- --------
$1,023,940 $744,586 $569,203 $616,632
- ----------------------------------------------------------------------------------------------------------------------------------
106 1 $612,904
107 1 $1,103,853 7/1/98 $1,064,192 $630,429 $706,157
108 1 $1,119,190 9/30/98 $1,037,079 $729,148
109 1 $634,596 7/31/98 $668,330 $472,046 $523,801
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Country Lane Corporation
<S> <C> <C> <C> <C> <C> <C>
110 1 $484,017 6/30/98 $487,637 $353,347 $354,337
110 2 $151,255 6/30/98 $152,387 $110,421 $110,730
110 3 $211,758 6/30/98 $213,341 $154,590 $155,023
---------- -------- -------- --------
$847,030 $853,365 $618,358 $620,090
- ----------------------------------------------------------------------------------------------------------------------------------
111 1 $1,120,879 5/31/98 $1,209,625 $498,334 $501,103
112 1 $2,132,729 8/31/98 $2,031,816 $889,079
113 1 $755,536 8/31/98 $741,419 $630,986 $630,992
114 1 $847,578 7/31/98 $837,302 $472,814 $470,742
115 1 $713,245 7/31/98 $709,456 $495,488 $568,174
- ----------------------------------------------------------------------------------------------------------------------------------
116 1 $1,372,909 9/30/98 $1,346,499 $995,563 $882,570
117 1 $566,340 8/30/98 $586,818 $412,009 $412,001
118 1 $702,556 4/30/98 $736,808 $446,458 $500,892
119 1 $407,229 6/30/98 $407,229 $322,220 $332,444
120 1 $1,583,001 6/30/98 $1,449,833 $734,595 $795,155
- ----------------------------------------------------------------------------------------------------------------------------------
121 1 $388,350
122 1 $388,350
123 1 $388,350
124 1 $1,202,596 8/31/98 $1,192,473 $616,103 $748,687
125 1 $805,706 5/31/98 $774,095 $577,445 $604,748
- ----------------------------------------------------------------------------------------------------------------------------------
126 1 $1,299,635 8/31/98 $1,296,107 $607,394 $643,976
127 1 $807,301 6/30/98 $865,129 $266,811 $446,314
128 1 $755,394 8/31/98 $774,111 $402,332 $456,820
129 1 $687,148
130 1 $1,105,354 5/31/98 $1,125,050 $744,756 $741,138
- ----------------------------------------------------------------------------------------------------------------------------------
131 1 $943,465 6/30/98 $918,498 $474,262 $507,693
132 1 $1,423,627 3/31/98 $1,417,402 $783,216 $774,092
133 1 $803,602 7/31/98 $789,328 $574,965 $700,843
134 1 $633,830 5/30/98 $617,857 $510,475 $519,968
135 1 $563,263
- ----------------------------------------------------------------------------------------------------------------------------------
136 1 $628,551 6/30/98 $571,980 $495,770 $510,064
137 1 $457,714 6/30/98 $511,037 $400,235 $413,235
138 1 $446,393 8/31/98 $487,432 $167,095 $221,621
139 1 $375,638 8/31/98 $373,623 $172,899 $219,552
140 1 $752,642 7/31/98 $756,027 $425,350 $472,676
- ----------------------------------------------------------------------------------------------------------------------------------
141 1 $1,167,422 6/30/98 $1,147,428 $1,079,000 $894,096
142 1 $1,872,448 4/30/98 $1,777,444 $788,067 $778,444
143 1 $624,578 6/30/98 $604,150 $437,227 $439,059
144 1 $854,112 4/30/98 $742,897 $539,038 $579,819
145 1 $631,428 8/30/98 $646,144 $369,865 $406,803
- ----------------------------------------------------------------------------------------------------------------------------------
146 1 $454,632 9/30/98 $431,900 $399,636
147 1 $566,931 5/31/98 $566,931 $417,858 $441,334
148 1 $2,692,252 6/30/98 $2,616,812 $737,362 $801,964
149 1 $709,026 8/31/98 $666,608 $395,311 $452,422
150 1 $798,454 9/30/98 $874,755 $526,164 $493,263
- ----------------------------------------------------------------------------------------------------------------------------------
151 1 $1,457,423 5/31/98 $1,401,417 $1,266,288 $1,168,175
152 1 $1,047,662 5/30/98 $1,024,139 $551,984 $559,610
153 1 $590,395 4/30/98 $548,393 $430,086 $430,993
154 1 $528,970 6/30/98 $529,718 $384,611 $393,254
155 1 $714,071 4/1/98 $671,323 $509,656 $505,447
- ----------------------------------------------------------------------------------------------------------------------------------
156 1 $1,326,882 4/30/98 $1,255,571 $658,622 $648,576
157 1
158 1 $478,519 6/30/98 $512,966 $323,325 $376,317
159 1 $605,540 9/30/98 $573,527 $379,904 $416,988
160 1 $809,783 8/31/98 $791,169 $468,853 $507,847
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Brentwood/Pontchartrain Apts
<S> <C> <C> <C> <C> <C> <C>
161 1 $369,354 6/30/98 $370,758 $242,220 $260,905
161 2 $162,548 5/30/98 $159,567 $88,186 $93,080
---------- -------- -------- --------
$531,902 $530,325 $330,406 $353,985
- ----------------------------------------------------------------------------------------------------------------------------------
162 1 $541,085 5/31/98 $550,741 $341,726 $340,076
163 1 $596,480 9/30/98 $590,206 $378,894 $451,308
164 1 $1,623,010 4/30/98 $1,671,272 $399,424 $385,823
165 1 $526,614 9/30/98 $554,333 $333,316 $340,995
166 1 $552,449 4/30/98 $581,872 $312,650 $374,214
- ----------------------------------------------------------------------------------------------------------------------------------
167 1 $453,976 7/31/98 $437,968 $378,165 $351,392
168 1 $515,975 8/31/98 $482,186 $321,323 $355,595
169 1 $436,763 9/30/98 $445,745 $287,136 $299,701
170 1 $746,608 9/30/98 $752,348 $446,932 $459,828
171 1 $435,582 6/30/98 $492,307 $208,792 $282,229
- ----------------------------------------------------------------------------------------------------------------------------------
172 1 $434,170 8/31/98 $435,648 $331,372 $332,496
173 1 $2,746,958 9/30/98 $2,612,086 $538,377 $610,495
174 1 $426,366 3/31/98 $425,976 $301,136 $296,932
175 1 $587,709 8/31/98 $575,401 $343,318 $356,321
176 1 $380,051 8/31/98 $377,344 $295,926 $330,664
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Loan # Asset # Underwritten NOI Net Cash Flow NOI DSCR Net Cash Flow DSCR Lock Box
First Hill Apartments
<S> <C> <C> <C> <C> <C> <C>
105 1 $313,624 $301,874 1.45 1.40
105 2 $181,308 $174,808 1.45 1.40
-------- -------- ---- ----
$494,932 $476,682 1.45 1.40
- -----------------------------------------------------------------------------------------------------------------------------------
106 1 $500,888 $487,050 1.26 1.22 Hard
107 1 $640,193 $590,193 1.74 1.60
108 1 $634,362 $499,149 1.64 1.29
109 1 $524,718 $476,681 1.46 1.32
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Country Lane Corporation
<S> <C> <C> <C> <C> <C> <C>
110 1 $319,350 $304,044 1.68 1.60
110 2 $99,797 $133,019 1.68 1.60
110 3 $139,716 $95,014 1.68 1.60
-------- -------- ---- ----
$558,863 $532,077 1.68 1.60
- -----------------------------------------------------------------------------------------------------------------------------------
111 1 $588,651 $521,151 1.74 1.54
112 1 $757,232 $655,641 1.74 1.50
113 1 $603,461 $538,150 1.84 1.64 Hard
114 1 $433,661 $423,261 1.40 1.37
115 1 $526,530 $474,310 1.65 1.49
- -----------------------------------------------------------------------------------------------------------------------------------
116 1 $808,742 $717,249 2.12 1.88 Soft
117 1 $437,481 $402,645 1.46 1.35
118 1 $504,367 $452,850 1.37 1.23
119 1 $325,000 $325,000 1.05 1.05 Hard
120 1 $592,223 $519,731 1.78 1.56
- -----------------------------------------------------------------------------------------------------------------------------------
121 1 $388,350 $388,350 1.00 1.00 Hard
122 1 $388,350 $388,350 1.00 1.00 Hard
123 1 $388,350 $388,350 1.00 1.00 Hard
124 1 $688,264 $599,633 2.24 1.95
125 1 $543,576 $516,814 1.87 1.78
- -----------------------------------------------------------------------------------------------------------------------------------
126 1 $608,619 $457,979 2.04 1.53 Hard
127 1 $490,299 $388,851 1.50 1.19
128 1 $470,218 $370,482 1.56 1.23 Hard
129 1 $447,926 $400,739 1.48 1.32 Hard
130 1 $723,264 $633,664 2.51 2.20
- -----------------------------------------------------------------------------------------------------------------------------------
131 1 $457,033 $450,233 1.51 1.48
132 1 $722,904 $652,034 2.32 2.10
133 1 $650,107 $557,921 2.13 1.83 Soft
134 1 $476,396 $417,228 1.51 1.32
135 1 $416,647 $365,997 1.50 1.31
- -----------------------------------------------------------------------------------------------------------------------------------
136 1 $444,180 $409,923 1.39 1.29 Hard
137 1 $373,032 $329,612 1.41 1.25
138 1 $261,618 $237,118 1.96 1.79
139 1 $223,010 $203,760 1.96 1.79
140 1 $464,153 $393,367 1.54 1.30
- -----------------------------------------------------------------------------------------------------------------------------------
141 1 $829,059 $517,208 2.91 1.82
142 1 $691,024 $602,152 2.21 1.92
143 1 $405,034 $368,157 1.60 1.46
144 1 $459,559 $376,735 1.79 1.47
145 1 $418,536 $377,545 1.56 1.41 Hard
- -----------------------------------------------------------------------------------------------------------------------------------
146 1 $351,634 $327,637 1.34 1.25 Hard
147 1 $404,958 $387,304 1.59 1.52
148 1 $612,221 $481,380 1.89 1.49
149 1 $358,658 $331,744 1.33 1.23
150 1 $551,846 $436,989 2.16 1.71
- -----------------------------------------------------------------------------------------------------------------------------------
151 1 $1,087,032 $921,228 4.43 3.75
152 1 $505,521 $461,601 2.10 1.92 Soft
153 1 $390,155 $336,978 1.43 1.23
154 1 $387,190 $333,377 1.44 1.24
155 1 $437,374 $362,119 1.88 1.55
- -----------------------------------------------------------------------------------------------------------------------------------
156 1 $543,429 $480,650 1.88 1.66 Hard
157 1 $251,579 1.00 1.00 Hard
158 1 $394,807 $344,861 1.54 1.35 Hard
159 1 $365,260 $327,694 1.66 1.49 Hard
160 1 $489,408 $341,912 2.20 1.54 Hard
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Brentwood/Pontchartrain Apts
<S> <C> <C> <C> <C> <C> <C>
161 1 $256,495 $237,055 1.34 1.23
161 2 $67,414 $59,414 1.34 1.23
---------- -------- ---- ----
$323,909 $296,469 1.34 1.23
- -----------------------------------------------------------------------------------------------------------------------------------
162 1 $314,496 $296,086 1.42 1.34
163 1 $432,370 $386,669 1.89 1.69
164 1 $452,844 $372,220 2.11 1.73
165 1 $356,598 $304,711 1.86 1.59
166 1 $392,954 $339,867 1.79 1.55
- -----------------------------------------------------------------------------------------------------------------------------------
167 1 $315,490 $281,795 1.62 1.45
168 1 $311,800 $261,881 1.52 1.27 Hard
169 1 $303,639 $253,816 1.51 1.27
170 1 $435,976 $394,949 2.19 1.99
171 1 $313,952 $256,021 1.55 1.26 Hard
- -----------------------------------------------------------------------------------------------------------------------------------
172 1 $270,964 $253,964 1.45 1.36 Soft
173 1 $435,139 $304,535 1.98 1.38
174 1 $285,995 $267,745 1.51 1.41
175 1 $293,656 $258,656 1.65 1.45
176 1 $254,801 $242,551 1.47 1.40 Soft
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Balloon/Anticipated Current
Repayment Date Occupancy
Loan # Asset # Value LTV LTV Current Occupancy Period
First Hill Apartments
<S> <C> <C> <C> <C> <C> <C>
105 1 $4,150,000 64.5% 55.8% 100% 8/31/98
105 2 $2,600,000 64.5% 55.8% 100% 8/31/98
---------- ----- -----
$6,750,000 64.5% 55.8%
- ----------------------------------------------------------------------------------------------------------------------------------
106 1 $6,100,000 70.5% 57.8% 100% 6/30/98
107 1 $5,658,000 75.9% 47.8% 99% 6/30/98
108 1 $6,140,000 69.5% 19.5% 100% 10/1/98
109 1 $6,100,000 69.0% 28.1% 100% 10/2/98
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Country Lane Corporation
<S> <C> <C> <C> <C> <C> <C>
110 1 $3,200,000 74.6% 56.6% 82% 6/30/98
110 2 $1,400,000 74.6% 56.6% 82% 6/30/98
110 3 $1,000,000 74.6% 56.6% 82% 6/30/98
---------- ----- -----
$5,600,000 74.6% 56.6%
- ----------------------------------------------------------------------------------------------------------------------------------
111 1 $5,500,000 76.0% 58.7% 91% 01/31/99
112 1 $6,800,000 60.7% 43.3% 77% 8/31/98
113 1 $6,400,000 63.1% 55.4% 94% 10/1/98
114 1 $4,900,000 81.3% 70.3% 100% 8/25/98
115 1 $5,100,000 77.0% 59.1% 91% 7/31/98
- ----------------------------------------------------------------------------------------------------------------------------------
116 1 $10,600,000 37.0% 29.1% 88% 9/1/98
117 1 $4,850,000 78.5% 68.2% 100% 9/1/98
118 1 $6,300,000 60.1% 42.8% 100% 5/5/98
119 1 $6,400,000 59.1% 23.6% 100% 8/31/98
120 1 $5,285,000 70.9% 45.5% 57% 6/30/98
- ----------------------------------------------------------------------------------------------------------------------------------
121 1 $4,600,000 96.4% 39.2% 100% 9/1/98
122 1 $4,560,000 97.2% 39.5% 100% 9/1/98
123 1 $4,600,000 96.4% 39.2% 100% 9/1/98
124 1 $6,600,000 56.6% 49.6% 84% 2/1/98
125 1 $7,500,000 49.8% 37.4% 100% 6/18/98
- ----------------------------------------------------------------------------------------------------------------------------------
126 1 $6,150,000 60.0% 52.6% 92% 9/1/98
127 1 $5,400,000 67.7% 55.1% 100% 6/30/98
128 1 $4,850,000 73.8% 61.0% 95% 10/1/98
129 1 $4,300,000 81.0% 65.2% 100% 10/1/98
130 1 $7,900,000 44.1% 34.1% 95% 12/01/98
- ----------------------------------------------------------------------------------------------------------------------------------
131 1 $4,750,000 73.2% 59.4% 99% 8/1/98
132 1 $6,300,000 55.0% 35.6% 65% 3/31/98
133 1 $5,826,000 58.9% 24.4% 100% 6/30/98
134 1 $5,000,000 67.9% 54.7% 100% 5/30/98
135 1 $4,500,000 75.3% 66.0% 93% 9/24/98
- ----------------------------------------------------------------------------------------------------------------------------------
136 1 $5,000,000 66.5% 46.8% 100% 9/16/98
137 1 $4,200,000 78.9% 54.0% 84% 6/30/98
138 1 $2,550,000 73.5% 62.9% 97% 8/31/98
139 1 $1,920,000 73.5% 62.9% 100% 8/31/98
140 1 $4,700,000 69.3% 55.6% 100% 7/31/98
- ----------------------------------------------------------------------------------------------------------------------------------
141 1 $6,350,000 50.6% 20.8% 100% 7/1/98
142 1 $6,190,000 51.8% 21.5% 68% 4/30/98
143 1 $4,600,000 69.3% 60.3% 100% 8/30/98
144 1 $5,200,000 61.2% 47.2% 85% 6/1/98
145 1 $4,940,000 64.4% 52.9% 99% 8/30/98
- ----------------------------------------------------------------------------------------------------------------------------------
146 1 $4,350,000 73.2% 59.9% 100% 7/1/98
147 1 $4,450,000 69.8% 53.9% 100% 6/24/98
148 1 $5,000,000 61.4% 38.1% 76% 6/30/98
149 1 $4,100,000 74.7% 59.6% 96% 8/31/98
150 1 $5,500,000 54.3% 43.5% 93% 9/30/98
- ----------------------------------------------------------------------------------------------------------------------------------
151 1 $11,600,000 25.7% 19.8% 90% 12/30/98
152 1 $5,610,000 53.2% 40.6% 97% 12/21/98
153 1 $4,500,000 65.5% 53.4% 100% 01/01/99
154 1 $4,200,000 68.9% 52.0% 96% 6/30/98
155 1 $4,400,000 65.6% 50.6% 97% 6/1/98
- ----------------------------------------------------------------------------------------------------------------------------------
156 1 $4,400,000 64.8% 27.8% 73% 4/30/98
157 1 $2,900,000 97.6% 0.0% 100% 8/12/98
158 1 $4,300,000 65.8% 42.7% 96% 9/1/98
159 1 $3,750,000 75.2% 65.0% 100% 7/1/98
160 1 $4,500,000 60.9% 53.5% 89% 10/1/98
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Brentwood/Pontchartrain Apts
<S> <C> <C> <C> <C> <C> <C>
161 1 $2,500,000 79.3% 1.0% 91% 7/31/98
161 2 $950,000 79.3% 1.0% 94% 7/31/98
---------- ----- -----
$3,450,000 79.3% 1.0%
- ----------------------------------------------------------------------------------------------------------------------------------
162 1 $3,450,000 78.6% 60.4% 100% 5/31/98
163 1 $5,200,000 51.7% 41.3% 88% 9/1/98
164 1 $3,950,000 66.7% 51.4% 0% 01/00/00
165 1 $3,300,000 72.5% 63.2% 97% 10/1/98
166 1 $3,720,000 63.6% 51.8% 98% 6/1/98
- ----------------------------------------------------------------------------------------------------------------------------------
167 1 $3,425,000 69.0% 53.2% 100% 9/1/98
168 1 $3,700,000 63.4% 50.7% 100% 09/22/98
169 1 $3,300,000 70.2% 44.4% 92% 8/31/98
170 1 $4,000,000 57.3% 48.3% 94% 10/8/98
171 1 $3,200,000 68.5% 62.2% 91% 8/1/98
- ----------------------------------------------------------------------------------------------------------------------------------
172 1 $2,900,000 75.5% 60.3% 100% 9/1/98
173 1 $4,400,000 49.7% 34.8% 72% 9/30/98
174 1 $2,800,000 77.7% 49.4% 99% 01/01/99
175 1 $2,850,000 76.1% 66.7% 97% 9/16/98
176 1 $2,600,000 78.5% 62.7% 100% 9/1/98
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Audit/Agreed Upon Audits/Agreed Upon U/W Ongoing Actual Ongoing
Loan # Asset # U/W Occupancy Procedures Upfront Procedures Forward Capital Reserve Capital Reserve
First Hill Apartments
<S> <C> <C> <C> <C> <C> <C>
105 1 95% No No $250.00 $250.00
105 2 95% No No $250.00 $250.00
- -----------------------------------------------------------------------------------------------------------------------------------
106 1 95% No Yes $0.15 $0.15
107 1 95% No No $250.00 $250.00
108 1 93% No No $0.20 $0.20
109 1 94% No No $0.15 $0.15
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Country Lane Corporation
<S> <C> <C> <C> <C> <C> <C>
110 1 82% No No $60.00 $52.13
110 2 82% No No $60.00 $64.37
110 3 82% No No $60.00 $75.44
- -----------------------------------------------------------------------------------------------------------------------------------
111 1 91% No No $250.00 $250.00
112 1 75% No No 5.00% 5.00%
113 1 94% No Yes $0.15 $0.15
114 1 95% No No $50.00 $0.00
115 1 90% No No $0.19 $0.19
- -----------------------------------------------------------------------------------------------------------------------------------
116 1 84% No No $0.21 $0.21
117 1 93% No No $0.15 $0.15
118 1 90% No No $0.15 $0.15
119 1 100% No No $0.00 $0.00
120 1 53% No No 5.00% 5.00%
- -----------------------------------------------------------------------------------------------------------------------------------
121 1 100% Yes Yes $0.00 $0.00
122 1 100% Yes Yes $0.00 $0.00
123 1 100% Yes Yes $0.00 $0.00
124 1 84% No No $0.15 $0.15
125 1 95% No No $0.23 $0.15
- -----------------------------------------------------------------------------------------------------------------------------------
126 1 92% No Yes $0.20 $0.20
127 1 93% No No $0.26 $0.25
128 1 92% No Yes $0.20 $0.20
129 1 95% No No $0.15 $0.15
130 1 92% No No $0.20 $0.20
- -----------------------------------------------------------------------------------------------------------------------------------
131 1 95% No No $50.00 $0.00
132 1 64% No No 5.00% 5.00%
133 1 92% No No $0.32 $0.32
134 1 93% No No $0.20 $0.20
135 1 93% No No $0.15 $0.15
- -----------------------------------------------------------------------------------------------------------------------------------
136 1 95% No No $0.15 $0.15
137 1 84% No No $0.15 $0.15
138 1 93% No No $250.00 $250.00
139 1 95% No No $250.00 $250.00
140 1 95% No No $0.32 $0.32
- -----------------------------------------------------------------------------------------------------------------------------------
141 1 83% No No $0.15 $0.10
142 1 68% No No 5.00% 5.00%
143 1 95% No No $0.20 $0.20
144 1 85% No No $0.20 $0.20
145 1 95% No Yes $0.17 $0.17
- -----------------------------------------------------------------------------------------------------------------------------------
146 1 95% No No $0.15 $0.15
147 1 95% No No $285.00 $284.75
148 1 75% No No 5.00% 5.00%
149 1 95% No No $283.00 $283.30
150 1 90% No No $0.27 $0.27
- -----------------------------------------------------------------------------------------------------------------------------------
151 1 90% No No $0.15 $0.15
152 1 95% No No $305.04 $305.04
153 1 92% No Yes $0.20 $0.20
154 1 92% No No $0.14 $0.14
155 1 94% No No $0.21 $0.21
- -----------------------------------------------------------------------------------------------------------------------------------
156 1 70% No No 5.00% 4.00%
157 1 100% No Yes $0.00 $0.00
158 1 93% No No $0.15 $0.15
159 1 95% No No $0.16 $0.16
160 1 89% Yes Yes $0.22 $0.22
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Brentwood/Pontchartrain Apts
<S> <C> <C> <C> <C> <C> <C>
161 1 91% No No $270.00 $270.00
161 2 94% No No $250.00 $250.00
- -----------------------------------------------------------------------------------------------------------------------------------
162 1 95% No No $263.00 $263.00
163 1 88% No Yes $0.15 $0.15
164 1 91% No No $252.00 $251.95
165 1 9% No No $0.23 $0.23
166 1 92% No No $0.20 $0.20
- -----------------------------------------------------------------------------------------------------------------------------------
167 1 91% No No $0.16 $0.16
168 1 95% No Yes $0.22 $0.22
169 1 92% No No $0.17 $0.17
170 1 94% No No $0.20 $0.20
171 1 90% No Yes $0.20 $0.20
- -----------------------------------------------------------------------------------------------------------------------------------
172 1 95% No No $250.00 $250.00
173 1 70% No No 5.00% 5.00%
174 1 95% No No $250.00 $250.00
175 1 95% No No $250.00 $250.00
176 1 95% No No $250.00 $250.00
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Lease Expiration
Loan # Asset # Reserve Units Tenant 1 Date % of Total SF
First Hill Apartments
<S> <C> <C> <C> <C> <C>
105 1 $/unit
105 2 $/unit
- ------------------------------------------------------------------------------------------------------------------------------
106 1 $psf Sneaker Stadium 2018 100%
107 1 $/unit
108 1 $psf Digital Television 2002 20%
109 1 $psf Food Lion 2011 45%
- ------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Country Lane Corporation
<S> <C> <C> <C> <C> <C>
110 1 $/unit
110 2 $/unit
110 3 $/unit
- ------------------------------------------------------------------------------------------------------------------------------
111 1 $/unit
112 1 %revenue
113 1 $psf Hastings 2005 34%
114 1 $/unit
115 1 $psf The TJ Maxx Companies, Inc 2006 51%
- ------------------------------------------------------------------------------------------------------------------------------
116 1 $psf Ralph's 2005 36%
117 1 $psf Ross Dress for Less 2005 54%
118 1 $psf Embassy Ballroom 2007 20%
119 1 $psf Loew's Theaters 2018 100%
120 1 %revenue
- ------------------------------------------------------------------------------------------------------------------------------
121 1 $psf Circuit City 100%
122 1 $psf Circuit City 100%
123 1 $psf Circuit City 100%
124 1 $psf Payless 2016 31%
125 1 $psf Strawberry 2002 55%
- ------------------------------------------------------------------------------------------------------------------------------
126 1 $psf MedPartners 1999 6%
127 1 $psf Omeda Communications 2001 51%
128 1 $psf Seasons Mortgage Group 2002 21%
129 1 $psf List Industries 2003 100%
130 1 $psf Giant Food 2004 28%
- ------------------------------------------------------------------------------------------------------------------------------
131 1 $/unit
132 1 %revenue
133 1 $psf Gold's Gym 3%
134 1 $psf
135 1 $psf Razzmatazz Cards 2003 9%
- ------------------------------------------------------------------------------------------------------------------------------
136 1 $psf Seven Eleven 2006 12%
137 1 $psf Food Lion 2015 44%
138 1 $/unit
139 1 $/unit
140 1 $psf The Egg Store 2002 25%
- ------------------------------------------------------------------------------------------------------------------------------
141 1 $psf Quad City Consolidation and Distribution, Inc. 2001 89%
142 1 %revenue
143 1 $psf
144 1 $psf
145 1 $psf Tele-K Marketing 2001 12%
- ------------------------------------------------------------------------------------------------------------------------------
146 1 $psf HK Market 2007 102%
147 1 $/unit
148 1 %revenue
149 1 $/unit
150 1 $psf SC Department of Vocational Rehab 1998 17%
- ------------------------------------------------------------------------------------------------------------------------------
151 1 $psf Sport Authority 2004 34%
152 1 $/unit
153 1 $psf Greenpeace 2003 64%
154 1 $psf
155 1 $psf Jewish News (B-1) 2000 12%
- ------------------------------------------------------------------------------------------------------------------------------
156 1 %revenue
157 1 $psf Perry Judd's 2018 100%
158 1 $psf
159 1 $psf Buffets Inc. 2002 28%
160 1 $psf J.C. Penney 2002 19%
- ------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Brentwood/Pontchartrain Apts
<S> <C> <C> <C> <C> <C>
161 1 $/unit
161 2 $/unit
- ------------------------------------------------------------------------------------------------------------------------------
162 1 $/unit
163 1 $psf TShirt 1999 21%
164 1 $/unit
165 1 $psf
166 1 $psf Carolina Rehabilitation 1999 20%
- ------------------------------------------------------------------------------------------------------------------------------
167 1 $psf RE/Max R.E. 1999 17%
168 1 $psf Network One of Portland 2001 30%
169 1 $psf
170 1 $psf Thriftway Market 2007 42%
171 1 $psf
- ------------------------------------------------------------------------------------------------------------------------------
172 1 $/unit
173 1 %revenue
174 1 $/unit
175 1 $/unit
176 1 $/unit
- ------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Lease Expiration
Loan # Asset # Tenant 2 Date % of Total SF Tenant 3
First Hill Apartments
<S> <C> <C> <C> <C> <C>
105 1
105 2
- ------------------------------------------------------------------------------------------------------------------------------
106 1
107 1
108 1 Humana 2002 40%
109 1 Dollar General 2001 10%
- ------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Country Lane Corporation
<S> <C> <C> <C> <C> <C>
110 1
110 2
110 3
- ------------------------------------------------------------------------------------------------------------------------------
111 1
112 1
113 1 Old Mexico Grill of Santa Fe 2000 7% Souper Salad
114 1
115 1 Blockbuster Video 2001 12% Payless Shoe Source
- ------------------------------------------------------------------------------------------------------------------------------
116 1 Super Trak 1999 11%
117 1 Blockbuster Video 2005 15%
118 1 Sakowitz Furs 2001 19% American Pro Line Golf
119 1
120 1
- ------------------------------------------------------------------------------------------------------------------------------
121 1
122 1
123 1
124 1 American Tire 2011 7% Clothestime
125 1 Lane Bryant 2002 45%
- ------------------------------------------------------------------------------------------------------------------------------
126 1 BSA Senior Health Center 2001 5% Meeks & Constillo
127 1 Exec Greetings 2002 27%
128 1 Savage & Company (MTM) 1998 11% Acumen Corporation
129 1
130 1 Western Auto Parts 2006 7%
- ------------------------------------------------------------------------------------------------------------------------------
131 1
132 1
133 1
134 1
135 1
- ------------------------------------------------------------------------------------------------------------------------------
136 1 Beijing Gourmet 2002 13% Park N' Shop
137 1 Eckerds 2005 13%
138 1
139 1
140 1 DC Sales 2000 22% Pet Supplies Plus
- ------------------------------------------------------------------------------------------------------------------------------
141 1
142 1
143 1
144 1
145 1 Yuma Junction 2013 11% Quadrelle Realty
- ------------------------------------------------------------------------------------------------------------------------------
146 1
147 1
148 1
149 1
150 1
- ------------------------------------------------------------------------------------------------------------------------------
151 1 Holiday Spa/Bally's 1999 12%
152 1
153 1 Catholics For Free Choice 2005 13%
154 1
155 1 Jewish News (B-2) 2000 3% Citation Corporation
- ------------------------------------------------------------------------------------------------------------------------------
156 1
157 1
158 1
159 1 Hirshfield's 2007 15%
160 1 Stage Stores 2000 15% Dunlaps
- ------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Brentwood/Pontchartrain Apts
<S> <C> <C> <C> <C> <C>
161 1
161 2
- ------------------------------------------------------------------------------------------------------------------------------
162 1
163 1 Brysis Data 1998 14% dWave Systems
164 1
165 1
166 1
- ------------------------------------------------------------------------------------------------------------------------------
167 1 Dr. McCune 1999 11% White Hen
168 1 Andalex 1999 8% Mings Dynasty
169 1
170 1
171 1
- ------------------------------------------------------------------------------------------------------------------------------
172 1
173 1
174 1
175 1
176 1
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Lease Expiration
Loan # Asset # Date % of Total SF
First Hill Apartments
105 1
105 2
- ---------------------------------------------------------------------
106 1
107 1
108 1
109 1
- ---------------------------------------------------------------------
Country Lane Corporation
110 1
110 2
110 3
- ---------------------------------------------------------------------
111 1
112 1
113 1 2000 7%
114 1
115 1 2006 5%
- ---------------------------------------------------------------------
116 1
117 1
118 1 2002 15%
119 1
120 1
- ---------------------------------------------------------------------
121 1
122 1
123 1
124 1 2002 7%
125 1
- ---------------------------------------------------------------------
126 1 1999 4%
127 1
128 1 2000 10%
129 1
130 1
- ---------------------------------------------------------------------
131 1
132 1
133 1
134 1
135 1
- ---------------------------------------------------------------------
136 1 1999 12%
137 1
138 1
139 1
140 1 2003 16%
- ---------------------------------------------------------------------
141 1
142 1
143 1
144 1
145 1 2002 8%
- ---------------------------------------------------------------------
146 1
147 1
148 1
149 1
150 1
- ---------------------------------------------------------------------
151 1
152 1
153 1
154 1
155 1 2002 10%
- ---------------------------------------------------------------------
156 1
157 1
158 1
159 1
160 1 2001 13%
- ---------------------------------------------------------------------
Brentwood/Pontchartrain Apts
161 1
161 2
- ---------------------------------------------------------------------
162 1
163 1 2001 11%
164 1
165 1
166 1
- ---------------------------------------------------------------------
167 1 2002 10%
168 1 2001 8%
169 1
170 1
171 1
- ---------------------------------------------------------------------
172 1
173 1
174 1
175 1
176 1
<PAGE>
<TABLE>
<CAPTION>
Annex B
Loan # Asset # Property Name Address
<S> <C> <C> <C>
177 1 Autumn Ridge Apts. 705 E. Siena Hghts Dr.
178 1 Holiday Inn Express - Hermitage 1414 Princeton Place
179 1 8080 Ward Parkway 8080 Ward Parkway
180 1 One Court Street 1 Court St.
181 1 Greenspring Village Professional 10807 Falls Road
- ------------------------------------------------------------------------------------------------------------------------------------
182 1 701 Santa Monica Blvd. 701 Santa Monica Blvd.
183 1 Econo Lodge--Waldorf 11770 Business Park Dr.
184 1 Cannon Valley Apts. 1170 Cannon Valley Dr.
185 1 Econolodge Williamsburg 1900 Richmond Road
186 1 414-416 East Cooper Street 414-416 East Cooper Street
- ------------------------------------------------------------------------------------------------------------------------------------
187 1 Community Shopping Center 7401 - 7467 Annapolis Road
188 1 Brookfield Apartments 238 Auburn Street
189 1 Regency Plaza Apts. 33 and 55 S. Shaddle
190 1 Blacksburg Square Shopping Center 1301-1321 South Main Street
191 1 Kenora Park Apartments 3557 Kenora Drive
- ------------------------------------------------------------------------------------------------------------------------------------
192 1 Kennedy Center 1801 McKees Rocks Road
193 1 Grand Island 1607 - 1723 S. Locust Street
194 1 Sleep Inn Richmond 2321 Willis Road
195 1 Raintree Apartments 2300 23rd Avenue
196 1 Greenway Allen Shopping Center 531 McDermott Drive
- ------------------------------------------------------------------------------------------------------------------------------------
197 1 Cedar Ridge 1400 & 1401 Namekagon
198 1 Blue Heron 210 Homestead Drive
199 1 Ore Creek Apartments 609-623 Flint Road
200 1 Best Western/New Englander Inn 220 Northside Dr.
201 1 MSP Associates Industrial Complex 2122-2276 E. 14 Mile Rd.
- ------------------------------------------------------------------------------------------------------------------------------------
202 1 Dairy Mart - Amelia 1114 Ohio Pike
203 1 Dairy Mart - Ontario 2094 Park Avenue West
204 1 Airport Apartments 741-751 NW 45th Ave
205 1 University Square Mall 1650 Warren Street
206 1 Dairy Mart - Grove City 3040 London- Groveport Road
- ------------------------------------------------------------------------------------------------------------------------------------
207 1 Revco Store HWY 70
208 1 Dairy Mart- Liberty West Chester 7198 Hamilton Mason Rd
209 1 Gallant Place Apartments 2148 - 2168 Montclair Dr.
210 1 Lafayette Square Apartments 2718 Gehring Drive
211 1 Miller East Office Building 4318 Miller Road
- ------------------------------------------------------------------------------------------------------------------------------------
212 1 Morningside Apartments 1521 Marie Street
213 1 Bella Casa MHP 85961 Edenvale Road
214 1 Kaleidoscope Shopping Center 10614 Westheimer Road
215 1 Weatherbridge Flex Facility NW Maynard Rd. & James Jackson Ave.
216 1 Professional Building East 3101 Breckenridge Lane
- ------------------------------------------------------------------------------------------------------------------------------------
217 1 Hobbs Plaza 2400 N. Grimes Street
218 1 The Woods Condominiums 4013 Manchaca Road
219 1 Corporate Park II 111 Corporate Lane
220 1 Madison East Apartments 2780 Madison Avenue
221 1 Cato Fashion Center Hwy 58 at Hwy 85
- ------------------------------------------------------------------------------------------------------------------------------------
222 1 Dairy Mart - Rootstown 4307 State Rte 4404
223 1 Clinton Chateau Apartments 1581 Canal Road
224 1 Country Estates MHP 8580 Thompson Drive
225 1 Hilltop Center 11102-11118 Lee Highway
226 1 Overlad MHP 3026 13th Ave.
- ------------------------------------------------------------------------------------------------------------------------------------
227 1 Dairy Mart - Salem 1370 6th Avenue
228 1 Corporate Park III 201 Corporate Lane
229 1 Raven Court 2487 126th NE
230 1 Country Cove 100-104 Poplar Ridge Dr.
231 1 Meadow Lane 1101 El Camino Dr.
<CAPTION>
Loan # Asset # City State Zip Property Type Year Built/ Renovated
<S> <C> <C> <C> <C> <C> <C>
177 1 Adrian MI 49221 Multifamily 1995
178 1 Hermitage TN 37076 Hotel-Ltd. Service 1990/1994
179 1 Kansas City MO 64114 Office 1974/1996
180 1 Lebanon NH 03766 Office 1989
181 1 Baltimore MD 21230 Office 1977
- -------------------------------------------------------------------------------------------------------------------------------
182 1 Santa Monica CA 90401 Office 1983/1994
183 1 Waldorf MD 20601 Hotel-Ltd. Service 1985/1993
184 1 Northfield MN 55057 Multifamily 1975/1996
185 1 Williamsburg VA 23188 Hotel-Ltd. Service 1961/1998
186 1 Aspen CO 81611 Retail-Unanchored 1980/1992
- -------------------------------------------------------------------------------------------------------------------------------
187 1 Landover Hills MD 20784 Retail-Unanchored 1951/1989
188 1 Portland ME 04103 Multifamily 1984
189 1 Mundelein IL 60060 Multifamily 1965/1998
190 1 Blacksburg VA 24060 Retail-Anchored 1981
191 1 Spring Valley CA 91977 Multifamily 1978/1995
- -------------------------------------------------------------------------------------------------------------------------------
192 1 Kennedy PA 15136 Retail-Anchored 1995
193 1 Grand Island NE 68801 Retail-Anchored 1973/1978
194 1 Richmond VA 23237 Hotel-Ltd. Service 1996
195 1 Birmingham AL 35215 Multifamily 1974/1997
196 1 Allen TX 75013 Retail-Anchored 1998
- -------------------------------------------------------------------------------------------------------------------------------
197 1 Hudson WI 54016 Multifamily 1995
198 1 Mankato MN 56001 Multifamily 1994
199 1 Brighton MI 48116 Multifamily 1974
200 1 Bennington VT 05201 Hotel-Ltd. Service 1960/1997
201 1 Warren MI 48093 Industrial 1978/1996
- -------------------------------------------------------------------------------------------------------------------------------
202 1 Amelia OH 45102 Retail-Anchored 1998
203 1 Ontario OH 44862 Retail-Anchored 1997
204 1 Miami FL 33126 Multifamily 1967/1996
205 1 Mankato MN 56002 Retail-Unanchored 1968/1995
206 1 Grove City OH 43123 Retail-Anchored 1997
- -------------------------------------------------------------------------------------------------------------------------------
207 1 Crossville TN 38555 Retail-Anchored 1997
208 1 Liberty Township OH 45044 Retail-Anchored 1998
209 1 Rock Hill SC 29730 Multifamily 1969/1995
210 1 Gretna LA 70053 Multifamily 1973/1997
211 1 Flint MI 48507 Office 1985/1997
- -------------------------------------------------------------------------------------------------------------------------------
212 1 Trenton MI 48183 Multifamily 1977
213 1 Pleasant Hill OR 97455 Mobile Home Park 1965/1975
214 1 Houston TX 77042 Retail-Unanchored 1984/1994
215 1 Cary NC 27511 Office 1996
216 1 Louisville KY 40207 Office 1969/1996
- -------------------------------------------------------------------------------------------------------------------------------
217 1 Hobbs NM 88240 Retail-Anchored 1981
218 1 Austin TX 78704 Multifamily 1986/1997
219 1 Columbia SC 29202 Industrial 1982
220 1 Memphis TN 38111 Multifamily 1967/1997
221 1 South Hill VA 23970 Retail-Anchored 1995
- -------------------------------------------------------------------------------------------------------------------------------
222 1 Rootstown OH 44272 Retail-Anchored 1995
223 1 Clinton Township MI 48038 Multifamily 1988/1996
224 1 Blair NE 68008 Mobile Home Park 1976
225 1 Fairfax City VA 22030 Retail-Unanchored 1947/1997
226 1 Council Bluffs IA 51501 Mobile Home Park 1970
- -------------------------------------------------------------------------------------------------------------------------------
227 1 New York NY 10019 Retail-Anchored 1995/1995
228 1 Columbia SC 29202 Industrial 1988
229 1 Blaine MN 55434 Multifamily 1995
230 1 Young America MN 55397 Multifamily 1994
231 1 Pekin IL 61554 Multifamily 1994
<CAPTION>
Cut-off Date Cut-off Date
Principal Principal Balance
Loan # Asset # Units Unit Type Balance /Unit 1997 Revenue
<S> <C> <C> <C> <C> <C> <C>
177 1 48 units $2,022,864 $42,143 $398,490
178 1 65 rooms $2,015,822 $31,013 $1,030,986
179 1 41,088 sf $1,993,547 $49 $407,685
180 1 23,354 sf $1,992,764 $85 $474,143
181 1 18,970 sf $1,990,147 $105 $455,866
- --------------------------------------------------------------------------------------------------------------------------------
182 1 16,490 sf $1,949,199 $118 $415,193
183 1 87 rooms $1,922,545 $22,098 $1,057,029
184 1 72 units $1,908,552 $26,508 $452,058
185 1 85 rooms $1,883,683 $22,161 $762,036
186 1 4,155 sf $1,867,731 $450 $314,167
- --------------------------------------------------------------------------------------------------------------------------------
187 1 45,600 sf $1,839,312 $40 $445,095
188 1 60 units $1,837,556 $30,626 $414,757
189 1 52 units $1,815,447 $34,912 $410,133
190 1 47,752 sf $1,742,252 $36 $264,367
191 1 54 units $1,736,069 $32,149 $309,408
- --------------------------------------------------------------------------------------------------------------------------------
192 1 20,225 sf $1,676,949 $83 $253,499
193 1 79,615 sf $1,667,789 $21 $298,737
194 1 51 rooms $1,654,548 $32,442 $719,092
195 1 90 units $1,642,934 $18,255 $431,408
196 1 18,995 sf $1,619,890 $85
- --------------------------------------------------------------------------------------------------------------------------------
197 1 72 units $1,567,840 $21,776 $485,180
198 1 72 units $1,494,709 $20,760 $407,627
199 1 48 units $1,484,621 $30,930 $301,844
200 1 58 rooms $1,478,164 $25,486 $892,642
201 1 71,560 sf $1,463,172 $20 $429,078
- --------------------------------------------------------------------------------------------------------------------------------
202 1 96,703 sf $1,422,318 $15
203 1 68,738 sf $1,375,173 $20
204 1 45 units $1,354,368 $30,097 $275,242
205 1 28,291 sf $1,351,987 $48 $345,513
206 1 75,838 sf $1,343,994 $18
- --------------------------------------------------------------------------------------------------------------------------------
207 1 10,722 sf $1,330,172 $124
208 1 3,280 sf $1,305,778 $398
209 1 80 units $1,290,996 $16,137 $400,651
210 1 106 units $1,195,010 $11,274 $448,677
211 1 23,457 sf $1,194,822 $51 $317,255
- --------------------------------------------------------------------------------------------------------------------------------
212 1 60 units $1,190,438 $19,841 $305,016
213 1 76 pads $1,188,136 $15,633 $225,727
214 1 59,952 sf $1,185,374 $20 $413,140
215 1 21,440 sf $1,185,064 $55 $218,577
216 1 25,166 sf $1,184,496 $47 $268,575
- --------------------------------------------------------------------------------------------------------------------------------
217 1 41,201 sf $1,127,094 $27 $254,625
218 1 42 units $1,096,046 $26,096 $333,213
219 1 39,875 sf $1,095,156 $27 $195,444
220 1 64 units $1,090,441 $17,038 $310,612
221 1 16,160 sf $1,087,777 $67 $177,304
- --------------------------------------------------------------------------------------------------------------------------------
222 1 81,724 sf $1,048,231 $13
223 1 30 units $1,034,819 $34,494 $186,713
224 1 116 pads $1,015,542 $8,755 $208,059
225 1 12,661 sf $996,571 $79 $154,065
226 1 103 pads $987,209 $9,585 $256,176
- --------------------------------------------------------------------------------------------------------------------------------
227 1 46,499 sf $865,241 $19
228 1 37,500 sf $856,213 $23 $155,225
229 1 32 units $824,372 $25,762 $236,094
230 1 48 units $804,636 $16,763 $293,203
231 1 55 units $603,449 $10,972 $216,460
<CAPTION>
Most Recent Most Most Recent
Loan # Asset # Period Revenue Recent Period Underwritten Revenue 1997 NOI Period NOI
<S> <C> <C> <C> <C> <C> <C>
177 1 $400,217 5/31/98 $391,605 $272,216 $269,833
178 1 $988,151 9/30/98 $935,011 $447,192 $393,474
179 1 $494,184 10/15/98 $577,257 $180,005 $255,576
180 1 $472,525 7/31/98 $447,184 $316,737 $312,300
181 1 $459,401 5/31/98 $342,716 $373,142 $376,390
- ---------------------------------------------------------------------------------------------------------------------------------
182 1 $414,821 4/30/98 $395,523 $318,449 $314,363
183 1 $1,059,588 4/30/98 $1,005,954 $453,315 $473,277
184 1 $462,717 4/30/98 $451,973 $240,434 $256,914
185 1 $763,374 6/30/98 $739,771 $359,917 $373,536
186 1 $320,900 7/31/98 $311,395 $276,781 $283,762
- ---------------------------------------------------------------------------------------------------------------------------------
187 1 $441,369 8/31/98 $442,334 $344,598 $340,446
188 1 $425,173 6/30/98 $412,368 $248,245 $262,117
189 1 $410,408 5/31/98 $410,115 $250,693 $250,693
190 1 $288,648 8/31/98 $275,687 $226,954 $250,109
191 1 $343,712 7/31/98 $371,689 $153,923 $179,492
- ---------------------------------------------------------------------------------------------------------------------------------
192 1 $285,579 6/30/98 $277,051 $202,158 $240,623
193 1 $296,634 5/31/98 $309,304 $224,404 $221,657
194 1 $747,841 3/31/98 $674,808 $370,438 $374,745
195 1 $457,121 6/30/98 $453,480 $217,183 $217,183
196 1 $306,060
- ---------------------------------------------------------------------------------------------------------------------------------
197 1 $487,986 6/30/98 $478,928 $238,130 $273,204
198 1 $394,496 6/30/98 $407,694 $204,290 $200,631
199 1 $303,863 3/31/98 $302,165 $173,721 $181,996
200 1 $892,642 12/30/97 $880,694 $395,417 $395,417
201 1 $418,896 6/30/98 $393,926 $372,679 $363,290
- ---------------------------------------------------------------------------------------------------------------------------------
202 1
203 1
204 1 $282,023 7/31/98 $279,274 $189,513 $203,491
205 1 $347,140 7/31/98 $322,065 $251,603 $257,502
206 1
- ---------------------------------------------------------------------------------------------------------------------------------
207 1 $194,290 8/31/98 $192,694 $153,488
208 1
209 1 $390,117 6/30/98 $390,117 $178,310 $182,825
210 1 $465,865 8/31/98 $468,898 $179,517 $201,533
211 1 $288,283 7/31/98 $279,586 $223,589 $193,472
- ---------------------------------------------------------------------------------------------------------------------------------
212 1 $301,626 8/30/98 $305,239 $213,686 $191,673
213 1 $223,256 4/30/98 $223,256 $177,090 $173,558
214 1 $409,338 8/31/98 $415,952 $220,875 $217,417
215 1 $221,380 5/31/98 $209,635 $177,752 $177,785
216 1 $289,717 5/31/98 $296,870 $162,015 $189,317
- ---------------------------------------------------------------------------------------------------------------------------------
217 1 $260,771 07/31/98 $263,786 $175,319 $174,285
218 1 $338,683 7/31/98 $341,815 $165,127 $173,273
219 1 $192,388 8/31/98 $191,949 $159,925 $154,869
220 1 $316,414 9/30/98 $328,412 $169,306 $171,503
221 1 $177,304 3/31/98 $168,439 $168,269 $168,239
- ---------------------------------------------------------------------------------------------------------------------------------
222 1
223 1 $191,414 7/31/98 $186,105 $135,791 $141,846
224 1 $227,156 5/31/98 $243,265 $122,034 $127,236
225 1 $164,347 9/1/98 $203,628 $130,308 $143,710
226 1 $263,552 4/30/98 $268,745 $124,431 $129,518
- ---------------------------------------------------------------------------------------------------------------------------------
227 1
228 1 $166,050 8/31/98 $157,360 $124,507 $133,355
229 1 $241,299 6/30/98 $228,475 $102,548 $127,404
230 1 $306,622 6/30/98 $306,342 $117,731 $137,270
231 1 $227,134 6/30/98 $230,372 $112,199 $123,707
<CAPTION>
Net Cash Flow
Loan # Asset # Underwritten NOI Net Cash Flow NOI DSCR DSCR Lock Box
<S> <C> <C> <C> <C> <C> <C>
177 1 $246,910 $234,910 1.42 1.35
178 1 $333,022 $286,271 1.82 1.57
179 1 $324,208 $261,446 2.01 1.62 Hard
180 1 $286,269 $253,321 1.72 1.52
181 1 $252,919 $224,333 1.52 1.34
- -----------------------------------------------------------------------------------------------------------------------------------
182 1 $268,632 $237,097 1.49 1.31
183 1 $382,503 $332,205 2.03 1.76
184 1 $252,932 $236,865 1.64 1.53
185 1 $354,874 $317,885 1.89 1.69
186 1 $255,034 $240,191 1.69 1.59
- -----------------------------------------------------------------------------------------------------------------------------------
187 1 $340,356 $274,499 2.23 1.80
188 1 $242,166 $227,166 1.56 1.46 Soft
189 1 $224,925 $209,637 1.52 1.41
190 1 $229,315 $196,148 1.74 1.49
191 1 $204,037 $190,537 1.57 1.47
- -----------------------------------------------------------------------------------------------------------------------------------
192 1 $203,949 $182,755 1.51 1.36
193 1 $218,538 $193,274 1.55 1.38 Hard
194 1 $280,352 $246,612 1.68 1.48
195 1 $211,934 $189,434 1.67 1.50
196 1 $205,459 $180,310 1.54 1.36
- -----------------------------------------------------------------------------------------------------------------------------------
197 1 $260,623 $242,623 1.50 1.40 Soft
198 1 $213,912 $195,912 1.26 1.15 Soft
199 1 $170,561 $153,665 1.37 1.24
200 1 $333,087 $289,052 2.07 1.79 Hard
201 1 $314,428 $266,025 2.41 2.04
- -----------------------------------------------------------------------------------------------------------------------------------
202 1 $120,992 1.00 1.00 Hard
203 1 $116,437 1.00 1.00 Hard
204 1 $155,980 $144,730 1.47 1.36
205 1 $213,421 $179,011 1.83 1.53
206 1 $115,284 1.00 1.00 Hard
- -----------------------------------------------------------------------------------------------------------------------------------
207 1 $154,513 $151,297 1.16 1.14 Hard
208 1 $110,234 1.00 1.00 Hard
209 1 $167,746 $147,746 1.55 1.37
210 1 $192,134 $159,884 2.06 1.71
211 1 $183,001 $148,305 1.82 1.47 Hard
- -----------------------------------------------------------------------------------------------------------------------------------
212 1 $181,753 $166,753 1.85 1.69
213 1 $159,955 $156,305 1.50 1.47
214 1 $210,862 $167,402 1.82 1.44
215 1 $168,253 $141,088 1.45 1.22
216 1 $191,794 $150,976 1.85 1.46
- -----------------------------------------------------------------------------------------------------------------------------------
217 1 $177,647 $143,970 1.74 1.41 Hard
218 1 $175,030 $160,589 1.91 1.75
219 1 $153,109 $132,120 1.53 1.32
220 1 $172,122 $156,122 1.87 1.70
221 1 $150,207 $133,442 1.56 1.38
- -----------------------------------------------------------------------------------------------------------------------------------
222 1 $88,869 1.00 1.00 Hard
223 1 $125,076 $116,759 1.54 1.43
224 1 $146,372 $140,572 1.66 1.60
225 1 $166,866 $148,774 2.13 1.90
226 1 $134,155 $129,005 1.56 1.50
- -----------------------------------------------------------------------------------------------------------------------------------
227 1 $72,682 1.00 1.00 Hard
228 1 $117,585 $101,202 1.51 1.30
229 1 $115,090 $107,090 1.26 1.18 Soft
230 1 $136,982 $124,982 1.54 1.41 Soft
231 1 $99,397 $85,397 1.45 1.24 Soft
<CAPTION>
Balloon/Anticipated Current
Repayment Date Occupancy
Loan # Asset # Value LTV LTV Current Occupancy Period
<S> <C> <C> <C> <C> <C> <C>
177 1 $2,680,000 75.5% 30.4% 98% 5/29/98
178 1 $3,440,000 58.6% 0.0% 62% 9/30/98
179 1 $3,300,000 60.4% 53.0% 89% 10/1/98
180 1 $3,100,000 64.3% 49.9% 92% 9/1/98
181 1 $3,200,000 62.2% 48.4% 100% 6/1/98
- ----------------------------------------------------------------------------------------------------------------------------------
182 1 $3,800,000 51.3% 41.8% 100% 6/11/98
183 1 $3,400,000 56.5% 23.6% 73% 4/30/98
184 1 $2,450,000 77.9% 59.7% 100% 5/22/98
185 1 $2,800,000 67.3% 28.8% 42% 06/30/98
186 1 $3,000,000 62.3% 47.6% 100% 8/13/98
- ----------------------------------------------------------------------------------------------------------------------------------
187 1 $2,900,000 63.4% 55.8% 85% 9/1/98
188 1 $2,400,000 76.6% 59.9% 99% 6/30/98
189 1 $2,430,000 74.7% 57.4% 100% 6/10/98
190 1 $2,400,000 72.6% 62.3% 100% 7/1/98
191 1 $2,200,000 78.9% 67.5% 100% 9/3/98
- ----------------------------------------------------------------------------------------------------------------------------------
192 1 $2,200,000 76.2% 61.8% 91% 7/30/98
193 1 $2,200,000 75.8% 59.6% 100% 8/12/98
194 1 $2,575,000 64.3% 0.0% 75% 12/31/98
195 1 $2,600,000 63.2% 47.4% 95% 6/8/98
196 1 $2,220,000 73.0% 63.9% 88% 9/21/98
- ----------------------------------------------------------------------------------------------------------------------------------
197 1 $3,020,000 51.9% 43.6% 100% 7/1/98
198 1 $2,535,000 59.0% 50.2% 93% 7/30/98
199 1 $1,950,000 76.1% 59.3% 98% 4/1/98
200 1 $2,600,000 56.9% 27.0% 75% 12/30/97
201 1 $2,900,000 50.5% 1.5% 100% 6/1/98
- ----------------------------------------------------------------------------------------------------------------------------------
202 1 $1,450,000 98.1% 26.4% 100% 10/13/98
203 1 $1,400,000 98.2% 28.3% 100% 10/13/98
204 1 $1,700,000 79.7% 69.1% 100% 8/31/98
205 1 $2,450,000 55.2% 34.8% 100% 6/1/98
206 1 $1,350,000 99.6% 29.4% 100% 10/13/98
- ----------------------------------------------------------------------------------------------------------------------------------
207 1 $1,700,000 78.2% 0.0% 100% 8/31/98
208 1 $1,325,000 98.5% 25.5% 100% 10/13/98
209 1 $1,875,000 68.9% 53.6% 78% 02/23/99
210 1 $1,650,000 72.4% 62.7% 98% 8/31/98
211 1 $1,675,000 71.3% 45.0% 100% 7/31/98
- ----------------------------------------------------------------------------------------------------------------------------------
212 1 $1,800,000 66.1% 51.2% 95% 02/01/99
213 1 $1,940,000 61.2% 40.2% 99% 12/10/98
214 1 $2,700,000 43.9% 0.0% 78% 6/30/98
215 1 $1,750,000 67.7% 28.2% 100% 6/17/98
216 1 $1,800,000 65.8% 26.9% 100% 01/01/99
- ----------------------------------------------------------------------------------------------------------------------------------
217 1 $1,875,000 60.1% 54.2% 91% 9/1/98
218 1 $1,650,000 66.4% 58.5% 100% 7/31/98
219 1 $1,525,000 71.8% 58.7% 93% 10/16/98
220 1 $1,380,000 79.0% 49.4% 95% 9/30/98
221 1 $1,470,000 74.0% 47.6% 100% 01/01/99
- ----------------------------------------------------------------------------------------------------------------------------------
222 1 $1,100,000 95.3% 27.0% 100% 10/13/98
223 1 $1,300,000 79.6% 60.1% 100% 8/1/98
224 1 $1,500,000 67.7% 43.6% 97% 4/27/98
225 1 $1,800,000 55.4% 48.0% 100% 9/4/98
226 1 $1,375,000 71.8% 46.4% 100% 6/4/98
- ----------------------------------------------------------------------------------------------------------------------------------
227 1 $900,000 96.1% 30.9% 100% 10/13/98
228 1 $1,250,000 68.5% 56.0% 100% 10/16/98
229 1 $1,410,000 58.5% 49.1% 91% 9/22/98
230 1 $1,830,000 44.0% 37.0% 100% 9/22/98
231 1 $1,450,000 41.6% 35.4% 92% 9/22/98
<CAPTION>
Audit/Agreed Upon Audits/Agreed Upon U/W Ongoing Actual Ongoing
Loan # Asset # U/W Occupancy Procedures Upfront Procedures Forward Capital Reserve Capital Reserve
<S> <C> <C> <C> <C> <C> <C>
177 1 95% No No $250.00 $250.00
178 1 59% No No 5.00% 5.00%
179 1 89% No Yes $0.20 $0.20
180 1 92% No No $0.15 $0.15
181 1 93% No No $0.20 $0.20
- -----------------------------------------------------------------------------------------------------------------------------------
182 1 95% No No $0.26 $0.26
183 1 71% No No 5.00% 5.00%
184 1 95% No No $223.00 $223.00
185 1 42% No No 5.00% 5.00%
186 1 95% No No $0.15 $0.15
- -----------------------------------------------------------------------------------------------------------------------------------
187 1 85% No No $0.49 $0.49
188 1 95% No No $250.00 $250.00
189 1 95% No No $294.00 $294.25
190 1 95% No No $0.20 $0.20
191 1 100% No No $250.00 $250.00
- -----------------------------------------------------------------------------------------------------------------------------------
192 1 93% No No $0.15 $0.15
193 1 97% No Yes $0.15 $0.15
194 1 65% No No 5.00% 5.00%
195 1 95% No No $250.00 $250.00
196 1 88% No No $0.15 $0.15
- -----------------------------------------------------------------------------------------------------------------------------------
197 1 95% Yes Yes $250.00 $250.00
198 1 93% Yes Yes $250.00 $250.00
199 1 95% No No $352.00 $352.07
200 1 74% No No 5.00% 5.00%
201 1 94% No No $0.15 $0.15
- -----------------------------------------------------------------------------------------------------------------------------------
202 1 100% Yes Yes $0.00 $0.00
203 1 100% Yes Yes $0.00 $0.00
204 1 95% No No $250.00 $250.00
205 1 91% No No $0.26 $0.26
206 1 100% Yes Yes $0.00 $0.00
- -----------------------------------------------------------------------------------------------------------------------------------
207 1 100% No No $0.30 $0.30
208 1 100% Yes Yes $0.00 $0.00
209 1 89% No No $250.00 $250.00
210 1 95% No No $304.00 $304.00
211 1 94% No No $0.25 $0.25
- -----------------------------------------------------------------------------------------------------------------------------------
212 1 95% No No $250.00 $250.00
213 1 95% No No $50.00 $0.00
214 1 78% No No $0.19 $0.19
215 1 94% No No $0.15 $0.15
216 1 92% No No $0.26 $0.26
- -----------------------------------------------------------------------------------------------------------------------------------
217 1 87% No Yes $0.17 $0.17
218 1 95% No No $344.00 $344.00
219 1 93% No No $0.15 $0.10
220 1 94% No No $250.00 $250.00
221 1 95% No No $0.16 $0.16
- -----------------------------------------------------------------------------------------------------------------------------------
222 1 100% Yes Yes $0.00 $0.00
223 1 95% No No $277.00 $277.00
224 1 95% No No $50.00 $0.00
225 1 93% No No $0.26 $0.26
226 1 95% No No $50.00 $0.00
- -----------------------------------------------------------------------------------------------------------------------------------
227 1 100% Yes Yes $0.00 $0.00
228 1 93% No No $0.15 $0.10
229 1 91% Yes Yes $250.00 $250.00
230 1 95% Yes Yes $250.00 $250.00
231 1 93% Yes Yes $250.00 $250.00
<CAPTION>
Lease Expiration
Loan # Asset # Reserve Units Tenant 1 Date % of Total SF
<S> <C> <C> <C> <C> <C>
177 1 $/unit
178 1 %revenue
179 1 $psf Power Tech 2002 13%
180 1 $psf Sweet Tomatoes Trattoria 2006 24%
181 1 $psf Flagship Health, PA 2003 37%
- --------------------------------------------------------------------------------------------------------------------------------
182 1 $psf Visualize 2001 49%
183 1 %revenue
184 1 $/unit
185 1 %revenue
186 1 $psf Musicland Retail, Inc. 2002 56%
- --------------------------------------------------------------------------------------------------------------------------------
187 1 $psf
188 1 $/unit
189 1 $/unit
190 1 $psf Lowe's Food Store 2001 44%
191 1 $/unit
- ---------------------------------------------------------------------------------------------------------------------------------
192 1 $psf Revco 2010 42%
193 1 $psf Skagway 2003 81%
194 1 %revenue
195 1 $/unit
196 1 $psf Mexi-Go Restaurant 2003 24%
- ---------------------------------------------------------------------------------------------------------------------------------
197 1 $/unit
198 1 $/unit
199 1 $/unit
200 1 %revenue
201 1 $psf Universal Cutting Tools 2001 20%
- ---------------------------------------------------------------------------------------------------------------------------------
202 1 $psf Dairy Mart 100%
203 1 $psf Dairy Mart 100%
204 1 $/unit
205 1 $psf Carmike Theaters 2003 39%
206 1 $psf Dairy Mart 100%
- ---------------------------------------------------------------------------------------------------------------------------------
207 1 $psf Revco 2017 100%
208 1 $psf Dairy Mart 2818%
209 1 $/unit
210 1 $/unit
211 1 $psf EDS 2002 90%
- ---------------------------------------------------------------------------------------------------------------------------------
212 1 $/unit
213 1 $/unit
214 1 $psf Venture Carpet 2001 8%
215 1 $psf Golds Gym 2003 72%
216 1 $psf Baptist East Healthcare East 2002 32%
- ---------------------------------------------------------------------------------------------------------------------------------
217 1 $psf Big Cheese Pizza 2003 21%
218 1 $/unit
219 1 $psf
220 1 $/unit
221 1 $psf Cato Fashions 2006 40%
- ---------------------------------------------------------------------------------------------------------------------------------
222 1 $psf Dairy Mart 100%
223 1 $/unit
224 1 $/unit
225 1 $psf
226 1 $/unit
- ---------------------------------------------------------------------------------------------------------------------------------
227 1 $psf Dairy Mart 100%
228 1 $psf IKON 2002 35%
229 1 $/unit
230 1 $/unit
231 1 $/unit
<CAPTION>
Lease Expiration
Loan # Asset # Tenant 2 Date % of Total SF Tenant 3
<S> <C> <C> <C> <C> <C>
177 1
178 1
179 1 Freirch & Katz 2001 8% Money Line Mortgage
180 1 William Kmon 2008 16%
181 1 Drs. Feldman and Sachs 2005 32% O'Conner, Piper & Flynn
- --------------------------------------------------------------------------------------------------------------------------------
182 1 Pritchard Marketing 2001 15%
183 1
184 1
185 1
186 1 Driscol Gallery 2002 44%
- --------------------------------------------------------------------------------------------------------------------------------
187 1
188 1
189 1
190 1
191 1
- --------------------------------------------------------------------------------------------------------------------------------
192 1
193 1 Joann Fabrics 2000 14%
194 1
195 1
196 1
- --------------------------------------------------------------------------------------------------------------------------------
197 1
198 1
199 1
200 1
201 1 Boat America Corp. 2001 14%
- --------------------------------------------------------------------------------------------------------------------------------
202 1
203 1
204 1
205 1 Albatross 2001 30% Hardee's
206 1
- --------------------------------------------------------------------------------------------------------------------------------
207 1
208 1
209 1
210 1
211 1 Metropolitan Life 2000 10%
- --------------------------------------------------------------------------------------------------------------------------------
212 1
213 1
214 1
215 1 GymCarolina 2003 28%
216 1
- --------------------------------------------------------------------------------------------------------------------------------
217 1 Blockbuster Video 2000 14% Colortyme
218 1
219 1
220 1
221 1 Dollar Tree 2001 20% Kelly Rentals
- --------------------------------------------------------------------------------------------------------------------------------
222 1
223 1
224 1
225 1
226 1
- --------------------------------------------------------------------------------------------------------------------------------
227 1
228 1
229 1
230 1
231 1
</TABLE>
Lease Expiration
Loan # Asset # Date % of Total SF
177 1
178 1
179 1 2001 6%
180 1
181 1 2002 25%
- ---------------------------------------------------------------------
182 1
183 1
184 1
185 1
186 1
- ---------------------------------------------------------------------
187 1
188 1
189 1
190 1
191 1
- ---------------------------------------------------------------------
192 1
193 1
194 1
195 1
196 1
- ---------------------------------------------------------------------
197 1
198 1
199 1
200 1
201 1
- ---------------------------------------------------------------------
202 1
203 1
204 1
205 1 2001 21%
206 1
- ---------------------------------------------------------------------
207 1
208 1
209 1
210 1
211 1
- ---------------------------------------------------------------------
212 1
213 1
214 1
215 1
216 1
- ---------------------------------------------------------------------
217 1 1999 12%
218 1
219 1
220 1
221 1 2005 20%
- ---------------------------------------------------------------------
222 1
223 1
224 1
225 1
226 1
- ---------------------------------------------------------------------
227 1
228 1
229 1
230 1
231 1
<PAGE>
<TABLE>
<CAPTION>
Annex C: Premium Loans
Anticipated Cut-off
Cut-off Cut-off Repayment Date Date Principal
Loan Name Date LTV PTV LTV/PTV DSCR Balance
--------- -------- --- ------- ---- -------
<S> <C> <C> <C> <C> <C>
2 Park LaBrea - B Note 68.6% 70.9% 55.3% 1.33 $140,613,989
4 Prime Retail III - Note B 57.1% 62.4% 51.8% 1.54 81,565,300
4 Prime Retail III - Note C 57.1% 62.4% 51.8% 1.54 16,313,060
5 Springfield Mall - D8 74.4% 81.2% 61.1% 1.20 90,394,069
8 Laurel Mall 68.6% 74.9% 56.5% 1.27 53,588,156
9 Baldwin Complex 70.8% 77.7% 57.4% 1.27 48,875,113
12 Hunter's Square 72.5% 79.5% 59.2% 1.21 39,854,911
13 Point Plaza 72.1% 78.3% 59.3% 1.21 39,268,946
14 East Bank Club 49.3% 53.5% 34.0% 2.43 36,492,811
15 Showplace 63.4% 69.2% 52.0% 1.29 36,468,858
17 Winchester Center 72.3% 79.5% 58.9% 1.27 30,738,896
21 Rennaissance Center 70.3% 76.2% 57.6% 1.18 28,906,669
26 125 County Line Rd. 66.7% 73.3% 52.6% 1.21 22,588,653
34 Wild Basin Office 66.7% 73.1% 54.6% 1.26 13,444,814
36 Westside South Shopping Center 70.3% 76.5% 57.3% 1.30 12,303,485
37 Highpoint 66.9% 76.6% 56.5% 1.28 12,043,639
39 Soho Grand Hotel - New Note 51.5% 56.6% 43.3% 1.86 11,940,271
44 Loretto Towne Centre 72.1% 78.8% 65.5% 1.23 6,828,136
44 Playhouse Square 72.1% 78.8% 65.5% 1.23 4,643,132
45 Centerpark One, L.L.C. 69.4% 76.1% 56.0% 1.27 11,248,709
47 Angel Park Apt 80.2% 82.4% 64.0% 1.25 10,828,449
52 Western Marquette 70.6% 76.8% 64.1% 1.46 9,319,356
54 Spring Properties, Inc. 60.4% 66.4% 49.3% 1.42 9,045,840
56 City Plaza 72.8% 79.7% 59.9% 1.20 8,884,560
57 400 - 450 Country Club Drive 64.4% 70.9% 52.3% 1.32 8,564,742
58 Dunkirk Market Center 69.4% 76.0% 49.5% 1.26 7,698,157
62 Sea Cliff Office Park 55.2% 60.6% 49.7% 1.26 7,397,077
63 Sheffield Square 62.1% 67.7% 50.5% 1.41 7,392,796
64 Woodmill Apartments 74.1% 80.0% 66.3% 1.25 7,295,906
67 Liberty Park Center 67.9% 74.5% 61.4% 1.35 7,065,211
69 Lumber Exchange 59.9% 65.1% 54.3% 1.22 6,943,833
70 Horizon Corporate Office Building 68.2% 75.1% 55.6% 1.20 6,887,779
71 Willowlake Center 72.5% 79.6% 58.3% 1.21 6,847,104
75 College View Towers & Apts. 71.4% 74.6% 57.1% 1.24 6,641,748
76 One Congressional Place 64.0% 70.2% 57.5% 1.17 6,595,293
79 Fairbanks Village Plaza 69.9% 76.2% 56.9% 1.21 6,287,121
86 Lincoln Office 68.9% 75.9% 56.2% 1.19 5,167,980
94 Victory Center 72.1% 79.1% 55.7% 1.35 4,846,614
98 Plumtree Apartments 71.4% 76.5% 63.8% 1.21 4,639,237
103 Pear Tree Place 71.7% 78.7% 56.6% 1.19 4,442,998
106 Site 5 70.5% 78.2% 57.8% 1.22 4,302,721
112 Hampton Inn-Chesterfield 60.7% 68.8% 43.3% 1.50 4,127,476
118 Embassy Park 60.1% 66.0% 42.8% 1.23 3,789,082
134 Heritage Medical Office 67.9% 74.5% 54.7% 1.32 3,394,752
136 Centreville Plaza 66.5% 73.0% 46.8% 1.29 3,324,928
139 State Road Plaza 69.3% 76.1% 55.6% 1.30 3,258,985
147 Comfort Inn-Chicopee 61.4% 67.4% 38.1% 1.49 3,068,325
148 Kimberly Lakes Apartments 74.7% 79.2% 59.6% 1.23 3,062,623
152 MA Winter Building 65.5% 71.8% 53.4% 1.23 2,948,941
153 Southport I and II 68.9% 75.7% 52.0% 1.24 2,894,021
165 Medical Arts Office Bldg. 63.6% 69.0% 51.8% 1.55 2,364,357
167 Evergreen Postal Building 63.4% 69.9% 50.7% 1.27 2,347,465
170 Paseo Verde 68.5% 74.5% 62.2% 1.26 2,192,790
181 701 Santa Monica Blvd. 51.3% 56.2% 41.8% 1.31 1,949,199
---- ---- ---- ---- ------------
Total / Weighted Average: 67.2% 72.8% 55.2% 1.35 $923,939,084
<CAPTION>
Unamortized Premium Base Interest Base
Loan Name Premium Cut-off Balance Rate Rate Amort. Amort.
--------- ------- --------------- ---- ---- ------ ------
<S> <C> <C> <C> <C> <C> <C>
2 Park LaBrea - B Note 3.3% $145,332,084 7.379% 8.000% 325 360
4 Prime Retail III - Note B 9.9% 89,239,173 6.990% 8.400% 316 360
4 Prime Retail III - Note C 9.9% 17,847,835 6.990% 8.400% 316 360
5 Springfield Mall - D8 9.4% 98,618,876 7.405% 8.500% 342 360
8 Laurel Mall 9.6% 58,466,113 7.390% 8.500% 342 360
9 Baldwin Complex 10.0% 53,628,316 7.050% 8.190% 342 360
12 Hunter's Square 10.0% 43,741,104 7.260% 8.410% 341 360
13 Point Plaza 9.1% 42,672,895 7.440% 8.500% 343 360
14 East Bank Club 8.7% 39,580,276 7.440% 8.500% 294 300
15 Showplace 9.4% 39,808,417 7.410% 8.500% 342 360
17 Winchester Center 10.1% 33,773,050 7.210% 8.370% 341 360
21 Rennaissance Center 8.6% 31,326,445 7.500% 8.500% 343 360
26 125 County Line Rd. 10.0% 24,810,832 7.250% 8.420% 331 347
34 Wild Basin Office 9.9% 14,728,741 7.350% 8.500% 340 358
36 Westside South Shopping Center 9.2% 13,381,877 7.230% 8.500% 322 360
37 Highpoint 15.0% 13,794,627 7.520% 9.253% 333 360
39 Soho Grand Hotel - New Note 10.3% 13,133,280 6.981% 8.500% 275 300
44 Loretto Towne Centre 9.5% 7,460,625 7.130% 8.500% 316 360
44 Playhouse Square 9.5% 5,073,225 7.130% 8.500% 316 360
45 Centerpark One, L.L.C. 9.8% 12,332,720 7.000% 8.120% 342 360
47 Angel Park Apt 2.9% 11,129,873 7.660% 8.000% 354 360
52 Western Marquette 9.1% 10,136,506 7.192% 8.500% 318 360
54 Spring Properties, Inc. 10.2% 9,947,831 7.230% 8.400% 341 360
56 City Plaza 9.7% 9,725,359 7.420% 8.500% 347 360
57 400 - 450 Country Club Drive 10.4% 9,434,403 7.060% 8.250% 341 360
58 Dunkirk Market Center 9.8% 8,432,484 7.000% 8.150% 307 317
62 Sea Cliff Office Park 10.0% 8,113,903 6.880% 8.309% 315 360
63 Sheffield Square 9.2% 8,059,770 7.430% 8.500% 342 360
64 Woodmill Apartments 8.2% 7,877,939 6.830% 8.000% 322 360
67 Liberty Park Center 10.0% 7,747,659 6.840% 8.263% 315 360
69 Lumber Exchange 9.1% 7,552,691 7.192% 8.500% 318 360
70 Horizon Corporate Office Building 10.5% 7,586,910 7.290% 8.500% 341 360
71 Willowlake Center 10.0% 7,520,037 7.190% 8.340% 340 358
75 College View Towers & Apts. 4.7% 6,942,440 7.450% 8.000% 351 360
76 One Congressional Place 10.1% 7,235,698 6.780% 8.207% 316 360
79 Fairbanks Village Plaza 9.3% 6,856,351 7.420% 8.500% 342 360
86 Lincoln Office 10.5% 5,692,670 7.290% 8.500% 341 360
94 Victory Center 10.0% 5,318,828 7.170% 8.360% 324 340
98 Plumtree Apartments 7.5% 4,973,929 6.930% 8.000% 325 360
103 Pear Tree Place 9.9% 4,877,534 7.260% 8.420% 331 348
106 Site 5 11.1% 4,771,530 7.220% 8.500% 340 360
112 Hampton Inn-Chesterfield 13.7% 4,677,244 7.820% 9.500% 290 300
118 Embassy Park 10.0% 4,158,282 7.400% 8.600% 301 310
134 Heritage Medical Office 10.0% 3,724,797 7.320% 8.480% 337 355
136 Centreville Plaza 10.0% 3,650,584 7.250% 8.450% 301 310
139 State Road Plaza 10.0% 3,575,462 7.300% 8.460% 336 354
147 Comfort Inn-Chicopee 10.0% 3,369,291 7.930% 9.200% 271 275
148 Kimberly Lakes Apartments 6.1% 3,246,826 7.290% 8.000% 348 360
152 MA Winter Building 9.7% 3,229,104 7.370% 8.500% 342 360
153 Southport I and II 10.0% 3,177,343 7.130% 8.300% 320 333
165 Medical Arts Office Bldg. 8.8% 2,567,919 7.470% 8.500% 343 360
167 Evergreen Postal Building 10.4% 2,587,687 6.730% 7.900% 341 360
170 Paseo Verde 9.1% 2,385,060 7.192% 8.500% 318 360
181 701 Santa Monica Blvd. 9.8% 2,136,132 7.360% 8.500% 342 360
---- -------------- ----- ----- --- ---
Total / Weighted Average: 8.6% $1,001,170,586 7.276% 8.365% 330 355
</TABLE>
Annex C
<PAGE>
[This page intentionally left blank]
<PAGE>
ANNEX D
GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES
Except in certain limited circumstances, the globally offered Commercial
Mortgage Asset Trust, Commercial Mortgage Pass-Through Certificates, Series
1999-C1 (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 (except to the extent provided in
applicable Treasury regulations) 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
(including a trust, to the extent provided in the applicable Treasury
regulations, which were in existence on August 20, 1996 and is eligible to elect
to be treated as a U.S. Person). 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>
All information in this Term Sheet, whether regarding the assets backing any
securities discussed herein or otherwise, will be superseded by the information
contained in any fiscal prospectus for any securities actually sold to you.
Annex E
STRUCTURAL AND COLLATERAL TERM SHEET
$2,107,801,800 (Approximate) February 26, 1999
Commercial Mortgage Asset Trust
Mortgage Pass-Through Certificates
Series 1999-C1
Approximate Securities Structure:
- --------------------------------
<TABLE>
<CAPTION>
Expected Expected
Approximate Credit Weighted Expected
Expected Rating Face/Notional Support Average Life Payment
Class (S&P/Moody's) Amount (MM) (% of UPB) (years)(a) Window
- -----------------------------------------------------------------------------------
Publicly Offered Classes
<S> <C> <C> <C> <C> <C>
A1 AAA/Aaa $400.0 28.50% 5.58 04/99-12/07
A2 AAA/Aaa 930.0 28.50 10.06 12/07-06/12
A3 AAA/Aaa 368.1 28.50 13.90 06/12-04/13
B AA/Aa2 106.9 24.00 14.22 04/13-07/13
C A/A2 130.6 18.50 14.37 07/13-08/13
D BBB/Baa2 136.6 12.75 14.48 08/13-10/13
E BBB-/Baa3 35.6 11.25 14.57 10/13-10/13
<CAPTION>
Private Classes (b)
<S> <C> <C> <C> <C> <C>
X AAAr/Aaa
F BB+/Ba1 -- -- -- --
G BB/Ba2 -- -- -- --
H BB-/Ba3 -- -- -- --
J NR/B1 -- -- -- --
K NR/B2 -- -- -- --
L NR/B3 -- -- -- --
M1 NR/NR -- -- -- --
M2 NR/NR -- -- -- --
Total Securities: $2,375.0
</TABLE>
(a) Calculated at 0% CPR, no balloon extension and ARD Loans pay in full on
Anticipated Repayment Dates.
(b) Not offered hereby.
- --------------------------------------------------------------------------------
Key Features:
------------
Co-Lead Managers: Goldman, Sachs & Co.
Co-Managers: Lehman Brothers Inc.
Donaldson, Lufkin & Jenrette Securities Corporation
Nomura Securities International, Inc.
Mortgage Loan Capital Company of America LLC
Seller: Short-Term Asset Receivables Trust
Master Servicer: First Union Bank
Special Servicer: Lennar Partners, Inc.
Trustee: LaSalle National Bank
Launch: On or about March 15, 1999
Pricing: On or about March 16, 1999
Closing: On or about March 23, 1999
Cut-Off Date: March 11, 1999
Distribution Date: 17th of each month, or following business day
(commencing April 1999)
Payment Delay: 6 days
ERISA Eligible: Classes A1, A2, and A3
SMMEA Eligible: Classes A1, A2, A3, and B
Structure: Sequential Pay
Day Count: 30/360
Tax Treatment: REMIC
Rated Final
Distribution Date: January 17, 2032
Clean up Call: 1.0%
Minimum
Denominations: Public Offered
Classes: $10,000
Delivery: DTC
- --------------------------------------------------------------------------------
Collateral Facts:
- ----------------
Initial Pool Balance: $2,374,987,404
Number of Mortgage Loans: 230
Number of Mortgaged Properties: 268
Average Cut-Off Date Principal Balance: 10,326,032
Weighted Average Current Mortgage Rate: 7.701%
Weighted Average U/W DSCR: 1.49x
Weighted Average Cut-Off Date LTV Ratio: 68.1%
Weighted Average Remaining Term to Maturity (months): 150
Weighted Average Remaining Amortization Term (months): 336
Weighted Average Seasoning (months): 8
Balloon Loans as % of Total: 16.1%
Ten Largest Loans or Related Loans as % of Total: 37.1%
Selected Loan Data:
- -------------------
Number of Cut-Off Date Principal Balance
Mortgaged -------------------------------------
Geographic Distribution Properties % by UPB Wtd.Avg. DSCR
- -------------------------------------------------------------------------
California 36 $456,845,900 19.2% 1.51x
Michigan 26 269,470,263 11.3 1.29
New York 11 191,456,838 8.1 1.69
Virginia 20 182,935,663 7.7 1.29
Illinois 16 152,497,140 6.4 1.68
Other 159 1,121,781,601 47.2 1.49
--- ------------- -----
Total/Wtd. Avg. 268 $2,374,987,404 100.0% 1.49x
- -------------------------------------------------------------------------
Ten Largest Loans or Related Loans
- ----------------------------------
Loan Balance % by UPB LTV DSCR Property Type
- ------------------------------------------------------------------
DDR/DRA JV $156,000,000 6.6% 64.3% 2.00X Retail
Park LaBrea 140,613,989 5.9 68.6 1.33 Multifamily
The Source 124,000,000 5.2 69.7 1.74 Retail
Prime Retail 97,878,360 4.1 57.1 1.54 Retail
III
Springfield 90,394,069 3.8 74.4 1.20 Retail
Mall
Atlanta 80,770,298 3.4 56.1 1.77 Hotel
Marriott
Iowa Malls 65,875,608 2.8 77.8 1.28 Retail
Laurel Place 53,588,156 2.3 68.6 1.27 Retail
Mall
Baldwin 48,875,113 2.1 70.8 1.27 Office
Complex
Accor-M-Six 48,320,671 1.7 N/A N/A Hotel
Penvest I ------------ ----
Total/Weighted
Average $882,003,204 37.1% 67.1% 1.65x
- -------------------------------------------------------------------------
Number of Cut-Off Date Principal Balance
Mortgaged --------------------------------------------
Property Type Properties Balance % by UPB Wtd. Avg. DSCR
------------------------------------------------------------------------
Retail (a) 93 $1,037,420,187 43.7% 1.51x
Office (b) 60 619,646,435 26.1 1.41
Multifamily 55 338,959,580 14.3 1.36
Hotel (c) 33 189,352,018 8.0 1.72
Industrial 15 96,441,003 4.1 1.43
Health Club 2 66,315,488 2.8 2.08
Mobile Home Park 8 14,828,946 0.6 1.49
Health Care (d) 2 10,023,747 0.4 1.72
--- ------------- -----
Total/Wtd.Avg. 268 $2,374,987,404 100.0% 1.49x
- -------------------------------------------------------------------------
(a) Includes mall, factory outlet, convenience station, anchored,
quasi-anchored, and unanchored retail properties.
(b) Includes medical office properties.
(c) Includes full and limited service hotel properties.
(d) Includes assisted living and nursing home properties.
This material is for your private information and we are not soliciting any
action based upon it. This material is not to be construed as an offer to sell
or the solicitation of any offer to buy any security in any jurisdiction where
such an offer or solicitation would be illegal. This material is based on
information that we consider reliable, but we do not represent that it is
accurate or complete and it should not be relied upon as such. By accepting this
material the recipient agrees that it will not distribute or provide the
material to any other person. The information contained in this material may be
based on assumptions regarding market conditions and other matters as reflected
therein. We make no representations regarding the reasonableness of such
assumptions or the likelihood that any of such assumptions will coincide with
actual market conditions or events, and this material should not be relied upon
for such purposes. We and our affiliates, officers, directors, partners and
employees, including persons involved in the preparation or issuance of this
material may, from time to time, have long or short positions in, and buy and
sell, the securities mentioned therein or derivatives thereof (including
options). This material may be filed with the Securities and Exchange Commission
(the "SEC") and incorporated by reference into an effective registration
statement previously filed with the SEC under Rule 415 of the Securities Act of
1933, including in cases where the material does not pertain to securities that
are ultimately offered for sale pursuant to such registration statement.
Information contained in this material is current as of the date appearing on
this material only. Information in this material regarding any assets backing
any securities discussed herein supersedes all prior information regarding such
assets. All information in this Term Sheet, whether regarding the assets backing
any securities discussed herein or otherwise, will be superseded by the
information contained in the final prospectus for any securities actually sold
to you.
<PAGE>
[This page intentionally left blank]
<PAGE>
All information in this Term Sheet, whether regarding the assets backing any
securities discussed herein or otherwise, will be superseded by the information
contained in any final prospectus for any securities actually sold to you.
STRUCTURAL AND COLLATERAL TERM SHEET
STRUCTURAL OVERVIEW
/ / For purpose of calculating principal distributions of the Certificates:
-- Available prinipal will be allocated sequentially to the Class A1, A2,
A3, B, C, D, E, F, G, H, J, K, L, M1/M2 certificates.
-- In case the principal balance of the Class M1/M2, L, K, J, H, G, F, E,
D, C, B, in that order, have been reduced to zero due to the
allocation of principal losses, then A1, A2, and A3 will be allocated
principal pro rata.
/ / Class X will be entitled to receive payments of interest only and will not
receive any payments of principal. Class X will be entitled to payments of
interest pro rata (based on interest entitlements) with the Class A1, A2,
and A3 Certificates each month.
/ / Each class will be subordinate to the Class A1, A2, A3, and X and to each
class with an earlier alphabetical designation than such class. Each of the
Class A1, A2, A3, and X Certificates will be of equal priority.
/ / All classes will pay interest on a 30/360 basis.
/ / Principal Losses will be allocated in reverse alphabetical order to Class
M1/M2, L, K, J, H, G, F, E, D, C, B, and then pro rata to Class A1, A2, and
A3.
/ / The Master Servicer will cover prepayment interest shortfalls (excluding
shortfalls on specially serviced mortgage loans), provided that with
respect to any loans with due dates on or preceding the related
determination date the Master Servicer will only cover prepayment interest
shortfalls up to the Master Servicing fee equal to 5 basis points per
annum on the principal balance of all loans. Net prepayment interest
shortfalls (after application of prepayment interest excesses and other
Servicer coverage from the Master Servicing Fee) will be allocated
reverse priority (based on interest entitlements) to all regular
Certificates.
/ / Shortfalls resulting from Master Servicer and Special Servicer
modifications, Special Servicer compensation or other extraordinary trust
fund expenses will be allocated in reverse alphabetical order to classes of
outstanding regular Certificates other than to the Class X.
This material is for your private information and we are not soliciting any
action based upon it. This material is not to be continued as an offer to sell
or the solicitation of any offer to buy any security in any jurisdiction where
such an offer or solicitation would be illegal. This material is based on
information that we consider reliable, but we do not represent that it is
accurate or complete and it should not be relied upon as such. By accepting this
material the recipient agrees that it will not distribute or provide the
materialto any other person. The information contained in this material may be
based on assumptions regardingmarket conditions and other matters as reflected
therein. We make no representations regarding the reasonableness of such
assumptions or the likelihood that any of such assumptions will coincide with
actual market conditions or events, and this material should not be relied upon
for such purposes. We and our affiliates, offiers, directors, partners and
employees, including persons involved in the preparation or issuance of this
material may, from time to time, have long or short positions in, and buy and
sell, the securities mentioned therein or derivatives thereof (including
options). This material may be filed with the Securities and Exchange Commission
(the "SEC") and incorporated by reference into an effective registration
statement previously filed with the SEC under Rule[nb]415 of the Seurities Act
of 1933, including in cases where the material does not pertain to securities
that are ultimately offered for sale pursuant to such registration statement.
Information contained in this material is current as of the date appearing on
this material only. Information in this material regarding any assets backing
any securities discussed herein supersedes all prior information regading such
assets. All information in this Term Sheet, whether regarding the assets backing
any securities discussed herein or otherwise, will be superseded by the
information contained in the final prospectus for any securities actually sold
to you.
Annex E-1
<PAGE>
All information in this Term Sheet, whether regarding the assets backing any
securities discussed herein or otherwise, will be superseded by the information
contained in any final prospectus for any securities actually sold to you.
STRUCTURAL AND COLLATERAL TERM SHEET
AVERAGE LIFETABLE (in years) (a)
(Prepayment Locked Out through Lock Out period, Defeasance and Yield
Maintenance, then run at the indicated CPRs)
Prepayment Assumptions (CPR)
0% CPR 25% CPR 50% CPR 75% CPR 100% PP(b)
------ ------- ------- ------- ----------
A1 5.58 5.57 5.57 5.56 5.47
A2 10.06 10.05 10.04 10.03 9.95
A3 13.90 13.88 13.85 13.82 13.63
B 14.22 14.19 14.16 14.13 14.04
C 14.37 14.35 14.33 14.29 14.11
D 14.48 14.46 14.45 14.43 14.21
E 14.57 14.56 14.51 14.48 14.32
(a) ARD loans are assumed to pay on the Anticipated Repayment Date.
(b) "PP" means 100% of each loan prepays when it becomes freely prepayable.
This material is for your private information and we are not soliciting any
action based upon it. This material is not to be construed as an offer to sell
or the solicitation of any offer to buy any security in any jurisdiction where
such an offer or solicitation would be illegal. This material is based on
information that we consider reliable, but we do not represent that it is
accurate or complete and it should not be relied upon as such. By accepting this
material the recipient agrees that it will not distribute or provide the
material to any other person. The information contained in this material may be
based on assumptions regarding market conditions and other matters as reflected
therein. We make no representations regarding the reasonableness of such
assumptions or the likelihood that any of such assumptions will coincide with
actual market conditions or events, and this material should not be relied upon
for such purposes. We and our affiliates, officers, directors, partners and
employees, including persons involved in the preparation or issuance of this
material may, from time to time, have long or short positions in, and buy and
sell, the securities mentioned therein or derivatives thereof (including
options). This material may be filed with the Securities and Exchange Commission
(the "SEC") and incorporated by reference into an effective registration
statement previously filed with the SEC under Rule 415 of the Securities Act of
1933, including in cases where the material does not pertain to securities that
are ultimately offered for sale pursuant to such registration statement.
Information contained in this material is current as of the date appearing on
this material only. Information in this material regarding any assets backing
any securities discussed herein supersedes all prior information regarding such
assets. All information in this Term Sheet, whether regarding the assets backing
any securities discussed herein or otherwise, will be superseded by the
information contained in the final prospectus for any securities actually sold
to you.
Annex E-2
<PAGE>
All information in this Term Sheet, whether regarding the assets backing any
securities discussed herein or otherwise, will be superseded by the information
contained in any final prospectus for any securities actually sold to you.
STRUCTURAL AND COLLATERAL TERM SHEET
DISTRIBUTION BY CUT-OFF DATE PRINCIPAL BALANCE
<TABLE>
<CAPTION>
Weighted
Average Weighted
Percentage of Weighted Remaining Average
Number of Cut-Off Date Aggregate Average Cut-Off Weighted Average Term to Cut-Off
Range of Cut-Off Date Mortgage Principal Cut-Off Date Date Principal Average Mortgage Maturity Date LTV
Principal Balances Loans Balance Balance Balance DSCR Rate (mos) Ratio
- --------------------- -------- ------------- ------------ --------------- -------- -------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 500,000 - 2,499,999 67 $ 104,923,423 4.4% $ 1,566,021 1.48x 7.526% 162 66.7%
2,500,000 - 4,999,999 73 268,204,820 11.3 3,674,039 1.49 7.457 162 67.4
5,000,000 - 7,499,999 30 191,470,967 8.1 6,382,366 1.41 7.601 149 69.2
7,500,000 - 9,999,999 9 76,926,763 3.2 8,547,418 1.34 7.923 159 68.7
10,000,000 - 19,999,999 23 295,205,483 12.4 12,835,021 1.35 7.900 162 70.5
20,000,000 - 29,999,999 9 223,569,247 9.4 24,841,027 1.59 7.411 143 70.6
30,000,000 - 39,999,999 8 276,228,170 11.6 34,528,521 1.46 8.063 165 67.2
40,000,000 - 59,999,999 4 182,926,205 7.7 45,731,551 1.25 8.159 181 69.6
60,000,000 - 79,999,999 1 65,875,608 2.8 65,875,608 1.28 8.400 118 77.8
80,000,000 - 99,999,999 3 269,042,727 11.3 89,680,909 1.49 8.133 137 62.6
100,000,000 -156,000,000 3 420,613,989 17.7 140,204,663 1.70 7.098 121 67.3
--- -------------- -----
Total/Wtd. Avg. 230 $2,374,987,404 100.0% $ 10,326,032 1.49x 7.701% 150 68.1%
</TABLE>
This material is for your private information and we are not soliciting any
action based upon it. This material is not to be construed as an offer to sell
or the solicitation of any offer to buy any security in any jurisdiction where
such an offer or solicitation would be illegal. This material is based on
information that we consider reliable, but we do not represent that it is
accurate or complete and it should not be relied upon as such. By accepting this
material the recipient agrees that it will not distribute or provide the
material to any other person. The information contained in this material may be
based on assumptions regarding market conditions and other matters as reflected
therein. We make no representations regarding the reasonableness of such
assumptions or the likelihood that any of such assumptions will coincide with
actual market conditions or events, and this material should not be relied upon
for such purposes. We and our affiliates, officers, directors, partners and
employees, including persons involved in the preparation or issuance of this
material may, from time to time, have long or short positions in, and buy and
sell, the securities mentioned therein or derivatives thereof (including
options). This material may be filed with the Securities and Exchange Commission
(the "SEC") and incorporated by reference into an effective registration
statement previously filed with the SEC under Rule 415 of the Securities Act of
1933, including in cases where the material does not pertain to securities that
are ultimately offered for sale pursuant to such registration statement.
Information contained in this material is current as of the date appearing on
this material only. Information in this material regarding any assets backing
any securities discussed herein supersedes all prior information regarding such
assets. All information in this Term Sheet, whether regarding the assets backing
any securities discussed herein or otherwise, will be superseded by the
information contained in the final prospectus for any securities actually sold
to you.
Annex E-3
<PAGE>
All information in this Term Sheet, whether regarding the assets backing any
securities discussed herein or otherwise, will be superseded by the information
contained in any final prospectus for any securities actually sold to you.
STRUCTURAL AND COLLATERAL TERM SHEET
DISTRIBUTION OF MORTGAGED PROPERTIES BY STATE
<TABLE>
<CAPTION>
Weighted
Average Weighted
Percentage of Weighted Remaining Average
Number of Cut-Off Date Aggregate Average Cut-Off Weighted Average Term to Cut-Off
Mortgaged Principal Cut-Off Date Date Principal Average Mortgage Maturity Date LTV
State Properties Balance Balance Balance DSCR Rate (mos) Ratio
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CA 36 $ 456,845,900 19.2% $12,690,164 1.51x 7.670% 154 67.6%
MI 26 269,470,263 11.3 10,364,241 1.29 8.081 163 71.8
NY 11 191,456,838 8.1 17,405,167 1.69 7.093 125 66.3
VA 20 182,935,663 7.7 9,146,783 1.29 7.942 176 71.6
IL 16 152,497,140 6.4 9,531,071 1.68 7.758 140 61.7
OH 15 120,213,547 5.1 8,014,237 1.24 8.090 177 72.2
AZ 6 96,464,755 4.1 16,077,459 1.83 6.926 98 67.7
TX 17 85,842,981 3.6 5,049,587 1.57 7.304 137 64.6
NV 4 85,799,200 3.6 21,449,800 1.32 8.371 168 69.5
GA 1 80,770,298 3.4 80,770,298 1.77 7.400 131 56.1
IA 7 78,228,268 3.3 11,175,467 1.28 8.326 123 77.0
MN 11 62,119,639 2.6 5,647,240 1.75 7.134 97 65.3
MD 13 58,868,957 2.5 4,528,381 1.56 7.837 186 62.1
OR 6 47,596,576 2.0 7,932,763 1.72 7.348 121 63.5
NC 8 43,174,807 1.8 5,396,851 1.43 7.850 168 67.8
IN 2 40,599,626 1.7 20,299,813 1.48 8.211 132 61.1
FL 6 36,972,811 1.6 6,162,135 1.31 7.340 145 72.4
HI 1 30,343,508 1.3 30,343,508 1.35 7.070 114 79.0
PA 4 29,868,951 1.3 7,467,238 1.28 8.070 171 67.9
NJ 4 24,481,507 1.0 6,120,377 1.53 7.202 194 70.7
NM 5 24,052,645 1.0 4,810,529 1.43 8.099 115 68.2
DC 2 22,884,581 1.0 11,442,291 1.32 7.585 172 72.5
LA 7 22,674,449 1.0 3,239,207 1.40 7.748 178 72.2
CT 1 15,275,478 0.6 15,275,478 0.00 8.450 230 0.0
WI 3 12,787,628 0.5 4,262,543 1.42 7.862 161 74.8
ME 5 12,736,837 0.5 2,547,367 1.55 7.781 142 65.6
WV 2 11,612,826 0.5 5,806,413 1.39 6.890 114 79.5
NH 2 10,877,324 0.5 5,438,662 1.26 8.298 171 71.3
KY 3 9,742,198 0.4 3,247,399 1.45 7.275 175 71.8
MO 3 8,972,397 0.4 2,990,799 1.58 8.466 161 61.9
SC 5 8,914,092 0.4 1,782,818 1.51 7.256 160 62.4
DE 1 7,295,906 0.3 7,295,906 1.25 8.000 117 74.1
AL 2 6,623,089 0.3 3,311,545 1.43 6.881 132 75.6
TN 3 4,436,435 0.2 1,478,812 1.47 6.821 190 69.5
WA 2 4,351,943 0.2 2,175,972 1.40 6.780 118 64.5
SD 1 3,839,898 0.2 3,839,898 1.36 7.250 175 71.4
MA 1 3,068,325 0.1 3,068,325 1.49 9.200 176 61.4
NE 2 2,683,330 0.1 1,341,665 1.46 7.368 173 72.7
MT 1 2,682,784 0.1 2,682,784 0.00 7.030 230 0.0
CO 1 1,867,731 0.1 1,867,731 1.59 7.080 178 62.3
AR 1 1,578,108 0.1 1,578,108 0.00 7.030 230 0.0
VT 1 1,478,164 0.1 1,478,164 1.79 8.940 170 56.9
--- -------------- -----
Total/Wtd. Avg. 268 $2,374,987,404 100.0% $ 8,861,893 1.49x 7.701% 150 68.1%
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
This material is for your private information and we are not soliciting any
action based upon it. This material is not to be construed as an offer to sell
or the solicitation of any offer to buy any security in any jurisdiction where
such an offer or solicitation would be illegal. This material is based on
information that we consider reliable, but we do not represent that it is
accurate or complete and it should not be relied upon as such. By accepting this
material the recipient agrees that it will not distribute or provide the
material to any other person. The information contained in this material may be
based on assumptions regarding market conditions and other matters as reflected
therein. We make no representations regarding the reasonableness of such
assumptions or the likelihood that any of such assumptions will coincide with
actual market conditions or events, and this material should not be relied upon
for such purposes. We and our affiliates, officers, directors, partners and
employees, including persons involved in the preparation or issuance of this
material may, from time to time, have long or short positions in, and buy and
sell, the securities mentioned therein or derivatives thereof (including
options). This material may be filed with the Securities and Exchange Commission
(the "SEC") and incorporated by reference into an effective registration
statement previously filed with the SEC under Rule 415 of the Securities Act of
1933, including in cases where the material does not pertain to securities that
are ultimately offered for sale pursuant to such registration statement.
Information contained in this material is current as of the date appearing on
this material only. Information in this material regarding any assets backing
any securities discussed herein supersedes all prior information regarding such
assets. All information in this Term Sheet, whether regarding the assets backing
any securities discussed herein or otherwise, will be superseded by the
information contained in the final prospectus for any securities actually sold
to you.
Annex E-4
<PAGE>
All information in this Term Sheet, whether regarding the assets backing
any securities discussed herein or otherwise, will be superseded by the
information contained in any final prospectus for any securities
actually sold to you.
STRUCTURAL AND COLLATERAL TERM SHEET
DISTRIBUTION OF MORTGAGED PROPERTIES BY STATE
[GRAPHIC OMITTED]
[PIE CHART]
State Percentage
----- ----------
California 19.2%
Michigan 11.3%
New York 8.1%
Nevada 3.6%
Texas 3.6%
Georgia 3.4%
Florida 1.6%
Other 49.2%
This material is for your private information and we are not soliciting any
action based upon it. This material is not to be construed as an offer to sell
or the solicitation of any offer to buy any security in any jurisdiction where
such an offer or solicitation would be illegal. This material is based on
information that we consider reliable, but we do not represent that it is
accurate or complete and it should not be relied upon as such. By accepting this
material the recipient agrees that it will not distribute or provide the
material to any other person. The information contained in this material may be
based on assumptions regarding market conditions and other matters as reflected
therein. We make no representations regarding the reasonableness of such
assumptions or the likelihood that any of such assumptions will coincide with
actual market conditions or events, and this material should not be relied upon
for such purposes. We and our affiliates, officers, directors, partners and
employees, including persons involved in the preparation or issuance of this
material may, from time to time, have long or short positions in, and buy and
sell, the securities mentioned therein or derivatives thereof (including
options). This material may be filed with the Securities and Exchange Commission
(the "SEC") and incorporated by reference into an effective registration
statement previously filed with the SEC under Rule 415 of the Securities Act of
1933, including in cases where the material does not pertain to securities that
are ultimately offered for sale pursuant to such registration statement.
Information contained in this material is current as of the date appearing on
this material only. Information in this material regarding any assets backing
any securities discussed herein supersedes all prior information regarding such
assets. All information in this Term Sheet, whether regarding the assets backing
any securities discussed herein or otherwise, will be superseded by the
information contained in the final prospectus for any securities actually sold
to you.
Annex E-5
<PAGE>
All information in this Term Sheet, whether regarding the assets backing any
securities discussed herein or otherwise, will be superseded by the information
contained in any final prospectus for any securities actually sold to you.
STRUCTURAL AND COLLATERAL TERM SHEET
DISTRIBUTION BY PROPERTY TYPE
[PIE CHART]
Property Type Percentage
- ------------- ----------
Retail 43.7%
Office 26.1%
Multifamily 14.3%
Hotel 8.0%
Industrial 4.1%
Health Club 2.8%
Mobile Home Park 0.6%
Health Care 0.4%
<TABLE>
<CAPTION>
Weighted
Average Weighted
Percentage of Weighted Remaining Average
Number of Cut-Off Date Aggregate Cut- Average Cut-Off Weighted Average Term to Cut-Off
Mortgaged Principal Off Date Date Principal Average Mortgage Maturity Date LTV
Property Type Properties Balance Balance Balance DSCR Rate (mos) Ratio
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Retail
Anchored 51 $726,877,270 30.6% $14,252,495 1.55x 7.540% 134 69.0%
Mall 3 101,892,082 4.3 33,964,027 1.22 8.325 163 74.5
Factory Outlet 5 97,878,360 4.1 19,575,672 1.54 8.400 112 57.1
Unanchored 20 63,250,441 2.7 3,162,522 1.48 7.439 155 65.2
Quasi-Anchored 8 40,161,298 1.7 5,020,162 1.41 8.092 199 68.3
Convenient Stations 6 7,360,735 0.3 1,226,789 0.00 7.520 239 0.0
Total Retail 93 1,037,420,187 43.7 11,155,056 1.51 7.713 139 68.2
Office
Office 51 532,362,864 22.4 10,438,488 1.42 7.801 158 68.6
Medical Office 9 87,283,571 3.7 9,698,175 1.35 7.804 153 70.6
Total Office 60 619,646,435 26.1 10,327,441 1.41 7.802 157 68.9
Multifamily 55 338,959,580 14.3 6,162,901 1.36 7.643 158 72.1
Hotel
Full Service 5 110,487,055 4.7 22,097,411 1.75 7.553 128 55.2
Ltd. Service 28 78,864,964 3.3 2,816,606 1.63 7.422 198 62.3
Total Hotel 33 189,352,018 8.0 5,737,940 1.72 7.498 157 57.1
Industrial 15 98,441,003 4.1 6,562,734 1.43 7.563 168 72.1
Health Club 2 66,315,488 2.8 33,157,744 2.08 7.825 146 56.9
Mobile Home Park 8 14,828,946 0.6 1,853,618 1.49 7.008 145 74.3
Health Care
Assisted Living 1 6,872,718 0.3 6,872,718 1.72 7.610 176 71.6
Nursing 1 3,151,029 0.1 3,151,029 1.72 7.610 176 71.6
Total Health Care 2 10,023,747 0.4 5,011,873 1.72 7.610 176 71.6
Total/Wtd. Avg. 268 $2,374,987,404 100.0% $ 8,861,893 1.49x 7.701% 150 68.1%
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
This material is for your private information and we are not soliciting any
action based upon it. This material is not to be construed as an offer to sell
or the solicitation of any offer to buy any security in any jurisdiction where
such an offer or solicitation would be illegal. This material is based on
information that we consider reliable, but we do not represent that it is
accurate or complete and it should not be relied upon as such. By accepting this
material the recipient agrees that it will not distribute or provide the
material to any other person. The information contained in this material may be
based on assumptions regarding market conditions and other matters as reflected
therein. We make no representations regarding the reasonableness of such
assumptions or the likelihood that any of such assumptions will coincide with
actual market conditions or events, and this material should not be relied upon
for such purposes. We and our affiliates, officers, directors, partners and
employees, including persons involved in the preparation or issuance of this
material may, from time to time, have long or short positions in, and buy and
sell, the securities mentioned therein or derivatives thereof (including
options). This material may be filed with the Securities and Exchange Commission
(the "SEC") and incorporated by reference into an effective registration
statement previously filed with the SEC under Rule 415 of the Securities Act of
1933, including in cases where the material does not pertain to securities that
are ultimately offered for sale pursuant to such registration statement.
Information contained in this material is current as of the date appearing on
this material only. Information in this material regarding any assets backing
any securities discussed herein supersedes all prior information regarding such
assets. All information in this Term Sheet, whether regarding the assets backing
any securities discussed herein or otherwise, will be superseded by the
information contained in the final prospectus for any securities actually sold
to you.
Annex E-6
<PAGE>
All information in this Term Sheet, whether regarding the assets backing
any securities discussed herein or otherwise, will be superseded by the
information contained in any final prospectus for any securities
actually sold to you.
STRUCTURAL AND COLLATERAL TERM SHEET
DISTRIBUTION BY YEAR BUILT
<TABLE>
<CAPTION>
Weighted
Average Weighted
Percentage of Weighted Remaining Average
Number of Cut-Off Date Aggregate Cut- Average Cut-Off Weighted Average Term to Cut-Off
Mortgaged Principal Off Date Date Principal Average Mortgage Maturity Date LTV
Year Built Properties Balance Balance Balance DSCR Rate (mos) Ratio
---------------- ----------- ------------- ------------ --------------- -------- -------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Before 1922 9 $ 77,981,972 3.3% $ 8,664,664 1.35x 8.150% 167 62.9%
1922 - 1931 8 85,690,176 3.6 10,711,272 1.31 7.787 150 71.4
1932 - 1941 4 22,088,428 0.9 5,522,107 1.40 7.949 194 63.2
1942 - 1951 5 167,750,767 7.1 33,550,153 1.33 8.026 168 68.3
1952 - 1961 7 51,503,821 2.2 7,357,689 1.38 8.102 174 65.5
1962 - 1971 44 238,582,489 10.0 5,422,329 1.44 7.734 150 69.7
1972 - 1981 62 464,291,655 19.5 7,488,575 1.59 7.837 161 69.9
1982 - 1991 77 746,423,667 31.4 9,693,814 1.39 7.700 147 67.7
1992 - 1998 52 520,674,427 21.9 10,012,970 1.67 7.331 129 66.7
--- ---------------- -----
Total/Wtd. Avg. 268 $2,374,987,404 100.0% $ 8,861,893 1.49x 7.701% 150 68.1%
</TABLE>
DISTRIBUTION BY UNDERWRITTEN DEBT SERVICE COVERAGE RATIO
<TABLE>
<CAPTION>
Weighted
Average Weighted
Percentage of Weighted Remaining Average
Number of Cut-Off Date Aggregate Cut- Average Cut-Off Weighted Average Term to Cut-Off
Range of Underwritten Mortgage Principal Off Date Date Principal Average Mortgage Maturity Date LTV
DSCR Ratios Loans Balance Balance Balance DSCR Rate (mos) Ratio
---------------- ----------- ---------- ------------ --------------- -------- -------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1.00 - 1.09x 1 $ 3,781,591 0.2% 3,781,591 1.05 7.150 174 59.1
1.10 - 1.19 12 179,558,674 7.6 14,963,223 1.19 8.240 158 72.9
1.20 - 1.29 56 697,758,028 29.4 12,459,965 1.25 8.212 156 71.4
1.30 - 1.39 45 440,602,580 18.6 9,791,168 1.35 7.566 151 69.9
1.40 - 1.49 36 179,874,333 7.6 4,996,509 1.44 7.469 160 68.4
1.50 - 1.59 18 151,364,531 6.4 8,409,141 1.54 8.056 128 59.6
1.60 - 1.69 14 79,917,888 3.4 5,708,421 1.65 7.088 142 66.6
1.70 - 1.79 14 246,499,706 10.4 17,607,122 1.75 6.973 129 64.3
1.80 - 1.89 5 23,507,356 1.0 4,701,471 1.86 8.074 134 50.2
1.90 - 1.99 5 168,220,371 7.1 33,644,074 1.99 6.687 84 63.6
2.00 - 2.09 2 4,928,813 0.2 2,464,407 2.08 7.453 173 53.7
2.10 - 4.00 5 75,780,683 3.2 15,156,137 2.89 7.593 173 62.0
CTL 17 123,192,849 5.2 7,246,638 NA 7.669 231 NA
--- -------------- -----
Total/Wtd. Avg. 230 $ 2,374,987,404 100.0% $ 10,326,032 1.49x 7.701% 150 68.1%
</TABLE>
This material is for your private information and we are not soliciting any
action based upon it. This material is not to be construed as an offer to sell
or the solicitation of any offer to buy any security in any jurisdiction where
such an offer or solicitation would be illegal. This material is based on
information that we consider reliable, but we do not represent that it is
accurate or complete and it should not be relied upon as such. By accepting this
material the recipient agrees that it will not distribute or provide the
material to any other person. The information contained in this material may be
based on assumptions regarding market conditions and other matters as reflected
therein. We make no representations regarding the reasonableness of such
assumptions or the likelihood that any of such assumptions will coincide with
actual market conditions or events, and this material should not be relied upon
for such purposes. We and our affiliates, officers, directors, partners and
employees, including persons involved in the preparation or issuance of this
material may, from time to time, have long or short positions in, and buy and
sell, the securities mentioned therein or derivatives thereof (including
options). This material may be filed with the Securities and Exchange Commission
(the "SEC") and incorporated by reference into an effective registration
statement previously filed with the SEC under Rule 415 of the Securities Act of
1933, including in cases where the material does not pertain to securities that
are ultimately offered for sale pursuant to such registration statement.
Information contained in this material is current as of the date appearing on
this material only. Information in this material regarding any assets backing
any securities discussed herein supersedes all prior information regarding such
assets. All information in this Term Sheet, whether regarding the assets backing
any securities discussed herein or otherwise, will be superseded by the
information contained in the final prospectus for any securities actually sold
to you.
Annex E-7
<PAGE>
All information in this Term Sheet, whether regarding the assets backing any
securities discussed herein or otherwise, will be superseded by the information
contained in any final prospectus for any securities actually sold to you.
STRUCTURAL AND COLLATERAL TERM SHEET
DISTRIBUTION BY CUT-OFF DATE LOAN TO VALUE RATIO
<TABLE>
<CAPTION>
Weighted
Average Weighted
Percentage of Weighted Remaining Average
Number of Cut-Off Date Aggregate Average Cut-Off Weighted Average Term to Cut-Off
Range of Cut-Off Date Mortgage Principal Cut-Off Date Date Principal Average Mortgage Maturity Date LTV
Loan to Value Ratios Loans Balance Balance Balance DSCR Rate (mos) Ratio
- --------------------- -------- ------------- ------------ --------------- -------- -------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
25.0 - 39.9 2 $ 6,911,112 0.3% $ 3,455,556 2.69x 7.871% 149 32.2%
40.0 - 49.9 9 61,009,467 2.6 6,778,830 2.21 8.094 166 48.6
50.0 - 59.9 27 264,614,487 11.1 9,800,537 1.64 7.894 126 56.1
60.0 - 64.9 32 374,067,532 15.8 11,689,610 1.64 7.217 125 63.4
65.0 - 69.9 49 684,620,049 28.8 13,971,838 1.41 7.752 152 68.2
70.0 - 74.9 45 506,262,990 21.3 11,250,289 1.28 8.046 164 72.6
75.0 - 79.9 42 286,241,845 12.1 6,815,282 1.32 7.480 133 77.9
80.0 - 89.9 6 42,204,861 1.8 7,034,143 1.29 7.541 143 80.9
90.0 - 99.9 1 25,862,212 1.1 25,862,212 3.70 6.510 174 90.4
CTL 17 123,192,849 5.2 7,246,638 N/A 7.669 231 N/A
--- -------------- -----
Total/Wtd. Avg. 230 $2,374,987,404 100.0% $10,326,032 1.49x 7.701% 150 68.1%
</TABLE>
DISTRIBUTION BY BALLOON LOAN TO VALUE RATIO
<TABLE>
<CAPTION>
Weighted
Average Weighted
Percentage of Weighted Remaining Average
Number of Cut-Off Date Aggregate Average Cut-Off Weighted Average Term to Cut-Off
Range of Balloon Mortgage Principal Cut-Off Date Date Principal Average Mortgage Maturity Date LTV
Loan to Value Ratios Loans Balance Balance Balance DSCR Rate (mos) Ratio
- --------------------- -------- ------------- ------------ --------------- -------- -------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
0.0 - 9.9% 13 $ 63,545,198 2.7% $ 4,888,092 1.37x 7.667% 220 71.2%
10.0 - 19.9 3 47,569,925 2.0 15,856,642 2.31 7.087 222 51.5
20.0 - 29.9 22 88,330,321 3.7 4,015,015 1.53 7.769 190 62.5
30.0 - 39.9 16 80,753,456 3.4 5,047,091 2.19 8.017 187 50.6
40.0 - 49.9 45 343,664,039 14.5 7,636,979 1.53 7.467 153 62.1
50.0 - 59.9 79 964,872,065 40.6 12,213,570 1.34 8.086 157 67.5
60.0 - 69.9 47 696,864,943 29.3 14,826,914 1.61 7.244 121 72.5
70.0 - 79.9 5 89,387,457 3.8 17,877,491 1.31 8.002 118 78.6
--- -------------- -----
Total/Wtd. Avg. 230 $2,374,987,404 100.0% $10,326,032 1.49x 7.701% 150 68.1%
</TABLE>
This material is for your private information and we are not soliciting any
action based upon it. This material is not to be construed as an offer to sell
or the solicitation of any offer to buy any security in any jurisdiction where
such an offer or solicitation would be illegal. This material is based on
information that we consider reliable, but we do not represent that it is
accurate or complete and it should not be relied upon as such. By accepting this
material the recipient agrees that it will not distribute or provide the
material to any other person. The information contained in this material may be
used on assumptions regarding market conditions and other matters as reflected
therein. We make no representations regarding the reasonableness of such
assumptions or the likelihood that any of such assumptions will coincide with
actual market conditions or events, and this material should not be relied upon
for such purposes. We and our affiliates, officers, directors, partners and
employees, including persons involved in the preparation or issuance of this
material may, from time to time, have long or short positions in, and buy and
sell, the securities mentioned therein or derivatives thereof (including
options). This material may be filed with the Securities and Exchange Commission
(the "SEC") and incorporated by reference into an effective registration
statement previously filed with the SEC under Rule 415 of the Securities Act of
1933, including in cases where the material does not pertain to securities that
are ultimately offered for sale pursuant to such registration statement.
Information contained in this material is current as of the date appearing on
this material only. Information in this material regarding any assets backing
any securities discussed herein supersedes all prior information regarding such
assets. All information in this Term Sheet, whether regarding the assets backing
any securities discussed herein or otherwise, will be superseded by the
information contained in the final prospectus for any securities actually sold
to you.
Annex E-8
<PAGE>
All information in this Term Sheet, whether regarding the assets backing
any securities discussed herein or otherwise, will be superseded by the
information contained in any final prospectus for any securities
actually sold to you.
STRUCTURAL AND COLLATERAL TERM SHEET
DISTRIBUTION BY MORTGAGE INTEREST RATE
<TABLE>
<CAPTION>
Weighted
Average Weighted
Percentage of Weighted Remaining Average
Number of Cut-Off Date Aggregate Cut- Average Cut-Off Weighted Average Term to Cut-Off
Range of Mortgage Principal Off Date Date Principal Average Mortgage Maturity Date LTV
Mortgage Rates Notes Balance Balance Balance DSCR Rate (mos) Ratio
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
6.250 - 6.499% 5 $ 15,150,984 0.6% $ 3,030,197 1.65x 6.424% 126 67.1%
6.500 - 6.749 13 391,267,105 16.5 30,097,470 1.90 6.633 115 69.2
6.750 - 6.999 18 91,569,901 3.9 5,087,217 1.40 6.889 129 72.4
7.000 - 7.249 53 321,221,189 13.5 6,060,777 1.48 7.080 156 69.2
7.250 - 7.499 38 248,589,900 10.5 6,541,839 1.55 7.382 150 63.3
7.500 - 7.749 23 70,891,572 3.0 3,082,242 1.54 7.590 184 66.0
7.750 - 7.999 12 91,633,797 3.9 7,636,150 1.37 7.860 148 71.9
8.000 - 8.249 12 284,885,133 12.0 23,740,428 1.32 8.054 166 69.4
8.250 - 8.499 25 385,849,005 16.2 15,433,960 1.35 8.385 150 67.3
8.500 - 8.749 24 402,709,865 17.0 16,779,578 1.37 8.501 164 67.4
8.750 - 8.999 3 46,684,508 2.0 15,561,503 1.23 8.816 161 69.8
9.000 - 9.249 1 3,068,325 0.1 3,068,325 1.49 9.200 176 61.4
9.250 - 9.499 1 12,043,639 0.5 12,043,639 1.28 9.253 171 66.9
9.500 - 10.249 1 4,127,476 0.2 4,127,476 1.50 9.500 174 60.7
10.250 - 10.499 3 3,196,848 0.1 1,065,616 1.34 10.360 142 51.6
10.500 - 10.759 2 2,098,158 0.1 1,049,079 1.18 10.631 129 54.0
-- -------------- -----
Total/Wtd. Avg. 234 $2,374,987,404 100.0% $10,149,519 1.49x 7.701% 150 68.1%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
DISTRIBUTION BY PREMIUM LOAN TYPE
<TABLE>
<CAPTION>
Weighted
Average Weighted Weighted
Percentage of Average Cut- Weighted Remaining Term Average Average Cut-
Number of Cut-Off Date Aggregate Off Date Weighted Average to Maturity Cut-Off Off
Mortgage Principal Cut-Off Date Principal Average Mortgage (mos) Date LTV Date PTV
Loan Type Notes Balance Balance Balance DSCR Rate Ratio Ratio
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Non-Premium 180 $1,451,048,320 61.1% $ 8,061,380 1.58x 7.278% 143 68.7% 68.7%
Premium 54 923,939,084 38.9 17,109,983 1.35 8.365 160 67.2 72.8
--- -------------- ----
Total/Wtd. Avg. 234 $2,374,987,404 100.0% $10,149,519 1.49x 7.701% 150 68.1% 70.4%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
This material is for your private information and we are not soliciting any
action based upon it. This material is not to be construed as an offer to sell
or the solicitation of any offer to buy any security in any jurisdiction where
such an offer or solicitation would be illegal. This material is based on
information that we consider reliable, but we do not represent that it is
accurate or complete and it should not be relied upon as such. By accepting this
material the recipient agrees that it will not distribute or provide the
material to any other person. The information contained in this material may be
based on assumptions regarding market conditions and other matters as reflected
therein. We make no representations regarding the reasonableness of such
assumptions or the likelihood that any of such assumptions will coincide with
actual market conditions or events, and this material should not be relied upon
for such purposes. We and our affiliates, officers, directors, partners and
employees, including persons involved in the preparation or issuance of this
material may, from time to time, have long or short positions in, and buy and
sell, the securities mentioned therein or derivatives thereof (including
options). This material may be filed with the Securities and Exchange Commission
(the "SEC") and incorporated by reference into an effective registration
statement previously filed with the SEC under Rule 415 of the Securities Act of
1933, including in cases where the material does not pertain to securities that
are ultimately offered for sale pursuant to such registration statement.
Information contained in this material is current as of the date appearing on
this material only. Information in this material regarding any assets backing
any securities discussed herein supersedes all prior information regarding such
assets. All information in this Term Sheet, whether regarding the assets backing
any securities discussed herein or otherwise, will be superseded by the
information contained in the final prospectus for any securities actually sold
to you.
Annex E-9
<PAGE>
All information in this Term Sheet, whether regarding the assets backing any
securities discussed herein or otherwise, will be superseded by the information
contained in any final prospectus for any securities actually sold to you.
STRUCTURAL AND COLLATERAL TERM SHEET
DISTRIBUTION BY ORIGINAL TERM TO MATURITY OR ANTICIPATED REPAYMENT DATE
<TABLE>
<CAPTION>
Weighted
Average Weighted
Percentage of Weighted Remaining Average
Range of Original Terms Number of Cut-Off Date Aggregate Average Cut-Off Weighted Average Term to Cut-Off
to Maturity or Anticipated Mortgage Principal Cut-Off Date Date Principal Average Mortgage Maturity Date LTV
Repayment Date (months) Notes Balance Balance Balance DSCR Rate (mos) Ratio
- ------------------------- --------- ------------ ------------ --------------- -------- -------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
72 - 95 1 $ 156,000,000 6.6% $156,000,000 2.00x 6.640% 79 64.3%
108 - 119 2 12,458,876 0.5 6,229,438 1.30 8.189 105 69.2
120 - 131 77 760,960,994 32.0 9,882,610 1.46 7.459 117 68.9
132 - 143 2 2,098,158 0.1 1,049,079 1.18 10.631 129 54.0
144 - 155 2 84,696,870 3.6 42,348,435 1.77 7.444 131 55.2
156 - 167 2 2,501,322 0.1 1,250,661 1.30 8.114 149 70.4
168 - 191 125 1,216,445,062 51.2 9,731,560 1.43 8.005 172 68.8
192 - 215(a) 1 11,685,718 0.5 11,685,718 N/A 7.880 192 N/A
228 - 251 18 112,422,093 4.7 6,245,672 1.29 7.597 232 75.2
252 - 264(a) 4 15,718,312 0.7% 3,929,578 N/A 7.640 255 N/A
--- -------------- ------
Total/Wtd. Avg. 234 $2,374,987,404 100.0% $10,149,519 1.49x 7.701% 150 68.1%
- -----------------------------------------------------------------------------------------------------------------------------------
(a) Contains only CTL loans.
</TABLE>
DISTRIBUTION BY REMAINING TERM TO MATURITY OR ANTICIPATED REPAYMENT DATE
<TABLE>
<CAPTION>
Weighted
Average Weighted
Percentage of Weighted Remaining Average
Range of Remaining Terms Number of Cut-Off Date Aggregate Average Cut-Off Weighted Average Term to Cut-Off
to Maturity or Anticipated Mortgage Principal Cut-Off Date Date Principal Average Mortgage Maturity Date LTV
Repayment Date (months) Loans Balance Balance Balance DSCR Rate (mos) Ratio
- ------------------------- --------- ------------- ------------- --------------- -------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
72 - 95 1 $ 156,000,000 6.6% $156,000,000 2.00x 6.640% 79 64.3%
96 - 107 2 12,458,876 0.5 6,229,438 1.30 8.189 105 69.2
108 - 119 76 636,960,994 26.8 8,381,066 1.40 7.616 116 68.7
120 - 131 5 210,795,028 8.9 42,159,006 1.75 7.009 124 63.7
132 - 143 3 3,196,848 0.1 1,065,616 1.34 10.360 142 51.6
144 - 155 1 1,676,949 0.1 1,676,949 1.36 7.010 153 76.2
156 - 167 5 162,595,840 6.8 32,519,168 1.25 8.454 165 70.3
168 - 191 118 1,051,476,747 44.3 8,910,820 1.45 7.930 173 68.7
192 - 215(a) 1 11,685,718 0.5 11,685,718 N/A 7.880 192 N/A
216 - 227 1 1,330,172 0.1 1,330,172 1.14 7.290 219 78.2
228 - 251 17 111,091,921 4.7 6,534,819 1.30 7.601 233 74.9
252 - 255(a) 4 15,718,312 0.7 3,929,578 N/A 7.640 255 N/A
--- -------------- ------
Total/Wtd. Avg. 234 $2,374,987,404 100.0% $ 10,149,519 1.49x 7.701% 150 68.1%
- -----------------------------------------------------------------------------------------------------------------------------------
(a) Contains only CTL loans.
</TABLE>
This material is for your private information and we are not soliciting any
action based upon it. This material is not to be construed as an offer to sell
or the solicitation of any offer to buy any security in any jurisdiction where
such an offer or solicitation would be illegal. This material is based on
information that we consider reliable, but we do not represent that it is
accurate or complete and it should not be relied upon as such. By accepting this
material the recipient agrees that it will not distribute or provide the
material to any other person. The information contained in this material may be
based on assumptions regarding market conditions and other matters as reflected
therein. We make no representations regarding the reasonableness of such
assumptions or the likelihood that any of such assumptions will coincide with
actual market conditions or events, and this material should not be relied upon
for such purposes. We and our affiliates, officers, directors, partners and
employees, including persons involved in the preparation or issuance of this
material may, from time to time, have long or short positions in, and buy and
sell, the securities mentioned therein or derivatives thereof (including
options). This material may be filed with the Securities and Exchange Commission
(the "SEC") and incorporated by reference into an effective registration
statement previously filed with the SEC under Rule 415 of the Securities Act of
1933, including in cases where the material does not pertain to securities that
are ultimately offered for sale pursuant to such registration statement.
Information contained in this material is current as of the date appearing on
this material only. Information in this material regarding any assets backing
any securities discussed herein supersedes all prior information regarding such
assets. All information in this Term Sheet, whether regarding the assets backing
any securities discussed herein or otherwise, will be superseded by the
information contained in the final prospectus for any securities actually sold
to you.
Annex E-10
<PAGE>
All information in this Term Sheet, whether regarding the assets backing any
securities discussed herein or otherwise, will be superseded by the information
contained in any final prospectus for any securities actually sold to you.
STRUCTURAL AND COLLATERAL TERM SHEET
DISTRIBUTION BY MATURITY OR ANTICIPATED REPAYMENT YEAR
<TABLE>
<CAPTION>
Weighted
Average Weighted
Percentage of Weighted Remaining Average
Number of Cut-Off Date Aggregate Average Cut-Off Weighted Average Term to Cut-Off
Maturity / Anticipated Mortgage Principal Cut-Off Date Date Principal Average Mortgage Maturity Date LTV
Repayment Year Loans Balance Balance Balance DSCR Rate (mos) Ratio
- --------------------- -------- ------------- ------------- --------------- -------- -------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
2005 1 $ 156,000,000 6.6% $156,000,000 2.00x 6.640% 79 64.3%
2007 1 10,461,537 0.4 10,461,537 1.27 8.330 105 68.4
2008 41 408,678,259 17.2 9,967,762 1.42 7.693 115 66.7
2009 40 360,304,804 15.2 9,007,620 1.50 7.221 119 70.9
2010 1 80,770,298 3.4 80,770,298 1.77 7.400 131 56.1
2011 4 4,873,797 0.2 1,218,449 1.35 9.207 146 60.1
2012 3 104,715,744 4.4 34,905,248 1.24 8.494 164 71.3
2013 111 1,060,102,918 44.6 9,550,477 1.44 7.984 172 68.6
2014 9 49,253,924 2.1 5,472,658 1.43 7.302 178 68.9
2015(a) 1 11,685,718 0.5 11,685,718 N/A 7.880 192 N/A
2017 1 1,330,172 0.1 1,330,172 1.14 7.290 219 78.2
2018 10 98,183,104 4.1 9,818,310 1.30 7.629 232 73.1
2019 7 12,908,817 0.5 1,844,117 1.29 7.383 239 78.1
2020(a) 4 15,718,312 0.7 3,929,578 N/A 7.640 255 N/A
--- -------------- -----
Total/Wtd. Avg. 234 $2,374,987,404 100.0% $10,149,519 1.49x 7.701% 150 68.1%
</TABLE>
(a) Contains only CTL loans.
DISTRIBUTION BY AMORTIZATION TYPE
<TABLE>
<CAPTION>
Weighted
Average Weighted
Percentage of Weighted Remaining Average
Number of Cut-Off Date Aggregate Average Cut-Off Weighted Average Term to Cut-Off
Mortgage Principal Cut-Off Date Date Principal Average Mortgage Maturity Date LTV
Amortization Type Loans Balance Balance Balance DSCR Rate (mos) Ratio
- ----------------- -------- ------------- ------------- --------------- -------- -------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Hyper 209 $1,955,166,469 82.3% $ 9,354,863 1.43x 7.855% 152 68.2%
Balloon 18 382,476,115 16.1 21,248,673 1.86 6.886 130 67.2
Fully 7 37,344,820 1.6 5,334,974 1.37 7.985 226 67.2
--- -------------- -----
Total/Wtd. Avg. 234 $2,374,987,404 100.0% $10,149,519 1.49x 7.701% 150 68.1%
</TABLE>
This material is for your private information and we are not soliciting any
action based upon it. This material is not to be construed as an offer to sell
or the solicitation of any offer to buy any security in any jurisdiction where
such an offer or solicitation would be illegal. This material is based on
information that we consider reliable, but we do not represent that it is
accurate or complete and it should not be relied upon as such. By accepting this
material the recipient agrees that it will not distribute or provide the
material to any other person. The information contained in this material may be
used on assumptions regarding market conditions and other matters as reflected
therein. We make no representations regarding the reasonableness of such
assumptions or the likelihood that any of such assumptions will coincide with
actual market conditions or events, and this material should not be relied upon
for such purposes. We and our affiliates, officers, directors, partners and
employees, including persons involved in the preparation or issuance of this
material may, from time to time, have long or short positions in, and buy and
sell, the securities mentioned therein or derivatives thereof (including
options). This material may be filed with the Securities and Exchange Commission
(the "SEC") and incorporated by reference into an effective registration
statement previously filed with the SEC under Rule 415 of the Securities Act of
1933, including in cases where the material does not pertain to securities that
are ultimately offered for sale pursuant to such registration statement.
Information contained in this material is current as of the date appearing on
this material only. Information in this material regarding any assets backing
any securities discussed herein supersedes all prior information regarding such
assets. All information in this Term Sheet, whether regarding the assets backing
any securities discussed herein or otherwise, will be superseded by the
information contained in the final prospectus for any securities actually sold
to you.
Annex E-11
<PAGE>
All information in this Term Sheet, whether regarding the assets backing
any securities discussed herein or otherwise, will be superseded by the
information contained in any final prospectus for any securities
actually sold to you.
STRUCTURAL AND COLLATERAL TERM SHEET
DISTRIBUTION BY REMAINING LOCKOUT
<TABLE>
<CAPTION>
Weighted
Average Weighted
Percentage of Weighted Remaining Average
Number of Cut-Off Date Aggregate Average Cut-Off Weighted Average Term to Cut-Off
Remaining Lockout Mortgage Principal Cut-Off Date Date Principal Average Mortgage Maturity Date LTV
Period (months) Notes Balance Balance Balance DSCR Rate (mos) Ratio
- ----------------- --------- ------------ ------------- --------------- -------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
72-95 1 $ 156,000,000 6.6% $156,000,000 2.00x 6.640% 79 64.3%
96-107 5 26,654,275 1.1 5,330,855 1.32 7.981 110 69.2
108-119 74 746,765,595 31.4 10,091,427 1.46 7.452 117 68.9
120-131 4 86,795,028 3.7 21,698,757 1.76 7.521 131 55.2
132-143 3 3,196,848 0.1 1,065,616 1.34 10.360 142 51.6
144-155 2 13,535,591 0.6 6,767,795 1.23 8.267 158 80.1
156-167 42 473,100,432 19.9 11,264,296 1.35 8.087 169 68.6
168-179 80 729,113,513 30.7 9,113,919 1.48 7.936 174 68.9
180-203(a) 1 11,685,718 0.5 11,685,718 N/A 7.880 192 N/A
204-215 1 1,330,172 0.1 1,330,172 1.14 7.290 219 78.2
216-227(a) 1 40,320,671 1.7 40,320,671 N/A 7.030 230 N/A
228-239 16 70,771,250 3.0 4,423,203 1.30 7.926 234 74.9
240-251(a) 4 15,718,312 0.7 3,929,578 N/A 7.640 255 N/A
--- -------------- -----
Total/Wtd. Avg. 234 $2,374,987,404 100.0% $ 10,149,519 1.49 7.701% 150 68.1%
</TABLE>
(a)Contains only CTL loans.
DISTRIBUTION BY ORIGINATION YEAR
<TABLE>
<CAPTION>
Weighted
Average Weighted
Percentage of Weighted Remaining Average
Number of Cut-Off Date Aggregate Average Cut-Off Weighted Average Term to Cut-Off
Mortgage Principal Cut-Off Date Date Principal Average Mortgage Maturity Date LTV
Origination Year Notes Balance Balance Balance DSCR Rate (mos) Ratio
- ---------------- --------- ------------- ------------- --------------- -------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1995 2 $ 2,372,476 0.1% $ 1,186,238 1.40x 10.360% 142 49.2%
1997 9 175,051,965 7.4 19,450,218 1.31 8.290 161 68.7
1998 222 2,179,832,195 91.8 9,819,064 1.50 7.649 149 68.0
1999 1 17,730,768 0.7 17,730,768 1.38 7.980 118 67.7
--- -------------- ------
Total/Wtd. Avg. 234 $2,374,987,404 100.0% $10,549,619 1.49x 7.701% 150 68.1%
</TABLE>
This material is for your private information and we are not soliciting any
action based upon it. This material is not to be construed as an offer to sell
or the solicitation of any offer to buy any security in any jurisdiction where
such an offer or solicitation would be illegal. This material is based on
information that we consider reliable, but we do not represent that it is
accurate or complete and it should not be relied upon as such. By accepting this
material the recipient agrees that it will not distribute or provide the
material to any other person. The information contained in this material may be
based on assumptions regarding market conditions and other matters as reflected
therein. We make no representations regarding the reasonableness of such
assumptions or the likelihood that any of such assumptions will coincide with
actual market conditions or events, and this material should not be relied upon
for such purposes. We and our affiliates, officers, directors, partners and
employees, including persons involved in the preparation or issuance of this
material may, from time to time, have long or short positions in, and buy and
sell, the securities mentioned therein or derivatives thereof (including
options). This material may be filed with the Securities and Exchange Commission
(the "SEC") and incorporated by reference into an effective registration
statement previously filed with the SEC under Rule 415 of the Securities Act of
1933, including in cases where the material does not pertain to securities that
are ultimately offered for sale pursuant to such registration statement.
Information contained in this material is current as of the date appearing on
this material only. Information in this material regarding any assets backing
any securities discussed herein supersedes all prior information regarding such
assets. All information in this Term Sheet, whether regarding the assets backing
any securities discussed herein or otherwise, will be superseded by the
information contained in the final prospectus for any securities actually sold
to you.
Annex E-12
<PAGE>
All information in this Term Sheet, whether regarding the assets backing any
securities discussed herein or otherwise, will be superseded by the information
contained in any final prospectus for any securities actually sold to you.
Collateral Term Sheet
DDR/DRA Pool Loan
Loan Information
Original Cut-Off Date
-------- ------------
Principal Balance: $156,000,000 $156,000,000
Premium: None None
Origination Date: September 15, 1998
Interest Rate: 6.64%
Amortization: Interest Only
Hyperamoritization: N/A
Anticipated Repayment Date: N/A
Maturity Date: October 11, 2005
Borrow/Sponsor: DDRA Community Centers Five, L.P., a special
purpose entity indirectly owned and controlled
by Developers Diversified Realty Corporation
Call Protection: Prepayment lockout until the third month
preceding the Maturity Date. US Treasury
deleasance allowedon or after March 15, 2001.
Removal of Property The lender may terminate the property manager
Manager: upon the event of default under the loan. Any
replacement must approved by the lender.
Collection Account: Hard Lockbox
Cross-Collateralization/
Default: Yes
Mezzanine Loans/Preferred
Equity: None
Property Information
Single Asset/Portfolio: Portfolio of 6 assets
Property Type: Retail - Anchored
Location: Arizona (2 props.), Minnesota (2 props.),
Texas (1 prop.), Oregon (1 prop.)
Years Built: 1994-1997
The Collateral: Six retail power centers located in four states
with a total of 1,977,129 sf of GLA.
Square Major Tenants
------- ---------------
Footage
--------
Ahwatukee Foothills Towne Center 546,665 Smith's Food and Drugs,
AMC Theatres, Steinmart,
HomePlace, Barnes & Nobel,
Office Max
Arrowhead Crossing 346,680 Oshmans, Circuit City,
CompUSA, TJ Maxx, Linens
N Things, Staples,
Barnes & Noble
Eagan Promenade 278,510 Byerly's, HomePlace,
Barnes & Noble, Office
Max, Michael's, Old Navy,
TJ Max
East Chase Market Shopping Center 235,027 Toys 'R Us, MJ Design,
United Artists Theatres
PetSmart, Old Navy
Maple Grove Crossing 250,436 HomePlace, Kohl's, Old
Navy, Pet Food Warehouse,
Barnes & Noble
Tanasbourne Town Center 298,041 Haggen's, Foods,
HomePlace, Office Depot,
Barnes & Noble, PetCo
Property Management: Developers Diversified Realty Corp., an
affiliate of the Borrower
Occupany (1/28/99): 95.5%
TTM Net Operating Income: $20,353,809
(ending 9/30/98)
Underwritten Net Cash Flow: $20,972,080
Appraised Value: $242,500,000
Appraisal Date: November 2, 1997
Cut-Off Date Loan/SF (a): $78.90
Cut-Off Date
------------
LTV (a) 64.3%
DSCR (a)(b): 2.00X
(a) Based on the Cut-off Date Principal Balance.
(b) Based on Underwritten Net Cash Flow.
This material is for your private information and we are not soliciting any
action based upon it. This material is not to be construed as an offer to sell
or the solicitation of any offer to buy any security in any jurisdiction where
such an offer or solicitation would be illegal. This material is based on
information that we consider reliable, but we do not represent that it is
accurate or complete and it should not be relied upon as such. By accepting this
material the recipient agrees that it will not distribute or provide the
material to any other person. The information contained in this material may be
based on assumptions regarding market conditions and other matters as reflected
therein. We make no representations regarding the reasonableness of such
assumptions or the likelihood that any of such assumptions will coincide with
actual market conditions or events, and this material should not be relied upon
for such purposes. We and our affiliates, officers, directors, partners and
employees, including persons involved in the preparation or issuance of this
material may, from time to time, have long or short positions in, and buy and
sell, the securities mentioned therein or derivatives thereof (including
options). This material may be filed with the Securities and Exchange Commission
(the "SEC") and incorporated by reference into an effective registration
statement previously filed with the SEC under Rule 415 of the Securities Act of
1933, including in cases where the material does not pertain to securities that
are utimately offered for sale pursuant to such registration statement.
Information contained in this material is current as of the date appearing on
this material only. Information in this material regarding any assets backing
any securities discussed herein supersedes all prior information regarding such
assets. All information in this Term Sheet, whether regarding the assets backing
any securities discussed herein or otherwise, will be superseded by the
information contained in the final prospectus for any securities actually sold
to you.
Annex E-13
<PAGE>
All information in this Term Sheet, whether regarding the assets backing any
securities discussed herein or otherwise, will be superseded by the information
contained in any final prospectus for any securities actually sold to you.
Collateral Term Sheet
Park LaBrea Loan
<TABLE>
<CAPTION>
Loan Information
Original Cut-Off Date
-------- ------------
<S> <C>
Principal Balance: $285,563,810 $281,227,978
Amount Included: $142,781,905 $140,613,989
Balance is evidenced by a separate pari
passu note that is cross-collateralized
and cross defaulted with this note.
Premium (a): $4,718,095 $4,718,095
Origination Date: January 13, 1998
Interest Rate: 8.00%
Amortization: 360 months
Hyperamoritization: After the Anticipated Repayment Date,
interest rate increase to 10.00%. All
excess flow is used to reduce outstanding
principal balance; 2% of the additional
interest is deferred and accrues interest
at the increased rate until the principal
balance is zero.
Anticipated
Repayment Date: March 11, 2013
Maturity Date: March 11, 2028
Borrower/Sponsor: Prime/Park La Brea Holdings, L.P., a
special purpose California limited
partnership.
Call Protection: Prepayment lockout up to six months
before the Anticipated Repayment Date.
U.S. treasury defeasance permitted
after March 31, 2001.
Removal of Property The lender may terminate the property
Manager: manager upon the event of default under
the loan. Any replacement must be
approved by the lender.
Collection Account: Soft Lockbox
Cross-Collateralization/
Default: N/A
Mezzanine Loans/Preferred $33,500,000. Currently held by
Equity: Stanwood Financial Trust, a publicly
traded REIT.
<CAPTION>
Property Information
Single Asset/Portfolio: Single Asset
<S> <C>
Property Type: Multifamily
Location: 6200 West 3rd St.
Los Angeles, California
Year Built/Renovated: 1943/1995
The Collateral: A residential development in Los
Angeles, CA consisting of 4,226
apartment units on 166 acres.
Park La Brea is the largest
apartment complex west of the
Mississippi. Total rentable area
of 4,166,929 square feet contain-
ed in 26 two-story garden apart-
ment building, and 18 twelve-
story apartment towers. On site
amenities include a bank, fitness
center, dry cleaner, swimming
pool, tennis courts, and 24-hour
security.
Property Management: PLB Management, LLC, an affiliate
of the Borrower
Occupancy (12/31/98): 97.7%
TTM Net Operating Income: $33,973,368
(ending 7/31/98)
Underwritten Net Cash Flow: $33,456,352
Appraised Value: $410,000,000
Appraisal Date: November 2, 1997
Cut-Off Date/Loan/Unit(b): $66,547
Cut-Off Date At ARD
------------ ------
LTV (b) 68.6% 55.3%
PTV (c) 70.9%
DSCR (b)(d): 1.33x
Seismic: PML of 6%
(a) Premium allocated to the note owned by CMAT 1999-C1.
(b) Based on Total Cut-Off Date Principal Balance of
$281,227,978
(c) Based on Total Cut-Off Date Proceeds of $290,664,168.
(d) Based on Underwritten Net Cash Flow.
</TABLE>
This material is for your private information and we are not soliciting any
action based upon it. This material is not to be construed as an offer to sell
or the solicitation of any offer to buy any security in any jurisdiction where
such an offer or solicitation would be illegal. This material is based on
information that we consider reliable, but we do not represent that it is
accurate or complete and it should not be relied upon as such. By accepting this
material the recipient agrees that it will not distribute or provide the
material to any other person. The information contained in this material may be
used on assumptions regarding market conditions and other matters as reflected
therein. We make no representations regarding the reasonableness of such
assumptions or the likelihood that any of such assumptions will coincide with
actual market conditions or events, and this material should not be relied upon
for such purposes. We and our affiliates, officers, directors, partners and
employees, including persons involved in the preparation or issuance of this
material may, from time to time, have long or short positions in, and buy and
sell, the securities mentioned therein or derivatives thereof (including
options). This material may be filed with the Securities and Exchange Commission
(the "SEC") and incorporated by reference into an effective registration
statement previously filed with the SEC under Rule 415 of the Securities Act of
1933, including in cases where the material does not pertain to securities that
are ultimately offered for sale pursuant to such registration statement.
Information contained in this material is current as of the date appearing on
this material only. Information in this material regarding any assets backing
any securities discussed herein supersedes all prior information regarding such
assets. All information in this Term Sheet, whether regarding the assets backing
any securities discussed herein or otherwise, will be superseded by the
information contained in the final prospectus for any securities actually sold
to you.
Annex E-14
<PAGE>
All information in this Term Sheet, whether regarding the assets backing any
securities discussed herein or otherwise, will be superseded by the information
contained in any final prospectus for any securities actually sold to you.
Collateral Term Sheet
The Source
Loan Information
<TABLE>
<CAPTION>
Original Cut-Off Date
-------- ------------
<S> <C> <C>
Principal Balance: $124,000,000 $124,000,000
Premium: None None
Origination Date: November 6, 1998
Interest Rate: 6.65%
Amortization: Interest Only
Hyperamortization: N/A
Anticipated Repayment Date: N/A
Maturity Date: March 11, 2009
Borrower/Sponsor: W&S Associates, L.P., a special purpose New
York limited partnership indirectly owned and
controlled by Simon Property Group, LP
Call Protection: Prepayment lockout until the Maturity Date. US
Treasury defeasance permitted on or after
March 15, 2001.
Removal of Property The lender may terminate the Property
Manager: Manager (1) if the DSCR in any trailing twelve
Month period falls below 1.10:1.0, or (2) upon
an event of default under the loan.
Cash Management System
Account: Hard Lockbox
Cross-
Collateralization/Default: N/A
Mezzanine Loans/Preferred
Equity: None
</TABLE>
Property Information
<TABLE>
<CAPTION>
<S> <C> <C>
Single Asset/Portfolio: Single Asset
Property Type: Retail - Anchored
Location: 1504 Old Country Road
Westbury, New York
Year Built: 1997
The Collateral: The Source Retail Property consists of an
enclosed, two-story retail mall with
521,486 square feet of GLA. The anchors
of the mall are Circuit City, Nordstrom
Rack, Off Saks Fifth Avenue, Old Navy
and ABC Home. Other major tenants
include ABC Carpet, Cheesecake
Factory, Data Vision, Loehmann's,
Rainforest Cafe and Virgin Megastore.
Property Management: M.S. Management Associates, Inc., an
entity controlled by the principals of the
Borrower
Occupancy (12/31/1998): 97.6%
TTM Net Operating Income: $10,291,747
(ending 8/31/98)
Underwritten Net Cash Flow: $14,549,935
Appraised Value: $178,000,000
Appraised Date: September 24, 1998
Cut-Off Date Loan/SF (a): $237.78
Cut-Off Date At ARD
------------ ------
LTV (a) 69.7% 69.7%
DSCR (a) (b): 1.74x
</TABLE>
(a) Based on Cut-Off Date Principal Balane of $124,000,000.
(b) Based on Underwritten Net Cash flow.
This material is for your private information and we are not soliciting any
action based upon it. This material is not to be construed as an offer to sell
or the solicitation of any offer to buy any security in any jurisdiction where
such an offer or solicitation would be illegal. This material is based on
information that we consider reliable, but we do not represent that it is
accurate or complete and it should not be relied upon as such. By accepting this
material the recipient agrees that it will not distribute or provide the
material to any other person. The information contained in this material may be
based on assumptions regarding market conditions and other matters as reflected
therein. We make no representations regarding the reasonableness of such
assumptions or the likelihood that any of such assumptions will coincide with
actual market conditions or events, and this material should not be relied upon
for such purposes. We and our affiliates, officers, directors, partners and
employees, including persons involved in the preparation or issuance of this
material may, from time to time, have long or short positions in, and buy and
sell, the securities mentioned therein or derivatives thereof (including
options). This material may be filed with the Securities and Exchange Commission
(the "SEC") and incorporated by reference into an effective registration
statement previously filed with the SEC under Rule 415 of the Securities Act of
1933, including in cases where the material does not pertain to securities that
are ultimately offered for sale pursuant to such registration statement.
Information contained in this material is current as of the date appearing on
this material only. Information in this material regarding any assets backing
any securities discussed herein supersedes all prior information regarding such
assets. All information in this Term Sheet, whether regarding the assets backing
any securities discussed herein or otherwise, will be superseded by the
information contained in the final prospectus for any securities actually sold
to you.
Annex E-15
<PAGE>
All information in this Term Sheet, whether regarding the assets backing any
securities discussed herein or otherwise, will be superseded by the information
contained in any final prospectus for any securities actually sold to you.
Collateral Term Sheet
The Prime Retail III Pool Loan
<TABLE>
<CAPTION>
Loan Information
<S> <C>
Original Cut-Off Date
-------- ------------
Principal Balance: $163,841,167 $163,130,601
Amount Included: $98,304,700 $97,878,360
Balance is evidenced by a pari passu
note that is cross-collateralized and
cross defaulted with these two notes.
Premium (a): $9,695,300 $9,208,648
Origination Date: June 15, 1998
Interest Rate: 8.40%
Amortization: 360 months
Hyperamoritization: After the Anticipated Repayment Date,
interest rate increases to 10.40%. All
excess flow is used to reduce outstanding
principal balance; the additional 2%
interest is deferred and accrues interest
at the increased rate until the principal
balance is zero.
Anticipated Repayment
Date: July 11, 2008
Maturity Date: July 11, 2028
Borrower/Sponsor: Prime Retail, Inc. (Sponsor)
Call Protection: Repayment lockout until three months
prior to the Anticipated Repayment
Date. US Treasury defeasance permitted
on or after March 2001.
Removal of Property The lender may terminate the Property
Manager: Manager (1) if the DSCR in any trailing
twelve month period falls below 1.15:1.0,
or (2) upon an event of default under
under the loan.
Collection Account: Hard Lockbox
Cross-Collaterilization/
Default: Yes
Mezzanine Loans/Preferred
Equity: None
<CAPTION>
Property Information
<S> <C>
Single Asset/Portfolio: Portfolio of 5 assets
Property Type: Retail - Factory Outlets
Location: Maine (1 prop.), California (2
prop.), Indiana (1 prop.),
New York (1 prop.)
Year Built/Renovated: 1984-1995/1995-1997
The Collateral: Five centers in four different
states with over 380 tenants
currently operating in the
outlets.
Square
Footage Major Tenants
------- -------------
Kittery Outlet Village 131,345 Old Navy, Lenox,
Corning/Revere,
J Crew
Outlets at Gilroy (b) 577,082 Calvin Klein, The
Gap, Nike, Eddie
Lighthouse Place 492,915 Bauer, Springmaid
Spiegel Inc.,
Finger Lakes Outlet Center 391,830 Levi's, Bass
Company VF Factory
Outlet, Liz
Claiborne, Reebok
Property Management: Self-managed
Occupancy (2/16/1999): 97.6%
TTM Net Operating Income: $25,386,362
(ending 4/30/98) (c)
Underwritten Net Cash Flow: $22,996,769
Appraised Value: $285,900,000
Appraisal Date: April 1998
Cut-Off Date Loan/SF (d): $102.39
Cut-Off Date At ARD
------------ ------
LTV (d) 57.1% 51.8%
PLTV (e) 62.4%
DSCR (d)(f): 1.54x
Seismic: Borrower obtained insurance of
$50,000,000 with a $250,000
deductible for The Outlets at
Gilroy property in California.
</TABLE>
(a) Premium allocated to the note owned by CMAT 1999-C1.
(b) This property is split into two phases: Outlets of
Gilroy I, II, and V (271,875 SF) and Outlets of Gilroy
III and IV (305,207 SF)
(c) TTM period ending 4/30/98 for all properties except
Lighthouse Place for which TTM period ends 6/15/98.
(d) Based on Total Cut-Off Date Loan Balance of $163,130,600
(e) Based on Total Cut-Off Date Proceeds of $178,478,347.
(f) Based on Underwritten Net Cash Flow.
This material is for your private information and we are not soliciting any
action based upon it. This material is not to be construed as an offer to sell
or the solicitation of any offer to buy any security in any jurisdiction where
such an offer or solicitation would be illegal. This material is based on
information that we consider reliable, but we do not represent that it is
accurate or complete and it should not be relied upon as such. By accepting this
material the recipient agrees that it will not distribute or provide the
material to any other person. The information contained in this material may be
used on assumptions regarding market conditions and other matters as reflected
therein. We make no representations regarding the reasonableness of such
assumptions or the likelihood that any of such assumptions will coincide with
actual market conditions or events, and this material should not be relied upon
for such purposes. We and our affiliates, officers, directors, partners and
employees, including persons involved in the preparation or issuance of this
material may, from time to time, have long or short positions in, and buy and
sell, the securities mentioned therein or derivatives thereof (including
options). This material may be filed with the Securities and Exchange Commission
(the "SEC") and incorporated by reference into an effective registration
statement previously filed with the SEC under Rule 415 of the Securities Act of
1933, including in cases where the material does not pertain to securities that
are ultimately offered for sale pursuant to such registration statement.
Information contained in this material is current as of the date appearing on
this material only. Information in this material regarding any assets backing
any securities discussed herein supersedes all prior information regarding such
assets. All information in this Term Sheet, whether regarding the assets backing
any securities discussed herein or otherwise, will be superseded by the
information contained in the final prospectus for any securities actually sold
to you.
Annex E-16
<PAGE>
All information in this Term Sheet, whether regarding the assets backing any
securities discussed herein or otherwise, will be superseded by the information
contained in any final prospectus for any securities actually sold to you.
Collateral Term Sheet
Springfield Mall Loan
Loan Information
Original Cut-Off Date
-------- ------------
Principal Balance: $181,863,408 $180,788,138
Amount Included: $90,931,704 $90,394,069
Balance is evidenced by a separate pari passu
note that is cross-collateralized and cross
defaulted with this note.
Premium (a): $8,568,296 $8,224,807
Origination Date: March 19,1998
Interest Rate: 8.50%
Amortization: 360 months
Hyperamortization: After the Anticipated Repayment Date, interest
rate increases to 10.50%. All excess flow is used
to reduce outstanding principal balance;
the additional 2% interest is deferred and
accrues interest at the increased rate until the
principal balance is zero.
Anticipated Repayment Date: April 11, 2013
Maturity Date: April 11, 2028
Borrower/Sponsor: Franconia Two, L.P., which is controlled by John
Reese and his company, Fischer Reese
Associates. Fischer Reese has developed and
managed over 8 million square feet of retail
shopping centers. The mall was developed by
Arthur Fischer. The limited partner of the
borrower is Franconia Associates, which is
controlled by Fischer Reese, with Meshulam
Riklis its majority owner.
Call Protection: Prepayment lockout to the Anticipated
Repayment Date. U.S. Treasury defeasance
permitted on or after March 19, 2002.
Removal of Property The Lender may terminate the property manager
Manager: upon an event of default under the loan or if the
DSCR drops below 1.00x.
Collection Account Hard Lockbox
Cross-Collateralization/
Default: N/A
Mezzanine Loans/Preferred $2.5MM loan made by Chase to Franconia
Associates, limited partner of the borrower, and
Meshulam Riklis, and $100MM loan made by
an affiliate of borrower and Meshulam Riklis to
Franconia Associates.
Property Information
Single Asset/Portfolio: Single Asset
Property Type: Retail - Mall
Location: 6500 Springfield Mall
Springfield, VA
Year Built/Renovated: 1973/1991
The Collateral: A 1,415,660 square foot super regional
shopping center located in Springfield,
VA. The collateral inludes the enclosed
mall, two outparcel stores (a total of
776,714 sq. ft.) and a parking garage.
The anchors are Macy's, Montgomery
Ward and JC Penney. The anchors own
their own stores except the Macy's store
is build on land leased from the borrower.
The mall is well located in the middle-
income community in the Northern
Virginia suburbs. Disposable income in
the county and the area is among the
highest in the country.
Property Management: Fischer Reese Associates, Inc.
Occupancy (2/10/1999): 93.7%
Net Operating Income: $20,309,860
(TTM ending 6/30/98)
Underwritten Net Cash Flow: $20,068,658
Appraised Value: $243,000,000
Appraised Date: January 5, 1998
Cut-Off Date Loan/SF (b): $127.71
Cut-Off Date At ARD
------------ ------
LTV (b): 74.4% 61.1%
PTV (c): 81.2%
DSCR (b) (d): 1.20x
(a) Premium allocated to the note owned by CMAT 1999-C1.
(b) Based on Total Cut-Off Date Principal Balance of 180,788,138.
(c) Based on Total Cut-Off Date Proceeds of $197,237,752.
(d) Based on Underwritten Net Cash Flow.
This material is for your private information and we are not soliciting any
action based upon it. This material is not to be construed as an offer to sell
or the solicitation of any offer to buy any security in any jurisdiction where
such an offer or solicitation would be illegal. This material is based on
information that we consider reliable, but we do not represent that it is
accurate or complete and it should not be relied upon as such. By accepting this
material the recipient agrees that it will not distribute or provide the
material to any other person. The information contained in this material may be
based on assumptions regarding market conditions and other matters as reflected
therein. We make no representations regarding the reasonableness of such
assumptions or the likelihood that any of such assumptions will coincide with
actual market conditions or events, and this material should not be relied upon
for such purposes. We and our affiliates, officers, directors, partners and
employees, including persons involved in the preparation or issuance of this
material may, from time to time, have long or short positions in, and buy and
sell, the securities mentioned therein or derivatives thereof (including
options). This material may be filed with the Securities and Exchange Commission
(the "SEC") and incorporated by reference into an effective registration
statement previously filed with the SEC under Rule 415 of the Securities Act of
1933, including in cases where the material does not pertain to securities that
are ultimately offered for sale pursuant to such registration statement.
Information contained in this material is current as of the date appearing on
this material only. Information in this material regarding any assets backing
any securities discussed herein supersedes all prior information regarding such
assets. All information in this Term Sheet, whether regarding the assets backing
any securities discussed herein or otherwise, will be superseded by the
information contained in the final prospectus for any securities actually sold
to you.
Annex E-17
<PAGE>
All information in this Term Sheet, whether regarding the assets backing any
securities discussed herein or otherwise, will be superseded by the information
contained in any final prospectus for any securities actually sold to you.
Collateral Term Sheet
Atlanta Marriott Hotel Loan
Loan Information
Original Cut-Off Date
-------- ------------
Principal Balance: $164,000,000 $161,540,596
Amount Included: $82,000,000 $80,770,298
Balance is evidenced by a separate pari passu
note that is cross-collateralized and cross
defaulted with this note.
Premium: None None
Origination Date: January 30, 1998
Interest Rate: 7.40%
Amortization: 300 months
Hyperamortization: After the Anticipated Repayment Date, interest
rate increases to 9.40%. All excess flow is used
to reduce outstanding principal balance; the
additional 2% interest is deferred and accrues
interest at the increased rate until the principal
balance is zero.
Anticipated Repayment Date: February 11, 2010
Maturity Date: February 11, 2023
Borrower/Sponsor: HMA Realty Limited Partnership, a special
purpose entity indirectly owned and controlled
by Host Marriott.
Call Protection: Prepayment lockout to the Anticipated
Repayment Date. U.S. Treasury defeasance
permitted on or after February 12, 2001.
Removal of Property The Lender may terminate the property
Manager: manager upon an event of default under the
loan.
Collection Account Lockbox upon the occurrence of certain trigger
events.
Cross-Collateralization/
Default: N/A
Mezzanine Loans/Preferred
Equity: None
Property Information
Single Asset/Portfolio: Single Asset
Property Type: Hotel
Location: Marriott Marquis
265 Peachtree Center Ave
Atlanta, GA
Year Built/Renovated: 1985/1997
The Collateral: A 51-story full-service hotel with 1,671
rooms in downtown Atlanta. It is the
largest convention hotel in Atlanta and
one of the largest non-casino hotels in the
U.S.
Property Management: A subsidiary of Marriott International
Occupancy (1/1/99): 67.3%
ADR (TTM ending 6/19/98): $132.50
Net Operating Income: $29,775,530
(TTM ending 6/19/98)
Underwritten Net Cash Flow: $25,453,287
Appraised Value: $288,000,000
Appraised Date: November 17, 1997
Cut-Off Date Loan/Room (a): $96,673
Cut-Off Date At ARD
------------ ------
LTV (a): 56.1% 42.8%
DSCR (a) (b): 1.77x
(a) Based on Cut-Off Date Principal Balance of $163,742,612.
(b) Based on Underwritten Net Cash Flow.
This material is for your private information and we are not soliciting any
action based upon it. This material is not to be construed as an offer to sell
or the solicitation of any offer to buy any security in any jurisdiction where
such an offer or solicitation would be illegal. This material is based on
information that we consider reliable, but we do not represent that it is
accurate or complete and it should not be relied upon as such. By accepting this
material the recipient agrees that it will not distribute or provide the
material to any other person. The information contained in this material may be
based on assumptions regarding market conditions and other matters as reflected
therein. We make no representations regarding the reasonableness of such
assumptions or the likelihood that any of such assumptions will coincide with
actual market conditions or events, and this material should not be relied upon
for such purposes. We and our affiliates, officers, directors, partners and
employees, including persons involved in the preparation or issuance of this
material may, from time to time, have long or short positions in, and buy and
sell, the securities mentioned therein or derivatives thereof (including
options). This material may be filed with the Securities and Exchange Commission
(the "SEC") and incorporated by reference into an effective registration
statement previously filed with the SEC under Rule 415 of the Securities Act of
1933, including in cases where the material does not pertain to securities that
are ultimately offered for sale pursuant to such registration statement.
Information contained in this material is current as of the date appearing on
this material only. Information in this material regarding any assets backing
any securities discussed herein supersedes all prior information regarding such
assets. All information in this Term Sheet, whether regarding the assets backing
any securities discussed herein or otherwise, will be superseded by the
information contained in the final prospectus for any securities actually sold
to you.
Annex E-18
<PAGE>
<TABLE>
<S> <C> <C>
ABN AMRO Commercial Mortgage Asset Trust Statement Date: 04/16/99
LaSalle National Bank First Union National Bank, Servicer Payment Date: 04/16/99
Lennar Partners, Inc., Special Servicer Prior Payment: NA
Administrator: Commercial Mortgage Pass Through Certificates Record Date: 04/09/99
Lora Peloquin (800) 246-5761 Series 1999-C1
135 S. LaSalle Street Suite 1625 WAC:
Chicago, IL 60674-4107 WAMM:
</TABLE>
<TABLE>
<CAPTION>
Number Of Pages
---------------
<S> <C>
Table Of Contents
REMIC Certificate Report
Other Related Information
Asset Backed Facts Sheets
Delinquency Loan Detail
Mortgage Loan Characteristics
Loan Level Detail
TOTAL PAGES INCLUDED IN THIS PACKAGE
Specially Serviced Loan Detail Appendix A
Modified Loan Detail Appendix B
Realized Loss Detail Appendix C
INFORMATION IS AVAILABLE FOR THIS ISSUE
FROM THE FOLLOWING SOURCES
LaSalle Web Site www.Inbabs.com
LaSalle Bulletin Board (714) 282-3990
LaSalle ASAP Fax System (714) 282-5518
ASAP #: 999
Monthly Data File Name: 0999MMYY.EXE
</TABLE>
Annex F-1
<PAGE>
<TABLE>
<S> <C> <C>
ABN AMRO Commercial Mortgage Asset Trust Statement Date: 04/16/99
LaSalle National Bank First Union National Bank, Servicer Payment Date: 04/16/99
Lennar Partners, Inc., Special Servicer Prior Payment: NA
Administrator: Commercial Mortgage Pass Through Certificates Record Date: 04/09/99
Lora Peloquin (800) 246-5761 Series 1999-C1
135 S. LaSalle Street Suite 1625 WAC:
Chicago, IL 60674-4107 WAMM:
<CAPTION>
Original Opening Principal Principal Negative Closing Interest Interest Pass-Through
Class Face Value(1) Balance Payment Adj. or Loss Amortization Balance Payment Adjustment Rate(2)
CUSIP Per $1,000 Per $1,000 Per $1,000 Per. $1,000 Per $1,000 Per $1,000 Per $1,000 Per $1,000 Next Rate(3)
- ----- ------------ ---------- ---------- ----------- ------------ ---------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
Notes: (1) N denotes notional balance not included in total
(2) Interest Paid minus Interest Adjustment minus Deferred Interest
equals Accrual
(3) Estimated
Annex F-2
<PAGE>
<TABLE>
<S> <C> <C>
ABN AMRO Commercial Mortgage Asset Trust Statement Date: 04/16/99
LaSalle National Bank First Union National Bank, Servicer Payment Date: 04/16/99
Lennar Partners, Inc., Special Servicer Prior Payment: NA
Administrator: Commercial Mortgage Pass Through Certificates Record Date: 04/09/99
Lora Peloquin (800) 246-5761 Series 1999-C1
135 S. LaSalle Street Suite 1625
Chicago, IL 60674-4107 Other Related Information
<CAPTION>
Amount of Available Funds allocable to principal:
Principal Distribution Amount
P&I Advances made by: Beginning Current Ending
Unreimbursed Period Reimbursed Unreimbursed
------------- ------- ---------- ------------
<S> <C> <C> <C> <C>
Servicer
Trustee
Fiscal Agent
------------- ------- ---------- ------------
Total P&I Advances 0.00 0.00 0.00 0.00
------------- ------- ---------- ------------
</TABLE>
Specially Serviced Mortgage Loans:
Amount of Property Advances made during Collection Period
Amount of P&I Advances made during Collection Period
Aggregate Amount of Property Advances remaining Unreimbursed
Aggregate Amount of P&I Advances remaining Unreimbursed
Number of Outstanding Loans
Outstanding Principal Balance
Current Amount of Prepayment Interest Shortfalls
in excess of Servicer Prepayment Interest Shortfalls
Annex F-3
<PAGE>
<TABLE>
<S> <C> <C>
ABN AMRO Commercial Mortgage Asset Trust Statement Date: 04/16/99
LaSalle National Bank First Union National Bank, Servicer Payment Date: 04/16/99
Lennar Partners, Inc., Special Servicer Prior Payment: NA
Administrator: Commercial Mortgage Pass Through Certificates Record Date: 04/09/99
Lora Peloquin (800) 246-5761 Series 1999-C1
135 S. LaSalle Street Suite 1625
Chicago, IL 60674-4107 Other Related Information
<CAPTION>
Summary of Mortgage Loans Repurchased by Seller or Liquidated or Disposed of:
Amounts
Included in
Loan Repurchase Liquidation Other Available
Number Proceeds Proceeds Proceeds Funds
- ------ ---------- ----------- -------- -----------
<S> <C> <C> <C> <C>
1.
2.
3.
- ------------- ------- ---------- ------------ -----------
Totals 0.00 0.00 0.00 0.00
- ------------- ------- ---------- ------------ -----------
</TABLE>
Summary of Expenses:
Current Period Servicing Fees
Current Period Trustee Fees
Current Period Special Servicing Fees
Principal Recovery Fees
Other Servicing Compensation
Total
Prepayment Premiums received during the Collection Period
Default Interest received during the Collection Period
Net Default Interest received during the Collection Period
Excess Interest received during the Collection Period
Trust Fund Expenses
Current Realized Losses on Mortgage Loans
Cumulative Realized Losses on MOrtgage Loans
Annex F-4
<PAGE>
<TABLE>
<S> <C> <C>
ABN AMRO Commercial Mortgage Asset Trust Statement Date: 04/16/99
LaSalle National Bank First Union National Bank, Servicer Payment Date: 04/16/99
Lennar Partners, Inc., Special Servicer Prior Payment: NA
Administrator: Commercial Mortgage Pass Through Certificates Record Date: 04/09/99
Lora Peloquin (800) 246-5761 Series 1999-C1
135 S. LaSalle Street Suite 1625
Chicago, IL 60674-4107 Other Related Information
<CAPTION>
Remaining
Remaining Current Unreimbursed
Current Unreimbursed Reduction Reduction Reduction
Interest Interest Interest Interest Interest
Class Shortfall Shortfall Shortfall Shortfall Pass-Thru Rate
<S> <C> <C> <C> <C> <C>
</TABLE>
Annex F-5
<PAGE>
<TABLE>
<S> <C> <C>
ABN AMRO Commercial Mortgage Asset Trust Statement Date: 04/16/99
LaSalle National Bank First Union National Bank, Servicer Payment Date: 04/16/99
Lennar Partners, Inc., Special Servicer Prior Payment: NA
Administrator: Commercial Mortgage Pass Through Certificates Record Date: 04/09/99
Lora Peloquin (800) 246-5761 Series 1999-C1
135 S. LaSalle Street Suite 1625
Chicago, IL 60674-4107 Other Related Information
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
REO Property sold of disposed of during the related Collection Period
Portion Final
Realized Included in Recovery
Loan Loss Sale Other Available Determination
Number Attributable Proceeds Proceeds Funds Date
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1
2
3
- -------------------------------------------------------------------------------------------------------
Totals
- -------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
REO Property included in the Trust
Most Aggregate Aggregate Portion
Recent Amount Amount Included in
Loan Appraisal of Net of Other Available
Number Valuation Income Revenues Funds
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1
2
3
- ----------------------------------------------------------------------------------------------------------
Totals
- ----------------------------------------------------------------------------------------------------------
</TABLE>
Annex F-6
<PAGE>
<TABLE>
<S> <C> <C>
ABN AMRO Commercial Mortgage Asset Trust Statement Date: 04/16/99
LaSalle National Bank First Union National Bank, Servicer Payment Date: 04/16/99
Lennar Partners, Inc., Special Servicer Prior Payment: NA
Administrator: Commercial Mortgage Pass Through Certificates Record Date: 04/09/99
Lora Peloquin (800) 246-5761 Series 1999-C1
135 S. LaSalle Street Suite 1625
Chicago, IL 60674-4107 Other Related Information
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -------------------------------------------------------------------------------------------------
Mortgaged Properties that became REO during the preceding calendar month
Unpaid
Debt Principal
Service Stated Balance
Loan Property Coverage Principal as of REO
Number City State Type Ratio Balance Date
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------
Totals
- -------------------------------------------------------------------------------------------------
<CAPTION>
-------------------------------------------------------------------------
Appaisal Reduction Amounts
Loan Curent Total
Number Period Reduction
- ---------------------------------------------------------------------------
<S> <C> <C>
1
2
3
- ---------------------------------------------------------------------------
Totals # 0.00
- ---------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Annex F-7
<PAGE>
<TABLE>
<S> <C> <C>
ABN AMRO Commercial Mortgage Asset Trust Statement Date: 04/16/99
LaSalle National Bank First Union National Bank, Servicer Payment Date: 04/16/99
Lennar Partners, Inc., Special Servicer Prior Payment: NA
Administrator: Commercial Mortgage Pass Through Certificates Record Date: 04/09/99
Lora Peloquin (800) 246-5761 Series 1999-C1
135 S. LaSalle Street Suite 1625
Chicago, IL 60674-4107
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Distribution Delinq 1 Month Delinq 2 Months Delinq 3+ Months Foreclosure/Bankruptcy
Date # Balance # Balance # Balance # Balance
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
04/16/99
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Distribution REO Modifications Prepayments Curr Weighted Avg.
Date # Balance # Balance # Balance Coupon Remit
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Note: Foreclosure, Bankcruptcy and REO Totals are not included
in the delinquency aging categories
Annex F-8
<PAGE>
<TABLE>
<S> <C> <C>
ABN AMRO Commercial Mortgage Asset Trust Statement Date: 04/16/99
LaSalle National Bank First Union National Bank, Servicer Statement Date: 04/16/99
Lennar Partners, Inc., Special Servicer Prior Payment: NA
Administrator: Commercial Mortgage Pass Through Certificates Record Date: 04/09/99
Lora Peloquin (800) 246-5761 Series 1999-C1
135 S. LaSalle Street #Suite 1625
Chicago, IL 60674-4107
</TABLE>
<TABLE>
<CAPTION>
Delinquent Loan Detail
- ------------------------------------------------------------------------------------------------------------------------------------
Paid Outstanding Out. Property Special
Disclosure Doc Thru Current P&I P&I Protection Servicer Foreclosure Bankruptcy REO
Control # Group Date Advance Advances** Advances Transfer Date Date Date Date
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
A. P&I Advance - Loan in Grace Period 2. P&I Advance - Loan delinquent 2 months 7. P&I Advance - Loan in
B. P&I Advance - Late Payment but < one month 3. P&I Advance - Loan delinquent 3 months Foreclosure
delinq or More 8. P&I Advance - Loan in
1. P&I Advance - Loan delinquent 1 month 4. Matured Balloon/Assumed Scheduled Bankruptcy
Payment 9. P&I Advance - REO Loan
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
** Outstanding P&I Advances include the current period P&I Advance
Annex F-9
<PAGE>
<TABLE>
<S> <C> <C>
ABN AMRO Commercial Mortgage Asset Trust Statement Date: 04/16/99
LaSalle National Bank First Union National Bank, Servicer Payment Date: 04/16/99
Lennar Partners, Inc., Special Servicer Prior Payment: NA
Administrator: Commercial Mortgage Pass Through Certificates Record Date: 04/09/99
Lora Peloquin (800) 246-5761 Series 1999-C1
135 S. LaSalle Street Suite 1625
Chicago, IL 60674-4107
</TABLE>
<TABLE>
<CAPTION>
Distribution of Principal Balances
- ------------------------------------------
Current Number
Scheduled of Scheduled Based on
Balances Loans Balance Balance
- --------- ----- --------- --------
<S> <C> <C> <C>
----- ------- ------
Total 0 0 0.00%
===== ======= ======
</TABLE>
Average Scheduled Balance is
Maximum Scheduled Balance is
Minimum Scheduled Balance is
<TABLE>
<CAPTION>
Distribution of Property Types
- -------------------------------------------
Number
Property of Scheduled Based on
Types Loans Balance Balance
- --------- -------- --------- --------
<S> <C> <C> <C>
----- ------- ------
Total 0 0 0.00%
===== ======= ======
<CAPTION>
Distribution of Mortgage Interest Rates
- -----------------------------------------------------------
Current Mortgage Number of Scheduled Based on
Interest Rate Loans Balance Balance
- ----------------- --------- --------- ---------
<S> <C> <C> <C>
-------- ------- --------
Total 0 0 0.00%
======== ======= ========
<CAPTION>
Geographic Distribution
- -----------------------------------------
Number Based
Geographic of Scheduled on
Location Loans Balance Balance
- ---------- ------ --------- -------
<S> <C> <C> <C>
----- ----- -------
Total 0 0 0.00%
===== ====== =======
</TABLE>
Annex F-10
<PAGE>
<TABLE>
<S> <C> <C>
ABN AMRO Commercial Mortgage Asset Trust Statement Date: 04/16/99
LaSalle National Bank First Union National Bank, Servicer Payment Date: 04/16/99
Lennar Partners. Inc., Special Servicer Prior Payment: NA
Administrator: Commercial Mortgage Pass Through Certificates Record Date: 04/09/99
Lora Peloquin (800) 246-5761 Series 1999-Cl
135 S. LaSalle Street Suite 1625
Chicago, IL 60674-4107
</TABLE>
Loan Seasoning
Number Scheduled Based on
Number of Years of Loans Balance Balance
- --------------- -------- --------- --------
1 year or less
1+ to 2 years
2+ to 3 years
3+ to 4 years
4+ to 5 years
5+ to 6 years
6+ to 7 years
7+ to 8 years
9+ to 9 years
9+ to 10 Years
10 Years or more
Total 0 0 0.00%
Weighted Average Seasoning is
Distribution of Remaining Term
Fully Amortizing
- ------------------------------------------------------------
Fully Amortizing Number Scheduled Based on
Mortgage Loans of Loans Balance Balance
- ---------------- -------- --------- --------
120 months or less
121 to 180 months
181 to 240 months
241 to 360 months
Total 0 0 0.00%
Weighted Average Months to maturity is
Distribution of DSCR
Debt Service Number Scheduled Based on
Coverage Ratio (1) of Loans Balance Balance
- ------------------ -------- --------- --------
Total 0 0 0.00%
Weighted Average Debt Service Coverage Ratio is
Distribution of Amortization Type
Number Scheduled Based on
Amortization Type of Loans Balance Balance
- ----------------- -------- --------- --------
Total 0 0 0.00%
Distribution of Remaining Term
Ballon Loans
Balloon Number Scheduled Based on
Mortgage Loans of Loans Balance Balance
- -------------- -------- --------- --------
12 months or less
13 to 24 months
25 to 36 months
37 to 48 months
49 to 60 months
61 to 120 months
121 to 180 months
181 to 360 months
Total 0 0 0.00%
Weighted Average Mouths to Maturity is
NOI Aging
Number Scheduled Based on
NOI Date of Loans Balance Balance
- ---------------- -------- --------- --------
1 year or less
1 to 2 years
2 years or more
Unknown
Total 0 0 0.00%
(1) Debt Service Coverage Ratios are calculated as described in the prospectus,
values are updated periodically as new NOI figures became available from
borrowers on an asset level.
Neither the Trustee, Servicer, Special Servicer or Underwriter makes any
representation as to the accuracy of the data provided by the borrower for this
calculation.
Annex F-11
<PAGE>
<TABLE>
<S> <C> <C>
ABN AMRO Commercial Mortgage Asset Trust Statement Date: 04/16/99
LaSalle National Bank First Union National Bank, Servicer Payment Date: 04/16/99
Lennar Partners, Inc., Special Servicer Prior Payment: NA
Administrator: Commercial Mortgage Pass Through Certificates Record Date: 04/09/99
Lora Peloquin (800) 246-5761 Series 1999-C1
135 S. LaSalle Street Suite 1625
Chicago, IL 60674-4107
</TABLE>
Loan Level Detail
<TABLE>
<CAPTION>
Property Operating Ending Loss
Disclosure Type Maturity Statement Principal Note Scheduled Prepayment Status
Control # Group Code Date DSCR Date State Balance Rate P&I Prepayment Date Code(1)
---------- ----- -------- -------- ---- ---------- ----- --------- ----- ---------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
* NOI and DSCR, if available and reportable under the terms of the trust
agreement, are based on information obtained from the related borrower, and
no other party to the agreement shall be held liable for the accuracy or
methodology used to determine such figures.
<TABLE>
<S> <C> <C> <C>
(1) Legend: A. P&I Adv - in Grace Period 1. P&I Adv - delinquent 1 month 3. P&I Adv - delinquent 3+ months
B. P&I Adv - < one month delinq 2. P&I Adv - delinquent 2 months 4. Mat. Balloon/Assumed P&I
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
(1) Legend: 5. Prepaid in Full 7. Foreclosure 9. REO 11. Modification
6. Specially Serviced 8. Bankruptcy 10. DPO
</TABLE>
Annex F-12
<PAGE>
<TABLE>
<S> <C> <C>
ABN AMRO Commercial Mortgage Asset Trust Statement Date: 04/16/99
LaSalle National Bank First Union National Bank, Servicer Payment Date: 04/16/99
Lennar Partners, Inc., Special Servicer Prior Payment: NA
Administrator: Commercial Mortgage Pass Through Certificates Record Date: 04/09/99
Lora Peloquin (800) 246-5761 Series 1999-C1
135 S. LaSalle Street Suite 1625
Chicago, IL 60674-4107
<CAPTION>
Specially Serviced Loan Detail
- ------------------------------------------------------------------------------------------------------------------------------------
Beginning Specially
Disclosure Scheduled Interest Maturity Property Serviced
Control # Balance Rate Date Type Status Code(1) Comments
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Legend:
1) Request for waiver of Prepayment Penalty
2) Payment default
3) Request for Loan Modification or Workout
4) Loan with Borrower Bankruptcy
5) Loan in Process of Foreclosure
6) Loan now REO Property
7) Loans Paid Off
8) Loans Returned to Master Servicer
- --------------------------------------------------------------------------------
Appendix A
Annex F-13
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
ABN AMRO Commercial Mortgage Asset Trust Statement Date: 04/16/99
LaSalle National Bank First Union National Bank, Servicer Payment Date: 04/16/99
Lennar Partners, Inc., Special Servicer Prior Payment: NA
Administrator: Commercial Mortgage Pass Through Certificates Record Date: 04/09/99
Lora Peloquin (800) 246-5761 Series 1999-C1
135 S. LaSalle Street Suite 1625
Chicago, IL 60674-4107
<CAPTION>
Modified Loan Detail
- ------------------------------------------------------------------------------------------------------------------------------------
Disclosure Modification Modification
Control # Date Description
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Appendix B
Annex F-14
<PAGE>
<TABLE>
<S> <C> <C>
ABN AMRO Commercial Mortgage Asset Trust Statement Date: 04/16/99
LaSalle National Bank First Union National Bank, Servicer Payment Date: 04/16/99
Lennar Partners, Inc., Special Servicer Prior Payment: NA
Administrator: Commercial Mortgage Pass Through Certificates Record Date: 04/09/99
Lora Peloquin (800) 246-5761 Series 1999-C1
135 S. LaSalle Street Suite 1625
Chicago, IL 60674-4107
</TABLE>
<TABLE>
<CAPTION>
Realized Loss Detail
- ------------------------------------------------------------------------------------------------------------------------------------
Beginning Gross Proceeds Aggregate Net Net Proceeds
Dist Disclosure Appraisal Appraisal Scheduled Gross as a % of Liquidation Liquidation as a % of Realized
Date Control # Date Value Balance Proceeds Sched Principal Expenses * Proceeds Sched. Balance Loss
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Current Total 0.00 0.00 0.00 0.00 0.00
Cumulative 0.00 0.00 0.00 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Aggregate liquidation expenses also include outstanding
P&I advances and unpaid servicing fees, unpaid trustee fees, etc.
Appendix C
Annex F-15
<PAGE>
[This page intentionally left blank]
<PAGE>
ANNEX G
First Union National Bank Statement Date: 04/17/99
Administrator: Payment Date: 04/17/99
[ ] Prior Payment: NA
One First Union Center Record Date: 04/09/99
TW9
301 South College Street
Charlotte, North Carolina 28288-1075
COMMERCIAL MORTGAGE ASSET TRUST
FIRST UNION NATIONAL BANK, SERVICER
LENNAR PARTNERS, INC., SPECIAL SERVICER
SERVICER REPORTS
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES,
SERIES 1999-C1
<TABLE>
<CAPTION>
TABLE OF CONTENTS NUMBER OF PAGES
- -------------------------------------------------------------------------------------------- ---------------
<S> <C>
Form of Comparative Financial Status Report................................................. Annex G-1
Form of Delinquent Loan Status Report....................................................... Annex G-2
Form of Historical Loan Modification Report................................................. Annex G-3
Form of Historical Loss Estimate Report..................................................... Annex G-4
Form of REO Status Report................................................................... Annex G-5
Form of Watch List.......................................................................... Annex G-6
Form of Loan Payoff Notification Report..................................................... Annex G-7
TOTAL PAGES INCLUDED IN THIS PACKAGE........................................................
</TABLE>
Annex G
<PAGE>
COMMERCIAL MORTGAGE ASSET TRUST ("CMAT")
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 1999-C1
FIRST UNION NATIONAL BANK, AS SERVICER
COMPARATIVE FINANCIAL STATUS REPORT
AS OF
<TABLE>
<CAPTION>
ORIGINAL UNDERWRITING INFORMATION
BASIS YEAR
----------------------------------------------------
LAST
PROPERTY SCHEDULED ANNUAL FINANCIAL
PRO SUP INSPECT LOAN PAID THRU DEBT INFO AS TOTAL
LOAN# CITY ST DATE BALANCE DATE SERVICE OF DATE % OCC REVENUE $ NOI (1) DSCR
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
LIST ALL LOANS CURRENTLY IN DEAL WITH OR WITHOUT
INFORMATION LARGEST TO SMALLEST LOAN
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL: $ $ WA $ $ WA
- ----------------------------------------------------------------------------------------------------------------------------------
RECEIVED
- ----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL INFORMATION: LOANS BALANCE
- ----------------------------------------------------------------------------------------------------------------------------------
# % $ %
- ----------------------------------------------------------------------------------------------------------------------------------
CURRENT FULL YEAR:
- ----------------------------------------------------------------------------------------------------------------------------------
CURRENT FULL YR. RECEIVED WITH DSC < 1:
- ----------------------------------------------------------------------------------------------------------------------------------
PRIOR FULL YEAR:
- ----------------------------------------------------------------------------------------------------------------------------------
PRIOR FULL YR. RECEIVED WITH DSC < 1:
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
2ND PRECEDING ANNUAL OPERATING INFORMATION PRECEDING ANNUAL OPERATING INFORMATION
- ----------------------------------------------------------------------------------------------------------------------------------
AS OF NORMALIZED AS OF NORMALIZED
- ----------------------------------------------------------------------------------------------------------------------------------
LAST LAST FINANCIAL
PROPERTY FINANCIAL PROPERTY INFO
PRO SUP INSPECT INFO AS TOTAL NORMALIZED INSPECT AS OF TOTAL NORMALIZED
LOAN# DATE OF DATE % OCC REVENUE $ NOI (1) OSCR DATE DATE % OCC REVENUE $ NOI
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
LIST ALL LOANS CURRENTLY IN DEAL WITH OR
WITHOUT INFORMATION TO SMALLEST LOAN
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL: WA $ WA $ $
- ----------------------------------------------------------------------------------------------------------------------------------
REQUIRED
LOANS BALANCE
# % $ %
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
TRAILING FINANCIAL INFORMATION (2) NET CHANGE
MONTH REPORTED NORMALIZED PRECEDING & BASIS
- ----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL
INFO
PRO SUP AS OF TOTAL % TOTAL % (1)
LOAN# (1) DSCR DATE % OCC REVENUE $ NOI % DSCR % OCC REVENUE DSCR
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
TOTAL: WA WA $ $ WA WA $ WA
</TABLE>
(1) DSCR should match to Operating Statement and is normally calculated using
NOI/Debt Service.
(2) Net Change should compare the latest year to the underwriting year
Annex G-1
<PAGE>
COMMERCIAL MORTGAGE ASSET TRUST ("CMAT")
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 1999-C1
FIRST UNION NATIONAL BANK, AS SERVICER
DELINQUENT LOAN STATUS REPORT
AS OF
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
SQ FT PAID SCHEDULED
PROPERTY OR THRU LOAN
PROSPECTUS ID SHORT NAME (WHEN APPROPRIATE) TYPE CITY STATE UNITS DATE BALANCE
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
90+ DAYS DELINQUENT
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
60 DAYS DELINQUENT
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
30 DAYS DELINQUENT
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
CURRENT & AT SPECIAL SERVICER
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
OTHER
TOTAL P&I TOTAL ADVANCES CURRENT CURRENT
ADVANCES EXPENSES (TAXES & TOTAL MONTHLY INTEREST MATURITY LTM NOI
PROSPECTUS ID TO DATE TO DATE ESCROW) EXPOSURE P&I RATE DATE DATE LTM NOI
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
90+ DAYS DELINQUENT
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
60 DAYS DELINQUENT
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
30 DAYS DELINQUENT
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
CURRENT & AT SPECIAL SERVICER
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
APPRAISAL
BPO OR LOSS USING DATE
LTM VALUATION INTERNAL 92% APPR. ESTIMATED TRANSFER CLOSING NOI
PROSPECTUS ID DSCR VALUE DATE VALUE** OR BPO(F) RECOVERY % DATE DATE FILED
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
90+ DAYS DELINQUENT
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
60 DAYS DELINQUENT
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
30 DAYS DELINQUENT
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
CURRENT & AT SPECIAL SERVICER
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
EXPECTED
FCL SALE WORK OUT
PROSPECTUS ID DATE STRATEGY COMMENTS
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
90+ DAYS DELINQUENT
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
60 DAYS DELINQUENT
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
30 DAYS DELINQUENT
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
CURRENT & AT SPECIAL SERVICER
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
FCL--Foreclosure
LTM--Latest 12 Months either Last Annual or Trailing 12 months
* Work out Strategy should match the CSSA Loan file using abbreviated words in
place of a code number such as (FCL--In Foreclosure, MOD--Modification,
DPO--Discount Payoff, NS--Note Sale, BK--Bankruptcy, PP--Payment Plan,
TBD--To Be Determined etc...)
** App--Appraisal, BPO--Broker opinion, Int.--Internal Value
Annex G-2
<PAGE>
COMMERCIAL MORTGAGE ASSET TRUST ("CMAT")
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 1999-C1
FIRST UNION NATIONAL BANK, AS SERVICER
HISTORICAL LOAN MODIFICATION REPORT
AS OF
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
MOD /
PROSPECTUS EXTENTION
ID CITY STATE FLAG
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL FOR ALL LOANS:
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL FOR LOANS IN CURRENT MONTH:
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
MODIFICATIONS:
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
MATURITY DATE EXTENSIONS:
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL.
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
BALANCE
WHEN SENT TO BALANCE AT THE
PROSPECTUS SPECIAL EFFECTIVE DATE OF # MTHS FOR
ID EFFECT DATE SERVICER REHABILITATION OLD RATE RATE CHANGE NEW RATE
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL FOR ALL LOANS:
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL FOR LOANS IN CURRENT MONTH:
- --------------------------------------------------------------------------------------------------------------------------------
# OF LOANS $ BALANCE
- --------------------------------------------------------------------------------------------------------------------------------
MODIFICATIONS:
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
MATURITY DATE EXTENSIONS:
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL.
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL # MTHS (1) REALIZED
PROSPECTUS NEW FOR CHANGE LOSS TO TRUST
ID OLD P&I NEW P&I OLD MATURITY MATURITY OF MOD $
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL FOR ALL LOANS:
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL FOR LOANS IN CURRENT MONTH:
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
MODIFICATIONS:
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
MATURITY DATE EXTENSIONS:
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL.
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
(2) EST.
FUTURE
INTEREST LOSS
TO TRUST $
PROSPECTUS (RATE
ID REDUCTION) COMMENT
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL FOR ALL LOANS:
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL FOR LOANS IN CURRENT MONTH:
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
MODIFICATIONS:
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
MATURITY DATE EXTENSIONS:
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL.
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* The information in these columns is from a particular point in time and
should not change on this report once assigned.
(1) Actual principal loss taken by bonds.
(2) Expected future loss due to a rate reduction. This is just an estimate
calculated at the time of the modification.
Annex G-3
<PAGE>
COMMERCIAL MORTGAGE ASSET TRUST ("CMAT")
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 1999-C1
FIRST UNION NATIONAL BANK, AS SERVICER
HISTORICAL LOSS ESTIMATE REPORT
AS OF
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
LATEST
SHORT NAME % APPRAISAL OR
PROSPECTUS (WHEN PROPERTY RECEIVED BROKERS EFFECT DATE
ID APPROPRIATE) TYPE CITY STATE FROM SALE OPINION OF SALE
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL ALL LOANS:
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
CURRENT MONTH ONLY:
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
NET AMT
PROSPECTUS RECEIVED SCHEDULED TOTAL P&I TOTAL SERVICING
ID SALES PRICE FROM SALE BALANCE ADVANCED EXPENSES FEES EXPENSE NET PROCEEDS
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL ALL LOANS:
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
CURRENT MONTH ONLY:
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
DATE MINOR TOTAL LOSS LOSS % OF
PROSPECTUS ACTUAL LOSSES DATE LOSS MINOR ADJ TO ADJ PASSED WITH SCHEDULED
ID PASSED THRU PASSED THRU TRUST THRU ADJUSTMENT BALANCE
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL ALL LOANS:
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
CURRENT MONTH ONLY:
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Annex G-4
<PAGE>
COMMERCIAL MORTGAGE ASSET TRUST ("CMAT")
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 1999-C1
FIRST UNION NATIONAL BANK, AS SERVICER
REO STATUS REPORT
AS OF
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL OTHER
SQ FT PAID SCHEDULED P&I TOTAL ADVANCES
PROSPECTUS PROPERTY PROPERTY OR THRU LOAN ADVANCES EXPENSES (TAXES &
ID NAME TYPE CITY STATE UNITS DATE BALANCE TO DATE TO DATE ESCROW)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
(1) USE THE FOLLOWING CODES: App.-Appraisal; BPO-Brokers Opinion; Int-Internal Value
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
LOSS
CAP VALUE APPRAISAL USING
CURRENT LTM LTM RATE USING BPO OR 92%
PROSPECTUS TOTAL MONTHLY MATURITY NOI NOI/ ASSIGN VALUATION NOI & INTERNAL APPR. OR
ID EXPOSURE P&I DATE DATE DSC *** DATE CAP RATE VALUE** BPO
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
(1) USE THE FOLLOWING CODES: App.-Appraisal; BPO-Brokers Opinion; Int-Internal Value
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL
ESTIMATED APPRAISAL REO PENDING
PROSPECTUS RECOVERY REDUCTION TRANSFER ACQUISITION RESOLUTION
ID % REALIZED DATE DATE DATE COMMENTS
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
(1) USE THE FOLLOWING CODES: App.-Appraisal; BPO-Brokers Opinion; Int-Internal Value
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Annex G-5
<PAGE>
COMMERCIAL MORTGAGE ASSET TRUST ("CMAT")
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 1999-C1
FIRST UNION NATIONAL BANK, AS SERVICER
WATCH LIST
AS OF
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
PROSUP PROPERTY CURRENT PAID LTM*
LOAN SHORT PROPERTY SCHEDULED THRU MATURITY CURRENT
NUMBER NAME TYPE CITY STATE BALANCE DATE DATE DSCR
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
$0.00
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL:
- ----------------------------------------------------------------------------------------------------------------------------------
*LTM- LAST 12 MONTHS EITHER TRAILING OR LAST ANNUAL
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
PROSUP
LOAN
NUMBER COMMENT / REASON ON WATCH LIST
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
TOTAL:
- ----------------------------------------------------------------------------------------------------------------------------------
*LTM- LAST 12 MONTHS EITHER TRAILING OR LAST ANNUAL
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Annex G-6
<PAGE>
COMMERCIAL MORTGAGE ASSET TRUST ("CMAT")
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 1999-C1
LOAN PAYOFF NOTIFICATION REPORT
AS OF
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
S55 P7
SHORT NAME S61 SCHEDULED
S4 (WHEN PROPERTY S58 LOAN
PROSPECTUS ID APPROPRIATE) TYPE STATE BALANCE
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
Scheduled Payments
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Unscheduled Payments
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Total:
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Servicer Estimated Information
P8 P10 P11 EXPECTED
S4 PAID THRU CURRENT MATURITY P54 YIELD PAYMENT
PROSPECTUS ID DATE INTEREST RATE DATE LTM DSCR MAINTENANCE DATE
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
Scheduled Payments
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Unscheduled Payments
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Total:
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
EXPECTED
S4 DISTRIBUTION
PROSPECTUS ID DATE
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Scheduled Payments
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Unscheduled Payments
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Total:
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Annex G-7
<PAGE>
PROSPECTUS DATED MARCH 1, 1999
(SUBJECT TO COMPLETION)
MORTGAGE PASS-THROUGH CERTIFICATES
(ISSUABLE IN SERIES)
ASSET SECURITIZATION 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 various types of multifamily or commercial
mortgage loans and/or installment contracts for the sale of multifamily or
commercial properties (the "Mortgage Loans"), mortgage-backed securities
evidencing interests therein or secured thereby (the "MBS"), or a combination of
Mortgage Loans and MBS (with respect to any series, collectively, "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 "Risk Factors" herein and such information as may be set forth under the
caption "Risk Factors" 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" or "financial asset
securitization investment trusts" 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 "RISK FACTORS" HEREIN COMMENCING ON PAGE 11.
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 MARCH 1, 1999
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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 or
FASIT elections will be made and designation of the regular interests, residual
interests and ownership interests, as applicable; (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, Northwestern Atrium Center, 500 West Madison,
Suite 1400, Chicago, Illinois 60661; and New York Regional Office, 75 Park
Place, 14th Floor, New York, New York 10007. 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.
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.
2
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TABLE OF CONTENTS
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Prospectus Supplement....................................................... 2
Available Information....................................................... 2
Incorporation of Certain Information by Reference........................... 2
Summary of Prospectus....................................................... 7
Risk Factors................................................................ 11
Limited Liquidity......................................................... 11
Limited Assets............................................................ 11
Average Life of Certificates; Prepayments; Yields......................... 11
Limited Nature of Ratings................................................. 12
Risks Associated with Certain Mortgage Loans and Mortgaged Properties..... 12
Retail Properties......................................................... 13
Multifamily Properties.................................................... 13
Office Properties......................................................... 14
Hotel Properties.......................................................... 14
Senior Housing/Healthcare Properties...................................... 15
Mobile Home Park Properties............................................... 15
Industrial Properties..................................................... 16
Balloon Payments.......................................................... 16
Substitution of Mortgage Assets........................................... 17
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....................... 22
Mortgage Underwriting Standards and Procedures............................ 22
Payment Provisions of the Mortgage Loans.................................. 23
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
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Removal and Addition of Mortgage Assets................................... 27
Foreclosures and Payment Plans............................................ 27
Due-on-Sale and Due-on-Encumbrance Clauses................................ 27
The Depositor............................................................... 27
Description of the Certificates............................................. 28
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..................................................... 44
The Trustee............................................................... 45
Description of Credit Support............................................... 45
General................................................................... 45
Subordinate Certificates.................................................. 45
Cross-Support Provisions.................................................. 45
Insurance or Guarantees with Respect to the Mortgage Assets............... 46
Letter of Credit.......................................................... 46
Insurance Policies and Surety Bonds....................................... 46
Certificate Guarantee Insurance........................................... 46
Reserve Funds............................................................. 46
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
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Non-Judicial Foreclosure/Power of Sale.................................... 51
Limitations on Lender's Rights............................................ 51
Rights of Redemption...................................................... 53
Anti-Deficiency Legislation............................................... 53
Leasehold Risks........................................................... 54
Bankruptcy Laws........................................................... 54
Environmental Legislation................................................. 56
Due-on-Sale and Due-on-Encumbrance........................................ 56
Acceleration on Default................................................... 57
Default Interest, Prepayment Charges and Prepayments...................... 57
Applicability of Usury Laws............................................... 57
Alternative Mortgage Instruments.......................................... 57
Soldiers' and Sailors' Civil Relief Act of 1940........................... 58
Forfeitures in Drug and RICO Proceedings.................................. 58
Certain Laws and Regulations.............................................. 58
Type of Mortgaged Property................................................ 58
Americans with Disabilities Act........................................... 59
Federal Income Tax Consequences............................................. 59
REMIC Certificates.......................................................... 59
General................................................................... 59
Status of REMIC Certificates.............................................. 60
Qualification as a REMIC.................................................. 60
Taxation of REMIC Regular Certificates.................................... 62
General................................................................ 62
Original Issue Discount................................................ 62
Acquisition Premium.................................................... 64
Variable Rate REMIC Regular Certificates............................... 64
Deferred Interest...................................................... 65
Market Discount........................................................ 65
Premium................................................................ 66
Election to Treat All Interest Under the Constant Yield Method......... 66
Sale or Exchange of REMIC Regular Certificates......................... 66
Treatment of Losses.................................................... 67
Taxation of Residual Certificates......................................... 67
Taxation of REMIC Income............................................... 67
Basis and Losses....................................................... 68
Treatment of Certain Items of REMIC Income and Expense................. 69
Limitations on Offset or Exemption of REMIC Income..................... 69
Tax-Related Restrictions on Transfer of Residual Certificates.......... 70
Sale or Exchange of a Residual Certificate............................. 72
Mark to Market Regulations............................................. 72
Taxes That May Be Imposed on the REMIC Pool............................... 73
Prohibited Transactions................................................ 73
Contributions to the REMIC Pool After the Startup Day.................. 73
Net Income from Foreclosure Property................................... 73
Liquidation of the REMIC Pool............................................. 73
Administrative Matters.................................................... 73
Limitations on Deduction of Certain Expenses.............................. 74
Taxation of Certain Foreign Investors..................................... 74
REMIC Regular Certificates............................................. 74
Residual Certificates.................................................. 75
Backup Withholding........................................................ 75
Reporting Requirements.................................................... 75
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FASIT Certificates.......................................................... 76
General................................................................... 76
Status of FASIT Regular Certificates...................................... 76
Qualifications as a FASIT................................................. 77
Taxation of FASIT Regular Certificates.................................... 78
Prohibited Transactions Tax............................................... 78
Taxation of Certain Foreign Investors..................................... 78
Backup Withholding........................................................ 78
Reporting Requirements.................................................... 78
Grantor Trust Certificates.................................................. 79
Standard Certificates..................................................... 79
General................................................................ 79
Tax Status............................................................. 79
Premium and Discount................................................... 80
Recharacterization of Servicing Fees................................... 80
Sale or Exchange of Standard Certificates.............................. 81
Stripped Certificates..................................................... 81
General................................................................ 81
Status of Stripped Certificates........................................ 82
Taxation of Stripped Certificates...................................... 82
Reporting Requirements and Backup Withholding............................. 83
Taxation of Certain Foreign Investors..................................... 84
ERISA Considerations........................................................ 84
General................................................................... 84
Certain Requirements Under ERISA.......................................... 84
General................................................................ 84
Parties in Interest/Disqualified Persons.................................. 84
Delegation of Fiduciary Duty.............................................. 85
Administrative Exemptions................................................. 85
Governmental Plans........................................................ 85
Unrelated Business Taxable Income; Residual Certificates.................. 85
Legal Investment............................................................ 86
Method of Distribution...................................................... 87
Legal Matters............................................................... 89
Financial Information....................................................... 89
Rating...................................................................... 89
Index of Principal Definitions.............................................. 90
</TABLE>
6
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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
Asset Securitization Corporation, a wholly-owned subsidiary of Nomura Asset
Capital Corporation. 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/or commercial mortgage loans and/or
installment contracts ("Installment Contracts") for the sale of commercial
or multifamily properties (collectively, the "Mortgage Loans"), mortgage
pass-through certificates or other mortgage-backed securities evidencing
interests in or secured by Mortgage Loans (collectively, the "MBS") or a
combination of Mortgage Loans and MBS. 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, warehouse facilities,
mini-warehouse facilities or self-storage facilities, 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
7
<PAGE>
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 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 "Risk
Factors--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 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
8
<PAGE>
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 "Risk Factors--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 "Risk Factors--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 "Risk Factors--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 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".
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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 "Risk Factors--Book-Entry Registration" and
"Description of the Certificates--Book-Entry Registration and Definitive
Certificates".
RISK FACTORS
An investment in the Offered Certificates may include certain material
risks. See "Risk Factors" herein and 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") or as one or more "financial asset securitization
investment trusts" (each a "FASIT") 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 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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RISK FACTORS
Investors should consider, in connection with the purchase of Offered
Certificates, among other things, the following factors and certain other
factors as may be set forth in "Risk Factors" in the related Prospectus
Supplement.
LIMITED LIQUIDITY
There can be no assurance that a secondary market for the Certificates of
any series will develop or, if it does develop, that it will provide holders
with liquidity of investment or will continue while Certificates of such series
remain outstanding. 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 fall significantly below
the applicable mortgage rates, principal prepayments are likely to be higher
than if prevailing rates remain 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.
In addition, if an election is made to treat the Trust Fund as a FASIT, the
deposit of Replacement Mortgage Assets or Additional Mortgage Assets with faster
or slower rates of amortization and different prepayment provisions will affect
the average life of each class of related Certificates and may also affect the
yields on such classes. To the extent the Depositor removes Mortgage Assets
prior to a prepayment by the related borrower and substitutes a Replacement
Mortgage Asset in its place, such substitution may reduce the likelihood of a
prepayment for Certificateholders and to the extent any Certificate was
purchased at a discount, such substitution will reduce the actual yield to
maturity. Furthermore, in the event that the Depositor elects to deposit
Additional Mortgage Assets into the Trust Fund and to issue new Certificates
corresponding to such Mortgage Assets, the credit enhancement provided to one or
more classes of Certificates may increase or decrease and the weighted average
life of one or more classes of Certificates may lengthen or shorten. See
"Description of the Trust Funds--Addition and Removal of Mortgage Assets from
the Trust Fund" herein and "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
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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
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.
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 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 preempted by state law in
certain states, and rent control is not imposed at the state level in those
states. In some states, however,
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local rent control ordinances are not preempted 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.
Owners of residential rental real estate property meeting the definition of
low-income housing pursuant to Section 42 of the Code (the "Section 42
Properties") may receive low-income housing tax credits ("Tax Credits") from
their respective state or local allocating agency. The Section 42 Property may
be subject to certain restrictions on maximum tenant income or maximum rental
rates. If a Section 42 Property owner does not maintain compliance with such Tax
Credit restrictions, that owner may lose its Tax Credit related to the period of
noncompliance and face the partial recapture of previously taken Tax Credits.
There is also the possibility that a change in law could eliminate the Tax
Credits. Any limitation on a borrower's ability to raise property rents or rent
to high-income tenants and any payment obligation of a borrower resulting from
recapture of a previously taken Tax Credit, may impair such borrower's ability
to repay its Mortgage Loan obligation from its net operating income or the
proceeds of a sale or refinancing of the related Section 42 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.
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.
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.
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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.
SENIOR HOUSING/HEALTHCARE PROPERTIES
Significant factors determining the value of senior housing and healthcare
properties include federal and state laws, competition with similar properties
on a local and regional basis and the continued availability of revenue from
government reimbursement programs, primarily Medicaid and Medicare. Providers of
long-term nursing care and other medical services are subject to federal and
state laws that relate to the adequacy of medical care, distribution of
pharmaceuticals, rate setting, equipment, personnel, operating policies and
additions to facilities and services and, to the extent dependent on patients
whose fees are reimbursed by private insurers, to the reimbursement policies of
such insurers. In addition, facilities where such care or other medical services
are provided are subject to periodic inspection by governmental authorities to
determine compliance with various standards necessary for continued licensing
under state law and continued participation in the Medicaid and Medicare
reimbursement programs. The failure of any such borrowers to maintain or renew
any required license or regulatory approval could prevent it from continuing
operations at a Mortgaged Property (in which case no revenues would be received
from such property or portion thereof requiring licensing) or, if applicable,
bar it from participation in government reimbursement programs. Furthermore, in
the event of foreclosure, there can be no assurance that the Trustee (or Master
Servicer or Special Servicer) or purchaser in a foreclosure sale would be
entitled to the rights under such licenses and such party may have to apply in
its own right for such a license. There can be no assurance that a new license
could be obtained.
Under applicable federal and state laws and regulations, Medicare and
Medicaid, only the provider who actually furnished the related medical goods and
services generally may sue for or enforce its rights to reimbursement.
Accordingly, in the event of foreclosure, none of the Trustee, the Master
Servicer, the Special Servicer or a subsequent lessee or operator of the
property would generally be entitled to obtain from federal or state governments
any outstanding reimbursement payments relating to services furnished at the
respective properties prior to such foreclosure.
The operators of such nursing homes are likely to compete on a local and
regional basis with others that operate similar facilities, some of which
competitors may be better capitalized, may offer services not offered by such
operators or may be owned by non-profit organizations or government agencies
supported by endowments, charitable contributions, tax revenues and other
sources not available to such operators. The successful operation of a Mortgaged
Property that is a nursing home will generally depend upon the number of
competing facilities in the local market, as well as upon other factors such as
its age, appearance, reputation and management, the types of services it
provides and the quality of care and the cost of that care.
Nursing home facilities may receive a substantial portion of their revenues
from government reimbursement programs, primarily Medicaid and Medicare.
Medicaid and Medicare are subject to statutory and regulatory changes,
retroactive rate adjustments, administrative rulings, policy interpretations,
delays by fiscal intermediaries and government funding restrictions. Moreover,
government payors have employed cost-containment measures that limit payments to
health care providers, and there are currently under construction various
proposals for national health care reform that could further limit those
payments. Accordingly, there can be no assurance that payments under government
reimbursement programs will, in the future, be sufficient to fully reimburse the
cost of caring for program beneficiaries. If not, net operating income of the
Mortgaged Properties that receive revenues from those sources, and consequently
the ability of the related borrowers to meet their Mortgage Loan obligations,
could be adversely affected.
MOBILE HOME PARK PROPERTIES
Loans secured by liens on mobile home park properties pose risks not
associated with loans secured by liens on other types of income-producing real
estate.
The successful operation of a mobile home park property will generally
depend upon the number of competing mobile home park communities and other
residential developments in the local market, such as apartment buildings, other
mobile home park
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communities, and site-built single family homes, as well as upon other factors
such as its location, age, appearance, reputation, the ability of management to
provide adequate maintenance and insurance, and the types of services it
provides.
Mobile home park properties are "special purpose" properties that could not
be readily converted to general residential, retail or office use. Thus, if the
operation of any of the mobile home park properties becomes unprofitable due to
competition, age of the improvements or other factors such that the borrower
becomes unable to meet its obligations on the related Mortgage Loan, the
liquidation value of that mobile home park property may be substantially less,
relative to the amount owing on the related Mortgage Loan, than would be the
case if the mobile home park property were readily adaptable to other uses.
Certain states regulate the relationship of a mobile home park community
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. For example, there are
provisions that limit the basis on which a landlord may terminate a mobile home
owner's tenancy or increase its rent and generally prohibit a landlord from
terminating a tenancy solely by reason of the sale of the owner's mobile home.
In addition to state regulation of the landlord tenant relationship,
numerous counties and municipalities impose rent control on mobile home park
communities. 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 deteremined through mediation
or binding arbitration. In many cases, the rent control laws do not permit
vacancy decontrol, or permit vacancy decontrol only in the relatively rare event
that the mobile home is removed from the mobile home park. Local authority to
impose rent control on mobile home park communities is preempted 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 preempted
for tenants having short-term or month-to-month leases, and the Mortgaged
Properties in such states may be subject to various forms of rent control with
respect to those tenants. Any limitations on the Mortgaged Borrowers' ability to
raise property rents may impair their ability to repay the related Mortgage Loan
from their net operating income or the proceeds of a sale or refinancing of the
related Mortgaged Properties.
The location and construction quality of common area improvements to a
mobile home park housing community may affect the occupancy level as well as the
rents that may be charged for the individual mobile home parks. The
characteristics of a mobile home park community may change over time or in
relation to other developments. The effects of poor construction quality on
common area improvements will increase over time in the form of increased
maintenance and capital improvements. Even good construction will deteriorate
over time if the property manager does not schedule and perform adequate
maintenance in a timely fashion.
INDUSTRIAL PROPERTIES
Significant factors determining the value of industrial properties are the
quality of tenants, building design and adaptability and the location of the
properties. Industrial 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 (as is frequently the case with industrial properties).
Aspects of building site design and adaptability affect the value of an
industrial property. Site characteristics which are valuable to an industrial
property include clear heights, column spacing, number of bays and bay depths,
divisibility, truck turning radius and overall functionality and accessibility.
Location is also important because an industrial property requires the
availability of labor sources, proximity to supply sources and customers and
accessibility to rail lines, major roadways and other distribution channels.
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.
SUBSTITUTION OF MORTGAGE ASSETS
In the event that an election is made to treat the Trust Fund as a FASIT,
the related Prospectus Supplement will describe the extent to which any Mortgage
Asset may be removed or added to the Trust Fund and the terms and conditions for
such removal or addition. The related Prospectus Supplement will also describe
the manner in which Certificateholders will be informed of the removal of any
Mortgage Asset from, and the addition of any Additional Mortgage Asset to, the
Trust Fund. See "Description of the Trust Fund--Addition and Removal of Mortgage
Assets from the Trust Fund" herein.
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
work out 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 work out 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.
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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".
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. Under the laws of certain states, contamination of
a property may give rise to a lien on the property to assure the costs of
cleanup. In several states, such a lien has priority over the lien of an
existing mortgage against such property. In addition, under the laws of some
states and under the federal Comprehensive Environmental Response, Compensation
and Liability Act of 1980 ("CERCLA"), a lender may be liable, as an "owner" or
"operator," for the costs of addressing releases or threatened releases of
hazardous substances that require remedial action at a property, if agents or
employees of the lender have become sufficiently involved in the operations of
the mortgagor, regardless of whether the environmental damage or threat was
caused by a prior owner. A lender also risks such liability on foreclosure of
the mortgage. 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 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.
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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--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--REMIC Certificates--Taxation of REMIC
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
(i) Multifamily and/or Commercial Loans and/or Installment Contracts
(collectively, the "Mortgage Loans") or (ii) pass-through certificates or other
mortgage-backed securities evidencing interests in or secured by one or more
Mortgage Loans ("MBS"). Any MBS that are included in the assets of a Trust Fund
(i) will have been either (a) previously registered under the Securities Act of
1933, as amended (the "Securities Act"), or (b) eligible for sale under Rule
144(k) of the Securities Act and (ii) will have been acquired in bona fide
secondary market transactions from third parties not including the issuer of
such MBS or any affiliate of such issuer. As used herein, "Mortgage Loans"
refers to both whole Mortgage Loans and Mortgage Loans underlying MBS. Mortgage
Loans that secure, or interests in which are evidenced by, MBS are herein
sometimes referred to as Underlying Mortgage Loans. Mortgage Loans that are not
Underlying Mortgage Loans are sometimes referred to as "Whole 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 or the issuer of
such MBS 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, warehouse facilities, mini-warehouse facilities or self-storage
facilities, 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, provided that Mortgage
Loans secured by Mortgaged Properties located outside the United States or the
District of Columbia will not represent more than 10% of the aggregate principal
balance of the Mortgage Loans in any of the Trust Funds. 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.
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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.
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".
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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 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
22
<PAGE>
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 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.
In the event that an election is made to treat the Trust Fund as a FASIT,
the Depositor may also have the right to issue new Certificates having a
Certificate Balance equal to all or a portion of the aggregate outstanding
principal balance of any Additional Mortgage Assets deposited into the Trust
Fund. The new Certificates may be in the form of an increase in the Certificate
Balance of an existing class of Certificates or in the form a new class of
Certificates. The related Prospectus Supplement will set forth the terms and
conditions under which the Depositor may issue such new Certificates. See
"Description of the Trust Fund--Addition and Removal of Mortgage Assets from the
Trust Fund" herein.
MBS
Any 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.
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<PAGE>
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.
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.
In the event that an election is made to treat the Trust Fund as a FASIT, the
related Prospectus Supplement will describe the effect, if any, that any removal
of Mortgage Assets and the related deposit of Replacement Mortgage Assets and
any deposit of Additional Mortgage Assets may have on the Pass-Through Rates for
the related classes of Certificates.
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
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<PAGE>
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.
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.
In the event that an election is made to treat the Trust Fund as a FASIT,
to the extent the Depositor removes Mortgage Assets prior to a prepayment by the
related borrower and substitutes Replacement Mortgage Assets in its place, such
substitution may reduce the likelihood of a prepayment for Certificateholders
and to the extent any Certificate was purchased at a discount, such substitution
will reduce the actual yield to maturity. In addition, in the event that the
Depositor elects to deposit Additional Mortgage Assets into the Trust Fund and
to issue new Certificates corresponding to such Mortgage Assets, the credit
enhancement provided to one or more classes of Certificates may increase or
decrease and the weighted average life of one or more classes of Certificates
may lengthen or shorten.
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
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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.
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 work out. 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.
REMOVAL AND ADDITION OF MORTGAGE ASSETS
In the event that an election is made to treat the Trust Fund as a FASIT,
the deposit of Replacement Mortgage Assets or Additional Mortgage Assets with
faster or slower rates of amortization and different prepayment provisions will
affect the average life of each class of related Certificates. See "Description
of the Trust Fund--Addition and Removal of Mortgage Assets from the Trust Fund"
herein.
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
Asset Securitization Corporation, the Depositor, is a Delaware corporation
organized on June 23, 1992 for the purpose of acquiring Mortgage Assets and
selling interests therein or bonds secured thereby. It is a wholly owned
subsidiary of Nomura Asset Capital Corporation, which is in turn a wholly-owned
subsidiary of Nomura Holding America Inc., 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. 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.
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The Depositor does not have, nor is it expected in the future to have, any
significant assets.
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.
Types of Certificates classified by allocation of principal distributions can
include:
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 typehave 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.
</TABLE>
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<TABLE>
<S> <C>
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 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".
In the event that an election is made to treat the Trust Fund as a FASIT,
the Depositor may also have the right to issue new Certificates having a
Certificate Balance equal to all or a portion of the aggregate outstanding
principal balance of any Additional Mortgage Assets deposited into the Trust
Fund. The new Certificates may be in the form of an increase in the Certificate
Balance of an existing class of Certificates or in the form of a new class of
Certificates. The related Prospectus Supplement will set forth the terms and
conditions under which the Depositor may issue such new Certificates. See
"Description of the Trust Fund--Addition and Removal of Mortgage Assets from the
Trust Fund" herein.
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
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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.
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
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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. 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
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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 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
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respect thereof and (f) if applicable, the aggregate amount of interest accrued
and payable on related servicing expenses and related advances;
(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.
In addition, in the event that an election is made to treat the Trust Fund
as a FASIT, the related Prospectus Supplement will set forth the manner in which
Certificateholders will be informed of the removal of any Mortgage Assets from,
and the deposit of any Replacement Mortgage Assets or Additional Mortgage Assets
to, the Trust Fund.
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
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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 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
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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 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 Asset
Securitization 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.
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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 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
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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.
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;
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(iv) any amounts paid under any instrument or drawn from any fund that
constitutes Credit Support for the related series of Certificates as described
under "Description of Credit Support";
(v) any advances made as described under "Description of the
Certificates--Advances in Respect of Delinquencies";
(vi) any amounts paid under any Cash Flow Agreement, as described under
"Description of the Trust Funds--Cash Flow Agreements";
(vii) all proceeds of 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
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modification, waiver or amendment that would so affect or impair the payments
on, or the security for, a Whole Loan if (i) in its 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 or FASIT provisions
of the Code (if a REMIC election or FASIT election, respectively, 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 the Master Servicer for its
expenses and (ii) that such expenses will be recoverable by it from related
Insurance Proceeds or Liquidation Proceeds.
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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.
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
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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 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
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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 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
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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, and at the direction of holders of Certificates
evidencing not less than 51% of the Voting Rights, the Trustee shall, terminate
all of the rights and obligations of the Master Servicer under the Agreement
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
Unless otherwise specified in the related Prospectus Supplement, 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 or FASIT 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 or FASIT, as applicable, at any time that the related Certificates are
outstanding.
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
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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.
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 "Risk Factors--Credit Support Limitations".
SUBORDINATE CERTIFICATES
If so specified in the related Prospectus Supplement, one or more classes
of Certificates of a series may be Subordinate Certificates. 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.
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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.
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.
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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.
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.
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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 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
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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 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
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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 beneificary 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
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.
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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 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
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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.
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.
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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 beyond the close of the third calendar
year following the year of acquisition. With respect to a series of Certificates
for which an election is made to qualify the Trust Fund or a part thereof as a
REMIC, the Agreement will permit foreclosed property to be held beyond the close
of such third calendar year 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 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.
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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.
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
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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.
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 mangement 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, and the lender may be liable to the government or private parties
for clean-up or other remedial costs pursuant to CERCLA.
A decision in May 1990 of the United States Court of Appeals for the
Eleventh Circuit in United States v. Fleet Factors Corp. very narrowly construed
the CERCLA secured-creditor exemption. The Court held that a mortgagee need not
have involved itself in the day-to-day operations of the mortgaged property or
in decisions relating to hazardous waste in order to be liable under CERCLA;
rather, liability could attach to a mortgagee if its involvement in the
management of the property is sufficiently broad to support the inference that
it had the capacity to influence the mortgagor's treatment of hazardous waste.
Such capacity to influence could be inferred from the extent of the mortgagee's
involvement in the mortgagor's financial management. A subsequent decision by
the United States Court of Appeals for the Ninth Circuit in In re Bergsoe Metal
Corp. disagreed with the Fleet Factors opinion, ruling that a secured lender had
no liability absent "some actual management of the facility" on the part of the
lender. The scope of the secured-creditor exemption is thus unclear.
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 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
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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 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
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("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 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
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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.
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"). 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. For purposes of this discussion, unless otherwise specified, the
term "Mortgage Loans" will be used to refer to Mortgage Loans, MBS and
Installment Contracts.
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 "REMIC 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 REMIC
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
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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 "--Grantor Trust Certificates".
STATUS OF REMIC CERTIFICATES
REMIC Certificates held by a domestic building and loan association will
constitute "a regular or residual interest in a REMIC" within the meaning of
Code Section 7701(a)(19)(C)(xi) but only in the same proportion that the assets
of the REMIC Pool would be treated as "loans . . . secured by an interest in
real property which is . . . residential real property" (such as single family
or multifamily properties, but not commercial properties) within the meaning of
Code Section 7701(a)(19)(C)(v) or as other assets described in Code Section
7701(a)(19)(C), and otherwise will not qualify for such treatment. REMIC
Certificates held by a real estate investment trust will constitute "real estate
assets" within the meaning of Code Section 856(c)(4)(A), and interest on the
REMIC Regular Certificates and income with respect to Residual Certificates will
be considered "interest on obligations secured by mortgages on real property or
on interests in real property" within the meaning of Code
Section 856(c)(3)(B) in the same proportion that, for both purposes, the assets
of the REMIC Pool would be so treated. If at all times 95% or more of the assets
of the REMIC Pool qualify for each of the foregoing respective treatments, the
REMIC Certificates will qualify for the corresponding status in their entirety.
For purposes of Code Section 856(c)(4)(A), payments of principal and interest on
the Mortgage Loans that are reinvested pending distribution to holders of REMIC
Certificates qualify for such treatment. Where two REMIC Pools are a part of a
tiered structure they will be treated as one REMIC for purposes of the tests
described above respecting asset ownership of more or less than 95%. In
addition, if the assets of the REMIC include Buy-Down Mortgage Loans, it is
possible that the percentage of such assets constituting "qualifying real
property loans" or "loans . . . secured by an interest in real property" for
purposes of Code Section 7701(a)(19)(C)(v), respectively, may be required to be
reduced by the amount of the related Buy-Down Funds. Offered 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
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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 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 held for not more than two years, with extensions 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 REMIC 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.
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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 REMIC 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 REMIC REGULAR CERTIFICATES
GENERAL
In general, interest, original issue discount and market discount on a
REMIC Regular Certificate will be treated as ordinary income to a holder of the
REMIC Regular Certificate (the "Regular Certificateholder") as they accrue, and
principal payments on a REMIC Regular Certificate will be treated as a return of
capital to the extent of the Regular Certificateholder's basis in the REMIC
Regular Certificate allocable thereto. Regular Certificateholders must use the
accrual method of accounting with regard to REMIC Regular Certificates,
regardless of the method of accounting otherwise used by such Regular
Certificateholders.
ORIGINAL ISSUE DISCOUNT
Accrual Certificates will be, and other Classes of REMIC Regular
Certificates may be, issued with "original issue discount" within the meaning of
Code Section 1273(a). Holders of any Class of REMIC 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 REMIC Regular Certificates. To the extent
such issues are not addressed in such regulations, the Depositor intends to
apply the methodology described in the Conference Committee Report to the 1986
Act. No assurance can be provided that the Service will not take a different
position as to those matters not currently addressed by the OID Regulations.
Moreover, the OID Regulations include an anti-abuse rule allowing the Service to
apply or depart from the OID Regulations where necessary or appropriate to
ensure a reasonable tax result in light of the applicable statutory provisions.
A tax result will not be considered unreasonable under the anti-abuse rule in
the absence of a substantial effect on the present value of a taxpayer's tax
liability. Investors are advised to consult their own tax advisors as to the
discussion herein and the appropriate method for reporting interest and original
issue discount with respect to the REMIC Regular Certificates.
Each REMIC Regular Certificate (except to the extent described below with
respect to a REMIC 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 REMIC Regular Certificate is the excess of the "stated redemption
price at maturity" of the REMIC Regular Certificate over its "issue price". The
issue price of a Class of REMIC Regular Certificates offered pursuant to this
Prospectus generally is the first price at which a substantial amount of REMIC
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
REMIC 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 REMIC 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 REMIC Regular Certificate always
includes the original principal amount of the REMIC 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 REMIC Regular Certificate. Distributions of
interest on an Accrual Certificate, or on other REMIC 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
REMIC Regular Certificates includes all distributions of interest as well as
principal thereon. Likewise, the Depositor intends to treat an
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"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 REMIC 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 REMIC 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 REMIC Regular
Certificate multiplied by the weighted average maturity of the REMIC Regular
Certificate. For this purpose, the weighted average maturity of the REMIC
Regular Certificate is computed as the sum of the amounts determined by
multiplying the number of full years (i.e., rounding down partial years) from
the issue date until each distribution is scheduled to be made by a fraction,
the numerator of which is the amount of each distribution included in the stated
redemption price at maturity of the REMIC Regular Certificate and the
denominator of which is the stated redemption price at maturity of the REMIC
Regular Certificate. 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
REMIC Regular Certificates. The Prepayment Assumption with respect to a Series
of REMIC Regular Certificates will be set forth in the related Prospectus
Supplement. Holders generally must report de minimis OID pro rata as principal
payments are received, and such income will be capital gain if the REMIC 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 REMIC Regular Certificate accrued during an accrual period
for each day on which it holds the REMIC Regular Certificate, including the date
of purchase but excluding the date of disposition. The Depositor will treat the
monthly period ending on the day before each Distribution Date as the accrual
period. With respect to each REMIC 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 REMIC 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 REMIC Regular Certificate as of the end of that
accrual period that are included in the REMIC Regular Certificate's stated
redemption price at maturity and (b) the distributions made on the REMIC Regular
Certificate during the accrual period that are included in the REMIC Regular
Certificate's stated redemption price at maturity, over (ii) the adjusted issue
price of the REMIC 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 REMIC 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 REMIC Regular
Certificate at the beginning of any accrual period equals the issue price of the
REMIC Regular Certificate, increased by the aggregate amount of original issue
discount with respect to the REMIC Regular Certificate that accrued in all prior
accrual periods and reduced by the amount of distributions included in the REMIC
Regular Certificate's stated redemption price at maturity that were made on the
REMIC 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 REMIC 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 REMIC
Regular Certificates can result in both a change in the priority of principal
payments with respect to certain Classes of REMIC Regular Certificates and
either an increase or decrease in the daily portions of original issue discount
with respect to such REMIC Regular Certificates.
In the case of a Random Lot Certificate, the Depositor intends to 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
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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 REMIC 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 REMIC Regular Certificate reduced pro rata by a fraction, the
numerator of which is the excess of its purchase price over such adjusted issue
price and the denominator of which is the excess of the remaining stated
redemption price at maturity over the adjusted issue price. Alternatively, such
a subsequent purchaser may elect to treat all such acquisition premium under the
constant yield method, as described below under the heading "Election to Treat
All Interest Under the Constant Yield Method".
VARIABLE RATE REMIC REGULAR CERTIFICATES
REMIC 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 REMIC 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 rate by
their terms not applicable to REMIC Regular Certificates. However, if final
regulations dealing with contingent interest with respect to REMIC 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 REMIC Regular
Certificates as ordinary income. Investors should consult their tax advisors
regarding the appropriate treatment of any REMIC Regular Certificate that does
not pay interest at a fixed rate or variable rate as described in this
paragraph.
Under the REMIC Regulations, a REMIC 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, the Depositor intends to
treat REMIC 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 REMIC 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 REMIC Regular Certificate generally to be determined by
assuming that interest will be payable for the life of the REMIC Regular
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Certificate based on the initial rate (or, if different, the value of the
applicable variable rate as of the pricing date) for the relevant Class. Unless
otherwise specified in the applicable Prospectus Supplement, the Depositor
intends to treat such variable interest as qualified stated interest, other than
variable interest on an interest-only or super-premium Class, which will be
treated as non-qualified stated interest includible in the stated redemption
price at maturity. Ordinary income reportable for any period will be adjusted
based on subsequent changes in the applicable interest rate index.
Although unclear under the OID Regulations, the Depositor intends to treat
REMIC 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 REMIC Regular Certificates.
DEFERRED INTEREST
Under the OID Regulations, all interest on a REMIC 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 REMIC Regular Certificates may constitute income to the
holders of such REMIC Regular Certificates prior to the time distributions of
cash with respect to such Deferred Interest are made.
MARKET DISCOUNT
A purchaser of a REMIC 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 REMIC Regular Certificate (i) is exceeded by
the then-current principal amount of the REMIC Regular Certificate or (ii) in
the case of a REMIC Regular Certificate having original issue discount, is
exceeded by the adjusted issue price of such REMIC 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 REMIC 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 or (ii) in the ratio of stated interest allocable to the
relevant period to the sum of the interest for such period plus the remaining
interest as of the end of such period, or in the case of a REMIC 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 REMIC 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 REMIC
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 REMIC 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
REMIC 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 REMIC 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 REMIC Regular Certificate
multiplied by the weighted average maturity of the REMIC 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
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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 REMIC 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 REMIC 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. Treasury Regulations issued under Code
Section 171 do not by their terms apply to REMIC Regular Certificates, which are
prepayable based on prepayments on the underlying Mortgage Loans. 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 REMIC 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 REMIC Regular Certificate
rather than as a separate deduction item. See "Election to Treat All Interest
Under the Constant Yield Method" below regarding an alternative manner in which
the Code Section 171 election may be deemed to be made.
ELECTION TO TREAT ALL INTEREST UNDER THE CONSTANT YIELD METHOD
A holder of a debt instrument such as a REMIC 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 REMIC REGULAR CERTIFICATES
If a Regular Certificateholder sells or exchanges a REMIC 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 REMIC Regular Certificate. The adjusted basis of a REMIC Regular Certificate
generally will equal the cost of the REMIC 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 REMIC Regular Certificate and
reduced by amounts included in the stated redemption price at maturity of the
REMIC 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 REMIC
Regular Certificate realized by an investor who holds the REMIC Regular
Certificate as a capital asset will be capital gain or loss and will be
long-term or short-term depending on whether the REMIC Regular Certificate has
been held for the long-term capital gain holding period (currently more than one
year). Such gain will be treated as ordinary income (i) if a REMIC Regular
Certificate is held as part of a "conversion transaction" as defined in Code
Section 1258(c), up to the amount of interest that would have accrued on the
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 REMIC 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 REMIC Regular Certificate. In addition, gain or loss recognized from the
sale of a REMIC Regular Certificate by certain banks or thrift institutions will
be treated as ordinary income or
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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 REMIC Regular Certificates will be required to report income
with respect to REMIC 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 REMIC Regular Certificates, except to the extent it can be established that
such losses are uncollectible. Accordingly, the holder of a REMIC 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. To the extent the rules of Code Section 166 regarding bad debts are
applicable, it appears that holders of REMIC Regular Certificates that are
corporations or that otherwise hold the REMIC 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
REMIC Regular Certificates becoming wholly or partially worthless, and that, in
general, holders of REMIC Regular Certificates that are not corporations and do
not hold the REMIC 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 REMIC Regular Certificates becoming wholly worthless.
Although the matter is not free from doubt, non-corporate holders of REMIC
Regular Certificates should be allowed a bad debt deduction at such time as the
principal balance of any class or subclass of such REMIC 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 REMIC
Regular Certificates has been otherwise retired. The Service could also assert
that losses on the REMIC 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 REMIC 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 REMIC 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 REMIC 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 REMIC 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 the Regular Certificates, plus income on reinvestment of
cash flows and reserve assets, plus any cancellation of indebtedness income upon
allocation of realized losses to the REMIC Regular Certificates. The REMIC
Pool's deductions include interest and original issue discount expense on the
REMIC Regular Certificates, servicing fees on the Mortgage Loans, other
administrative expenses of the REMIC 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.
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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) on the REMIC 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 REMIC 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 REMIC
Regular Certificates on account of any unaccrued original issue discount
relating to those REMIC Regular Certificates. When there is more than one class
of REMIC Regular Certificates that distribute principal sequentially, this
mismatching of income and deductions is particularly likely to occur in the
early years following issuance of the REMIC Regular Certificates when
distributions in reduction of principal are being made in respect of earlier
classes of REMIC Regular Certificates to the extent that such classes are not
issued with substantial discount. If taxable income attributable to such a
mismatching is realized, in general, losses would be allowed in later years as
distributions on the later classes of REMIC 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 REMIC Regular
Certificates, may increase over time as distributions in reduction of principal
are made on the lower yielding classes of REMIC 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
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provide for periodic adjustments to the REMIC income otherwise reportable by
such holder. The REMIC Regulations currently in effect do not so provide. See
"Treatment of Certain Items of REMIC Income and Expense --Market Discount" below
regarding the basis of Mortgage Loans to the REMIC Pool and "Sale or Exchange of
a Residual Certificate" below regarding possible treatment of a loss upon
termination of the REMIC Pool as a capital loss.
TREATMENT OF CERTAIN ITEMS OF REMIC INCOME AND EXPENSE
Although the Depositor intends to compute REMIC income and expense in
accordance with the Code and applicable regulations, the authorities regarding
the determination of specific items of income and expense are subject to
differing interpretations. The Depositor makes no representation as to the
specific method that it will use for reporting income with respect to the
Mortgage Loans and expenses with respect to the REMIC 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 REMIC Regular Certificates as described above under "Taxation
of REMIC Regular Certificates--Original Issue Discount" and "--Variable Rate
REMIC Regular Certificates", without regard to the de minimis rule described
therein.
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 REMIC Regular Certificates as described above under
"Taxation of REMIC 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 REMIC 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 REMIC
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
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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 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.
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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.
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 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. Except as may be provided
in Treasury regulations, any person holding an interest in a Pass-Through Entity
as a nominee for another will, with respect to such interest, be treated as a
Pass-Through Entity.
The 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.
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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 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 as
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 Service has promulgated 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. The Mark
to Market Regulations provide that a Residual Certificate is not treated as a
security and thus may not be marked to market. The Mark to Market Regulations
apply to all Residual Certificates acquired on or after January 4, 1995.
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TAXES THAT MAY BE IMPOSED ON THE REMIC POOL
PROHIBITED TRANSACTIONS
Income from certain transactions by the REMIC Pool, called prohibited
transactions, will not be part of the calculation of income or loss includible
in the federal income tax returns of Residual Certificateholders, but rather
will be taxed directly to the REMIC Pool at a 100% rate. Prohibited transactions
generally include (i) the disposition of a qualified mortgage other than for
(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 REMIC 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 REMIC 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
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be subject to the procedural and administrative rules of the Code applicable to
partnerships, including the determination by the Service of any adjustments to,
among other things, items of REMIC income, gain, loss, deduction or credit in a
unified administrative proceeding. The Residual Certificateholder owning the
largest percentage interest in the Residual Certificates will be obligated to
act as "tax matters person", as defined in applicable Treasury regulations, with
respect to the REMIC Pool. Each Residual Certificateholder will be deemed, by
acceptance of such Residual Certificates, to have agreed (i) to the appointment
of the tax matters person as provided in the preceding sentence and (ii) to the
irrevocable designation of the Master Servicer as agent for performing the
functions of the tax matters person.
LIMITATIONS ON DEDUCTION OF CERTAIN EXPENSES
An investor who is an individual, estate or trust will be subject to
limitation with respect to certain itemized deductions described in Code
Section 67, to the extent that such itemized deductions, in the aggregate, do
not exceed 2% of the investor's adjusted gross income. In addition, Code
Section 68 provides that itemized deductions otherwise allowable for a taxable
year of an individual taxpayer will be reduced by the lesser of (i) 3% of the
excess, if any, of adjusted gross income over $100,000 ($50,000 in the case of a
married individual filing a separate return) (subject to 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
Mortgage-Backed Securities 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 REMIC Regular Certificates, as well as
holders of Residual Certificates, where such REMIC 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 REMIC 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
REMIC 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
REMIC 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 REMIC 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 REMIC 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 REMIC Regular Certificate. The term "Non-U.S.
Person" means any person who is not a U.S. Person.
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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 Offered 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.
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 "REMIC 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 REMIC Regular Certificates, and proceeds from the
sale of the REMIC 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 REMIC 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 REMIC 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 REMIC 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 REMIC Regular Certificates or beneficial owners who own REMIC Regular
Certificates through a broker or middleman as nominee. All brokers, nominees and
all other non-exempt holders of record of REMIC 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 REMIC Regular
Certificates. Holders through nominees must request such information from the
nominee.
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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 REMIC
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 REMIC 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".
FASIT CERTIFICATES
GENERAL
If so specified in the applicable Prospectus Supplement, an election will
be made to treat the Trust Fund or specified assets thereof (such portion of the
Trust Fund, the "Trust FASIT"), as a FASIT within the meaning of Code
Section 860L(a). The Offered Certificates will be designated as classes of
regular interests and the Class O Certificate will be designated as the sole
class of ownership interest in the Trust FASIT. Assuming (i) the making of an
appropriate election, (ii) compliance with the Pooling and Servicing Agreement,
as applicable, and (iii) compliance with any changes in the law, including any
amendments to the Code or applicable temporary or final Treasury regulations
thereunder, in the opinion of Cadwalader, Wickersham & Taft, (a) the Trust FASIT
will qualify as a FASIT, (b) one Class thereof (the "FASIT Ownership
Certificate" or the "Class O Certificate") will represent the sole class of
ownership interest in the Trust FASIT, and (c) the remaining Classes thereof
(the "FASIT Regular Certificates") will represent "regular interests" in the
Trust FASIT. Only the FASIT Regular Certificates are offered pursuant to this
Prospectus. References herein to the REMIC Regulations are to Treasury
regulations issued under Sections 860A through 860G of the Code to the extent
such sections are incorporated by reference into the FASIT Provisions. If so
specified in the applicable Prospectus Supplement, the portion of a Trust Fund
as to which a FASIT election is not made may be treated as a grantor trust for
federal income tax purposes. See "Grantor Trust Certificates."
STATUS OF FASIT REGULAR CERTIFICATES
FASIT Regular Certificates held by a real estate investment trust will
constitute "real estate assets" within the meaning of Code
Sections 856(c)(4)(A) and interest on the FASIT Regular 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 Trust FASIT and
the income thereon would be so treated. FASIT Certificates held by a domestic
building and loan association will be treated as "regular interest[s] in a
FASIT" under Code Section 7701(a)(19)(C)(xi), but only in the proportion that
the Trust FASIT holds "loans secured by an interest in real property which
is . . . residential real property" within the meaning of Code
Section 7701(a)(19)(C)(v). For this purpose, Mortgage Loans secured by
multifamily residential housing should qualify. It is also likely that Mortgage
Loans secured by nursing homes and assisted living facilities would qualify as
"loans secured by an interest in . . . health institutions or facilities,
including structures designed or used primarily for residential purposes
for . . . persons under care" within the meaning of Code
Section 7701(a)(19)(C)(vii). If at all times 95% or more of the assets of the
Trust FASIT or the income thereon qualify for the foregoing treatments, the
FASIT Certificates will qualify for the corresponding status in their entirety.
Mortgage Loans which have been defeased with Treasury obligations and the income
therefrom will not qualify for the foregoing treatments. Accordingly, the FASIT
Regular Certificates may not be a suitable investment for investors who require
a specific amount or percentage of assets or income meeting the foregoing
treatments. For purposes of Code Section 856(c)(4)(A), payments of principal and
interest on a Mortgage Loan that are reinvested pending distribution to holders
of FASIT Regular Certificates should qualify for such treatment. FASIT Regular
Certificates held by a regulated investment company will not constitute
"government securities" within the meaning of Code Section 851(b)(4)(A)(i).
FASIT Regular Certificates held by certain financial institutions will
constitute an "evidence of indebtedness" within the meaning of Code
Section 582(c)(1).
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QUALIFICATION AS A FASIT
In order for the Trust FASIT to qualify as a FASIT, there must be ongoing
compliance on the part of the applicable portion of the Trust Fund with the
requirements set forth in the Code. The FASIT must fulfill an asset test, which
requires that substantially all of the assets of the FASIT, as of the close of
the third calendar month beginning after the "Startup Day" (which for purposes
of this discussion is the date of the initial issuance of the FASIT
Certificates) and at all times thereafter, must consist of cash or cash
equivalents, certain debt instruments (other than debt instruments issued by the
owner of the FASIT or a related party) and hedges (and contracts to acquire the
same), foreclosure property and regular interests in another FASIT or in a
REMIC. Based on identical statutory language applicable to REMICs, it appears
that the "substantially all" requirement should be met if at all times the
aggregate adjusted basis of the nonqualified assets is less than one percent of
the aggregate adjusted basis of all the FASIT's assets. The FASIT Provisions
also require the FASIT ownership interest and certain "high-yield" regular
interests (described below) to be held only by certain fully taxable domestic
corporations. The Pooling and Servicing Agreement provides that no legal or
beneficial interest in the Class O Certificate or any Class of Certificates
which the Depositor determines to be a high-yield regular interest may be
transferred or registered unless certain conditions, designed to prevent
violation of this requirement, are met.
Permitted debt instruments must bear interest, if any, at a fixed or
qualified variable rate. Permitted hedges include interest rate or foreign
currency notional principal contracts, letters of credit, insurance, guarantees
of payment default and similar instruments to be provided in regulations, and
which are reasonably required to guarantee or hedge against the FASIT's risks
associated with being the obligor on interests issued by the FASIT. Foreclosure
property is real property acquired by the FASIT in connection with the default
or imminent default of a qualified mortgage, provided the Depositor had no
knowledge or reason to know as of the date such asset was acquired by the FASIT
that such a default had occurred or would occur. Foreclosure property may
generally not be held beyond the close of the third taxable year after the
taxable year of the holder of the Class O Certificate in which the FASIT
acquired such property, with one extension available from the Internal Revenue
Service.
In addition to the foregoing requirements, the various interests in a FASIT
also must meet certain requirements. All of the interests in a FASIT must be
either of the following: (a) one or more classes of regular interests or (b) a
single class of ownership interest. A regular interest is an interest in a FASIT
that is issued on or after the Startup Day with fixed terms, is designated as a
regular interest, and (i) unconditionally entitles the holder to receive a
specified principal amount (or other similar amount), (ii) 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,
(iii) has a stated maturity of not longer than 30 years, (iv) has an issue price
not greater than 125% of its stated principal amount, and (v) has a yield to
maturity not greater than 5 percentage points higher than the related applicable
Federal rate (as defined in Code Section 1274(d)). A regular interest that is
described in the preceding sentence except that it fails to meet one or more of
requirements (i), (ii), (iv) or (v) is a "high-yield" regular interest. A
high-yield regular interest that fails requirement (ii) must consist of a
specified, nonvarying portion of the interest payments on the permitted assets,
by reference to the REMIC rules. An ownership interest is an interest in a FASIT
other than a regular interest that is issued on the Startup Day, is designated
an ownership interest and is held by a single, fully-taxable, domestic
corporation. An interest in a FASIT 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 ownership interest in the FASIT, and are
dependent on the absence of defaults or delinquencies on permitted assets lower
than reasonably expected returns on permitted assets, unanticipated expenses
incurred by the FASIT or prepayment interest shortfalls. Accordingly, based on
the foregoing, in the opinion of Cadwalader, Wickersham & Taft, the FASIT
Regular Certificates of a Series will constitute classes of regular interests,
and the Class O Certificate of a Series will represent the sole class of
ownership interest in the Trust FASIT.
If an entity fails to comply with one or more of the ongoing requirements
of the Code for status as a FASIT during any taxable year, the Code provides
that the entity or applicable portion thereof will not be treated as a FASIT
thereafter. In this event, any entity that holds mortgage loans and is the
obligor with respect to debt obligations with two or more maturities, such as
the Trust Fund, may be treated as a separate association taxable as a
corporation, and the FASIT Certificates may be treated as equity interests
therein. The legislative history to the FASIT Provisions indicates, however,
that an entity can continue to be a FASIT if loss of its status was inadvertent,
it takes prompt steps to requalify and other requirements that may be provided
in Treasury regulations are met. Loss of FASIT status results in retirement of
all regular interests and their reissuance. If the resulting instruments would
be treated as equity under general tax principles, cancellation of debt income
may result.
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TAXATION OF FASIT REGULAR CERTIFICATES
General. The FASIT Regular Certificates generally will be treated for
federal income tax purposes as newly-originated debt instruments. In general,
interest, original issue discount ("OID") and market discount on a FASIT Regular
Certificate will be treated as ordinary income to the holder of a FASIT Regular
Certificate, and principal payments (other than principal payments that do not
exceed accrued market discount) on a FASIT Regular Certificate will be treated
as a return of capital to the extent of the Certificateholder's basis allocable
thereto. Certificateholders must use the accrual method of accounting with
respect to FASIT Regular Certificates, regardless of the method of accounting
otherwise used by such Certificateholders.
Except as set forth in the applicable Prospectus Supplement, the
discussions above under the headings "REMIC Certificates--Taxation of REMIC
Regular Certificates--Original Issue Discount," "--Acquisition Premium,"
"--Market Discount," "--Premium," "--Election to Treat All Interest Under the
Constant Yield Method," and "--Treatment of Losses" will apply to the FASIT
Regular Certificates. The discussion under the headings "--Sale or Exchange of
REMIC Regular Certificates" will also apply to the FASIT Regular Certificates,
except that the treatment of a portion of the gain on a REMIC Regular Interest
as ordinary income to the extent the yield thereon did not exceed 110% of the
applicable Federal rate will not apply.
PROHIBITED TRANSACTIONS TAX
Income from certain transactions by a FASIT, called prohibited
transactions, are taxable to the holder of the ownership interest in that FASIT
at a 100% rate. Prohibited transactions generally include (i) the disposition of
a permitted asset other than for (a) foreclosure, default, or imminent default
of a qualified mortgage, (b) bankruptcy or insolvency of the FASIT, (c) a
qualified (complete) liquidation, (d) substitution for another permitted debt
instrument or distribution of the debt instrument to the holder of the ownership
interest to reduce overcollateralization, but only if a principal purpose of
acquiring the debt instrument which is disposed of was not the recognition of
gain (or the reduction of a loss) on the withdrawn asset as a result of an
increase in the market value of the asset after its acquisition by the FASIT or
(e) the retirement of a Class of FASIT regular interests, (ii) the receipt of
income from nonpermitted assets, (iii) the receipt of compensation for services,
or (iv) the receipt of any income derived from a loan originated by the FASIT.
It is unclear the extent to which tax on such transactions could be collected
from the Trust FASIT directly under the applicable statutes rather than from the
holder of the Class O Certificate. However, under the Pooling and Servicing
Agreement, any such prohibited transactions tax that is not payable by a party
thereto as a result of its own actions will be paid by the Trust FASIT and will
reduce Available Funds. It is not anticipated that the Trust FASIT will engage
in any prohibited transactions.
TAXATION OF CERTAIN FOREIGN INVESTORS
The federal income tax treatment of Non-U.S. Persons who own FASIT Regular
Certificates is the same as that described above under "REMIC
Certificates--Taxation of Certain Foreign Investors--REMIC Regular
Certificates."
High-yield FASIT Regular Certificates may not be sold to or beneficially
owned by Non-U.S. Persons. Any such purported transfer will be null and void
and, upon the Trustee's discovery of any purported transfer in violation of this
requirement, the last preceding owner of such FASIT Regular Certificates will be
restored to ownership thereof as completely as possible. Such last preceding
owner will, in any event, be taxable on all income with respect to such FASIT
Regular Certificates for federal income tax purposes. The Pooling and Servicing
Agreement provides that, as a condition to transfer of a high-yield FASIT
Regular Certificate, the proposed transferee must furnish an affidavit as to its
status as a U.S. Person and otherwise as a permitted transferee.
BACKUP WITHHOLDING
Distributions made on the FASIT Regular Certificates, and proceeds from the
sale of the FASIT Regular Certificates to or through certain brokers, may be
subject to a "backup" withholding tax under Code Section 3406 in the same manner
as described above under "REMIC Certificates--Backup Withholding."
REPORTING REQUIREMENTS
Reports of accrued interest, OID, if any, and information necessary to
compute the accrual of any market discount on the FASIT Regular Certificates
will be made annually to the Internal Revenue Service and to investors in the
same manner as described above under "REMIC Certificates--Reporting
Requirements" with respect to REMIC Regular Certificates.
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GRANTOR TRUST CERTIFICATES
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 post-1991 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 Fund 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 "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 "REMIC Certificates--Taxation of REMIC 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
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
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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 are subject to a lower maximum tax rate (20%) than
ordinary income or short-term capital gains of such taxpayers (39.6%). 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 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.
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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
"REMIC Certificates--Taxation of REMIC 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 "REMIC Certificates--Taxation of REMIC
Regular Certificates--Original Issue Discount" and "--Variable Rate REMIC
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.
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
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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 "REMIC Certificates--Taxation of REMIC Regular Certificates--Sale or
Exchange of REMIC 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 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
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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 "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 "REMIC
Certificates--Taxation of Certain Foreign Investors--REMIC Regular
Certificates".
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
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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.
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--REMIC
Certificates--Taxation of Residual Certificates--Tax-Related Restrictions on
Transfer of Residual Certificates--Disqualified Organizations."
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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 Certificates will specify
which, if any, of the Classes of Certificates offered thereby will constitute
"mortgage related securities" for purposes of the Secondary Mortgage Market
Enhancement Act of 1984 as amended ("SMMEA"). The appropriate characterization
of those 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 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 liens originated
by certain types of Originators as specified in SMMEA and secured by first liens
on real estate, will be "mortgage related securities" for purposes of SMMEA. As
"mortgage related securities," such Classes will constitute legal investments
for persons, trusts, corporations, partnerships, associations, business trusts
and business entities (including, but not limited to, state-chartered depository
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" (effective December 31, 1996) to include, in
relevant part, Certificates satisfying the rating and qualified Originator
requirements for "mortgage related securities," but evidencing interests in a
Trust Fund consisting, in whole or in part, of first liens on one or more
parcels of real estate upon which are located one or more commercial structures,
states were authorized to enact legislation, on or before September 23, 2001,
specifically referring to Section 347 and prohibiting or restricting the
purchase, holding or investment by state-regulated entities in such types of
Certificates. Section 347 also provides that the enactment by a state of any
such legislative restrictions shall not affect the validity of any contractual
commitment to purchase, hold or invest in securities qualifying as "mortgage
related securities" solely by reason of Section 347 that was made, and shall not
require the sale or disposition of any securities acquired, prior to the
enactment of such state legislation. Accordingly, the investors affected by any
such legislation, when and if enacted, will be authorized to invest in
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
86
<PAGE>
or certificate of interest or participation that is directly secured by a first
lien on one or more parcels of real estate upon which one or more commercial
structures are located and that is fully secured by interests in a pool of loans
to numerous obligors." In the absence of any rule or administrative
interpretation by the OCC defining the term "numerous obligors," no
representation is made as to whether any Class of Certificates will qualify as
"commercial mortgage-related securities," and thus as "Type IV securities," for
investment by national banks. The National Credit Union Administration ("NCUA")
has adopted rules, codified at 12 C.F.R. Part 703, which permit federal credit
unions to invest in "mortgage related securities" under certain limited
circumstances, other than stripped mortgage related securities, residual
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. The Office of Thrift Supervision (the "OTS") has issued Thrift
Bulletin 13a (December 1, 1998), "Management of Interest Rate Risk, Investment
Securities, and Derivatives Activities," which thrift institutions subject to
the jurisdiction of the OTS should consider before investing in any of the
Certificates.
All depository institutions considering an investment in the 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, which has been adopted by the Board
of Governors of the Federal Reserve System, the Federal Deposit Insurance
Corporation, the OCC and the OTS effective May 26, 1998, and by the NCUA
effective October 1, 1998. The 1998 Policy Statement sets forth general
guidelines which depository institutions must follow in managing risks
(including market, credit, liquidity, operational (transaction), and legal
risks) applicable to all securities (including mortgage pass-through securities
and mortgage-derivative products) used for investment purposes.
Institutions whose investment activities are subject to regulation by
federal or state authorities should review rules, policies and guidelines
adopted from time to time by such authorities before purchasing any
Certificates, as certain Series, Classes 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 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 Certificates as "mortgage
related securities," no representation is made as to the proper characterization
of the Certificates for legal investment purposes, financial institution
regulatory purposes, or other purposes, or as to the ability of particular
investors to purchase 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 Certificates) may adversely affect the liquidity of the
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 Certificates of any class constitute legal
investments or are subject to investment, capital or other restrictions and, if
applicable, whether SMMEA has been overridden in any jurisdiction relevant to
such investor.
METHOD OF DISTRIBUTION
The 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
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<PAGE>
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. Asset Securitization Corporation, the Depositor, is a
wholly-owned subsidiary of Nomura Asset Capital Corporation ("Nomura Capital").
Nomura and Nomura Capital 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 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.
88
<PAGE>
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.
89
<PAGE>
INDEX OF PRINCIPAL DEFINITIONS
<TABLE>
<CAPTION>
PAGE(S) ON WHICH TERM IS
TERM DEFINED IN THE PROSPECTUS
- ------------------------------------------------------ -------------------------
<S> <C>
1933 Act.............................................. 88
1986 Act.............................................. 62
1998 Policy Statement................................. 87
Accrual Certificates.................................. 9
Accrued Certificate Interest.......................... 30
ADA................................................... 59
anchored.............................................. 13
ARM Loans............................................. 22
Available Funds....................................... 30
Bankruptcy Code....................................... 54
BIF................................................... 37
Book-Entry Certificates............................... 29
Cash Flow Agreement................................... 8, 24
Cede.................................................. 2, 34
CERCLA................................................ 18
Certificate Balance................................... 8, 31
Certificateholder..................................... 34, 59
Certificateholders.................................... 2, 19
Certificates.......................................... 7
Class O Certificate................................... 76
clearing agency....................................... 34
clearing corporation.................................. 34
CMAT..................................................
Code.................................................. 10, 59
Collection Account.................................... 8, 24
Collection Period..................................... 30
Commercial Loans...................................... 20
Commercial Properties................................. 7, 20
Commission............................................ 2
Cooperatives.......................................... 20
Covered Trust......................................... 17
CPR................................................... 26
Credit Support........................................ Cover, 8, 24
Crime Control Act..................................... 58
Cut-off Date.......................................... 9
Debt Service Coverage Ratio........................... 20
Definitive Certificates............................... 29, 34
Department............................................ 85
Determination Date.................................... 29
Disqualified Organization............................. 71, 85
Distribution Date..................................... 9
DTC................................................... 2, 34
</TABLE>
90
<PAGE>
<TABLE>
<CAPTION>
PAGE(S) ON WHICH TERM IS
TERM DEFINED IN THE PROSPECTUS
- ------------------------------------------------------ -------------------------
<S> <C>
EDGAR................................................. 2
Equity Participations................................. 23
ERISA................................................. 10, 84
Exchange Act.......................................... 2
FASIT................................................. 10
FASIT Ownership Certificate........................... 76
FASIT Regular Certificates............................ 76
FDIC.................................................. 37
FHA................................................... 22
foreclosure property.................................. 73
HUD................................................... 22
Indirect Participants................................. 34
Installment Contracts................................. 7
Insurance Proceeds.................................... 37
L/C Bank.............................................. 46
Liquidation Proceeds.................................. 37
Loan-to-Value Ratio................................... 21
Lock-out Date......................................... 23
Lock-out Period....................................... 23
Mark to Market Regulations............................ 72
Master Servicer....................................... 7
MBS................................................... Cover, 7, 20
MBS Agreement......................................... 23
MBS Issuer............................................ 23
MBS Servicer.......................................... 23
MBS Trustee........................................... 23
Mortgage Asset Seller................................. 20
Mortgage Assets....................................... Cover, 20
Mortgage Loans........................................ Cover, 7, 20, 59
Mortgage Notes........................................ 20
Mortgage Rate......................................... 8, 23
mortgage related securities........................... 10, 86, 87
Mortgaged Properties.................................. 7
Mortgages............................................. 20
Multifamily Loans..................................... 20
Multifamily Properties................................ 7, 20
NCUA.................................................. 58, 87
Net Leases............................................ 21
Net Operating Income.................................. 20
New Regulations....................................... 75
Nomura................................................ 88
Nomura Capital........................................ 88
Non-SMMEA Certificates................................ 86
Nonrecoverable Advance................................ 32
</TABLE>
91
<PAGE>
<TABLE>
<CAPTION>
PAGE(S) ON WHICH TERM IS
TERM DEFINED IN THE PROSPECTUS
- ------------------------------------------------------ -------------------------
<S> <C>
OCC................................................... 86
Offered Certificates.................................. Cover
OID................................................... 78
OID Regulations....................................... 62
operator.............................................. 18, 40
Originator............................................ 20
OTS................................................... 87
owner................................................. 18, 40
Participants.......................................... 34
Pass-Through Entity................................... 70, 71
Pass-Through Rate..................................... 8
Permitted Investments................................. 37
Plan.................................................. 10
plan assets........................................... 85
Plans................................................. 84
Prepayment Assumption................................. 63
Prepayment Premium.................................... 23
Random Lot Certificates............................... 62
Rating Agency......................................... 10
Record Date........................................... 29
Regular Certificateholder............................. 62
Regulations........................................... 85
Related Proceeds...................................... 32
Relief Act............................................ 58
REMIC................................................. 10, 60
REMIC Certificates.................................... 59
REMIC Pool............................................ 59, 60
REMIC Regular Certificates............................ 59, 75
REMIC Regulations..................................... 59
REO Account........................................... 38
Residual Certificateholders........................... 67
Residual Certificates................................. 59
RICO.................................................. 58
SAIF.................................................. 37
Section 42 Properties................................. 14
Securities Act........................................ 20
Senior Certificates................................... 9, 28
Service............................................... 61
Similar Law........................................... 85
SMMEA................................................. 86
SPA................................................... 26
Special Servicer...................................... 7, 39
Standard Certificateholder............................ 79
Standard Certificates................................. 79
</TABLE>
92
<PAGE>
<TABLE>
<CAPTION>
PAGE(S) ON WHICH TERM IS
TERM DEFINED IN THE PROSPECTUS
- ------------------------------------------------------ -------------------------
<S> <C>
Stripped Certificateholder............................ 82
Stripped Certificates................................. 79, 81
Stripped Interest Certificates........................ 9
Stripped Principal Certificates....................... 9
Sub-Servicer.......................................... 39
Sub-Servicing Agreement............................... 39
Subordinate Certificates.............................. 9, 28
Tax Credits........................................... 14
Title V............................................... 57
Title VIII............................................ 58
Treasury.............................................. 59
Trust Assets.......................................... 2
Trust FASIT........................................... 76
Trust Fund............................................ Cover
Trustee............................................... 7
U.S. Person........................................... 72
UCC................................................... 48
unanchored............................................ 13
Value................................................. 21
Voting Rights......................................... 19
Warranting Party...................................... 36
Web................................................... 2
</TABLE>
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<PAGE>
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<PAGE>
- --------------------------------------------------------------------------------
COMMERCIAL MORTGAGE ASSET TRUST
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 1999-C1
IMPORTANT NOTICE TO ALL POTENTIAL INVESTORS
The file on this diskette contains the "Characteristics of the Notes",
"Characteristics of the Mortgaged Properties" and "Characteristics of the
Premium Loans" in Microsoft Excel Version 5.0 format. The information contained
in this diskette appears elsewhere in paper form in this Prospectus Supplement
and must be considered part of, and together with, the information contained
elsewhere in the Prospectus Supplement and the Prospectus. Defined terms used in
this diskette but not otherwise defined therein shall have the respective
meanings assigned to them in the paper portion of the Prospectus Supplement and
Prospectus. All of the information contained in this diskette is subject to the
same limitations and qualifications contained elsewhere in this Prospectus and
Prospectus Supplement. Prospective investors are strongly urged to read the
paper portion of this Prospectus Supplement and the Prospectus in its entirety
prior to accessing this diskette. The information contained in this diskette has
been filed by the Depositor with the Securities and Exchange Commission as part
of a Current Report on Form 8-K, which is incorporated by reference in this
Prospectus Supplement, and is also available through the public reference branch
of the Securities and Exchange Commission. IF THIS DISKETTE WAS NOT RECEIVED IN
A SEALED PACKAGE, THERE CAN BE NO ASSURANCES THAT IT REMAINS IN ITS ORIGINAL
FORMAT AND SHOULD NOT BE RELIED UPON FOR ANY PURPOSE. PROSPECTIVE INVESTORS MAY
CONTACT PAUL SUN AT GOLDMAN, SACHS & CO. AT (212) 902-0609 OR JIM BLAKEMORE AT
LEHMAN BROTHERS INC. AT (212) 526-7708 TO RECEIVE AN ADDITIONAL COPY OF THE
DISKETTE.
- --------------------------------------------------------------------------------
<PAGE>
This diskette contains a spreadsheet file that can be put on a
user-specified hard drive or network drive. The file is "[CMATAnnexes].xls". The
file "[CMATAnnexes].xls". is a Microsoft Excel(1), Version 5.0 spreadsheet. The
file provides, in electronic format, certain loan level information shown in
ANNEX A, ANNEX B and ANNEX C of the Prospectus Supplement.
Open the file as you would normally open any spreadsheet in Microsoft
Excel. After the file is opened, a screen will appear requesting a password.
Please "click" the "read only" option. At that point a securities law legend
will be displayed. READ THE LEGEND CAREFULLY.
- ------------------
(1) Microsoft Excel is a registered trademark of Microsoft Corporation.
<PAGE>
===============================================================================
No dealer, salesperson or other person is authorized to give any information
or to represent anything not contained in this prospectus. You must not rely on
any unauthorized information or representations. This prospectus is an offer to
sell only the certificates offered hereby, but only under circumstances and in
jurisdictions where it is lawful to do so. The information contained in this
prospectus is current only as of its date.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Prospectus Supplement
Table of Contents............................... S-4
Summary of Prospectus Supplement................ S-10
Risk Factors and Other Special Considerations... S-31
Description of the Mortgage Pool................ S-57
Description of the Offered Certificates......... S-104
Prepayment and Yield Considerations............. S-120
The Mortgage Loan Sellers....................... S-131
The Pooling and Servicing Agreement............. S-131
Certain Legal Aspects of Mortgage Loans for
Mortgaged Properties Located in California,
Michigan, New York, Virginia, Illinois and
Ohio.......................................... S-159
Use of Proceeds................................. S-161
Certain Federal Income Tax Consequences......... S-161
Certain ERISA Considerations.................... S-162
Legal Investment................................ S-165
Legal Matters................................... S-165
Rating.......................................... S-166
Underwriting.................................... S-166
Index of Significant Definitions................ S-168
Annex A--Characteristics of the Notes........... A-1
Annex B--Characteristics of the Mortgaged
Properties.................................... B-1
Annex C--Characteristics of the Premium Loans... C-1
Annex D--Global Clearance, Settlement and Tax
Documentation Procedures...................... D-1
Annex E--Structural and Collateral Term Sheet... E-1
Annex F--Form of Trustee Reports................ F-1
Annex G--Form of Servicing Reports.............. G-1
Prospectus
Table of Contents............................... 3
Summary of Prospectus........................... 7
Risk Factors.................................... 11
Description of the Trust Funds.................. 20
Use of Proceeds................................. 24
Yield Considerations............................ 25
The Depositor................................... 27
Description of the Certificates................. 28
Description of the Agreements................... 35
Description of Credit Support................... 45
Certain Legal Aspects of Mortgage Loans......... 48
Federal Income Tax Consequences................. 59
ERISA Considerations............................ 84
Legal Investment................................ 86
Method of Distribution.......................... 87
Legal Matters................................... 89
Financial Information........................... 89
Rating.......................................... 89
Index of Principal Definitions.................. 90
</TABLE>
$2,107,801,000
(Approximate)
COMMERCIAL MORTGAGE
ASSET TRUST
CLASS A-1, CLASS A-2,
CLASS A-3, CLASS B, CLASS C,
CLASS D AND CLASS E
COMMERCIAL MORTGAGE
PASS-THROUGH CERTIFICATES
SERIES 1999-C1
---------------------
PROSPECTUS SUPPLEMENT
---------------------
Co-Lead Managers and Joint Bookrunners
GOLDMAN, SACHS & CO.
LEHMAN BROTHERS
---------------------
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
NOMURA SECURITIES
INTERNATIONAL, INC.
===============================================================================
